F-1/A

As filed with the Securities and Exchange Commission on February 16, 2010

Registration No. 333-164050

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT No. 1

TO

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Med BioGene Inc.

(Exact name of Registrant as specified in its charter)

British Columbia	8071	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

300 - 2386 East Mall

Gerald McGavin Building

Vancouver, British Columbia

V6T 1Z3 Canada

(604) 827-5100

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Erinn B. Broshko

Chief Executive Officer

Med BioGene Inc.

300 - 2386 East Mall

Gerald McGavin Building

Vancouver, British Columbia

V6T 1Z3 Canada

(604) 827-4505

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Kevin K. Rooney Hayden Bergman Rooney, Professional Corporation 150 Post Street, Suite 650 San Francisco, California 94108 Telephone: (415) 692-3310 Facsimile: (415) 399-9320 R. Hector MacKay-Dunn, Q.C. Farris, Vaughan, Wills & Murphy LLP 25^th Floor 700 West Georgia Street Vancouver, British Columbia Canada V7Y 1B3 Telephone: (604) 661-9307 Facsimile: (604) 661-9349 Joseph A. Garcia McCarthy Tétrault LLP Suite 1300, Pacific Centre 777 Dunsmuir Street Vancouver, British Columbia Canada V7Y 1K2 Telephone: (604) 643-7991 Facsimile: (604) 643-7900 Jeffrey J. Fessler Sichenzia Ross Friedman Ference LLP 61 Broadway 32^nd Floor New York, New York 10006 Telephone: (212) 930-9700 Facsimile: (212) 930-9725

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Calculation of Registration Fee

Title of each class of securities to be registered	Proposed maximum aggregate offering price(1)	Amount of registration fee
Common Shares(2)	$23,000,000	$1,640(3)

(1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.

(2) Includes Common Shares that may be sold pursuant to the exercise of a 45-day option granted by the Registrant to the underwriter to cover over-allotments, if any.

(3) Amount previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 16, 2010

[            ] Common Shares

This is the initial public offering of our common shares in the United States and no public market currently exists in the United States for our common shares. We are selling [            ] common shares to investors in the United States in a firm commitment offering. We expect the public offering price to be between $[            ] and $[            ] per common share.

Our common shares are listed in Canada on the TSX Venture Exchange under the symbol “MBI.” On February 12, 2010, the closing price of our common shares on the TSX Venture Exchange was C$6.50 per share, or US$6.08 per share, based on the U.S.-Canadian dollar noon rate in the City of New York on February 1, 2010 for cable transfers of Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York, being US$1.00 = C$1.0682, and after giving effect to an assumed 1-for-50 reverse stock split of our outstanding common shares that we expect to effect prior to or upon the date of this prospectus.

We have applied to list our common shares on The NASDAQ Capital Market under the symbol “MBGI”, and to graduate our listing from the TSX Venture Exchange to the Toronto Stock Exchange under the symbol “MBI”.

Investing in our common shares involves a high degree of risk. See “Risk Factors” beginning on page 8 of this prospectus for a discussion of information that you should consider before investing in our common shares.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discount and commissions(1)	$	$
Proceeds, before expenses, to us	$	$

(1) See “Underwriting” for a description of compensation payable to the underwriter.

We have granted a 45-day option to Rodman & Renshaw, LLC, the underwriter, to purchase up to an additional [        ] common shares from us on the same terms as set forth above. If the underwriter exercises its right to purchase all of such additional common shares, we estimate that we will receive gross proceeds of approximately $[        ] from the sale of common shares being offered and net proceeds of approximately $[        ] after deducting approximately $[        ] for underwriting discounts and commissions, based on an initial public offering price of $[        ] per common share, the midpoint of the range shown above. The shares issuable upon exercise of the underwriter option are identical to those offered by this prospectus and have been registered under the registration statement of which this prospectus forms a part.

The underwriter expects to deliver the common shares to purchasers in the offering on or about [                    ], 2010.

Rodman & Renshaw, LLC

The date of this prospectus is [                    ], 2010.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	8
Special Note Regarding Forward-Looking Statements and Information	22
Explanatory Note Regarding Reverse Stock Split	22
Use of Proceeds	23
Enforcement of Civil Liabilities	24
Dividend Policy	24
Per Share Market Information	25
Capitalization	26
Dilution	27
Selected Consolidated Financial Data	29
Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Business	44
Management	63
Certain Relationships and Related Transactions	73
Security Ownership of Certain Beneficial Owners and Management	74
Description of Capital Stock	76
Shares Eligible for Future Sale	85
Certain Material Income Tax Considerations	87
NASDAQ Quorum Requirement	93
Underwriting	94
Legal Matters	103
Experts	103
Expenses Related to this Offering	103
Where You Can Find More Information	104
Index to Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not, and the underwriter has not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriter is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus or other date stated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

In this prospectus, unless otherwise specified, all monetary amounts are in U.S. dollars. All Canadian dollar, or C$, amounts have been translated into U.S. dollars at the February 1, 2010 noon buying rate in the City of New York for cable transfers of Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York, being US$1.00 = C$1.0682.

In this prospectus, our audited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and are presented in U.S. dollars.

We obtained statistical data, market data and other industry data and forecasts used throughout this prospectus from market research, publicly available information and industry publications. Industry publications generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy and completeness of the information. Nevertheless, we are responsible for the accuracy and completeness of the historical information presented in this prospectus, as of the date of the prospectus.

LungExpress Dx is our trademark. Each trademark, trade name or service mark of any other company appearing in this prospectus belongs to its holder.

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PROSPECTUS SUMMARY

This summary highlights certain information appearing elsewhere in this prospectus. Before deciding to invest in our common shares you should read the entire prospectus carefully, including “Risk Factors,” our audited consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case appearing elsewhere in this prospectus. References in this prospectus to “we,” “us” and “our” refer to Med BioGene Inc., unless the context requires otherwise.

Our Company

We are a life science company focused on the development and commercialization of genomic-based clinical laboratory diagnostic tests for cancer.

In making treatment decisions for cancer patients, physicians rely primarily upon tumor stage to predict a patient’s prognosis and likelihood of cancer recurrence. Because tumor staging is heavily dependent on visual assessment and human interpretation, physicians and patients often make treatment decisions using subjective and limited information that may not reflect the molecular nature of the patient’s cancer. Our mission is to develop and commercialize genomic-based tests that characterize tumors on a molecular level to provide personalized, clinically relevant information to improve patient treatment and reduce health care costs.

Our initial focus is on lung cancer, a disease that accounts for more deaths per year than breast cancer, prostate cancer and colon cancer combined, and we expect to launch our first test, LungExpress Dx, in the United States in 2010.

LungExpress Dx uses our proprietary 15-gene signature to improve upon staging for identifying those patients with early-stage non-small-cell lung cancer, or NSCLC, who, following surgical removal of their tumor, are at a higher and lower risk of mortality. In our initial study of patient specimens from the National Cancer Institute of Canada Clinical Trials Group JBR.10 trial, or JBR.10 clinical trial, patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy. We believe that the use of LungExpress Dx will result in better-informed and personalized treatment decisions and improve the selection of patients who may benefit from adjuvant chemotherapy.

Following completion of this offering, we intend to:

• establish our central laboratory in the United States certified in accordance with the Clinical Laboratory Improvement Amendments of 1988, or CLIA, where we will perform our services;

• launch LungExpress Dx as a clinical service in the United States in 2010 and build a focused sales, marketing and reimbursement team, either alone or through partnerships;

• commercialize LungExpress Dx in Asia and Europe and other jurisdictions outside of the United States through distribution agreements with established companies with relevant local sales, marketing, reimbursement and regulatory compliance experience; and

• seek to partner with pharmaceutical companies to use LungExpress Dx as a companion diagnostic to identify those patients who are more likely to respond to their United States Food and Drug Administration, or FDA, approved or development-stage targeted therapies.

We believe that, in commercializing LungExpress Dx, we will continue to develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing,

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reimbursement and regulatory compliance. While our primary focus is LungExpress Dx, we may selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

LungExpress Dx

Lung Cancer

According to a 2009 peer-reviewed publication, over 1.3 million people are diagnosed with, and approximately 1.0 million die from, lung cancer globally each year. In the United States alone, the National Cancer Institute estimates that in 2009 approximately 220,000 people will have been diagnosed with lung cancer and 160,000 will die from the disease. Another 2009 peer-reviewed publication also estimates that the number of Americans diagnosed each year with lung cancer will increase significantly over the next two decades to 280,000 by 2020 and 338,000 by 2030.

NSCLC represents approximately 85% to 90% of all lung cancers and is comprised of multiple sub-types, including adeno-, squamous cell and large-cell carcinomas. A 2007 study by the International Association for the Study of Lung Cancer, which employed the population-based Surveillance Epidemiology and End Results, or SEER, United States cancer registry data, estimates that early-stage NSCLC represents approximately 34% of all diagnosed NSCLC cases.

Because of expected population increases and aging in the United States, the costs of diagnosing and treating lung cancer, and the estimated value of life lost from the disease, are substantial and expected to increase dramatically, even if mortality rates remain constant. The National Cancer Institute estimates that in the United States in 2007, $9.6 billion was spent on the diagnosis and treatment of lung cancer, representing over 13% of all cancer-related expenditures. According to a 2008 peer-reviewed publication, the value of life lost in the United States from lung cancer deaths in the year 2000 was estimated to be $240 billion, representing over 25% of the value for all cancers. In this study, the value of life lost was calculated by multiplying the years of life lost by $150,000, an estimate of the value of one year of life commonly used by health economists. Small declines in lung cancer mortality rates, for example, through more effective patient treatment, can have a substantial impact on healthcare expenditures and the value of life lost.

The Opportunity

A more accurate means of determining which early-stage NSCLC patients are, following surgery, at a higher and lower risk of mortality is needed to improve the selection of patients who may benefit from adjuvant chemotherapy. We believe that the use of LungExpress Dx will assist in addressing this unmet need.

Treatment decisions regarding NSCLC patients are based largely on current indications of prognosis and risk associated with tumor staging using the Tumor-Node-Metastasis, or TNM, algorithm. TNM staging is based upon the anatomical extent of the tumor, such as size, local and distant lymph node involvement and metastasis to stratify patients into stages I to IV. Stages I and II, considered early-stage, with localized disease, are associated with a better survival rate than stage III and IV, with the latter being considered non-curable.

Early-stage NSCLC patients are treated primarily by surgical removal of their tumors. Recent clinical trials have established that adjuvant chemotherapy, administered after tumor removal, significantly improves the survival of stage II patients, but does not significantly improve the survival of stage I patients. As a result, the American Society of Clinical Oncology, or ASCO, recommends adjuvant chemotherapy for stage II patients, but not for stage I patients, and the National Comprehensive Cancer Network, or NCCN, recommends adjuvant chemotherapy for stage II patients and, in certain circumstances, stage I patients.

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However, within five years of surgery, 30% to 55% of stage I and II patients will die as a result of cancer recurrence, implying that patients diagnosed with the same stage of disease can differ in terms of tumor aggressiveness and response to treatment. While TNM stage currently remains the strongest predictor of prognosis, in many cases it fails to identify those patients within stage I who have an aggressive tumor and may benefit from chemotherapy, and those patients within stage II who have a less aggressive tumor and may not benefit from chemotherapy.

This uncertainty, coupled with other factors such as patient wishes, age, comorbidity and postoperative complications, has led to significant non-compliance by physicians and patients with the ASCO and NCCN guidelines. Peer-reviewed publications reviewing the clinical practices at two major cancer care centers, Princess Margaret Hospital in Toronto (May 2003 to May 2005) and Institut Mutualiste Montsouris in Paris (January 2004 to May 2005), confirmed such non-compliance in that, following surgery, 23% to 34% of stage I patients were treated with chemotherapy and approximately 50% of stage II patients were not treated with chemotherapy.

We believe that by providing information regarding each patient’s risk of mortality, the use of LungExpress Dx will assist both physicians and patients in making better-informed and personalized treatment decisions.

Our Solution

We believe that the use of LungExpress Dx will have the following benefits:

Improved Quality of Treatment Decisions. LungExpress Dx improves upon staging in identifying those patients with early-stage NSCLC, who, following surgical removal of their tumor, are at a higher and lower risk of mortality. In our initial study of patient specimens from the JBR.10 clinical trial, patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy. We believe that the use of LungExpress Dx will result in better-informed and personalized treatment decisions and improve the selection of patients who may benefit from adjuvant chemotherapy.

Health Economic Benefits. Improving the quality of treatment decisions through the use of LungExpress Dx may result in health economic benefits. Our initial study was presented in January 2010 at a poster session of the American Association for Cancer Research – International Association for the Study of Lung Cancer Joint Conference on Molecular Origins of Lung Cancer and demonstrates projected cost savings through the use of LungExpress Dx. Our model shows that approximately half of stage I NSCLC patients who are classified by LungExpress Dx as higher risk and who under current guidelines are not routinely treated with adjuvant chemotherapy, may benefit from such treatment, possibly avoiding or delaying disease recurrence and associated costs relating to treatment failure and terminal care, which can be over $75,000 per patient. Increasingly, targeted therapies are also being used in cases of disease recurrence and can add over $100,000 per person, per treatment course. On the other hand, approximately half of stage II NSCLC patients who are classified by LungExpress Dx as lower risk and who under current guidelines are routinely treated with adjuvant chemotherapy may not benefit from such treatment according to our model, possibly avoiding the costs and side effects associated with such treatment.

Integration into Current Clinical Practice. LungExpress Dx can be integrated into the current clinical treatment of early-stage NSCLC patients where chemotherapy should begin, if at all, within four to eight weeks from surgery. Once a patient is diagnosed with NSCLC, the tumor is surgically removed and a pathologist determines the TNM stage of disease. At that time, a physician will then be able to order LungExpress Dx and the pathology laboratory will provide us with the tumor specimen. We will then analyze the tumor specimen and deliver our results to the treating physician so that the physician and patient may discuss treatment options with a better understanding of the patient’s personal risk profile.

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Development of LungExpress Dx

As presented at the 2008 Annual Meeting of ASCO and submitted for peer-review publication, the 15-gene signature of LungExpress Dx was developed using five-year outcome data from untreated stage IB and II NSCLC patients in the JBR.10 clinical trial.

Of the 482 patients participating in the JBR.10 clinical trial, flash frozen tumor specimens from 62 observation patients and 71 patients treated with chemotherapy were available for analysis. The LungExpress Dx genes were selected using an unbiased genome-wide microarray approach in which all 25,000 genes in the human genome from the observation patients were evaluated and narrowed down to 172 genes with the greatest ability to predict mortality. Using statistical analysis, a sub-set of 15 genes were shown to best correlate with patient survival and were selected for the LungExpress Dx signature. Using the expression levels of these 15 genes, we developed a proprietary algorithm that separates patients into higher and lower risk groups based upon predicted mortality. We then validated LungExpress Dx in predicting patient mortality in five independent studies involving microarray data from tumor specimens totaling 676 untreated stage I and II NSCLC patients.

We also compared the 71 JBR.10 clinical trial patients treated with chemotherapy to the 62 observation patients using the LungExpress Dx classification. The study demonstrated that patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy.

We believe that the results of these studies demonstrate that LungExpress Dx quantifies the risk of mortality and may also correlate with the likelihood of chemotherapy benefit in early-stage NSCLC patients.

LungExpress Dx has been validated for use with patient specimens preserved by flash freezing. Following the commercial launch of LungExpress Dx, we plan to complete our studies to validate LungExpress Dx for use with patient specimens preserved by formalin fixation, paraffin embedding, or FFPE, and to commence studies to validate the utility of our test in quantifying a patient’s mortality risk and likelihood of chemotherapy benefit, potentially including a prospective and randomized clinical trial.

Our Business Strategy

Our business strategy is as follows:

Commercialize LungExpress Dx in the United States. We plan to launch LungExpress Dx as a clinical service in the United States in 2010. We anticipate using a portion of the net proceeds from our offering to establish our CLIA-certified central laboratory where we will perform our services and build, either alone or through partnerships, a focused domestic sales, marketing and reimbursement team in the United States. We believe that the most effective way to maximize the adoption of LungExpress Dx will be to have our team interact directly with oncologists, pathologists, patient advocacy groups and third-party payors to convey the clinical and health economic benefits of our test.

Commercialize LungExpress Dx Internationally. Asia and Europe have high incidence rates of lung cancer primarily because of the prevalence of smoking. We plan to commercialize LungExpress Dx in Asia and Europe and other jurisdictions outside of the United States through distribution agreements with established companies with relevant local sales, marketing, reimbursement and regulatory compliance experience. We have been involved in discussions with numerous groups to facilitate the distribution of our test in select countries.

Partner with Pharmaceutical Companies to Use LungExpress Dx as a Companion Diagnostic. LungExpress Dx was developed with data obtained from untreated patient specimens and, as such, we can correlate patients classified by our test as higher and lower risk with their response to any specific treatment regimen. As a result,

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we may seek to partner with pharmaceutical companies to use LungExpress Dx as a companion diagnostic to identify those patients who are more likely to respond to their FDA-approved or development-stage targeted therapies to assist in moving away from a “one-size-fits-all” approach to patient management.

Selectively Apply Our Commercial and Clinical Infrastructure to Other Tests. We believe that, in commercializing LungExpress Dx, we will continue to develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing, reimbursement and regulatory compliance. While our primary focus is LungExpress Dx, we may selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

Company History and Information

Med BioGene Inc., our predecessor, was incorporated under the Canada Business Corporations Act on October 16, 2002, and transitioned to the Business Corporations Act (British Columbia) on July 20, 2005. Effective April 28, 2006, to facilitate a listing of our common shares on the TSX Venture Exchange, our predecessor company acquired Dragon-Tex (Group) Limited, a company incorporated under the Business Corporations Act (Alberta). In connection with the acquisition, we undertook a series of concurrent transactions resulting in us being a company amalgamated under the Business Corporations Act (British Columbia) on April 28, 2006.

We have one wholly-owned subsidiary, DTX Acquisition Company Inc., which is a company amalgamated under the Business Corporations Act (Alberta) on April 28, 2006. DTX Acquisition Company Inc. has no active business and holds no assets.

We are currently a development-stage company which, since inception through December 31, 2009, has incurred cumulative losses from operations of $10,942,085. Our independent registered public accounting firm has issued a report on our audited consolidated financial statements for the year ended December 31, 2009 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern without raising additional capital from external sources.

Our principal executive offices are located at 300-2386 East Mall, Gerald McGavin Building, Vancouver, British Columbia, Canada V6T 1Z3, and our telephone number at that address is (604) 827-5100. Our web site is located at www.medbiogene.com. The information contained on our web site does not constitute a part of this prospectus.

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Reverse Stock Split

We intend to effect a reverse stock split of our common shares on the basis of between 1-for-10 and 1-for-70 prior to or upon the date of this prospectus. No fractional common shares will be issued in connection with the stock split, and all such fractional interests will be rounded down to the nearest whole number of common shares. Issued and outstanding stock options and warrants will be split on the same basis and exercise prices will be adjusted accordingly. All information presented in this prospectus assumes a 1-for-50 reverse stock split of our outstanding common shares, stock options and warrants and, unless otherwise indicated, all such amounts and corresponding common share price, per share and stock option and warrant exercise price data set forth in this prospectus have been adjusted to give effect to the assumed reverse stock split.

The Offering

Common shares offered by us in this offering [            ] shares

Common shares to be outstanding after this offering [            ] shares

Use of proceeds We currently plan to use the net proceeds from this offering to launch LungExpress Dx in 2010 as a clinical service, expand our laboratory and clinical capabilities and acquire laboratory and other equipment related to our business and the providing of our clinical services, build our commercial capabilities in sales, marketing and reimbursement, conduct following commercial launch additional studies respecting LungExpress Dx and for general corporate purposes. See “Use of Proceeds”.

Risk factors Investing in our common shares involves a high degree of risk and purchasers of our common shares may lose their entire investment. See “Risk Factors” and the other information included elsewhere in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common shares.

Proposed NASDAQ Capital Market symbol “MBGI”

Proposed Toronto Stock Exchange symbol “MBI”

Unless we indicate otherwise, all information in this prospectus: (1) assumes no exercise by the underwriter of its option to purchase up to an additional [            ] common shares to cover over-allotments, if any; (2) assumes a 1-for-50 reverse stock split of our outstanding common shares, stock options and warrants, which will be effected prior to or upon the date of this prospectus, and the corresponding adjustment of all common share price, per share and stock option and warrant exercise price data; (3) excludes 147,650 common shares issuable upon the exercise of stock options outstanding as of February 8, 2010, with a weighted average exercise price of $9.61 per share, under the Med BioGene Inc. 2006 Incentive Stock Option Plan; (4) excludes 635,493 common shares issuable upon the exercise of warrants outstanding as of February 8, 2010, with a weighted average exercise price of $12.62 per share; and (5) excludes 141,830 common shares reserved for future stock option grants under the Med BioGene Inc. 2006 Incentive Stock Option Plan.

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Summary Consolidated Financial Data

The following tables set forth our summary statement of operations data for the fiscal years ended December 31, 2009, 2008 and 2007, and our summary balance sheet data as of December 31, 2009, 2008 and 2007. Our statement of operations data for the fiscal years ended December 31, 2009, 2008 and 2007 were derived from our audited consolidated financial statements included elsewhere in this prospectus. We have not included summary financial data for the years ended December 31, 2006 and 2005, as such information is not available on a basis that is consistent with the summary financial data for the years ended December 31, 2009, 2008 and 2007 and cannot be provided in accordance with United States generally accepted accounting principles without unreasonable effort or expense.

The historical results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this information together with “Description of Capital Stock,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements and related notes included elsewhere in this prospectus.

	Year Ended December 31,
	2009			2008			2007
Consolidated Statement of Operations Data:
Expenses:
Research and development	$	988,636		$	751,117		$	1,080,925
General and administrative		1,070,204			1,317,124			1,172,524
Amortization of property and equipment		78,876			87,129			61,625
Total expenses		2,137,716			2,155,370			2,315,074
Other income (expense):
Interest and other income		12,165			29,168			49,806
Interest expense		(9,020	)		(13,433	)		(10,192	)
Other income, net		3,145			15,735			39,614
Net loss	$	(2,134,571	)	$	(2,139,635	)	$	(2,275,460	)
Loss per share:
Basic	$	(1.98	)	$	(3.17	)	$	(4.40	)
Diluted	$	(1.98	)	$	(3.17	)	$	(4.40	)

	As of December 31, 2009
	Actual		As Adjusted(1)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	1,522,428	$
Working capital		642,166
Total assets		1,804,679
Total liabilities		919,814
Total shareholders’ equity		884,865

(1) Our consolidated as adjusted balance sheet data as of December 31, 2009 gives effect to the issuance and sale of [            ] common shares by us in this offering, assuming an initial public offering price of $[            ] per share, after deducting estimated underwriting discounts, commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the amounts representing cash and cash equivalents, working capital, total assets and total shareholders’ equity by $[            ] million.

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RISK FACTORS

You should carefully consider the risks described below before buying common shares in this offering. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed. In that case, the trading price of our common shares could decline, and you could lose all or part of your investment.

We are a development-stage company with a limited operating history, no marketed tests and substantial losses predicted for the foreseeable future.

Our predecessor was founded in October 2002 and we were amalgamated in April 2006. As such, we have a limited operating history and have not earned any profits to date. Since our inception through December 31, 2009, we have incurred cumulative losses from operations of $10,942,085. To date, we have not achieved, and we may never achieve, revenues sufficient to offset expenses. We expect to devote substantially all of our resources to develop and commercialize LungExpress Dx and any future tests.

Because of the numerous risks and uncertainties associated with developing and commercializing LungExpress Dx and any future tests, we are unable to predict the extent of any future losses or when we will become profitable, if ever. We may never become profitable and you may never receive a return on an investment in our common shares. An investor in our common shares must carefully consider the substantial challenges, risks and uncertainties inherent in the attempted development and commercialization of tests in the medical diagnostic industry. We may never successfully commercialize LungExpress Dx or any future tests, and our business may fail.

We are planning to conduct, following the launch of LungExpress Dx, additional studies respecting our test. If such studies fail to produce positive results, or if we are required to conduct additional studies prior to commercialization, our commercialization of LungExpress Dx will be negatively affected, our business will be harmed and the market price of our common shares could significantly decline.

LungExpress Dx has been validated for use with patient specimens preserved by flash freezing. Following the commercial launch of LungExpress Dx, we plan to complete our studies to validate LungExpress Dx for use with patient specimens preserved by FFPE, and to commence studies to validate the utility of our test in quantifying a patient’s mortality risk and likelihood of chemotherapy benefit, potentially including a prospective and randomized clinical trial. If such studies are delayed or fail to produce positive results, or if we are required to conduct additional studies prior to marketing or continuing to market LungExpress Dx, our commercialization of LungExpress Dx will be negatively affected, our business will be harmed and the market price of our common shares could significantly decline.

If our test development timelines fall short of our forecasts or market expectations, our common share price may decline.

Periodically, we forecast the timing of various scientific, clinical and regulatory accomplishments. We have included in this prospectus numerous forecasts regarding, among other things, the commercialization of LungExpress Dx, the commencement of marketing LungExpress Dx, the conducting of additional studies following the launch of LungExpress Dx and the adequacy of the proceeds from this offering to fund our commercialization and development programs. All of these forecasts are based on a variety of assumptions, most of which are beyond our ability to control. Actual results are likely to vary relative to our forecasts and, in many cases, could vary dramatically. If we do not achieve these forecasts as publicly announced, the commercialization of LungExpress Dx may be negatively affected and the market price for our common shares may decline.

Our near-term financial success and the market price of our common shares depend upon the successful commercialization of one test, LungExpress Dx, and we will need to generate sufficient revenues from this, and possibly other tests, to achieve profitability.

For the foreseeable future, we expect to derive substantially all of our revenues, if any, from sales of one test, LungExpress Dx. Our plans are to begin commercialization of LungExpress Dx in 2010, but there can be no

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assurances that we will commercialize the test within this time period, if at all. We are in various stages of research and development for other tests but have suspended our activities in those areas to focus on the commercialization of LungExpress Dx. We are not currently able to estimate when or if we will be able to commercialize additional tests or whether we will be successful in doing so. If we are unable to successfully commercialize LungExpress Dx and other tests, our future revenues and ability to achieve profitability will be impaired, and the market price of our common shares could decline significantly.

In order to market LungExpress Dx and any future tests that we develop, we will need to develop and employ, either alone or through partnerships, a marketing and sales force with technical expertise. There can be no assurance that our sales or marketing efforts will be successful.

We currently have no sales, marketing or distribution capabilities. In order to market LungExpress Dx and any future tests, we will need to develop and employ, either alone or through partnerships, a marketing and sales force with technical expertise. To the extent that we rely on third parties to market our tests, the commercial success of such tests may be beyond our control. There can be no assurance that our sales or marketing efforts will be successful and, if not successful, could have a material adverse effect on our business or financial condition.

Should we commercialize LungExpress Dx and any future tests, they may not gain acceptance among physicians, healthcare professionals and third-party payors, which could have a material impact on our future business, financial condition and operations.

Should we commercialize LungExpress Dx and any future tests as clinical services in the United States and internationally, our success will depend upon such tests being accepted in the market. The degree of market acceptance of our tests by physicians, healthcare professionals and third-party payors will depend on a number of factors, including:

• acceptance of the methods of patient specimen preservation for use with our tests including, upon the planned launch of LungExpress Dx, specimens preserved by flash freezing;

• our ability to provide acceptable evidence of clinical utility;

• successful integration into clinical practice;

• availability and advantages of alternative tests;

• effectiveness of our sales and marketing efforts and strategies;

• pricing and positive health economics; and

• our ability to obtain sufficient insurance coverage or reimbursement.

If LungExpress Dx and any future tests that we commercialize fail to gain market acceptance, our ability to generate revenue would be impaired, which could have a material impact on our business, financial condition and operations.

If we are not able to offer LungExpress Dx at a price that we deem appropriate, or if there is a general decrease in the prices of molecular diagnostics tests, then we may need to lower our price, which could have a material adverse impact on our revenue.

If we are able to commercialize LungExpress Dx, we will receive revenue based upon the realized sales price of LungExpress Dx. The sales price at which we offer LungExpress Dx will, to a certain extent, depend upon the expected clinical utility and positive health economics of our test, along with the prices charged for other marketed molecular diagnostic tests. If we are not able to offer LungExpress Dx at a price that we deem appropriate, or if there is a general decrease in the prices of molecular diagnostics tests, then we may need to lower our price, which could have a material adverse impact on our revenue.

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Our ability to successfully commercialize LungExpress Dx will depend largely upon the extent to which third-party payors reimburse our test.

Physicians and patients may decide not to order LungExpress Dx unless third-party payors, such as managed care organizations as well as government payors such as Medicare and Medicaid, pay a substantial portion of the test price. Reimbursement by a third-party payor may depend on a number of factors, including a payor’s determination that LungExpress Dx is:

• not experimental or investigational;

• medically necessary;

• appropriate for the specific patient;

• cost-effective;

• supported by peer-reviewed publications; and

• included in clinical practice guidelines.

There is uncertainty concerning third-party payor reimbursement of any test, including LungExpress Dx. Several entities conduct technology assessments of medical tests and devices and provide the results of their assessments for informational purposes to other parties. These assessments may be used by third-party payors and health care providers as grounds to deny coverage for a test or procedure. LungExpress Dx may receive negative assessments that may impact our ability to receive reimbursement of the test. Since each payor makes its own decision as to whether to establish a policy to reimburse our test, seeking these approvals may be a time-consuming and costly process.

Under current Medicare billing rules, claims for tests performed on Medicare beneficiaries who were hospital inpatients at the time the patient specimens were obtained and whose tests were ordered less than 14 days from discharge must be incorporated in the payment that the hospital receives for the inpatient services provided. Medicare billing rules also require hospitals to bill for the test when ordered for hospital outpatients less than 14 days following the date of the hospital procedure where the patient specimens were obtained. Accordingly, we will be required to bill individual hospitals for tests performed on Medicare beneficiaries during these time frames. Because we do not expect to have a written agreement in place with such hospitals, we may not be paid for our tests or may have to pursue payment from the hospital on a case-by-case basis. We believe these billing rules may lead to confusion regarding whether Medicare provides adequate reimbursement for our test, and could discourage Medicare patients from using our test. However, we believe that physicians will be able to order LungExpress Dx outside of this time frame and still allow us to provide our test results within the acceptable period for patient treatment. Although we expect to work with Medicare and other diagnostic laboratories to revise or reverse these billing rules, we have no assurance that Medicare will do so, and we also cannot ensure that hospitals will agree to arrangements to pay us for tests performed on patients falling under these rules.

Insurers, including managed care organizations as well as government payors such as Medicare and Medicaid, have increased their efforts to control the cost, utilization and delivery of health care services. From time to time, Congress has considered and implemented changes in the Medicare fee schedules in conjunction with budgetary legislation. Further reductions of reimbursement for Medicare services may be implemented from time to time. Reductions in the reimbursement rates of other third-party payors have occurred and may occur in the future. These measures may result in reduced payment rates and decreased test utilization for the clinical laboratory industry. In addition, we may not be able to obtain reimbursement coverage for any other new test or test enhancement we may develop in the future.

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If we are unable to obtain reimbursement approval from private payors and Medicare and Medicaid programs for LungExpress Dx, or if the amount reimbursed is inadequate, our ability to generate revenues from LungExpress Dx could be limited. Even if we are being reimbursed, insurers may withdraw their coverage policies or cancel their contracts with us at any time, stop paying for our test or reduce the payment rate for our test, which would reduce our revenue. Moreover, we may depend upon a limited number of third-party payors for a significant portion of our test revenues and if these or other third-party payors stop providing reimbursement or decrease the amount of reimbursement for our test, our revenues could decline.

Following commercialization, any significant disruption in the operation of our laboratories or the laboratories of our third-party collaborators that perform our commercialized tests could result in a loss of revenue to us and negatively impact our business.

Following commercialization, any significant disruption in the operation of our laboratories or the laboratories of our third-party collaborators that perform our tests could adversely impact or limit our ability to generate revenue. In addition, such laboratories may be subject to regulatory intervention, which could lead to interruptions and delays in performing the analysis associated with our tests and allowing us to make the test results available to our customers. Any such delays or regulatory intervention could cause a reduction in our revenue and negatively impact our business.

We may need to raise additional capital to accomplish our objectives of commercializing LungExpress Dx and any future tests, and if we are unable to raise such capital as needed our business could be adversely affected.

If we do not have sufficient cash resources, our ability to commercialize LungExpress Dx and any future tests could be limited unless we are able to obtain additional capital through future debt or equity financings. There can be no assurance that we will be able to obtain financing if, and when, it is needed or that, if available, it will be available on terms that we deem acceptable. The credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and instability characterized by the bankruptcy, failure, collapse or sale of various financial institutions and increasing levels of intervention from governments. These events have generally made equity and debt financing more difficult to obtain. As a result, we may be unable to pursue our research and development or commercialization activities, which could have an adverse effect on our business.

Many of our competitors have financial, marketing and human resource assets greater than ours, and there can be no assurance that we can successfully compete with such competitors or that such competition will not have a materially adverse effect on our business, financial position or results of operations.

The technologies associated with the molecular diagnostics industry are evolving rapidly and there is intense competition within such industries. Certain molecular diagnostics companies have established technologies that may be competitive to LungExpress Dx and any future tests that we develop. Some of these tests may use different approaches or means to obtain diagnostic results, which could be more effective or less expensive than our tests for similar indications. Moreover, these and other future competitors have or may have considerably greater resources than we do in terms of technology, sales, marketing, commercialization and capital resources. These competitors may have substantial advantages over us in terms of research and development expertise, experience in clinical studies, experience in regulatory issues, brand name exposure and expertise in sales and marketing as well as in operating central laboratory services. Many of these organizations have financial, marketing and human resources greater than ours; therefore, there can be no assurance that we can successfully compete with present or potential competitors or that such competition will not have a materially adverse effect on our business, financial position or results of operations.

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We currently purchase from third parties the gene expression equipment, reagents and other equipment used in our research and testing and we may not be able to successfully purchase such materials in the future.

We currently purchase from third parties the gene expression equipment and reagents and other equipment used in our research and testing. To commercialize LungExpress Dx and any future tests, we must acquire or license such products in larger commercial quantities in compliance with regulatory requirements and at acceptable costs. However, we may not be able to successfully acquire or license such products in appropriate amounts and at acceptable prices, and in such a case our ability to commercialize LungExpress Dx and any future tests could be impaired.

If we are not able to establish successful collaborations with third parties, we may not be able to grow our business.

Our strategy involves, in certain cases, entering into various arrangements with corporate and academic collaborators, licensors, licensees and others for the research, development, clinical testing (including the acquisition of patient specimens), marketing and commercialization of LungExpress Dx and any future tests. There can be no assurance, however, that we will be able to establish such arrangements on favorable terms, if at all, or that current or future arrangements will be successful. In such case, we may not be able to grow our business.

If we seek to commercialize LungExpress Dx or any other tests we develop through collaborations or licensing arrangements with third parties, we may relinquish significant rights to our technologies or grant licenses on terms that are not favorable to us, which may negatively impact our revenues and profitability.

If we seek to commercialize LungExpress Dx or any other tests we develop through collaborations or licensing arrangements with third parties, we may relinquish significant rights to our technologies, or grant licenses on terms that are not favorable to us. Such arrangements may provide for the payment by such third parties of certain fees and royalties on the revenues earned by them in the sale of LungExpress Dx or any other tests we develop. The amount of such fees and royalties may be less than the revenues and gross margin that we could have obtained by marketing and selling the tests ourselves in such jurisdictions and may negatively impact our revenues and profitability.

Fluctuations in exchange rates could result in foreign currency exchange losses.

Substantially all of our expenses are currently denominated in Canadian dollars, while a portion of our expenses are denominated in foreign currencies, primarily in U.S dollars. Fluctuations in exchange rates, particularly those involving the U.S. dollar, may affect our costs. Where our operations conducted in Canadian dollars are reported in U.S. dollars, such fluctuations could result in changes in reported results which do not reflect changes in the underlying operations. As substantially all of our current expenses are denominated in Canadian dollars, any potential future appreciation of the Canadian dollar against the U.S. dollar could adversely affect our results of operations. The fluctuation of foreign exchange rate affects the value of these monetary assets and liabilities denominated in U.S. dollars. Generally, an appreciation of the Canadian dollar against the U.S. dollar results in a foreign exchange loss for monetary assets denominated in U.S. dollars, and a foreign exchange gain for monetary liabilities denominated in U.S. dollars. On the contrary, a devaluation of the Canadian dollar against the U.S. dollar results in a foreign exchange gain for monetary assets denominated in U.S. dollars and a foreign exchange loss for monetary liabilities denominated in U.S. dollars. We have not entered into any hedging transactions to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to successfully hedge all or part of our exposure or at all.

If product liability lawsuits are successfully brought against us, we will incur significant liabilities and may be required to cease the development or commercialization of our tests.

Clinical studies involve the testing of experimental or approved drugs or biological products on human beings. These studies involve a risk of liability for side effects in subjects due to the drug or biological product

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being tested or as a result of negligence or error. Our tests, however, are intended for in vitro diagnostic use and, as such, potentially have less product liability exposure as compared to the testing of therapeutic drug candidates. We currently have no product liability insurance and have no knowledge of any applicable laws that require us to have liability insurance, but we intend to obtain such insurance if available at reasonable rates. Should it prove impossible to obtain product liability insurance at reasonable rates or to otherwise protect us against potential liability proceedings, we might be required to cease the development or commercialization of our tests. In the event that a product liability claim is brought against us, we may be required to pay legal and other expenses to defend the claim, and if such a claim is successful, damage awards may not be covered by insurance. We may also be obliged to indemnify certain of our collaborators. Defending any product liability claim or claims could require us to expend significant financial and managerial resources.

We depend upon our officers, and if we are not able to retain them or recruit additional qualified personnel, the commercialization of LungExpress Dx and any future tests that we develop could be delayed or negatively impacted.

Our success is largely dependent upon the continued contributions of our officers. Our success also depends in part on our ability to attract and retain highly qualified scientific, commercial and administrative personnel. In order to pursue our test development and commercialization strategies, we will need to attract and hire, or engage as consultants, additional personnel with specialized experience in a number of disciplines, including laboratory and clinical operations, clinical affairs and studies, assay development, government regulation, sales and marketing, billing and reimbursement and information systems. There is intense competition for personnel in the fields in which we operate. If we are unable to attract new employees and retain existing employees, the development and commercialization of LungExpress Dx and any future tests could be delayed or negatively impacted.

We may acquire companies that own rights to patient specimens or other rights and technologies associated with developing and commercializing additional tests, and if we are unable to successfully acquire and integrate these companies or rights and technologies, our business could be adversely affected.

Another way for us to develop and commercialize additional tests is by acquiring companies that own rights to patient specimens or other rights and technologies associated with developing and commercializing additional tests. There can be no assurance that we will be able to identify, locate, acquire or profitably manage additional businesses, rights or technologies or successfully integrate them with our company and existing rights and technologies. Furthermore, acquisitions involve a number of specific risks, including failure of the acquired business or assets to achieve expected results, diversion of management’s attention, failure to retain any key personnel of the acquired business, failure to obtain valid consents to assignment of contracts and risks associated with unanticipated events or liabilities, some or all of which could have a material adverse effect on our business, financial condition and results of operations.

Our independent registered public accounting firm has issued a report on our audited consolidated financial statements that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern without raising additional capital from external sources.

Our audited consolidated financial statements as of December 31, 2009 were prepared under the assumption that we will continue as a going concern for the next 12 months. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring losses from operations and net capital deficiency and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern is dependent upon our ability to obtain additional financing, explore licensing and co-development options for developing our products, and, ultimately, to generate revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Risks Related to Our Intellectual Property

If we are unable to adequately acquire and protect or enforce our intellectual property, our competitive position could be impaired.

Our commercial success depends in part on our ability to obtain patents or rights to patents and maintain their validity, protect our trade secrets and effectively enforce our proprietary rights or patents against infringers. Although we have filed, or have licenses to, patent applications in respect of the technology underlying LungExpress Dx, including an exclusive license to two pending U.S. patent applications, one of which has a corresponding pending application under the Patent Cooperation Treaty in respect of certain of our technology, there are no guarantees that such patents will be accepted or that we will develop other patentable tests in the future. Moreover, there can be no assurance that a patent granted to us or in respect of which we hold a license will make the related test more competitive, that third parties will not contest the protection granted by the patent, or that the patents of third parties will not be detrimental to our commercial activities. Our failure or inability to protect our trade secrets and proprietary know-how could impair our competitive position.

There is no guarantee that other companies will not independently develop tests similar to LungExpress Dx or any future tests that we develop, that they will not imitate our tests or that our competitors will not produce tests designed to circumvent our proprietary rights. Certain of the genes utilized in our signature underlying LungExpress Dx and any future tests that we develop may be covered by patents or patent applications of other parties. Accordingly, we may also need to obtain rights for other technologies belonging to third parties. There is no guarantee that such technologies belonging to third parties will be offered to us on acceptable terms. If we do not obtain such licenses, the commercialization of LungExpress Dx and any future tests that we develop could be delayed or negatively impacted.

We have licensed, or will license, from third parties certain technology necessary to develop and commercialize LungExpress Dx and any future tests. If these licenses terminate, or if these third parties do not comply with the terms of our license, or if the underlying licensed patents are found to be invalid, our business could be negatively impacted.

We have licensed, or will license, from third parties, in particular the University Health Network, certain technology necessary to develop and commercialize LungExpress Dx. In return for the use of their technology, we have paid or agreed, or will agree, to pay the licensor certain fees and royalties based on sales of our tests. Royalties are a component of cost of test revenues and impact the profit margin on our tests. We may need to license additional technology to commercialize any future tests. If these licenses terminate, if the licensors fail to abide by the terms of the license or fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid or if we are unable to enter into necessary licenses on acceptable terms, our business could be negatively impacted. Companies may attempt to replicate our tests by operating in countries that do not recognize or enforce our intellectual property rights. Such companies could compete with us by sending test results into the United States and other countries where we have commercial operations and therefore reduce sales of our tests.

We may incur significant expenses or be prevented from developing or commercializing LungExpress Dx or other tests as a result of an intellectual property infringement claim.

Our commercial success depends in part on our ability to operate without infringing the patents and other proprietary rights of third parties. Infringement proceedings in the biotechnology and molecular diagnostics industries may be lengthy, costly and time-consuming and their outcome is uncertain. If we become involved in any patent litigation, interference or other administrative proceedings, we will incur substantial expense and the efforts of our technical and management personnel will be significantly diverted. As a result of such litigation or proceedings, we could lose our proprietary position and be restricted or prevented from developing, manufacturing and selling the affected tests, incur significant damage awards, including punitive damages, or be required to seek third-party licenses that may not be available on commercially acceptable terms, if at all.

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Risks Related to Regulatory Matters

The industry in which we operate is highly regulated and the failure to obtain, or any delays in obtaining, regulatory approvals could adversely affect our ability to commercialize LungExpress Dx or other tests and generate revenue.

The industry in which we operate is highly regulated. Ultimate commercial success may be dependent upon our ongoing ability to obtain the necessary regulatory approvals for our tests. To date we have neither submitted for, nor received, any regulatory certificates or approvals required to commercialize LungExpress Dx or any other test that we may develop. The task of obtaining appropriate regulatory clearance or approval for tests may be time consuming and costly. We will be required to demonstrate through clinical studies that our tests are effective for their intended purpose. There is no guarantee that our tests or processes will meet the applicable regulatory standards. The regulatory clearance or approval process may also require the expenditure of substantial resources, is uncertain and subject to delays. In addition, approval by a regulatory authority in one country does not ensure the approval by regulatory authorities of other countries. Failure to obtain, or any delays in obtaining, regulatory clearances or approvals could adversely affect our ability to commercialize our tests and generate revenue.

If the clinical reference laboratory that we plan to establish is found to not be in compliance with CLIA or state requirements, the commencement or continuation of our clinical services of LungExpress Dx will be affected and our business could be harmed.

We are planning to offer LungExpress Dx as a clinical service in a clinical reference laboratory to be established by us. As such, we will be required to hold certain federal, state and local licenses, certifications and permits to conduct our business. Under CLIA, we will be required to hold a certificate applicable to the type of work we perform and to comply with standards covering personnel, facilities administration, quality systems and proficiency testing.

Prior to offering LungExpress Dx as a diagnostic service, we plan to apply for a CLIA certificate. We may do so by seeking either a certificate of accreditation from a third party, such as the College of American Pathologists, or a certificate of compliance by applying to a state department of health. Once we have submitted the application for a certificate that contains the required information, we may receive a certificate of registration. This process generally takes between one to two months, although it can take longer. We can begin clinical testing of patient specimens once we have received this certificate of registration. After submitting our application for a certificate of accreditation or compliance, we will be inspected by either the third party or the state agency. If we are found to meet the CLIA requirements, we will then receive a certificate of accreditation or compliance. This process generally takes six to 12 months, although the times may vary depending upon the certifying body. We will be subject to survey and inspection every two years to assess compliance with program standards. The standards applicable to the testing which we will perform may change over time. We cannot assure you that we will be able to operate profitably or at all should regulatory compliance requirements become substantially more costly in the future. If we are found to not be in compliance with CLIA requirements, the commencement of our clinical services of LungExpress Dx will be delayed and our business could be harmed.

If, following the commercial launch of LungExpress Dx, we are found to not be in compliance with CLIA requirements, we may be subject to sanctions such as suspension, limitation or revocation of our CLIA certificate, as well as directed plan of correction, state on-site monitoring, civil monetary penalties, civil injunctive suit or criminal penalties. We will be required to maintain CLIA compliance and certification to be eligible to bill for services provided to Medicare beneficiaries. If we are found to be not in compliance with CLIA program requirements and subjected to sanction, our business could be harmed.

In addition to federal certification requirements of laboratories under CLIA, we are required to obtain and maintain for our clinical reference laboratory, once established, licenses under California, New York, Florida,

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Maryland, Pennsylvania and Rhode Island law. Depending upon which state we establish our clinical reference laboratory, we will not be able to undertake our clinical services on patient specimens originating from these named states until such time as we receive the applicable licensure. If we do not receive, or are delayed in receiving, such licenses, our business could be harmed.

If the FDA were to begin regulating genomic tests, including LungExpress Dx, we could be forced to delay commercialization of LungExpress Dx, experience significant delays in commercializing any future tests, incur substantial costs and time delays associated with meeting requirements for pre-market clearance or approval and/or experience decreased demand for or reimbursement of our test.

Clinical laboratory tests like LungExpress Dx are regulated in the United States under CLIA as well as by applicable state laws. Diagnostic kits that are sold and distributed through interstate commerce are regulated as medical devices by the FDA. Clinical laboratory tests that are developed and validated by a laboratory for its own use are called laboratory developed tests, or LDTs. Most LDTs currently are not subject to FDA regulation, although reagents or software provided by third parties and used to perform LDTs may be subject to regulation. We expect that, upon the commencement of commercialization, LungExpress Dx will be an LDT and not a diagnostic kit. As a result, we believe that LungExpress Dx should not be subject to regulation under current FDA policies, however there is no assurance that it will not be subject to such regulation in the future. The container we expect to provide for collection and transport of tumor samples from a pathology laboratory to our clinical reference laboratory may be a medical device subject to FDA regulation and while we expect that it will be exempt from pre-market review by FDA, there is no certainty in that respect.

We cannot provide any assurance that FDA regulation, including pre-market review, will not be required in the future for LungExpress Dx, either through new policies adopted by the FDA or new legislation enacted by Congress. It is possible that legislation will be enacted into law and may result in increased regulatory burdens for us to offer or continue to offer LungExpress Dx as a clinical laboratory service.

If pre-market review is required, our business could be negatively impacted until such review is completed and clearance to market or approval is obtained, and the FDA could require that we stop selling LungExpress Dx pending pre-market clearance or approval. If LungExpress Dx is allowed to remain on the market but there is uncertainty about the regulatory status of the test or if it is deemed investigational by the FDA, orders or reimbursement may decline. The regulatory clearance or approval process may involve, among other things, successfully completing additional clinical studies and submitting a pre-market clearance notice or submitting a premarket approval application, or PMA, to the FDA. If pre-market review is required by the FDA, there can be no assurance that LungExpress Dx will be cleared or approved on a timely basis, if at all. Ongoing compliance with FDA regulations, such as the Quality System Regulation and Medical Device Reporting, would increase the cost of conducting our business, and subject us to inspection by the FDA and to the requirements of the FDA and penalties for failure to comply with these requirements. We may also decide voluntarily to pursue FDA pre-market review of LungExpress Dx if we determine that doing so would be appropriate. Some competitors may develop competing tests cleared for marketing by the FDA. There may be a marketing differentiation or perception that an FDA-cleared test is more desirable than LungExpress Dx, and that could discourage adoption and reimbursement of our test.

Should any of the reagents obtained by us from vendors and used in conducting our LungExpress Dx clinical laboratory service be affected by future regulatory actions, our business could be adversely affected by those actions, including increasing the cost of testing or delaying, limiting or prohibiting the purchase of reagents necessary to perform testing.

If the FDA decides to regulate our tests, it may require that we conduct extensive pre-market clinical testing prior to submitting a regulatory application for commercial sales. If we are required to conduct pre-market clinical studies, whether using retrospectively collected and banked samples or prospectively collected samples, delays in the commencement or completion of clinical studies could significantly increase our test development

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costs and delay commercialization. Many of the factors that may cause or lead to a delay in the commencement or completion of clinical studies may also ultimately lead to delay or denial of regulatory clearance or approval.

The commencement of clinical studies may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites and the eligibility criteria for the clinical trial. We may find it necessary to engage contract research organizations to perform data collection and analysis and other aspects of our clinical studies, which might increase the cost of the studies. We will also depend on clinical investigators, medical institutions and contract research organizations to perform the studies properly. If these parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, or if the quality, completeness or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, FDA requirements or for other reasons, our clinical studies may have to be extended, delayed or terminated. Many of these factors would be beyond our control. We may not be able to enter into replacement arrangements without undue delays or considerable expenditures. If there are delays in testing as a result of the failure to perform by third parties, our research and development costs would increase, and we may not be able to obtain regulatory clearance or approval for our test. In addition, we may not be able to establish or maintain relationships with these parties on favorable terms, if at all. Each of these outcomes would harm our ability to market our test, or to become profitable.

Risks Associated with this Offering

New investors in our common shares will experience immediate and substantial dilution of approximately $[            ] per share.

The initial public offering price of our common shares is substantially higher than our net tangible book value per common share. Investors purchasing common shares in this offering will, therefore, incur immediate dilution of $[            ] in net tangible book value per common share. This dilution figure deducts the estimated underwriting discounts and commissions and estimated offering expenses payable from the initial public offering price. If the holders of outstanding options or warrants exercise those options or warrants, you will suffer further dilution. See “Dilution.”

Our share price could be volatile and could decline following this offering.

Prior to this offering, there has been no public market for our common shares in the United States. An active market may not develop in the United States following completion of this offering, or if developed, may not be maintained.

The market prices of the securities of development stage companies, and in particular those companies with no significant history of profits, have been extremely volatile. The price at which our common shares will trade after this offering could fluctuate substantially due to the following factors, some of which are beyond our control:

• variations in our operating results;

• variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

• announcements of developments affecting our business, systems or expansion plans by us or others; and

• conditions and trends in the life sciences market.

As a result of these and other factors, investors in our common shares may not be able to resell their shares at or above the initial offering price.

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In the past, securities class action litigation often has been instituted against companies following periods of volatility in the market price of their securities. This type of litigation, if directed at us, could result in substantial costs and a diversion of management’s attention and resources.

Future sales of our common shares, including those purchased in this offering, may depress our share price.

Sales of substantial amounts of our common shares in the public market following this offering by our existing shareholders may adversely affect the market price of our common shares. Shares issued upon the exercise of outstanding options and warrants also may be sold in the public market. Such sales could create the perception to the public of difficulties or problems with our business. As a result, these sales might make it more difficult for us to sell securities in the future at a time and price that we deem necessary or appropriate.

Upon completion of this offering, we will have [            ] common shares outstanding, assuming no exercise of the underwriter’s over-allotment option. Of these shares, [            ] will be freely tradeable without restriction in the United States immediately following this offering. After the lock-up agreements pertaining to this offering expire 180 days from the date of this prospectus, an additional [            ] common shares will be eligible for sale in the public market, [            ] of which are currently held by our non-affiliate investors, and are subject to certain limitations under Rule 144. After additional lock-up agreements pertaining to this offering expire 180 days from the date of this prospectus, an additional [            ] shares will be eligible for sale in the public market, [            ] of which are currently held by directors, officers and other affiliates, and are subject to volume limitations under Rule 144 of the Securities Act and certain other restrictions. Rodman & Renshaw, LLC, may also, in its sole discretion, permit our officers, directors and certain other shareholders to sell shares prior to the expiration of the lock-up agreements.

Our common shares have no prior trading history in the United States, and an active market may not develop.

Our common shares are currently listed in Canada on the TSX Venture Exchange but are not listed on any U.S. stock exchange or quoted on any U.S. quotation system. Accordingly, prior to this offering, there has been no public market in the United States for our common shares. The initial public offering price for our common shares may bear no relationship to the price at which our common shares will trade upon the completion of this offering. The price of our common shares may be lower than the price of the shares sold in this offering. In addition, because the liquidity and trading patterns of securities listed on the TSX Venture Exchange may be substantially different from those of securities listed on The NASDAQ Capital Market and the Toronto Stock Exchange, historical trading prices may not be indicative of the prices at which our shares will trade in the future. Although we have applied to have our common shares listed in the United States on The NASDAQ Capital Market, an active trading market for our shares may never develop or be sustained in the United States following this offering. If an active market for our common shares does not develop, it may be difficult for U.S. residents to sell the shares they purchase in this offering without depressing the market price for the shares, or at all.

Our common shares have historically been thinly traded and you may be unable to sell at or near ask prices or at all if you desire to liquidate your shares.

Our common shares are currently listed in Canada on the TSX Venture Exchange. We cannot predict the extent to which an active public market for our common shares will develop in the United States or will be sustained. We have applied for listing of our common shares on The NASDAQ Capital Market and graduation of the listing of our common shares to the Toronto Stock Exchange.

Our common shares have historically been “thinly-traded” on the TSX Venture Exchange, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small. This situation is attributable to a number of factors, including the fact that we are currently a

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development-stage company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow a development-stage company such as ours or purchase or recommend the purchase of our shares until such time as we generate revenue. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained.

The market price for our common shares is particularly volatile given our status as a development-stage company with a small and thinly traded “float” that could lead to wide fluctuations in our share price. The price at which you purchase our common shares may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common shares at or above your purchase price if at all, which may result in substantial losses to you.

Our management might not use the proceeds of this offering effectively.

Our management has broad discretion over the use of proceeds of this offering. In addition, our management has not designated a specific use for a substantial portion of the proceeds of this offering. Accordingly, it is possible that our management may allocate the proceeds in ways that do not improve our operating results. In addition, cash proceeds received in the offering may be temporarily used to purchase short-term, low-risk investments, and such investments might not be invested to yield a favorable rate of return.

We do not intend to pay dividends. You will not receive funds without selling our common shares, and you may lose the entire amount of your investment.

We have never declared or paid any cash dividends on our common shares and do not intend to pay dividends in the foreseeable future. We intend to invest our future earnings, if any, to fund our growth. We cannot assure you that you will receive a return on your investment when you sell your common shares or that you will not lose the entire amount of your investment.

Increased costs associated with corporate governance compliance may significantly affect our results of operations.

Compliance with the Sarbanes-Oxley Act of 2002 will require changes in some of our corporate governance and securities disclosure and compliance practices, and will require a thorough documentation and evaluation of our internal control procedures. We expect this to increase our legal compliance and financial reporting costs. This could also make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur higher costs to obtain coverage. In addition, this could make it more difficult for us to attract and retain qualified members of our board of directors, or qualified executive officers. We are presently evaluating and monitoring regulatory developments and cannot estimate the timing or extent of additional costs we may incur in this regard.

Our internal controls over financial reporting may not be adequate and our independent auditors may not be able to certify as to their adequacy, which could have a significant and adverse effect on our business and reputation.

In 2010, we will undergo the process of documenting and evaluating our internal controls over financial reporting in order to allow management to report on, and our independent auditors to attest to, such controls, as required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities Exchange Commission promulgated thereunder, which we refer to in this prospectus as Section 404. Section 404 requires a reporting company to, among other things, annually review and disclose its internal controls over

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financial reporting, and evaluate and disclose changes in its internal controls over financial reporting quarterly. Currently, we expect to be required to comply with Section 404 for our fiscal year ending December 31, 2011. We will perform the system and process documentation, evaluation and testing required (and any necessary remediation) in an effort to comply with management certification and auditor attestation requirements of Section 404. In the course of our evaluation, we may identify areas of our internal controls requiring improvement and plan to design enhanced processes and controls to address issues that might be identified through this review. As a result, we expect to incur additional expenses and diversion of management’s time. We cannot be certain as to the timing of completion of our documentation, evaluation, testing and remediation actions or the impact of the same on our operations and may not be able to ensure that the process is effective or that the internal controls are currently effective or will be effective in a timely manner. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent auditors may not be able to certify as to the effectiveness of our internal control over financial reporting. As a result, there could be an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such actions could adversely affect our financial results.

Our articles, our shareholder rights plan and certain Canadian laws could delay or deter a change of control.

Our preferred shares are available for issuance from time to time at the discretion of our board of directors, without shareholder approval. Our articles give to our board of directors the authority, subject to the corporate law of British Columbia, to determine or alter the special rights and restrictions granted to or imposed on any wholly unissued series of preferred shares, and such rights may be superior to those of our common shares. Our shareholders rights plan, effective January 15, 2010, requires, among other things, that anyone who seeks to acquire 20% or more of our outstanding common shares make a bid in compliance with special provisions in the plan. Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition of Canada to review any acquisition of a significant interest in us. This legislation grants the Commissioner jurisdiction to challenge such an acquisition before the Canadian Competition Tribunal if the Commissioner believes that it would, or would be likely to, result in a substantial lessening or prevention of competition in any market in Canada. The Investment Canada Act (Canada) subjects an acquisition of control of a company by a non-Canadian to government review if the value of its assets, as calculated pursuant to the legislation, exceeds a threshold amount. A reviewable acquisition may not proceed unless the relevant minister is satisfied that the investment is likely to result in a net benefit to Canada. Any of the foregoing could prevent or delay a change of control and may deprive or limit strategic opportunities for our shareholders to sell their shares.

We are likely to be a passive foreign investment company for U.S. tax purposes, which may negatively affect the tax treatment of the holding and disposition of our shares for U.S. investors.

For U.S. federal income taxation purposes, we will be a passive foreign investment company, or PFIC, if in any taxable year either: (a) 75% or more of our gross income consists of passive income; or (b) 50% or more of the value of our assets is attributable to assets that produce, or are held for the production of, passive income. If we meet either test, our shares held by a U.S. person in that year will be PFIC shares for that year and all subsequent years held by that person. Because our gross income consists mostly of interest, we anticipate being a PFIC for the current taxable year and future years until we begin to generate gross income from our operations. Gain realized by a U.S. investor from the sale of PFIC shares is taxed as ordinary income, as opposed to capital gain, and subject to an interest charge unless the U.S. person has timely made one of the tax elections described in the section titled “Certain Material Income Tax Considerations – United States Federal Income Tax Information for United States Holders”. The PFIC rules are extremely complex. A U.S. person is encouraged to consult his or her U.S. tax advisor before making an investment in our shares.

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You may be unable to enforce actions against us, certain of our directors and officers, or the expert named in this prospectus under U.S. federal securities laws.

We are a corporation organized under the laws of the Province of British Columbia, Canada. Most of our directors and officers, as well as the expert named in this prospectus, reside principally in Canada. Because a substantial portion of their assets and currently all of our assets are located outside the United States, it may not be possible for you to effect service of process within the United States upon us or those persons. Furthermore it may not be possible for you to enforce against us or them in the United States, judgments obtained in U.S. courts based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. There is doubt as to the enforceability, in original actions in Canadian courts, of liabilities based upon the U.S. federal securities laws and as to the enforceability in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. Therefore, it may not be possible to enforce those actions against us, certain of our directors and officers or the expert named in this prospectus.

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements, and our activities may be restricted.

If we are deemed to be an investment company under the Investment Company Act of 1940, our activities may be restricted, including:

• restrictions on the nature of our investments; and

• restrictions on the issuance of securities.

In addition, we may have imposed upon us burdensome requirements, including:

• registration as an investment company;

• adoption of a specific form of corporate structure; and

• reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

We do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This prospectus contains forward-looking statements and information. Such forward-looking statements and information include statements regarding, among other things, (a) our commercialization of LungExpress Dx and other tests we may develop, (b) our projected sales and profitability, (c) our growth strategies, (d) anticipated trends in our industry, (e) our anticipated needs for working capital, and (f) our future financing plans. Forward-looking statements and forward-looking information, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements or forward-looking information. These statements and information may be found under “Prospectus Summary”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements and forward-looking information as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally.

Each forward-looking statement and forward-looking information should be read in context with, and with an understanding of, the various other disclosures concerning our company and our business made elsewhere in this prospectus as well as other public reports which may be filed with the Securities and Exchange Commission, or SEC. You should not place undue reliance on any forward-looking statement or information as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statement or information contained in this prospectus to reflect new events or circumstances, unless and to the extent required by applicable law. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act provides any protection for statements made and information provided in this prospectus.

EXPLANATORY NOTE REGARDING REVERSE STOCK SPLIT

We intend to effect a reverse stock split of our common shares on the basis of between 1-for-10 and 1-for-70 prior to or upon the date of this prospectus. No fractional common shares will be issued in connection with the stock split, and all such fractional interests will be rounded down to the nearest whole number of common shares. Issued and outstanding stock options and warrants will be split on the same basis and exercise prices will be adjusted accordingly. All information presented in this prospectus assumes a 1-for-50 reverse stock split of our outstanding common shares, stock options and warrants and, unless otherwise indicated, all such amounts and corresponding common share price, per share and stock option and warrant exercise price data set forth in this prospectus have been adjusted to give effect to the assumed reverse stock split.

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USE OF PROCEEDS

The net proceeds to us from the sale of [            ] common shares being offered by us at an assumed initial public offering price of $[            ] per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, are estimated to be approximately $[            ] million, or approximately $[            ] million if the underwriter’s over-allotment option is exercised in full.

We expect to use the net proceeds from this offering as follows:

• an estimated $[            ] million to expand our laboratory and clinical capabilities and acquire laboratory and other equipment related to our business and the providing of our clinical services;

• an estimated $[            ] million to build our commercial capabilities in sales, marketing and reimbursement related to the launch of LungExpress Dx, in the United States and internationally;

• an estimated $[            ] million to conduct, following the commercial launch of LungExpress Dx, additional studies respecting our test; and

• the remainder of the net proceeds will be used for general corporate purposes, including working capital and other operating expenses.

We believe that, in commercializing LungExpress Dx, we will continue to develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing, reimbursement and regulatory compliance. While our primary focus is LungExpress Dx, we may use a portion of the net proceeds to acquire assets, rights or companies to selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

We expect to use the net proceeds from this offering: in the first 12 months, to establish our laboratory operations and complete the commercial launch of LungExpress Dx and build our initial commercial capabilities in sales, marketing and reimbursement related to such launch commensurate with our increasing commercial needs; in the second 12 months, to expand upon our laboratory operations and commercial abilities to facilitate the increasing acceptance and adoption by clinicians of LungExpress Dx; and in the first 24 months, to conduct, following the launch of LungExpress Dx, additional studies respecting our test.

The amounts set forth above are estimates, and the exact amounts that we will spend for any of these uses cannot yet be determined. In addition, the net proceeds we actually expend for general corporate purposes may vary significantly depending on a number of factors, including future revenue growth, profitability and our cash flows. Depending on future events and other changes in the business climate, we may determine at a later time to use our net proceeds for different purposes. As a result, we will retain broad discretion over the allocation of the net proceeds from this offering, and there are no assurances that we may not require additional capital in the future. Pending use of the net proceeds from this offering, we intend to invest the net proceeds in short-term, investment-grade securities. We cannot predict whether the proceeds invested will yield a favorable return.

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ENFORCEABILITY OF CIVIL LIABILITIES

We have been organized under the laws of the province of British Columbia, Canada, and our executive offices are located in Vancouver, British Columbia. Most of our directors and officers, as well as the expert named in this prospectus, reside principally in Canada, and a substantial portion of their assets and currently all of our assets are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon the directors, officers and the expert named in this prospectus who are not residents of the United States or to enforce against them judgments obtained in the courts of the United States based upon the civil liability provisions of the federal securities laws or other laws of the United States. There is substantial doubt as to the enforceability in Canada against us or against any of our directors, officers and the expert named in this prospectus who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities based solely upon the civil liability provisions of the U.S. federal securities laws. Therefore, it may not be possible to enforce those actions against us, our directors and officers and the expert named in this prospectus.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common shares. We currently intend to retain our future earnings, if any, for future growth and development of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board or directors and will depend on our results of operations, financial conditions, contractual and legal restrictions and other factors the board deems relevant.

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PER SHARE MARKET INFORMATION

Our common shares are listed for trading in Canada on the TSX Venture Exchange under the symbol “MBI”. The following table sets forth, for the periods indicated prior to the date of this prospectus, the high and low closing prices of our common shares on the TSX Venture Exchange as adjusted to give effect to an assumed 1-for-50 reverse stock split of our outstanding common shares:

Common Shares
	High(1)		Low(1)
2006(2)	$	21.99	$	9.83
2007	$	29.02	$	8.89
2008	$	11.23	$	2.34
2009	$	9.36	$	2.34
Q1 - 2008	$	11.23	$	6.09
Q2 - 2008	$	9.36	$	5.15
Q3 - 2008	$	7.96	$	6.09
Q4 - 2008	$	6.55	$	2.34
Q1 - 2009	$	5.15	$	2.34
Q2 - 2009	$	4.68	$	4.21
Q3 - 2009	$	5.15	$	3.28
Q4 - 2009	$	9.36	$	4.68
January 2010	$	9.36	$	5.62

(1) The closing prices set forth in this table are adjusted to reflect the assumed 1-for-50 reverse stock split of our common shares and may not accurately reflect the historical closing prices of our common shares had the stock split been given effect prior to the dates noted in this table.

(2) Initial trading date was May 5, 2006.

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CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2009:

• on an actual basis; and

• on an as adjusted basis to reflect the sale of [            ] common shares in this offering at the assumed initial public offering price of $[            ] per share, less the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes appearing elsewhere in this prospectus.

	Actual			As Adjusted
Long-term obligations	$	20,698		$
Shareholders’ equity (deficit):
Common shares, without par value: unlimited number of shares authorized; 1,447,489 shares issued and outstanding (actual); [            ] shares issued and outstanding (as adjusted)		7,672,984
Warrants to purchase common shares: 635,493 shares (actual) and [            ] common shares (as adjusted)		2,357,753
Contributed surplus		1,446,194
Deficit accumulated during the development stage		(10,942,085	)
Accumulated other comprehensive income		350,019
Total shareholders’ equity (deficit)		884,865
Total capitalization	$	905,563

The table above excludes the following shares:

• 144,650 common shares issuable upon the exercise of stock options outstanding as of December 31, 2009 with a weighted-average exercise price of $9.27 per share;

• 3,000 common shares issuable upon the exercise of options granted after December 31, 2009 with an exercise price of $6.21 per share;

• 635,493 common shares issuable upon the exercise of warrants outstanding as of December 31, 2009 with a weighted-average exercise price of $12.62 per share;

• 141,830 common shares reserved for future issuance under the Med BioGene Inc. Incentive Stock Option Plan; and

• [                    ] common shares if the underwriter’s over-allotment option were exercised in full.

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DILUTION

If you invest in our common shares, your interest will be diluted to the extent of the difference between the initial public offering price per common share and the net tangible book value per common share after this offering. Dilution results from the fact that the initial public offering price per share is substantially in excess of the book value per common share attributable to the existing shareholders for our presently outstanding common shares.

The net tangible book value of our common shares on December 31, 2009 was $884,865 or $0.61 per common share. The net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of common shares outstanding.

After giving effect to our sale of [            ] common shares in this offering at an assumed initial public offering price of $[            ] per share (excluding the underwriter’s over-allotment option), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value on a pro forma basis would be approximately $[            ], or approximately $[            ] per share. This represents an immediate increase in net tangible book value of $[            ] per share to existing shareholders and an immediate dilution in pro forma net tangible book value of $[            ] per share to new investors purchasing our common shares in this offering.

The following table illustrates the per share dilution:

Assumed initial public offering price per share			$
Net tangible book value per share as of December 31, 2009	$	0.61
Increase in net tangible book value per share attributable to this offering	$
Net tangible book value per share as adjusted after this offering			$
Dilution per share to new investors in this offering			$

If the underwriter exercises its over-allotment option in full to purchase [            ] additional common shares in this offering, the pro forma net tangible book value per share after the offering would be $[            ] per share, the increase in pro forma net tangible book value per share to existing shareholders would be $[            ] per share and the dilution to new investors purchasing shares in this offering would be $[            ] per share.

The following table sets forth, on the pro forma basis discussed above as of December 31, 2009, the differences between the number of common shares purchased from us (excluding the underwriter’s over-allotment option), the total price and average price per share paid by our existing shareholders and by the new investors in this offering, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us, using the assumed initial public offering price of $[            ] per share.

	Shares Purchased		Total Consideration			Average Price Per Share
Our existing shareholders	1,447,489	%	$	10,030,737	%	$	6.93
New investors in this offering
Total		%	$		%

The foregoing calculations are based on 1,447,489 common shares outstanding as of December 31, 2009 and exclude:

• 144,650 common shares issuable upon the exercise of options outstanding as of December 31, 2009 with a weighted-average exercise price of $9.27 per share;

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• 3,000 common shares issuable upon the exercise of options granted after December 31, 2009 with an exercise price of $6.21 per share;

• 635,493 common shares issuable upon the exercise of warrants outstanding as of December 31, 2009 with a weighted-average exercise price of $12.62 per share; and

• 141,830 common shares reserved for issuance under the Med BioGene Inc. 2006 Incentive Stock Option Plan.

If all of these options and warrants were exercised, then our existing shareholders, including the holders of these options and warrants, would own [            ]% and our new investors holding newly issued shares would own [            ]% of the total number of common shares outstanding upon the closing of this offering. The net tangible book value per share after this offering would be $[            ], causing dilution to new investors of $[            ] per share.

If the underwriter’s over-allotment option is exercised in full, the number of shares held by the existing shareholders after this offering would be reduced to [            ]% of the total number of common shares outstanding after this offering, and the number of newly issued shares held by new investors would increase to [            ] or [            ]% of the total number of common shares outstanding after this offering.

To the extent that any outstanding options or warrants are exercised, new investors will experience further dilution.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected statement of operations data for the fiscal years ended December 31, 2009, 2008 and 2007, and our selected balance sheet data as of December 31, 2009, 2008 and 2007. Our selected statement of operations data for the fiscal years ended December 31, 2009, 2008 and 2007 were derived from our audited consolidated financial statements included elsewhere in this prospectus. We have not included selected financial data for the years ended December 31, 2006 and 2005, as such information is not available on a basis that is consistent with the selected financial data for the years ended December 31, 2009, 2008 and 2007 and cannot be provided in accordance with United States generally accepted accounting principles basis without unreasonable effort or expense.

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this information together with “Description of Capital Stock,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements and related notes included elsewhere in this prospectus.

	Year Ended December 31,
	2009			2008			2007
Consolidated Statement of Operations Data:
Expenses:
Research and development	$	988,636		$	751,117		$	1,080,925
General and administrative		1,070,204			1,317,124			1,172,524
Amortization of property and equipment		78,876			87,129			61,625
Total expenses		2,137,716			2,155,370			2,315,074
Other income (expense):
Interest and other income		12,165			29,168			49,806
Interest expense		(9,020	)		(13,433	)		(10,192	)
Other income, net		3,145			15,735			39,614
Net loss	$	(2,134,571	)	$	(2,139,635	)	$	(2,275,460	)
Loss per share:
Basic	$	(1.98	)	$	(3.17	)	$	(4.40	)
Diluted	$	(1.98	)	$	(3.17	)	$	(4.40	)
Weighted average number of shares used in calculating loss per share:
Basic		1,080,192			675,782			517,482
Diluted		1,080,192			675,782			517,482

	As of December 31,
	2009		2008		2007
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	1,522,428	$	760,053	$	1,384,233
Working capital		642,166		605,328		1,269,465
Total assets		1,804,679		1,168,841		2,068,285
Total liabilities		919,814		318,164		443,806
Total shareholders’ equity		884,865		850,677		1,624,479

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and forward-looking information, the accuracy of which involves risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements and forward-looking information for many reasons, including the risks faced by us described in “Risk Factors” starting on page 8 and elsewhere in this prospectus.

Overview

We are a life science company focused on the development and commercialization of genomic-based clinical laboratory diagnostic tests for cancer. Our initial focus is in lung cancer, a disease that accounts for more deaths than breast cancer, prostate cancer and colon cancer combined, and we expect to launch our first test, LungExpress Dx, in the United States in 2010.

LungExpress Dx uses our proprietary 15-gene signature to improve upon staging for identifying those patients with early-stage NSCLC who, following surgical removal of their tumor, are at a higher and lower risk of mortality. In our initial study of patient specimens from the JBR.10 clinical trial, patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy. We believe that the use of LungExpress Dx will result in better-informed and personalized treatment decisions and improve the selection of patients who may benefit from adjuvant chemotherapy.

Following completion of this offering, we intend to:

• establish our central laboratory in the United States certified in accordance with CLIA, where we will perform our services;

• launch LungExpress Dx as a clinical service in the United States in 2010 and build a focused sales, marketing and reimbursement team, either alone or through partnerships;

• commercialize LungExpress Dx in Asia and Europe and other jurisdictions outside of the United States through distribution agreements with established companies with relevant local sales, marketing, reimbursement and regulatory compliance experience; and

• seek to partner with pharmaceutical companies to use LungExpress Dx as a companion diagnostic to identify those patients who are more likely to respond to their FDA-approved or development-stage targeted therapies.

We believe that, in commercializing LungExpress Dx, we will continue to develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing, reimbursement and regulatory compliance. While our primary focus is LungExpress Dx, we may selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

We expect to use the net proceeds from this offering: in the first 12 months, to establish our laboratory operations and complete the commercial launch of LungExpress Dx and build our initial commercial capabilities in sales, marketing and reimbursement related to such launch commensurate with our increasing commercial needs; in the second 12 months, to expand upon our laboratory operations and commercial abilities to facilitate the increasing acceptance and adoption by clinicians of LungExpress Dx; and in the first 24 months, to conduct, following the commercial launch of LungExpress Dx, additional studies respecting our test.

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Should we commercialize LungExpress Dx and any other tests, we believe that the key factors that will drive adoption of such tests will be the extent of, among other things: acceptance by clinicians of the methods of patient specimen preservation for use with our tests including, upon the launch of LungExpress Dx, specimens preserved by flash freezing; acceptance by healthcare providers of the clinical benefits of our tests; demonstration of the cost-effectiveness of using our tests; reimbursement by third-party payors; and the employment by us of focused and effective sales and marketing teams. Reimbursement by third-parties of LungExpress Dx and any other tests that we develop is essential to our commercial success. In general, clinical laboratory testing services, when covered, are paid under various methodologies, including prospective payment systems and fee schedules. Reimbursement from payors depends upon whether a service is covered under the patient’s policy and if payment practices for the service have been established. As new tests, LungExpress Dx and any other tests that we develop may be considered investigational by payors and not covered under current reimbursement policies.

Since our inception through December 31, 2009, we have incurred cumulative losses from operations of $10,942,085. We expect our net losses to continue for the foreseeable future. We anticipate that a substantial portion of our capital resources and efforts will be focused on the commercialization of one test, LungExpress Dx. Upon the launch of LungExpress Dx, our financial results will be impacted by a number of factors, including establishment of coverage policies by third-party insurers and government payors, our ability in the short term to collect from third-party payors often requiring a case-by-case manual appeals process, our ability to recognize revenues other than from cash collections on tests billed until such time as reimbursement policies or contracts are in effect and our success in international commercialization.

Our business and prospects should be considered in light of the risks and uncertainties known or anticipated to relate to us and also those frequently encountered by companies developing tests in the molecular diagnostics industry. The successful commercialization of LungExpress Dx and any other tests by us is highly uncertain. We cannot, with certainty, estimate or know the nature, timing and expense of the efforts necessary to commercialize, or the period in which material net cash inflows are expected to commence from, LungExpress Dx or any other tests.

Critical Accounting Policies and Estimates

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Basis of presentation

We have generated no revenue to date, other than minimal consulting revenue unrelated to our tests, and our activities have focused on and consisted primarily of developing tests and raising capital. Accordingly, we are considered to be in the development stage at December 31, 2009, as defined in Statement of Financial Accounting Standards, or SFAS, No. 7, Accounting and Reporting by Development Stage Enterprises.

Generally accepted accounting principles

Our financial statements have been prepared in accordance with United States generally accepted accounting principles and are presented in U.S. dollars.

Consolidation

Our audited consolidated financial statements include the accounts of Med BioGene Inc. and our wholly-owned subsidiary DTX Acquisition Company Inc. (incorporated in Alberta). All material intercompany transactions and balances have been eliminated upon consolidation.

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Stock-based compensation expense

We grant stock options to our employees and consultants. We account for stock-based awards issued in accordance with SFAS No. 123R, Share-Based Payment. Stock-based awards are measured at the fair value of the equity instruments issued using the Black-Scholes option pricing model. The fair value of stock options granted is amortized, based on the vesting period to either general and administrative expense or research and development expense, based on the department in which the employee or consultant is employed.

Under the fair value-based method, stock-based payments to employees and non-employees are measured at the fair value of the equity instruments issued. The fair value of stock-based payments to non-employees is periodically re-measured at the earlier of the completion of the services provided, a firm commitment to complete the services or the vesting date, and any change therein is recognized over the applicable service period.

Our accounting estimates related to stock-based compensation are considered a critical accounting estimate because estimates are made in calculating compensation expense including expected option lives, forfeiture rates and expected volatility. The fair market value of our common shares on the date of each option grant was determined based on the closing price of common shares on the TSX Venture Exchange on the grant date. Expected option lives are estimated using vesting terms and contractual lives. Expected forfeiture rates and volatility are calculated using historical information. Actual option lives and forfeiture rates may be different from estimates and may result in potential future adjustments which would impact the amount of stock-based compensation expense recorded in a particular period.

We recognize stock-based compensation expense on a straight-line basis over the vesting period of the underlying option, which is generally 18 months. The amount of stock-based compensation expense expected to be amortized in future periods may decrease if unvested options for which deferred stock-based compensation expense has been recorded are subsequently forfeited.

Research, development and collaboration costs

Research and development costs, which include employee costs, clinical and regulatory activities, are expensed as incurred, net of related government contributions.

We enter into collaboration agreements and research subcontracting with various parties and record these costs as research and development expenses. We record accruals for estimated study costs comprised of work performed by our collaborators under contract terms. All clinical collaborators enter into agreements with us that specify work content and payment terms.

In addition to costs for research and development, under our University Health Network collaboration agreement, we will be required to make certain research funding payments, milestone payments and annual royalty payments based on sales of LungExpress Dx resulting from our commercial launch. At such time as we begin to generate revenue from the sale of LungExpress Dx, such payments to University Health Network will be recorded in the cost of product revenues as a royalty payment.

Income taxes

Income taxes are accounted for under the FASB issued ASC Topic 740 (formerly SFAS No. 109, Accounting for Income Taxes, or FAS 109). Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities at each year end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances have been established to reduce our deferred tax assets, including investment tax credits, to zero, as we believe that it is more likely than not that such assets will not be realized.

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Use of estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Significant estimates are used for, but not limited to, the assessment of the net realizable value of long-lived assets, stock-based compensation, clinical trial expense accruals and taxes. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit and highly liquid short-term interest bearing securities with maturities at the date of purchase of three months or less. Cash and cash equivalents are held at a Canadian chartered bank. Interest earned is recognized in other income in our audited consolidated financial statements.

Property and equipment

We record plant and equipment at cost, which includes all expenditures incurred to prepare an asset for its intended use. Cost includes the purchase price, installation costs and other duties and preparation charges. We amortize the capitalized cost of assets on a declining balance basis, except certain software which is amortized straight line over the applicable license period, as follows:

Furniture and fixtures	20%
Computer hardware and office software	30%
Laboratory equipment	20%
Laboratory and bioinformatics software	5 years

Reporting currency and foreign currency translation

Our audited consolidated financial statements are based on a Canadian dollar functional currency and have been translated into the U.S. dollar reporting currency using the current rate method as follows: assets and liabilities are reflected using the rate of exchange prevailing at the balance sheet date; shareholders deficiency are reflected using the applicable historic rate; and revenue and expenses are reflected at the average rate of exchange for the respective periods. Translation gains and losses have been included as part of the cumulative transaction adjustment which is reported as a component of accumulated other comprehensive loss.

We translate non-Canadian dollar balances for operations into functional currency as follows:

a) property, plant and equipment using historical rates;

b) other assets and liabilities using closing rates with translation gains and losses recorded in other income/expense; and

c) income and expenses using average exchange rates, except for expenses that relate to non-monetary assets and liabilities measured at historical rates, which are translated using the same historical rate as associated non-monetary assets and liability.

Leases

Leases have been classified as either capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases where payments are expensed as incurred.

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Financial instruments

In 2008, we adopted the FASB issued ASC Topic 820, Fair Value Measurement and Disclosure (formerly SFAS 157 Fair Value Measurements), which defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements. The primary assets and liabilities affected were available for sale securities. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy established by ASC 820 prioritizes the inputs into valuation techniques used to measure fair value. The three levels of the hierarchy are as follows:

• Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to us for identical assets or liabilities;

• Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and

• Level 3: Unobservable inputs that are supported by little or no market activity.

The adoption of ASC 820 did not change the valuation techniques that we use for financial assets and financial liabilities.

Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities and long term liabilities. The carrying amounts of financial instruments approximate their fair value due to their short maturities. The carrying value of our money market investments totaling $1,522,428 as of December 31, 2009 is included in cash and cash equivalents on our balance sheet and approximates their market values based on Level 2 inputs.

We have classified our financial instruments as follows:

Financial Instrument	Classification	Measurement	December 31, 2009
Cash and cash equivalents	Cash equivalents	Fair value	$1,522,428
Government contribution receivable	Loans and receivables	Amortized cost using the effective interest method	$          —
Accounts payable and accrued liabilities	Other financial liabilities	Amortized cost using the effective interest method	$   899,116
Long-term liabilities	Other financial liabilities	Amortized cost using the effective interest method	$     20,698

Long-lived assets

Long-lived assets consist of property and equipment. The carrying value of long-lived assets is reviewed for impairment whenever events or circumstances indicate that the assets may not be recoverable. For impairment assessment purposes, the estimated fair value of property and equipment is based on a combination of current depreciated replacement costs and current market value.

Patent costs

The costs incurred in establishing and maintaining patents for intellectual property developed internally are expensed in the period incurred.

Investment tax credits

Investment tax credits can be used to reduce taxable income in future taxation years. Investment tax credits are recorded when the qualifying expenditures have been incurred and only if it is reasonably assured that the tax

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credits will be realized. Investment tax credits are earned when expenditures are made on qualifying research and development and such expenditures are subject to audit by the Canada Revenue Agency. As management believes there is sufficient uncertainty regarding the realization of deferred tax assets, a full valuation allowance has been provided.

Government contribution agreements

Contributions under government agreements relate to the funding of eligible research and development expenditures for defined programs. Amounts received or receivable are included as a contribution in determining the loss for the year as a reduction of the expenses to which it relates.

Loss per common share

Net loss per share is calculated in accordance with the FASB issued ASC Topic 260, Earnings Per Share (formerly SFAS No. 128, Earnings Per Share). Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss attributable to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by giving effect to all dilutive potential common stock outstanding during the period, including stock options, warrants and shares to be issued under our employee stock purchase plan.

Diluted net loss per share is the same as basic net loss per share for all periods presented because any potential dilutive common shares were anti-dilutive due to our net loss (as including such shares would decrease our basic net loss per share).

Potential dilutive common shares that would have been included in the calculation of diluted earnings per share if we had net income are as follows:

	Year Ended December 31,
	2009	2008	2007
Common share options	83,500	—	5,000
Common share warrants	270,021	—	—
Total	353,521	—	5,000

Key Business Metrics

Revenues

We have no tests currently for sale or approved for sale and we have not generated any revenues from test sales. We have recognized $85,256 of consulting revenues since inception through December 31, 2009. We do not expect to receive any revenues until the commercialization of LungExpress Dx in 2010.

Our revenues will be earned directly by us where we provide our LungExpress Dx services from our clinical reference laboratory, and as royalty income where we license our tests to third parties. Our revenues will depend upon a number of factors, including establishment of coverage policies by third-party insurers and government payors, our ability in the short term to collect from payors often requiring a case-by-case manual appeals process, our ability to recognize revenues other than from cash collections on tests billed until such time as reimbursement policies or contracts are in effect and our success in international commercialization.

Research and development expenses

Research and development expenses consist primarily of salaries and other related costs for personnel, fees and reimbursement of costs incurred by our collaborators at the University Health Network, costs of clinical studies to validate our tests, research informatics expenses, subcontract research fees, fees and costs related to

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filing intellectual property claims, consulting services fees related to regulatory issues and business development expenses related to the identification and evaluation of new test opportunities. We expense research and development costs as they are incurred.

From inception to December 31, 2009, we incurred total research and development expenses of $4,000,877 Approximately 41% of these expenses related to the development, validation and commercialization of LungExpress Dx. The remaining expenses related to our earlier test development programs in hematological cancers and cardiovascular disease, which we have suspended to focus resources on LungExpress Dx. The following table summarizes the amounts spent on research and development for the periods presented.

	For the Year Ended December 31,
	2009			2008			2007
Personnel, consulting and stock-based compensation	$	348,470		$	470,998		$	791,066
License fees and subcontract research		513,543			250,562			—
Facilities and operations		152,889			122,807			465,462
Less: Government contributions		(26,266	)		(93,250	)		(175,603	)
Total	$	988,636		$	751,117		$	1,080,925

Following the completion of this offering, we expect to incur additional research and development expenses equal to approximately 25% of the net proceeds of this offering. Of this amount, we expect to use:

• 40% to hire additional clinical and scientific staff;

• 30% for general research and development purposes, including the acquisition of additional laboratory equipment and associated laboratory expenses; and

• 30% to conduct, following the commercial launch of LungExpress Dx, additional studies respecting our test.

We anticipate launching LungExpress Dx as a clinical service in the United States in 2010, however, we may not be able to do so on schedule. Following the commercial launch of LungExpress Dx, we plan to complete our studies to validate LungExpress Dx for use with patient specimens preserved by FFPE, and to commence studies to validate the utility of our test in quantifying a patient’s mortality risk and likelihood of chemotherapy benefit, potentially including a prospective and randomized clinical trial; however, the expected time for completion and results of such studies are unknown. Our clinical development and validation studies and regulatory considerations relating to LungExpress Dx and any other tests are subject to risks and uncertainties that may significantly impact our expense projections and development timelines, including:

• the scope, rate of progress and expense of clinical development and validation studies;

• uncertainties as to the future results of such studies;

• the terms and timing of any collaborative, licensing and other arrangements that we may establish;

• our ability to acquire patient specimens to undertake current and future studies; and

• the expense and timing of receipt of regulatory approvals.

In addition to LungExpress Dx, we may selectively develop additional tests that maximize efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs. Developing additional tests may significantly impact our expense projections and development timelines.

General and administrative expenses

Our general and administrative expenses consist primarily of personnel related costs, legal costs, accounting costs and other professional and administrative costs and costs associated with general corporate activities.

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We expect our general and administrative expenses to increase significantly over the next few years as we continue to build our operations and sales and marketing teams to support the commercialization of LungExpress Dx. In addition, general and administrative expenses will increase as we incur costs associated with being a publicly traded company in the United States, including costs related to compliance with Sarbanes-Oxley, increased directors and officers’ insurance premiums and the implementation of improved business information systems.

We expect increases in personnel costs, fees to professional services firms and expenses relating to the acquisition of additional equipment to make up a significant portion of these planned expenditures. We expect to use approximately 20% of the net proceeds of this offering for general and administrative expenses.

We also expect to begin incurring substantial sales and marketing expenses, including expenses relating to increased personnel and educational and promotional programs, subsequent to the closing of this offering as we commercialize LungExpress Dx. We plan to hire a number of sales and marketing personnel following the completion of this offering. Educational and promotional expenses include costs associated with educating physicians, laboratory personnel and other healthcare professionals regarding the clinical utility and cost-effectiveness of using LungExpress Dx. Selling and marketing expenses also include the costs of sponsoring continuing education programs and dissemination of publications and promotional programs regarding LungExpress Dx and future tests.

Approximately 55% of the net proceeds of this offering will be used to support sales and marketing efforts. We are, however, unable to determine with certainty the timing and amount of expenditures we will incur in sales and marketing as these costs will relate directly to the timing of the launch, and rate of adoption, of LungExpress Dx and the extent to which we market our test in collaboration with third-parties, if at all.

Interest income

Interest income consists of interest earned on our cash and cash equivalents.

Interest expense

Interest expense currently consists of accretion of interest due to the purchase terms relating to bioinformatics software purchased in 2007 with extended payment terms. Future planned capital acquisitions may be funded through the use of term debt or leases which would result in an increase in interest expense in the future. The availability of such financing and whether the terms of such financing would be acceptable to us are unknown. At present, all budgeted capital expenditures are planned to be funded from the proceeds of this offering.

Results of Operations

Comparison of Years Ended December 31, 2009 and 2008

The following table summarizes our results for 2009 and 2008:

	December 31,
	2009				2008
Category	Amount		Percentage of total		Amount		Percentage of total
Research and development expenses	988,636		46.3	%	751,117		35.1	%
General and administrative expenses	1,070,204		50.1	%	1,317,124		61.6	%
Amortization of property and equipment	78,876		3.7	%	87,129		4.1	%
Interest expense	9,020		0.4	%	13,433		0.6	%
Interest income	(12,165	)	-0.6	%	(29,168	)	-1.4	%
Total	2,134,571		100.0	%	2,139,635		100.0	%

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We did not generate any revenue during 2009 or 2008. We incurred a net loss of $2,134,571, or $1.98 per common share, for 2009, compared to a loss of $2,139,635, or $3.17 per common share, for 2008. Research and development and general and administrative expenses are the primary components of our operating expenses.

Research and development expenses

Research and development expenses were $988,636 for 2009, compared to $751,116 for 2008, representing an increase of 32%. Personnel and consulting costs decreased to $331,425 for 2009, compared to $413,198 for 2008, as a result of a reduction in the number of our employees and consultants, including a decrease in compensation expenses associated with the ceasing of employment of our former Chief Scientific Officer. This reduction in personnel costs was also a result of lower stock based compensation expense which decreased to $17,045 for 2009 from $57,800 for 2008, due to the full vesting of certain option grants. License and contract development fees increased to $513,543 for 2009, compared to $250,562 for 2008, relating to expenses incurred with the University Health Network and other third parties concerning the licensing and development of certain intellectual property related to LungExpress Dx. During 2009, in collaboration with the University Health Network, we completed a significant validation study of LungExpress Dx and the costs related to this study have been fully accrued. Fees associated with the ongoing prosecution of patent applications regarding certain intellectual property underlying LungExpress Dx were incurred during 2009 and these expenses were offset by lower expenses related to facilities, supplies and operations in 2009, compared to 2008. During 2009, we completed work, funded in part by a government contribution agreement, in the area of cardiovascular disease. A total of $9,176 was collected in connection with this agreement during 2009 compared to $93,250 in 2008. Also, during 2009, we completed a research survey of clinicians in the United States regarding the integration of LungExpress Dx into clinical practice and a portion of the costs of this survey were offset by a government contribution agreement in the amount of $17,090, which was collected during 2009. No further government contribution arrangements are currently in place to provide funding, nor have any applications been made in such respect.

General and administrative expenses

General and administrative expenses were $1,070,204 for 2009, compared to $1,317,124 for 2008, representing a decrease of 19%. Personnel costs increased to $408,464 for 2009, compared to $384,062 for 2008, mainly due to an increase in salary expense associated with the hiring in early 2009 of our current Chief Financial Officer. Consulting fees relating to business development decreased to $86,612 in 2009 from $321,552 in 2008, due to a reduction in early 2009 of consulting expenses following the completion of negotiations of our collaboration agreements with the University Health Network. Stock-based compensation expenses decreased to $111,242 for 2009, compared to $203,402 for 2008, due to the full vesting of certain option grants.

Amortization

Amortization expense decreased marginally to $78,876 for 2009 from $87,129 for 2008, the majority of which related to the amortization of certain bioinformatics software acquired by us at the end of 2007.

Interest expense

Interest expense decreased to $9,020 for 2009 from $13,433 for 2008. Interest expense relates to the accretion of interest on the purchase terms relating to bioinformatics software that we purchased in 2007 with extended payment terms. Also included in interest expense for 2008 were interest charges on equipment leases that were fully repaid during 2008.

Interest income

Interest income decreased to $12,165 for 2009 from $29,168 for 2008, as a result of lower average cash balances on hand combined with substantially lower interest rates during 2009 compared to 2008.

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Comparison of Years Ended December 31, 2008 and 2007

The following table summarizes our results for 2008 and 2007:

	For the Year Ended December 31,
	2008					2007
Category	Amount			Percentage of Total		Amount			Percentage of Total
Research and development expenses	$	751,117		35.1	%	$	1,080,925		47.5	%
General and administrative expenses		1,317,124		61.6			1,172,524		51.5
Amortization of property and equipment		87,129		4.1			61,625		2.6
Interest expense		13,433		0.6			10,192		0.4
Interest income		(29,168	)	(1.4	)		(49,806	)	(2.0	)
Total	$	2,139,635		100.0	%	$	2,275,460		100.0	%

We did not generate any revenue during 2008 and 2007. We incurred a loss of $2,139,635, or $3.17 per common share, for 2008, compared to a loss of $2,275,460, or $4.40 per common share, for 2007. Research and development and general and administrative expenses are the primary components of our operating expenses.

Research and development expenses

Research and development expenses were $751,117 for 2008, compared to $1,080,925 for 2007, representing a decrease of 30%. Laboratory supplies expense decreased significantly in 2008 as a result of the reduced use of microarrays and related reagents, while licensing and collaboration fees paid to third parties, including the University Health Network, increased. Personnel-related expenses were largely unchanged during 2008 and 2007, while associated stock-based compensation was $21,350 for 2008, compared to $235,413 for 2007, representing a decrease of 91%, resulting from a significant number of options fully vesting in November of 2007.

Government contributions under an Industrial Research Assistance Program grant relating to our cardiovascular research program were $93,250 in 2008, compared to $175,603 in 2007. This decrease reflects our reduced focus in this area, in favour of increased focus on the development of LungExpress Dx. Funding under this grant was exhausted in the first quarter of 2009 with the payment of $27,378.

General and administrative expenses

General and administrative expenses were $1,317,124 for 2008 compared to $1,172,524 for 2007, representing an increase of 12%. This change was due in part to an increase in personnel costs of $69,000 and an increase of $182,000 in expenses for 2008 compared to 2007, relating to increased legal, consulting and other costs of negotiating our licensing and collaboration agreements with University Health Network. The costs related to public company operations, which includes investor relations and public market awareness and communications activities, were $259,000 for 2008 compared to $191,000 for 2007, representing an increase of 31%. This increase was offset in part by a decrease in stock-based compensation expenses to $235,000 for 2007 due to certain options fully vesting in November 2007.

Interest income

Interest income totalled $29,168 for 2008, compared to $49,806 for 2007. This decrease was primarily due to lower average cash balances held in 2008.

Interest expense

Interest expense increased to $13,433 for 2008, compared to $10,192 for 2007, consisting primarily of the accretion of interest due to the purchase terms relating to bioinformatics software purchased by us during 2007 with extended payment terms. The balance related to interest on equipment leases that were fully repaid during 2008.

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Amortization

Amortization expense increased to $87,129 for 2008 from $61,625 for 2007. The majority of amortization expense related to the amortization of laboratory equipment and certain bioinformatics software acquired by us at the end of 2007.

Liquidity and Capital Resources

Since inception, we have funded our operations through a combination of sales of securities and government grants. Through December 31, 2009, we have raised net proceeds of approximately $7,441,104 through the sale of common shares and warrants as follows:

• in 2007, we completed a brokered private placement and issued 7,493,500 units, each unit consisting of one common share and one common share purchase warrant, for net proceeds of $2,397,190;

• in 2008, we completed a prospectus financing and issued 12,168,667 units, each unit consisting of one common share and one-half of a common share purchase warrant, for net proceeds of $1,398,294; and

• in 2009, we completed four separate non-brokered private placements and issued in aggregate 31,082,001 units, each unit consisting of one common share and one-half of a common share purchase warrant, for net proceeds of $1,901,254.

At December 31, 2009, we had $1,522,428 in cash and cash equivalents and working capital of $642,166.

Based on our current level of operations and staffing, we believe we have sufficient funds on hand to continue operations through the first half of 2010. Our independent registered public accounting firm has issued a report on our audited consolidated financial statements for the year ended December 31, 2009 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern without raising additional capital from external sources. We expect that the net proceeds of this offering, together with our available cash resources, will be sufficient to support our operations for at least 12 months following the date of this prospectus. Until we can generate revenues sufficient to finance our cash requirements, if at all, we may need to raise additional external funds through the sale of equity or debt securities or by entering into strategic partnerships. The sale of such additional equity and debt securities may result in additional dilution to our shareholders or may not be available, if at all, in amounts or on terms acceptable to us. The entering into of such strategic partnerships, if available, may require us to relinquish significant rights to our technologies, or grant licenses on terms that are not favorable to us. If we are not able to secure additional funding when needed, we may need to delay, reduce the scope of or eliminate part or all of our development and commercialization efforts.

Cash Flows

Comparison of Years Ended December 31, 2009 and 2008

For 2009, our cash used in operating activities was $1,179,272, compared to $1,770,175 for 2008. The cash used in operating activities consisted mainly of salaries and related employee costs, payments to third-parties for license, contract research and consulting services and company operating costs.

For 2009, cash used in investing activities was $2,959, compared to $6,617 in 2008. The amounts expended in 2008 and 2009 relate to the replacement of computer equipment.

Cash provided by financing activities was $1,901,254 for 2009, compared to $1,378,418 for 2008. For 2008, we received $1,398,294 from the sale of our securities. The amounts received in 2008 were partially offset by payment under certain capital leases which are discussed in Note 7 of the footnotes accompanying our audited consolidated financial statements included elsewhere in this prospectus.

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Comparison of Years Ended December 31, 2008 and 2007

For 2008, our cash used in operating activities was $1,770,175, compared to $1,872,905 for 2007. The cash used in operating activities consisted mainly of salaries and related employee costs, payments to third-parties and company operating costs.

For 2008, cash used in investing activities was $6,617, compared to $177,838 used in investing activities during 2007. The amounts expended in investing activities in 2008 related to the replacement of computer equipment. The amount expended in 2007 related to our purchase of laboratory equipment and a software license relating to our laboratory information management system.

Cash provided by financing activities was $1,378,418 for 2008, compared to $2,326,772 for 2007. For 2008, we received $1,398,294 from the sale of our securities. For 2007, we received $2,397,190 from the sale of our securities, and non-material amounts received from the exercise of stock options and warrants. These amounts were partially offset by payment under certain capital leases and repayment of a note due to a former executive in the amount of $60,226. The capital leases are discussed in Note 7 of the footnotes accompanying our audited consolidated financial statements included elsewhere in this prospectus.

Contractual Obligations and Other Commitments

The following table summarizes our contractual obligations and other commitments as of December 31, 2009, and the effect that such obligations and commitments are expected to have on our liquidity and cash flows in future periods.

Contractual Obligations	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
University Health Network obligations	$	866,925	$	508,612	$	358,313	$	—	$	—
Operating lease obligations		50,130		50,130		—		—		—
Long-term obligations		88,581		67,833		20,698		—		—
Total	$	1,005,636	$	626,625	$	379,011	$	—	$	—

Other than the contractual obligations set forth above, we do not have any other long-term debt obligations, operating lease obligations, purchase obligations or other long-term liabilities. In April 2008 and February 2009, we entered into exclusive license and sponsored research agreements with University Health Network. These agreements provide to us, among other things, exclusive world-wide rights to develop and commercialize certain intellectual property underlying LungExpress Dx. The research and development expense for this project incurred since inception to December 31, 2009 is approximately $615,911. Under our agreements with University Health Network, we are obligated to pay up to an additional $866,925 in research funding and milestone payments along with royalties based on net sales of LungExpress Dx. We expect this project to be completed and the research funding portion of our obligations to be paid by the end of 2010.

Off-Balance Sheet Arrangements

As of December 31, 2009, we had no off-balance sheet arrangements.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115, which is effective for fiscal years beginning after November 15, 2007 and we adopted it on January 1, 2008. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent

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unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. The adoption of this pronouncement did not have a material impact on our results of operations or financial position for the year ended December 31, 2008, as we did not elect to measure any of our financial instruments at fair value.

In June 2007, the Emerging Issues Task Force, or EITF, issued a consensus, EITF 07-3, Advance Payments for Research and Development Activities, which states that non-refundable advance payments for goods that will be used or services that will be performed in future research and development activities should be deferred and capitalized until the goods have been delivered or the related services have been rendered. EITF 07-3 is to be applied prospectively for new contractual arrangements entered into in fiscal years beginning after December 15, 2007 and we adopted it on January 1, 2008. The adoption did not result in a material change to our current accounting practice.

In December 2007, the FASB issued ACS 805 (revised 2007), Business Combinations, which provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination. This standard also expands required disclosures surrounding the nature and financial effects of business combinations. The standard became effective for us on January 1, 2009, but did not have a significant impact on our audited consolidated financial statements.

In February 2008, the FASB issued Staff ACS 820-10-55-23A, Effective Date of FASB Statement No. 157 which delayed the effective date of ACS 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities that are recognized or disclosed in the financial statements at fair value on a nonrecurring basis only. The adoption of this paragraph did not have a significant impact on our audited consolidated financial statements.

In March 2008, the FASB issued amendments to ACS 815-10-50 that expand the quarterly and annual disclosure requirements in about an entity’s derivative instruments and hedging activities. This section is effective for fiscal years beginning after November 15, 2008 and its adoption did not have an impact on our financial position, results of operations or cash flows as the pronouncement addresses disclosure requirements only.

On June 16, 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, to address the question of whether instruments granted in share-based payment transactions are participating securities prior to vesting. FSP EITF 03-6-1 indicates that unvested share-based payment awards that contain rights to dividend payments should be included in earnings per share calculations. The guidance will be effective for fiscal years beginning after December 15, 2008. Effective January 1, 2009, we adopted FSP EITF 03-6-1. The adoption of EITF 03-6-1 did not materially impact our consolidated results of operations or consolidated financial position.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements. Prior to this FSP, fair values for these assets and liabilities were only disclosed annually. This FSP applies to all financial instruments within the scope of SFAS 107 and requires all entities to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments. This FSP shall be effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity may early adopt this FSP only if it also elects to early adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2. This FSP does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this FSP requires comparative disclosures only for periods ending after initial adoption. Management is currently evaluating the disclosure requirements of this new FSP.

In May 2009, the FASB issued ACS 855-10-50, Subsequent Events, which requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements. This subsection is effective for interim and annual periods ending after June 15, 2009.

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Foreign Exchange

We maintain our accounts in Canadian dollars, and substantially all of our expenses are denominated in Canadian dollars, while a portion of our expenditures are denominated in foreign currencies, primarily the U.S. dollar. Historically, these expenditures have primarily consisted of upfront and ongoing licensing fees. Fluctuations in exchange rates, primarily those involving the U.S. dollar, may affect our costs. We have not taken any action to hedge against this currency risk, including any possible future Canadian devaluation or appreciation.

Qualitative and Quantitative Disclosures About Market Risk

The primary objective of our investment activities is to preserve principal, while at the same time maximizing income we receive from investments without significantly increasing risk. Some of the securities we invest in may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the value of our investment will decline. To minimize this risk in the future, we intend to maintain our portfolio of cash equivalents and investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities and certificates of deposit with maturities of less than thirteen months. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate.

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BUSINESS

Our Company

We are a life science company focused on the development and commercialization of genomic-based clinical laboratory diagnostic tests for cancer.

In making treatment decisions for cancer patients, physicians rely primarily upon tumor stage to predict a patient’s prognosis and likelihood of cancer recurrence. Because tumor staging is heavily dependent on visual assessment and human interpretation, physicians and patients often make treatment decisions using subjective and limited information that may not reflect the molecular nature of the patient’s cancer. Our mission is to develop and commercialize genomic-based tests that characterize tumors on a molecular level to provide personalized, clinically relevant information to improve patient treatment and reduce health care costs.

Our initial focus is on lung cancer, a disease that accounts for more deaths per year than breast cancer, prostate cancer and colon cancer combined, and we expect to launch our first test, LungExpress Dx, in the United States in 2010.

LungExpress Dx uses our proprietary 15-gene signature to improve upon staging for identifying those patients with NSCLC who, following surgical removal of their tumor, are at a higher and lower risk of mortality. In our initial study of patient specimens from the JBR.10 clinical trial, patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy. We believe that the use of LungExpress Dx will result in better-informed and personalized treatment decisions and improve the selection of patients who may benefit from adjuvant chemotherapy.

Following completion of this offering, we intend to:

• establish our central laboratory in the United States certified in accordance with CLIA where we will perform our services;

• launch LungExpress Dx as a clinical service in the United States in 2010 and build a focused sales, marketing and reimbursement team, either alone or through partnerships;

• commercialize LungExpress Dx in Asia and Europe and other jurisdictions outside of the United States through distribution agreements with established companies with relevant local sales, marketing, reimbursement and regulatory compliance experience; and

• seek to partner with pharmaceutical companies to use LungExpress Dx as a companion diagnostic to identify those patients who are more likely to respond to their FDA-approved or development-stage targeted therapies.

We believe that, in commercializing LungExpress Dx, we will continue to develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing, reimbursement and regulatory compliance. While our primary focus is LungExpress Dx, we may selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

Current Diagnosis and Treatment of Cancer is Limited

Cancer is a broad and heterogeneous class of complex malignancies where mutations in the genome, either inherited or acquired through environmental influences, affect the normal behavior of cells in the human body, allowing them to grow uncontrollably and to spread to other organs. The most common forms of cancer are skin, lung, prostate, breast and colon.

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According to the American Cancer Society, in 2007, cancer afflicted over 12 million people worldwide and killed over 7.6 million people. In the United States alone, over 1.4 million Americans will be diagnosed with cancer and over 560,000 will die from the disease. According to the World Health Organization, cancer is expected to overtake heart disease as the worldwide leading cause of death in 2010.

The most common practice used to diagnose cancer is through pathologic evaluation of tumors under a microscope. After visually examining the sample, the pathologist determines the extent of progression, or stage, of the cancer based on a variety of clinical measures, including the tumor pathology grade, size of the tumor, how deeply the tumor has invaded tissues at the site of origin and the extent of any invasion into surrounding organs, lymph nodes or distant sites.

Physicians rely primarily on tumor stage to predict a patient’s prognosis and likelihood of cancer recurrence, which is the key determinant in treatment decisions. Because tumor pathology and staging are heavily dependent on visual assessment and human interpretation, physicians and patients make treatment decisions often using subjective and limited information that may not reflect the molecular nature of the patient’s cancer.

We believe that, in reliance on such limited information, in many cases a patient’s prognosis may not be accurately assessed resulting in the undertreatment of higher risk patients who may benefit from chemotherapy, and the overtreatment of lower risk patients who may not benefit from chemotherapy.

Understanding Cancer at the Molecular Level through Genomics

Genomics is the study of the expression, regulation and function of an entire set of genes, the functional units of the body’s biological information. A gene is a set of instructions or information that is embedded in the deoxyribonucleic acid, or DNA, of a cell. For a gene to be turned on or “expressed” by a cell, the cell must first transcribe a copy of its DNA sequence into messenger ribonucleic acid, or mRNA, which is then translated by the cell into protein. Proteins are large molecules that control most biological processes and make up molecular pathways, which cells use to carry out their specific functions. Even before the completion of the sequencing of the human genome in 2001, genomics were, and continue to be, used to examine and characterize diseases on a molecular level.

For a long time, it was believed that diseases resulted entirely from the environment (e.g. a tuberculosis infection) or entirely from human biology (e.g. an inherited disease like cystic fibrosis). However, it is now known that many human diseases are a result of a complex interaction between biology, environment and many other factors.

Humans differ because of mutational differences within their genome. The genome consists of more than three billion nucleotides that can acquire a mutation at any time throughout one’s life. Every person carries at least several mutations in their genome, which are either inherited from ancestors or newly acquired. Most of these mutations are harmless. However, cancer and other diseases can occur when mutated genes activate or block certain molecular pathways that are important for normal biological function. The ability to detect a mutation and understand the process by which it contributes to the development and progression of a disease is fundamental to understanding the molecular mechanisms of cancer.

A common way to study the behavior of an altered cell is through quantification of mRNA, which allows for the measurement of the expression of single or multiple genes. Expression levels can be correlated with disease and clinical outcomes. Using high-throughput gene expression analysis techniques, scientists can assess simultaneously the expression of more than 40,000 mRNAs in any particular patient sample (blood, urine, saliva, or tissue). By profiling the gene expression patterns and performing a quantitative analysis of the mRNA, scientists increasingly understand the underlying mechanisms of disease. Such an understanding provides us with potential diagnostic and prognostic tests and therapeutic targets through the development of unique gene expression “signatures” of disease.

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Technology improvements and decreasing costs have aided the implementation of genomic diagnostic, prognostic and therapeutic tools in health care. For example, genomic analysis has led to the development of gene expression-based tests for breast cancer, colon cancer, determining a patient’s originating cancer in the event of metastasis and in managing the care of heart transplant patients. These tests have increasingly been integrated into routine clinical practice and, in the case of a test for breast cancer recurrence, have been recommended for use in the ASCO guidelines.

Genomics is different from “genetics”. Genetics is the study of how traits are inherited from one generation to the next through genes, and how new traits are generated by way of genetic mutations. For example, the detection of mutations in the BRCA1 and BRCA2 genes may be used to assess a woman’s risk of developing breast or ovarian cancer. This genetic test has become the standard of care in identifying women with hereditary breast and ovarian cancer, but is different from genomic tests like LungExpress Dx.

LungExpress Dx

Increasing Incidence of Lung Cancer

Lung cancer is the most common cancer and leading cause of cancer death worldwide, accounting for more deaths per year than breast cancer, prostate cancer and colon cancer combined.

According to a 2009 peer-reviewed publication, over 1.3 million people are diagnosed with, and approximately 1.0 million die from, lung cancer globally each year. In the United States alone, the National Cancer Institute estimates that in 2009 approximately 220,000 people will have been diagnosed with lung cancer and 160,000 will die from the disease. Another 2009 peer-reviewed publication also estimates that the number of Americans diagnosed each year with lung cancer will increase significantly over the next two decades to 280,000 by 2020 and 338,000 by 2030.

NSCLC represents approximately 85% to 90% of all lung cancers and is comprised of multiple sub-types, including adeno-, squamous cell and large-cell carcinomas. A 2007 study by the International Association for the Study of Lung Cancer, which employed the population-based SEER United States cancer registry data, estimates that early-stage NSCLC represents approximately 34% of all diagnosed NSCLC cases.

Diagnosis of lung cancer at the early stages of disease is associated with better prognosis. As a result, studies such as the International Early Lung Cancer Action Project and the Pan Canadian Early Detection of Lung Cancer are being undertaken to look at the impact of various screening programs on the stage of diagnosis of lung cancer. In addition, new technologies are being developed to screen for the presence of lung cancer to provide for earlier diagnosis of the disease.

Significant Costs of Diagnosing and Treating Lung Cancer

Because of expected population increases and aging in the United States, the costs of diagnosing and treating lung cancer, and the estimated value of life lost from the disease, are substantial and expected to increase dramatically, even if mortality rates remain constant. The National Cancer Institute estimates that in the United States in 2007, $9.6 billion was spent on the diagnosis and treatment of lung cancer, representing over 13% of all cancer-related expenditures. According to a 2008 peer-reviewed publication, the value of life lost in the United States from lung cancer deaths in the year 2000 was estimated to be $240 billion, representing over 25% of the value for all cancers. In this study, the value of life lost was calculated by multiplying the years of life lost by $150,000, an estimate of the value of one year of life commonly used by health economists. Small declines in lung cancer mortality rates, for example, through more effective patient treatment, can have a substantial impact on healthcare expenditures and the value of life lost.

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NSCLC Staging is Inadequate

A more accurate means of determining which early-stage NSCLC patients are, following surgery, at a higher and lower risk of mortality is needed to improve the selection of patients who may benefit from adjuvant chemotherapy. We believe that the use of LungExpress Dx will assist in addressing this unmet need.

Treatment decisions regarding NSCLC patients are based largely on current indications of prognosis and risk associated with tumor staging using the TNM algorithm. TNM staging is based upon the anatomical extent of the tumor, such as size, local and distant lymph node involvement and metastasis to stratify patients into stages I to IV. Stages I and II, considered early-stage, with localized disease, are associated with a better survival rate than stage III and IV, with the latter being considered non-curable.

Early-stage NSCLC patients are treated primarily by surgical removal of their tumours. Recent clinical trials have led to the adoption of adjuvant cisplatin-based chemotherapy for patients with surgically removed tumors in stage II, and in certain circumstances, stage IB NSCLC. The five-year survival advantage conferred by adjuvant chemotherapy in these studies ranged from 4% in the International Adjuvant Lung Trial to 15% in the JBR.10 clinical trial. No trial showed a significant survival benefit in stage IB. The Lung Adjuvant Cisplatin Evaluation meta-analysis pooled individual patient data from five trials of cisplatin-based chemotherapy and found a 5.4% survival advantage at five years. Subgroup analysis confirmed a significant benefit in stage II patients, but not in stage I patients. Moreover, a potential detrimental effect was observed in stage IA. As a result, ASCO recommends adjuvant chemotherapy for stage II patients, but not for stage I patients, and NCCN recommends adjuvant chemotherapy for stage II patients and, in certain circumstances, stage I patients.

However, within five years of surgery, 30% to 55% of stage I and II patients will die as a result of cancer recurrence, implying that patients diagnosed with the same stage of disease can differ in terms of tumor aggressiveness and response to treatment. While TNM stage currently remains the strongest predictor of prognosis, in many cases it fails to identify those patients within stage I who have an aggressive tumor and may benefit from chemotherapy, and those patients within stage II who have a less aggressive tumor and may not benefit from chemotherapy.

This uncertainty, coupled with other factors such as patient wishes, age, comorbidity and postoperative complications, has led to significant non-compliance by physicians and patients with the general treatment guidelines. Peer-reviewed publications reviewing the clinical practices at two major cancer care centers, Princess Margaret Hospital in Toronto (May 2003 to May 2005) and Institut Mutualiste Montsouris in Paris (January 2004 to May 2005), confirmed such non-compliance in that, following surgery, 23% to 34% of stage I patients were treated with chemotherapy and approximately 50% of stage II patients were not treated with chemotherapy.

We believe that by providing information regarding each patient’s risk of mortality, the use of LungExpress Dx will assist both physicians and patients in making better-informed and personalized treatment decisions.

Our Solution

We believe that the use of LungExpress Dx will have the following benefits:

Improved Quality of Treatment Decisions. LungExpress Dx improves upon staging in identifying those patients with early-stage NSCLC, who, following surgical removal of their tumor, are at a higher and lower risk of mortality. In our initial study of patient specimens from the JBR.10 clinical trial, patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy. We believe that the use of LungExpress Dx will result in better-informed and personalized treatment decisions and improve the selection of patients who may benefit from adjuvant chemotherapy.

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Health Economic Benefits. Improving the quality of treatment decisions through the use of LungExpress Dx may result in health economic benefits. Our initial study was presented in January 2010 at a poster session of the American Association for Cancer Research – International Association for the Study of Lung Cancer Joint Conference on Molecular Origins of Lung Cancer and demonstrates projected cost savings through the use of LungExpress Dx. Our model shows that approximately half of stage I NSCLC patients who are classified by LungExpress Dx as higher risk and who under current guidelines are not routinely treated with adjuvant chemotherapy, may benefit from such treatment, possibly avoiding or delaying disease recurrence and associated costs relating to treatment failure and terminal care, which can be over $75,000 per patient. Increasingly, targeted therapies are also being used in cases of disease recurrence and can approximately add an additional $100,000 per person, per treatment course. On the other hand, approximately half of stage II NSCLC patients who are classified by LungExpress Dx as lower risk and who under current guidelines are routinely treated with adjuvant chemotherapy may not benefit from such treatment, possibly avoiding the costs and side effects associated with such treatment.

Integration into Current Clinical Practice. LungExpress Dx can be integrated into the current clinical treatment of early-stage NSCLC patients where chemotherapy should begin, if at all, four to eight weeks from surgery. Once a patient is diagnosed with NSCLC, the tumor is surgically removed and a pathologist determines the TNM stage of disease. At that time, a physician will then be able to order LungExpress Dx and the pathology laboratory will provide us with the tumor specimen. We will then analyze the tumor specimen and deliver our results to the treating physician so that the physician and patient may discuss treatment options with a better understanding of the patient’s personal risk profile.

Clinical Development of LungExpress Dx

As presented at the 2008 Annual Meeting of ASCO and as detailed in a manuscript submitted for publication in a peer-reviewed journal, the 15-gene signature of LungExpress Dx was developed from patient tumor specimens collected prospectively in the JBR.10 clinical trial.

This study was a randomized trial that compared four cycles of cisplatin plus vinorelbine adjuvant chemotherapy to observation (i.e. no treatment) after surgical tumor removal in patients with stage IB and II NSCLC. With a median follow-up of 5.2 years, adjuvant chemotherapy improved absolute five-year survival by 15% and median survival by 21 months. JBR.10 is among the landmark trials that have established adjuvant chemotherapy as the standard of care for early-stage NSCLC.

Of the 482 patients participating in the JBR.10 clinical trial, flash frozen tumor specimens from 62 observation patients and 71 patients treated with chemotherapy were available for analysis. The LungExpress Dx genes were selected using an unbiased genome-wide microarray approach in which all 25,000 genes in the human genome from the 62 observation patients were evaluated and narrowed down to 172 genes with the greatest ability to predict mortality (univariate survival analysis p<0.005). Using statistical analysis, a sub-set of 15 genes were shown to best correlate with patient mortality and were selected for the LungExpress Dx signature. Using the expression levels of these 15 genes, we developed a proprietary algorithm that separates patients into higher and lower risk groups based upon predicted mortality.

The 15 genes used in our signature of LungExpress Dx are known to be important in cancer initiation, development, establishment and metastasis, including cell cycle regulation, apoptosis, signal transduction and cell signaling, cell adhesion, nucleotide synthesis and transmembrane ion transport.

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LungExpress Dx in Quantifying Patient Mortality and Likelihood of Chemotherapy Benefit

When applied to the 62 observation patients, LungExpress Dx classified 31 patients as higher risk and 31 patients as lower risk. Absolute five-year survival for the higher risk patients was approximately 20%, compared to approximately 93% for the lower risk patients (HR=15.02, 95% CI 5.12-44.04, p<0.0001). Our 15-gene signature was stage independent, as it separated the higher and lower risk groups in both stage I (HR 13.32, 95% CI 2.86-62.11, p<0.0001) and stage II (HR 13.47, 95% CI 3.00-60.43, p<0.0001).

In describing the results of our LungExpress Dx studies, we use three main statistical metrics that are customarily used by scientific and commercial organizations to describe the extent of the significance of the results of a particular study. The first metric is a hazard ratio, or HR, which is a measure of survival at any point in time in one group of patients compared to a second group of patients. A hazard ratio of one means that there is no difference in survival between the two groups. A hazard ratio of greater than one or less than one means that survival was better in one of the groups. The second metric is a p-value, which is a statistical measurement that indicates the probability that a result may have occurred by random chance. A low p-value, typically less than 0.05 (p<0.05) indicates a small likelihood (less than 5%) that the result is due to chance and is, consequently, considered to be a statistically significant result. The third metric is a 95% confidence interval, or 95% CI, which is a measure of the precision of an estimated value in a statistical test. Wider confidence intervals indicate lower precision based on larger variation in the data, and narrow intervals indicate greater precision and less variation in the data.

Since clinical variables such as TNM stage, gender, age and histology are known prognostic factors in NSCLC and correlate with outcome, we performed a multivariate analysis to control for those factors. This multivariate analysis showed our 15-gene signature to be independent of such variables (HR 18.00, 95% CI 5.78-56.05; p<0.0001) and was more effective in predicting patient mortality.

We also validated LungExpress Dx in predicting mortality in five independent studies involving microarray data from patient specimens of multiple sub-types, including adeno-, squamous cell and large-cell carcinomas, totaling 676 untreated stage I and II NSCLC patients. The studies involved 169 patients as a subset of the National Cancer Institute Director’s Challenge Consortium for the Molecular Classification of Lung Adenocarcinoma collected from the University of Michigan, H. L. Moffitt Cancer Center and Memorial Sloan-Kettering Cancer Center (HR 3.2, 95% CI 1.69-6.11, p=0.0002); 133 patients from the Netherlands Cancer Institute (HR 2.3, 95% CI 1.2-4.4, p=0.014); 106 patients from the University of Michigan (HR 2.3, 95% CI 1.1-4.7, p=0.026); 85 patients from Duke University (HR 1.5, 95% CI 0.81-2.89, p=0.19); and 183 patients from Princess Margaret Hospital, University Health Network in Toronto (HR 2.2, 95% CI 1.3-3.7, p=0.0036). We believe that the insignificant p-value in the Duke University study may be due to its smaller sample size. The results of our University Health Network validation study were presented in January 2010 at a poster session of the American Association for Cancer Research – International Association for the Study of Lung Cancer Joint Conference on Molecular Origins of Lung Cancer.

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We also compared absolute five-year survival in the JBR.10 clinical trial of the 71 patients treated with chemotherapy to the 62 observation patients using the LungExpress Dx classification. The study demonstrated that patients classified by LungExpress Dx as higher risk significantly benefited from adjuvant chemotherapy (five-year survival: treated 65%; untreated 20%) (HR=0.33, 95% CI 0.17-0.63, p=0.0005), and those classified as lower risk did not benefit, and may have experienced a detrimental effect, from adjuvant chemotherapy (five-year survival: treated 77%; untreated 93%) (HR 3.67, 95% CI 1.22-11.06, p=0.0133).

We believe that the results of these studies demonstrate that LungExpress Dx quantifies mortality risk and may also correlate with the likelihood of chemotherapy benefit in early-stage NSCLC patients.

LungExpress Dx Classifies Patients Based Upon Their Molecular Risk Profile

In the above validation studies involving untreated NSCLC patients, LungExpress Dx classified:

• 56% of stage I patients as higher risk, who under current ASCO and NCCN guidelines are generally not recommended for routine treatment with adjuvant chemotherapy following tumor removal; and

• 41% of stage II patients as lower risk, who under current ASCO and NCCN guidelines are generally recommended for routine treatment with adjuvant chemotherapy following tumor removal.

Using such information, and in consideration of all other clinical variables, physicians and patients may determine, in the case of a higher risk stage I patient to undergo chemotherapy to possibly reduce the risk of cancer recurrence, or in the case of a lower risk stage II patient to avoid potentially unnecessary chemotherapy.

Additional Studies Respecting LungExpress Dx

LungExpress Dx has been validated for use with patient specimens preserved by flash freezing. Following the commercial launch of LungExpress Dx, we plan to complete our studies to validate LungExpress Dx for use with patient specimens preserved by FFPE, and to commence studies to validate the utility of our test in quantifying a patient’s mortality risk and likelihood of chemotherapy benefit, potentially including a prospective and randomized clinical trial.

Health Economic Benefits of LungExpress Dx

We are collaborating with health economists in the area of genomics to examine the health economic implications of LungExpress Dx. Our initial study analyzed data from 183 stage I and II NSCLC patients in our University Health Network LungExpress Dx validation study to compare risk classification based on TNM staging and guideline criteria from NCCN to risk classification and subsequent treatment from the use of

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LungExpress Dx. The results of this study were presented in January 2010 at a poster session of the American Association for Cancer Research – International Association for the Study of Lung Cancer Joint Conference on Molecular Origins of Lung Cancer.

We designed a standard model for prognosis simulation, called a Markov model, to forecast survival and expected costs as if LungExpress Dx was used to guide treatment for early-stage NSCLC patients. The model, when applied to a hypothetical population of patients with the demographic and disease characteristics of the patients enrolled in the University Health Network validation study, demonstrated an increase in survival and a reduction in projected aggregate costs at both five years and lifetime.

Our model shows that approximately half of stage I NSCLC patients who are classified by LungExpress Dx as higher risk and who under current ASCO and NCCN guidelines are not routinely treated with adjuvant chemotherapy, may benefit from such treatment, possibly avoiding or delaying disease recurrence and associated costs relating to treatment failure and terminal care, which can be over $75,000 per patient. Increasingly, targeted therapies are also being used in cases of disease recurrence and can approximately add an additional $100,000 per person, per treatment course. On the other hand, approximately half of stage II NSCLC patients who are classified by LungExpress Dx as lower risk and who under current ASCO and NCCN guidelines are routinely treated with adjuvant chemotherapy may not benefit from such treatment, possibly avoiding the costs and side effects associated with such treatment.

According to this study, the use of LungExpress Dx has the potential to significantly reduce costs associated with the treatment of patients with early-stage NSCLC.

Business Strategy

Our mission is to develop and commercialize genomic-based tests that characterize tumors on a molecular level to provide personalized, clinically relevant information to improve patient treatment and reduce health care costs. To give effect to our mission, we have developed a business strategy that involves four main areas:

Commercialize LungExpress Dx in the United States. We plan to launch LungExpress Dx as a clinical service in the United States in 2010. We anticipate using a portion of the net proceeds from this offering to establish our CLIA-certified central laboratory where we will perform our services and build, either alone or through partnerships, a focused sales, marketing and reimbursement team in the United States. We believe that the most effective way to maximize the adoption of LungExpress Dx will be to have our team interact directly with oncologists, pathologists, patient advocacy groups and third-party payors to convey the clinical and health economic benefits of our test.

Commercialize LungExpress Dx Internationally. Asia and Europe have high incidence rates of lung cancer primarily because of the prevalence of smoking. We plan to commercialize LungExpress Dx in Asia and Europe and other jurisdictions outside of the United States through distribution agreements with established companies with relevant local sales, marketing, reimbursement and regulatory compliance experience. We have been involved in discussions with numerous groups to facilitate the distribution of our test in select countries.

Partner with Pharmaceutical Companies to use LungExpress Dx as a Companion Diagnostic. LungExpress Dx was developed with data obtained from untreated patient specimens and, as such, we can correlate patients classified by our test as higher and lower risk with their response to any specific treatment regimen. As a result, we may seek to partner with pharmaceutical companies to use LungExpress Dx as a companion diagnostic to identify those patients who are more likely to respond to their FDA-approved or development-stage targeted therapies to assist in moving away from a “one-size-fits-all” approach to patient management.

Selectively Apply Our Commercial and Clinical Infrastructure to Other Tests. We believe that, in commercializing LungExpress Dx, we will develop valuable commercial and clinical experience and infrastructure relating to test development, laboratory operations, sales, marketing, reimbursement and regulatory

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compliance. While our primary focus is LungExpress Dx, we may selectively develop and launch additional tests that maximize our efficiencies of scale and scope and align with our mission of providing personalized, clinically relevant information to improve patient treatment and reduce health care costs.

Sales and Marketing

Our sales and marketing strategy is to employ a focused team to target lung cancer oncologists, pathologists and patient advocacy groups. Our direct sales approach will highlight the clinical and economic benefits of LungExpress Dx and the scientific validation supporting our test. We expect to use a portion of the net proceeds from this offering to build, either alone or through partnerships, a sales and marketing team with clinical oncology selling and marketing experience obtained from leading biopharmaceutical, pharmaceutical and specialty reference laboratory companies.

Our marketing strategy will focus on educating physicians, laboratory personnel, other healthcare professionals and patient advocacy groups regarding the clinical benefits of LungExpress Dx. We plan to hire and train our customer service representatives to handle inquiries from these groups. We will also utilize the Internet for communicating with external constituencies, and our web site will contain clinical information for healthcare professionals and educational information for lung cancer patients.

We may promote LungExpress Dx through marketing channels commonly used by the biopharmaceutical and pharmaceutical industries, such as sponsored continuing medical education, medical meeting participation and broad-based publication of our scientific and economic data.

Reimbursement

Revenues for clinical laboratory tests may come from several sources, including commercial third-party payors, such as insurance companies and health maintenance organizations, government payors, such as Medicare and Medicaid, patients and, in some cases, from hospitals or referring laboratories who, in turn, bill third-party payors for testing. Reimbursement of LungExpress Dx by third-party payors will be essential to our commercial success.

Following commercialization of LungExpress Dx, we believe the following key factors will drive broad adoption of our test:

• acceptance by clinicians of the methods of patient specimen preservation for use with our test including, upon launch, specimens preserved by flash freezing;

• acceptance by healthcare providers of its clinical benefits;

• demonstration of the cost-effectiveness of using our test;

• expanded reimbursement by third-party payors;

• targeted marketing and sales efforts; and

• inclusion in lung cancer treatment guidelines of ASCO and NCCN.

We expect to pursue coverage by Medicare, Medicaid, national commercial third-party payors and regional payors. Where policies, contracts or agreements are not in place, we plan to pursue case-by-case reimbursement. We believe that it may take several years to achieve substantial successful reimbursement. However, we cannot predict whether, or under what circumstances, third-party payors will reimburse for LungExpress Dx. Payment amounts may also vary across individual policies and coverage and payment policies, if adopted, may be applied prospectively rather than retroactively. Denial of coverage by payors, or payment at inadequate levels, would have a material adverse impact on market acceptance of LungExpress Dx.

Commercial Third-party Payors and Patient Pay. When a payor policy, contract or agreement is in place, we expect to bill the payor, the hospital or referring laboratory as well as the patient (for deductibles and co-insurance or co-payments, where applicable) in accordance with the established policy. When there is no

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payor policy in place, we plan to pursue reimbursement on behalf of each patient on a case-by-case basis. We will request that physicians have a billing conversation with patients prior to a test being submitted to discuss the patient’s responsibility should their policy not cover the test. We will also request that the physician inform the patient that we will take on the primary responsibility for obtaining third-party reimbursement on behalf of patients, including appeals for initial denials, prior to billing a patient. With this practice established, we believe that most patients receiving the LungExpress Dx test will have agreed to the test knowing that they may be responsible for all or some portion of the cost of the test should their medical insurer deny or limit coverage. Our efforts on behalf of patients will take a substantial amount of our time, and bills may not be paid for many months, if at all. Furthermore, if a third-party payor denies coverage after a final appeal, it may take a substantial amount of time to collect from the patient, and we may not be successful.

Medicare and Medicaid. In determining whether or not Medicare will pay for a test, the Centers for Medicare and Medicaid Services, or CMS, which oversees Medicare, can permit the contractors who process and pay Medicare claims to make that determination or it can make a national coverage determination, which will bind all Medicare contractors.

Under current Medicare billing rules, claims made for LungExpress Dx tests performed on Medicare beneficiaries who were hospital inpatients at the time the patient specimens were obtained and whose tests were ordered less than 14 days from discharge must be incorporated in the payment that the hospital receives for the inpatient services provided. Medicare billing rules also require hospitals to bill for the test when ordered for hospital outpatients less than 14 days following the date of the hospital procedure where the patient specimens were obtained. Accordingly, we will be required to bill individual hospitals for tests performed on Medicare beneficiaries during these time frames. Because we do not expect to have a written agreement in place with many, if not all, of these hospitals, we may not be paid for our tests or may have to pursue payment from the hospital on a case-by-case basis. We believe that these billing rules may lead to confusion regarding whether Medicare will provide adequate reimbursement for our test, and could discourage Medicare patients from using our test. Although there has been significant debate regarding revising or reversing these billing rules, we have no assurance that Medicare will do so, and we also cannot ensure that hospitals will agree to arrangements to pay us for tests performed on patients falling under these rules.

In addition, each state Medicaid program, which pays for services furnished to the eligible medically indigent, will usually make its own decision whether or not to cover LungExpress Dx.

We expect that the majority of any international revenues will be influenced by patient self-pay in various countries and payor reimbursement through distribution partners. We expect any international sales of LungExpress Dx to be heavily dependent on reimbursement in the future. In many countries, governments are primarily responsible for reimbursing diagnostic tests. Governments often have significant discretion in determining whether a test will be reimbursed at all, and if so, how much will be paid. Although we plan on establishing agreements with distribution partners in countries outside of the United States, particularly in Asia and Europe, there are no assurances that we will be able to do so. We expect that it will take several years to establish coverage and reimbursement for LungExpress Dx in countries outside of the United States.

Payment. Clinical laboratory testing services, when covered by third-party payors, are paid under various methodologies, including prospective payment systems and fee schedules. Under Medicare, payment is generally made under the Clinical Laboratory Fee Schedule with amounts assigned to specific procedure billing codes. Each Medicare carrier jurisdiction has a fee schedule that establishes the price for each specific laboratory billing code. The Social Security Act establishes that these fee schedule amounts are to be increased annually, subject to certain limitations, by the percentage increase in the consumer price index, or CPI, for the prior year. Congress has frequently legislated that the CPI increase not be implemented. In the Medicare Prescription Drug, Improvement and Modernization Act of 2003, or MMA, Congress eliminated the CPI update through 2008. In addition, the National Limitation Amount, or NLA, which acts as a ceiling on Medicare reimbursement, is set at a percentage of the median of all the carrier fee schedule amounts for each test code. In the past, Congress has frequently lowered the percentage of the median used to calculate the NLA in order to achieve budget savings.

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Currently, the NLA ceiling is set at 74% of the medians for established tests and 100% of the median for diagnostic tests for which no limitation amount was established prior to 2001. Thus, no Medicare carrier can pay more than the NLA amount for any specific code.

We do not expect there to be a specific Current Procedural Terminology, or CPT, procedure code or group of codes to report LungExpress Dx. Therefore, we believe that our test generally must be reported under a non-specific, unlisted procedure code, which is subject to manual review of each claim.

A Healthcare Common Procedure Coding System, or HCPCS code, has been issued effective January 1, 2006 that some private third-party payors may accept on claims for the LungExpress Dx test. Medicare will not accept this HCPCS code, however. We may move forward with plans to obtain specific CPT procedure coding. If we do move forward with plans to obtain specific CPT coding, there is no assurance that specific coding will be adopted. Whether or not we obtain a specific CPT code for the test, there can be no assurance that an adequate payment rate will continue to be assigned to the test.

On several occasions, including in 2003 during the negotiations over the MMA, Congress has considered imposing a 20% co-insurance amount on clinical laboratory services, which would require beneficiaries to pay a portion of the cost of their clinical laboratory testing. Although that requirement has not been enacted at this time, Congress could decide to impose such an obligation at some point in the future. If so, it could make it more difficult for us to collect co-insurance payments for LungExpress Dx.

Third-Party Collaborations

In the commercialization of LungExpress Dx we are collaborating with leading, researchers and health economists in the areas of lung cancer and genomics in the United States and Canada, including a team at the Princess Margaret Hospital, University Health Network in Toronto. The team is led by Dr. Ming-Sound Tsao, holder of the M. Qasim Choksi Chair in Lung Cancer Translational Research, and Dr. Frances A. Shepherd, holder of the Scott Taylor Chair in Lung Cancer Research and the Past-Chair of the National Cancer Institute of Canada Clinical Trials Group Lung Cancer Site. Drs. Tsao and Shepherd are Professors at the University of Toronto and have in total authored more than 500 articles in peer reviewed journals.

In April 2008 and February 2009, we entered into exclusive license and sponsored research agreements with University Health Network. These agreements provide to us, among other things, exclusive world-wide rights to commercialize certain intellectual property underlying LungExpress Dx and further provide for our collaboration in certain activities related to the development and validation of LungExpress Dx and associated data analysis and in the collection of patient specimens to be used in such activities. The research and development expense for this project incurred since inception to September 30, 2009 is approximately $495,520. Under our agreements we are obligated to pay up to an additional $929,436 in research funding and milestone payments along with royalties based on net sales of LungExpress Dx. We expect this project to be completed and the balance of our research funding to be paid by the end of 2010.

Our license continues until the expiration of the last underlying patent claim, or May 14, 2029, subject to extension in certain circumstances for delays during the patent prosecution and regulatory review process, but is subject to early termination by University Health Network if we:

• file or consent to a petition in bankruptcy or insolvency or petition for reorganization under any bankruptcy law, or make a general assignment for the benefit of our creditors, or otherwise acknowledge insolvency or are adjudged bankrupt;

• materially breach any of our obligations under the agreements and fail to, or cannot, remedy the breach within thirty days after being given written notice by University Health Network of such breach; or

• terminate or suspend certain work under our sponsored research agreements and:

• four years elapses from the date of termination or suspension; or

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• we breach our obligation to maintain the University Health Network patents in respect of the underlying intellectual property licensed by us, materially impairing the scope of license coverage of such patents.

Competition

Our principal competition comes from existing diagnostic methods used by pathologists and oncologists. These methods have been used for many years and are therefore difficult to change or supplement. In addition, companies offering capital equipment and kits or reagents to local pathology laboratories represent another source of potential competition. These kits are used directly by the pathologist, which facilitates adoption more readily than tests like LungExpress Dx that are performed outside the pathology laboratory. In addition, few diagnostic methods are as expensive as the price that may be charged for LungExpress Dx.

We also face competition from many public and private companies that offer products or have conducted research to profile genes, gene expression or protein expression in early-stage NSCLC, such as Allegro Diagnostics, Inc., Agendia B.V., ALMAC Group Ltd., BG Medicine, Clarient, Inc., Epigenomics, Exiqon Diagnostics, Genomic Health, Inc., Genzyme Corporation, Oncomics, Ltd., Pinpoint Genomics, Inc., Response Genetics, Inc. and Rosetta Genomics Ltd.

Commercial laboratories with strong distribution networks for diagnostic tests, such as Laboratory Corporation of America Holdings and Quest Diagnostics Incorporated, may become competitors. Other potential competitors include companies that develop diagnostic tests such as Bayer Diagnostics, a division of Siemens AG, Roche Diagnostics, a division of F. Hoffmann-La Roche Ltd, and Veridex LLC, a Johnson & Johnson company. Our competitors may invent and commercialize tests or technology platforms that compete with ours. In addition, in December 2005, the United States federal government allocated a significant amount of funding to The Cancer Genome Atlas, a project aimed at developing a comprehensive catalog of the genetic mutations and other genomic changes that occur in cancers and maintaining the information in a free public database. As more information regarding cancer genomics becomes available to the public, we anticipate that more products aimed at identifying targeted treatment options will be developed and these products may compete with ours. In addition, competitors may develop their own versions of our test in countries where we did not apply for or have licensed rights to patents or where any future patents are not issued and compete with us in those countries, including encouraging the use of their test by physicians or patients in other countries.

The price of LungExpress Dx, once established, may be considered relatively expensive for a diagnostic test. This may impact potential reimbursement of and demand for LungExpress Dx. Many of our present and potential competitors have widespread brand recognition and substantially greater financial and technical resources and development, production and marketing capabilities than we have or will have. Others may develop lower-priced, less complex tests that could be viewed by physicians and payors as functionally equivalent to our test, which could force us to lower the list price of our test and impact our operating margins and our ability to achieve profitability. We plan to launch LungExpress Dx in the United States under CLIA. Some competitors may develop competing tests cleared for marketing by the FDA. There may be a marketing differentiation or perception that an FDA-cleared test is more desirable than LungExpress Dx, and that could discourage adoption and reimbursement of our test. If we are unable to compete successfully against current or future competitors, we may be unable to establish or increase market acceptance for, and sales of, our test, which could prevent us from establishing, increasing or sustaining our revenues or achieving or sustaining profitability and could cause the market price of our common shares to decline.

Regulation

Clinical Laboratory Improvement Amendments of 1988

We are planning to offer LungExpress Dx as a clinical service in a clinical reference laboratory to be established by us. As such, we will be required to hold certain federal, state and local licenses, certifications and

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permits to conduct our business. To date, we have neither submitted for, nor received, any such licenses, certifications or permits required to conduct our business. Under CLIA, we will be required to hold a certificate applicable to the type of work we perform and to comply with standards covering personnel, facilities administration, quality systems and proficiency testing.

Prior to offering LungExpress Dx as a diagnostic service, we plan to apply for a CLIA certificate. We may do so by seeking either a certificate of accreditation from a third party, such as the College of American Pathologists, or a certificate of compliance by applying to a state department of health. Once we have submitted the application for a certificate that contains the required information, we may receive a certificate of registration. This process generally takes between one to two months, although it can take longer. We can begin clinical testing of patient specimens once we have received this certificate of registration. After submitting our application for a certificate of accreditation or compliance, we will be inspected by either the third party or the state agency. If we are found to meet the CLIA requirements, we will then receive a certificate of accreditation or compliance. This process generally takes six to 12 months, although the times may vary depending upon the certifying body. We will be subject to survey and inspection every two years to assess compliance with program standards. The standards applicable to the testing which we will perform may change over time. We cannot assure you that we will be able to operate profitably or at all should regulatory compliance requirements become substantially more costly in the future. If we are found to not be in compliance with CLIA requirements, the commencement of our clinical services of LungExpress Dx will be delayed and our business could be harmed.

If, following the commercial launch of LungExpress Dx, we are found to not be in compliance with CLIA requirements, we may be subject to sanctions such as suspension, limitation or revocation of our CLIA certificate, as well as directed plan of correction, state on-site monitoring, civil monetary penalties, civil injunctive suit or criminal penalties. We will be required to maintain CLIA compliance and certification to be eligible to bill for services provided to Medicare beneficiaries. If we are found to be out of compliance with CLIA program requirements and subjected to sanction, our business could be harmed.

U.S. Food and Drug Administration

The FDA regulates the sale or distribution through interstate commerce of medical devices, including in vitro diagnostic test kits. Devices subject to FDA regulation must undergo pre-market review prior to commercialization unless the device is of a type exempted from such review. In addition, manufacturers of medical devices must comply with various regulatory requirements under the Federal Food, Drug, and Cosmetic Act and regulations promulgated under that Act, including quality system review regulations, unless exempted from those requirements for particular types of devices. Entities that fail to comply with FDA requirements can be liable for criminal or civil penalties, such as warning letters, recalls, seizures, orders to cease manufacturing and restrictions on labeling and promotion.

Clinical laboratory tests, such as the test that we expect to launch as LungExpress Dx, are regulated under CLIA, as administered by CMS, as well as by applicable state laws. Diagnostic kits that are sold and distributed through interstate commerce are regulated as medical devices by the FDA. Clinical laboratory tests that are developed and validated by a laboratory for its own use are LDTs. Most LDTs currently are not subject to FDA regulation, although reagents or software provided by third parties and used to perform LDTs may be subject to regulation. We believe that LungExpress Dx, once offered as a clinical service, will not be a diagnostic kit, and we also believe that at that time LungExpress Dx will be an LDT. As a result, we believe that at that time LungExpress Dx should not be subject to regulation under established FDA policies. The container that we expect to provide for collection and transport of tumor samples from a pathology laboratory to our clinical reference laboratory may be considered a medical device subject to FDA regulation but would currently be exempt from pre-market review by the FDA.

In September 2006, the FDA issued draft guidance on a new class of tests called In Vitro Diagnostic Multivariate Index Assays. Under this draft guidance, LungExpress Dx could be classified as either a Class II or a Class III medical device, which may require varying levels of FDA pre-market review depending upon intended use and on the level of control necessary to assure the safety and effectiveness of the test. In July 2007,

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the FDA posted a revised draft guidance that addressed some of the comments submitted in response to the September 2006 draft guidance. The revised draft guidance includes an 18 month transition period of FDA enforcement discretion following release of final guidance for currently available tests if the laboratory submits a pre-market review submission within 12 months of the publication of final guidance. The comment period for this revised guidance expired in October 2007.

We cannot provide any assurance that any FDA regulation, including pre-market review, will not be required for LungExpress Dx, either through new policies adopted by the FDA or new legislation enacted by Congress. It is possible that legislation will be enacted into law and may result in increased regulatory burdens for us to offer, or in the future continue to offer, LungExpress Dx as a clinical service.

If pre-market review is required, our business could be negatively impacted until such review is completed and clearance to market or approval is obtained, and the FDA could require that we not sell, or stop selling, our test pending pre-market clearance or approval. If our test is on the market, and allowed to continue as such, but there is uncertainty about the regulatory status of our test or if it is deemed investigational by the FDA, or if labeling claims the FDA allows us to make are limited, orders or reimbursement may cease or decline. The regulatory approval process may involve, among other things, successfully completing additional clinical trials and submitting a pre-market clearance notice or filing a PMA application with the FDA. If pre-market review is required by the FDA, there can be no assurance that our test will be cleared or approved on a timely basis, if at all. If our test is cleared, we may need to obtain a new clearance or approval if we wish to modify the test or the claims that we make for the test. Ongoing compliance with FDA regulations would increase the costs of conducting our business, and subject us to inspection by the FDA and to the requirements of the FDA and penalties for failure to comply with these requirements. These requirements could include registering with the FDA, listing the test with the FDA, adhering to the FDA’s Quality System Requirements, submitting reports to the FDA, and limitations on advertising and promotion. We may also decide voluntarily to pursue FDA pre-market review of LungExpress Dx if we determine that doing so would be appropriate.

Should any of the reagents that we obtain from vendors and use in conducting our test be affected by future regulatory actions, our business could be adversely affected by those actions, including increasing the cost of testing or delaying, limiting or prohibiting the purchase of reagents necessary to perform testing.

Health Insurance Portability and Accountability Act

Under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, the United States Department of Health and Human Services, or HHS, has issued regulations to protect the privacy and security of protected health information used or disclosed by health care providers, and would include us. HIPAA also regulates standardization of data content, codes and formats used in health care transactions and standardization of identifiers for health plans and providers. Penalties for violations of HIPAA regulations include civil and criminal penalties.

We plan to develop policies and procedures to comply with these regulations. The requirements under these regulations may change periodically and could have an effect on our business operations if compliance becomes substantially more costly than under current requirements.

In addition to federal privacy regulations, there are a number of state laws governing confidentiality of health information that will be applicable to our operations. New laws governing privacy may be adopted in the future as well. We plan to take steps to comply with health information privacy requirements to which we are aware that we are subject. However, we can provide no assurance that we be, or will remain, in compliance with diverse privacy requirements in all of the jurisdictions in which we do business. Failure to comply with privacy requirements could result in civil or criminal penalties, which could have a materially adverse impact on our business.

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Federal and State Physician Self-referral Prohibitions

Upon offering LungExpress Dx as a clinical service, we will be subject to the federal physician self-referral prohibitions commonly known as the Stark Law, and to similar restrictions under California’s Physician Ownership and Referral Act, commonly known as PORA. Together these restrictions will generally prohibit us from billing a patient or any governmental or private payor for any test when the physician ordering the test, or any member of such physician’s immediate family, has an investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.

Both the Stark Law and PORA contain an exception for referrals made by physicians who hold investment interests in a publicly traded company that has shareholders’ equity exceeding $75 million at the end of its most recent fiscal year or on average during the previous three fiscal years, and which satisfies certain other requirements. In addition, both the Stark Law and PORA contain an exception for compensation paid to a physician for personal services rendered by the physician. We expect to have compensation arrangements with a number of physicians for personal services, such as speaking engagements and specimen tissue preparation. We plan to structure such arrangements with terms intended to comply with the requirements of the personal services exception to Stark and PORA. However, we cannot be certain that regulators would find these arrangements to be in compliance with Stark, PORA or similar state laws. We would be required to refund any payments we receive pursuant to a referral prohibited by these laws to the patient, the payor or the Medicare program, as applicable.

Sanctions for a violation of the Stark Law include the following:

• denial of payment for the services provided in violation of the prohibition;

• refunds of amounts collected by an entity in violation of the Stark Law;

• a civil penalty of up to $15,000 for each service arising out of the prohibited referral;

• possible exclusion from federal healthcare programs, including Medicare and Medicaid; and

• a civil penalty of up to $100,000 against parties that enter into a scheme to circumvent the Stark Law’s prohibition.

These prohibitions apply regardless of the reasons for the financial relationship and the referral. No finding of intent to violate the Stark Law is required for a violation. In addition, under an emerging legal theory, knowing violations of the Stark Law may also serve as the basis for liability under the Federal False Claims Act.

Further, a violation of PORA is a misdemeanor and could result in civil penalties and criminal fines. Finally, other states have self-referral restrictions with which we have to comply that differ from those imposed by federal and California law. While we will attempt to comply with the Stark Law, PORA and similar laws of other states, it is possible that some of our future financial arrangements with physicians could be subject to regulatory scrutiny at some point in the future, and we cannot provide an assurance that we will be found to be in compliance with these laws following any such regulatory review.

Federal and State Anti-kickback Laws

The Federal Anti-kickback Law makes it a felony for a provider or supplier, including a laboratory, to knowingly and willfully offer, pay, solicit or receive remuneration, directly or indirectly, in order to induce business that is reimbursable under any federal health care program. A violation of the Anti-kickback Law may result in imprisonment for up to five years and fines of up to $250,000 in the case of individuals and $500,000 in the case of organizations. Convictions under the Anti-kickback Law result in mandatory exclusion from federal health care programs for a minimum of five years. In addition, HHS has the authority to impose civil assessments and fines and to exclude health care providers and others engaged in prohibited activities from Medicare, Medicaid and other federal health care programs.

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Actions that violate the Anti-kickback Law or similar laws may also involve liability under the Federal False Claims Act, which prohibits the knowing presentation of a false, fictitious or fraudulent claim for payment to the U.S. Government. Actions under the Federal False Claims Act may be brought by the Department of Justice or by a private individual in the name of the government.

Although the Anti-kickback Law applies only to federal health care programs, a number of states have passed statutes substantially similar to the Anti-kickback Law pursuant to which similar types of prohibitions are made applicable to all other health plans and third-party payors.

Federal and state law enforcement authorities scrutinize arrangements between health care providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to induce patient care referrals and opportunities. The law enforcement authorities, the courts and Congress have also demonstrated a willingness to look behind the formalities of a transaction to determine the underlying purpose of payments between health care providers and actual or potential referral sources. Generally, courts have taken a broad interpretation of the scope of the Anti-kickback Law, holding that the statute may be violated if merely one purpose of a payment arrangement is to induce future referrals.

In addition to statutory exceptions to the Anti-kickback Law, regulations provide for a number of safe harbors. If an arrangement meets the provisions of a safe harbor, it is deemed not to violate the Anti-kickback Law. An arrangement must fully comply with each element of an applicable safe harbor in order to qualify for protection.

Among the safe harbors that may be relevant to us upon us offering LungExpress Dx as a clinical service is the discount safe harbor. The discount safe harbor potentially applies to discounts provided by providers and suppliers, including laboratories, to physicians or institutions where the physician or institution bills the payor for the test, not when the laboratory bills the payor directly. If the terms of the discount safe harbor are met, the discounts will not be considered prohibited remuneration under the Anti-kickback Law. This safe harbor may therefore be potentially applicable to our agreements to sell tests to hospitals where the hospital submits a claim to the payor.

The personal services safe harbor to the Anti-kickback Law provides that remuneration paid to a referral source for personal services will not violate the Anti-kickback Law provided all of the elements of that safe harbor are met. One element is that, if the agreement is intended to provide for the services of the physician on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals. Failure to meet the terms of the safe harbor does not render an arrangement illegal. Rather, such arrangements must be evaluated under the language of the statute, taking into account all facts and circumstances.

While we plan to undertake our business in compliance with the Anti-kickback Law and applicable similar state laws, there can be no assurance that our relationships with physicians, hospitals and other customers will not be subject to investigation or a successful challenge under such laws. If imposed for any reason, sanctions under the Anti-kickback Law and applicable similar state laws could have a negative effect on our business.

Other Federal and State Fraud and Abuse Laws

In addition to the requirements that are discussed above, there are several other health care fraud and abuse laws that could have an impact on our business. For example, provisions of the Social Security Act permit Medicare and Medicaid to exclude an entity that charges the federal health care programs substantially in excess of its usual charges for its services. The terms “usual charge” and “substantially in excess” are ambiguous and subject to varying interpretations.

Further, the Federal False Claims Act prohibits a person from knowingly submitting a claim or making a false record or statement in order to secure payment by the federal government. In addition to actions initiated by

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the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud. Because the complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action. If the government is ultimately successful in obtaining redress in the matter or if the plaintiff succeeds in obtaining redress without the government’s involvement, then the plaintiff will receive a percentage of the recovery. Finally, the Social Security Act includes its own provisions that prohibit the filing of false claims or submitting false statements in order to obtain payment. Violation of these provisions may result in fines, imprisonment or both, and possible exclusion from Medicare or Medicaid programs. In addition, many states have analogous false claims statutes applicable to all payors.

State Laboratory Licensing

In addition to federal certification requirements of laboratories under CLIA, licensure will be required and maintained for our clinical reference laboratory, once established, under California, New York, Florida, Maryland, Pennsylvania and Rhode Island law. Certain of such laws outline standards for the day-to-day operation of a clinical laboratory, including the training and skills required of personnel and quality control. In addition, certain of such laws mandate proficiency testing, which involves testing of specimens that have been specifically prepared for the laboratory.

If our clinical reference laboratory, once established, is out of compliance with such state standards, the applicable regulatory authority may suspend, restrict or revoke our license to operate our clinical reference laboratory, assess substantial civil monetary penalties, or impose specific corrective action plans. Any such actions could materially affect our business. We cannot provide assurance that such authorities will initially, or at all times in the future, find us to be in compliance with all such laws.

Environmental Laws

We expect to be subject to regulation under federal, state and local laws and regulations governing environmental protection and the use, storage, handling and disposal of hazardous substances. The cost of complying with these laws and regulations may be significant. Our activities as currently planned will require the controlled use of potentially harmful biological materials, hazardous materials and chemicals. We will not be able to eliminate the risk of accidental contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have.

Regulation Outside of the United States

Upon us marketing outside the United States, we will be subject to foreign regulatory requirements governing human clinical testing and marketing approval for our tests. These requirements vary by jurisdiction, differ from those in the United States and may require us to perform additional pre-clinical or clinical testing. In many countries outside of the United States, coverage, pricing and reimbursement approvals are also required.

Insurance

We currently have no product liability insurance and have no knowledge of any applicable laws that require us to have liability insurance, but we intend to obtain such insurance if available at reasonable rates.

Enforceability of Applicable Laws

To our knowledge, we are not aware of any limitations on the enforceability of any of the laws and regulations discussed in this prospectus as a result of us being a British Columbian company, other than generally applicable enforceability procedures against a foreign corporation. We expect to register as a foreign corporation

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upon commercializing LungExpress Dx in the United States in the applicable jurisdictions and as required by applicable law.

Intellectual Property

In order to remain competitive, we must develop and maintain protection on the proprietary aspects of our technologies. We rely on a combination of patents, copyrights, trademarks, trade secret laws and confidentiality, material data transfer agreements, licenses and invention assignment agreements to protect our intellectual property rights. We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop and maintain our competitive position. We generally protect this information with reasonable security measures.

We currently have an exclusive license to two pending U.S. patent applications, one of which has a corresponding pending application under the Patent Cooperation Treaty in respect of certain of our technology. These patent applications relate to two main areas: gene expression technology methods, and gene markers for quantifying NSCLC patient mortality and response to adjuvant chemotherapy. We intend to file additional patent applications in the United States and abroad to strengthen our intellectual property rights. Our patent applications may not result in issued patents, and we cannot assure you that any patents that might issue will protect our technology. Any patents issued to us in the future may be challenged by third parties as being invalid or unenforceable, or third parties may independently develop similar or competing technology that are not covered by our patents. We cannot be certain that the steps we have taken will prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

We have also filed a trademark application with the U.S. Patent and Trademark Office for the standard character mark “LungExpress Dx”.

From time to time, we may receive, notices of claims of infringement, misappropriation or misuse of other parties’ proprietary rights. Some of these claims may lead to litigation. We cannot assure you that we will prevail in these actions, or that other actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks or the validity of patents issued to us in the future, will not be asserted or prosecuted against us, or that any assertions of misappropriation, infringement or misuse or prosecutions seeking to establish the validity of our patents will not materially or adversely affect our business, financial condition and results of operations.

An adverse determination in litigation or interference proceedings to which we may become a party relating to any patents issued to us in the future or any patents owned by third parties could subject us to significant liabilities to third parties or require us to seek licenses from third parties. Furthermore, if we are found to willfully infringe these patents, we could, in addition to other penalties, be required to pay treble damages. Although patent and intellectual property disputes in this area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties. We may be unable to obtain necessary licenses on satisfactory or commercially feasible terms, if at all. If we do not obtain necessary licenses, we may not be able to redesign LungExpress Dx or other of our tests to avoid infringement, or such redesign may take considerable time, and force us to reassess our business plans. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling LungExpress Dx or other of our tests, which would have a significant adverse impact on our business.

All employees and technical consultants working for us are required to execute confidentiality agreements in connection with their employment and consulting relationships with us. Confidentiality agreements provide that all confidential information developed or made known to others during the course of the employment, consulting or business relationship shall be kept confidential except in specified circumstances. Agreements with

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employees and technical consultants also provide that all inventions conceived by the individual while employed or contracted by us are our exclusive property. We cannot provide any assurance that employees and consultants will abide by the confidentiality or assignment terms of these agreements. Despite measures taken to protect our intellectual property, unauthorized parties might copy aspects of our technology or obtain and use information that we regard as proprietary.

Employees

As of December 31, 2009, we had seven full-time personnel and one significant consultant. None of our employees are covered by a collective bargaining agreement and we have never experienced a work stoppage. We consider our relations with our employees and consultants to be good.

We intend to significantly increase the number of our personnel following this offering. Over the 24 months following the completion of this offering, we plan to hire, or engage as consultants, additional personnel with specialized experience in a number of disciplines, including laboratory and clinical operations, clinical affairs and studies, assay development, government regulation, sales and marketing, billing and reimbursement and information systems. There is intense competition for personnel in the fields in which we operate. If we are unable to attract new employees and retain existing employees, the development and commercialization of LungExpress Dx and any future tests could be delayed or negatively impacted.

Facilities

Our executive offices are located in Vancouver, British Columbia, Canada. We lease approximately 2,190 square feet of office and laboratory space under an agreement that expires in August 2010, subject to two options for us to extend such lease for up to an additional five years in total. We plan to use a portion of the net proceeds of this offering to establish in the United States our CLIA-certified central laboratory from which we will offer LungExpress Dx as a clinical service. We will acquire equipment for such laboratory customarily used in molecular diagnostics that is widely available.

Legal Proceedings

We are not a party to any pending material legal proceedings.

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MANAGEMENT

Directors and Officers

The following table sets forth certain information with respect to our directors and officers as of February 1, 2010.

Name	Age	Position
Erinn B. Broshko	39	Chief Executive Officer and Director
David G. Matthews	48	Chief Financial Officer
Dr. John H. Rayson(1)(3)	68	Chairman of the Board and Director
R. Hector MacKay-Dunn, Q.C.(2)	59	Corporate Secretary and Director
Bruce G. Cousins(1)(3)	48	Director
Dr. Heiner Dreismann(2)	56	Director
Dennis L. Grimaud(3)	53	Director
Dr. Michael R. Hayden	59	Director
Senator Dr. Wilbert J. Keon, O.C.	74	Director
Kevin K. Rooney	38	Director

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Member of the Nominating Committee.

Erinn B. Broshko has served as our Chief Executive Officer and one of our directors since May 2006. From March 2000 to May 2006, Mr. Broshko was a corporate and securities lawyer with the Vancouver law firm of Farris, Vaughan, Wills & Murphy LLP, where Mr. Broshko’s legal practice was focused primarily on biotechnology companies and he represented clients in corporate transactions. Mr. Broshko holds a B.A. (Honors) and M.A. from the University of Saskatchewan, an LL.B. from Dalhousie Law School and an M.B.A. from the University of British Columbia.

David G. Matthews has served as our Chief Financial Officer since January 2009. From March 2008 to March 2009, Mr. Matthews was a Director of BMO Capital Corporation, a subsidiary of Bank of Montreal providing mezzanine financing and equity capital to Canadian mid-market companies. From 2004 to 2007, Mr. Matthews was the Managing Director of Aspreva Pharmaceuticals SA, the European subsidiary of Aspreva Pharmaceuticals Corporation, a NASDAQ and Toronto Stock Exchange-listed company, which was acquired in 2007 by Galenica Group, a Swiss Exchange-listed company. From 1995 to 2000, Mr. Matthews was the Chief Financial Officer of StressGen Biotechnologies Corp. (now Nventa Biopharmaceuticals Corporation, a Toronto Stock Exchange-listed company, and Allelix Biopharmaceuticals Inc., a Toronto Stock Exchange-listed company, which was acquired in 1998 by NPS Pharmaceuticals. Mr. Matthews holds an M.B.A. from Clarkson University.

Dr. John H. Rayson has served as one of our directors and a member of the Audit Committee since September 2004 and a member of the Nominating Committee since November 2008. From 1994 to 2001, Dr. Rayson was the President and Chief Executive Officer of MDS Metro Laboratory Services, a laboratory services company, and subsidiary of MDS Inc., a NYSE and Toronto Stock Exchange-listed global life sciences company, which was acquired in 2007 by Borealis Infrastructure and is now called LifeLabs, and from 2001 to 2007 was Chief Executive Officer and Executive Vice Chairman. Dr. Rayson holds an M.D. from the University of Manitoba.

R. Hector MacKay-Dunn, Q.C. has served as our Corporate Secretary and one of our directors since June 2005 and a member of our Compensation Committee since August 2009. Mr. MacKay-Dunn is a Senior Partner at Farris, Vaughan, Wills & Murphy LLP, where Mr. MacKay-Dunn advises private and public growth companies in a broad range of industries on domestic and cross-border private and public securities offerings, mergers and acquisitions, tender offers, and international partnering transactions. Mr. MacKay-Dunn was

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appointed Queen’s Counsel in 2003. Mr. MacKay-Dunn is the immediate past Chair of the British Columbia Innovation Council, the Province’s lead agency with the mandate to advance ideas into investment-ready companies in the areas of science and technology, a director of British Columbia Leading Edge Endowment Fund, British Columbia’s C$56 million program to attract top researchers to B.C.’s universities and LifeSciences BC and a former director of Genome British Columbia. Mr. Mackay-Dunn holds a B.A. and LL.B. from the University of British Columbia.

Bruce G. Cousins has served as one of our directors and the Chairman of the Audit Committee since August 2006 and a member of the Nominating Committee since November 2008. Mr. Cousins is a chartered accountant and since April 2009 has been the Vice President and Chief Financial Officer of Ballard Power Systems Inc., a NASDAQ and Toronto Stock Exchange-listed company. From June 2008 to September 2008, Mr. Cousins was the Vice President and Chief Financial Officer of Xantrex Technologies Inc., Toronto Stock Exchange-listed company, which was acquired in 2008 by Schneider Electric S.A., Executive Vice President and Chief Financial Officer of Aspreva Pharmaceuticals Corporation, a NASDAQ and Toronto Stock Exchange-listed company, which was acquired in 2007 by Galenica Group, a Swiss Exchange-listed company, and the World Wide Financial Director for Johnson & Johnson’s, a NYSE-listed company, Wound Management Division. Mr. Cousins holds a B.Com. from McMaster University.

Dr. Heiner Dreismann has served as one of our directors since May 2008 and a member of our Compensation Committee since August 2009. Since July 2008, Dr. Dreismann has been the Interim Chief Executive Officer and lead director of Genenews Limited, a Toronto Stock Exchange-listed molecular diagnostics company, and the Chief Executive Officer of Vectrant Technologies Inc., a life science company. From 2000 to 2006, Dr. Dreismann was the former Chief Executive Officer of Roche Molecular Diagnostics, a division of F. Hoffmann-La Roche Ltd., a pharmaceutical and diagnostics company. Prior to his appointment as Chief Executive Officer, Dr. Dreismann held other senior positions within Roche in the areas of Global Business Development, Business Unit Manager for PCR and Microbiology, as well as research and development positions in microbiology and infectious diseases and in manufacturing. Dr. Dreismann holds a Masters Degree in Biology and a Ph.D. in Microbiology/Molecular Biology from Westfaelische Wilhelms University in Muenster, Germany.

Dennis L. Grimaud has served as one of our directors since February 2008 and a member of our Nominating Committee since November 2008. Mr. Grimaud has over 30 years of experience in the health care industry and over 18 years of experience in biotechnology and molecular diagnostics as an entrepreneur, senior executive and consultant. Since June 2008, Mr. Grimaud has been the Chief Executive Officer of DIATHERIX Laboratories Inc., a clinical laboratory services company. From 2004 to 2006, Mr. Grimaud was the Chief Executive Officer of Genaco Biomedical Products, Inc., a molecular diagnostics company, which was acquired in 2006 by Qiagen, a NASDAQ-listed company. From 1988 to 1999, Mr. Grimaud was the founder and President and Chief Executive Officer of Cytometry Associates, a biomedical company. Mr. Grimaud is a director of Tennessee Commerce Bancorp, Inc., a NASDAQ-listed company.

Dr. Michael R. Hayden, M.B.Ch.B., Ph.D., F.R.C.P.(C) has served as one of our directors since January 2010. Since 1983, Dr. Hayden has been a Professor of Medical Genetics at the University of British Columbia. In 1990, Dr. Hayden founded the Canadian Genetic Diseases Network and serves as its Scientific Director. In 1992, Dr. Hayden founded the Centre for Molecular Medicine and Therapeutics, a gene research centre associated with the University of British Columbia’s Faculty of Medicine, and serves as its director. In 1997, Dr. Hayden co-founded Xenon Pharmaceuticals Inc., a biotechnology company, and continues to serve as its Chief Scientific Officer and on its board of directors. From 2002 to 2007, Dr. Hayden was a founder, director and Chief Medical Advisor of Aspreva Pharmaceuticals Corporation, a NASDAQ and Toronto Stock Exchange-listed company, which was acquired in 2007 by Galenica Group, a Swiss Exchange-listed company. In 1994, Dr. Hayden co-founded Neurovir Inc., a biotechnology company, and served as a board member until 2000. Dr. Hayden holds an M.B.Ch.B. and Ph.D. from the University of Cape Town. Dr. Hayden is also a Fellow of the Royal College of Physicians and Surgeons of Canada, (F.R.C.P.(C)).

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Senator Dr. Wilbert J. Keon, O.C. has served as one of our directors since September 2004. Dr. Keon was a practicing academic surgeon from 1969 to September 2001. He founded the University of Ottawa Heart Institute in 1969, where he was the Chief Executive Officer until April 2004. Dr. Keon was a Professor and the Chairman of the University of Ottawa Department of Surgery for 15 years and was the first Canadian surgeon to implant a total artificial heart as a bridge to transplant. Dr. Keon has held appointments and elected offices in 36 national and international professional associations including Past-President of the Medical Research Council of Canada. He has been honored by his profession with numerous awards as well as by his country as an Officer of the Order of Canada and as a Senator of the Parliament of Canada since 1990. Dr. Keon holds a B.Sc. and an M.D. from the University of Ottawa, an M.Sc. from McGill University, an F.R.C.S.(C) (General Surgery) from the University of Toronto and an F.R.C.S.(C) (Cardiac Surgery) from Harvard University.

Kevin K. Rooney has served as one of our directors since June 2009. Since June 2005, Mr. Rooney has been a co-founding shareholder and Chief Operating Officer of Hayden Bergman Rooney, Professional Corporation, a corporate, securities and mergers and acquisitions boutique law firm in San Francisco that represents clients in the United States and Canada. Mr. Rooney heads the firm’s public company practice. From July 2000 to October 2004, Mr. Rooney was a corporate and securities attorney at Wilson Sonsini Goodrich & Rosati, Professional Corporation, in Palo Alto, California, and from October 2004 to June 2005 a corporate and securities attorney at Davies Ward Phillips & Vineberg LLP in Toronto, Ontario. Mr. Rooney is an Adjunct Professor at USF School of Law teaching Corporate Transactions and a Lecturer at the University of California Berkeley HAAS School of Business co-teaching Business Law (MBA). Mr. Rooney is a member of the TSX Venture Exchange Ontario Local Advisory Board, the Law Society of Upper Canada and The State Bar of California. Mr. Rooney holds a B.A.Sc. (Honors Co-op) in Mechanical Engineering with a Management Science Option from the University of Waterloo and an LL.B. from Dalhousie Law School.

Board of Directors

Our directors are elected at each annual general meeting of our shareholders and serve until their successors are elected or appointed, unless they resign or are removed earlier. Our articles currently provide that the number of directors is set at eight; provided that, between annual general meetings of our shareholders the directors may appoint one or more additional directors, but the number of additional directors may not at any time exceed one-third of the number of the current directors who are then elected or appointed as directors.

Audit Committee and Audit Committee Financial Expert

Our audit committee consists of Messrs. Cousins and Rayson, each of whom is an independent director under The NASDAQ Capital Market’s listing standards and the rules and regulations of the SEC. Mr. Broshko is also currently a member of our audit committee as permitted under applicable Canadian laws and regulations, but will resign from such position prior to the date of this prospectus. Mr. Cousins chairs the committee and is our audit committee financial expert (as is currently defined under the rules and regulations of the SEC). We intend to identify and appoint one additional independent director to our audit committee within one year after the completion of the offering.

The responsibilities of our audit committee will include:

• meeting with our management periodically to consider the scope, adequacy and effectiveness of our internal control over financial reporting and steps taken in the event of material control deficiencies;

• nominating the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services;

• overseeing the independent registered public accounting firm, including reviewing independence and quality control procedures and experience and qualifications of audit personnel that are providing us audit services;

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• meeting with the independent registered public accounting firm and reviewing the progress and findings of their efforts related to the documentation, assessment and testing of internal controls related to compliance with the applicable rules and regulations of the SEC and The NASDAQ Capital Market, and meeting with management regarding these matters; and

• reviewing our financial statements, the adequacy and sufficiency of our internal accounting and financial controls and our reporting practices and procedures, the performance of the auditors, and reporting recommendations to our full board of directors for approval.

Compensation Committee

Our compensation committee consists of Messrs. Dreismann and MacKay-Dunn, each of whom is an independent director under The NASDAQ Capital Market’s listing standards and the rules and regulations of the SEC. Our compensation committee oversees and, as appropriate, makes recommendations to the board of directors regarding the annual salaries and other compensation of our executive officers, our general employee compensation, and other policies, and provides assistance and recommendations with respect to our compensation policies and practices.

Nominating Committee

Our nominating committee consists of Messrs. Cousins, Grimaud and Rayson, each of whom is an independent director under The NASDAQ Capital Market’s listing standards and the rules and regulations of the SEC. The nominating committee is responsible for identifying qualified candidates to the board of directors and making recommendations regarding the size and composition of the board.

Compensation Committee Interlocks and Insider Participation

No member of our board of directors or compensation committee serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

Director Compensation

As of February 1, 2010, with the exception of Dr. Heiner Dreismann who received an option to purchase 1,000 of our common shares and receives $5,000 per month in his capacity as a test development and commercialization consultant to us, each of our non-employee directors is entitled to receive the following compensation in accordance with our current policy on director compensation:

• each non-employee director receives an annual retainer of $1,872;

• each non-employee director receives $468 for each board meeting attended in person ($234 for meetings attended by video or telephone conference);

• each non-employee director, upon their election to the board of directors, receives an initial stock option grant, as well as annual stock option grants to purchase common shares pursuant to the Med BioGene Inc. 2006 Incentive Stock Option Plan at the discretion of the board of directors;

• each of the Chairman of the Board and Chairman of the Audit Committee receives an additional annual retainer of $1,404; and

• the Chairman of the Board receives $234 for each management meeting attended.

All of our directors are reimbursed for out-of-pocket expenses incurred in attending board of director and committee meetings.

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During the year ended December 31, 2009, we accrued $38,220 for unpaid fees to directors pursuant to the above terms and paid out $8,809 in director’s fees.

The above compensation may be amended by the board of directors from time to time at its discretion.

Code of Conduct and Ethics

We intend to adopt prior to the date of this prospectus a code of conduct and ethics applicable to our directors, officers and employees in accordance with the rules of the SEC and The NASDAQ Capital Market.

Executive Compensation

The following table sets forth all compensation awarded to, or earned by our chief executive officer and chief financial officer and each of our other executive officers whose total compensation exceeded $100,000 for services rendered to us during 2009. We refer to these individuals elsewhere in this prospectus as our “named executive officers.”

Summary Compensation Table

Name and Principal Position	Salary ($)	Bonus ($)		Option Awards ($) (1)	All Other Compensation ($)		Total ($)
Erinn Broshko	140,423	69,048	(2)	24,550	10,771	(3)	244,792
Chief Executive Officer
David G. Matthews(4)	128,721	—		16,367	5,579	(5)	150,667
Chief Financial Officer

(1) Represents stock based compensation expense incurred during 2009.

(2) Mr. Broshko elected to receive this amount all in units, where each unit consisted of one common share and one-half of a common share purchase warrant.

(3) Represents health and insurance benefits and payment of law society dues.

(4) Mr.Matthews was appointed as our Chief Financial Officer on January 12, 2009.

(5) Represents health and insurance benefits.

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Option Grants

The following table contains information concerning each option grant made to our directors and named executive officers to date.

Grants of Plan-Based Awards

Name	Grant Date	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)
Erinn B. Broshko Chief Executive Officer	5/17/06	20,000	18.72	287,004
	2/25/09	30,000	4.68	46,163
David G. Matthews Chief Financial Officer	2/25/09	20,000	4.68	30,775
Dr. John H. Rayson	5/17/06	3,000	18.72	43,051
	9/7/07	1,400	15.91	17,091
	2/25/09	3,000	4.68	4,616
R. Hector MacKay-Dunn, Q.C.	5/17/06	2,000	18.72	28,700
	9/7/07	1,000	15.91	12,208
	10/11/07	350	15.91	4,264
	2/25/09	1,000	4.68	1,539
Bruce G. Cousins	5/31/06	3,000	18.72	43,051
	9/7/07	1,400	15.91	17,091
	2/25/09	2,000	4.68	3,078
Dr. Heiner Dreismann	5/29/08	4,000	3.96	24,188
	2/25/09	2,000	4.68	3,078
Dennis L. Grimaud	2/18/09	3,000	15.91	17,814
	7/15/08	1,000	7.02	4,741
	2/25/09	2,000	4.68	3,078
Senator Dr. Wilbert J. Keon, O.C.	5/17/06	3,000	18.72	43,051
	9/7/07	700	15.91	8,545
	2/25/09	1,000	4.68	1,539
Kevin K. Rooney	8/13/09	3,000	4.68	8,175
Dr. Michael Hayden	2/8/10	3,000	6.21	16,392

Employment Agreements and Change in Control Arrangements

Erinn B. Broshko

We entered into an employment agreement with Mr. Broshko, our Chief Executive Officer effective as of May 29, 2006. Mr. Broshko currently receives an annual base salary of $140,423, subject to increases at the discretion of our board of directors. Mr. Broshko is also eligible for a discretionary performance bonus of up to 50% of his annual base salary as determined by our board of directors. Under the agreement, other than in the event of a change in control of us, Mr. Broshko may terminate his employment at any time by giving three months prior written notice of the effective date of his resignation. If we terminate Mr. Broshko’s employment without cause, we are obligated to pay to him a lump sum of 18 months of his then current base salary plus such other sums owed for arrears of salary, vacation pay and any performance bonus. We are also obligated to maintain Mr. Broshko’s benefits during the notice period. If Mr. Broshko obtains a new source of remuneration

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for personal services, the payment of benefits will cease six months from the date of termination of his employment, excluding the notice period.

We entered into a change of control agreement with Mr. Broshko effective as of May 29, 2006. In the event of a potential change in control and until 12 months after a change in control, unless Mr. Broshko terminates his employment with us for good reason, Mr. Broshko will continue to diligently carry out his duties and obligations under his employment agreement. If within 12 months following a change of control of us, Mr. Broshko terminates his employment for good reason, or we terminate his employment other than for cause, we are obligated to pay to Mr. Broshko a lump sum equal to 12 months of his then current base salary plus other sums owed for arrears of salary, vacation pay and any performance bonus. In such case, we are also obligated to maintain Mr. Broshko’s benefits for the 12-month period and his unvested stock options will immediately vest. For example, in the event Mr. Broshko’s employment was terminated upon a change of control as of December 31, 2009, he would have been entitled to receive a lump sum payment of $160,154, less applicable withholding.

David G. Matthews

We entered into an employment agreement with Mr. Matthews, our Chief Financial Officer effective as of January 12, 2009. Mr. Matthews currently receives an annual base salary of $140,423, subject to increases at the discretion of our board of directors. Mr. Matthews is also eligible for a discretionary performance bonus of up to 50% of his annual base salary as determined by our board of directors. Under the agreement, other than in the event of a change in control of us, Mr. Matthews may terminate his employment at any time by giving three months prior written notice of the effective date of his resignation. If we terminate Mr. Matthews’s employment without cause, we are obligated to pay to him a lump sum of seven and one-half months of his then current base salary plus such other sums owed for arrears of salary, vacation pay and any performance bonus. We are also obligated to maintain Mr. Matthews’ benefits during the notice period. If Mr. Matthews obtains a new source of remuneration for personal services, the payment of benefits will cease six months from the date of termination of his employment, excluding the notice period.

We entered into a change of control agreement with Mr. Matthews as of January 12, 2009. In the event of a potential change in control and until 12 months after a change in control, unless Mr. Matthews terminates his employment with us for good reason, Mr. Matthews will continue to diligently carry out his duties and obligations under his employment agreement. If within 12 months following a change of control of us, Mr. Matthews terminates his employment for good reason, or we terminate his employment other than for cause, we are obligated to pay to Mr. Matthews a lump sum equal to 12 months of his then current base salary plus other sums owed for arrears of salary, vacation pay and any performance bonus. In such case, we are also obligated to maintain Mr. Matthews’ benefits for the 12-month period and his unvested stock options will immediately vest. For example, in the event Mr. Matthew’s employment was terminated upon a change of control as of December 31, 2009, he would have been entitled to receive a lump sum payment of $147,444, less applicable withholding.

Confidentiality Agreements and Assignments of Inventions

Under our employment agreements with our named executive officers, each of them has entered into a confidentiality agreement and assignment of inventions and agreed to keep strictly confidential all of our confidential information and all other information belonging to us or acquired by them in any capacity a result of their involvement with us and to inform us and assign to us all inventions conceived or reduced to practice during the term of his employment that make use of confidential information or trade secrets or which relate to our business. Each of our named executive officers has further agreed not to compete with us, solicit our customers or provide services to our customers or solicit our employees or service providers during the term of his employment with us and for six months following his termination.

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Med BioGene Inc. 2006 Incentive Stock Option Plan

Our Med BioGene Inc. 2006 Incentive Stock Option Plan was adopted by our board of directors in February 2006, and approved by our shareholders in March 2006. The Med BioGene Inc. 2006 Incentive Stock Option Plan provides for the grant of stock options to purchase our common shares.

Share Reserve. Pursuant to an amendment dated February 12, 2010, we have reserved an aggregate of 289,480 common shares for issuance under the Med BioGene Inc. 2006 Incentive Stock Option Plan and, following the completion of this offering, the aggregate number of shares reserved under the Med BioGene Inc. 2006 Incentive Stock Option Plan will be a number equal to 20% of the then issued and outstanding common shares, subject to a formula increase each year. The number of common shares in respect of which options may be granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan may be increased, decreased or fixed by our board of directors, as permitted under the applicable rules and regulations of the regulatory authorities and stock exchanges to which we are subject.

Upon the expiration, termination or surrender of an option which has not been exercised in full, the number of common shares reserved for issuance under that option which have not been issued will become available for issue for the purpose of additional options which may be granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan. In addition, the number of common shares reserved for issuance to any one person shall not, in the aggregate, exceed five percent of the total number of our outstanding common shares.

Administration. The compensation committee of our board of directors administers the Med BioGene Inc. 2006 Incentive Stock Option Plan. The compensation committee has the complete discretion to make all decisions relating to the Med BioGene Inc. 2006 Incentive Stock Option Plan.

Eligibility. Our directors, officers, employees and consultants and those of our affiliated companies, or other persons as the compensation committee may approve, are eligible to participate in the Med BioGene Inc. 2006 Incentive Stock Option Plan.

Grant and Exercise of Options. Subject to the terms of the Med BioGene Inc. 2006 Incentive Stock Option Plan, the compensation committee may grant to any eligible person one or more options as it deems appropriate. The compensation committee may also impose such limitations or conditions on the exercise or vesting of any option as it deems appropriate.

The exercise price for options granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan is the fair market value of such shares at the time of grant as determined by the compensation committee, provided that such price may not be less than the lowest price permitted under the applicable rules and regulations of all regulatory authorities to which we are subject, including stock exchanges. Participants in the Med BioGene Inc. 2006 Incentive Stock Option Plan may pay the exercise price by cash, bank draft or certified check, or by such other consideration as the compensation committee may permit.

An option will expire on the date determined by the compensation committee and specified in the option agreement pursuant to which such option is granted, which date shall not be later than the tenth anniversary of the date of grant, or such earlier date as may be required by applicable, law, rules or regulations, including those of any exchange or market on which the common shares are listed or traded. If an optionee’s status as a director, officer, employee or consultant terminates for any reason other than death or termination for cause, the option will expire on the date determined by the compensation committee and specified in the option agreement, which date will not be later than three months after the termination of such status. If the optionee’s status as a director, officer, employee or consultant is terminated for cause, the option shall terminate immediately. In the event that the optionee dies before otherwise ceasing to be a director, officer, employee or consultant, or before the expiration of the option following such a termination, the option will expire one year after the date of death, or on such other date determined by the compensation committee and specified in the option agreement.

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Notwithstanding the foregoing, except as expressly permitted by our compensation committee, all stock options will cease to vest as at the date upon which the optionee ceases to be eligible to participate in the Med BioGene Inc. 2006 Incentive Stock Option Plan.

Options intended to qualify as an “incentive stock option”, as that term is defined in Section 422 of the Internal Revenue Code, may be granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan. To the extent required by the Internal Revenue Code, these options are subject to additional terms and conditions as set out in the Med BioGene Inc. 2006 Incentive Stock Option Plan.

Change in Control. In the event of a merger or acquisition transaction that results in a change of control of us, the compensation committee may, at its option, take any of the following actions: (a) determine the manner in which all unexercised option rights granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan will be treated, including the acceleration of such stock options; (b) offer any participant under the Med BioGene Inc. 2006 Incentive Stock Option Plan the opportunity to obtain a new or replacement option, if applicable; or (c) commute for or into any other security or any other property or cash, any option that is still capable of being exercised.

Transferability. Options granted under the Med BioGene Inc. 2006 Incentive Stock Option Plan are not transferable or assignable and may be exercised only by the optionee, subject to exceptions in the event of the death or disability of the optionee.

Amendments or Termination. The Med BioGene Inc. 2006 Incentive Stock Option Plan will terminate on February 13, 2016. Our compensation committee has the right at any time to suspend, amend or terminate the Med BioGene Inc. 2006 Incentive Stock Option Plan subject to certain exceptions.

Limitations on Directors’ Liability and Indemnification

Under the British Columbia Business Corporations Act, or BCBCA, we may indemnify an individual who:

• is or was our director or officer;

• is or was a director or officer of another corporation: (a) at the time when such corporation is or was an affiliate of ours; or, (b) at our request; or

• at our request, is or was, acting in a similar capacity of a partnership, trust, joint venture or other unincorporated entity,

against a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of any legal proceeding or investigative action, whether current, threatened, pending or completed, in which such eligible party is involved because of that association with us or other entity.

However, indemnification is prohibited under the BCBCA if:

• such eligible party did not act honestly and in good faith with a view to our best interests (or the other entity, as the case may be); and

• in the case of a proceeding other than a civil proceeding, such eligible party did not have reasonable grounds for believing that such person’s conduct was lawful.

We may not indemnify or pay the expenses of an eligible party in respect of an action brought against an eligible party by or on behalf of us.

The BCBCA allows us to pay, as they are incurred in advance of a final disposition of a proceeding, the expenses actually and reasonably incurred by the eligible party, provided that, we receive from such eligible party an undertaking to repay the amounts advanced if it is ultimately determined that such payment is prohibited.

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Despite the foregoing, on application by us or an eligible party, a court may:

• order us to indemnify an eligible party in respect of an eligible proceeding;

• order us to pay some or all of the expenses incurred by an eligible party in an eligible proceeding;

• order enforcement of or any payment under an indemnification agreement;

• order us to pay some or all of the expenses actually and reasonably incurred by a person in obtaining the order of the court; and

• make any other order the court considers appropriate.

The BCBCA provides that we may purchase and maintain insurance for the benefit of an eligible party (or their heirs and personal or other legal representatives of the eligible party) against any liability that may be incurred by reason of the eligible party being or having been a director or officer, or in an equivalent position of ours or that of an associated corporation.

Our articles provide that, subject to the BCBCA, we must indemnify our directors, former directors or alternate directors and his or her heirs and legal personal representatives against all judgments, penalties or fines awarded or imposed in, or an amount paid in settlement of, all legal proceedings, investigative actions or other eligible proceedings (whether current, threatened, pending or completed) to which such person is or may be liable, and we must, after the final disposition of a legal proceeding, investigative action or other eligible proceeding, pay the expenses (which includes costs, charges and expenses, including legal and other fees but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding) actually and reasonably incurred by such person in respect of that proceeding.

We maintain liability insurance which insures our directors and officers against certain losses and which insures us against our obligations to indemnify our directors and officers.

We have entered into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our certificate of incorporation and bylaws. These agreements, among other things, provide for indemnification of our directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by any such person in any action or proceeding arising out of such person’s services as a director or officer or at our request.

At present, we are not aware of any pending or threatened litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification would be required or permitted.

We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers. There is no pending litigation or proceeding involving any of our directors, officers, employees or agents. We are not aware of any pending or threatened litigation or proceeding that might result in a claim for indemnification by a director, officer, employee or agent.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Consulting Agreement

On May 27, 2008, we entered into a consulting agreement with Dr. Heiner Dreismann, one of our directors, in his capacity as a test development and commercialization consultant. In accordance with the terms of the agreement, on May 29, 2008, Dr. Dreismann was granted an option to purchase 4,000 of our common shares, representing 1,000 common shares for his services as a consultant and 3,000 common shares for serving as one of our directors. In 2009, we paid fees and expenses under such agreement totalling $62,069.

In 2007, we paid $11,284 to the spouse of a former Chief Scientific Officer and a then significant shareholder. Her employment with us ceased on July 31, 2007.

Financing Activities

Berkeley Capital Corp. II, a capital pool company previously listed on the TSX Venture Exchange (TSXV: BIZ.P), participated as lead investor in our June 2009 non-brokered private placement of units. Each unit consisted of one common share and one-half of a common share purchase warrant. Concurrent with the closing of the private placement, Kevin K. Rooney, then a director of and legal counsel to Berkeley Capital Corp. II, was appointed as one of our directors. In consideration of Berkeley Capital Corp. II incurring certain expenses associated with completing the investment, we reimbursed $44,668 of Berkeley Capital Corp. II’s legal fees, including out-of-pocket costs, owing to Hayden Bergman Rooney, Professional Corporation, a law firm of which Mr. Rooney is a shareholder. Such payment was satisfied by the issuance to Hayden Bergman Rooney, Professional Corporation, of 12,500 units in the private placement. In addition, Mr. Rooney separately purchased 7,500 units in the private placement on June 25, 2009.

Legal Fees

We retain Farris, Vaughan, Wills & Murphy LLP, a law firm where R. Hector MacKay-Dunn, Q.C., a member of our board of directors and our Corporate Secretary, is a senior partner. In 2009, 2008 and 2007, we incurred legal fees payable to Farris, Vaughan, Wills & Murphy LLP of $89,308, $86,658 and $45,296, respectively.

In connection with this offering, we have retained Hayden Bergman Rooney, Professional Corporation, a law firm where Kevin K. Rooney, a member of our board of directors, is a shareholder and the Chief Operating Officer. During 2009, we incurred legal fees payable to Hayden Bergman Rooney, Professional Corporation, of $124,567.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of our common shares as of February 8, 2010 by:

• each person or entity who is known by us to own beneficially more than 10% of our outstanding shares;

• each of our officers and directors; and

• all of our officers and directors as a group.

Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power, or of which a person has the right to acquire ownership within 60 days after February 8, 2010. Except as otherwise noted, each person or entity has sole voting and investment power with respect to the shares shown.

We have not included beneficial ownership by our shareholders of 5% or more since the information in the table below is based upon publicly available information from System for Electronic Disclosure by Insiders (SEDI) in Canada, which limits reporting by such shareholders to only those persons or entities holding 10% or more of our outstanding shares.

As of November 23, 2009, a total of 13 of our shareholders holding an aggregate of 37,599 common shares, or approximately 2.6% of our outstanding shares as of February 1, 2010, were registered in the United States.

Applicable percentage ownership in the following table is based on 1,447,489 common shares outstanding as of February 8, 2010 and as adjusted for the sale of our common shares offered by this prospectus.

Name and Address(1)	Amount and Nature of Beneficial Ownership	Percent of Shares Outstanding
		Before Offering		After Offering(2)
Erinn B. Broshko(3)	108,644	7.2	%		%
Kevin K. Rooney(4)	62,271	4.3
David G. Matthews(5)	15,556	1.1
Dr. John H. Rayson(6)	7,533	*
Bruce G. Cousins(7)	6,844	*
R. Hector MacKay-Dunn, Q.C(8)	4,128	*
Dr. Heiner Dreismann(9)	5,556	*
Dennis L. Grimaud(10)	5,556	*
Senator Dr. Wilbert J. Keon, O.C(11)	4,478	*
Michael R. Hayden	—	—
All directors and executive officers as a group (9 persons)(12)	220,566	14.3	%		%

 * Less than 1% of our outstanding common shares.

(1) Unless otherwise indicated, the address for each shareholder listed in the following table is c/o Med BioGene Inc., 300-2386 East Mall, Gerald McGavin Building, Vancouver, British Columbia, Canada V6T 1Z3.

(2) Assumes no purchases of common shares in this offering by the listed persons.

(3) Includes options to purchase 43,333 common shares, warrants to purchase 13,997 common shares and 1,170 shares held by Mr. Broshko’s spouse.

(4) Includes options to purchase 1,333 common shares and warrants to purchase 3,750 common shares. Also includes 13,833 common shares and warrants to purchase 7,583 common shares held by Bay Bridge Partners II, LLC, which is owned one-third by Mr. Rooney and of which Mr. Rooney is a managing member and a director. Also includes 12,537 common shares and warrants to purchase 6,268 common shares held on behalf of Bay Bridge Partners II, LLC. Mr. Rooney disclaims beneficial ownership of the common shares

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held by or on behalf of Bay Bridge Partners II, LLC except to the extent of his pecuniary interest therein. Mr. Rooney’s address is 501 Beale Street, Unit 9H, San Francisco, California 94105.

(5) Includes options to purchase 15,556 common shares and warrants to purchase 165 common shares.

(6) Includes options to purchase 6,733 common shares held by Dr. Rayson and 400 common shares and warrants to purchase 400 common shares held by La Raison D’etre Holdings Ltd., a company whose sole shareholder is Mr. Rayson’s spouse. Mr. Rayson disclaims beneficial ownership in the securities held by La Raison D’etre Holdings Ltd.

(7) Includes options to purchase 5,956 common shares held by Mr. Cousins and 444 common shares and warrants to purchase 444 common shares held by Mr. Cousins’ spouse.

(8) Includes options to purchase 4,128 common shares.

(9) Includes options to purchase 5,556 common shares.

(10) Includes options to purchase 5,556 common shares.

(11) Includes options to purchase 4,478 common shares.

(12) Includes, without duplication, the common shares listed in footnotes (3) through (11) above.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of the rights of our common shares and preferred shares as set forth in our notice of articles and articles, and certain related sections of the BCBCA. For more detailed information, please see our notice of articles and articles, which are filed as exhibits to the registration statement of which this prospectus is a part.

Our authorized capital stock consists of an unlimited number of common shares, each without par value, and an unlimited number of preferred shares issuable in series, each without par value, none of which are designated.

As of February 8, 2010, we had issued and outstanding 1,447,489 common shares and no preferred shares. As of February 8, 2010, we had outstanding warrants to purchase 635,493 common shares and options to purchase 147,650 common shares.

Upon completion of this offering, based upon the common shares outstanding as of February 8, 2010, we will have [            ] common shares and no preferred shares issued and outstanding.

Share Capital

Common Shares

The holders of our common shares are entitled to one vote for each share held at any meeting of the shareholders. Subject to the prior rights of the holders of our preferred shares, the holders of our common shares are entitled to receive dividends as and when declared by our board of directors. Subject to the prior payment to the holders of our preferred shares, in the event of our liquidation, dissolution or winding-up or other distribution of our assets among our shareholders, the holders of our common shares are entitled to share pro rata in the distribution of the balance of our assets.

Preferred Shares

Our preferred shares may be issued in one or more series. Our board of directors may alter our notice of articles and articles to fix the number of preferred shares in, and to determine the designation of the shares of, each series and to create, define and attach rights and restrictions to the shares of each series, subject to the rights and restrictions attached to our preferred shares as a class. The preferred shares are entitled to preference over the common shares with respect to the payment of dividends and the distribution of assets in the event of our liquidation, dissolution or winding-up or other distribution of our assets among our shareholders. If any amount of cumulative dividends (whether or not declared) or declared non-cumulative dividends or any amount payable on any such distribution of assets constituting a return of capital in respect of the preferred shares or any series is not paid in full, the preferred shares of that series shall participate rateably with the preferred shares of every other series in respect of such dividends and amounts.

Escrowed Shares

On June 5, 2009, as a part of our private placement financing completed on such date, we received from Berkeley Capital Corp. II, a former TSX Venture Exchange-listed company, an investment in the amount of $556,802. Our units issued to Berkeley Capital Corp. II in the private placement were distributed pro rata to Berkeley Capital Corp. II’s shareholders and the company was subsequently dissolved. Our securities distributed to the insiders of Berkeley Capital Corp. II then subject to escrow obligations in accordance with TSX Venture Exchange policy were placed in escrow in place of their former shares of Berkeley Capital Corp. II that were cancelled. In order to satisfy this escrow requirement, we entered into an assignment agreement dated June 5, 2009 whereby we assumed the Berkeley Capital Corp. II escrow agreement dated August 31, 2007 and an

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aggregate of 84,627 (approximately 7%) of our common shares and an aggregate of 42,313 warrants to purchase our common shares were placed in escrow. Under TSX Venture Exchange policy and the terms of the escrow agreement, 10% of the escrowed securities were released on June 16, 2009, and 15% of the escrowed securities were, and continue to be, released every nine months thereafter. Upon completion of the offering, we expect to graduate our listing from the TSX Venture Exchange to the Toronto Stock Exchange and the release of the escrowed securities will be accelerated to 25% released on June 16, 2009 and 25% released every six months thereafter, on a retrospective basis.

On October 8, 2009, as a part of our private placement financing completed on such date, we received from SEP Capital Corporation, a former TSX Venture Exchange-listed company, an investment in the amount of $351,204. Our units issued to SEP Capital Corporation in the private placement were distributed pro rata to SEP Capital Corporation’s shareholders and the company was subsequently dissolved. Our securities distributed to the insiders of SEP Capital Corporation then subject to escrow obligations in accordance with TSX Venture Exchange policy were placed in escrow in place of their former shares of SEP Capital Corporation that were cancelled. In order to satisfy this escrow requirement, we entered into an assignment agreement dated September 11, 2009 whereby we assumed the SEP Capital Corporation escrow agreement dated February 6, 2006 and an aggregate of 55,308 (approximately 4%) of our common shares and an aggregate of 27,654 warrants to purchase our common shares were placed in escrow. Under TSX Venture Exchange policies, 10% of the escrowed securities were released on December 29, 2009, and 15% of the escrowed securities were, and continue to be, released every nine months thereafter. Upon completion of the offering, we expect to graduate our listing from the TSX Venture Exchange to the Toronto Stock Exchange issuer and the release of the escrowed securities will be accelerated to 25% released on December 29, 2009 and 25% released every six months thereafter, on a retrospective basis.

Key Provisions of our Notice of Articles, Articles and BCBCA

The following is a summary of certain key provisions of our notice of articles and articles and certain related sections of the BCBCA. Please note that this is only a summary and is not intended to be exhaustive. For further information please refer to the full version of our notice of articles and articles which are included as an exhibit to the registration statement of which this prospectus is a part.

Stated Objects or Purposes

Our notice of articles and articles do not contain stated objects or purposes and do not place any limitations on the business that we may carry on.

Directors

Power to Vote on Matters in Which a Director is Materially Interested. The BCBCA and our articles state that a director who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with his or her duty or interest as a director must disclose the nature and extent of the conflict in accordance with the provisions of the BCBCA.

A director who holds a disclosable interest in respect of any contract or transaction into which we have entered or propose to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all our directors have a disclosable interest in that contract or transaction, in which case any or all of our directors may vote on such resolution. A director having a disclosable interest who is present at the meeting of our directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

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A director holds a disclosable interest in a contract or transaction if: (a) the contract or transaction is material to us; (b) we have entered, or propose to enter, into the contract or transaction; and (c) either of the following applies to the director:

• the director has a material interest in the contract or transaction; or

• the director is a director or senior officer of, or has a material interest in, a person who has a material interest in the contract or transaction.

Under the BCBCA, a director does not hold a disclosable interest merely because:

• the contract or transaction is an arrangement by way of security granted by us for money loaned to, or obligations undertaken by, the director or a person in whom the director has a material interest, for our benefit or for the benefit of an affiliate of ours;

• the contract or transaction relates to an indemnity or insurance of officers and directors under the BCBCA;

• the contract or transaction relates to the remuneration of the director in that person’s capacity as director, officer, employee or agent of ours or an affiliate of ours;

• the contract or transaction relates to a loan to us, and the director or a person in whom the director has a material interest, is or is to be a guarantor of some or all of the loan; or

• the contract or transaction has been or will be made with or for the benefit of a corporation that is affiliated with us and the director is also a director or senior officer of that corporation or an affiliate of that corporation.

Directors’ Power to Determine the Compensation of Directors. Our articles provide that the remuneration of our directors, if any, may be determined by our directors or, if our directors so decide, by our shareholders. Such remuneration may be in addition to any salary or other remuneration paid to any of our officers or employees who are also directors.

Our articles also provide that we must reimburse our directors for reasonable expenses they incur on our behalf and, if any director performs any professional or other services for us that in the opinion of our directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about our business, he or she may be paid a remuneration fixed by our directors, or, at the option of such a director, fixed by ordinary resolution of our shareholders. Such remuneration may be either in addition to, or in substitution for, any other remuneration that the director may be entitled to receive. Our board of directors, unless otherwise determined by ordinary resolution of our shareholders, may also pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with us or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension, or allowance.

Borrowing Powers Exercisable by the Board of Directors. Our articles provide that our directors may authorize us to:

• borrow money in such manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

• issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation of us or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

• guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

• mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of our present and future assets and undertaking.

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Any deviation from the foregoing borrowing powers requires an amendment to our articles, which requires a special resolution of our shareholders. Such a resolution is not effective until it is deposited at our records office. A special resolution means a resolution passed by: (a) a majority of not less than 2/3 of the votes cast by our shareholders who, being entitled to do so, vote in person or by proxy at a general meeting, or (b) a resolution consented to in writing by all of the shareholders holding shares that carry the right to vote at general meetings.

Retirement or Non-Retirement of Directors Under an Age Limit Requirement. Our notice of articles and articles do not impose any mandatory age-related retirement or non-retirement requirement for our directors.

Number of Shares Required to be Owned by a Director. Our articles provide that a director is not required to hold a share in our capital stock as a qualification for his or her office.

Action Necessary to Change the Rights of Holders of Our Shares

Our shareholders can authorize the alteration of our notice of articles and articles to create or vary the special rights or restrictions attached to any of our shares by passing a special resolution. Such a special resolution will not be effective until, in the case of an amendment to our notice of articles, a notice of alteration is filed with the Registrar of Companies and, in the case of an amendment to our articles, that resolution is deposited at our records office. However, a right or special right attached to any issued shares may not be prejudiced or interfered with unless the shareholders holding shares to which the right or special right is attached consent by a special separate resolution.

Shareholder Meetings

We must hold an annual general meeting of our shareholders at least once every calendar year at a time and place determined by our board of directors, provided that the meeting must not be held later than 15 months after the preceding annual general meeting. A meeting of our shareholders may be held anywhere in North America.

Our directors may, at any time, call a meeting of our shareholders. Shareholders holding not less than five percent of our issued voting shares may also cause our directors to hold a general meeting.

A notice convening a general meeting, specifying the date, time, and location of the meeting, and, where a meeting is to consider special business, the general nature of the special business, must be given to shareholders not less than 21 days prior to the meeting. Shareholders entitled to notice of a meeting may waive or reduce the period of notice for such meeting. The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any person entitled to notice does not invalidate any proceedings at that meeting.

A quorum for general meetings is two persons present and being, or representing by proxy, shareholders holding in the aggregate not less than 20% of the issued shares entitled to be voted at the meeting. If within half an hour from the time set for a general meeting, a quorum is not present, the meeting, if convened by requisition of shareholders, will be dissolved; but otherwise it will stand adjourned to the same day in the next week at the same time and place without any requirement to give notice of the adjourned to meeting to shareholders. If at such adjourned meeting a quorum is not present within half an hour from the time set for the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum. We have applied to The NASDAQ Capital Market for an exemption to the minimum quorum requirements for meetings of shareholders.

Holders of our common shares are entitled to attend general meetings. Our directors, our president (if any), our secretary (if any), our assistant secretary (if any), our lawyer, our auditor and any other persons invited by our directors are entitled to attend at any meeting of our shareholders but will not be counted in the quorum or be entitled to vote at the meeting unless he or she is a shareholder or proxyholder entitled to vote at the meeting.

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Limitations on the Right to Own Securities

Neither our notice of articles nor our articles provide for any limitations on the rights to own our securities. See also “Description of Capital Stock—Exchange Controls.”

Change of Control

Neither our notice of articles nor our articles contain any change of control limitations with respect to a merger, acquisition or corporate restructuring that involves us. However, our shareholder rights plan, effective January 15, 2010, requires, among other things, that anyone who seeks to acquire 20% or more of our outstanding common shares make a bid in compliance with special provisions in the plan.

Shareholder Ownership Disclosure

Although U.S. and Canadian securities laws regarding shareholder ownership by certain persons require certain disclosure, our articles do not provide for any ownership threshold above which shareholder ownership must be disclosed.

Shareholder Rights Plan

We have implemented a shareholder rights plan effective January 15, 2010. Under our rights plan, each of our common shares will have associated with it one “right”. Each of these rights entitles its holder to acquire additional common shares at a 50% discount from the then prevailing market price under circumstances provided for in the rights plan. The purpose of our rights plan is to:

• facilitate the maximization of stockholder values if a substantial portion of our common shares is acquired by any person;

• protect us and our stockholders from abusive acquisition tactics which may not be in our or our stockholders’ best interest; and

• provide a framework within which appropriate take-over bids can be put before our stockholders in a manner that allows our stockholders to make a fully-informed decision with respect to such take-over bids.

The exercise of the rights under our rights plan would cause substantial dilution to a person attempting to acquire us on terms not permitted by the rights plan or otherwise approved by our board of directors, and therefore would significantly increase the price that such person would have to pay to complete the acquisition. Our rights plan may deter a potential acquisition or take-over bid. Until the “separation time” occurs, the rights will:

• not be exercisable;

• be represented by the same certificate that represents the common shares with which the rights are associated; and

• trade together with those common shares.

Unless the shareholder rights plan is re-confirmed by our shareholders at our 2015 annual meeting, the rights will terminate at the close of business on the date of that meeting, unless the rights have been earlier redeemed by us. Following the “separation time”, the rights would become exercisable and we would issue separate certificates representing the rights, which would trade separately from our common shares. However, a holder of rights will not, as such, have any rights as a stockholder, such as the right to vote or receive dividends. The “separation time” would occur upon the earlier of:

• 10 business days after a public announcement by us or by an “acquiring person” that the person has become an “acquiring person”; or

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• 10 business days after a person commences or announces its intention to commence a take-over bid that, if successful, would result in the person becoming an “acquiring person.”

Under our rights plan, a person will become an “acquiring person” if the person, alone or together with a group, acquires beneficial ownership of 20% or more of our outstanding voting shares. However, an “acquiring person” will not include us, any of our subsidiaries, or any of our employee benefit plans or any person or entity acting pursuant to such employee benefit plans, and a person who becomes the beneficial owner of 20% or more of our voting shares as a result of share acquisitions made pursuant to a “permitted bid” will not be an “acquiring person.” A “permitted bid” is an offer to acquire 20% or more of our voting shares made in compliance with all applicable laws and certain other conditions, which are intended to ensure equal treatment for all of our stockholders and to provide our stockholders with sufficient time in which to evaluate the offer. Our rights plan will also contain provisions designed to prevent inadvertent triggering of the rights by institutional or certain other stockholders.

If any person becomes an acquiring person, each holder of a right, other than the acquiring person, will be entitled to purchase, at the exercise price, a number of our common shares having a market value of two times the exercise price. The initial exercise price of a right, which is subject to adjustment, is $100.00.

At any time until the “separation time”, our board of directors may redeem all of the rights at a redemption price of $0.001 per right. Upon such redemption, the rights will terminate and the only entitlement of the holders of rights will be to receive the redemption price.

Our board of directors may amend any provisions in the rights plan without stockholder consent, provided that on or after the first date of public announcement by us or an acquiring person that the person has become an acquiring person, no amendment may be made that would materially and adversely affect the interest of the holders of the rights.

Warrants

As of February 8, 2010, there were outstanding warrants to purchase 635,493 common shares with a weighted average exercise price of $12.62 per share, as set forth in the following table:

Issuance Date	Description	Number Outstanding	Weighted Average Exercise Price ($)		Expiration Date
June 1, 2007(1)	Unit warrants issued in 2007 private placement (tranche one)	136,320	$	30.68	June 1, 2010
June 1, 2007(2)	Warrants issued as agent’s fee in 2007 private placement (tranche one)	9,329	$	21.24	June 1, 2010
June 29, 2007(1)	Unit warrants issued in 2007 private placement (tranche two)	13,550	$	30.68	June 29, 2010
June 29, 2007(2)	Warrants issued as agent’s fee in 2007 private placement (tranche two)	1,016	$	21.24	June 29, 2010
August 7, 2008(3)	Unit warrants issued in 2008 public offering (tranche one)	106,997	$	9.44	August 7, 2010
August 7, 2008(4)	Warrants issued as agent’s fee in 2008 public offering (tranche one)	15,581	$	7.08	August 7, 2010
September 18, 2008(3)	Unit warrants issued in Canadian 2008 secondary offering (tranche two)	14,690	$	9.44	September 18, 2010

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Issuance Date	Description	Number Outstanding	Weighted Average Exercise Price ($)		Expiration Date
September 18, 2008(4)	Warrants issued as agent’s fee in Canadian 2008 secondary offering (tranche two)	2,204	$	7.08	September 18, 2010
June 5, 2009(5)	Unit warrants issued in 2009 private placement (tranche one)	154,235	$	4.72	June 5, 2011
June 5, 2009(5)	Warrants issued as agent’s fee in 2009 private placement (tranche one)	8,554	$	4.72	June 5, 2011
June 25, 2009(5)	Unit warrants issued in 2009 private placement (tranche two)	52,015	$	4.72	June 25, 2011
June 25, 2009(5)	Warrants issued as agent’s fee in 2009 private placement (tranche two)	5,842	$	4.72	June 25, 2011
October 8, 2009(5)	Unit warrants issued in 2009 private placement (tranche three)	46,250	$	4.72	October 8, 2011
October 8, 2009(5)	Warrants issued as agent’s fee in 2009 private placement (tranche three)	3,125	$	4.72	October 8, 2011
December 24, 2009(5)	Unit warrants issued in December 2009 private placement	58,320	$	8.50	December 24, 2011
December 24, 2009(5)	Warrants issued as agent’s fee in December 2009 private placement	7,465	$	8.50	December 24, 2011
	Balance of February 1, 2010 (unaudited)	635,493	$	12.62

(1) Each warrant entitles the holder to purchase one common share at a price of $31.05 per share for a period of 36 months following the closing date of the applicable offering; provided that we can accelerate the expiry date for such warrants if the closing price of our common shares on the TSX Venture Exchange is greater than $37.74 for 20 or more consecutive trading days.

(2) Each warrant entitles the holder to purchase one unit at a price of $21.00 where each unit entitles the holder to purchase one common share and one common share purchase warrant, which warrant allows the holder to purchase one common share at a price of $31.05 per share for a period of 36 months following the closing date of the applicable offering; provided that we can accelerate the expiry date for such warrants if the closing price of our common shares on the TSX Venture Exchange is greater than $37.74 for 20 or more consecutive trading days.

(3) Each warrant entitles the holder thereof to purchase one common share at a price of $9.56 for a period of 24 months following the closing date of the applicable offering; provided that we can accelerate the expiration of the warrants if over a period of 20 consecutive trading days, the daily volume weighted average trading price of our common shares on the TSX Venture Exchange exceeds $19.00.

(4) Each warrant entitles the holder thereof to purchase one common share at a price of $7.17 for a period of 24 months following the closing date of the applicable offering; provided that we can accelerate the expiration of the warrants if over a period of 20 consecutive trading days, the daily volume weighted average trading price of our common shares on the TSX Venture Exchange exceeds $19.00.

(5) Each warrant entitles the holder thereof to purchase one common share at a price of $4.78 for a period of 24 months following the closing date of the applicable offering; provided that, we can accelerate the expiration of the warrants if the closing price of the Company’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $14.00 for 20 or more consecutive trading days.

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Options

As of February 8, 2010, there were outstanding options to purchase 147,650 common shares at a weighted average exercise price of $9.61 per share, as set forth in the following table:

Options Outstanding			Options Exercisable
Exercise Price ($)	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price ($)
4.78	83,500	4.2	44,389	4.78
6.45	7,000	4.8	778	6.45
6.21	3,000	5.0	—	6.21
7.17	1,000	3.5	944	7.17
8.12	4,000	3.4	4,000	8.12
16.24	14,550	2.9	14,550	16.24
19.11	34,000	1.4	34,000	19.11
28.19	600	2.1	600	28.19
	147,650		99,261

Auditor, Transfer Agent and Registrar

Our auditors are PricewaterhouseCoopers LLP, Chartered Accountants, 250 Howe Street, Suite 700, Vancouver, British Columbia V6C 3S7.

Upon the closing of this offering, the transfer agent and registrar for our common shares in the United States will be Computershare Trust Company, N.A. in Golden, Colorado and in Canada will be Computershare Investor Services Inc. in Vancouver, British Columbia and Toronto, Ontario.

The NASDAQ Capital Market Listing and Toronto Stock Exchange Listing

Our common shares are listed on the TSX Venture Exchange under the symbol “MBI.” We have applied for listing of our common shares on The NASDAQ Capital Market under the symbol “MBGI.” Furthermore, we have applied to graduate the listing of our common shares on the TSX Venture Exchange to the Toronto Stock Exchange under the symbol “MBI”.

Exchange Controls

Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition of Canada, or Commissioner, to review any acquisition of control over a significant interest in us. This legislation grants the Commissioner jurisdiction, for up to one year, to challenge this type of acquisition before the Canadian Competition Tribunal if the Commissioner believes that it would, or would be likely to, substantially reduce or prevent competition in any market in Canada.

This legislation also requires any person who intends to acquire our common shares to file a notification with the Canadian Competition Bureau if certain financial thresholds are exceeded, and that person would hold more than 20% of our common shares. If a person already owns 20% or more of our common shares, a notification must be filed when the acquisition would bring that person’s holdings to over 50%. Where a notification is required, the legislation prohibits completion of the acquisition until the expiration of a statutory waiting period, unless the Commissioner provides written notice that he or she does not intend to challenge the acquisition.

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There is no law, governmental decree or regulation in Canada that restricts the export or import of capital, or which would affect the remittance of dividends or other payments by us to non-resident holders of our common shares, other than withholding tax requirements.

There is no limitation imposed by Canadian law or our notice of articles or articles on the right of non-residents to hold or vote our common shares, other than those imposed by the Investment Canada Act (Canada), or Investment Act.

The Investment Act requires each individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a “Canadian” as defined in the Investment Act, referred to in this discussion as a “non-Canadian” who commences a new business activity in Canada or acquires control of an existing Canadian business, where the establishment or acquisition of control is not a reviewable transaction, to file a notification with Industry Canada. The Investment Act generally prohibits the implementation of a reviewable transaction by a non-Canadian unless after review the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. Whether or not an investment is reviewable, the Investment Act also provides for a review of investments that the Minister responsible for the Investment Act, after consultation with the Minister of Public Safety and Emergency Procedures, considers could be injurious to Canadian national security. An investment in our common shares by a non-Canadian would be reviewable under the Investment Act if it were an investment to acquire control of us and the value of our assets were C$5.0 million or more. The Investment Act provides for special review thresholds for World Trade Organization, or WTO, member country investors, including United States investors. Under the Investment Act, an investment in our common shares by a non-Canadian who is a “WTO investor” (as defined in the Investment Act) would be reviewable only if it were an investment to acquire control of us and the value of our assets was equal to or greater than a specified amount, which increases in stages. The specified amount is C$312 million in 2009. The threshold amount is subject to an annual adjustment on the basis of a prescribed formula in the Investment Act to reflect inflation and real growth within Canada. Pursuant to amendments to the Investment Act that have received royal assent but have not yet been implemented, the threshold amount will be increased to C$600 million and then raised to C$1 billion over a four year period, and adjusted annually thereafter.

The acquisition of a majority of the voting interests of an entity or of a majority of the undivided ownership interests in the voting shares of an entity that is a corporation is deemed to be acquisition of control of that entity. The acquisition of less than a majority but one-third or more of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is presumed to be acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquiror through the ownership of voting shares. The acquisition of less than one-third of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is deemed not to be acquisition of control of that corporation. Certain transactions in relation to our common shares would be exempt from review from the Investment Act, including:

• acquisition of our common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;

• acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and

• acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of voting interests, remains unchanged.

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SHARES ELIGIBLE FOR FUTURE SALE

Although our common shares are currently listed in Canada on the TSX Venture Exchange, prior to this offering, there has been no public market for our common shares in the United States, and we cannot predict the effect, if any, that market sales of shares of our common shares or the availability of common shares for sale in the United States will have on the market price of our common shares prevailing from time to time. Nevertheless, sales of substantial amounts of our common shares in the public market could adversely effect the market price of our common shares and could impair our future ability to raise capital through the sale of our equity securities.

Upon completion of this offering, we will have [            ] shares of our common shares outstanding, assuming no exercise of the underwriter’s over-allotment option and no exercise of outstanding options after the date of this offering. Of the outstanding shares, all of the shares sold in this offering and [            ] shares currently listed in Canada will be freely tradeable in the United States, except that any shares held by our “affiliates” as that term is defined in Rule 144 promulgated under the Securities Act, may only be sold in compliance with the limitations described below. The remaining common shares will be deemed “restricted shares” as defined under Rule 144. Restricted shares may be sold in the public market in the United States only if registered or if they qualify for an exemption from registration under Rule 144, which is summarized below. Subject to the lock-up agreements described in “Underwriting” and the provisions of Rule 144, additional shares will be available for sale in the public market in the United States as follows:

Eligibility of Shares for Sale in Public Market

Days after Date of this Prospectus	Shares Eligible for Sale	Comment
Upon completion of this offering		Shares sold in this offering and shares currently listed in Canada.
Upon completion of this offering		Shares saleable under Rule 144 that are not subject to lock-up.
90 days		Shares saleable under Rule 144 that are not subject to lock-up.
180 days		Shares that become saleable under Rule 144 upon expiration of 180-day lock-up.

Lock-Up Agreements

All of our officers, directors and certain other shareholders of our common shares as of [            ] have agreed that, without prior written consent of Rodman & Renshaw, LLC, they will not offer, sell, contract to sell, pledge, grant any option to sell, or otherwise dispose of, directly or indirectly, any of our common shares or securities convertible into or exercisable for our common shares, or warrants or other rights to purchase our common shares during the 180-day period following the date of this prospectus. See “Underwriting—No Sales of Similar Securities.”

The lock-up agreement with a former officer and director allows for sales of common shares for aggregate gross proceeds up to C$30,000 during the lock-up period. In addition, Rodman & Renshaw, LLC, may, in its sole discretion, permit early release of shares subject to the lock-up agreements. In considering any request to release shares subject to lock-up agreements, Rodman & Renshaw, LLC will consider the possible impact of the release of the shares on the trading price of the stock sold in the offering. Rodman & Renshaw, LLC does not have any present intention or any understandings, implicit or explicit, to release any of the shares subject to the lock-up agreements prior to the expiration of the lock-up periods described above.

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Escrowed Shares

Certain of our outstanding common shares, including held by certain of one of our current directors, are held in escrow pursuant to the rules of the TSX Venture Exchange. See “Management—Escrowed Shares.”

Rule 144

As a general matter, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who (i) is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale made under Rule 144, and (ii) has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirement of Rule 144. In addition, if such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

Persons who have beneficially owned restricted shares of our common shares for at least six months but who are our affiliates at the time of, or any time during the three months preceding, a sale, are subject to additional restrictions, by which such persons are entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

• 1% of the number of our common shares then outstanding, which will equal approximately [            ] shares immediately after this offering, or [            ] if the underwriter exercises its option to purchase additional common shares pursuant to the over-allotments in full; and

• the average weekly trading volume of our common shares on The NASDAQ Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale,

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months preceding the sale. Such sales must also comply with the manner of sale, current public information and notice provisions of Rule 144.

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, directors, officers, consultants or advisors who purchases our common shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell such common shares 90 days after the date of the prospectus in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period requirement, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

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CERTAIN MATERIAL INCOME TAX CONSIDERATIONS

Canadian Federal Income Tax Information for United States Residents

The following is a discussion of the principal Canadian federal income tax considerations generally applicable as of the date of this prospectus to holders of our common shares who acquire such shares in this offering and who, for purposes of the Income Tax Act (Canada) and the regulations thereunder, or Canadian Tax Act:

• deal at arm’s length and are not affiliated with us;

• hold such shares as capital property;

• do not use or hold (and will not use or hold) and are not (and will not be) deemed to use or hold our common shares, in or in the course of carrying on business in Canada;

• have not been at any time residents of Canada; and

• are, at all relevant times, residents of the United States, or U.S. Residents, entitled to all of the benefits under the Canada-United States Income Tax Convention (1980), or the Convention, pursuant to the limitation of benefits article of the Convention.

Common shares will generally be presumed to be capital property to a U.S. Resident for purposes of the Canadian Tax Act, provided that the U.S. Resident does not hold its shares in the course of carrying on a business of trading or dealing in securities and has not acquired its shares in a transaction considered to be an adventure in the nature of trade.

TAX MATTERS ARE VERY COMPLICATED AND THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON SHARES WILL DEPEND UPON THE SHAREHOLDER’S PARTICULAR SITUATION. THE SUMMARY OF THE PRINCIPAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS INTENDED TO PROVIDE ONLY A GENERAL SUMMARY AND IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES. MOREOVER, THIS DISCUSSION DOES NOT INCLUDE A DESCRIPTION OF THE TAX LAWS OF ANY PROVINCE OR TERRITORY WITHIN CANADA. ACCORDINGLY, HOLDERS AND PROSPECTIVE HOLDERS OF OUR COMMON SHARES ARE ENCOURAGED TO CONSULT WITH THEIR OWN TAX ADVISERS ABOUT THE TAX CONSEQUENCES TO THEM HAVING REGARD TO THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING ANY CONSEQUENCES OF PURCHASING, OWNING OR DISPOSING OF OUR COMMON SHARES ARISING UNDER CANADIAN FEDERAL, CANADIAN PROVINCIAL OR TERRITORIAL, U.S. FEDERAL, U.S. STATE OR LOCAL TAX LAWS OR TAX LAWS OF JURISDICTIONS OUTSIDE THE UNITED STATES AND CANADA.

This summary is based on the current provisions of the Canadian Tax Act, proposed amendments to the Canadian Tax Act publicly announced by the Minister of Finance (Canada) prior to the date hereof, or the Proposed Amendments, and the provisions of the Convention as in effect on the date hereof. No assurance can be given that the Proposed Amendments will be entered into law in the manner proposed, or at all. No advance income tax ruling has been requested or obtained from the Canada Revenue Agency to confirm the tax consequences of any of the transactions described herein.

This summary is not exhaustive of all possible Canadian federal income tax consequences for U.S. Residents, and other than the Proposed Amendments, does not take into account or anticipate any changes in law, whether by legislative, administrative, governmental or judicial decision or action, nor does it take into account Canadian provincial, U.S. or foreign tax considerations which may differ significantly from those discussed herein. No assurances can be given that subsequent changes in law or administrative policy will not affect or

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modify the statements expressed herein. Further, no opinion was requested by us, nor has an opinion been provided by our counsel or independent registered public accounting firm, with respect to the Canadian income tax consequences described in the following discussion. Accordingly, we urge holders and prospective holders of our common shares to consult with, and rely upon, their own tax advisors in considering the potential Canadian federal, provincial, local and non-Canadian tax consequences associated with purchasing, owning and disposing of our common shares.

A U.S. Resident will generally not be subject to tax under the Canadian Tax Act in respect of any capital gain on a disposition of our common shares unless, at the time of disposition, such shares constitute “taxable Canadian property”, as defined in the Canadian Tax Act, of the U.S. Resident and the U.S. Resident is not eligible for an exemption in respect of such capital gain pursuant to the Convention. Provided that our common shares are listed on a designated stock exchange (which currently includes The NASDAQ Capital Market and the Toronto Stock Exchange), our common shares will not generally constitute “taxable Canadian property” if, at any time during the 60-month period immediately preceding the disposition of the common shares, the U.S. Resident, persons with whom the U.S. Resident did not deal at arm’s length (within the meaning of the Canadian Tax Act), or the U.S. Resident together with all such persons, did not own 25% or more of the issued shares of any class or series of shares of our capital stock. Notwithstanding the forgoing, in certain circumstances set out in the Canadian Tax Act our shares can be deemed to be taxable Canadian property to a U.S. Resident. U.S. Residents whose shares may constitute taxable Canadian property should consult their own tax advisors.

In addition, the Convention generally will exempt a U.S. Resident who would otherwise be liable to pay Canadian income tax in respect of any capital gain realized by the U.S. Resident on the disposition of our common shares, from such liability provided that the value of our common shares, at the time of disposition, is not derived principally from real property situated in Canada, within the meaning of the Convention.

Amounts in respect of our common shares paid or credited or deemed to be paid or credited as, on account or in lieu of payment of, or in satisfaction of, dividends to a U.S. Resident will generally be subject to Canadian non-resident withholding tax at the rate of 25%. Currently, under the Convention the rate of Canadian non-resident withholding tax will generally be reduced to:

• 5% of the gross amount of dividends if the beneficial owner of the dividends is a corporation that is a U.S. Resident and that owns at least 10% of our voting shares; or

• 15% of the gross amount of dividends if the beneficial owner of the dividends is a U.S. Resident other than a corporation that owns at least 10% of our voting shares.

United States Federal Income Tax Information for United States Holders

The following is a general discussion of material U.S. federal income tax consequences of the ownership and disposition of our common shares by U.S. Holders (as defined below). This discussion is based on the United States Internal Revenue Code of 1986, as amended, Treasury regulations promulgated thereunder, and judicial and administrative interpretations thereof, all as in effect at the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion only addresses the tax consequences for U.S. Holders that will hold their common shares as a “capital asset” and does not address U.S. federal income tax consequences that may be relevant to particular U.S. Holders in light of their individual circumstances or U.S. Holders that are subject to special treatment under certain U.S. federal income tax laws, such as:

• tax-exempt organizations and pension plans;

• persons subject to alternative minimum tax;

• banks and other financial institutions;

• insurance companies;

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• partnerships and other pass-through entities (as determined for United States federal income tax purposes);

• broker-dealers;

• persons who hold their common shares as a hedge or as part of a straddle, constructive sale, conversion transaction, and other risk management transaction; and

• persons who acquired their common shares through the exercise of employee stock options or otherwise as compensation.

Further, no opinion was requested by us, nor has an opinion been provided by our counsel or independent registered public accounting firm, with respect to the United States income tax consequences described in the following discussion. Accordingly, we urge holders and prospective holders of our common shares to consult with, and rely upon, their own tax advisors in considering the potential United States federal, state, local and non-United States tax consequences associated with purchasing, owning and disposing of our common shares.

As used herein, the term “U.S. Holder” means a beneficial owner of our common shares that is:

• an individual citizen or resident of the United States;

• a corporation, a partnership or entity treated as a corporation or partnership for U.S. federal income tax purposes, that is created or organized in or under the laws of the United States or any political subdivision thereof;

• an estate the income of which is subject to U.S. federal income taxation regardless of its source; and

• a trust if both:

• a United States court is able to exercise primary supervision over the administration of the trust; and

• one or more United States persons have the authority to control all substantial decisions of the trust.

TAX MATTERS ARE VERY COMPLICATED AND THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON SHARES WILL DEPEND UPON THE SHAREHOLDER’S PARTICULAR SITUATION. THE SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS INTENDED TO PROVIDE ONLY A GENERAL SUMMARY AND IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. MOREOVER, THIS DISCUSSION DOES NOT INCLUDE A DESCRIPTION OF THE TAX LAWS OF ANY STATE OR LOCAL GOVERNMENT WITHIN THE UNITED STATES. ACCORDINGLY, HOLDERS AND PROSPECTIVE HOLDERS OF OUR COMMON SHARES ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS ABOUT THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON SHARES.

Ownership of Shares

The gross amount of any distribution received by a U.S. Holder with respect to our common shares generally will be included in the U.S. Holder’s gross income as a dividend to the extent attributable to our current and accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s shares, the remainder will be taxed as capital gain (the taxation of capital gain is discussed under the heading “Sale of Shares” below).

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For taxable years beginning before January 1, 2011, dividends received by non-corporate U.S. Holders from a qualified foreign corporation, and that satisfy the minimum holding period requirements, are taxed at the same preferential rates that apply to long-term capital gains. A foreign corporation is a “qualified foreign corporation” if it is eligible for the benefits of a comprehensive income tax treaty with the United States (the income tax treaty between Canada and the United States is such a treaty) or the shares with respect to which such dividend is paid is readily tradable on an established securities market in the United States (such as The NASDAQ Capital Market on which our shares will be traded). Notwithstanding satisfaction of one or both of these conditions, a foreign corporation is not a qualified foreign corporation if it is a passive foreign investment company, or PFIC, for the taxable year of the corporation in which the dividend is paid or the preceding taxable year. (Whether a foreign corporation is a PFIC is discussed below under the heading “Passive Foreign Investment Companies”).

A foreign corporation that is a PFIC for any taxable year within a U.S. person’s holding period generally is treated as a PFIC for all subsequent years in the U.S. person’s holding period. We have been a PFIC in the past and we may be a PFIC in the future. Accordingly, U.S. Holders who acquire our common shares may be treated as holding shares of a PFIC throughout their holding period for the purpose of determining whether dividends received from us are dividends from a qualified foreign corporation. As a consequence, dividends received by U.S. Holders may not be eligible for taxation at the preferential rates applicable to long-term capital gains.

If a distribution is paid in Canadian dollars, the U.S. dollar value of such distribution on the date of receipt is used to determine the amount of the distribution received by a U.S. Holder. A U.S. Holder who continues to hold such Canadian dollars after the date on which they are received may recognize gain or loss upon their disposition due to exchange rate fluctuations. Generally such gains and losses will be ordinary income or loss from U.S. sources.

U.S. Holders may deduct Canadian tax withheld from distributions they receive for the purpose of computing their U.S. federal taxable income (or alternatively a credit may be claimed against the U.S. Holder’s U.S. federal income tax liability as discussed below under the heading “Foreign Tax Credit”). Corporate U.S. Holders generally will not be allowed a dividends received deduction with respect to dividends they receive from us.

Foreign Tax Credit

Generally, the dividend portion of a distribution received by a U.S. Holder will be treated as income in the passive income category for foreign tax credit purposes. Subject to a number of limitations, a U.S. Holder may elect to claim a credit against its U.S. federal income tax liability (in lieu of a deduction) for Canadian withholding tax deducted from its distributions. The credit may be claimed only against U.S. federal income tax attributable to a U.S. Holder’s passive income that is from foreign sources.

If we are a qualified foreign corporation with respect to a non-corporate U.S. Holder, dividends received by such U.S. Holder will qualify for taxation at the same preferential rates that apply to long-term capital gains. In such case, the dividend amount that would otherwise be from foreign sources is reduced by multiplying the dividend amount by a fraction, the numerator of which is the U.S. Holder’s preferential capital gains tax rate and the denominator of which is the U.S. Holder’s ordinary income tax rate. The effect is to reduce the dividend amount from foreign sources, thereby reducing the U.S. federal income tax attributable to foreign source income against which the credit may be claimed. Canadian withholding taxes that cannot be claimed as a credit in the year paid may be carried back to the preceding year and then forward 10 years and claimed as a credit in those years, subject to the same limitations referred to above.

The rules relating to the determination of the foreign tax credit are very complex. U.S. Holders and prospective U.S. Holders should consult their own tax advisors to determine whether and to what extent they would be entitled to claim a foreign tax credit.

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Sale of Shares

Subject to the discussion below under the heading “Passive Foreign Investment Companies”, a U.S. Holder generally will recognize capital gain or loss upon the sale of our shares equal to the difference between: (a) the amount of cash plus the fair market value of any property received; and (b) the U.S. Holder’s adjusted tax basis in such shares. This gain or loss generally will be capital gain or loss from U.S. sources, and will be long-term capital gain or loss if the U.S. Holder held its shares for more than 12 months. Generally, the net long-term capital gain of a non-corporate U.S. Holder from the sale of shares is subject to taxation at a top marginal rate of 15% for taxable years beginning before January 1, 2011. Capital gain that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to certain limitations.

Passive Foreign Investment Companies

We will be a PFIC if in any taxable year either: (a) 75% or more of our gross income consists of passive income; or (b) 50% or more of the value of our assets is attributable to assets that produce, or are held for the production of, passive income. Subject to certain limited exceptions, if we meet the gross income test or the asset test for a particular taxable year, our shares held by a U.S. Holder in that year will be treated as shares of a PFIC, or the Med BioGene PFIC Shares, for that year and all subsequent years in the U.S. Holder’s holding period, even if we fail to meet either test in a subsequent year. Because in the past our gross income consisted mostly of interest, we met the gross income test in prior taxable years and we believe we will meet the gross income test for 2009. We could meet the gross income test or the asset test in the future and be a PFIC again in 2010 and later years if we fail to generate sufficient gross income from our operations or the relative values of our passive and non-passive assets change. As a consequence, a U.S. Holder who acquires our common shares in this offering may be treated as holding Med BioGene PFIC Shares.

If we were a PFIC in the future, gain realized by a U.S. Holder from the sale of Med BioGene PFIC Shares and certain dividends received on such shares would be subject to tax under the excess distribution regime, unless the U.S. Holder made one of the elections discussed below. Under the excess distribution regime, federal income tax on a U.S. Holder’s gain from the sale of Med BioGene PFIC Shares would be calculated by allocating the gain ratably to each day the U.S. Holder held its shares. Gain allocated to years preceding the first year in which we were a PFIC in the U.S. Holder’s holding period, if any, and gain allocated to the year of disposition would be treated as gain arising in the year of disposition and taxed as ordinary income. Gain allocated to all other years, the Med BioGene PFIC Years, would be taxed at the highest tax rate in effect for each of those years. Interest for the late payment of tax would be calculated and added to the tax due for each of the Med BioGene PFIC Years, as if the tax was due and payable with the tax return filed for that year. A distribution that exceeds 125% of the average distributions received on Med BioGene PFIC Shares by a U.S. Holder during the 3 preceding taxable years (or, if shorter, the portion of the U.S. Holder’s holding period before the taxable year) would be taxed in a similar manner.

A U.S. Holder may avoid taxation under the excess distribution regime by making a qualified electing fund, or QEF, election. For each year that we would meet the PFIC gross income test or asset test, an electing U.S. Holder would be required to include in gross income, its pro rata share of our net ordinary income and net capital gains, if any. The U.S. Holder’s adjusted tax basis in our shares would be increased by the amount of such income inclusions. An actual distribution to the U.S. Holder out of such income generally would not be treated as a dividend and would decrease the U.S. Holder’s adjusted tax basis in our shares. Gain realized from the sale of our shares covered by a QEF election would be taxed as a capital gain. U.S. Holders will be eligible to make QEF elections only if we agree to provide to the U.S. Holders, which we have agreed beginning for the 2009 tax year, the information they will need to comply with the QEF rules. Generally, a QEF election should be made by the due date of the U.S. Holder’s tax return for the first taxable year in which the U.S. Holder held our shares that includes the close of our taxable year for which we met the PFIC gross income test or asset test. A QEF election is made on IRS Form 8621.

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A U.S. Holder may also avoid taxation under the excess distribution regime by timely making a mark-to-market election. An electing U.S. Holder would include in gross income the increase in the value of its Med BioGene PFIC Shares during each of its taxable years and deduct from gross income the decrease in the value of its Med BioGene PFIC Shares during each of its taxable years. Amounts included in gross income or deducted from gross income by an electing U.S. Holder are treated as ordinary income and ordinary deductions from U.S. sources. Deductions for any year are limited to the amount by which the income inclusions of prior years exceed the income deductions of prior years. Gain from the sale of Med BioGene PFIC Shares covered by an election is treated as ordinary income from U.S. sources while a loss is treated as an ordinary deduction from U.S. sources only to the extent of prior income inclusions. Losses in excess of such prior income inclusions are treated as capital losses from U.S. sources. A mark-to-market election is timely if it is made by the due date of the U.S. Holder’s tax return for the first taxable year in which the U.S. Holder held our shares that includes the close of our taxable year for which we met the PFIC gross income test or asset test. A mark-to-market election is also made on IRS Form 8621.

As noted above (under the heading titled “Ownership of Shares”), a PFIC is not a qualified foreign corporation and hence dividends received from a PFIC are not eligible for taxation at preferential long-term capital gain tax rates. Similarly, ordinary income included in the gross income of a U.S. Holder who has made a QEF election or a market-to-market election, and dividends received from corporations subject to such election, are not eligible for taxation at preferential long- term capital gain rates.

The PFIC rules are extremely complex and could, if they apply, have significant, adverse effects on the taxation of dividends received and gains realized by a U.S. Holder. Accordingly, prospective U.S. Holders are strongly urged to consult their tax adviser concerning the potential application of these rules to their particular circumstances.

Controlled Foreign Corporation

Special rules apply to certain U.S. Holders that own stock in a foreign corporation that is classified as a “controlled foreign corporation,” or CFC. Based on the expected distribution of our common shares among U.S. Holders and non- U.S. Holders as a result of this offering, we do not expect to be classified as a CFC. However, future ownership changes could cause us to become a CFC. Prospective U.S. Holders are urged to consult their tax advisor concerning the potential application of the CFC rules to their particular circumstances.

Information Reporting and Backup Withholding

United States information reporting and backup withholding requirements may apply with respect to distributions to U.S. Holders, or the payment of proceeds from the sale of shares, unless the U.S. Holder: (a) is an exempt recipient (including a corporation); (b) complies with certain requirements, including applicable certification requirements; or (c) is described in certain other categories of persons. The backup withholding tax rate is currently 28%. Any amounts withheld from a payment to a U.S. Holder under the backup withholding rules may be credited against any U.S. federal income tax liability of the U.S. Holder and may entitle the U.S. Holder to a refund.

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NASDAQ QUORUM REQUIREMENT

NASDAQ Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of certain of the requirements of the Rule 5600 Series. A foreign private issuer that follows a home country practice in lieu of one or more provisions of the Rule 5600 Series is required to disclose in its registration statement related to its initial public offering or first U.S. listing on The NASDAQ Capital Market, or on its website, each requirement of the Rule 5600 Series that it does not follow and describe the home country practice followed by the issuer in lieu of those requirements.

We do not follow Marketplace Rule 5620(c), but instead follow our home country practice. The NASDAQ Capital Market minimum quorum requirement under Rule 5620(c) for a meeting of shareholders is 33.33% of the outstanding common shares. In addition, Rule 5620(c) requires that an issuer listed on The NASDAQ Capital Market state its quorum requirement in its governing documents. Our quorum requirement is set forth in our articles. A quorum for a meeting of our shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 20% of the issued shares entitled to be voted at the meeting. The foregoing is consistent with the laws, customs and practices in Canada. We have applied to The NASDAQ Capital Market for an exemption to the minimum quorum requirement.

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UNDERWRITING

Subject to the terms and conditions of an underwriting agreement, dated [                    ], 2010, we have agreed to sell to Rodman & Renshaw, LLC and Rodman & Renshaw, LLC has agreed to purchase on a firm commitment basis all of the common shares offered in this offering at the initial public offering price, less the underwriting discount set forth on the cover page of this prospectus. The address of Rodman & Renshaw, LLC is 1251 Avenue of the Americas, 20^th Floor, New York, NY, 10020.

Nature of Underwriting Commitment

The underwriting agreement provides that the underwriter is committed to purchase all of the common shares offered in this offering, other than those covered by the over-allotment option described below, if the underwriter purchases any of these securities. The underwriting agreement provides that the obligations of the underwriter to purchase the shares offered hereby are conditional and may be terminated at its discretion based on its assessment of the state of the financial markets. The obligations of the underwriter may also be terminated upon the occurrence of other events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriter’s obligations are subject to the authorization and the validity of the shares being accepted for listing on The NASDAQ Capital Market and to various other customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the underwriter of officers’ certificates and legal opinions of our counsel.

Option to Purchase Additional Shares

We have granted the underwriter an option, exercisable within 45 days after the date of this prospectus, to purchase up to an aggregate of [            ] additional common shares at the initial public offering price less the underwriting discounts and commissions, solely to cover over-allotments, if any, made in connection with the offering of the common shares offered by this prospectus.

Underwriter’s Warrant

We have agreed to issue and sell to the underwriter for $100, a warrant to purchase up to a total of [            ] common shares. The shares issuable upon exercise of this warrant are identical to those offered by this prospectus. This warrant is exercisable at $[            ] per share (125% of the price of the shares sold in the offering), commencing on a date which is one year from the effective date of the registration statement and expiring five years from the effective date of the registration statement. This warrant may also be exercised on a cashless basis. Pursuant to FINRA Rule 5110(g)(1), the underwriter will not sell, transfer, assign, pledge or hypothecate this warrant or the securities underlying this warrant, nor will it engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this warrant or the underlying securities for a period of 180 days from the date of this prospectus. This warrant grants holders demand and “piggy back” registration rights for periods of three and five years, respectively, from the first anniversary of the date of this prospectus. These rights apply to all of the securities directly and indirectly issuable upon exercise of the warrant. We will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrant, other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrant may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of common stock at a price below the warrant exercise price.

This warrant will be valued based on the underlying shares obtainable and valuation factors appropriate at the time it is issued. We currently estimate that value to be approximately $            , based on the number of shares subject to this warrant, a midpoint offering price of the common shares of $            , the resulting exercise prices related to the warrant on the shares, the five year term of the warrant, a risk-free interest rate of [    ]% currently commensurate with that term, an expected dividend yield of [    ]% and estimated volatility of [    ]%, based on a review of our historical volatility. The initial value of this warrant will be charged to additional paid-

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in capital as part of the offering costs incurred, and the warrant will be accounted for as a derivative instrument liability because it is denominated in a currency other than our functional currency.

Pricing of Common Shares

The underwriter has advised us that it proposes to offer the shares directly to the public at the initial public offering price set forth on the cover page of this prospectus, and to certain dealers that are members of the Financial Industry Regulatory Authority (FINRA), at such price less a concession not in excess of $[            ] per share. The underwriter may allow, and the selected dealers may reallow, a concession not in excess of $[            ] per share to certain brokers and dealers. After this offering, the offering price and concessions and discounts to brokers and dealers and other selling terms may from time to time be changed by the underwriter. These prices should not be considered an indication of the actual value of our shares and are subject to change as a result of market conditions and other factors. No variation in those terms will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus.

Our common shares are listed in Canada on the TSX Venture Exchange under the symbol “MBI.” We have applied to list of our common shares on The NASDAQ Capital Market under the symbol “MBGI” and on the Toronto Stock Exchange under the symbol “MBI.” We intend to effect a 50-for-1 reverse stock split to be effected prior to or upon the date of this prospectus.

The initial public offering price for the shares was determined by negotiation between us and the underwriter. The principal factors considered in determining the public offering price of the shares included:

• the information in this prospectus and otherwise available to the underwriters;

• the history and the prospects for the industry in which we will compete;

• our current stock price on the TSX Venture Exchange;

• our current financial condition and the prospects for our future cash flows and earnings;

• the general condition of the economy and the securities markets at the time of this offering;

• the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

• the public demand for our securities in this offering.

We cannot be sure that the initial public offering price will correspond to the price at which our shares will trade in the public market following this offering or that an active trading market for our shares will develop and continue after this offering.

Discounts and Commissions

The following table summarizes the compensation to be paid to the underwriter by us and the proceeds, before expenses, payable to us, assuming a $[            ] initial public offering price per share. The information assumes either no exercise or full exercise by the underwriter of the over-allotment option.

		Total
	Per Share	Without Over-Allotment	With Over-Allotment
Public offering price	$	$	$
Underwriting discounts and commissions(1)	$	$	$
Non-accountable expense allowance(2)	$	$	$
Proceeds, before expenses, to us	$	$	$

(1) Underwriting discount is $[            ] per share (7% of the price of the shares sold in the offering).

(2) The non-accountable expense allowance of 1% is not payable with respect to the shares sold upon exercise of the underwriter’s over-allotment option.

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We estimate that the total expenses of this offering, excluding the underwriter’s discounts and commissions and the non-accountable expense allowance and any exercise of the underwriter’s over-allotment option, will be approximately $[            ].

Lock-ups

All of our current officers and directors and one of our former officers and directors have agreed, subject to certain exemptions, that, for a period of 180 days from the effective date of the registration statement of which this prospectus forms a part, they will not sell, contract to sell, grant any option for the sale or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities, without the prior written consent of the underwriter.

Other Terms

In connection with this offering, the underwriter or certain of the securities dealers may distribute prospectuses electronically. No forms of prospectus other than printed prospectuses and electronically distributed prospectuses that are printable in Adobe PDF format will be used in connection with this offering.

The underwriting agreement provides for indemnification between us and the underwriter against specified liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriter to payments that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the SEC, indemnification for liabilities under the Securities Act is against public policy as expressed in the Securities Act, and is therefore, unenforceable.

The underwriter has informed us that they do not expect to confirm sales of shares offered by this prospectus to accounts over which they exercise discretionary authority without obtaining the specific approval of the account holder.

We have granted the underwriter a right of first refusal over future underwritten financings and a right to participate in private placement offerings by us for a period of 12 months following the closing date of this offering. The right of first refusal does not apply to the common shares offered hereby, issuances of common shares upon exercise of the warrant to be issued to the underwriter in connection with this offering, issuances of common shares upon the exercise of currently outstanding warrants or amendments to the warrant agreements related thereto, granting options to acquire securities under the Med BioGene 2006 Incentive Stock Option Plan, as amended, or issuing common shares upon the exercise of outstanding options under Med BioGene 2006 Incentive Stock Option Plan, issuing common shares pursuant to agreements in effect as of the date hereof or amendments related thereto or issuing common shares in connection with strategic acquisitions subject to shareholder approval. We have agreed to pay (i) the fees, expenses and disbursements relating to background checks of our executive officers in an amount not to exceed $20,000 in the aggregate and (ii) up to an additional $36,000 for certain specified actual expenses, including “road show” expenses.

Stabilization

Until the distribution of the common shares offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriter to bid for and to purchase our securities. As an exception to these rules, the underwriter may engage in transactions effected in accordance with Regulation M under the Exchange Act that are intended to stabilize, maintain or otherwise affect the price of our common shares. The underwriter may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.

• Stabilizing transactions permit bids or purchases for the purpose of pegging, fixing or maintaining the price of the common shares, so long as stabilizing bids do not exceed a specified maximum.

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• Over-allotment involves sales by the underwriter of shares in excess of the number of shares the underwriter are obligated to purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriter may close out any covered short position by either exercising their over-allotment option or purchasing shares in the open market.

• Covering transactions involve the purchase of securities in the open market after the distribution has been completed in order to cover short positions. In determining the source of securities to close out the short position, the underwriter will consider, among other things, the price of securities available for purchase in the open market as compared to the price at which they may purchase securities through the over-allotment option. If the underwriter sells more common shares than could be covered by the over-allotment option, creating a naked short position, the position can only be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in this offering.

• Penalty bids permit the underwriter to reclaim a selling concession from a selected dealer when the common shares originally sold by the selected dealer are purchased in a stabilizing or syndicate covering transaction.

These stabilizing transactions, covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common shares or preventing or retarding a decline in the market price of our common shares. As a result, the price of our common shares may be higher than the price that might otherwise exist in the open market.

Neither we nor the underwriter makes any representation or prediction as to the effect that the transactions described above may have on the prices of our securities. These transactions may occur on The NASDAQ Capital Market or on any other trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.

Foreign Regulatory Restrictions on Purchase of the Common Shares

We have not taken any action to permit a public offering of our common shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this offering of common shares and the distribution of the prospectus outside the United States. In addition to the public offering of the shares in the United States, the underwriter may, subject to the applicable foreign laws, also offer the common shares to certain institutions or accredited persons in the following countries:

Italy. This offering of our common shares has not been cleared by Consob, the Italian Stock Exchange’s regulatory agency of public companies, pursuant to Italian securities legislation and, accordingly, no common shares may be offered, sold or delivered, nor may copies of this prospectus or of any other document relating to our common shares be distributed in Italy, except (1) to professional investors (operatori qualificati); or (2) in circumstances which are exempted from the rules on solicitation of investments pursuant to Decree No. 58 and Article 33, first paragraph, of Consob Regulation No. 11971 of May 14, 1999, as amended. Any offer, sale or delivery of our common shares or distribution of copies of this prospectus or any other document relating to our common stock in Italy under (1) or (2) above must be (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Decree No. 58 and Legislative Decree No. 385 of September 1, 1993, or the Banking Act; and (ii) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to

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which the issue or the offer of securities in Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities issued or offered in Italy and their characteristics; and (iii) in compliance with any other applicable laws and regulations.

Germany. The offering of our common shares is not a public offering in the Federal Republic of Germany. The common shares may only be acquired in accordance with the provisions of the Securities Sales Prospectus Act (Wertpapier-Verkaudfspropsektgestz), as amended, and any other applicable German law. No application has been made under German law to publicly market our common shares in or out of the Federal Republic of Germany. Our common shares are not registered or authorized for distribution under the Securities Sales Prospectus Act and accordingly may not be, and are not being, offered or advertised publicly or by public promotion. Therefore, this prospectus is strictly for private use and the offering is only being made to recipients to whom the document is personally addressed and does not constitute an offer or advertisement to the public. Our common shares will only be available to persons who, by profession, trade or business, buy or sell securities for their own or a third party’s account.

France. Our common shares offered by this prospectus may not be offered or sold, directly or indirectly, to the public in France. This prospectus has not been or will not be submitted to the clearance procedure of the Autorité des Marchés Financiers, or the AMF, and may not be released or distributed to the public in France. Investors in France may only purchase the common shares offered by this prospectus for their own account and in accordance with articles L. 411-1, L. 441-2 and L. 412-1 of the Code Monétaire et Financier and decree no. 98-880 dated October 1, 1998, provided they are “qualified investors” within the meaning of said decree. Each French investor must represent in writing that it is a qualified investor within the meaning of the aforesaid decree. Any resale, directly or indirectly, to the public of the common shares offered by this prospectus may be effected only in compliance with the above mentioned regulations. ”Les actions offertes par ce document d’information ne peuvent pas être, directement ou indirectement, offertes ou vendues au public en France. Ce document d’information n’a pas été ou ne sera pas soumis au visa de l’Autorité des Marchés Financiers et ne peut être diffusé ou distribué au public en France. Les investisseurs en France ne peuvent acheter les actions offertes par ce document d’information que pour leur compte propre et conformément aux articles L. 411-1, L. 441-2 et L. 412-1 du Code Monétaire et Financier et du décret no. 98-880 du 1 octobre 1998, sous réserve qu’ils soient des investisseurs qualifiés au sens du décret susvisé. Chaque investisseur doit déclarer par écrit qu’il est un investisseur qualifié au sens du décret susvisé. Toute revente, directe ou indirecte, des actions offertes par ce document d’information au public ne peut être effectuée que conformément à la réglementation susmentionnée.”

Greece. The present prospectus has been submitted for approval by the United States Securities and Exchange Commission and not the Greek Capital Market Committee. All information contained in the prospectus is true and accurate. The offering of the shares of common stock of the company does not constitute an initial public offer in Greece according to CL. 2190/1920 and L. 3401/2005 as amended and in force. This prospectus is strictly for the use of the entity to which it has been addressed to by the company and not to be circulated in Greece or any other jurisdiction.

This information and documentation is true and accurate and in conformity with the information contained in the prospectus for the offer shares of common stock of the company, which is being reviewed for approval only by the United States Securities and Exchange Commission and does not constitute provision of the investment service of investment advice according to L. 3606/2007. Any recipient of this material has stated to be a qualified and experienced investor and will evaluate the contents and decide on his/her own discretion whether to participate or not in this offering of our common shares.

Switzerland. This prospectus may only be used by those persons to whom it has been directly handed out by the offeror or its designated distributors in connection with the offer described therein. The common shares are only offered to those persons and/or entities directly solicited by the offeror or its designated distributors, and are not offered to the public in Switzerland. This prospectus constitutes neither a public offer in Switzerland nor an issue prospectus in accordance with the respective Swiss legislation, in particular but not limited to Article 652A

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Swiss Code Obligations. Accordingly, this prospectus may not be used in connection with any other offer, whether private or public and shall in particular not be distributed to the public in Switzerland.

United Kingdom. In the United Kingdom, the common shares offered by this prospectus are directed to and will only be available for purchase to a person who is an exempt person as referred to at paragraph (c) below and who warrants, represents and agrees that: (a) it has not offered or sold, will not offer or sell, any common shares offered by this prospectus to any person in the United Kingdom except in circumstances which do not constitute an offer to the public in the United Kingdom for the purposes of the section 85 of the Financial Services and Markets Act 2000 (as amended) (“FSMA”); and (b) it has complied and will comply with all applicable provisions of FSMA and the regulations made thereunder in respect of anything done by it in relation to the common shares offered by this prospectus in, from or otherwise involving the United Kingdom; and (c) it is a person who falls within the exemptions to Section 21 of the FSMA as set out in The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“the Order”), being either an investment professional as described under Article 19 or any body corporate (which itself has or a group undertaking has a called up share capital or net assets of not less than £500,000 (if more than 20 members) or otherwise £5 million) or an unincorporated association or partnership (with net assets of not less than £5 million) or is a trustee of a high value trust or any person acting in the capacity of director, officer or employee of such entities as defined under Article 49(2)(a) to (d) of the Order, or a person to whom the invitation or inducement may otherwise lawfully be communicated or cause to be communicated. The investment activity to which this document relates will only be available to and engaged in only with exempt persons referred to above. Persons who are not investment professionals and do not have professional experience in matters relating to investments or are not an exempt person as described above, should not review nor rely or act upon this document and should return this document immediately. It should be noted that this document is not a prospectus in the United Kingdom as defined in the Prospectus Regulations 2005 and has not been approved by the Financial Services Authority or any competent authority in the United Kingdom.

Sweden. Neither this prospectus nor the common shares offered hereunder have been registered with or approved by the Swedish Financial Supervisory Authority under the Swedish Financial Instruments Trading Act (1991:980) (as amended), nor will such registration or approval be sought. Accordingly, this prospectus may not be made available nor may the common shares offered hereunder be marketed or offered for sale in Sweden other than in circumstances which are deemed not to be an offer to the public in Sweden under the Financial Instruments Trading Act. This prospectus may not be distributed to the public in Sweden and a Swedish recipient of the prospectus may not in any way forward the prospectus to the public in Sweden.

Norway. This prospectus has not been produced in accordance with the prospectus requirements laid down in the Norwegian Securities Trading Act 1997, as amended. This prospectus has not been approved or disapproved by, or registered with, either the Oslo Stock Exchange or the Norwegian Registry of Business Enterprises. This prospectus may not, either directly or indirectly be distributed to Norwegian potential investors.

Denmark. This prospectus has not been prepared in the context of a public offering of securities in Denmark within the meaning of the Danish Securities Trading Act No. 171 of 17 March 2005, as amended from time to time, or any Executive Orders issued on the basis thereof and has not been and will not be filed with or approved by the Danish Financial Supervisory Authority or any other public authority in Denmark. The offering of the shares of common stock will only be made to persons pursuant to one or more of the exemptions set out in Executive Order No. 306 of 28 April 2005 on Prospectuses for Securities Admitted for Listing or Trade on a Regulated Market and on the First Public Offer of Securities exceeding EUR 2,500,000 or Executive Order No. 307 of 28 April 2005 on Prospectuses for the First Public Offer of Certain Securities between EUR 100,000 and EUR 2,500,000, as applicable.

The Netherlands. The underwriter may not offer, distribute, sell, transfer or deliver any of our securities, directly or indirectly, in The Netherlands, as a part of their initial distribution or at any time thereafter, to any person other than our employees or employees of our subsidiaries, individuals who or legal entities which trade

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or invest in securities in the conduct of their profession or business within the meaning of article 2 of the Exemption Regulation issued under the Securities Transactions Supervision Act 1995 (Vrijstellingsregeling Wet toezich teffectenverkeer 1995), which includes banks, brokers, pension funds, insurance companies, securities institutions, investment institutions, and other institutional investors, including, among others, treasuries of large enterprises who or which regularly trade or invest in securities in a professional capacity.

Cyprus. Each of the book running managers has represented, warranted and agreed that: (i) it will not be providing from or within Cyprus any “Investment Services”, “Investment Activities” and “Non-Core Services” (as such terms are defined in the Investment Firms Law 144(I) of 2007, (the “IFL”) in relation to the common shares, or will be otherwise providing Investment Services, Investment Activities and Non-Core Services to residents or persons domiciled in Cyprus. Each book running manager has represented, warranted and agreed that it will not be concluding in Cyprus any transaction relating to such Investment Services, Investment Activities and Non-Core Services in contravention of the IFL and/or applicable regulations adopted pursuant thereto or in relation thereto; and (ii) it has not and will not offer any of the common shares other than in compliance with the provisions of the Public Offer and Prospectus Law, Law 114(I)/2005.

Israel. The common shares offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (ISA). The common shares may not be offered or sold, directly or indirectly, to the public in Israel. The ISA has not issued permits, approvals or licenses in connection with the offering of the common shares or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the common shares being offered. Any resale, directly or indirectly, to the public of the common shares offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Oman. For the attention of the residents of Oman:

The information contained in this prospectus neither constitutes a public offer of securities in the Sultanate of Oman (“Oman”) as contemplated by the Commercial Companies Law of Oman (Sultani Decree 4/74) or the Capital Market Law of Oman (Sultani Decree 80/98), nor does it constitute an offer to sell, or the solicitation of any offer to buy non-Omani securities in Oman as contemplated by Article 6 of the Executive Regulations to the Capital Market Law of Oman (issued vide Ministerial Decision No 4/2001), and nor does it constitute a distribution of non-Omani securities in Oman as contemplated under the Rules for Distribution of Non-Omani Securities in Oman issued by the Capital Market Authority of Oman (“CMA”). Additionally, this prospectus is not intended to lead to the conclusion of any contract of whatsoever nature within the territory of Oman.

This prospectus has been sent at the request of the investor in Oman, and by receiving this prospectus, the person or entity to whom it has been issued and sent understands, acknowledges and agrees that this prospectus has not been approved by the CMA or any other regulatory body or authority in Oman, nor has any authorization, license or approval been received from the CMA or any other regulatory authority in Oman, to market, offer, sell, or distribute the shares within Oman.

No marketing, offering, selling or distribution of any financial or investment products or services has been or will be made from within Oman and no subscription to any securities, products or financial services may or will be consummated within Oman. The underwriter is neither a company licensed by the CMA to provide investment advisory, brokerage, or portfolio management services in Oman, nor a bank licensed by the Central Bank of Oman to provide investment banking services in Oman. The underwriter does not advise persons or entities resident or based in Oman as to the appropriateness of investing in or purchasing or selling securities or other financial products.

Nothing contained in this prospectus is intended to constitute Omani investment, legal, tax, accounting or other professional advice. This prospectus is for your information only, and nothing herein is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice on the basis of your situation.

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United Arab Emirates. This document has not been reviewed, approved or licensed by the Central Bank of the United Arab Emirates (the “UAE”), Emirates Securities and Commodities Authority or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai International Financial Services Authority (the “DFSA”), a regulatory authority of the Dubai International Financial Centre (the “DIFC”). The sale of the common shares does not constitute a public offer of securities in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended), DFSA Offered Securities Rules and the Dubai International Financial Exchange Listing Rules, accordingly, or otherwise.

The common shares may not be offered to the public in the UAE and/or any of the free zones including, in particular, the DIFC. The common shares may be offered and this document may be issued, only to a limited number of investors in the UAE or any of its free zones (including, in particular, the DIFC) who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned. Management and the underwriter represents and warrants that the shares will not be offered, sold, transferred or delivered to the public in the UAE or any of its free zones including, in particular, the DIFC.

People’s Republic of China. This prospectus may not be circulated or distributed in the People’s Republic of China, or PRC, and our common shares may not be offered or sold to any person for re-offering or resale, directly or indirectly, to any resident of the PRC except pursuant to applicable laws and regulations of the PRC. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.

Botswana. We hereby represent and warrant that we have not offered for sale or sold, and will not offer or sell, directly or indirectly the common shares to the public in the Republic of Botswana, and confirms that the offering will not be subject to any registration requirements as a prospectus pursuant to the requirements and/or provisions of the Companies Act, 2003 or the Listing Requirements of the Botswana Stock Exchange.

Hong Kong. The common shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) has been issued or will be issued in Hong Kong or elsewhere other than with respect to the common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance.

The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

Singapore. This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common shares may not be circulated or distributed, nor may the common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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Where the common shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

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LEGAL MATTERS

The offering and the validity of the common shares offered in this offering are being passed upon for us by Farris, Vaughan, Wills & Murphy LLP, Vancouver, British Columbia. As of the date of this prospectus, R. Hector MacKay-Dunn, Q.C., a member of our board of directors and our Corporate Secretary and a senior partner of Farris, Vaughan, Wills & Murphy LLP, beneficially holds stock options to purchase 4,350 common shares. Legal matters relating to U.S. law and the offering are being passed upon for us by Hayden Bergman Rooney, Professional Corporation, San Francisco, California. As of the date of this prospectus, Kevin K. Rooney, a member of our board of directors and a shareholder and Chief Operating Officer of Hayden Bergman Rooney, Professional Corporation, holds 26,306 common shares, of which 12,537 are held on behalf of Bay Bridge Partners II, LLC, an investment company owned by the shareholders of Hayden Bergman Rooney, Professional Corporation of which Mr. Rooney owns a one-third interest and is a managing member and a director, warrants to purchase up to 13,153 common shares, of which 6,268 are held on behalf of Bay Bridge Partners II, LLC and a stock option to purchase 3,000 common shares, and Bay Bridge Partners II, LLC, owns 13,833 of our common shares and warrants to purchase up to 7,583 common shares. Legal matters relating to Canadian law and the offering are being passed upon for the underwriter by McCarthy Tétrault LLP, Vancouver, British Columbia. The underwriter has been advised by Sichenzia Ross Friedman Ference LLP, New York, New York with respect to certain legal matters relating to this offering involving U.S. law.

EXPERTS

PricewaterhouseCoopers LLP, independent registered public accounting firm, have audited our audited consolidated balance sheets as at December 31, 2009, 2008 and 2007 and the related audited consolidated statements of operations, shareholders’ equity and cash flows for each of the years then ended, as set forth in their report thereon appearing elsewhere herein. We have included our audited consolidated financial statements in the prospectus in reliance on PricewaterhouseCoopers LLP’s report, given on their authority as experts in accounting and auditing.

EXPENSES RELATED TO THIS OFFERING

The following table sets forth the costs and expenses (other than underwriting discounts and commissions and the underwriter non-accountable expense allowance) payable by us in connection with the sale and distribution of the common shares being registered. All amounts are estimates except the SEC registration fee, the FINRA filing fee and The NASDAQ Capital Market listing fee.

SEC registration fee	$	1,730
Canadian SEDAR filing fees	$	8,042
FINRA filing fee	$	2,800
The NASDAQ Capital Market listing fee	$	50,000
Toronto Stock Exchange listing fee
Blue Sky fees and expenses
Printing and engraving costs
Legal fees and expenses
Accounting fees and expenses
Transfer Agent and Registrar fees
Miscellaneous expenses
Total	$

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form F-1 with respect to the common shares offered by this prospectus. This prospectus, which forms part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. Some items are omitted in accordance with the rules and regulations of the SEC. For further information about us and our common shares, we refer you to the registration statement and the exhibits and schedules to the registration statement filed as part of the registration statement. Statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit are qualified in all respects by reference to the actual text of the exhibit. You may read and copy the registration statement, including the exhibits and schedules to the registration statement, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at www.sec.gov. from which you can electronically access the registration statement, including the exhibits and schedules to the registration statement.

Upon completion of this offering, we will become subject to the informational requirements of the Exchange Act as a foreign private issuer and, accordingly, will file periodic reports and other information with the SEC. Such periodic reports and other information will be available for inspection and copying at the SEC’s public reference room and the web site of the SEC referred to above. We will also be subject to the informational requirements of the securities commissions in all provinces of Canada. You are invited to read and copy any reports, statements or other information, other than confidential filings, that we intend to file with the Canadian provincial securities commissions. These filings are also electronically available from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) (www.sedar.com), the Canadian equivalent of the SEC’s electronic document gathering and retrieval system.

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MED BIOGENE INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as at December 31, 2009, 2008 and 2007	F-3
Consolidated Statement of Operations, Comprehensive Loss, and Deficit for the years ended December 31, 2009, 2008 and 2007	F-4
Consolidated Statements of Shareholders’ Equity for the period from July  20, 2005 (Inception) to December 31, 2005, the years ended December 31, 2005, 2006, 2007, 2008 and 2009	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007	F-9
Notes to Consolidated Financial Statements	F-11

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors of

Med BioGene Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive loss and deficit, shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of Med BioGene Inc. and its subsidiary at December 31, 2009, December 31, 2008 and December 31, 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/    PRICEWATERHOUSECOOPERS LLP

Chartered Accountants

Vancouver, B.C.

February 9, 2010

F-2

Med BioGene Inc.

(a development stage company)

Consolidated Balance Sheets

As at December 31, 2009, 2008 and 2007

(in US dollars)

	2009 $		2008 $		2007 $
Assets
Current assets
Cash and cash equivalents	1,522,428		760,053		1,384,233
Government contribution receivable (note 10)	—		27,378		88,196
GST receivable	6,302		75,902		127,209
Prepaid expenses and other receivables	12,552		9,388		14,781
	1,541,282		872,721		1,614,419
Property and equipment (note 6)	263,397		296,120		453,866
	1,804,679		1,168,841		2,068,285
Liabilities
Current liabilities
Accounts payable	446,542		152,396		258,929
Accrued liabilities	231,088		87,420		61,475
Due to related parties (note 11)	221,486		27,577		—
Current portion of lease obligations (note 7)	—		—		24,550
	899,116		267,393		344,954
Long-term liabilities (note 7)	20,698		50,771		98,852
	919,814		318,164		443,806
Shareholders’ Equity
Common shares (note 8)	7,672,984		6,389,893		5,414,786
Warrants (note 8)	2,357,753		1,686,918		1,254,500
Contributed surplus (note 8)	1,446,194		1,317,907		1,102,924
Deficit accumulated during the development stage	(10,942,085	)	(8,807,514	)	(6,667,879	)
Accumulated other comprehensive income	350,019		263,473		520,148
	884,865		850,677		1,624,479
	1,804,679		1,168,841		2,068,285
Going concern (note 1)
Commitments (note 12)
Subsequent events (note 14)

See accompanying notes.

F-3

Med BioGene Inc.

(a development stage company)

Consolidated Statements of Operations, Comprehensive Loss, and Deficit

For the years ended December 31, 2009, 2008, and 2007

(in US dollars)

	2009 $		2008 $		2007 $		Cumulative from inception to December 31, 2009 $
Revenue
Consulting revenue			—		—		85,256
Expenses
Research and development	988,636		751,117		1,080,925		4,000,877
General and administrative	1,070,204		1,317,124		1,172,524		4,492,580
Amortization of property and equipment	78,876		87,129		61,625		254,110
Accretion of preferred shares	—		—		—		63,615
Transaction costs (note 1)	—		—		—		2,282,109
	2,137,716		2,155,370		2,315,074		11,093,291
Loss from operations	(2,137,716	)	(2,155,370	)	(2,315,074	)	(11,008,035	)
Other income (expense)
Interest and other income	12,165		29,168		49,806		114,444
Interest and other expenses	(9,020	)	(13,433	)	(10,192	)	(48,494	)
Loss for the period	(2,134,571	)	(2,139,635	)	(2,275,460	)	(10,942,085	)
Other comprehensive income (loss)	86,546		(256,675	)	574,565		350,019
Comprehensive loss	(2,048,025	)	(2,396,310	)	(1,700,895	)	(10,592,066	)
Deficit accumulated during the development stage–Beginning of year	(8,807,514	)	(6,667,879	)	(4,392,419	)	—
Loss for the year	(2,134,571	)	(2,139,635	)	(2,275,460	)	(10,942,085	)
Deficit accumulated during the development stage–End of year	(10,942,085	)	(8,807,514	)	(6,667,879	)	(10,942,085	)
Basic and diluted loss per share	(0.04	)	(0.06	)	(0.09	)
Weighted average number of common shares outstanding (note 13)	54,009,621		33,789,097		25,874,115

See accompanying notes.

F-4

Med BioGene Inc.

(a development stage company)

Consolidated Statement of Shareholders’ Equity

(in US dollars)

	Common Shares	Amount $	Equity component of preferred shares		Additional paid-in capital $		Accumulated other comprehensive income (loss) $		Deficit accumulated during the development stage $		Total shareholders’ equity $
	(note 13)	(note 8)			(note 8)
Balance–December 31, 2005	9,852,820	507,626	60,401		45,055		—		(1,270,410	)	(657,328	)
Shares issued to acquire Dragon-Tex	5,000,000	1,868,469	—		—		—		—		1,868,469
Shares issued on conversion of preferred shares	1,418,000	312,240	(60,401	)	—		—		—		251,839
Shares issued in brokered private placement–net of offering costs	5,201,000	1,419,365	—		—		—		—		1,419,365
Shares issued on exercise of warrants	2,500	454	—		—		—		—		454
Shares issued on exercise of options	50,000	13,876	—		(9,133	)	—		—		4,743
Comprehensive loss for the year–cumulative translation adjustment	—	—	—		—		(54,417	)	—		(54,417	)
Warrants	—	—	—		126,507		—		—		126,507
Stock-based compensation expense	—	—	—		407,827		—		—		407,827
Loss for the year	—	—	—		—		—		(3,122,009	)	(3,122,009	)

See accompanying notes.

F-5

Med BioGene Inc.

(a development stage company)

Consolidated Statement of Shareholders’ Equity …continued

(in US dollars)

	Common Shares	Amount $		Equity component of preferred shares	Additional paid-in capital $		Accumulated other comprehensive income (loss) $		Deficit accumulated during the development stage $		Total shareholders’ equity $
	(note 13)	(note 8)			(note 8)
Balance–December 31, 2006	21,524,320	4,122,030		—	570,256		(54,417	)	(4,392,419	)	245,450
Shares issued on exercise of warrants	16,000	8,264		—	(2,805	)	—		—		5,459
Carried forward	21,540,320	4,130,294		—	567,451		(54,417	)	(4,392,419	)	250,909
Brought forward	21,540,320	4,130,294		—	567,451		(54,417	)	(4,392,419	)	250,909
Shares issued in brokered private placement–net of offering costs	7,493,508	2,397,190		—	—		—		—		2,397,190
Value of agents warrants	—	(107,016	)	—	107,016		—		—		—
Value ascribed to attached common share purchase warrants	—	(1,023,782	)	—	1,023,782		—		—		—
Shares issued on exercise of options	60,000	18,100		—	(12,229	)	—		—		5,871
Comprehensive income for the year–cumulative translation adjustment	—	—		—	—		574,565		—		574,565
Stock-based compensation expense	—	—		—	671,404		—		—		671,404
Loss for the year	—	—		—	—		—		(2,275,460	)	(2,275,460	)

See accompanying notes.

F-6

Med BioGene Inc.

(a development stage company)

Consolidated Statement of Shareholders’ Equity …continued

(in US dollars)

	Common Shares	Amount $		Equity component of preferred shares	Additional paid-in capital $		Accumulated other comprehensive income (loss) $		Deficit accumulated during the development stage $		Total shareholders’ equity $
	(note 13)	(note 8)			(note 8)
Balance–December 31, 2007	29,093,828	5,414,786		—	2,357,424		520,148		(6,667,879	)	1,624,479
Shares issued in brokered private placement–net of offering costs	12,168,667	1,398,294		—	—		—		—		1,398,294
Value of agents warrants	—	(92,928	)	—	92,928		—		—		—
Carried forward	41,262,495	6,720,152		—	2,450,352		520,148		(6,667,879	)	3,022,773
Brought forward	41,262,495	6,720,152		—	2,450,352		520,148		(6,667,879	)	3,022,773
Value ascribed to attached common share purchase warrants	—	(339,490	)	—	339,490		—		—		—
Shares issued on exercise of options	30,000	9,231		—	(6,236	)	—		—		2,995
Comprehensive loss for the year–cumulative translation adjustment	—	—		—	—		(256,675	)	—		(256,675	)
Stock-based compensation expense	—	—		—	221,219		—		—		221,219
Loss for the year	—	—		—	—		—		(2,139,635	)	(2,139,635	)

See accompanying notes.

F-7

Med BioGene Inc.

(a development stage company)

Consolidated Statement of Shareholders’ Equity …continued

(in US dollars)

	Common Shares	Amount $		Equity component of preferred shares	Additional paid-in capital $	Accumulated other comprehensive income (loss) $	Deficit accumulated during the development stage $		Total shareholders’ equity $
	(note 13)	(note 8)			(note 8)
Balance–December 31, 2008	41,292,495	6,389,893		—	3,004,825	263,473	(8,807,514	)	850,677
Carried forward	41,292,495	6,389,893		—	3,004,825	263,473	(8,807,514	)	850,677
Shares issued in private placement–net of offering costs	31,082,001	1,953,926		—	—	—	—		1,953,926
Value of agents warrants	—	(74,845	)	—	74,845	—	—		—
Value ascribed to attached common share purchase warrants	—	(595,990	)	—	595,990	—	—		—
Stock-based compensation expense	—	—		—	128,287	—			128,287
Loss for the year	—	—		—	—	—	(2,134,571	)	(2,134,571	)
Comprehensive income for the year	—	—		—	—	86,546	—		86,546
Balance–December 31, 2009	72,374,496	7,672,984		—	3,803,947	350,019	(10,942,085	)	884,865

See accompanying notes.

F-8

Med BioGene Inc.

(a development stage company)

Consolidated Statements of Cash Flows

For the years ended December 31, 2009, 2008 and 2007

(in US dollars)

	2009 $		2008 $		2007 $		Cumulative from inception to December 31, 2009 $
Cash flows from operating activities
Loss for the year	(2,134,571	)	(2,139,635	)	(2,275,460	)	(10,942,085	)
Adjustments to reconcile loss for the year to net cash used in operating activities
Amortization of property and equipment	78,876		87,129		61,625		254,109
Accretion of preferred shares	—		—		—		63,615
Non-cash interest expense	—		—		—		171
Stock-based compensation	128,287		221,219		671,404		1,428,962
Non-cash transaction costs	—		—				1,907,526
Shares issued in exchange for services	52,672		—		—		125,341
Shareholder loans	—		—		—		54,676
Changes in non-cash working capital
Accounts receivable	—		—		—		71
Government assistance receivable	27,378		50,556		(81,493	)	(3,315	)
GST receivable	69,600		30,878		(71,933	)	(13,819	)
Investment tax credits receivable	—		—		—		3,105
Prepaid expenses and other receivables	(3,164	)	2,931		47,222		(8,978	)
Accounts payable and accrued liabilities	601,650		(23,253	)	(224,270	)	899,607
	(1,179,272	)	(1,770,175	)	(1,872,905	)	(6,231,016	)
Cash flows from investing activities
Purchase of property and equipment	(2,959	)	(6,617	)	(177,838	)	(295,999	)
Cash flows from financing activities
Issuance of common shares units–net cash proceeds	1,901,254		1,398,294		2,397,190		7,441,104
Lease obligation payments	—		(22,871	)	(21,522	)	(63,109	)
Proceeds from shareholder loan	—		—		—		106,274
Repayment of shareholder loan	—		—		—		(33,974	)
Proceeds on exercise of stock options	—		2,995		5,871		11,998
Proceeds on exercise of warrants	—		—		5,459		7,277
Issuance of preferred shares	—		—		—		210,137
Note payable	—		—		(60,226	)	(187	)
	1,901,254		1,378,418		2,326,772		7,679,520
Effect of exchange rate changes on cash	43,352		(225,806	)	582,175		369,923
Net increase (decrease) increase in cash and cash equivalents	762,375		(624,180	)	858,204		1,522,428
Cash and cash equivalents–Beginning of year	760,053		1,384,233		526,029		—
Cash and cash equivalents–End of year	1,522,428		760,053		1,384,233		1,522,428

F-9

Med BioGene Inc.

(a development stage company)

Consolidated Statement of Cash Flows …continued

For the years ended December 31, 2009, 2008 and 2007

(in US dollars)

	2009 $	2008 $	2007 $	Cumulative from inception to December 31, 2009 $
Cash and cash equivalents are comprised of
Cash on deposit	758,028	99,116	6,422	279,228
Guaranteed investment certificates	764,400	660,937	1,377,811	748,448
	1,522,428	760,053	1,384,233	1,027,676
Supplemental cash flow information
Cash paid for interest	537	3,972	6,106	26,308
Shares issued in exchange for services	52,672	—	—	125,341
Unpaid consulting fees included in shareholder loan	—	—	—	54,676
Shares issued to settle shareholder loan	—	—	—	127,181
Capital assets acquired under lease obligation	—	—	—	59,916
Unpaid capital asset purchases	88,581	109,134	153,160	350,874
Conversion of preferred shares	—	—	—	312,240
Shares issued in conjunction with public listing	—	—	—	1,785,200

See accompanying notes.

F-10

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements

December 31, 2009, 2008, and 2007

(in US dollars)

1    Nature of operations and going concern

Nature of operations

Med BioGene Inc. (the “Company”) is based in Vancouver, British Columbia.

The Company is a life science company focused on the development and commercialization of genomic-based clinical laboratory diagnostic tests for cancer. The Company’s first test under development is LungExpress Dx, a test for early-stage non-small-cell lung cancer that improves upon staging for identifying those patients who, following surgical removal of their tumor, are at a higher and lower risk of mortality to assist in selecting patients who may benefit from adjuvant chemotherapy. The Company is considered to be in the development stage as all of its efforts have been devoted to research and development, raising capital, recruitment of personnel and long-term planning to commercialize the Company’s products. The Company has not generated income from operations and depends on equity financing to support its operations.

The predecessor company (the “Predecessor Company”) which had the same name as the Company, was incorporated under the Canada Business Corporation Act on October 16, 2002 and transitioned to the Business Corporations Act (British Columbia) on July 20, 2005. Effective April 28, 2006, the Predecessor Company acquired Dragon-Tex (Group) Limited (“Dragon-Tex”). To facilitate the acquisition, a wholly-owned subsidiary of the Predecessor Company amalgamated with Dragon-Tex (the “Dragon-Tex Amalgamation”) whereby the shareholders of Dragon-Tex exchanged their common shares for common shares of the Predecessor Company on the basis of two common shares of Dragon-Tex for one common share of the Predecessor Company. The Dragon-Tex amalgamation was accounted for as an acquisition of Dragon-Tex by the Company. As part of the acquisition of Dragon-Tex the Predecessor Company completed a brokered private placement (see note 8(a)) and incurred transaction costs of $2,040,411, which consisted of legal fees of $130,298, listing fees of $1,865,538 and agents fees of $44,575.

To date, the Company has financed its cash requirements primarily from share issuances. The Company’s ability to realize the carrying value of its assets is dependent on successfully bringing its technologies to market and achieving future profitable operations, the outcome of which cannot be predicted at this time. It will be necessary for the Company to raise additional funds for the continuing development and subsequent marketing of its technologies.

Going concern

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) applicable to a going concern which contemplates the realization of assets and the discharge of liabilities in the normal course of business. As discussed further below, there are material uncertainties which cast substantial doubt on the validity of this assumption.

For the year ended December 31, 2009, the Company had operating cash outflows of $1,179,272 (2008–$1,770,175; 2007–$1,872,905) and had not yet achieved profitable operations. As at December 31, 2009, the Company had working capital of $642,166 (2008–$605,328; 2007–$1,269,465), has accumulated losses of $10,942,085 (2008–$8,807,514; 2007–$6,667,879) since its inception and expects to incur further losses in the development of its business.

Management has assessed the Company’s ability to continue as a going concern. To complete its planned product development commitments and to begin generating revenue, funds will be required beyond those currently on hand. As the Company does not earn revenue at present, the single most important factor will be management’s

F-11

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

ability to raise additional capital from external sources. Management is engaged in a process to obtain additional financing and is also exploring licensing and co-development options for the development of its products. Initiatives are underway in both of these areas which are expected to be completed during 2010. There are, however, no assurances that this process will be successful, and factors within and outside the Company’s control will have a significant bearing on its ultimate success in obtaining additional financing or completing licensing or co-development agreements. If unsuccessful, the Company may have to significantly curtail its operations and expenditures.

If the going concern assumption is not appropriate, it may be necessary to adjust the carrying value of assets and liabilities, and the reported net losses and balance sheet classifications used. Such adjustments could be material.

2    Summary of significant accounting policies

Basis of preparation

These consolidated financial statements have been prepared in accordance with US GAAP and are stated in U.S. dollars unless otherwise noted.

The Company has generated no revenue to date, other than minimal consulting revenue, unrelated to the licensing of its products, and its activities have consisted primarily of developing product candidates, raising capital and recruiting personnel. Accordingly, the Company is considered to be in the development stage at December 31, 2009, as defined in the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Codification (“ASC”) Topic 915, Development Stage Enterprises.

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary DTX Acquisition Company Inc. (Incorporated in Alberta). All material intercompany transactions and balances have been eliminated upon consolidation.

Reporting currency and foreign currency translation

The consolidated financial statements of the Company are based on a Canadian dollar functional currency and have been translated into the U.S. dollar reporting currency using the current rate method as follows: assets and liabilities using the rate of exchange prevailing at the balance sheet date; shareholders deficiency using the applicable historic rate; and revenue and expenses at the average rate of exchange for the respective periods. Translation gains and losses have been included as part of the cumulative translation adjustment which is reported as a component of accumulated other comprehensive loss.

We translate non-Canadian dollar balances for operations into functional currency as follows:

a) Property and equipment using historical rates;

b) Other assets and liabilities using closing rates with translation gains and losses recorded in other income/expense; and

c) Income and expenses using average exchange rates, except for expenses that relate to non-monetary assets and liabilities measured at historical rates, which are translated using the same historical rate as associated non-monetary assets and liability.

F-12

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Exchange gains and losses arising on translation are included in the consolidated statement of earnings under other comprehensive loss. The other comprehensive income (loss) for the year ended December 31, 2009 was $86,546 (2008–($256,675); 2007–$574,565).

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Significant estimates are used for, but not limited to, assessment of the net realizable value of long-lived assets, fair value assumptions for stock-based compensation, assessment of clinical trial expense accruals, financial instruments fair value estimation and taxes. Actual results could differ from those estimates.

Stock-based compensation expense

The Company grants stock options to its employees and consultants. The Company accounts for stock-based awards issued in accordance with the FASB issued ASC topic 718, Compensation-Stock Compensation. Stock-based awards are measured at the fair value of the equity instruments issued using the Black-Scholes option pricing model. The fair value of stock options granted is amortized based on the vesting period, to either general and administrative expense or research and development expense, based on the department in which the employee or consultant is employed.

Under the fair value-based method, stock-based payments to employees and non-employees are measured at the fair value of the equity instruments issued. The fair value of stock-based payments to non-employees is periodically re-measured at the earlier of the completion of the services provided, a firm commitment to complete the services or the vesting date. Any change therein is recognized over the applicable service period.

The Company’s accounting estimate related to stock-based compensation is considered a critical accounting estimate because estimates are made in calculating compensation expense including expected option lives, forfeiture rates and expected volatility. The expected volatility assumptions have been developed taking into consideration both historical and implied volatility of the Company’s Canadian dollar share price. The fair market value of its common stock on the date of each option grant was determined based on the closing price of common stock on the TSX Venture Exchange on the grant date. Expected option lives are estimated using vesting terms and expected lives. Expected forfeiture rates are calculated using historical information. Actual option lives and forfeiture rates may be different from estimates and may result in potential future adjustments which would impact the amount of stock-based compensation expense recorded in a particular period.

The Company recognizes stock-based compensation expense on a straight-line basis over the vesting period of the underlying option, which is generally eighteen months. The amount of stock-based compensation expense expected to be amortized in future periods may decrease if unvested options for which deferred stock-based compensation expense has been recorded are subsequently forfeited.

Research, development and collaborations costs

Research and development costs, which include clinical and regulatory activities, are expensed as incurred, net of related government contributions.

F-13

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

The Company enters into collaboration agreements and research subcontracting with various parties and records these costs as research and development expenses. It records accruals for estimated study costs comprised of work performed by its collaborators under contract terms. All clinical collaborators enter into agreements with the Company which specify work content and payment terms.

In addition to costs for research and development, under the University Health Network (“UHN”) collaboration agreement, the Company will be required to make certain research funding payments, milestone payments and annual royalty payments based on sales of LungExpress Dx resulting from its commercial launch. At such time as the Company begins to generate revenue from the sale of LungExpress Dx, such payments to UHN will be recorded in cost of product revenues as a royalty payment.

From inception to December 31, 2009, the Company has incurred total research and development expenses of $4,000,877 of which approximately 41% has been spent on LungExpress Dx. These expenses include costs incurred both to develop the LungExpress Dx assay and to carry out clinical validation studies to validate its multi-gene test. The remaining amount was expended primarily on the Company’s earlier programs in Cardiovascular disease and Lymphoma on which work has been suspended.

Income taxes

Income taxes are accounted for under the FASB issued ASC Topic 740. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities at each year end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances have been established to reduce the Company’s deferred tax assets to zero, as the Company believes that it is more likely than not that such assets will not be realized.

Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit and highly liquid short-term interest bearing securities with maturities at the date of purchase of three months or less. Cash and cash equivalents are held at a recognized Canadian financial institution. Interest earned is recognized in other income on the financial statements.

Property and equipment

The Company records property and equipment at cost, which includes all expenditures incurred to prepare an asset for its intended use. Cost includes the purchase price, installation costs and other duties and preparation charges. The capitalized cost of assets is amortized on a declining balance basis except software which is amortized on a straight line basis over the applicable license period as follows:

Furniture and fixtures	20	%
Computer hardware and office software	30	%
Laboratory equipment	20	%
Laboratory equipment under capital lease	20	%
Laboratory and bioinformatics software	5 years

F-14

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Leases

Leases have been classified as either capital or operating leases. Leases which transfer substantially all the benefits and risks incidental to the ownership of assets are accounted for as an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases where payments are expensed as incurred.

Financial instruments

Financial instruments include cash, evidence of ownership in an entity, or a contract that imposes an obligation on one party and conveys a right to a second party to deliver/receive cash or another financial instrument.

The Company’s financial instruments include cash and cash equivalents, government contributions receivable and other receivables, accounts payable and accrued liabilities and long-term liabilities. The carrying amounts of financial instruments approximate their fair values due to their short maturities, except long-term liabilities which are carried at amortized cost. The carrying value of the Company’s cash and cash equivalents totalling $1,522,428 on the balance sheet as of December 31, 2009 and approximates their market values based on Level 2 inputs.

The Company has classified its financial instruments as follows:

Financial instrument	Classification	Measurement
Cash and cash equivalents	Cash equivalents	Fair value
Government contribution receivable and other receivables	Loans and receivables	Amortized cost using the effective interest method
Accounts payable and accrued liabilities	Other financial liabilities	Amortized cost using the effective interest method
Long-term liabilities	Other financial liabilities	Amortized cost using the effective interest method

	2009		2008		2007
Financial instrument	Carrying value $	Estimated fair value $	Carrying value $	Estimated fair value $	Carrying value $	Estimated fair value $
Cash and cash equivalents	1,522,428	1,522,428	760,053	760,053	1,384,233	1,384,233
Government contribution receivable and other receivables	12,552	12,552	36,766	36,766	102,977	102,977
Accounts payable and accrued liabilities	899,116	899,116	267,393	267,393	320,404	320,404
Long-term liabilities	20,698	20,698	50,771	50,771	98,852	98,852

Fair value measurement

In 2008, the Company adopted the FASB issued ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements. The primary assets and liabilities affected were available for sale securities. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly

F-15

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

transaction between market participants at the measurement date. The fair value hierarchy established by ASC 820 prioritizes the inputs into valuation techniques used to measure fair value. The three levels of the hierarchy are as follows:

• Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to us for identical assets or liabilities;

• Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and

• Level 3: Unobservable inputs that are supported by little or no market activity.

The adoption of ASC 820 did not change the valuation techniques that we used for financial assets and financial liabilities.

Long-lived assets

Long-lived assets comprise property and equipment. The carrying value of long-lived assets is reviewed for impairment whenever events or circumstances indicate that the assets may not be recoverable. For impairment assessment purposes, the estimated fair value of property and equipment is based on a combination of current depreciated replacement costs and current market value.

Patent costs

The costs incurred in establishing and maintaining patents for intellectual property developed internally are expensed in the period incurred.

Investment Tax Credits

Investment tax credits can be used to reduce taxable income in future taxation years. Investment tax credits are recorded when the qualifying expenditures have been incurred and if it is reasonably assured that the tax credits will be realized. Investment tax credits are earned when expenditures are made on qualifying research and development, such expenditures are subject to audit by the Canada Revenue Agency. As management believes there is sufficient uncertainty regarding the realization of deferred tax assets, a full valuation allowance has been provided.

Government Contribution Agreements

Contributions under Government agreements relate to funding of eligible research and development expenditures for defined programs. Amounts received or receivable are included as a contribution in determining the loss for the year as a reduction of the expenses to which it relates.

Loss per common share

Net loss per share is calculated in accordance with the FASB issued ASC Topic 260, Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by giving effect to all dilutive potential common stock outstanding during the period, including stock options, warrants and shares to be issued under the employee stock purchase plan.

F-16

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Diluted net loss per share is the same as basic net loss per share for all periods presented because any potential dilutive common shares were anti-dilutive due to our net loss (as including such shares would decrease basic net loss per share).

Potential dilutive common shares that would have been included in the calculation of diluted earnings per share if we had net income are as follows:

	2009 $	2008 $	2007 $
Common stock options	4,175,000	—	250,000
Common stock warrants	13,501,050	—	—
	17,676,050	—	250,000

3    New accounting policies

Accounting changes implemented in 2007

In June 2006, the FASB issued ASC Topic 740 (previously FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109 (Accounting for Income Taxes) (FIN 48)) to create a single model to address accounting for uncertainty in tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 is effective for fiscal years beginning after December 15, 2006. The Company adopted the provision of ASC 740 on January 1, 2007. As a result of the implementation of ASC 740, no adjustment was required to the liability for unrecognized tax benefits.

Accounting changes implemented in 2008

In February 2007, the FASB issued ASC Topic 825, Financial Instruments, which is effective for fiscal years beginning after November 15, 2007. The Company adopted it on January 1, 2008. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. The adoption of this pronouncement did not have a material impact on our results of operations or financial position for the year ended December 31, 2009, as the Company did not adopt the fair value option for any of our eligible financial instruments, which primarily include long-term liabilities.

In June 2007, the Emerging Issues Task Force (“EITF”), issued a consensus, ASC 730, Research and Development, which states that non-refundable advance payments for goods that will be used or services that will be performed in future research and development activities should be deferred and capitalized until the goods have been delivered or the related services have been rendered. ASC 730 is to be applied prospectively for new contractual arrangements entered into in fiscal years beginning after December 15, 2007 and the Company adopted it on January 1, 2008. The adoption did not result in a material change to its current accounting practice.

F-17

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Significant accounting developments

In December 2007, the FASB issued ASC 805 (revised 2007), Business Combinations, which provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination. This standard also expands required disclosures surrounding the nature and financial effects of business combinations. The standard became effective for the Company on January 1, 2009, but did not have a significant impact on the Company’s consolidated financial statements.

In February 2008, the FASB issued Staff ASC 820-10-55-23A, Effective Date of FASB Statement No. 157, which delayed the effective date of ASC 820 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities that are recognized or disclosed in the financial statements at fair value on a nonrecurring basis only. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued amendments to ASC 815-10-50 that expand the quarterly and annual disclosure requirements concerning an entity’s derivative instruments and hedging activities. This section is effective for fiscal years beginning after November 15, 2008 and its adoption did not have an impact on the Company’s financial position, results of operations or cash flows as the pronouncement addresses disclosure requirements only.

On June 16, 2008, the FASB issued ASC 260 (formerly FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities), to address the question of whether instruments granted in share-based payment transactions are participating securities prior to vesting. ASC 260 indicates that unvested share-based payment awards that contain rights to dividend payments should be included in earnings per share calculations. The guidance will be effective for fiscal years beginning after December 15, 2008. Effective January 1, 2009, the Company adopted ASC 260. The adoption of ASC 260 did not materially impact the Company’s consolidated financial statements.

Recent accounting pronouncements

In April 2009, the FASB issued ASC 825 and 270 (formerly FSP FAS 107-1 and APB 28-1). This ASC amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements. These ASCs do not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, these ASCs require comparative disclosures only for periods ending after initial adoption. These subsections are effective for interim reporting periods ending after June 15, 2009.

In May 2009, the FASB issued ACS 855-10-50, Subsequent Events, which requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements. This subsection is effective for interim and annual periods ending after June 15, 2009.

In June 2009, the FASB issued ASC Topic 105, Generally Accepted Accounting Principles. ASC Topic 105 establishes the FASB ASC as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with US GAAP for Securities and Exchange Commission (“SEC”) registrants. All guidance contained in the Codification carries an

F-18

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

equal level of authority. The Codification supersedes all existing non-SEC accounting and reporting standards. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. The FASB will instead issue new standards in the form of Accounting Standards Updates (“ASU”). The FASB will not consider ASUs as authoritative in their own rights and ASUs will serve only to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes in the Codification. These changes and the Codification itself do not change US GAAP. The adoption of these changes has only impacted the manner in which new accounting guidance under US GAAP is referred and did not impact the Company’s consolidated financial statements.

4     Capital disclosure

The Company considers share capital, warrants and contributed surplus as capital. The Company’s objectives when managing its capital structure are to provide sufficient capital to advance the commercialization of its products, meet the Company’s obligations as they come due, and provide for the potential acquisition of additional intellectual property rights related to products within the Company’s strategic plans.

The Company’s officers and senior management take full responsibility for managing the Company’s capital and do so through quarterly meetings and regular review of financial information. The Company’s Board of Directors are responsible for overseeing this process.

The Company monitors its capital structure and may make adjustments to it in light of changes in the Company’s operating performance, changes in economic conditions and the risk characteristics of the underlying assets. When adjustments to the capital structure are considered appropriate, such changes may include the issuance of new shares, issuance of new debt, or re-purchasing of shares for cancellation.

The Company is not subject to externally imposed capital requirements and there has been no change with respect to the overall capital risk management strategy during the year ended December 31, 2009. The method used by the Company to manage its capital has been the issuance of new share capital. Management does not foresee any changes to this in 2010.

5     Financial instruments and financial risk management

The Company is exposed to certain financial risks, including credit risk, liquidity risk and market risk.

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents and government contribution receivables. At present, the Company invests its excess cash in guaranteed certificates from Canadian Chartered banks, and will only consider investment of excess cash in highly rated government and corporate debt securities. The Company has established guidelines including diversification, credit ratings and maturities, to ensure safety and liquidity of its cash. These guidelines are periodically reviewed by the Company’s audit committee and modified to reflect changes in market conditions.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. To the extent that the Company does not believe it has sufficient liquidity to meet its current obligations, the Board

F-19

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

of Directors considers securing additional funds through issuances of equity and debt or partnering transactions. The Board of Directors approves the Company’s annual operating and capital budgets as well as any material transactions outside the ordinary course of business. Management regularly reviews these budgets and maintains short term cash flow forecasts. At December 31, 2009, the Company’s accounts payable and accrued liabilities were $899,116. All of these amounts fall due for payment within normal terms of trade which are generally between 30 and 60 days, with the exception of the bioinformatics software license which has extended payment terms as described in note 7. Further information relating to liquidity risk is set out in note 1.

Market risk

Market risk is the risk that changes in foreign exchange rates, interest rates and equity prices will affect the Company’s future cash flows or valuation of its financial instruments. The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar, primarily expenses for consulting, research and development work incurred in US dollars. The Company believes that the results of operations and cash flows would be affected by a sudden change in foreign exchange rates, but would not impair or enhance its ability to pay its US dollar denominated obligations. The Company does not currently view its exposure to US dollars as a significant risk due to the limited volume of transactions it conducts in this currency.

The Company is subject to interest rate risk on its cash and cash equivalents and believes that the results of operations, financial position and cash flows would not be significantly affected by a sudden change in market interest rates relative to the investment interest rates due to the short-term nature of the investments. Excess cash is invested in highly rated investment securities at fixed interest rates with varying terms to maturity but generally with maturities of three months or less from the date of purchase.

As at December 31,2009, cash and cash equivalents of $1,522,428 (2008–$760,053; 2007–$1,384,233), as described in note 2–Financial instruments, consisted of demand deposits and term deposits with a Canadian chartered bank with interest rates up to 1%. The Company does not invest in equity instruments of other corporations.

Changes in the Company’s equity price could impact its ability to raise additional capital.

6     Property and equipment

Property and equipment consist of the following:

	2009
	Cost $	Accumulated amortization $	Net $
Furniture and fixtures	13,484	7,209	6,275
Computer hardware and office software	69,185	40,164	29,021
Laboratory and bioinformatics software	169,504	92,015	77,489
Laboratory equipment	277,052	126,440	150,612
	529,225	265,828	263,397

F-20

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

	2008
	Cost $	Accumulated amortization $	Net $
Furniture and fixtures	11,523	4,790	6,733
Computer hardware and office software	56,599	23,990	32,609
Laboratory and bioinformatics software	144,863	52,149	92,714
Laboratory equipment under capital lease	56,142	17,544	38,598
Laboratory equipment	180,635	55,169	125,466
	449,762	153,642	296,120

	2007
	Cost $	Accumulated amortization $	Net $
Furniture and fixtures	13,734	3,668	10,066
Computer hardware and office software	63,635	16,092	47,543
Laboratory and bioinformatics software	179,527	31,800	147,727
Laboratory equipment under capital lease	69,576	8,117	61,459
Laboratory equipment	223,859	36,788	187,071
	550,331	96,465	453,866

7     Other liabilities

a) Capital lease obligations

The Company’s capital lease obligations related to its laboratory equipment were fully repaid in 2008.

b) Long-term liabilities

The Company has recorded the purchase of a bioinformatics software license with extended payment terms as a long-term liability recorded at amortized cost. The terms of the purchase agreement include an initial upfront payment followed by six semi-annual payments. At December 31, 2009, the Company owed $88,581 (2008–$80,730; 2007–$111,884) related to the purchase, of which $20,698 (2008–$50,771; 2007–$98,852) has been classified as a long-term liability and $67,883 (2008–$29,959; 2007–$13,032) is included in accounts payable.

c) Current liabilities in excess of 5% of total current liabilities

The following current liabilities are in excess of 5% of total current liabilities:

	2009 $	2008 $	2007 $
Subcontract research and development	295,580	82,022	66,735
Legal	213,788	22,638	—
Accounting	94,809	—	50,600
Bioinformatics software	67,883	29,959	13,032
Equipment–research and development	—	—	89,914

F-21

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

8     Capital stock

a) Common shares

Authorized

Unlimited number of voting common shares, without par value

Issued

	Number of shares	Amount $
Common shares
Balance at December 31, 2005	9,852,820	507,626
Shares issued to acquire Dragon-Tex	5,000,000	1,868,469
Conversion of preferred shares	1,418,000	312,240
Shares issued in brokered private placement net of offering costs	5,201,000	1,419,365
Shares issued on exercise of warrants	2,500	454
Shares issued on exercise of options	20,000	5,550
Shares issued on exercise of options	30,000	8,326
Balance at December 31, 2006	21,524,320	4,122,030
Shares issued on exercise of warrants	16,000	8,264
Shares issued on brokered private placement net of cash offering costs	7,493,508	2,397,190
Value of agents warrants issued	—	(107,016	)
Value ascribed to attached common share purchase warrants	—	(1,023,782	)
Shares issued on exercise of options	60,000	18,100
Balance at December 31, 2007	29,093,828	5,414,786
Shares issued in brokered public offering net of cash offering costs	12,168,667	1,398,294
Value of agents warrants issued	—	(92,928	)
Value ascribed to attached common share purchase warrants	—	(339,490	)
Shares issued on exercise of options	30,000	9,231
Balance at December 31, 2008	41,292,495	6,389,893
Shares issued in private placement net of cash offering cost	31,082,001	1,953,926
Value of agents warrants issued	—	(74,845	)
Value ascribed to attached common share purchase warrants	—	(595,990	)
Balance at December 31, 2009	72,374,496	7,672,984

Included in the total number of shares issued and outstanding as at December 31, 2009 are 6,297,100 shares and 3,148,500 common share purchase warrants held in escrow under two separate agreements. Under the first escrow, a total of 3,808,200 shares and 1,904,100 warrants will be released in five equal instalments, every nine months, between June 2010 and June 2012. Under the second escrow, a total of 2,488,900 shares and 1,244,400 warrants will be released in six equal instalments, every nine months, between March 2010 and September 2012.

These shares are included in the total number of shares issued and outstanding and are included in the calculation of basic loss per share.

F-22

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

2007 Private Placement

The Company completed a brokered private placement (the “2007 Private Placement”) whereby on June 1 and June 29, 2007 the Company issued 6,816,000 and 677,500 units (the “2007 Units”), respectively. Each 2007 Unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at a price of $0.62 for a period of 36 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange is greater than $0.76 for 20 or more consecutive trading days.

Agents for the 2007 Private Placement received a 7.5% selling commission and warrants to acquire that number of Units equal to 7.5% of the number of 2007 Units sold pursuant to the offering (excluding sales made to purchasers designated by the Chief Executive Officer of the Company, in which case the agents received a 1% selling commission and warrants to acquire that number of 2007 Units equal to 1% of the number of 2007 Units sold to such purchasers).

The relative fair value of the warrants included in the 2007 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 90%; expected life 3 years, and risk-free interest rate of 4.6%. The fair value of each warrant was $0.25 (June 1, 2007 closing) and $0.24 (June 29, 2007 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amounts of $929,702 and $94,080, respectively.

The agents warrants associated with these financings were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 90%; expected life 1.5 years, and risk-free interest rate of 4.6%. The fair value of each warrant was $0.21 (June 1, 2007 closing) and $0.21 (June 29, 2007 closing) per share, respectively. The fair value of these warrants was recorded as a cost of raising capital and amounted to $107,016.

2008 Prospectus Offering

The Company completed a prospectus financing (the “2008 Prospectus Financing”) whereby on August 7, 2008 and September 18, 2008 the Company issued 10,699,650 and 1,469,000 units (the “2008 Units”) respectively.

Each 2008 Unit consists of one common share and one-half of one transferable common share purchase warrant. Each full warrant entitles the holder thereof to purchase one common share at a price of $0.19 for a period of 24 months following the closing date of the offering; provided that, the Company can accelerate the expiration of the warrants, if, over a period of 20 consecutive trading days, the daily volume weighted average trading price of the Company’s common shares on the TSX Venture Exchange, exceeds $0.38. The Company may give warrant holders notice in writing within 30 days of such an occurrence that the warrants shall expire at 4:00p.m. (Vancouver time) on the 30th day following such notification.

The relative fair value of the warrants included in the 2008 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 181% and 180% respectively; expected life 2 years, and risk-free interest rate of 2.77% and 2.59% respectively. The fair value of each warrant was $0.10 (August 7, 2008 closing) and $0.10 (September 18, 2008 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amount of $339,490.

F-23

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Agents for the 2008 Prospectus Financing received a 7.5% selling commission and warrants to acquire that number of common shares equal to 7.5% of the number of 2008 Units sold pursuant to the offering, (excluding sales made to purchasers designated by the Chief Executive Officer of the Company, in which case the agents received a 2.5% selling commission and warrants to acquire that number of common shares equal to 2.5% of the number of Units sold to such purchasers). The Company paid to certain agents in conjunction with the 2008 Prospectus Financing, cash compensation of $160,940 and granted 889,250 warrants. Each warrant entitles the holder thereof to purchase one common share at a price of $0.14 for a period of 24 months following the closing date of the offering; provided that, if, over a period of 20 consecutive trading days, the daily volume weighted average trading price of the Company’s common shares on the TSX Venture Exchange, exceeds $0.38 on each of those 20 consecutive days, the Company may give notice in writing within 30 days of such an occurrence that the warrants shall expire at 4:00p.m. (Vancouver time) on the 30th day following the giving of such notice.

The agents’ warrants were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 181% and 180% respectively; expected life 2 years, and risk-free interest rate of 2.77% and 2.59% respectively. The fair value of each option was $0.10 (August 7, 2008 closing) and $0.10 (September 18, 2008 closing) per share respectively. The total value of the 2008 Agents’ Warrants of $92,928 was recorded as a reduction to proceeds from the 2008 Prospectus Financing.

2009 Private Placements

The Company completed a non brokered private placement (the “2009 Private Placement”) whereby on June 5 and June 25, 2009 the Company issued 15,423,500 and 4,576,500 units (the “2009 Units”) respectively. The Company also issued 625,000 2009 Units in satisfaction of $43,180 of expenses related to the private placement. Each 2009 Unit consists of one common share and one half a common share purchase warrant. Each full warrant entitles the holder thereof to purchase one common share at a price of $0.10 for a period of 24 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $0.28 for 20 or more consecutive trading days.

The Company paid agents’ commissions of $63,692 and issued 719,775 agents’ warrants with the same terms as those in the 2009 Units described above.

The relative fair value of the warrants included in the 2009 Private Placement units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 155% (June 5, 2009 closing) and 156% (June 25, 2009 closing); expected life 2 years, and risk-free interest rate of 1.28% (June 5, 2009 closing) and 1.23% (June 25, 2009 closing). The fair value of each warrant was $0.05 (June 5, 2009 closing) and $0.05 (June 25, 2009 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amounts of $273,904 and $70,343, respectively.

The Agent warrants associated with the 2009 Private Placement were valued using the same Black-Scholes option pricing model as the 2009 Units above. The fair value of these warrants was recorded as a cost of raising capital and amounted to $35,650.

F-24

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

On October 8, 2009, the Company closed a third non brokered private placement (the “October 2009 Private Placement”) whereby the Company issued to SEP Capital Corporation (“SEP”), a capital pool company listed on the TSX Venture Exchange (TSXV: SEP.P), 4,500,000 units (the “October 2009 Units). The Company also issued to SEP 125,000 October 2009 Units in satisfaction of $9,492 of expenses related to the private placement.

The Company paid to a third party an agent’s fee of $11,865 and issued warrants to purchase 156,250 common shares on the same terms as the warrants underlying the October 2009 Units.

The relative fair value of the warrants included in the October 2009 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 156%; expected life 2 years, and risk-free interest rate of 1.5%. The fair value of each warrant was $0.07 per share. The relative fair value of these warrants was allocated to warrants in the amounts of $103,335.

The agent warrants associated with the October 2009 Private Placement were valued using the same Black-Scholes option pricing model as the October 2009 Units. The fair value of these warrants was recorded as a cost of raising capital and amounted to $10,893.

On December 24, 2009, the Company closed a fourth non brokered private placement (the “December 2009 Private Placement”) and issued 5,832,000 units (the “December 2009 Units”) for gross proceeds of $667,297. Each December 2009 Unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant will entitle the holder to purchase one common share at a price of $0.17 for a period of 24 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $0.29 for 20 or more consecutive trading days.

The Company also paid agents’ commissions of $42,706 and issued 373,240 agents’ warrants with the same terms as those in the December 2009 Units described above.

The relative fair value of the warrants included in the December 2009 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 152%; expected life 2 years, and risk-free interest rate of 1.39%. The fair value of each warrant was $0.08 per share. The relative fair value of these warrants was allocated to warrants in the amounts of $148,408.

The agent warrants associated with the December 2009 Private Placement were valued using the same Black-Scholes option pricing model as the December 2009 Units. The fair value of these warrants was recorded as a cost of raising capital and amounted to $28,302.

b) Stock options

On February 13, 2006, the Board of Directors of Predecessor Company adopted the Med BioGene Inc. 2006 Incentive Stock Option Plan (the “Plan”). At the annual and special meeting of the Company held on December 30, 2008, the shareholders of the Company approved the amendment of the Plan to increase to 8,250,000 common shares in respect of which stock options may be granted thereunder. At the annual and special meeting of the Company held on February 12, 2010, the shareholders of the Company approved the amendment to the Plan to increase the number of common shares in respect of

F-25

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

which stock options may be granted thereunder to 14.474 million prior to the IPO (as defined in Note 13(a)), and following the IPO, to increase such number to a number equal to 20% of the then issued and outstanding common shares of the Company, subject to a formula increase each year thereafter.

Employee options vest over 18 months and expire in 5 years from the grant date. Options granted to non-employees vest over 12 months with the expiration periods ranging from 13 months to 5 years from the grant date.

The tables below provide information regarding outstanding options granted under the Plan up to December 31, 2009:

			Weighted average exercise price
	Options		US$
Granted in August 2004	250,000		0.10
Outstanding–December 31, 2005	250,000		0.10
Granted	3,250,000		0.38
Exercised	(50,000	)	0.10
Outstanding–December 31, 2006	3,450,000		0.37
Granted	1,037,500		0.39
Exercised	(60,000	)	0.10
Forfeited	(150,000	)	0.38
Outstanding–December 31, 2007	4,277,500		0.37
Granted	700,000		0.27
Exercised	(30,000	)	0.10
Forfeited	(75,000	)	0.38
Expired	(300,000	)	0.43
Outstanding–December 31, 2008	4,572,500		0.35
Granted	4,625,000		0.10
Forfeited	(1,855,000	)	0.36
Expired	(110,000	)	0.10
Outstanding–December 31, 2009	7,232,500		0.19

F-26

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

The following table summarizes the information about the stock options outstanding and exercisable at December 31, 2009:

		Options outstanding				Options exercisable
Exercise price (i)	Number outstanding	Weighted average remaining contractual life (years)	Intrinsic value (ii)		Number	Weighted average exercise price (i)	Intrinsic value (ii)
0.10	4,175,000	4.2	(79,576	)	2,219,444	0.10	(42,303	)
0.13	350,000	4.8	5,019		38,889	0.13	558
0.14	50,000	3.5	1,437		47,222	0.14	1,357
0.16	200,000	3.4	9,548		200,000	0.16	9,548
0.32	727,500	2.9	152,877		727,500	0.32	152,877
0.38	1,700,000	1.4	454,818		1,700,000	0.38	454,818
0.56	30,000	2.1	13,474		30,000	0.56	13,474
0.19	7,232,500	3.0	557,597		4,963,056	0.23	590,329

(i) the exercise prices of all stock options are denominated in Canadian dollars and are translated to US dollars at the December 31, 2009 exchange rate

(ii) based on the closing market share price on December 31, 2009 of $0.12

The fair value of the Company’s stock options granted was estimated using the Black-Scholes option pricing model and the following assumptions:

	2009	2008	2007
Expected volatility	108-121%	98%	90%
Weighed average expected volatility (iii)	109%	98%	90%
Risk-free interest rate (iii)	2.11% to 2.75%	1.69% to 3.48%	4.08% to 4.32%
Expected life	5 years	5 years	5 years
Options granted	4,625,000	7,000,000	1,037,500
Weighted average fair value per option	0.04	0.07	0.23
Dividend yield	0%	0%	0%

(iii) the volatility and risk-free interest rate assumptions varied over the expected term of these stock option grants. As at December 2009, there was $93,917 (2008–$62,249; 2007–$246,612) of unrecognized compensation cost relating to unvested stock options. We expect to recognize this cost over a weighted average period of 0.93 years (2008–0.3 years; 2007–1.3 years).

The Company recorded stock-based compensation expense of $128,287 for the year ended December 31, 2009, $221,219, during the year ended December 31, 2008, and $671,404 during the year ended December 31, 2007.

F-27

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

c) Warrants

As at December 31, 2009, the following warrants were outstanding:

Issuance date	Description	Number outstanding	Weighted average exercise price*	Expiration date
June 1, 2007	Unit warrants issued in 2007 private placement (tranche one)	6,816,008	0.62	June 1, 2010
June 1,2007	Warrants issued as agent’s fee in 2007 private placement (tranche one)	466,459	0.43	June 1, 2010
June 29, 2007	Unit warrants issued in 2007 private placement (tranche two)	677,500	0.62	June 29, 2010
June 29, 2007	Warrants issued as agent’s fee in 2007 private placement (tranche two)	50,813	0.43	June 29,2010
August 7, 2008	Unit warrants issued in 2008 private offering (tranche one)	5,349,834	0.19	August 7, 2010
August 7, 2008	Warrants issued as agent’s fee in 2008 public offering (tranche one)	779,025	0.14	August 7, 2010
September 18, 2008	Unit warrants issued in 2008 public offering (tranche two)	734,500	0.19	September 18, 2010
September 18, 2008	Warrants issued as agent’s fee in 2008 public offering (tranche two)	110,175	0.14	September 18, 2010
June 5, 2009	Unit warrants issued in 2009 private placement (tranche one)	7,711,744	0.10	June 5, 2011
June 5, 2009	Warrants issued in 2009 private placement (tranche one)	427,700	0.10	June 5, 2011
June 25, 2009	Unit warrants issued as agent’s fee in 2009 private placement (tranche two)	2,600,756	0.10	June 25, 2011
June 25, 2009	Warrants issued as agent’s fee in 2009 private placement (tranche two)	292,075	0.10	June 25, 2011
October 8, 2009	Unit warrants issued in 2009 private placement	2,312,500	0.10	October 8, 2011
October 8, 2009	Warrants issued as agent’s fee in 2009 private placement	156,250	0.10	October 8, 2011
December 24, 2009	Unit warrants issued in 2009 private placement	2,916,000	0.17	December 24, 2011
December 24, 2009	Warrants issued as agent’s fee in 2009 private placement	373,240	0.17	December 24, 2011
	Balance at December 31, 2009	31,774,579	0.25

* the exercise prices of all share purchase warrants are denominated in Canadian dollars and are translated to US dollars at the December 31, 2009 exchange rate

F-28

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

	$
Balance at December 31, 2004 and 2005	—
Warrants issued on conversion of preferred shares	34,437
Agents warrants	92,338
Exercise of warrants	(268	)
Balance at December 31, 2006	126,507
Exercise of warrants	(2,804	)
Agents fee warrants issued on private placement	107,016
Value ascribed to common share purchase warrants on private placement	1,023,781
Balance at December 31, 2007	1,254,500
Agents fee warrants issued on public offering	92,928
Value ascribed to common share purchase warrants on public offering	339,490
Balance at December 31, 2008	1,686,918
Agents fee warrants issued on private placement	74,845
Value ascribed to common share purchase warrants on private placement	595,990
Balance at December 31, 2009	2,357,753

d) Contributed surplus

	$
Balance–December 31, 2004 and 2005	45,055
Stock-based compensation	407,827
Exercise of options	(9,133	)
Balance–December 31, 2006	443,749
Stock-based compensation	671,404
Exercise of options	(12,229	)
Balance–December 31, 2007	1,102,924
Stock-based compensation	221,219
Exercise of options	(6,236	)
Balance–December 31, 2008	1,317,907
Stock-based compensation	128,287
Balance–December 31, 2009	1,446,194

F-29

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

9    Deferred income taxes

As at December 31, 2009, the Company has accumulated non-capital tax loss carryforwards, which can be applied to reduce taxable income in future years, which expire as follows:

	2009* $
2010	—
2014	77,104
2015	219,903
2026	506,984
2027	1,079,030
2028	1,552,416
2029	1,687,966
	5,123,403

* represents the gross amount of tax loss carryforwards translated at closing exchange rate

The Company has investment tax credit carryforwards totaling $725,433 which can be used to reduce taxable income in future taxation years. These carryforwards expire between the years of 2023 and 2028.

The Company has a Scientific Research and Expenditure pool carryforward of $2,125,425 which can be used to reduce taxable income in future taxation years. This pool carries forward indefinitely.

The tax effects of the temporary differences that give rise to significant portions of the consolidated deferred tax assets and future tax liabilities at December 31, 2009 are presented below:

	2009 $		2008 $		2007 $
Deferred tax assets (liabilities)
Non-capital losses carried forward	1,280,851		893,113		501,334
Research and development expenditure pool	531,342		232,064		527,024
Property and equipment	(41,768	)	(56,360	)	(103,825	)
Investment tax credit	598,570		509,100		443,910
Cumulative eligible capital expenditures	184,219		109,940		127,761
Financing costs	94,474		96,832		115,889
	2,647,688		1,784,689		1,612,093
Less: Valuation allowance	(2,647,688	)	(1,784,689	)	(1,612,093	)
	—		—		—

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As management believes there is sufficient uncertainty regarding the realization of deferred tax assets, a full valuation allowance has been provided.

F-30

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

The income tax recovery for the respective periods differs from the amount obtained by applying the applicable statutory income tax rate to the loss before income tax as follows:

	2009		2008		2007
Statutory income tax rate	30.00	%	31.06	%	34.12	%
	$		$		$
Income tax recovery based on statutory rate	(640,370	)	(664,571	)	(776,387	)
Increase in valuation allowance	512,750		558,641		746,921
Tax rate differential	147,116		146,145		(44,117	)
Permanent differences	(44,946	)	15,397		121,477
Change in estimates	(1,066	)	(70,899	)	(17,762	)
Expiry of losses	27,870
Other	(1,354	)	15,286		(30.132	)
Unrecognized tax benefits	—		—		—

Management did not recognize any tax benefits. The operating losses carryforward from inception are still open for income tax examination by Canadian taxation authorities.

10    Government contribution agreement

On February 8, 2007, the Company entered into a government contribution agreement with the National Research Council of Canada’s Industrial Research Assistance Program (“NRC-IRAP”). Under the terms of the agreement, NRC-IRAP reimbursed $295,118 of research and development costs incurred by the Company for research in the area of cardiovascular disease based on reimbursement of 50% of eligible research expenses. The government contributions have been offset against the applicable costs from which they are being contributed. Under this program, the Company claimed grant contributions in the year ending December 31, 2009 of $9,180 and $93,250 and $175,603 respectively for the fiscal years 2008 and 2007. Funding under this NRC-IRAP was exhausted in the first quarter of 2009.

During the third quarter of 2009, the Company entered into an additional NRC-IRAP agreement. This agreement funded a specific research project conducted on the Company’s behalf by a third party consultant. This NRC-IRAP grant covered 50% of the costs of the project and totalled $17,090. The project has been completed and no further funds are collectable or due under this project.

As at December 31, 2009 the Company had no agreements in place to obtain or receive further government funding, has no amounts due under any prior agreements and has not made applications to obtain any such funding.

11    Related party transactions

The Company retains Farris, Vaughan, Wills & Murphy LLP, a law firm where R. Hector MacKay-Dunn, Q.C., a director of and corporate secretary to the Company, is a senior partner. For the years ending 2009, 2008 and 2007, we incurred legal fees payable to Farris, Vaughan, Wills & Murphy LLP of $89,308, $86,658 and $45,296, respectively.

F-31

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Berkeley Capital Corp. II (“Berkeley”) (Formerly TSXV: BIZ.P), participated as lead investor in the Company’s June 2009 non-brokered private placement. Concurrent with the closing of the private placement, Kevin K. Rooney, then a director of and legal counsel to Berkeley, was appointed as a director of the Company. In consideration of Berkeley incurring certain expenses associated with completing the investment, the Company reimbursed $43,180 of Berkeley’s legal fees owing to Hayden Bergman Rooney, Professional Corporation, a law firm of which Mr. Rooney is a shareholder. Such payment was satisfied by the issuance to Hayden Bergman Rooney of 625,000 units in the private placement.

In addition, the Company incurred legal fees payable to Hayden Bergman Rooney during the year ended December 31, 2009 in the amount of $124,567 ((2008–$nil; 2007–$nil).

The Company pays consulting fees to one of the directors, Dr. Heiner Dreismann, in his capacity as a product development and commercialization consultant. Consulting fees of $62,069 were paid in the year ended December 31, 2009 ((2008–$40,370; 2007–$nil).

Related party transactions are reflected as part of general and administrative expense. Amounts owing to these related parties as at December 31, 2009 were $213,788 (2008–$22,638; 2007–$nil).

12    Commitments

The Company has a lease for its office and laboratory space which expires in August 2010, at a monthly rate of $5,570.

On April 14, 2008, the Company entered into development agreements with the UHN to provide the Company with exclusive world-wide rights to commercialize a prognostic test for early-stage non-small-cell lung cancer developed by UHN. Effective February 24, 2009 the Company expanded its development agreement with UHN. The agreement expands the intellectual property licensed to the Company and amends the terms of the research collaboration between UHN and the Company. Under these agreements, the Company and UHN are collaborating in certain activities related to the development and validation of LungExpress Dx and associated data analysis and in the collection of patient specimens to be used in such activities. The Company is obligated to suspend certain research work covered under the April 14, 2008 agreement. The research and development expense for this project incurred since inception is approximately $615,911. The Company is obligated to provide UHN with up to $866,925 in further milestone and development payments, along with royalties based on future net sales of the tests. We expect this project to be completed and the balance of research funding expended by the end of 2010. Approximately 90% of the above contractual obligations to UHN are related to the launch and commercialization of LungExpress Dx and if we are unsuccessful in our commercialization efforts, these amounts may never become obligations of the Company.

13    Subsequent Events

a) Stock options

The Plan was adopted by the Board in February 2006, and approved by the shareholders in March 2006. On February 12, 2010, the shareholders approved at the annual and special meeting of the Company, an amendment to the Plan to increase the number of common shares in respect of which stock options may be granted thereunder from 8.25 million to 14.474 million common shares.

F-32

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Further, upon closing of the Company’s proposed initial public offering in the United States and listing of its common shares on The NASDAQ Capital Market (the “IPO”), the Plan will be amended to:

i) Increase the number of common shares in respect of which stock options may be granted thereunder from 14.474 million to such number equal to 20% of the then issued and outstanding common shares; and

ii) Allow for further increases in the number of commons shares in respect of which stock options may be granted hereunder on the first day of each calendar year beginning with the 2011 calendar year, in an amount equal to the lesser of; (i) 5% of the outstanding common shares on the last day of the immediately preceding calendar year; or (ii) such number of common shares determined by the Board.

On February 8, 2010, Dr. Michael Hayden, one of our directors, was issued options to purchase 150,000 shares of common stock of the Company at an exercise price per share of $0.12.

b) Shareholder rights plan

We have implemented a shareholder rights plan effective January 15, 2010. Under our rights plan, each of our common shares will have associated with it one “right”. Each of these rights entitles its holder to acquire additional common shares at a 50% discount from the then prevailing market price under circumstances provide for in the rights plan.

c) Reverse Stock Split (pro forma unaudited)

The Company intends to, and is currently seeking shareholder approval to, effect a reverse stock split of between 1-for-10 and 1-for-70 in connection with the IPO. The reverse stock split will be effective prior to or upon the effectiveness of the registration statement (“Registration Statement”) on Form F-1 filed by the Company with the United States Securities and Exchange Commission in connection with the IPO, which includes these audited consolidated financial statements. No fractional common shares will be issued in connection with the stock split, and all such fractional interests will be rounded down to the nearest whole number of common shares. Issued and outstanding stock options and warrants will be split on the same basis and exercise prices will be adjusted accordingly.

Certain information provided in the Registration Statement with regards to the Company’s securities reflects an assumed 1-for-50 reverse stock split. As such, for purposes of consistency and cross-reference between the applicable disclosure in the Registration Statement and the information set forth in these audited consolidated financial statements, the Company has reproduced below under the applicable sub-headings on as as-split basis assuming a 1-for-50 reverse stock split all Company financial data and disclosure in these audited consolidated financial statements that will be affected by the reverse stock split.

Consolidated Statement of Earnings (assuming 1-for-50 reverse stock split)

	2009 $ (pro forma unaudited)		2008 $ (pro forma unaudited)		2007 $ (pro forma unaudited)
Basic and diluted loss per share	(1.98	)	(3.17	)	(4.40	)
Weighted average number of common shares outstanding	1,080,192		675,782		517,482

F-33

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Consolidated Statement of Shareholders’ Equity (assuming 1-for-50 reverse stock split)

	Common Shares (pro forma unaudited)
Balance—December 31, 2005	197,056
Shares issued to acquire Dragon-Tex	100,000
Shares issued on conversion of preferred shares	28,360
Shares issued in brokered private placement—net of offering costs	104,020
Shares issued on exercise of warrants	50
Shares issued on exercise of options	1,000
Comprehensive loss for the year—cumulative translation adjustment	—
Warrants	—
Stock-based compensation expense	—
Loss for the year	—
Balance—December 31, 2006	430,486
Shares issued on exercise of warrants	320
Carried forward	430,806
Brought forward	430,806
Shares issued in brokered private placement—net of offering costs	149,870
Value of agents warrants	—
Value ascribed to attached common share purchase warrants	—
Shares issued on exercise of options	1,200
Comprehensive income for the year—cumulative translation adjustment	—
Stock-based compensation expense	—
Loss for the year	—
Balance—December 31, 2007	581,876
Shares issued in brokered private placement—net of offering costs	243,373
Value of agents warrants	—
Carried forward	825,249
Brought forward	825,249
Value ascribed to attached common share purchase warrants	—
Shares issued on exercise of options	600
Comprehensive loss for the year—cumulative translation adjustment	—
Stock-based compensation expense	—
Loss for the year	—
Balance—December 31, 2008	825,849
Carried forward	825,849
Shares issued in private placement—net of offering costs	621,640
Value of agents warrants	—
Value ascribed to attached common share purchase warrants	—
Stock-based compensation expense	—
Loss for the year	—
Comprehensive income for the year	—
Balance—December 31, 2009	1,447,489

F-34

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Capital Stock (assuming 1-for-50 reverse stock split)

Common shares (assuming 1-for-50 reverse stock split)

Authorized

Unlimited number of voting common shares, without par value

Issued

	Number of shares (pro forma unaudited)	Amount $
Common shares
Balance at December 31, 2005	197,056	507,626
Shares issued to acquire Dragon-Tex	100,000	1,868,469
Conversion of preferred shares	28,360	312,240
Shares issued in brokered private placement net of offering costs	104,020	1,419,365
Shares issued on exercise of warrants	50	454
Shares issued on exercise of options	400	5,550
Shares issued on exercise of options	600	8,326
Balance at December 31, 2006	430,486	4,122,030
Shares issued on exercise of warrants	320	8,264
Shares issued on brokered private placement net of cash offering costs	149,870	2,397,190
Value of agents warrants issued	—	(107,016	)
Value ascribed to attached common share purchase warrants	—	(1,023,782	)
Shares issued on exercise of options	1,200	18,100
Balance at December 31, 2007	581,876	5,414,786
Shares issued in brokered public offering net of cash offering costs	243,373	1,398,294
Value of agents warrants issued	—	(92,928	)
Value ascribed to attached common share purchase warrants	—	(339,490	)
Shares issued on exercise of options	600	9,231
Balance at December 31, 2008	825,849	6,389,893
Shares issued in private placement net of cash offering cost	621,640	1,953,926
Value of agents warrants issued	—	(74,845	)
Value ascribed to attached common share purchase warrants	—	(595,990	)
Balance at December 31, 2009	1,447,489	7,672,984

Included in the total number of shares issued and outstanding as at December 31, 2009 are 113,247 shares and 56,623 common share purchase warrants held in escrow under two separate agreements. Under the first escrow, a total of 63,470 shares and 31,725 warrants will be released in five equal instalments, every six months, between June 2010 and June 2012. Under the second escrow, a total of 49,777 shares and 24,889 warrants will be released in six equal instalments, every six months, between March 2010 and September 2012.

These shares are included in the total number of shares issued and outstanding and are included in the calculation of basic loss per share.

F-35

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

2007 Private Placement (pro forma unaudited)

The Company completed a brokered private placement (the “2007 Private Placement”) whereby on June 1 and June 29, 2007 the Company issued 136,320 and 13,550 units (the “2007 Units”), respectively. Each 2007 Unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at a price of $31.05 for a period of 36 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange is greater than $37.74 for 20 or more consecutive trading days.

Agents for the 2007 Private Placement received a 7.5% selling commission and warrants to acquire that number of Units equal to 7.5% of the number of 2007 Units sold pursuant to the offering (excluding sales made to purchasers designated by the Chief Executive Officer of the Company, in which case the agents received a 1% selling commission and warrants to acquire that number of 2007 Units equal to 1% of the number of 2007 Units sold to such purchasers).

The relative fair value of the warrants included in the 2007 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 90%; expected life 3 years, and risk-free interest rate of 4.6%. The fair value of each warrant was $12.28 (June 1, 2007 closing) and $12.10 (June 29, 2007 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amounts of $929,702 and $94,080, respectively.

The agents warrants associated with these financings were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 90%; expected life 1.5 years, and risk-free interest rate of 4.6%. The fair value of each warrant was $10.51 (June 1, 2007 closing) and $10.51 (June 29, 2007 closing) per share, respectively. The fair value of these warrants was recorded as a cost of raising capital and amounted to $107,016.

2008 Prospectus Offering (pro forma unaudited)

The Company completed a prospectus financing (the “2008 Prospectus Financing”) whereby on August 7, 2008 and September 18, 2008 the Company issued 213,993 and 29,380 units (the “2008 Units”) respectively.

Each 2008 Unit consists of one common share and one-half of one transferable common share purchase warrant. Each full warrant entitles the holder thereof to purchase one common share at a price of $9.56 for a period of 24 months following the closing date of the offering; provided that, the Company can accelerate the expiration of the warrants, if, over a period of 20 consecutive trading days, the daily volume weighted average trading price of the Company’s common shares on the TSX Venture Exchange, exceeds $19.00. The Company may give warrant holders notice in writing within 30 days of such an occurrence that the warrants shall expire at 4:00p.m. (Vancouver time) on the 30th day following such notification.

The relative fair value of the warrants included in the 2008 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 181% and 180% respectively; expected life 2 years, and risk-free interest rate of 2.77% and 2.59% respectively. The fair value of each warrant was $5.14 (August 7, 2008 closing) and $4.91

F-36

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

(September 18, 2008 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amount of $339,490.

Agents for the 2008 Prospectus Financing received a 7.5% selling commission and warrants to acquire that number of common shares equal to 7.5% of the number of 2008 Units sold pursuant to the offering, (excluding sales made to purchasers designated by the Chief Executive Officer of the Company, in which case the agents received a 2.5% selling commission and warrants to acquire that number of common shares equal to 2.5% of the number of Units sold to such purchasers). The Company paid to certain agents in conjunction with the 2008 Prospectus Financing, cash compensation of $160,940 and granted 17,785 warrants. Each warrant entitles the holder thereof to purchase one common share at a price of $7.17 for a period of 24 months following the closing date of the offering; provided that, if, over a period of 20 consecutive trading days, the daily volume weighted average trading price of the Company’s common shares on the TSX Venture Exchange, exceeds $19.00 on each of those 20 consecutive days, the Company may give notice in writing within 30 days of such an occurrence that the warrants shall expire at 4:00p.m. (Vancouver time) on the 30th day following the giving of such notice.

The agents’ warrants were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 181% and 180% respectively; expected life 2 years, and risk-free interest rate of 2.77% and 2.59% respectively. The fair value of each option was $5.14 (August 7, 2008 closing) and $4.91 (September 18, 2008 closing) per share respectively. The total value of the 2008 Agents’ Warrants of $92,928 was recorded as a reduction to proceeds from the 2008 Prospectus Financing.

2009 Private Placements (pro forma unaudited)

The Company completed a non brokered private placement (the “2009 Private Placement”) whereby on June 5 and June 25, 2009 the Company issued 308,470 and 91,530 units (the “2009 Units”) respectively. The Company also issued 12,500 2009 Units in satisfaction of $43,180 of expenses related to the private placement. Each 2009 Unit consists of one common share and one half a common share purchase warrant. Each full warrant entitles the holder thereof to purchase one common share at a price of $4.78 for a period of 24 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $14.00 for 20 or more consecutive trading days.

The Company paid agents’ commissions of $63,692 and issued 14,396 agents’ warrants with the same terms as those in the 2009 Units described above.

The relative fair value of the warrants included in the 2009 Private Placement units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 155% (June 5, 2009 closing) and 156% (June 25, 2009 closing); expected life 2 years, and risk-free interest rate of 1.28% (June 5, 2009 closing) and 1.23% (June 25, 2009 closing). The fair value of each warrant was $2.67 (June 5, 2009 closing) and $2.69 (June 25, 2009 closing) per share, respectively. The relative fair value of these warrants was allocated to warrants in the amounts of $273,904 and $69,755, respectively.

F-37

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

The agent warrants associated with the 2009 Private Placement were valued using the same Black-Scholes option pricing model as the 2009 Units above. The fair value of these warrants was recorded as a cost of raising capital and amounted to $35,619.

On October 8, 2009, the Company closed a third non brokered private placement (the “October 2009 Private Placement”) whereby the Company issued to SEP Capital Corporation (“SEP”), a capital pool company listed on the TSX Venture Exchange (TSXV: SEP.P), 90,000 units (the “October 2009 Units. The Company also issued to SEP 2,500 October 2009 Units in satisfaction of $9,492 of expenses related to the private placement.

The Company paid to a third party an agent’s fee of $11,865 and issued warrants to purchase 3,125 common shares on the same terms as the warrants underlying the October 2009 Units.

The relative fair value of the warrants included in the October 2009 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 156%; expected life 2 years, and risk-free interest rate of 1.5%. The fair value of each warrant was $3.51 per share. The relative fair value of these warrants was allocated to warrants in the amounts of $103,335.

The agent warrants associated with the October 2009 Private Placement were valued using the same Black-Scholes option pricing model as the October 2009 Units. The fair value of these warrants was recorded as a cost of raising capital and amounted to $10,893.

On December 24, 2009, the Company closed a fourth non brokered private placement (the “December 2009 Private Placement”) and issued 116,640 units (the “December 2009 Units”) for gross proceeds of $667,297. Each December 2009 Unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant will entitle the holder to purchase one common share at a price of $8.60 for a period of 24 months following the closing date of the offering; provided that, the Company may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Company’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $14.50 for 20 or more consecutive trading days.

The Company also paid agents’ commissions of $42,706 and issued 7,465 agents’ warrants with the same terms as those in the December 2009 Units described above.

The relative fair value of the warrants included in the December 2009 Units were valued using the Black-Scholes option pricing model using the following fair value assumptions: dividend yield 0%; volatility 152%; expected life 2 years, and risk-free interest rate of 1.39%. The fair value of each warrant was $3.80 per share. The relative fair value of these warrants was allocated to warrants in the amounts of $148,408.

The agent warrants associated with the December 2009 Private Placement were valued using the same Black-Scholes option pricing model as the December 2009 Units. The fair value of these warrants was recorded as a cost of raising capital and amounted to $28,302.

Stock options (assuming 1-for-50 reverse stock split) (pro forma unaudited)

On February 13, 2006, the Board of Directors of Predecessor Company adopted the Med BioGene Inc. 2006 Incentive Stock Option Plan (the “Plan”). At the annual and special meeting of the Company held

F-38

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

on December 30, 2008, the shareholders of the Company approved the amendment of the Plan to increase to 165,000 common shares in respect of which stock options may be granted thereunder.

Employee options vest over 18 months and expire in 5 years from the grant date. Options granted to non-employees vest over 12 months with the expiration periods ranging from 13 months to 5 years from the grant date.

The tables below provide information regarding outstanding options granted under the Plan up to December 31, 2009 (pro forma unaudited):

	Options		Weighted average exercise price US$
Granted in August 2004	5,000		4.78
Outstanding–December 31, 2005	5,000		4.78
Granted	65,000		19.11
Exercised	(1,000	)	4.78
Outstanding–December 31, 2006	69,000		18.28
Granted	20,750		19.43
Exercised	(1,200	)	4.78
Forfeited	(3,000	)	19.11
Outstanding–December 31, 2007	85,550		18.72
Granted	14,000		13.27
Exercised	(600	)	4.78
Forfeited	(1,500	)	19.11
Expired	(6,000	)	21.61
Outstanding–December 31, 2008	91,450		17.78
Granted	92,500		4.90
Forfeited	(37,100	)	18.03
Expired	(2,200	)	4.78
Outstanding–December 31, 2009	144,650		9.68

F-39

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

The following table summarizes the information about the stock options outstanding and exercisable at December 31, 2009 (pro forma unaudited):

Exercise price (i)	Number outstanding	Options outstanding				Options exercisable
		Weighted average remaining contractual life (years)	Intrinsic value (ii)		Number	Weighted average exercise price (i)	Intrinsic value (ii)
4.78	83,500	4.2	(79,576	)	44,389	4.78	(42,303	)
6.45	7,000	4.8	5,019		778	6.45	558
7.17	1,000	3.5	1,437		944	7.17	1,357
8.12	4,000	3.4	9,548		4,000	8.12	9,548
16.24	14,550	2.9	152,877		14,550	16.24	152,877
19.11	34,000	1.4	454,818		34,000	19.11	454,818
28.19	600	2.1	13,474		600	28.19	13,474
9.27	144,650	3.0	557,597		99,261	11.68	590,329

(i) the exercise prices of all stock options are denominated in Canadian dollars and are translated to US dollars at the December 31, 2009 exchange rate

(ii) based on the closing market share price on December 31, 2009 of $5.73

The fair value of the Company’s stock options granted was estimated using the Black-Scholes option pricing model and the following assumptions:

	2009	2008	2007
Expected volatility	108-121%	98%	90%
Weighed average expected volatility (iii)	109%	98%	90%
Risk-free interest rate (iii)	2.11% to 2.75%	1.69% to 3.48%	4.08% to 4.32%
Expected life	5 years	5 years	5 years
Options granted	92,500	140,000	20,750
Weighted average fair value per option	1.84	3.36	11.60
Dividend yield	0%	0%	0%

(iii) the volatility and risk-free interest rate assumptions varied over the expected term of these stock option grants. As at December 2009, there was $93,917 (2008–$62,249) of unrecognized compensation cost relating to unvested stock options. We expect to recognize this cost over a weighted average period of 0.93 years (2008–0.3 years)

F-40

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Warrants (assuming 1-for-50 reverse stock split)

As at December 31, 2009, the following warrants were outstanding (pro forma unaudited):

Issuance date	Description	Number outstanding	Weighted average exercise price*	Expiration date
June 1, 2007	Unit warrants issued in 2007 private placement (tranche one)	136,320	31.05	June 1, 2010
June 1,2007	Warrants issued as agent’s fee in 2007 private placement (tranche one)	9,329	21.50	June 1, 2010
June 29, 2007	Unit warrants issued in 2007 private placement (tranche two)	13,550	31.05	June 29, 2010
June 29, 2007	Warrants issued as agent’s fee in 2007 private placement (tranche two)	1,016	21.50	June 29,2010
August 7, 2008	Unit warrants issued in 2008 private offering (tranche one)	106,997	9.56	August 7, 2010
August 7, 2008	Warrants issued as agent’s fee in 2008 public offering (tranche one)	15,581	7.17	August 7, 2010
September 18, 2008	Unit warrants issued in 2008 public offering (tranche two)	14,690	9.56	September 18, 2010
September 18, 2008	Warrants issued as agent’s fee in 2008 public offering (tranche two)	2,204	7.17	September 18, 2010
June 5, 2009	Unit warrants issued in 2009 private placement (tranche one)	154,235	4.78	June 5, 2011
June 5, 2009	Warrants issued in 2009 private placement (tranche one)	8,554	4.78	June 5, 2011
June 25, 2009	Unit warrants issued as agent’s fee in 2009 private placement (tranche two)	52,015	4.78	June 25, 2011
June 25, 2009	Warrants issued as agent’s fee in 2009 private placement (tranche two)	5,842	4.78	June 25, 2011
October 8, 2009	Unit warrants issued in 2009 private placement	46,250	4.78	October 8, 2011
October 8, 2009	Warrants issued as agent’s fee in 2009 private placement	3,125	4.78	October 8, 2011
December 24, 2009	Unit warrants issued in 2009 private placement	58,320	8.60	December 24, 2011
December 24, 2009	Warrants issued as agent’s fee in 2009 private placement	7,465	8.60	December 24, 2011
	Balance at December 31, 2009	635,493	12.62

* the exercise prices of all share purchase warrants are denominated in Canadian dollars and are translated to US dollars at the December 31, 2009 exchange rate

F-41

Med BioGene Inc.

(a development stage company)

Notes to Consolidated Financial Statements–(Continued)

December 31, 2009, 2008, and 2007

(in US dollars)

Related party transactions (assuming 1-for-50 reverse stock split) (pro forma unaudited)

Berkeley Capital Corp. II (“Berkeley”) (formerly TSXV: BIZ.P), participated as lead investor in the Company’s June 2009 non-brokered private placement. Concurrent with the closing of the private placement, Kevin K. Rooney, then a director of and legal counsel to Berkeley, was appointed as a director of the Company. In consideration of Berkeley incurring certain expenses associated with completing the investment, the Company reimbursed $43,180 of Berkeley’s legal fees owing to Hayden Bergman Rooney, Professional Corporation, a law firm of which Mr. Rooney is a shareholder. Such payment was satisfied by the issuance to Hayden Bergman Rooney of 12,500 units in the private placement.

Subsequent events (assuming 1-for-50 reverse stock split) (pro forma unaudited)

Stock Option Plan

The Company’s Stock Option Plan (the “2006 Option Plan”) was adopted by the Board in February 2006, and approved by the shareholders in March 2006. On February 12, 2010, the shareholders approved at the annual and special meeting of the Company an amendment to the Plan to increase the number of common shares in respect of which stock options may be granted thereunder from 165,000 to 289,480 common shares.

Further, upon closing of the Company’s proposed initial public offering in the United States and listing of its common shares on The NASDAQ Capital Market (the “IPO”), the Plan will be amended to:

i) Increase the number of common shares in respect of which stock options may be granted thereunder from 289,480 to such number equal to 20% of the then issued and outstanding common shares; and

ii) Allow for further increases in the number of commons shares in respect of which stock options may be granted hereunder on the first day of each calendar year beginning with the 2011 calendar year, in an amount equal to the lesser of; (i) 5% of the outstanding common shares on the last day of the immediately preceding calendar year; or (ii) such number of common shares determined by the Board.

On February 8, 2010, Dr. Michael Hayden, one of our directors, was issued options to purchase 3,000 shares of common stock of the Company at an exercise price of $6.21 per share.

d) The company has considered subsequent events up to February 9, 2010.

F-42

Through and including [                    ], 2010 (the 25^th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters with respect to their unsold allotments or subscriptions.

[            ] Common Shares

PROSPECTUS

Rodman & Renshaw, LLC

[                    ], 2010

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 6. Indemnification of Directors and Officers

Under the Business Corporations Act (British Columbia), or BCBCA, a company may indemnify an individual who:

• is or was a director or officer of the company;

• is or was a director or officer of another corporation: (a) at the time when such corporation is or was an affiliate of the company; or, (b) at the request of the company; or

• at the request of the company, is or was, acting in a similar capacity of a partnership, trust, joint venture or other unincorporated entity,

against a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of any legal proceeding or investigative action, whether current, threatened, pending or completed, in which such eligible party is involved because of that association with the company or other entity.

However, indemnification is prohibited under the BCBCA if:

• such eligible party did not act honestly and in good faith with a view to the company’s best interests (or the other entity, as the case may be); and

• in the case of a proceeding other than a civil proceeding, such eligible party did not have reasonable grounds for believing that such person’s conduct was lawful.

A company may not indemnify or pay the expenses of an eligible party in respect of an action brought against an eligible party by or on behalf of the company.

The BCBCA allows a company to pay, as they are incurred in advance of a final disposition of a proceeding, the expenses actually and reasonably incurred by the eligible party, provided that the company receives from such eligible party an undertaking to repay the amounts advanced if it is ultimately determined that such payment is prohibited.

Despite the foregoing, on application by a company or an eligible party, a court may:

• order the company to indemnify an eligible party in respect of an eligible proceeding;

• order the company to pay some or all of the expenses incurred by an eligible party in an eligible proceeding;

• order enforcement of or any payment under an indemnification agreement;

• order the company to pay some or all of the expenses actually and reasonably incurred by a person in obtaining the order of the court; and/or

• make any other order the court considers appropriate.

The BCBCA provides that a company may purchase and maintain insurance for the benefit of an eligible party (or their heirs and personal or other legal representatives of the eligible party) against any liability that may be incurred by reason of the eligible party being or having been a director or officer, or in an equivalent position of the company or that of an associated corporation.

The Registrant’s articles provide that, subject to the BCBCA, the Registrant must indemnify its directors, former directors or alternate directors and his or her heirs and legal personal representatives against all

II-1

judgments, penalties or fines awarded or imposed in, or an amount paid in settlement of, all legal proceedings, investigative actions or other eligible proceedings (whether current, threatened, pending or completed) to which such person is or may be liable, and the Registrant must, after the final disposition of a legal proceeding, investigative action or other eligible proceeding, pay the expenses (which includes costs, charges and expenses, including legal and other fees but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding) actually and reasonably incurred by such person in respect of that proceeding.

The Registrant has entered into an indemnity agreement with each of its directors and officers which provide, among other things, that the Registrant will indemnify him for expenses actually and reasonably incurred by such person because of any claim made against him in a proceeding by reason of the fact that he was a director and/or officer; provided that, the Registrant is only obligated to indemnify such person if, among other things, he acted honestly and in good faith with a view to the Registrant’s best interests and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, such person had reasonable grounds for believing that his conduct was lawful.

The form of underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification under certain circumstances by the underwriter of the Registrant, its directors, certain of its officers and its controlling persons for certain liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, or otherwise.

The Registrant maintains a directors’ and officers’ insurance and registrant reimbursement policy. The policy (i) insures directors and officers against losses for which the Registrant does not indemnify and which losses arise from certain wrongful acts in the indemnified parties’ capacities as directors and officers and (ii) reimburses the Registrant for those losses for which the registrant has lawfully indemnified the directors and officers. The policy contains various exclusions, none of which apply to this offering.

Item 7. Recent Sales of Unregistered Securities

The following is a summary of Registrant’s transactions within the last three years, involving sales of Registrant’s securities that were not registered under the Securities Act:

(a) The Registrant issued options with a five-year term to purchase a total of 130,250 common shares to certain of its directors, officers, employees and consultants. Stock options covering 12,000 shares were forfeited without being exercised. The date of issue, number of options and exercise prices for such stock options were as follows:

Date of Issue	Number		Exercise Price
February 2010	3,000		$	6.21
October 2009	7,000		$	6.45
August 2009	6,000		$	4.78
February 2009	79,500		$	4.78
July 2008	1,000		$	7.17
May 2008	4,000		$	8.12
April 2008	6,000		$	16.24
February 2008	3,000		$	16.24
October 2007	1,850		$	16.24
September 2007	13,200		$	16.24
February 2007	5,700		$	28.19
Forfeited prior to exercise	(12,000	)
	118,150

(b) On June 1 and June 29, 2007, as part of a single brokered financing in Canada and the United States, the Registrant issued 136,320 and 13,350 units, respectively. Each unit consisted of one common share and one common share purchase warrant. Each warrant entitled the holder thereof to purchase one

II-2

common share at a price of $31.05 for a period of 36 months following the closing date of the offering; provided that, the Registrant may accelerate the expiry date for such warrants if the closing price of the Registrant’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $39.79 for 20 or more consecutive trading days. Agents for the private placement received as part of their selling commission warrants to acquire 10,345 units.

(c) On August 7 and September 18, 2008, as part of a short-form prospectus financing in Canada, the Registrant issued 213,993 and 29,380 units, respectively. Each unit consisted of one common share and one- half of one transferable common share purchase warrant. Each full warrant entitled the holder thereof to purchase one common share at a price of $9.56 for a period of 24 months following the date of issuance; provided that, the Registrant may accelerate the expiry date for such warrants if the closing price of the Registrant’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $19.00 for 20 or more consecutive trading days. Agents for the prospectus financing received as part of their selling commission warrants to acquire 17,784 common shares. Each of such warrants entitled the holder thereof to purchase one common share at a price of $7.17 for a period of 24 months following the closing date of the offering; provided that, the Registrant may accelerate the expiry date for such warrants if the closing price of the Registrant’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $19.00 for 20 or more consecutive trading days.

(d) On June 5, June 25 and October 8, 2009, as part of a single non-brokered private placement in Canada and the United States, the Registrant issued 308,469, 91,530 and 90,000 units, respectively. The Registrant also issued 12,500 and 2,500 units in satisfaction of $43,180 and $9,492 of expenses on June 5, 2009 and October 8, 2009, respectively, related to the private placement. Each unit consisted of one common share and one-half a common share purchase warrant. Each full warrant entitled the holder thereof to purchase one common share at a price of $4.78 for a period of 24 months following the date of issuance; provided that, the Registrant may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Registrant’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $14.00 for 20 or more consecutive trading days. Agents for the private placement received as part of their selling commission warrants on the same terms as those underlying the units to acquire 14,396 common shares in respect of the June 5 and June 25 closings and 3,125 common shares in respect of the October 8 closing.

(e) On December 24, 2009, the Registrant completed a non-brokered private placement in Canada and issued 116,640 units. Each unit consisted of one common share and one-half of one common share purchase warrant. Each full warrant entitled the holder thereof to purchase one common share at a price of $8.60 for a period of 24 months following the date of issuance; provided that, the Registrant may accelerate the expiry date for such warrants if, at any time following the expiry of the four-month hold period, the closing price of the Registrant’s common shares on the TSX Venture Exchange or other major stock exchange or quotation system is greater than $14.50 for 20 or more consecutive trading days. Agents for the private placement received as part of their selling commission warrants on the same terms as those underlying the units to acquire 7,185 common shares.

The number of securities set forth above reflects the assumed 1-for-50 reverse stock split of our common shares to be effected prior to or upon the effective date of this registration statement. Except as indicated above, none of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and Registrant believes that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(2) or Rule 903 of Regulation S thereof, as applicable. The recipients in such transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients either received adequate information about Registrant or had access, through their relationships with Registrant, to such information.

II-3

Item 8. Exhibits and Financial Statement Schedules

(a) Exhibits

Exhibit Number	Description
1.1**	Form of Underwriting Agreement.
3.1	Notice of Articles of Registrant.
3.2	Articles of Registrant.
4.1**	Specimen of Registrant’s Common Share Certificate.
4.2	Form of Warrant issued to investors on June 1 and June 29, 2007.
4.3*	Form of Warrant issued to agents on June 1 and June 29, 2007.
4.4*	Form of Warrant issued to investors on August 7 and September 18, 2008.
4.5*	Form of Warrant issued to agents on August 7 and September 18, 2008.
4.6*	Form of Warrant issued to investors and agents on June 5, June 25 and October 8, 2009.
4.7*	Form of Warrant issued to investors and agents on December 24, 2009.
4.8	Form of Warrant to be granted to the Underwriter.
4.9	Escrow Agreement dated August 31, 2007 by and among Berkeley Capital Corp. II, Equity Transfer & Trust Company and certain shareholders of Berkeley Capital Corp. II, including Assignment Agreement dated June 5, 2009 by and among the Registrant, Berkeley Capital Corp. II, Equity Transfer & Trust Company and those shareholders now holding escrowed shares of Registrant.
4.10	Escrow Agreement dated February 6, 2007 by and among SEP Capital Corporation, Computershare Investors Services Inc. and certain shareholders of SEP Capital Corporation, including Assignment Agreement dated September 11, 2009 by and among the Registrant, SEP Capital Corporation, Med BioGene Inc., Computershare Investors Services Inc. and those shareholders now holding escrowed shares of Registrant.
4.11	Shareholders Rights Plan Agreement dated January 15, 2010 between Registrant and Computershare Investor Services Inc.
5.1*	Form of Opinion of Farris, Vaughan, Wills & Murphy LLP.
10.1*	Form of Indemnity Agreement by and between Registrant and each of its directors and officers.
10.2*	Med BioGene 2006 Incentive Stock Option Plan.
10.3*	Executive Employment Agreement dated June 1, 2006 with Erinn B. Broshko, Chief Executive Officer of Registrant, including Change in Control Agreement dated June 1, 2006 with Erinn B. Broshko and Confidentiality Agreement and Assignment of Inventions dated June 1, 2006 with Erinn B. Broshko.
10.4*	Executive Employment Agreement dated January 12, 2009 with David G. Matthews, Chief Financial Officer of Registrant, including Change in Control Agreement dated January 12, 2009 with David G. Matthews and Confidentiality Agreement and Assignment of Inventions dated January 12, 2009 with David G. Matthews.
10.5*	Letter Agreement dated May 27, 2008 with Dr. Heiner Dreismann, a director of Registrant.
10.6†*	Additional Exclusive License Agreement dated February 24, 2009 between Registrant and University Health Network.
10.7†*	Additional Sponsored Research Agreement dated February 24, 2009 between Registrant and University Health Network.

II-4

Exhibit Number	Description
10.8†*	Amended and Restated Exclusive License Agreement dated February 24, 2009 between Registrant and University Health Network.
10.9†*	Amended and Restated Sponsored Research Agreement dated February 24, 2009 between Registrant and University Health Network.
21.1*	Subsidiaries of Registrant.
23.1	Consent of PricewaterhouseCoopers, LLP.
23.2*	Consent of Farris, Vaughan, Wills & Murphy LLP (contained in Exhibit 5.1).
24.1*	Power of Attorney.

* Previously filed.

** To be filed by amendment.

† Confidential treatment is requested for certain confidential portions of this exhibit pursuant to Rule 406 under the Securities Act. In accordance with Rule 406, these confidential portions have been omitted from this exhibit and filed separately with the Commission.

(b) Financial Statement Schedules

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

Item 9. Undertakings

The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act, Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, Province of British Columbia, Canada, on February 16, 2010.

MED BIOGENE INC.
By:	/S/    ERINN B. BROSHKO
	Erinn B. Broshko
	Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/S/    ERINN B. BROSHKO Erinn B. Broshko	Chief Executive Officer and Director (principal executive officer)	February 16, 2010
DAVID G. MATTHEWS* David G. Matthews	Chief Financial Officer (principal financial and accounting officer)	February 16, 2010
DR. JOHN H. RAYSON* Dr. John H. Rayson	Chairman of the Board and Director	February 16, 2010
R. HECTOR MACKAY-DUNN* R. Hector MacKay-Dunn, Q.C.	Corporate Secretary and Director	February 16, 2010
BRUCE G. COUSINS* Bruce G. Cousins	Director	February 16, 2010
DR. HEINER DREISMANN* Dr. Heiner Dreismann	Director	February 16, 2010
DENNIS L. GRIMAUD*         Dennis L. Grimaud	Director	February 16, 2010
DR. WILBERT J. KEON*         Senator Dr. Wilbert J. Keon, O.C.	Director	February 16, 2010
/S/    KEVIN K. ROONEY Kevin K. Rooney	Director	February 16, 2010

*By:	/S/     ERINN B. BROSHKO
	Erinn B. Broshko Attorney-in-fact

II-6

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of Med BioGene Inc., has signed this registration statement or amendment thereto in San Francisco, on February 16, 2010.

Authorized Representative

/S/    KEVIN K. ROONEY        

Kevin K. Rooney

II-7

EXHIBIT INDEX

Exhibit Number	Description
1.1**	Form of Underwriting Agreement.
3.1	Notice of Articles of Registrant.
3.2	Articles of Registrant.
4.1**	Specimen of Registrant’s Common Share Certificate.
4.2	Form of Warrant issued to investors on June 1 and June 29, 2007.
4.3*	Form of Warrant issued to agents on June 1 and June 29, 2007.
4.4*	Form of Warrant issued to investors on August 7 and September 18, 2008.
4.5*	Form of Warrant issued to agents on August 7 and September 18, 2008.
4.6*	Form of Warrant issued to investors and agents on June 5, June 25 and October 8, 2009.
4.7*	Form of Warrant issued to investors and agents on December 24, 2009.
4.8	Form of Warrant to be granted to the Underwriter.
4.9	Escrow Agreement dated August 31, 2007 by and among Berkeley Capital Corp. II, Equity Transfer & Trust Company and certain shareholders of Berkeley Capital Corp. II, including Assignment Agreement dated June 5, 2009 by and among the Registrant, Berkeley Capital Corp. II, Equity Transfer & Trust Company and those shareholders now holding escrowed shares of Registrant.
4.10	Escrow Agreement dated February 6, 2007 by and among SEP Capital Corporation, Computershare Investors Services Inc. and certain shareholders of SEP Capital Corporation, including Assignment Agreement dated September 11, 2009 by and among the Registrant, SEP Capital Corporation, Med BioGene Inc., Computershare Investors Services Inc. and those shareholders now holding escrowed shares of Registrant.
4.11	Shareholders Rights Plan Agreement dated January 15, 2010 between Registrant and Computershare Investor Services Inc.
5.1*	Form of Opinion of Farris, Vaughan, Wills & Murphy LLP.
10.1*	Form of Indemnity Agreement by and between Registrant and each of its directors and officers.
10.2*	Med BioGene 2006 Incentive Stock Option Plan.
10.3*	Executive Employment Agreement dated June 1, 2006 with Erinn B. Broshko, Chief Executive Officer of Registrant, including Change in Control Agreement dated June 1, 2006 with Erinn B. Broshko and Confidentiality Agreement and Assignment of Inventions dated June 1, 2006 with Erinn B. Broshko.
10.4*	Executive Employment Agreement dated January 12, 2009 with David G. Matthews, Chief Financial Officer of Registrant, including Change in Control Agreement dated January 12, 2009 with David G. Matthews and Confidentiality Agreement and Assignment of Inventions dated January 12, 2009 with David G. Matthews.
10.5*	Letter Agreement dated May 27, 2008 with Dr. Heiner Dreismann, a director of Registrant.
10.6†*	Additional Exclusive License Agreement dated February 24, 2009 between Registrant and University Health Network.

Exhibit Number	Description
10.7†*	Additional Sponsored Research Agreement dated February 24, 2009 between Registrant and University Health Network.
10.8†*	Amended and Restated Exclusive License Agreement dated February 24, 2009 between Registrant and University Health Network.
10.9†*	Amended and Restated Sponsored Research Agreement dated February 24, 2009 between Registrant and University Health Network.
21.1*	Subsidiaries of Registrant.
23.1	Consent of PricewaterhouseCoopers, LLP.
23.2*	Consent of Farris, Vaughan, Wills & Murphy LLP (contained in Exhibit 5.1).
24.1*	Power of Attorney.

* Previously filed.

** To be filed by amendment.

† Confidential treatment is requested for certain confidential portions of this exhibit pursuant to Rule 406 under the Securities Act. In accordance with Rule 406, these confidential portions have been omitted from this exhibit and filed separately with the Commission.

EX-3.1

Exhibit 3.1

Date and Time: February 16, 2010 11:38 AM Pacific Time

Ministry of Finance BC Registry Services Mailing Address:
PO BOX 9431 Stn Prov Govt.
Victoria BC V8W 9V3
www.corporateonline.gov.bc.ca Location: 2nd Floor - 940 Blanshard St. Victoria BC 250 356-8626

Notice of Articles

BUSINESS CORPORATIONS ACT

This Notice of Articles was issued by the Registrar on: February 16, 2010 11:35 AM Pacific Time

Incorporation Number:                    BC0756177

Recognition Date and Time: April 28, 2006 03:13 PM Pacific Time as a result of an Amalgamation

NOTICE OF ARTICLES

Name of Company:

MED BIOGENE INC.

REGISTERED OFFICE INFORMATION

Mailing Address:	Delivery Address:
#300-2386 EAST MALL	#300-2386 EAST MALL
GERALD MCGAVIN BUILDING	GERALD MCGAVIN BUILDING
VANCOUVER BC V6T 1Z3	VANCOUVER BC V6T 1Z3
CANADA	CANADA

RECORDS OFFICE INFORMATION

Mailing Address:	Delivery Address:
#300-2386 EAST MALL	#300-2386 EAST MALL
GERALD MCGAVIN BUILDING	GERALD MCGAVIN BUILDING
VANCOUVER BC V6T 1Z3	VANCOUVER BC V6T 1Z3
CANADA	CANADA

Page: 1 of 3

DIRECTOR INFORMATION

Last Name, First Name, Middle Name:

Rooney, Kevin K.

Mailing Address:	Delivery Address:
501 BEALE ST. UNIT 9H	501 BEALE ST. UNIT 9H
SAN FRANCISCO CA 94105	SAN FRANCISCO CA 94105
UNITED STATES	UNITED STATES

Last Name, First Name, Middle Name:

KEON, DR. WILBERT J. (formerly KEON, WILBERT)

Mailing Address:	Delivery Address:
902-140 WELLINGTON	902 - 140 WELLINGTON
OTTAWA ON K1A 0A4	OTTAWA ON K1A 0A4
CANADA	CANADA

Last Name, First Name, Middle Name:

Dreismann, Dr. Heiner (formerly Dreismann, Heiner)

Mailing Address:	Delivery Address:
4253 GOLDEN OAK CT.	4253 GOLDEN OAK CT.
DANVILLE CA 94506	DANVILLE CA 94506
UNITED STATES	UNITED STATES

Last Name, First Name, Middle Name:

Hayden, Dr. Michael R.

Mailing Address:	Delivery Address:
3025-950 WEST 28TH AVENUE	3025-950 WEST 28TH AVENUE
VANCOUVER BC V5Z 4H4	VANCOUVER BC V5Z 4H4
CANADA	CANADA

Last Name, First Name, Middle Name:

MacKay-Dunn, R. Hector (formerly MacKay-Dunn, Hector)

Mailing Address:	Delivery Address:
25TH FLOOR, 700 WEST GEORGIA STREET	25TH FLOOR, 700 WEST GEORGIA STREET
VANCOUVER BC V7Y 1B3	VANCOUVER BC V7Y 1B3
CANADA	CANADA

Last Name, First Name, Middle Name:

RAYSON, DR. JOHN H. (formerly RAYSON, JOHN)

Mailing Address:	Delivery Address:
BOX 12	BOX 12
KOOTENAY BAY	KOOTENAY BAY
KOOTENAY BAY BC V0B 1X0	KOOTENAY BAY BC V0B 1X0
CANADA	CANADA

Page: 2 of 3

Last Name, First Name, Middle Name:

Cousins, Bruce G.

Mailing Address:	Delivery Address:
#1203 -4464 MARKHAM STREET	#1203 -4464 MARKHAM STREET
VICTORIA BC V8Z 7X8	VICTORIA BC V8Z 7X8
CANADA	CANADA

Last Name, First Name, Middle Name:

BROSHKO, ERINN B.

Mailing Address:	Delivery Address:
#300 - 2386 EAST MALL	#300 - 2386 EAST MALL
GERALD MCGAVIN BUILDING	GERALD MCGAVIN BUILDING
VANCOUVER BC V6T 1Z3	VANCOUVER BC V6T 1Z3
CANADA	CANADA

Last Name, First Name, Middle Name:

GRIMAUD, DENNIS L.

Mailing Address:	Delivery Address:
7055 WILLOWICK DRIVE	7055 WILLOWICK DRIVE
BRENTWOOD TN 37027	BRENTWOOD TN 37027
UNITED STATES	UNITED STATES

RESOLUTION DATES:

Date(s) of Resolution(s) or Court Order(s) attaching or altering Special Rights and Restrictions attached to a class or a series of shares:

February 12, 2010

AUTHORIZED SHARE STRUCTURE

1.	No Maximum	Common Shares	Without Par Value
			With Special Rights or Restrictions attached

2.	No Maximum	Preferred Shares	Without Par Value
			With Special Rights or Restrictions attached

Page: 3 of 3

EX-3.2

Exhibit 3.2

MED BIOGENE INC.

(the “Company”)

The Company has amended its articles and has as its articles the following:

Full name and signature of a director	Date of signing
/s/ ERINN B. BROSHKO	February 12, 2010

Incorporation number:

MED BIOGENE INC.

(the “Company”)

ARTICLES

1.	INTERPRETATION		1
	1.1	Definitions	1
	1.2	Business Corporations Act and Interpretation Act Definitions Applicable	1
2.	SHARES AND SHARE CERTIFICATES		1
	2.1	Authorized Share Structure	1
	2.2	Form of Share Certificate	1
	2.3	Shareholder Entitled to Share Certificate or Acknowledgement	1
	2.4	Delivery by Mail	2
	2.5	Replacement of Worn Out or Defaced Share Certificate or Acknowledgement	2
	2.6	Replacement of Lost, Stolen or Destroyed Share Certificate or Acknowledgement	2
	2.7	Splitting Share Certificates	2
	2.8	Share Certificate Fee	2
	2.9	Recognition of Trusts	2
3.	ISSUE OF SHARES		2
	3.1	Directors Authorized	2
	3.2	Commissions and Discounts	3
	3.3	Brokerage	3
	3.4	Conditions of Issue	3
	3.5	Share Purchase Warrants and Rights	3
4.	SHARE REGISTERS		3
	4.1	Central Securities Register	3
	4.2	Closing Register	3
5.	SHARE TRANSFERS		4
	5.1	Registering Transfers	4
	5.2	Form of Instrument of Transfer	4
	5.3	Transferor Remains Shareholder	4
	5.4	Signing of Instrument of Transfer	4
	5.5	Enquiry as to Title Not Required	4
	5.6	Transfer Fee	4
6.	TRANSMISSION OF SHARES		5
	6.1	Legal Personal Representative Recognized on Death	5
	6.2	Rights of Legal Personal Representative	5
7.	PURCHASE OF SHARES		5
	7.1	Company Authorized to Purchase Shares	5
	7.2	Purchase When Insolvent	5
	7.3	Sale and Voting of Purchased Shares	5

8.	BORROWING POWERS		5
9.	ALTERATIONS		6
	9.1	Increase or Reduction in Authorized Share Structure	6
	9.2	Alteration of Authorized Share Structure	6
	9.3	Special Rights and Restrictions	6
	9.4	Change of Name	7
	9.5	Other Alterations	7
10.	MEETINGS OF SHAREHOLDERS		7
	10.1	Annual General Meetings	7
	10.2	Resolution Instead of Annual General Meeting	7
	10.3	Calling of Meetings of Shareholders	7
	10.4	Notice for Meetings of Shareholders	7
	10.5	Location of Meeting	7
	10.6	Record Date for Notice	7
	10.7	Record Date for Voting	8
	10.8	Failure to Give Notice and Waiver of Notice	8
	10.9	Notice of Special Business at Meetings of Shareholders	8
	10.10	Class Meetings and Series Meetings of Shareholders	8
11.	PROCEEDINGS AT MEETINGS OF SHAREHOLDERS		8
	11.1	Special Business	8
	11.2	Special Majority	9
	11.3	Quorum	9
	11.4	One Shareholder May Constitute Quorum	9
	11.5	Other Persons May Attend	9
	11.6	Requirement of Quorum	9
	11.7	Lack of Quorum	9
	11.8	Lack of Quorum at Succeeding Meeting	10
	11.9	Chair	10
	11.10	Selection of Alternate Chair	10
	11.11	Adjournments	10
	11.12	Notice of Adjourned Meeting	10
	11.13	Decisions by Show of Hands or Poll	10
	11.14	Declaration of Result	10
	11.15	Motion Need Not be Seconded	11
	11.16	Casting Vote	11
	11.17	Manner of Taking Poll	11
	11.18	Demand for Poll on Adjournment	11
	11.19	Chair Must Resolve Dispute	11
	11.20	Casting of Votes	11
	11.21	Demand for Poll	11
	11.22	Demand for Poll Not to Prevent Continuance of Meeting	11
	11.23	Retention of Ballots and Proxies	11
	11.24	Ordinary Resolution	12
12.	VOTES OF SHAREHOLDERS		12
	12.1	Number of Votes by Shareholder or by Shares	12
	12.2	Votes of Persons in Representative Capacity	12
	12.3	Votes by Joint Holders	12
	12.4	Legal Personal Representatives as Joint Shareholders	12
	12.5	Representative of a Corporate Shareholder	12

	12.6	Proxy Provisions Do Not Apply to all Companies	13
	12.7	Appointment of Proxy Holders	13
	12.8	Alternate Proxy Holders	13
	12.9	When Proxy Holder Need Not Be Shareholder	13
	12.10	Deposit of Proxy	14
	12.11	Validity of Proxy Vote	14
	12.12	Form of Proxy	14
	12.13	Revocation of Proxy	14
	12.14	Revocation of Proxy Must Be Signed	15
	12.15	Production of Evidence of Authority to Vote	15
13.	DIRECTORS		15
	13.1	First Directors; Number of Directors	15
	13.2	Change in Number of Directors	15
	13.3	Directors’ Acts Valid Despite Vacancy	16
	13.4	Qualifications of Directors	16
	13.5	Remuneration of Directors	16
	13.6	Reimbursement of Expenses of Directors	16
	13.7	Special Remuneration for Directors	16
	13.8	Gratuity, Pension or Allowance on Retirement of Director	16
14.	ELECTION AND REMOVAL OF DIRECTORS		16
	14.1	Election at Annual General Meeting	16
	14.2	Consent to be a Director	16
	14.3	Failure to Elect or Appoint Directors	17
	14.4	Places of Retiring Directors Not Filled	17
	14.5	Directors May Fill Casual Vacancies,	17
	14.6	Remaining Directors Power to Act	17
	14.7	Shareholders May Fill Vacancies	17
	14.8	Additional Directors	17
	14.9	Ceasing to be a Director	18
	14.10	Removal of Director by Shareholders	18
	14.11	Removal of Director by Directors	18
15.	ALTERNATE DIRECTORS		18
	15.1	Appointment of Alternate Director	18
	15.2	Notice of Meetings	18
	15.3	Alternate for More Than One Director Attending Meetings	18
	15.4	Consent Resolutions	19
	15.5	Alternate Director Not an Agent	19
	15.6	Revocation of Appointment of Alternate Director	19
	15.7	Ceasing to be an Alternate Director	19
	15.8	Remuneration and Expenses of Alternate Director	19
16.	POWERS AND DUTIES OF DIRECTORS		19
	16.1	Powers of Management	19
	16.2	Appointment of Attorney of Company	20
	16.3	Remuneration of Auditor	20
17.	INTERESTS OF DIRECTORS AND OFFICERS		20
	17.1	Obligation to Account for Profits	20
	17.2	Restrictions on Voting by Reason of Interest	20
	17.3	Interested Director Counted in Quorum	20
	17.4	Disclosure of Conflict of Interest or Property	20
	17.5	Director Holding Other Office in the Company	20
	17.6	No Disqualification	21
	17.7	Professional Services by Director or Officer	21
	17.8	Director or Officer in Other Corporations	21
18.	PROCEEDINGS OF DIRECTORS		21
	18.1	Meetings of Directors	21
	18.2	Voting at Meetings	21
	18.3	Chair of Meetings	21
	18.4	Meetings by Telephone or Other Communications Medium	22
	18.5	Calling of Meetings	22
	18.6	Notice of Meetings,	22
	18.7	When Notice Not Required	22
	18.8	Meeting Valid Despite Failure to Give Notice	22
	18.9	Waiver of Notice of Meetings	22
	18.10	Quorum	22
	18.11	Validity of Acts Where Appointment Defective	22
	18.12	Consent Resolutions in Writing	23
19.	EXECUTIVE AND OTHER COMMITTEES		23
	19.1	Appointment and Powers of Executive Committee	23
	19.2	Appointment and Powers of Other Committees	23

	19.3	Obligations of Committees	24
	19.4	Powers of Board	24
	19.5	Committee Meetings	24
20.	OFFICERS		24
	20.1	Directors May Appoint Officers	24
	20.2	Functions, Duties and Powers of Officers	24
	20.3	Qualifications	25
	20.4	Remuneration and Terms of Appointment	25
21.	INDEMNIFICATION		25
	21.1	Definitions	25
	21.2	Mandatory Indemnification of Directors and Former Directors	25
	21.3	Indemnification of Other Persons	25
	21.4	Non-Compliance with Business Corporations Act	25
	21.5	Company May Purchase Insurance	25
22.	DIVIDENDS		26
	22.1	Payment of Dividends Subject to Special Rights	26
	22.2	Declaration of Dividends	26
	22.3	No Notice Required	26
	22.4	Record Date	26
	22.5	Manner of Paying Dividend	26
	22.6	Settlement of Difficulties	26
	22.7	When Dividend Payable	27
	22.8	Dividends to be Paid in Accordance with Number of Shares	27
	22.9	Receipt by Joint Shareholders	27
	22.10	Dividend Bears No Interest	27
	22.11	Fractional Dividends	27
	22.12	Payment of Dividends	27
	22.13	Capitalization of Surplus	27
	22.14	Set Aside Funds	27
23.	ACCOUNTING RECORDS		27
	23.1	Recording of Financial Affairs	27
	23.2	Inspection of Accounting Records	28
24.	NOTICES		28
	24.1	Method of Giving Notice	28
	24.2	Deemed Receipt of Mailing	28
	24.3	Certificate of Sending	28
	24.4	Notice to Joint Shareholders	29
	24.5	Notice to Trustees	29
25.	SEAL		29
	25.1	Who May Attest Seal	29
	25.2	Sealing Copies	29
	25.3	Mechanical Reproduction of Seal	29
26.	PROHIBITIONS		30
	26.1	Definitions	30
	26.2	Application	30
	26.3	Consent Required for Transfer of Shares or Designated Securities	30
27.	SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES WITHOUT PAR VALUE		30
	27.1	Voting	30
	27.2	Dividends	30
	27.3	Liquidation, Dissolution or Winding-Up	31
28.	SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES WITHOUT PAR VALUE		31
	28.1	Issuable in Series	31
	28.2	Ranking of Preferred Shares	31
29.	SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES, SERIES A		31
	29.1	Voting Rights	31
	29.2	Dividends	31

1. INTERPRETATION

1.1 Definitions

In these Articles, unless the context otherwise requires:

(1) “board of directors”, “directors” and “board” mean the directors or sole director of the Company for the time being;

(2) “Business Corporations Act” means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(3) “Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(4) “legal personal representative” means the personal or other legal representative of the shareholder;

(5) “registered address” of a shareholder means the shareholder’s address as recorded in the central securities register; and

(6) “seal” means the seal of the Company, if any.

1.2 Business Corporations Act and Interpretation Act Definitions Applicable

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

2. SHARES AND SHARE CERTIFICATES

2.1 Authorized Share Structure

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

2.2 Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

2.3 Shareholder Entitled to Share Certificate or Acknowledgement

Each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder’s name or (b) a non-transferable written acknowledgement of the shareholder’s right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate or acknowledgement and delivery of a share certificate or acknowledgement for a share to one of several joint shareholders or to one of the shareholders’ duly authorized agents will be sufficient delivery to all.

2.4 Delivery by Mail

Any share certificate or non-transferable written acknowledgement of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

2.5 Replacement of Worn Out or Defaced Share Certificate or Acknowledgement

If the directors are satisfied that a share certificate or a non-transferable written acknowledgement of the shareholder’s right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgement, as the case may be, and on such other terms, if any, as they think fit:

(1) order the share certificate or acknowledgement, as the case may be, to be cancelled; and

(2) issue a replacement share certificate or acknowledgement, as the case may be.

2.6 Replacement of Lost, Stolen or Destroyed Share Certificate or Acknowledgement

If a share certificate or a non-transferable written acknowledgement of a shareholder’s right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgement, as the case may be, must be issued to the person entitled to that share certificate or acknowledgement, as the case may be, if the directors receive:

(1) proof satisfactory to them that the share certificate or acknowledgement is lost, stolen or destroyed; and

(2) any indemnity the directors consider adequate.

2.7 Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.8 Share Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.7, the amount, if any and which must not exceed the amount prescribed under the Business Corporations Act, determined by the directors.

2.9 Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

3. ISSUE OF SHARES

3.1 Directors Authorized

Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

2

3.2 Commissions and Discounts

The Company may at any time pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3 Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

3.4 Conditions of Issue

Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is fully paid when:

(1) consideration is provided to the Company for the issue of the share by one or more of the following:

(a) past services performed for the Company;

(b) property; or

(c) money; and

(2) the value of the consideration received by the Company equals or exceeds the issue price set for the share under Article 3.1.

3.5 Share Purchase Warrants and Rights

Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, bonds, shares or any other securities issued or created by the Company from time to time.

4. SHARE REGISTERS

4.1 Central Securities Register

As required by and subject to the Business Corporations Act, the Company must maintain in British Columbia a central securities register. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

4.2 Closing Register

The Company must not at any time close its central securities register.

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5. SHARE TRANSFERS

5.1 Registering Transfers

A transfer of a share of the Company must not be registered unless:

(1) a duly signed instrument of transfer in respect of the share has been received by the Company;

(2) if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate has been surrendered to the Company; and

(3) if a non-transferable written acknowledgement of the shareholder’s right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgement has been surrendered to the Company.

5.2 Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company’s share certificates or in any other form that may be approved by the directors from time to time.

5.3 Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4 Signing of Instrument of Transfer

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgements deposited with the instrument of transfer:

(1) in the name of the person named as transferee in that instrument of transfer; or

(2) if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

5.5 Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgement of a right to obtain a share certificate for such shares.

5.6 Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

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6. TRANSMISSION OF SHARES

6.1 Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

6.2 Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

7. PURCHASE OF SHARES

7.1 Company Authorized to Purchase Shares

Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

7.2 Purchase When Insolvent

The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

(1) the Company is insolvent; or

(2) making the payment or providing the consideration would render the Company insolvent.

7.3 Sale and Voting of Purchased Shares

If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

(1) is not entitled to vote the share at a meeting of its shareholders;

(2) must not pay a dividend in respect of the share; and

(3) must not make any other distribution in respect of the share.

8. BORROWING POWERS

The Company, if authorized by the directors, may:

(1) borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(2) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

5

(3) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(4) mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

9. ALTERATIONS

9.1 Increase or Reduction in Authorized Share Structure

Subject to the Business Corporations Act, the Company may by resolution of the directors increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established.

9.2 Alteration of Authorized Share Structure

Subject to Article 9.3 and the Business Corporations Act, the Company may by:

(1) directors’ resolution subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

(2) ordinary resolution:

(a) create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

(b) if the Company is authorized to issue shares of a class of shares with par value:

(i) decrease the par value of those shares; or

(ii) if none of the shares of that class of shares are allotted or issued, increase the par value of those shares; or

(3) special resolution:

(a) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

(b) alter the identifying name of any of its shares; or

(c) otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act.

9.3 Special Rights and Restrictions

Subject to the Business Corporations Act, the Company may by special resolution:

(1) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or

(2) vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

6

9.4 Change of Name

The Company may by resolution of the directors authorize an alteration of its Notice of Articles in order to change its name or adopt or change any translation of that name.

9.5 Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by special resolution alter these Articles.

10. MEETINGS OF SHAREHOLDERS

10.1 Annual General Meetings

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2 Resolution Instead of Annual General Meeting

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.3 Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

10.4 Notice for Meetings of Shareholders

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

(1) if and for so long as the Company is a public company, 21 days;

(2) otherwise, 10 days.

10.5 Location of Meeting

A meeting of the shareholders may be held anywhere in North America as determined by the directors.

10.6 Record Date for Notice

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

(1) if and for so long as the Company is a public company, 21 days;

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(2) otherwise, 10 days.

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7 Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.8 Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.9 Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

(1) state the general nature of the special business; and

(2) if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

(a) at the meeting; or

(b) at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice, during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

10.10 Class Meetings and Series Meetings of Shareholders

Unless otherwise specified in these Articles, the provisions of these Articles relating to a meeting of shareholders will apply, with the necessary changes and so far as they are applicable, to a class meeting or series meeting of shareholders holding a particular class or series of shares.

11. PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

11.1 Special Business

At a meeting of shareholders, the following business is special business:

(1) at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(2) at an annual general meeting, all business is special business except for the following:

(a) business relating to the conduct of or voting at the meeting;

(b) consideration of any financial statements of the Company presented to the meeting;

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(c) consideration of any reports of the directors or auditor;

(d) the setting or changing of the number of directors;

(e) the election or appointment of directors;

(f) the appointment of an auditor;

(g) the setting of the remuneration of an auditor;

(h) business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

(i) any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

11.2 Special Majority

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3 Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 20% of the issued shares entitled to be voted at the meeting.

11.4 One Shareholder May Constitute Quorum

If there is only one shareholder entitled to vote at a meeting of shareholders:

(1) the quorum is one person who is, or who represents by proxy, that shareholder, and

(2) that shareholder, present in person or by proxy, may constitute the meeting.

11.5 Other Persons May Attend

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.6 Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.7 Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(1) in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

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(2) in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

11.8 Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.7(2) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

11.9 Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

(1) the chair of the board, if any; or

(2) if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.

11.10 Selection of Alternate Chair

If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present must choose one of their number to be chair of the meeting or if all of the directors present decline to take the chair or fail to so choose or if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

11.11 Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.12 Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.13 Decisions by Show of Hands or Poll

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair of the meeting or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.14 Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

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11.15 Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

11.16 Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.17 Manner of Taking Poll

Subject to Article 11.18, if a poll is duly demanded at a meeting of shareholders:

(1) the poll must be taken:

(a) at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

(b) in the manner, at the time and at the place that the chair of the meeting directs;

(2) the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

(3) the demand for the poll may be withdrawn by the person who demanded it.

11.18 Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.19 Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

11.20 Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.21 Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.22 Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

11.23 Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

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11.24 Ordinary Resolution

Unless the Business Corporations Act or these Articles otherwise provide, any action that must or may be taken or authorized by the shareholders may be taken or authorized by an ordinary resolution.

12. VOTES OF SHAREHOLDERS

12.1 Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(1) on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(2) on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

12.2 Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

12.3 Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

(1) any one of the joint shareholders may vote at any meeting of shareholders, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

(2) if more than one of the joint shareholders is present at any meeting of shareholders, personally or by proxy, and more than one of the joint shareholders votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

12.4 Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

12.5 Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

(1) for that purpose, the instrument appointing a representative must:

(a) be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

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(b) be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting;

(2) if a representative is appointed under this Article 12.5:

(a) the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

(b) the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6 Proxy Provisions Do Not Apply to all Companies

If and for so long as the Company is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply, Articles 12.7 to 12.15 apply only insofar as they are not inconsistent with any securities legislation in any province or territory of Canada or in the federal jurisdiction of the United States or in any states of the United States that is applicable to the Company and insofar as they are not inconsistent with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by securities commissions or similar authorities appointed under that legislation.

12.7 Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

12.8 Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9 When Proxy Holder Need Not Be Shareholder

A person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

(1) the Company is a public company;

(2) the person appointing the proxy holder is a corporation or a representative of a corporation appointed under Article 12.5;

(3) the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder entitled to vote at the meeting; or

(4) the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.

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12.10 Deposit of Proxy

A proxy for a meeting of shareholders must:

(1) be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(2) unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.11 Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

(1) at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(2) by the chair of the meeting, before the vote is taken.

12.12 Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

[name of company]

(the “Company”)

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the shareholder):                            .

Signed [month, day, year]

[Signature of shareholder]

[Name of shareholder- printed]

12.13 Revocation of Proxy

Subject to Article 12.14, every proxy may be revoked by an instrument in writing that is:

(1) received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

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(2) provided at the meeting to the chair of the meeting.

12.14 Revocation of Proxy Must Be Signed

An instrument referred to in Article 12.13 must be signed as follows:

(1) if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or his or her legal personal representative or trustee in bankruptcy; or

(2) if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Article 12.5.

12.15 Production of Evidence of Authority to Vote

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

13. DIRECTORS

13.1 First Directors; Number of Directors

The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act. The number of directors, excluding additional directors appointed under Article 14.8, is set at:

(1) subject to paragraphs (2) and (3), the number of directors that is equal to the number of the Company’s first directors;

(2) if the Company is a public company, the greater of three and the most recently set of:

(a) the number of directors set by directors’ resolution; and

(b) the number of directors set under Article 14.4; or

(3) if the Company is not a public company, the most recently set of:

(a) the number of directors set by directors’ resolution; and

(b) the number of directors set under Article 14.4.

13.2 Change in Number of Directors

If the number of directors is set under Articles 13.1(2)(a) or 13.1(3)(a):

(1) the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number; or

(2) if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number contemporaneously with the setting of that number, then the directors may appoint, or the shareholders may elect or appoint, directors to fill those vacancies.

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13.3 Directors’ Acts Valid Despite Vacancy

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

13.4 Qualifications of Directors

A director is not required to hold a share in the capital of the Company as qualification for his or her office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

13.5 Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

13.6 Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

13.7 Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company’s business, he or she may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that he or she may be entitled to receive.

13.8 Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

14. ELECTION AND REMOVAL OF DIRECTORS

14.1 Election at Annual General Meeting

At every annual general meeting and in every unanimous resolution contemplated by Article 10.2:

(1) the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and

(2) all the directors cease to hold office immediately before the election or appointment of directors under paragraph (1), but are eligible for re-election or re-appointment.

14.2 Consent to be a Director

No election, appointment or designation of an individual as a director is valid unless:

(1) that individual consents to be a director in the manner provided for in the Business Corporations Act;

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(2) that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or

(3) with respect to first directors, the designation is otherwise valid under the Business Corporations Act.

14.3 Failure to Elect or Appoint Directors

If:

(1) the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by Article 10.2, on or before the date by which the annual general meeting is required to be held under the Business Corporations Act; or

(2) the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by Article 10.2, to elect or appoint any directors;

then each director then in office continues to hold office until the earlier of:

(3) when his or her successor is elected or appointed; and

(4) when he or she otherwise ceases to hold office under the Business Corporations Act or these Articles.

14.4 Places of Retiring Directors Not Filled

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

14.5 Directors May Fill Casual Vacancies,

Any casual vacancy occurring in the board of directors may be filled by the directors.

14.6 Remaining Directors Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act, for any other purpose.

14.7 Shareholders May Fill Vacancies

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

14.8 Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

(1) one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or

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(2) in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this Article 14.8.

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(1), but is eligible for re-election or re-appointment.

14.9 Ceasing to be a Director

A director ceases to be a director when:

(1) the term of office of the director expires;

(2) the director dies;

(3) the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

(4) the director is removed from office pursuant to Articles 14.10 or 14.11.

14.10 Removal of Director by Shareholders

The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

14.11 Removal of Director by Directors

The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

15. ALTERNATE DIRECTORS

15.1 Appointment of Alternate Director

Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an “appointee”) who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.

15.2 Notice of Meetings

Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.

15.3 Alternate for More Than One Director Attending Meetings

A person may be appointed as an alternate director by more than one director, and an alternate director:

(1) will be counted in determining the quorum for a meeting of directors once for each of his or her appointors and, in the case of an appointee who is also a director, once more in that capacity;

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(2) has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an appointee who is also a director, an additional vote in that capacity;

(3) will be counted in determining the quorum for a meeting of a committee of directors once for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, once more in that capacity; and

(4) has a separate vote at a meeting of a committee of directors for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.

15.4 Consent Resolutions

Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.

15.5 Alternate Director Not an Agent

Every alternate director is deemed not to be the agent of his or her appointor.

15.6 Revocation of Appointment of Alternate Director

An appointor may at any time, by notice in writing received by the Company, revoke the appointment of an alternate director appointed by him or her.

15.7 Ceasing to be an Alternate Director

The appointment of an alternate director ceases when:

(1) his or her appointor ceases to be a director and is not promptly re-elected or re-appointed;

(2) the alternate director dies;

(3) the alternate director resigns as an alternate director by notice in writing provided to the Company or a lawyer for the Company;

(4) the alternate director ceases to be qualified to act as a director; or

(5) his or her appointor revokes the appointment of the alternate director.

15.8 Remuneration and Expenses of Alternate Director

The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

16. POWERS AND DUTIES OF DIRECTORS

16.1 Powers of Management

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

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16.2 Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

16.3 Remuneration of Auditor

The directors may set the remuneration of the auditor of the Company.

17. INTERESTS OF DIRECTORS AND OFFICERS

17.1 Obligation to Account for Profits

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.

17.2 Restrictions on Voting by Reason of Interest

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

17.3 Interested Director Counted in Quorum

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any of the resolutions considered at the meeting.

17.4 Disclosure of Conflict of Interest or Property

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act.

17.5 Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

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17.6 No Disqualification

No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.7 Professional Services by Director or Officer

Subject to the Business Corporations Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.8 Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

18. PROCEEDINGS OF DIRECTORS

18.1 Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

18.2 Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

18.3 Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors:

(1) the chair of the board, if any;

(2) in the absence of the chair of the board, the president, if any, if the president is a director; or

(3) any other director chosen by the directors if:

(a) neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;

(b) neither the chair of the board nor the president, if a director, is willing to chair the meeting; or

(c) the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.

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18.4 Meetings by Telephone or Other Communications Medium

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this Article 18.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner.

18.5 Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

18.6 Notice of Meetings,

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 18.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors and the alternate directors by any method set out in Article 24.1 or orally or by telephone.

18.7 When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:

(1) the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

(2) the director or alternate director, as the case may be, has waived notice of the meeting.

18.8 Meeting Valid Despite Failure to Give Notice

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director or alternate director, does not invalidate any proceedings at that meeting.

18.9 Waiver of Notice of Meetings

Any director or alternate director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, to his or her alternate director, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

18.10 Quorum

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at two directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

18.11 Validity of Acts Where Appointment Defective

Subject to the Business Corporations Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

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18.12 Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors may be passed without a meeting:

(1) in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or

(2) in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed that he or she has or may have a disclosable interest, if each of the other directors who are entitled to vote on the resolution consents to it in writing.

A consent in writing under this Article may be by signed document, fax, email or any other method of transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this Article 18.12 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

19. EXECUTIVE AND OTHER COMMITTEES

19.1 Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

(1) the power to fill vacancies in the board of directors;

(2) the power to remove a director;

(3) the power to change the membership of, or fill vacancies in, any committee of the directors; and

(4) such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.

19.2 Appointment and Powers of Other Committees

The directors may, by resolution:

(1) appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;

(2) delegate to a committee appointed under paragraph (1) any of the directors’ powers, except:

(a) the power to fill vacancies in the board of directors;

(b) the power to remove a director;

(c) the power to change the membership of, or fill vacancies in, any committee of the directors; and

(d) the power to appoint or remove officers appointed by the directors; and

(3) make any delegation referred to in paragraph (2) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

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19.3 Obligations of Committees

Any committee appointed under Articles 19.1 or 19.2, in the exercise of the powers delegated to it, must:

(1) conform to any rules that may from time to time be imposed on it by the directors; and

(2) report every act or thing done in exercise of those powers at such times as the directors may require.

19.4 Powers of Board

The directors may, at any time, with respect to a committee appointed under Articles 19.1 or 19.2:

(1) revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;

(2) terminate the appointment of, or change the membership of, the committee; and

(3) fill vacancies in the committee.

19.5 Committee Meetings

Subject to Article 19.3(1) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 19.1 or 19.2:

(1) the committee may meet and adjourn as it thinks proper;

(2) the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

(3) a majority of the members of the committee constitutes a quorum of the committee; and

(4) questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

20. OFFICERS

20.1 Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

20.2 Functions, Duties and Powers of Officers

The directors may, for each officer:

(1) determine the functions and duties of the officer;

(2) entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and

(3) revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

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20.3 Qualifications

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as a managing director must be a director. Any other officer need not be a director.

20.4 Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

21. INDEMNIFICATION

21.1 Definitions

In this Article 21:

(1) “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;

(2) “eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director, former director or alternate director of the Company (an “eligible party”) or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director or alternate director of the Company:

(a) is or may be joined as a party; or

(b) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding; and

(3) “expenses” has the meaning set out in the Business Corporations Act.

21.2 Mandatory Indemnification of Directors and Former Directors

Subject to the Business Corporations Act, the Company must indemnify a director, former director or alternate director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 21.2.

21.3 Indemnification of Other Persons

Subject to any restrictions in the Business Corporations Act, the Company may indemnify any person.

21.4 Non-Compliance with Business Corporations Act

The failure of a director, alternate director or officer of the Company, to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Article.

21.5 Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:

(1) is or was a director, alternate director, officer, employee or agent of the Company;

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(2) is or was a director, alternate director, officer, employee or agent of a corporation at a time when the corporation is or was an affiliate of the Company;

(3) at the request of the Company, is or was a director, alternate director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity; or

(4) at the request of the Company, holds or held a position equivalent to that of a director, alternate director or officer of a partnership, trust, joint venture or other unincorporated entity;

against any liability incurred by him or her as such director, alternate director, officer, employee or agent or person who holds or held such equivalent position.

22. DIVIDENDS

22.1 Payment of Dividends Subject to Special Rights

The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

22.2 Declaration of Dividends

Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

22.3 No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 22.2.

22.4 Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the directors pass the resolution declaring the dividend.

22.5 Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

22.6 Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

(1) set the value for distribution of specific assets;

(2) determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

(3) vest any such specific assets in trustees for the persons entitled to the dividend.

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22.7 When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

22.8 Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

22.9 Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

22.10 Dividend Bears No Interest

No dividend bears interest against the Company.

22.11 Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

22.12 Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

22.13 Capitalization of Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

22.14 Set Aside Funds

The directors may, before declaring any dividend, set aside such sums as they think proper as a reserve or reserves, which shall, at the discretion of the directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose and pending such application may, at the discretion of the directors, either be employed in the business of the Company or be invested in such investments as the directors may from time to time determine. The directors may also, without placing the same in reserve, carry forward such sums which they think prudent not to divide.

23. ACCOUNTING RECORDS

23.1 Recording of Financial Affairs

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act.

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23.2 Inspection of Accounting Records

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

24. NOTICES

24.1 Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

(1) mail addressed to the person at the applicable address for that person as follows:

(a) for a record mailed to a shareholder, the shareholder’s registered address;

(b) for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class; or

(c) in any other case, the mailing address of the intended recipient;

(2) delivery at the applicable address for that person as follows, addressed to the person:

(a) for a record delivered to a shareholder, the shareholder’s registered address;

(b) for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class; or

(c) in any other case, the delivery address of the intended recipient;

(3) sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

(4) sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class; or

(5) physical delivery to the intended recipient.

24.2 Deemed Receipt of Mailing

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 24.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

24.3 Certificate of Sending

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that capacity on behalf of the Company stating that a notice, statement, report or other record was sent in accordance with Article 24.1 is conclusive evidence of that fact.

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24.4 Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

24.5 Notice to Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

(1) mailing the record, addressed to them:

(a) by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and

(b) at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or

(2) if an address referred to in paragraph (1)(b) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.

25. SEAL

25.1 Who May Attest Seal

Except as provided in Articles 25.2 and 25.3, the Company’s seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

(1) any two directors;

(2) any officer, together with any director;

(3) if the Company only has one director, that director; or

(4) any one or more directors or officers or persons as may be determined by the directors.

25.2 Sealing Copies

For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 25.1, the impression of the seal may be attested by the signature of any director, officer or other person as may be determined by the directors.

25.3 Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and such persons as are authorized under Article 25.1 to attest the Company’s seal may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

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26. PROHIBITIONS

26.1 Definitions

In this Article 26:

(1) “designated security” means:

(a) a voting security of the Company;

(b) a security of the Company that is not a debt security and that carries a residual right to participate in the earnings of the Company or, on the liquidation or winding up of the Company, in its assets; or

(c) a security of the Company convertible, directly or indirectly, into a security described in paragraph (a) or (b);

(2) “security” has the meaning assigned in the Securities Act (British Columbia); and

(3) “voting security” means a security of the Company that:

(a) is not a debt security, and

(b) carries a voting right either under all circumstances or under some circumstances that have occurred and are continuing.

26.2 Application

Article 26.3 does not apply to the Company if and for so long as it is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply.

26.3 Consent Required for Transfer of Shares or Designated Securities

No share or designated security may be sold, transferred or otherwise disposed of without the consent of the directors and the directors are not required to give any reason for refusing to consent to any such sale, transfer or other disposition.

27. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES WITHOUT PAR VALUE

The Common Shares without par value in the capital of the Company (the “Common Shares”) shall have attached thereto the following special rights and restrictions:

27.1 Voting

The holders of the Common Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Company and shall have one vote for each Common Share held.

27.2 Dividends

Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares of the Company, the holders of the Common Shares shall be entitled to receive any dividends declared and payable by the Company on the Common Shares.

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27.3 Liquidation, Dissolution or Winding-Up

Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares of the Company, the holders of the Common Shares shall be entitled to receive the remaining property of the Company upon the liquidation, dissolution or winding-up of the Company.

28. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES WITHOUT PAR VALUE

The Preferred Shares without par value in the capital of the Company (the “Preferred Shares”) shall have attached thereto the following special rights and restrictions:

28.1 Issuable in Series

The Preferred Shares may be issued at any time or times in one or more series, and the directors may, by resolution, alter the Notice of Articles and the Articles of the Company to fix the number of Preferred Shares in, and to determine the designation of the shares of, each series and to create, define and attach special rights and restrictions to the shares of each series, subject to the special rights and restrictions hereby attached to the Preferred Shares as a class. A resolution under this Article 28.1 may only be passed prior to the issue of Preferred Shares of the series to which the resolution relates.

28.2 Ranking of Preferred Shares

The Preferred Shares of each series shall, with respect to the payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, rank on a parity with the Preferred Shares of every other series and be entitled to preference over the Common Shares and over any other shares of the Company ranking junior to the Preferred Shares. If any amount of cumulative dividends (whether or not declared) or declared non-cumulative dividends or any amount payable on any such distribution of assets constituting a return of capital in respect of the Preferred Shares of any series is not paid in full, the Preferred Shares of that series shall participate rateably with the Preferred Shares of every other series in respect of such dividends and amounts.

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EX-4.2

EXHIBIT 4.2

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE             , 2007.

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE (“TSXV”) AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSXV OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL             , 2007.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER APPLICABLE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATIONS S, RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTES UNDER THE U.S. SECURITIES ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.

THIS WARRANT CERTIFICATE, AND THE WARRANTS EVIDENCED HEREBY, WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 4:00 P.M. (VANCOUVER TIME) ON             , 2010.

MED BIOGENE INC.

a corporation amalgamated under the laws of the Province of British Columbia

and having its principal office at

#300 - 2386 East Mall, Gerald McGaving Building

Vancouver, British Columbia

NO.	WARRANTS
	Each entitling the holder to acquire one (1) common share in the capital of Med BioGene Inc., subject to adjustment as set forth herein, in accordance with the terms and conditions set forth herein.

THIS IS TO CERTIFY THAT for value received <NAME>, <ADDRESS> (the “Holder”) is the registered holder of the number of Warrants stated above and is entitled for each whole Warrant represented hereby to purchase one (1) common share (each a “Share” and collectively the “Shares”) in the capital of Med BioGene Inc. (the “Company”) at any time and from time to time from the date of issue hereof up to and including 4:00 p.m. (Vancouver Time) on             , 2010 (the “Expiry Time”), at a price per Share equal to $0.65, subject to adjustment as hereinafter provided (the “Exercise Price”), upon and subject to the following terms and conditions.

For purposes of this Warrant:

(i) “Warrant Shares” means the Shares which are issuable upon the exercise from time to time of these Warrants;

(ii) “$” means Canadian dollars.

These Warrants are issued under a subscription agreement between the Company and the Holder, inter alia, and accepted by the Company on             , 2007.

TERMS AND CONDITIONS

1. The Warrants represented by this Warrant Certificate may not be exercised in the United States or by or on behalf of a U.S. Person nor will the Warrant Shares be registered or delivered to an address in the United States, unless an exemption from registration under the U.S. Securities Act or the securities laws of any U.S. state is available, and with the prior consent of the Company (which will be delivered promptly and will not be unreasonably withheld but which may be conditioned on delivery of a legal opinion in form and substance satisfactory to the Company). As used herein, the terms “United States” and “U.S. Person” have the meanings ascribed to them in Regulation S under the U.S. Securities Act.

The Warrants represented by this Warrant Certificate and the Warrant Shares issuable upon exercise of these Warrants are subject to certain resale restrictions under applicable securities legislation. The Holder is advised to seek professional advice as to applicable resale restrictions.

Certificates representing the Warrant Shares issuable upon the exercise of these Warrants shall bear a legend in form and substance to those appearing on the first page of this Warrant Certificate until no longer required by applicable securities legislation.

2. If at any time after the day which is four months plus one day from the date hereof the closing price of the Shares on the TSX Venture Exchange, or such major stock exchange or quotation system as the Shares are then trading or are listed, is greater than $0.85 for 20 or more consecutive trading days, the Company may give notice to the Holder that the Expiry Time has been accelerated and that the Warrants will expire on the 20th business day following the date of such notice.

3. At any time and from time to time at or prior to the Expiry Time, including any accelerated Expiry Time pursuant to Section 2 (the “Exercise Period”), the Holder may exercise all or any number of whole Warrants represented hereby, upon delivering to the Company at its principal office noted above on this Warrant Certificate, together with a duly completed and executed subscription notice in the form attached hereto (the “Subscription Notice”) evidencing the election of the Holder to exercise the number of Warrants set forth in the Subscription Notice (which shall not be greater than the number of Warrants represented by this Warrant Certificate as adjusted from time to time pursuant to Sections 6 and 7 of this Warrant Certificate) and a certified cheque, money order or bank draft payable to the Company for the aggregate Exercise Price of all Warrants being exercised. If the Holder is not exercising all Warrants represented by this Warrant Certificate, the Holder shall be entitled to receive, without charge, a new Warrant Certificate representing the number of Warrants which is the difference between the number of Warrants represented by the then original Warrant Certificate and the number of Warrants being so exercised.

4. The Holder shall be deemed to have become the holder of record of Warrant Shares on the date (the “Exercise Date”) on which the Company has received a duly completed Subscription Notice, delivery of the Warrant Certificate and payment of the full aggregate Exercise Price in respect of the Warrants being exercised pursuant to such Subscription Notice; provided, however, that if such date is not a business day in the City of Vancouver, British Columbia (a “Business Day”) then the Warrant Shares shall be deemed to have been issued and the Holder shall be deemed to have become the holder of record of the Warrant Shares on the next following Business Day. Within seven (7) Business Days of the Exercise Date, the Company shall issue and deliver (or cause to be delivered) to the Holder, by registered mail or pre-paid courier to his, her or its address specified in the register of the Company, one or more certificates for the appropriate number of issued and outstanding Warrant Shares. All costs, expenses, transfer taxes and other charges payable in connection with the issue and delivery of the Warrant Shares shall be at the sole expense of the Company (other than withholding tax, if any).

5. The Company covenants and agrees that, until the Expiry Time, while any of the Warrants represented by this Warrant Certificate shall be outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Warrant Shares to satisfy the right of purchase herein provided, as

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such right of purchase may be adjusted pursuant to Sections 6 and 7 of this Warrant Certificate. The Company represents and warrants that all Warrant Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment of the aggregate Exercise Price at which such Warrant Shares may at that time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable shares and the holders thereof shall not be liable to the Company or its creditors in respect thereof. The Company further represents and warrants that this Warrant Certificate is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Company covenants that it will make all filings under applicable laws required to be made by the Company in connection with the exercise of the Warrants and issue of Warrant Shares.

6. The Exercise Price (and the number of Warrant Shares purchasable upon exercise) shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a) Share Reorganization. If during the Exercise Period the Company shall:

(i) issue Shares or securities exchangeable for or convertible into Shares to holders of all or substantially all of its then outstanding Shares by way of stock dividend or other distribution, or

(ii) subdivide, redivide or change its outstanding Shares into a greater number of Shares, or

(iii) consolidate, reduce or combine its outstanding Shares into a lesser number of Shares,

(any of such events in these paragraphs (i), (ii) and (iii) being a “Share Reorganization”), then the Exercise Price shall be adjusted as of the effective date or record date, as the case may be, at which the holders of Shares are determined for the purpose of the Share Reorganization by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Shares outstanding on such effective date or record date before giving effect to such Share Reorganization and the denominator of which shall be the number of Shares outstanding as of the effective date or record date after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Shares are distributed, the number of Shares that would have been outstanding had such securities been fully exchanged for or converted into Shares on such record date or effective date). From and after any adjustment of the Exercise Price pursuant to this Section 6(a), the number of Warrant Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(b) Rights Offering. If and whenever during the Exercise Period the Company shall fix a record date for the issue or distribution of rights, options or warrants to all or substantially all of the holders of Shares under which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares at a price per share to the holder (or having a conversion price or exchange price per Share) of less than 95% of the Current Market Price (as defined in Section 7 hereof) for the Shares on such record date (any of such events being called a “Rights Offering”), then the Exercise Price shall be adjusted effective immediately after the record date for the Rights Offering to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i) the numerator of which shall be the aggregate of:

(A) the number of Shares outstanding as of the record date for the Rights Offering, and

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(B) a number determined by dividing either

I. the product of the number of Shares offered under the Rights Offering and the price at which such Shares are offered,

or, as the case may be,

II. the product of the exchange or conversion price per share of such securities offered and the maximum number of Shares for or into which the securities so offered pursuant to the Rights Offering may be exchanged or converted,

by the Current Market Price of the Shares as of the record date for the Rights Offering; and

(ii) the denominator of which shall be the aggregate of the number of Shares outstanding on such record date after giving effect to the Rights Offering and including the number of Shares offered pursuant to the Rights Offering (including shares issuable upon exercise of the rights, warrants or options under the Rights Offering or upon the exercise of the exchange or conversion rights contained in such exchangeable or convertible securities under the Rights Offering).

Any Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such calculation. To the extent that such Rights Offering is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall, then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or if such expired rights, options or warrants had not been issued. From and after any adjustment of the Exercise Price pursuant to this Section 6(b), the number of Warrant Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(c) Special Distribution. If and whenever during the Exercise Period the Company shall issue or distribute to all or to substantially all the holders of the Shares:

(i) securities of the Company including shares, rights, options or warrants to acquire shares of any class or securities exchangeable for or convertible into or exchangeable into any such shares or cash, property or assets or evidences of its indebtedness, or

(ii) any cash, property or other assets,

and if such issuance or distribution does not constitute dividends paid in the ordinary course, a Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Exercise Price shall be adjusted immediately after the record date for the Special Distribution so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i) the numerator of which shall be the difference between:

(A) the amount obtained by multiplying the number of Shares outstanding on such record date by the Current Market Price of the Shares on such record date, and

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(B) the fair value (as determined by the directors of the Company) to the holders of such Shares of such Special Distribution; and

(ii) the denominator of which shall be the total number of shares outstanding on such record date multiplied by such Current Market Price of the Shares on such record date.

Any Common Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such computation. To the extent that such Special Distribution is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or if such expired rights, options or warrants had not been issued. From and after any adjustment of the Exercise Price pursuant to this Section 6(c), the number of Warrant Shares purchasable pursuant to this Warrant Certificate shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(d) Capital Reorganization. If and whenever during the Exercise Period there shall be a reclassification or redesignation of Shares at any time outstanding or a change of the Shares into other shares or into other securities or any other capital reorganization (other than a Share Reorganization), or a consolidation, amalgamation, arrangement or merger of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a “Capital Reorganization”), the Holder, where he has not exercised the right of subscription and purchase under this Warrant Certificate prior to the effective date or record date, as the case may be, of such Capital Reorganization, shall be entitled to receive, and shall accept upon the exercise of such right for the same aggregate consideration, in lieu of the number of Warrant Shares to which such Holder was theretofore entitled upon such exercise, the kind and aggregate number of shares, other securities or other property which such holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, he had been the registered holder of the number of Shares to which such holder was theretofore entitled to subscribe for and purchase; provided however, that no such Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken to so entitle the Holder. If determined appropriate by the board of directors of the Company, acting reasonably and in good faith, and subject to the prior written approval of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading, appropriate adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 6 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 6 shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any Warrant. Any such adjustments shall be made by and set forth in terms and conditions supplemental hereto approved by the board of directors of the Company, acting reasonably and in good faith.

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(e) If and whenever at any time after the date hereof and prior to the Expiry Time, the Company takes any action affecting its Shares to which the foregoing provisions of this Section 6, in the opinion of the board of directors of the Company, acting reasonably and in good faith, are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes thereof, or would otherwise materially affect the rights of the Holder hereunder, then the Company shall execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as aforesaid in such a manner as the board of directors of the Company may determine to be equitable in the circumstances, acting reasonably and in good faith. The failure of the taking of action by the board of directors of the Company to so provide for any adjustment on or prior to the effective date of any action or occurrence giving rise to such state of facts will be conclusive evidence, absent manifest error that the board of directors has determined that it is equitable to make no adjustment in the circumstances.

7. The following rules and procedures shall be applicable to the adjustments made pursuant to Section 6:

(a) The adjustments provided for in Section 6 are cumulative and shall be made successively whenever an event referred to therein shall occur, and shall, in the case of adjustments to the Exercise Price be computed to the nearest one-tenth of one cent subject to the following paragraphs of this Section 7.

(b) No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price and no adjustment shall be made in the number of Shares purchasable upon exercise of this Warrant unless it would result in a change of at least one one-hundredth of a Share; provided, however, that any adjustments which, except for the provisions of this Section 7(b) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment. Notwithstanding Section 6 or 7 hereof, no adjustment shall be made which would result in an increase in the Exercise Price or a decrease in the number of Shares issuable upon the exercise of this Warrant (except in respect of a consolidation of the outstanding Shares).

(c) No adjustment in the Exercise Price or in the number of Shares purchasable upon exercise of Warrants shall be made in respect of any event described in Section 6, other than the events referred to in Sections 6(a)(ii) and (iii), if the Holder is entitled to participate in such event on the same terms, mutatis mutandis, as if it had exercised its Warrants prior to or on the effective date or record date, as the case may be, of such event. The terms of the participation of the Holder in such event shall be subject to the prior written approval, if applicable, of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading.

(d) No adjustment in the Exercise Price shall be made pursuant to Section 6 in respect of the issue from time to time:

(i) of Warrant Shares purchasable on exercise of the Warrants represented by this Warrant Certificate;

(ii) of dividends paid in the ordinary course of Shares to holders of Shares who exercise an option or election to receive substantially equivalent dividends in Shares in lieu of receiving a cash dividend pursuant to a dividend reinvestment plan or similar plan adopted by the Company in accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws; or

(iii) of Shares pursuant to any stock option, stock option plan, stock purchase plan or benefit plan in force at the date hereof for directors, officers, employees, advisers or consultants of the Company, as such option or plan is amended or superseded from time to time in

6

accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws, and such other stock option, stock option plan, stock purchase plan or benefit plan as may be adopted by the Company in accordance with the requirements of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading and applicable securities laws;

and any such issue shall be deemed not to be a Share Reorganization or Capital Reorganization.

(e) If the Company shall set a record date to determine the holders of the Shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

(f) As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Company shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Company have unissued and reserved shares in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the holder of such Warrant Certificate is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

(g) For the purposes of this Warrant Certificate, “Current Market Price” of a Share at any date shall be calculated as the price per Share equal to the weighted average price at which the Shares have traded in the principal Canadian stock exchange or, if the Shares are not listed, the over-the-counter market, on which the Shares are then listed or posted for trading during the 20 consecutive trading days (on each of which at least 500 Shares are traded in board lots) ending not more than five trading days immediately prior to such date as reported by such market or exchange in which the Shares are then trading or quoted. If the Shares are not then traded in the over-the-counter market or on a recognized Canadian stock exchange, the Current Market Price of the Shares shall be the fair market value of the Shares as determined in good faith by the board of directors of the Company after consultation with a nationally or internationally recognized and independent investment dealer, investment banker or firm of chartered accountants.

(h) In the absence of a resolution of the board of directors of the Company fixing a record date for any dividend or distribution referred to in Section 6(a)(i) or any Rights Offering or Special Distribution, the Company shall be deemed to have fixed as the record date therefor the date on which such dividend or distribution, Rights Offering or Special Distribution is effected.

(i) Any question that at any time or from time to time arises with respect to the amount of any adjustment to the Exercise Price or other adjustments pursuant to Section 6 shall be conclusively determined by a firm of independent chartered accountants (who may be the Company’s auditors) and shall be binding upon the Company and the Holder, absent manifest error. Notwithstanding the foregoing, such determination shall be subject to the prior written approval of the principal Canadian stock exchange or over-the-counter market on which the Shares are then listed or quoted for trading. In the event that any such determination is made, the Company shall notify the Holder in the manner contemplated in Section 19 describing such determination.

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8. On the happening of each and every such event set out in Section 6, the applicable provisions of this Warrant Certificate, including the Exercise Price, shall, ipso facto, be deemed to be amended accordingly and the Company shall take all necessary action so as to comply with such provisions as so amended.

9. In any case in which Section 6 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such an event:

(a) issuing to the holder of any Warrant exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event, and

(b) delivering to such holder any distributions declared with respect to such additional Shares after such Exercise Date and before such event;

provided, however, that the Company shall deliver or cause to be delivered to such holder, an appropriate instrument evidencing such holder’s right, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price and/or the number of Shares purchasable on the exercise of any Warrant and to such distributions declared with respect to any additional Shares issuable on the exercise of any Warrant.

10. At least ten Business Days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment in any of the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable upon the exercise thereof, or such longer period of notice as the Company shall be required to provide holders of Shares in respect of any such event, the Company shall notify the Holder of the particulars of such event and, if determinable, the required adjustment and the computation of such adjustment. In case any adjustment for which such notice has been given is not then determinable, the Company shall promptly after such adjustment is determinable notify the Holder of the adjustment and the computation of such adjustment.

11. The Company shall maintain a register of holders in which shall be entered the names and addresses of the holders of the Warrants and of the number of Warrants held by them. Such register shall be open at all reasonable times for inspection by the Holder. The Company shall notify the Holder forthwith of any change of address of the principal office of the Company.

12. The Company shall not be required to issue fractional Warrant Shares in satisfaction of its obligations hereunder. If any fractional interest in a Warrant Share would, except for the provisions of this Section 12, be deliverable upon the exercise of a Warrant, the Company shall in lieu of delivering the fractional Warrant Shares therefor satisfy the right to receive such fractional interest by payment to the holder of such Warrant of an amount in cash equal (computed in the case of a fraction of a cent to the next lower cent) to the value of the right to acquire such fractional interest on the basis of the Current Market Price at the Exercise Date.

13. Subject as herein provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings.

14. The registered Holder of this Warrant Certificate may at any time up to and including the Expiry Time, upon the surrender hereof to the Company at its principal office, exchange this Warrant Certificate for one or more Warrant Certificates entitling the Holder to subscribe in the aggregate for the same number of Shares as is expressed in this Warrant Certificate. Any Warrant Certificate tendered for exchange shall be surrendered to the Company and cancelled.

15. If this Warrant Certificate becomes stolen, lost, mutilated or destroyed, the Company shall, on such terms as it may in its discretion acting reasonably impose, issue and deliver to the Holder a new Warrant Certificate of like denomination, tenor and date as the Warrant Certificate so stolen, lost, mutilated or destroyed.

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16. Nothing contained herein shall confer any right upon the Holder hereof or any other person to subscribe for or purchase any Shares of the Company at any time subsequent to the Expiry Time. After the Expiry Time this Warrant Certificate and all rights hereunder shall be void and of no value.

17. Except as expressly set out herein, the holding of this Warrant Certificate or the Warrants represented hereby shall not constitute a Holder hereof a holder of Shares nor entitle it to any right of interest in respect thereof.

18. Unless herein otherwise expressly provided, any notice to be given hereunder to the Holder shall be deemed to be validly given if such notice is given by personal delivery or registered mail to the attention of the Holder at its registered address recorded in the registers maintained by the Company. Any notice so given shall be deemed to be validly given, if delivered personally, on the day of delivery and if sent by post or other means, on the fifth Business Day next following the sending thereof. In determining under any provision hereof the date when notice of any event must be given, the date of giving notice shall be included and the date of the event shall be excluded.

19. Time is of the essence hereof.

20. This Warrant Certificate is binding upon the Company and its successors and assigns, provided that it shall not be assigned by the Company without the prior consent of the Holder.

21. This Warrant Certificate and the Warrants granted hereunder shall be governed by and be interpreted in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. The parties hereto irrevocably attorn to the jurisdiction of the courts of the Province of British Columbia.

IN WITNESS WHEREOF this Warrant Certificate has been executed on behalf of Med BioGene Inc. as of             , 2007.

MED BIOGENE INC.
By:
	Authorized Signing Officer

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SUBSCRIPTION NOTICE

TO:	MED BIOGENE INC.
	#300 - 2386 East Mall
	Gerald McGaving Building Vancouver, British Columbia
	V6T 1Z3

Attention: Chief Financial Officer

Terms used herein but not otherwise defined have the meanings ascribed thereto in the attached Warrant Certificate.

The Holder of the attached Warrant Certificate, hereby:

(a) subscribes for                              Warrant Shares at a price per of Cdn.$0.65 per Share (or such adjusted price which may be in effect under the provisions of the Warrant Certificate) and in payment of the exercise price encloses a certified cheque, bank draft or money order in lawful money of Canada payable to the order of Med BioGene Inc. or its successor corporation; and

(b) delivers herewith the above-mentioned Warrant Certificate entitling the undersigned to subscribe for the above-mentioned number of Warrant Shares,

in each case in accordance with the terms and conditions set out in the attached Warrant Certificate.

The undersigned hereby irrevocably directs that the said Warrant Shares be registered and delivered as follows:

Name(s) in Full	Address(es) *	Number of Warrant Shares
		Total Number of Warrant Shares

Total Purchase Price
	X	$0.65	=	$
No. Warrant Shares		Price Per Share		Total Purchase Price

* Certificates representing Warrant Shares will not be registered or delivered to an address in the United States unless Box B below is checked.

In connection with this exercise of the Warrant, the Holder encloses cash, a bank draft or a certified cheque payable to the Company in the amount described in the table above as full payment for the Warrant Shares to be acquired hereby.

The Holder represents, warrants and certifies as follows (one (only) of the following must be checked):

A.	¨	He, she or it is: (i) at the time of exercise of the Warrant is not in the United States; (ii) is not a “U.S. person”, as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and is not exercising this Warrant on behalf of a “U.S. person” or a person in the United States; and (iii) did not execute or deliver this Subscription Notice in the United States.
B.	¨	He, she or it is tendering with this Subscription Notice an opinion of counsel reasonably satisfactory to the Company to the effect that the exercise of the Warrant made is pursuant to an effective registration statement under the U.S. Securities Act or that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available.

The Holder understands that unless Box A above is checked or the exercise is made pursuant to an effective registration statement under the U.S. Securities Act, the certificate representing the Warrant Shares will bear a legend to the following effect:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY: (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) INSIDE THE UNITED STATES IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS, AFTER PROVIDING AN OPINION OF COUNSEL OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE ISSUER TO THAT EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

The Holder further understands that if the Warrant is exercised at a time when the Company is not a “foreign issuer” (as defined in Regulation S under the U.S. Securities Act) and Box A above is checked, the Holder agrees and understands that the Warrant Shares may be transferred without registration only to the Company, outside the United States in compliance with Rule 904 under the U.S. Securities Act, or pursuant to an exemption from registration, and that hedging transactions with regard to the Warrant Shares may not be conducted unless in compliance with the U.S. Securities Act, and the certificate representing the Warrant Shares will bear a legend to such effect.

DATED this      of         ,         .

Signature Guaranteed by:	Signature of Holder*
	Name of Holder
	Address of Holder (include postal code or zip code)

* This signature must correspond exactly with the name appearing on the Warrant Certificate.

¨ Please check box if the Warrant Share certificates are to be delivered at the office where this Subscription Notice is surrendered, failing which the certificates will be mailed to the addresses noted above.

EXERCISE OF THE WARRANT

Instructions:

1. The Holder may exercise his, her or its right to receive Warrant Shares by completing this form and surrendering this form and the Warrant Certificate representing the Warrants being exercised, along with and a certified cheque, money order or bank draft payable to the Company for the aggregate Exercise Price of all Warrants being exercised, to the Company at its principal office in Vancouver, British Columbia.

2. If this Subscription Notice indicates that Warrant Shares are to be issued to a person or persons other than the Holder, the signature of such other person or persons must be guaranteed by an authorized officer of a chartered bank, trust company or medallion guaranteed by a member of a recognized medallion guarantee program.

3. If this Subscription Notice is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a company or any person acting in a judiciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company.

DATED this      day of         , 200  .

(Signature of Subscriber)

(Print Name of Subscriber)

(Address of Subscriber in full)

The certificates will be mailed by registered mail to the address appearing in this Subscription Notice.

EX-4.8

Exhibit 4.8

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED, OR BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT, OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF SUCH SECURITIES BY ANY PERSON FOR A PERIOD OF SIX (6) MONTHS IMMEDIATELY FOLLOWING THE DATE OF EFFECTIVENESS OF THE COMPANY’S REGISTRATION STATEMENT NO.: 333-                     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT IN ACCORDANCE WITH THE TERMS HEREOF.

MED BIOGENE INC.

UNDERWRITER’S WARRANT

[            ] Common Shares

                    , 2010

This UNDERWRITER’S WARRANT (this “Warrant”) of Med BioGene Inc., a company amalgamated under the Business Corporations Act (British Columbia) (the “Company”), is being issued pursuant to that certain Underwriting Agreement, dated as of                     , 2010 (the “Underwriting Agreement”), by and among the Company and Rodman & Renshaw, LLC, (the “Underwriter”) relating to a firm commitment public offering (the “Offering”) of              common shares of the Company (the “Common Shares”) underwritten by the Underwriter named in the Underwriting Agreement.

FOR VALUE RECEIVED, the Company hereby grants to                      and its permitted successors and assigns (collectively, the “Holder”), the right to purchase from the Company up to                      (            ) Common Shares [5% of Firm Shares] (such shares underlying this Warrant, the “Warrant Shares”), at a per share purchase price equal to $             [125% of public offering price of Firm Shares] (the “Exercise Price”), subject to the terms, conditions and adjustments set forth below in this Warrant. Upon acceptance of this Warrant, Holder agrees to be bound by the terms and conditions hereof.

1. Date of Warrant Exercise. This Warrant shall become exercisable on the date that is one (1) year from the Base Date (the “Exercise Date”). As used in this Warrant, the term “Base Date” shall mean                     , 2010.

2. Expiration of Warrant. This Warrant shall expire on the five (5) year anniversary of the Base Date (the “Expiration Date”).

3. Exercise of Warrant. This Warrant shall be exercisable pursuant to the terms of this Section 3.

3.1 Manner of Exercise.

(a) This Warrant may only be exercised by the Holder hereof on or after the Exercise Date and on or prior to the Expiration Date, in accordance with the terms and conditions hereof, in whole or in part (but not as to fractional shares) with respect to any portion of this Warrant, during the Company’s normal business hours on any day other than a Saturday or a Sunday or a day on which commercial banking institutions in Vancouver, British Columbia are authorized by law to be closed (a “Business Day”), by surrender of this Warrant to the Company at its office maintained pursuant to Section 11.2(a) hereof, accompanied by a written exercise notice in the form attached as Exhibit A to this

Warrant (or a reasonable facsimile thereof) duly executed by the Holder, together with the payment of the aggregate Exercise Price for the number of Warrant Shares purchased upon exercise of this Warrant. Upon surrender of this Warrant, the Company shall cancel this Warrant document and shall, in the event of partial exercise, replace it with a new Warrant document in accordance with Section 3.3.

(b) Except as provided for in Section 3.1(c) below, each exercise of this Warrant must be accompanied by payment in full of the aggregate Exercise Price in cash by certified check, official bank check or wire transfer in immediately available funds for the number of Warrant Shares being purchased by the Holder upon such exercise.

(c) Subject to any limitation pursuant to applicable Canadian exchange rules or policies, the aggregate Exercise Price for the number of Warrant Shares being purchased may also, in the sole discretion of the Holder, be paid in full or in part on a “cashless basis” at the election of the Holder:

(i) in the form of Common Shares owned by the Holder (based on the Fair Market Value (as defined below) of such Common Shares on the date of exercise);

(ii) in the form of Warrant Shares withheld by the Company from the Warrant Shares otherwise to be received upon exercise of this Warrant having an aggregate Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the Warrant Shares being purchased by the Holder; or

(iii) by a combination of the foregoing, provided that the combined value of all cash and the Fair Market Value of any shares surrendered to the Company is at least equal to the aggregate Exercise Price for the number of Warrant Shares being purchased by the Holder.

For purposes of this Warrant, the term “Fair Market Value” means with respect to a particular date, the average closing price of the Common Shares for the five (5) trading days immediately preceding the applicable exercise date herein as officially reported by the principal securities exchange on which the Common Stock is then listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any securities exchange as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it.

For purposes of illustration of a cashless exercise of this Warrant under Section 3.1(c)(ii) (or for a portion thereof for which cashless exercise treatment is requested as contemplated by Section 3.1(c)(iii) hereof), the calculation of such exercise shall be as follows:

X = Y * (A-B)/A

where:

X = the number of Warrant Shares to be issued to the Holder (rounded to the nearest whole share).

Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

A = the Fair Market Value of the Common Shares.

B = the Exercise Price.

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(d) For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood, and acknowledged that the Common Shares issuable upon exercise of this Warrant in a cashless exercise transaction as described in Section 3.1(c) above shall be deemed to have been acquired at the time this Warrant was issued. Moreover, it is intended, understood, and acknowledged that the holding period for the Common Shares issuable upon exercise of this Warrant in a cashless exercise transaction as described in Section 3.1(c) above shall be deemed to have commenced on the date this Warrant was issued.

3.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the Business Day on which this Warrant shall have been duly surrendered to the Company as provided in Sections 3.1 and 12 hereof, and, at such time, the Holder in whose name any certificate or certificates for Warrant Shares shall be issuable upon exercise as provided in Section 3.3 hereof shall be deemed to have become the holder or holders of record thereof of the number of Warrant Shares purchased upon exercise of this Warrant.

3.3 Delivery of Common Share Certificates and New Warrant. As soon as reasonably practicable after each exercise of this Warrant, in whole or in part, and in any event within five (5) Business Days thereafter, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Holder hereof or, subject to Sections 9 and 10 hereof, as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

(a) a certificate or certificates (with an appropriate restrictive legend in accordance with Section 10.1 hereof, as applicable) for the number of duly authorized, validly issued, fully paid and nonassessable Warrant Shares to which the Holder shall be entitled upon exercise; and

(b) in case exercise is in part only, a new Warrant document of like tenor, dated the date hereof, for the remaining number of Warrant Shares issuable upon exercise of this Warrant after giving effect to the partial exercise of this Warrant (including the delivery of any Warrant Shares as payment of the Exercise Price for such partial exercise of this Warrant).

4. Registration Rights.

4.1 Demand Registration.

4.1.1 Grant of Right. The Company, upon written demand made at any time beginning twelve (12) months from the Base Date and for a period of three (3) years thereafter (a “Demand Notice”) of the Holder(s) of at least 25% of the Warrants and/or the Warrant Shares (the “Demanding Holders”), agrees to register, on one occasion, all or any portion of the Warrant Shares (collectively the “Registrable Securities”). On such occasion, the Company will file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the Registrable Securities within sixty (60) days after receipt of a Demand Notice and use its Reasonable Best Efforts (as defined in Section 15 hereof) to have the registration statement declared effective promptly thereafter, subject to compliance with review by the SEC; provided, however, that the Company shall not be required to comply with a Demand Notice if the Company has filed a registration statement with respect to which the Holder is entitled to piggyback registration rights pursuant to Section 4.2 hereof and either: (i) the Holder has elected to participate in the offering covered by such registration statement or (ii) if such registration statement relates to an underwritten primary offering of securities of the Company, until the offering covered by such registration statement has been withdrawn or until thirty (30) days after such offering is consummated. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (A) a registration statement with respect to the sale of such securities shall have become

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effective under the Securities Act of 1933, as amended (the “Securities Act”) and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such registration statement; (B) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; or (C) such securities shall have ceased to be outstanding. In addition, the term Registrable Securities shall not include any securities held by any Holder if such securities are then freely tradeable under Rule 144 without restriction in the opinion of counsel to the Company. The Company covenants and agrees to give written notice of its receipt of any Demand Notice by any Holder(s) to all other registered Holders of the Warrants and/or the Registrable Securities within ten (10) days from the date of the receipt of any such Demand Notice.

4.1.2 Terms. The Company shall bear all fees and expenses attendant to the registration of the Registrable Securities pursuant to Section 4.1.1, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. Subject to Section 4.1.1, the Company agrees to use its Reasonable Best Efforts to cause the filing required herein to become effective promptly and to qualify or register the Registrable Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause: (i) the Company to be obligated to register or license to do business in such State or submit to general service of process in such State, or (ii) the principal shareholders of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration statement filed pursuant to the demand right granted under Section 4.1.1 to remain effective for a period of at least twelve (12) consecutive months from the date that the Holders of the Registrable Securities covered by such registration statement are first given the opportunity to sell all of such securities. The Holders shall only use the prospectuses provided by the Company to sell the shares covered by such registration statement, and will immediately cease to use any prospectus furnished by the Company if the Company advises the Holder that such prospectus may no longer be used due to a material misstatement or omission.

4.2 “Piggy-Back” Registration.

4.2.1 Grant of Right. In addition to the demand right of registration, described in Section 4.1 hereof the Holder shall have the right beginning twelve (12) months from the Base Date and for a period of five (5) years thereafter to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of Common Shares which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities.

4.2.2 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the

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Company shall furnish the then Holders of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein by giving written notice, within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement.

4.3 General Terms.

4.3.1 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriter contained in Section              of the Underwriting Agreement between the Underwriter and the Company, dated as of                     , 2010. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Securities Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section              of the Underwriting Agreement pursuant to which the Underwriter has agreed to indemnify the Company.

4.3.2 Exercise of Warrants. Nothing contained in this Warrant shall be construed as requiring the Holder(s) to exercise their Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

4.3.3 Documents Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of: (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold comfort” letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities. The Company shall also deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to the managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and

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opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request.

4.3.4 Underwriting Agreement. The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any Holders whose Registrable Securities are being registered pursuant to this Section 4, which managing underwriter shall be reasonably satisfactory to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders, their Common Shares and their intended methods of distribution.

4.3.5 Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.

4.3.6 Damages. Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company otherwise fails to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.

5. Certain Adjustments. For so long as this Warrant is outstanding:

5.1 Mergers or Consolidations. If at any time after the date hereof there shall be a capital reorganization (other than a combination or subdivision of Common Shares otherwise provided for herein) resulting in a reclassification to or change in the terms of securities issuable upon exercise of this Warrant (a “Reorganization”), or an amalgamation, merger or consolidation of the Company with another corporation, association, partnership, organization, business, individual, government or political subdivision thereof or a governmental agency (a “Person” or the “Persons”) (other than a merger with another Person in which the Company is a continuing corporation and which does not result in any reclassification or change in the terms of securities issuable upon exercise of this Warrant or a merger effected exclusively for the purpose of changing the domicile of the Company) (a “Merger”), then, as a part of such Reorganization or Merger, lawful provision and adjustment shall be made so that the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, the number of shares of stock or any other equity or debt securities or property receivable upon such Reorganization or Merger by a holder of the number of Common Shares which might have been purchased upon exercise of this Warrant immediately prior to such Reorganization or Merger. In any such case, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Reorganization or Merger to the end that the provisions of this Warrant (including adjustment of the Exercise Price then in effect and the number of Warrant Shares) shall be applicable after that event, as near as reasonably may be, in relation to any shares of stock, securities, property or other assets thereafter deliverable upon exercise of this Warrant. The provisions of this Section 4.1 shall similarly apply to successive Reorganizations and/or Mergers.

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5.2 Splits and Subdivisions; Dividends. In the event the Company should at any time or from time to time effectuate a split or subdivision of the outstanding Common Shares or pay a dividend in or make a distribution payable in additional Common Shares or Common Shares Equivalents without payment of any consideration by such holder for the additional Common Shares or Common Share Equivalents (including the additional Common Shares issuable upon conversion or exercise thereof), then, as of the applicable record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share Exercise Price shall be appropriately decreased and the number of Warrant Shares shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares; provided, however, that no adjustment shall be made in the event the split, subdivision, dividend or distribution is not effectuated.

5.3 Combination of Shares. If the number of Common Shares outstanding at any time after the date hereof is decreased by a combination of the outstanding Common Shares, the per share Exercise Price shall be appropriately increased and the number of shares of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding Common Shares.

5.4 Adjustments for Other Distributions. In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common Stock paid out of current or retained earnings and declared by the Company’s board of directors) or options or rights not referred to in Sections 5.2, 5.3 or 5.4, then, in each such case for the purpose of this Section 5.5, upon exercise of this Warrant, the Holder shall be entitled to a proportionate share of any such distribution as though the Holder was the actual record holder of the number of Warrant Shares as of the record date fixed for the determination of the holders of Common Shares of the Company entitled to receive such distribution.

6. No Impairment. The Company will not, by amendment of its articles or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all of the terms and in the taking of all actions necessary or appropriate in order to protect the rights of the Holder against impairment.

7. Chief Financial Officer’s Report as to Adjustments. With respect to each adjustment pursuant to Section 5 of this Warrant, the Company, at its expense, will promptly compute the adjustment or re-adjustment in accordance with the terms of this Warrant and cause its Chief Financial Officer to certify the computation (other than any computation of the fair value of property of the Company, as the case may be) and prepare a report setting forth, in reasonable detail, the event requiring the adjustment or re-adjustment and the amount of such adjustment or re-adjustment, the method of calculation thereof and the facts upon which the adjustment or re-adjustment is based, and the Exercise Price and the number of Warrant Shares or other securities purchasable hereunder after giving effect to such adjustment or re-adjustment, which report shall be mailed by first class mail, postage prepaid to the Holder. The Company will also keep copies of all reports at its office maintained pursuant to Section 11.2(a) hereof and will cause them to be available for inspection at the office during normal business hours upon reasonable notice by the Holder or any prospective purchaser of the Warrant designated by the Holder thereof.

8. Reservation of Shares. The Company shall, solely for the purpose of effecting the exercise of this Warrant, at all times during the term of this Warrant, reserve and keep available out of its authorized Common Shares, free from all taxes, liens and charges with respect to the issue thereof and not subject to preemptive rights or other similar rights of shareholders of the Company, such number of its Common Shares as shall from time to time be sufficient to effect in full the exercise of this Warrant. If at

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any time the number of authorized but unissued Common Shares shall not be sufficient to effect in full the exercise of this Warrant, in addition to such other remedies as shall be available to Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued Common Shares to such number of shares as shall be sufficient for such purposes, including without limitation, using its Reasonable Best Efforts to obtain the requisite shareholder approval necessary to increase the number of authorized Common Shares. The Company hereby represents and warrants that all Common Shares issuable upon exercise of this Warrant shall be duly authorized and, when issued and paid for upon exercise in accordance with the terms hereof, shall be validly issued, fully paid and nonassessable.

9. Listing. The Company shall secure the listing of the Common Shares underlying this Warrant upon each national securities exchange or automated quotation system upon which Common Shares are then listed or quoted (subject to official notice of issuance) and, prior to the Company effecting any merger, amalgamation, capital stock exchange, asset acquisition or other business combination transaction that is approved by the board of directors of the Company, the Company shall its Reasonable Best Efforts to maintain such listing for a period of three (3) years after the date hereof. The Company shall at all times while listed comply in all material respects with the Company’s reporting, filing and other obligations under the by-laws or rules of the The NASDAQ Stock Market (or such other national securities exchange or market on which the Common Shares may then be listed, as applicable).

10. Restrictions on Transfer.

10.1 Restrictive Legends. This Warrant and each Warrant issued upon transfer or in substitution for this Warrant pursuant to Section 11 hereof, each certificate for Common Shares issued upon the exercise of the Warrant and each certificate issued upon the transfer of any such Common Shares shall be transferable only upon satisfaction of the conditions specified in this Section 10. Each of the foregoing securities shall be stamped or otherwise imprinted with a legend as follows unless such securities have been registered under the Securities Act:

“The common shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”) or applicable state law. The common shares may not be offered for sale, sold or otherwise transferred, except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act and applicable state law in the opinion of counsel.”

10.2 Notice of Proposed Transfer. Prior to any transfer of any securities which are not registered under an effective registration statement under the Securities Act (“Restricted Securities”), which transfer may only occur if there is an exemption from the registration provisions of the Securities Act and all other applicable securities laws, the Holder will give written notice to the Company of the Holder’s intention to effect a transfer (and shall describe the manner and circumstances of the proposed transfer). The following provisions shall apply to any proposed transfer of Restricted Securities:

(i) If in the opinion of counsel for the Holder reasonably satisfactory to the Company the proposed transfer may be effected without registration of the Restricted Securities under the Securities Act (which opinion shall state in detail the basis of the legal conclusions reached therein), the Holder shall thereupon be entitled to transfer the Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company. Each certificate representing the Restricted Securities

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issued upon or in connection with any transfer shall bear the restrictive legend required by Section 10.1 hereof.

(ii) If the opinion called for in (i) above is not delivered, the Holder shall not be entitled to transfer the Restricted Securities until either: (x) receipt by the Company of a further notice from such Holder pursuant to the foregoing provisions of this Section 10.2 and fulfillment of the provisions of clause (i) above, or (y) such Restricted Securities have been effectively registered under the Securities Act.

10.3 Certain Other Transfer Restrictions. Notwithstanding any other provision of this Section 10: (i) prior to the Exercise Date, this Warrant or the Restricted Securities thereunder may only be transferred or assigned to the persons permitted under FINRA Rule 5110(g); and (ii) no opinion of counsel shall be necessary for a transfer of Restricted Securities by the Holder thereof to any Person employed by or owning equity in the Holder, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if the transferee were the original purchaser hereof and such transfer is permitted under applicable securities law.

10.4 Termination of Restrictions. Except as set forth in Section 10.3 hereof, the restrictions imposed by this Section 10 upon the transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities: (a) which shall have been effectively registered under the Securities Act, or (b) when, in the opinions of both counsel for the Holder thereof and counsel for the Company, such restrictions are no longer required in order to insure compliance with the Securities Act. Whenever such restrictions shall cease and terminate as to any Restricted Securities, the Holder thereof shall be entitled to receive from the Company, without expense (other than applicable transfer taxes, if any), new securities of like tenor not bearing the applicable legend required by Section 10.1 hereof.

11. Ownership, Transfer, Sale and Substitution of Warrant.

11.1 Ownership of Warrant. The Company may treat any Person in whose name this Warrant is registered in the Warrant Register maintained pursuant to Section 11.2(b) hereof as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes, notwithstanding any notice to the contrary. Subject to Sections 10 and 11 hereof, this Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued.

11.2 Office; Exchange of Warrant.

(a) The Company will maintain its principal office at the location identified in the prospectus relating to the Offering or at such other offices as set forth in the Company’s most current filing (as of the date notice is to be given) under the Exchange Act or as the Company otherwise notifies the Holder.

(b) The Company shall cause to be kept at its office maintained pursuant to Section 11.2(a) hereof a Warrant Register for the registration and transfer of the Warrant. The name and address of the holder of the Warrant, the transfers thereof and the name and address of the transferee of the Warrant shall be registered in such Warrant Register. The Person in whose name the Warrant shall be so registered shall be deemed and treated as the owner and holder thereof for all purposes of this Warrant, and the Company shall not be affected by any notice or knowledge to the contrary.

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(c) Upon the surrender of this Warrant together with the assignment in the form attached as Exhibit B to this Warrant (or a reasonable facsimile thereof) duly executed by the Holder, for registration of transfer or for exchange at the office of the Company maintained pursuant to Section 11.2(a) hereof, the Company at its expense will (subject to compliance with Section 10 hereof, if applicable) execute and deliver to or upon the order of the Holder thereof a new Warrant of like tenor, in the name of such Holder or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face thereof for the number of Common Shares called for on the face of the Warrant so surrendered (after giving effect to any previous adjustment(s) to the number of Warrant Shares).

11.3 Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, upon delivery of indemnity reasonably satisfactory to the Company in form and amount or, in the case of any mutilation, upon surrender of this Warrant for cancellation at the office of the Company maintained pursuant to Section 11.2(a) hereof, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor and dated the date hereof.

11.4 Opinions. In connection with the sale of the Warrant Shares by Holder, the Company agrees to cooperate with the Holder, and at the Company’s expense, have its counsel provide any legal opinions required to remove the restrictive legends from the Warrant Shares in connection with a sale, transfer or legend removal request of Holder.

12. No Rights or Liabilities as Stockholder. No Holder shall be entitled to vote or receive dividends or be deemed the holder of any shares of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, amalgamation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Common Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. The Holder will not be entitled to share in the assets of the Company in the event of a liquidation, dissolution or the winding up of the Company.

13. Notices. Any notice or other communication in connection with this Warrant shall be given in writing and directed to the parties hereto as follows: (a) if to the Holder, c/o                      [—name and fax and/or email address] or (b) if to the Company, to the attention of its Chief Executive Officer at its office maintained pursuant to Section 11.2(a) hereof; provided that the exercise of the Warrant shall also be effected in the manner provided in Section 3 hereof. Notices shall be deemed properly delivered and received when delivered to the notice party (i) if personally delivered, upon receipt or refusal to accept delivery, (ii) if sent via facsimile, upon mechanical confirmation of successful transmission thereof generated by the sending telecopy machine, (iii) if sent by a commercial overnight courier for delivery on the next Business Day, on the first Business Day after deposit with such courier service, or (iv) if sent by registered or certified mail, five (5) Business Days after deposit thereof in the U.S. mail.

14. Payment of Taxes. The Company will pay all documentary stamp taxes attributable to the issuance of Common Shares underlying this Warrant upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the transfer or registration of this Warrant or any certificate for Common Shares

10

underlying this Warrant in a name other that of the Holder. The Holder is responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Shares underlying this Warrant upon exercise hereof.

15. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. The section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof. When used herein, the term “Reasonable Best Efforts” means, with respect to the applicable obligation of the Company, reasonable best efforts for similarly situated, publicly-traded companies.

[Remainder of page intentionally left blank]

11

IN WITNESS WHEREOF, the Company has caused this Underwriter’s Warrant to be duly executed as of the date first above written.

MED BIOGENE INC.
By:
	Name: Erinn B. Broshko
	Title: Chief Executive Officer

12

EXHIBIT A

FORM OF EXERCISE NOTICE

[To be executed only upon exercise of Warrant]

To MED BIOGENE INC.:

The undersigned registered holder of the within Warrant hereby irrevocably exercises the Warrant pursuant to Section 3.1 of the Warrant with respect to                      Warrant Shares, at an exercise price per share of $[            ], and requests that the certificates for such Warrant Shares be issued, subject to Sections 10 and 11, in the name of, and delivered to:

The undersigned is hereby making payment for the Warrant Shares in the following manner: [check one]

¨ by cash in accordance with Section 3.1(b) of the Warrant

¨ via cashless exercise in accordance with Section 3.1(c) of the Warrant in the following manner:

The undersigned hereby represents and warrants that it is, and has been since its acquisition of the Warrant, the record and beneficial owner of the Warrant.

Dated:                                           

Print or Type Name

(Signature must conform in all respects to name of holder as specified on the face of Warrant)

(Street Address)

(City)                                                 (State)                 (Zip Code)

13

EXHIBIT B

FORM OF ASSIGNMENT

[To be executed only upon transfer of Warrant]

For value received, the undersigned registered holder of the within Warrant hereby sells, assigns and transfers unto                      [include name and addresses] the rights represented by the Warrant to purchase              Common Shares of MED BIOGENE INC. to which the Warrant relates, and appoints                      Attorney to make such transfer on the books of MED BIOGENE INC. maintained for the purpose, with full power of substitution in the premises.

Dated:
	(Signature must conform in all respects to name of holder as specified on the face of Warrant)
	(Street Address)
	(City)                                         (State)                (Zip Code)
Signed in the presence of:
	(Signature of Transferee)
	(Street Address)
	(City)                                         (State)                (Zip Code)

14

EX-4.9

EXHIBIT 4.9

FORM 2F

CPC ESCROW AGREEMENT

THIS AGREEMENT is made as of the 31^st day of August, 2007

AMONG:

Berkeley Capital Corp. II (the Issuer)

AND:

Equity Transfer & Trust Company (the Escrow Agent)

AND:

EACH OF THE UNDERSIGNED SECURITYHOLDERS OF THE ISSUER

(a Securityholder or you)

(collectively, the Parties)

This Agreement is being entered into by the Parties under Exchange Policy 2.4 - Capital Pool Companies (the Policy) in connection with a listing of a Capital Pool Company on the TSX Venture Exchange (the Exchange).

For good and valuable consideration, the Parties agree as follows:

PART 1 ESCROW

1.1 Appointment of Escrow Agent

The Issuer and the Securityholders appoint the Escrow Agent to act as escrow agent under this Agreement. The Escrow Agent accepts the appointment.

1.2 Deposit of Escrow Securities in Escrow

(1) You are depositing the securities (escrow securities) listed opposite your name in Schedule “A” with the Escrow Agent to be held in escrow under this Agreement. You will immediately deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of these securities which you have or which you may later receive.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 1

(2) If you receive any shares of the Issuer upon exercise of a stock option granted by the Issuer prior to Completion of the Qualifying Transaction, (option securities) you will deposit them with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those option securities. When this Agreement refers to escrow securities, it includes option securities.

(3) If you receive any other securities (additional escrow securities):

(a) as a dividend or other distribution on escrow securities;

(b) on the exercise of a right of purchase, conversion or exchange attaching to escrow securities, including securities received on conversion of special warrants;

(c) on a subdivision, or compulsory or automatic conversion or exchange of escrow securities; or

(d) from a successor issuer in a business combination, if Part 7 of this Agreement applies,

you will deposit them in escrow with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those additional escrow securities. When this Agreement refers to escrow securities, it includes additional escrow securities.

(4) You will immediately deliver to the Escrow Agent any replacement share certificates or other evidence of option securities or additional escrow securities issued to you.

1.3 Direction to Escrow Agent

The Issuer and the Securityholders direct the Escrow Agent to hold the escrow securities in escrow until they are released from escrow under this Agreement.

PART 2 RELEASE OF ESCROW SECURITIES

2.1 Release Provisions

The provisions of Schedule B(1) - CPC Escrow Securities is incorporated into and forms part of this Agreement.

2.2 Release Provisions for Option Securities

The Escrow Agent will release any option securities upon receiving notice from the Exchange that the Issuer has completed a Qualifying Transaction.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 2

2.3 Additional escrow securities

If you acquire additional escrow securities in connection with the transaction to which this agreement relates, those securities will be added to the securities already in escrow, to increase the number of remaining escrow securities. After that, all of the escrow securities will be released in accordance with the applicable release schedule.

2.4 Delivery of Share Certificates for Escrow Securities

The Escrow Agent will send to each Securityholder any share certificates or other evidence of that Securityholder’s escrow securities in the possession of the Escrow Agent released from escrow as soon as reasonably practicable after the release.

2.5 Replacement Certificates

If, on the date a Securityholder’s escrow securities are to be released, the Escrow Agent holds a share certificate or other evidence representing more escrow securities than are to be released, the Escrow Agent will deliver the share certificate or other evidence to the Issuer or its transfer agent and request replacement share certificates or other evidence. The Issuer will cause replacement share certificates or other evidence to be prepared and delivered to the Escrow Agent. After the Escrow Agent receives the replacement share certificates or other evidence, the Escrow Agent will send to the Securityholder or at the Securityholder’s direction, the replacement share certificate or other evidence of the escrow securities released. The Escrow Agent and Issuer will act as soon as reasonably practicable.

2.6 Release upon Death

(1) If a Securityholder dies, the Securityholder’s escrow securities will be released from escrow. The Escrow Agent will deliver any share certificates or other evidence of the escrow securities in the possession of the Escrow Agent to the Securityholder’s legal representative provided that:

(a) the legal representative of the deceased Securityholder provides written notice to the Exchange of the intent to release the escrow securities as at a specified date which is at least 10 business days and not more than 30 business days prior to the proposed release; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to delivery the Escrow Agent must receive:

(a) a certified copy of the death certificate; and

(b) any evidence of the legal representative’s status that the Escrow Agent may reasonably require.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 3

2.7 Exchange Discretion to Terminate

If the Escrow Agent receives a request from the Exchange to halt or terminate the release of escrow securities from escrow, then the Escrow Agent will comply with that request, and will not release any escrow securities from escrow until it receives the written consent of the Exchange.

2.8 Discretionary Applications

The Exchange may consent to the release from escrow of escrow securities in other circumstances and on terms and on conditions it deems appropriate. Escrow securities may be released from escrow provided that the Escrow Agent receives written notice from the Exchange.

PART 3 EARLY RELEASE ON CHANGE OF ISSUER STATUS

3.1 Early Release – Graduation to Tier 1

(1) When a CPC or Resulting Issuer becomes a Tier 1 Issuer, the release schedule for its escrow securities changes.

(2) If the Issuer reasonably believes that it meets the Minimum Listing Requirements of a Tier 1 Issuer as described in Policy 2.1 – Minimum Listing Requirements, the Issuer may make application to the Exchange to be listed as a Tier 1 Issuer. The Issuer must also concurrently provide notice to the Escrow Agent that it is making such an application.

(3) If the graduation to Tier 1 is accepted by the Exchange, the Exchange will issue an Exchange Bulletin confirming final acceptance for listing of the Issuer on Tier 1. Upon issuance of this Bulletin the Issuer must immediately:

(a) issue a news release disclosing:

(i) that it has been accepted for graduation to Tier 1; and

(ii) the number of escrow securities to be released and the dates of release under the new schedule; and

(b) provide the news release, together with a copy of the Exchange Bulletin, to the Escrow Agent.

(4) Upon completion of the steps in section 3.1(3) above, the Issuer’s release schedule B(1) will be replaced with release schedule B(2).

(5) Within 10 days of the Exchange Bulletin confirming the Issuer’s listing on Tier 1, the Escrow Agent must release any escrow securities from escrow which under the new release schedule would have been releasable at a date prior to the Exchange Bulletin.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 4

PART 4 CANCELLATION OF ESCROWED SECURITIES

4.1 Delisting of the CPC

If the Issuer fails to complete a Qualifying Transaction, as defined in the applicable Exchange Policy, within 24 months following the date of listing of the Issuer and the Exchange issues an Exchange Bulletin that the Issuer will be delisted, the Issuer must immediately notify the Escrow Agent.

4.2 Cancellation of Certain Escrow Securities Held by Related Parties of the CPC

(1) If the Issuer is delisted prior to Completion of a Qualifying Transaction,

(a) the Escrow Agent will deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrow securities held by Related Parties to the CPC which were purchased prior to the IPO of the CPC at a discount to the IPO price. (the Discount Seed Shares); and

(b) the Issuer and the Escrow Agent must either:

(i) take such action as is necessary to cancel the Discount Seed Shares pursuant to the Policy, or

(ii) if the Issuer is moved to NEX, take such action as is necessary to immediately cancel that number of Discount Seed Shares held by Related Parties to the CPC as determined by a vote of the shareholders of the Issuer pursuant to section 14.13 of the Policy.

(2) For the purposes of cancellation of Discount Seed Shares, each Securityholder irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

4.3 Cancellation of Other Escrow Securities

(1) Any escrow securities which have not been released from escrow under this Agreement as at 4:30 p.m. (Vancouver time) or 5:30 p.m. (Calgary time) on the date which is the 10^th anniversary of the date of delisting from the Exchange must immediately be cancelled. The Escrow Agent must deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrowed securities. The Issuer and Escrow Agent must take all actions as may be necessary to expeditiously effect cancellation.

(2) For the purposes of cancellation of escrow securities under this Agreement, each Securityholder hereby irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 5

PART 5. DEALING WITH ESCROW SECURITIES

5.1 Restriction on Transfer, etc.

Unless it is expressly permitted in this Agreement, you will not sell, transfer, assign, mortgage, enter into a derivative transaction concerning, or otherwise deal in any way with your escrow securities or any related share certificates or other evidence of the escrow securities. If a Securityholder is a private company controlled by one or more Principals of the Issuer, the Securityholder may not participate in a transaction that results in a change of its control or a change in the economic exposure of the Principals to the risks of holding escrow securities.

5.2 Pledge, Mortgage or Charge as Collateral for a Loan

Subject to Exchange Acceptance, you may pledge, mortgage or charge your escrow securities to a financial institution as collateral for a loan, provided that no escrow securities or any share certificates or other evidence of escrow securities will be transferred or delivered by the Escrow Agent to the financial institution for this purpose. The loan agreement must provide that the escrow securities will remain in escrow if the lender realizes on the escrow securities to satisfy the loan.

5.3 Voting of Escrow Securities

Although you may exercise voting rights attached to your escrow securities, you may not, while your securities are held in escrow, exercise voting rights attached to any securities (whether in escrow or not) in support of one or more arrangements that would result in the repayment of capital being made on the escrow securities prior to a winding up of the Issuer.

5.4 Dividends on Escrow Securities

You may receive a dividend or other distribution on your escrow securities, and elect the manner of payment from the standard options offered by the Issuer. If the Escrow Agent receives a dividend or other distribution on your escrow securities, other than additional escrow securities, the Escrow Agent will pay the dividend or other distribution to you on receipt.

5.5 Exercise of Other Rights Attaching to Escrow Securities

You may exercise your rights to exchange or convert your escrow securities in accordance with this agreement.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 6

PART 6 PERMITTED TRANSFERS WITHIN ESCROW

6.1 Transfer to Directors and Senior Officers

(1) You may transfer escrow securities within escrow to existing or, upon their appointment, incoming directors or senior officers of the Issuer or any of its material operating subsidiaries, if the Issuer’s board of directors has approved the transfer and provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer the Escrow Agent must receive:

(a) a certified copy of the resolution of the board of directors of the Issuer approving the transfer;

(b) a certificate signed by a director or officer of the Issuer authorized to sign, stating that the transfer is to a director or senior officer of the Issuer or a material operating subsidiary and that any required acceptance from the Exchange on which the Issuer is listed has been received;

(c) an acknowledgment in the form of Form 5E signed by the transferee; and

(d) a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

(3) A transfer within escrow is a trade within the meaning of securities legislation and may require an exemption or discretionary order.

6.2 Transfer to Other Principals

(1) You may transfer escrow securities within escrow:

(a) to a person or company that before the proposed transfer holds more than 20% of the voting rights attached to the Issuer’s outstanding securities; or

(b) to a person or company that after the proposed transfer

(i) will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities, and

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 7

(ii) has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries,

provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer the Escrow Agent must receive:

(a) a certificate signed by a director or officer of the Issuer authorized to sign, stating that:

(i) the transfer is to a person or company that the officer believes, after reasonable investigation, holds more than 20% of the voting rights attached to the Issuer’s outstanding securities before the proposed transfer; or

(ii) the transfer is to a person or company that:

(A) the officer believes, after reasonable investigation, will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities; and

(B) has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries

after the proposed transfer; and

(iii) any required approval from the Exchange has been received;

(b) an acknowledgment in the form of Form 5E signed by the transferee; and

(c) a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 8

6.3 Transfer upon Bankruptcy

(1) You may transfer escrow securities within escrow to a trustee in bankruptcy or another person or company entitled to escrow securities on bankruptcy provided that

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer, the Escrow Agent must receive:

(a) a certified copy of either

(i) the assignment in bankruptcy filed with the Superintendent of Bankruptcy, or

(ii) the receiving order adjudging the Securityholder bankrupt;

(b) a certified copy of a certificate of appointment of the trustee in bankruptcy;

(c) a transfer power of attorney, duly completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(d) an acknowledgment in the form of Form 5E signed by

(i) the trustee in bankruptcy or

(ii) on direction from the trustee, with evidence of that direction attached to the acknowledgment form, another person or company legally entitled to the escrow securities.

6.4 Transfer Upon Realization of Pledged, Mortgaged or Charged Escrow Securities

(1) You may transfer within escrow to a financial institution provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 9

(2) Prior to the transfer the Escrow Agent must receive:

(a) a statutory declaration of an officer of the financial institution that the financial institution is legally entitled to the escrow securities;

(b) evidence that the Exchange has accepted the pledge, mortgage or charge of escrow securities to the financial institution;

(c) a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent;

and

(d) an acknowledgement in the form of Form 5E signed by the financial institution.

6.5 Transfer to Certain Plans and Funds

(1) You may transfer escrow securities within escrow to or between a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or other similar registered plan or fund with a trustee, where the beneficiaries of the plan or fund are limited to you and your spouse, children and parents provided that.

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer the Escrow Agent must receive:

(a) evidence from the trustee of the transferee plan or fund, or the trustee’s agent, stating that, to the best of the trustee’s knowledge, the annuitant of the RRSP or RRIF or the beneficiaries of the other registered plan or fund do not include any person or company other than you and your spouse, children and parents;

(b) a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(c) an acknowledgement in the form of Form 5E signed by the trustee of the plan or fund.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 10

6.6 Effect of Transfer Within Escrow

After the transfer of escrow securities within escrow, the escrow securities will remain in escrow and released from escrow under this Agreement as if no transfer has occurred, on the same terms that applied before the transfer. The Escrow Agent will not deliver any share certificates or other evidence of escrow securities to the transferees under this Part 6.

6.7 Discretionary Applications

The Exchange may consent to the transfer within escrow of escrow securities in other circumstances and on such terms and conditions as it deems appropriate.

PART 7 BUSINESS COMBINATIONS

7.1 Business Combinations

This Part applies to the following (business combinations):

(a) a formal take-over bid for all outstanding equity securities of the Issuer or which, if successful, would result in a change of control of the Issuer

(b) a formal issuer bid for all outstanding equity securities of the Issuer

(c) a statutory arrangement

(d) an amalgamation

(e) a merger

(f) a reorganization that has an effect similar to an amalgamation or merger

7.2 Delivery to Escrow Agent

You may tender your escrow securities to a person or company in a business combination. At least five business days prior to the date the escrow securities must be tendered under the business combination, you must deliver to the Escrow Agent:

(a) a written direction signed by you that directs the Escrow Agent to deliver to the depositary under the business combination any share certificates or other evidence of the escrow securities, and a completed and executed cover letter or similar document and, where required, transfer power of attorney completed and executed for transfer in accordance with the requirements of the Issuer’s depository, and any other documentation specified or provided by you and required to be delivered to the depositary under the business combination;

(b) written consent of the Exchange; and

(c) any other information concerning the business combination as the Escrow Agent may reasonably require.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 11

7.3 Delivery to Depositary

As soon as reasonably practicable, and in any event no later than three business days after the Escrow Agent receives the documents and information required under section 7.2, the Escrow Agent will deliver to the depositary, in accordance with the direction, any share certificates or other evidence of the escrow securities and a letter addressed to the depositary that

(a) identifies the escrow securities that are being tendered;

(b) states that the escrow securities are held in escrow;

(c) states that the escrow securities are delivered only for the purposes of the business combination and that they will be released from escrow only after the Escrow Agent receives the information described in section 7.4;

(d) if any share certificates or other evidence of the escrow securities have been delivered to the depositary, requires the depositary to return to the Escrow Agent, as soon as practicable, the share certificates or other evidence of escrow securities that are not released from escrow into the business combination; and

(e) where applicable, requires the depositary to deliver or cause to be delivered to the Escrow Agent, as soon as practicable, share certificates or other evidence of additional escrow securities that you acquire under the business combination.

7.4 Release of Escrow Securities to Depositary

(1) The Escrow Agent will release from escrow the tendered escrow securities provided that:

(a) you or the Issuer make application under the applicable Exchange Policy of the intent to release the tendered securities on a date at least 10 business days and not more than 30 business days prior to the date of the proposed release date; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date;

(c) the Escrow Agent receives a declaration signed by the depositary or, if the direction identifies the depositary as acting on behalf of another person or company in respect of the business combination, by that other person or company, that

(i) the terms and conditions of the business combination have been met or waived; and

(ii) the escrow securities have either been taken up and paid for or are subject to an unconditional obligation to be taken up and paid for under the business combination.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 12

7.5 Escrow of New Securities

If you receive securities (new securities) of another issuer (successor issuer) in exchange for your escrow securities, the new securities will be subject to escrow in substitution for the tendered escrow securities.

7.6 Release from Escrow of New Securities

(1) The Escrow Agent will send to a Securityholder share certificates or other evidence of the Securityholder’s new securities as soon as reasonably practicable after the Escrow Agent receives

(a) a certificate from the successor issuer signed by a director or officer of the successor issuer authorized to sign

(i) stating that it is a successor issuer to the Issuer as a result of a business combination;

(ii) containing a list of the securityholders whose new securities are subject to escrow under section 7.5;

(iii) containing a list of the securityholders whose new securities are not subject to escrow under section 7.5; and

(b) written confirmation from the Exchange that it has accepted the list of Securityholders whose new securities are not subject to escrow under section 7.5; and

(2) If your new securities are subject to escrow, unless subsection (3) applies, the Escrow Agent will hold your new securities in escrow on the same terms and conditions, including release dates, as applied to the escrow securities that you exchanged.

(3) If the Issuer is a Tier 2 Issuer, and the successor issuer is a Tier 1 Issuer, the release provisions relating to graduation will apply.

PART 8 RESIGNATION OF ESCROW AGENT

8.1 Resignation of Escrow Agent

(1) If the Escrow Agent wishes to resign as escrow agent, the Escrow Agent will give written notice to the Issuer and the Exchange.

(2) If the Issuer wishes to terminate the Escrow Agent as escrow agent, the Issuer will give written notice to the Escrow Agent and the Exchange.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 13

(3) If the Escrow Agent resigns or is terminated, the Issuer will be responsible for ensuring that the Escrow Agent is replaced not later than the resignation or termination date by another escrow agent that is acceptable to the Exchange and that has accepted such appointment, which appointment will be binding on the Issuer and the Securityholders.

(4) The resignation or termination of the Escrow Agent will be effective, and the Escrow Agent will cease to be bound by this Agreement, on the date that is 60 days after the date of receipt of the notices referred to above by the Escrow Agent or Issuer, as applicable, or on such other date as the Escrow Agent and the Issuer may agree upon (the resignation or termination date), provided that the resignation or termination date will not be less than 10 business days before a release date.

(5) If the Issuer has not appointed a successor escrow agent within 60 days of the resignation or termination date, the Escrow Agent will apply, at the Issuer’s expense, to a court of competent jurisdiction for the appointment of a successor escrow agent, and the duties and responsibilities of the Escrow Agent will cease immediately upon such appointment.

(6) On any new appointment under this section, the successor Escrow Agent will be vested with the same powers, rights, duties and obligations as if it had been originally named herein as Escrow Agent, without any further assurance, conveyance, act or deed. The predecessor Escrow Agent, upon receipt of payment for any outstanding account for its services and expenses then unpaid, will transfer, deliver and pay over to the successor Escrow Agent, who will be entitled to receive, all securities, records or other property on deposit with the predecessor Escrow Agent in relation to this Agreement and the predecessor Escrow Agent will thereupon be discharged as Escrow Agent.

(7) If any changes are made to Part 9 of this Agreement as a result of the appointment of the successor Escrow Agent, those changes must not be inconsistent with the Policy and the terms of this Agreement and the Issuer to this Agreement will file a copy of the new Agreement with the securities regulators with jurisdiction over this Agreement and the escrow securities.

PART 9 OTHER CONTRACTUAL ARRANGEMENTS

9.1 Escrow Agent Not a Trustee

The Escrow Agent accepts duties and responsibilities under this Agreement, and the escrow securities and any share certificates or other evidence of these securities, solely as a custodian, bailee and agent. No trust is intended to be, or is or will be, created hereby and the Escrow Agent shall owe no duties hereunder as a trustee.

9.2 Escrow Agent Not Responsible for Genuineness

The Escrow Agent will not be responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any escrow security deposited with it.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 14

9.3 Escrow Agent Not Responsible for Furnished Information

The Escrow Agent will have no responsibility for seeking, obtaining, compiling, preparing or determining the accuracy of any information or document, including the representative capacity in which a party purports to act, that the Escrow Agent receives as a condition to a release from escrow or a transfer of escrow securities within escrow under this Agreement.

9.4 Escrow Agent Not Responsible after Release

The Escrow Agent will have no responsibility for escrow securities that it has released to a Securityholder or at a Securityholder’s direction according to this Agreement.

9.5 Indemnification of Escrow Agent

(1) The Issuer and each Securityholder jointly and severally:

(a) release, indemnify and save harmless the Escrow Agent from all liabilities, actions, costs (including legal costs, expenses and disbursements), charges, claims, demands, damages, losses and expenses resulting from or arising out of the Escrow Agent’s performance of its duties under this Agreement in good faith;

(b) agree not to make or bring a claim or demand, or commence any action, against the Escrow Agent in respect of its performance of its duties under this Agreement in good faith; and

(c) agree to indemnify and save harmless the Escrow Agent from all costs (including legal costs, expenses and disbursements) and damages that the Escrow Agent incurs or is required by law to pay as a result of any person’s claim, demand or action in connection with the Escrow Agent’s performance of its duties under this Agreement in good faith.

(2) This indemnity survives the release of the escrow securities, the resignation or termination of the Escrow Agent and the termination of this Agreement.

(3) Equity shall be liable for claims or damages only to an aggregate maximum amount equal to the amount of fees paid by the Issuer to Equity under this agreement hereunder in the twelve months preceding the last of the events giving rise to such claims or damages, except to the extent that Equity has acted in bad faith or engaged in willful misconduct. In no event shall Equity be liable for indirect or consequential damages.

9.6 Additional Provisions

(1) The Escrow Agent will be protected in acting and relying reasonably upon any notice, direction, instruction, order, certificate, confirmation, request, waiver, consent, receipt, statutory declaration or other paper or document (collectively referred to as Documents) furnished to it and signed by any person required to or entitled to execute and deliver to

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 15

the Escrow Agent any such Documents in connection with this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth or accuracy of any information therein contained, which it in good faith believes to be genuine.

(2) The Escrow Agent will not be bound by any notice of a claim or demand with respect thereto, or any waiver, modification, amendment, termination or rescission of this Agreement unless received by it in writing, and signed by the other Parties and approved by the securities regulators with jurisdiction as set out in section 8.1, and, if the duties or indemnification of the Escrow Agent in this Agreement are affected, unless it has given its prior written consent.

(3) The Escrow Agent may retain such legal counsel and advisors as it may reasonably require for the purpose of discharging its duties or determining its rights under this Agreement and may rely and act upon the advice of such counsel or advisor. The Escrow Agent will give written notice to the Issuer as soon as practicable that it has retained legal counsel or other advisors. The Issuer will pay or reimburse the Escrow Agent for any reasonable fees, expenses and disbursements of such counsel or advisors.

(4) In the event of any disagreement arising under the terms of this Agreement, the Escrow Agent will be entitled, at its option, to refuse to comply with any and all demands whatsoever until the dispute is settled either by a written agreement among the Parties or by a court of competent jurisdiction.

(5) The Escrow Agent will have no duties or responsibilities except as expressly provided in this Agreement and will have no duty or responsibility arising under any other agreement, including any agreement referred to in this Agreement, to which the Escrow Agent is not a party.

9.7 Remuneration of Escrow Agent

The Issuer will pay the Escrow Agent reasonable remuneration for its services under this Agreement and reimburse the Escrow Agent for its expenses and disbursements in accordance with Escrow Agent’s Schedule of Fees accepted by the Issuer on July 24, 2007.

9.8 Notice to Escrow Agent

The Issuer shall forthwith provide a copy of the Exchange Bulletin, confirmation of listing and posting for trading of the subject escrowed shares or such other relevant document to the Escrow Agent as it shall require in order to make the required releases. No duty shall rest with the Escrow Agent to obtain this information independently nor shall it be held liable for any loss, claim, suit or action, howsoever caused by any delay in providing this information to it.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 16

PART 10 INDEMNIFICATION OF THE EXCHANGE

10.1 Indemnification

(1) The Issuer and each Securityholder jointly and severally:

(a) release, indemnify and save harmless the Exchange from all costs (including legal cost, expenses and disbursements), charges, claims, demands, damages, liabilities, losses and expenses incurred by the Exchange;

(b) agree not to make or bring a claim or demand, or commence any action, against the Exchange; and

(c) agree to indemnify and save harmless the Exchange from all costs (including legal costs) and damages that the Exchange incurs or is required by law to pay as a result of any person’s claim, demand or action,

arising from any and every act or omission committed or omitted by the Exchange, in connection with this Agreement, even if said act or omission was negligent, or constituted a breach of the terms of this Agreement.

(2) This indemnity survives the release of the escrow securities and the termination of this Agreement.

PART 11 NOTICES

11.1 Notice to Escrow Agent

Documents will be considered to have been delivered to the Escrow Agent on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Name: Equity Transfer & Trust Company

Address: 200 University Ave, Suite 410

    Toronto, ON 5MH 4H1

Contact Person: Stephen Headford

Facsimile: (416) 361-0470

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 17

11.2 Notice to Issuer

Documents will be considered to have been delivered to the Issuer on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand during normal business hours or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Name: Berkeley Capital Corp. II

Address: 48 Yonge Street, Suite 1000

Toronto, ON M5E 1G6

Contact Person: Anthony Lacavera

Facsimile: (416) 640-1089

11.3 Deliveries to Securityholders

Documents will be considered to have been delivered to a Securityholder on the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the address on the Issuer’s share register.

Any share certificates or other evidence of a Securityholder’s escrow securities will be sent to the Securityholder’s address on the Issuer’s share register unless the Securityholder has advised the Escrow Agent in writing otherwise at least ten business days before the escrow securities are released from escrow. The Issuer will provide the Escrow Agent with each securityholder’s address as listed on the Issuer’s share register.

11.4 Change of Address

(1) The Escrow Agent may change its address for delivery by delivering notice of the change of address to the Issuer and to each Securityholder.

(2) The Issuer may change its address for delivery by delivering notice of the change of address to the Escrow Agent and to each Securityholder.

(3) A Securityholder may change that Securityholder’s address for delivery by delivering notice of the change of address to the Issuer and to the Escrow Agent.

11.5 Postal Interruption

A party to this Agreement will not mail a Document if the party is aware of an actual or impending disruption of postal service.

PART 12 GENERAL

12.1 Interpretation – holding securities

Unless the context otherwise requires, all capitalized terms that are not otherwise defined in this Agreement, shall have the meanings as defined in Policy 1.1 - Interpretation or in Policy 5.4 - Escrow, Vendor Consideration and Resale Restrictions.

When this Agreement refers to securities that a Securityholder “holds”, it means that the Securityholder has direct or indirect beneficial ownership of or control or direction over the securities.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 18

12.2 Enforcement by Third Parties

The Issuer enters this Agreement both on its own behalf and as trustee for the Exchange and the Securityholders of the Issuer, and this Agreement may be enforced by either the Exchange, or the Securityholders of the Issuer, or both.

12.3 Termination, Amendment, and Waiver of Agreement

(1) Subject to subsection 12.3(3), this Agreement shall only terminate:

(a) with respect to all the Parties:

(i) as specifically provided in this Agreement;

(ii) subject to section 12.3(2), upon the agreement of all Parties; or

(iii) when the escrow securities of all Securityholders have been released from escrow pursuant to this Agreement; and

(b) with respect to a Party:

(i) as specifically provided in this Agreement; or

(ii) if the Party is a Securityholder, when all of the Securityholder’s escrow securities have been released from escrow pursuant to this Agreement.

(2) An agreement to terminate this Agreement pursuant to section 12.3(1)(a)(ii) shall not be effective unless and until the agreement to terminate

(a) is evidenced by a memorandum in writing signed by all Parties;

(b) has been consented to in writing by the Exchange; and

(c) has been approved by a majority of securityholders of the Issuer who are not Securityholders.

(3) Notwithstanding any other provision in this Agreement, the obligations set forth in section 10.1 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(4) No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

(a) is evidenced by a memorandum in writing signed by all Parties;

(b) has been approved in writing by the Exchange; and

(c) has been approved by a majority of securityholders of the Issuer who are not Securityholders.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 19

(5) No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether similar or not), nor shall any waiver constitute a continuing waiver, unless expressly provided.

12.4 Severance of Illegal Provision

Any provision or part of a provision of this Agreement determined by a court of competent jurisdiction to be invalid, illegal or unenforceable shall be deemed stricken to the extent necessary to eliminate any invalidity, illegality or unenforceability, and the rest of the Agreement and all other provisions and parts thereof shall remain in full force and effect and be binding upon the parties hereto as though the said illegal and/or unenforceable provision or part thereof had never been included in this Agreement.

12.5 Further Assurances

The Parties will execute and deliver any further documents and perform any further acts reasonably requested by any of the Parties to this Agreement which are necessary to carry out the intent of this Agreement.

12.6 Time

Time is of the essence of this Agreement.

12.7 Consent of Exchange to Amendment

The Exchange must approve any amendment to this Agreement.

12.8 Additional Escrow Requirements

A Canadian exchange may impose escrow terms or conditions in addition to those set out in this Agreement.

12.9 Governing Laws

The laws of the Province of Ontario and the applicable laws of Canada will govern this Agreement.

12.10 Counterparts

The Parties may execute this Agreement by fax and in counterparts, each of which will be considered an original and all of which will be one agreement.

12.11 Singular and Plural

Wherever a singular expression is used in this Agreement, that expression is considered as including the plural or the body corporate where required by the context.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 20

12.12 Language

This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

12.13 Benefit and Binding Effect

This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

12.14 Entire Agreement

This is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

12.15 Successor to Escrow Agent

Any corporation with which the Escrow Agent may be amalgamated, merged or consolidated, or any corporation succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent under this Agreement without any further act on its part or on the part or any of the Parties, provided that the successor is recognized by the Exchange.

(The rest of this page is intentionally left blank)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 21

The Parties have executed and delivered this Agreement as of the date set out above.

EQUITY TRANSFER & TRUST COMPANY

/S/ FARZANA SHEIKH

Authorized signatory

/S/ TERRENCE A. MARTINUK

Authorized signatory

BERKELEY CAPITAL CORP. II

/S/ ANTHONY LACAVERA

Authorized signatory

Authorized signatory

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 22

Signed, sealed and delivered by	)
Anthony Lacavera in the presence of:	)
	)
Simon Lockie	)
Name	)
	)
204 Berkeley Street	)	/S/ ANTHONY LACAVERA
Address	)	Anthony Lacavera
	)
Toronto, ON M5A2X4	)
	)
	)
Lawyer	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 23

Signed, sealed and delivered by	)
Michael Drake in the presence of:	)
	)
Brett A. Whalen	)
Name	)
	)
43 Albert Street	)	/S/ MICHAEL DRAKE
Address	)	Michael Drake
	)
Markham, ON L3P 2T4	)
	)
	)
Investment Banking	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 24

Signed, sealed and delivered by	)
Kevin K. Rooney in the presence of:	)
	)
Camille Formosa	)
Name	)
	)
150 Post Street, Suite 650	)	/S/ KEVIN K. ROONEY
Address	)	Kevin K. Rooney
	)
San Francisco, CA 94108	)
	)
	)
Attorney	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 25

Signed, sealed and delivered by	)
John Drake in the presence of:	)
	)
Kelly Miles	)
Name	)
	)
856 Griffith Street	)	/S/ JOHN DRAKE
Address	)	John Drake
	)
London, ON	)
	)
	)
Accountant	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 26

Signed, sealed and delivered by	)
Brice Scheschuk in the presence of:	)
	)
Simon Lockie	)
Name	)
	)
204 Berkeley Street	)	/S/ BRICE SCHESCHUK
Address	)	Brice Scheschuk
	)
Toronto, ON M5A2X4	)
	)
	)
Lawyer	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 27

Signed, sealed and delivered by	)
Simon Lockie in the presence of:	)
	)
Brice Scheschuk	)
Name	)
	)
285 Silver Birch Ave	)	/S/ SIMON LOCKIE
Address	)	Simon Lockie
	)
Toronto, ON M4E 3L6	)
	)
	)
CFO / Chartered Accountant	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 28

Signed, sealed and delivered by	)
David Roff in the presence of:	)
	)
Simon Lockie	)
Name	)
	)
204 Berkeley Street	)	/S/ DAVID ROFF
Address	)	David Roff
	)
Toronto, ON M5A2X4	)
	)
	)
Lawyer	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 29

Signed, sealed and delivered by	)
John Zammit in the presence of:	)
	)
Lisa Calendar	)
Name	)
	)
Providenciales	)	/S/ JOHN ZAMMIT
Address	)	John Zammit
	)
Turks and Caicos Islands	)
	)
	)
Chartered Accountant	)
Occupation	)

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 30

SCHEDULE “A” TO ESCROW AGREEMENT

Securityholder

Name:	Anthony Lacavera
Signature:	/S/ ANTHONY LACAVERA

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common	1,333,333	C-2

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 31

Securityholder

Name:	Michael Drake
Signature:	/S/ MICHAEL DRAKE

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	1,333,333	C-3

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 32

Securityholder

Name:	Kevin K. Rooney
Signature:	/S/ KEVIN K. ROONEY

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	1,333,333	C-1

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 33

Securityholder

Name:	John Drake
Signature:	/s/ JOHN DRAKE

Address for Notice:

1370 Sprucedale Ave.

London, Ontario N5X 2N8

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	450,000	C-8

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 34

Securityholder

Name:	Brice Scheschuk
Signature:	/S/ BRICE SCHESCHUK

Address for Notice:

285 Silver Birch Ave.

Toronto, Ontario M4E 3L6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	450,000	C-5

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 35

Securityholder

Name:	Simon Lockie
Signature:	/s/ SIMON LOCKIE

Address for Notice:

204 Berkeley Street

Toronto, Ontario M5A 2X4

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	200,000	C-7

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 36

Securityholder

Name:	David Roff
Signature:	/S/ DAVID ROFF

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	450,000	C-4

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 37

Securityholder

Name:	John Zammit
Signature:	/S/ JOHN ZAMMIT

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	450,000	C-6

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 38

SCHEDULE B(1) – CPC ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	10% 1/10 of your escrow securities	599,999
[Insert date 6 months following Final Exchange Bulletin]	1/6 of your remaining escrow securities	900,000
[Insert date 12 months following Final Exchange Bulletin]	1/5 of your remaining escrow securities	900,000
[Insert date 18 months following Final Exchange Bulletin]	1/4 of your remaining escrow securities	900,000
[Insert date 24 months following Final Exchange Bulletin]	1/3 of your remaining escrow securities	900,000
[Insert date 30 months following Final Exchange Bulletin]	1/2 of your remaining escrow securities	900,000
[Insert date 36 months following Final Exchange Bulletin]	all of your remaining escrowed securities	900,000
TOTAL	100%	5,999,999

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Final Exchange Bulletin.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 39

SCHEDULE B(2) – TIER 1 ISSUER - ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	1/4 of your escrow securities	1,499,999
[Insert date 6 months following Final Exchange Bulletin]	25% 1/3 of your remaining escrow securities	1,500,000
[Insert date 12 months following Final Exchange Bulletin]	1/2 of your remaining escrow securities	1,500,000
[Insert date 18 months following Final Exchange Bulletin]	all of your remaining escrowed securities	1,500,000
TOTAL	100%	5,999,999

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 40

ASSIGNMENT AGREEMENT

This Assignment Agreement (this “Agreement”) is being executed and delivered as of June 5, 2009 by Berkeley Capital Corp. II, a corporation existing under the laws of the Province of Ontario (“Assignor”), Med BioGene Inc., a corporation existing under the laws of the Province of British Columbia (“Assignee”), Equity Transfer & Trust Company (“Escrow Agent”) and those individuals (“Shareholders”) holding escrowed securities of the Assignor (the “Assignor Securities”), in connection with the closing of the Assignor’s Qualifying Transaction (as that term is defined in Policy 2.4 of the TSX Venture Exchange (the “TSXV”) Corporate Finance Manual (the “Manual”)). Assignor, Assignee, Escrow Agent and Shareholders are sometimes referred to hereafter as the “Parties”.

RECITALS

WHEREAS, Assignor, Escrow Agent and Shareholders are parties to a Form 2F CPC Escrow Agreement dated August 31, 2007 (the “Escrow Agreement”), which provides for the Assignor Securities to be held in escrow by the Escrow Agent and released by the Escrow Agent in accordance therewith upon the completion of a Qualifying Transaction of Assignor.

WHEREAS, Assignor and Assignee have entered into a subscription agreement dated as of the date hereof, whereby Assignor subscribed for and purchased $620,600 of units of Med BioGene in a private placement of Med BioGene as its Qualifying Transaction.

WHEREAS, Following the date hereof, Assignor will, as promptly as practicable, undertake the necessary steps to allow it to distribute the Med BioGene common shares and warrants underlying the Med BioGene Units (the “Med BioGene Securities”) pro rata to its shareholders and thereafter to be delisted from the TSXV and dissolved. The securities of Assignor will cease to exist upon Assignor’s dissolution.

WHEREAS, in order to ensure that all Med BioGene Securities distributed to the Shareholders will be held in escrow under the same terms as the Assignor’s Securities are held in escrow, the Parties desire to effect an assignment of the Escrow Agreement from Assignor to Assignee and specify that, upon completion of the Assignor’s Qualifying Transaction, the Med BioGene Securities held by the Shareholders as a result of the aforementioned distribution will be held in escrow pursuant to the terms and conditions of the Escrow Agreement.

NOW THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

1. Assignment. Effective on the date hereof, Assignor hereby assigns the Escrow Agreement and all rights and obligations thereunder to Assignee and Assignee, Escrow Agent and Shareholders hereby consent to the assignment of the Escrow Agreement (the “Assignment”). The Med BioGene Securities received by the Shareholders based on their pro rata ownership of Assignor in connection with the Qualifying Transaction shall remain subject to the terms and conditions of the Escrow Agreement. In connection with the Assignment, Assignee hereby assumes all of Assignor’s rights and obligations under the Escrow Agreement, subject to the policies of the TSXV. The parties hereto acknowledge and agree that the Escrow Agreement shall continue in full force and effect in accordance with its terms.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 41

2. Consent of TSXV. The Parties understand and acknowledge that the consent of the TSXV to this Agreement is required prior to its effectiveness.

3. Miscellaneous.

a. Governing Law. The laws of the Province of Ontario and the applicable laws of Canada will govern this Agreement.

b. Counterparts. The Parties may execute this Agreement by fax or other means of electronic transmission and in counterparts, each of which will be considered an original and all of which will be one agreement.

c. Amendment/Waiver. No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

i. is evidenced by a memorandum in writing signed by all Parties;

ii. has been approved in writing by the TSXV; and

iii. has been approved by a majority of securityholders of the Assignee who are not Shareholders.

d. Language. This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

e. Benefit and Binding Effect. This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

f. Entire Agreement. The Escrow Agreement, as assigned by this Agreement, is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

[Remainder of page intentionally left blank]

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 42

The Parties have executed and delivered this Agreement as of the date set out above.

EQUITY TRANSFER & TRUST COMPANY

/S/ LUISA M. ROBERTO

Authorized signatory

/S/ ROSA VIEIRA

Authorized signatory

BERKELEY CAPITAL CORP. II

/S/ ANTHONY LACAVERA

Authorized signatory

/S/ MICHAEL DRAKE

Authorized signatory

SHAREHOLDERS

/S/ ANTHONY LACAVERA

Anthony Lacavera

/S/ MICHAEL DRAKE

Michael Drake

/S/ KEVIN K. ROONEY

Kevin K. Rooney

/S/ JOHN DRAKE

John Drake

/S/ BRICE SCHESCHUK

Brice Scheschuk

/S/ SIMON LOCKIE

Simon Lockie

/S/ DAVID ROFF

David Roff

/S/ JOHN ZAMMIT

John Zammit

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 43

The Parties have executed and delivered this Agreement as of the date set out above.

MED BIOGENE INC.

/S/ ERINN BROSHKO

Authorized signatory

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 44

SCHEDULE A

(to Assignment Agreement)

Securityholder

Name: Anthony Lacavera

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	940,302
Warrants	470,151

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 45

Securityholder

Name: Michael Drake

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	940,302
Warrants	470,151

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 46

Securityholder

Name: Kevin K. Rooney

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	940,302
Warrants	470,151

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 47

Securityholder

Name: John Drake

Address for Notice:

1370 Sprucedale Ave.

London, Ontario N5X 2N8

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	317,352
Warrants	158,676

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 48

Securityholder

Name: Brice Scheschuk

Address for Notice:

15 Long Crescent

Toronto, Ontario M4E 1N7

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	317,352
Warrants	158,676

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 49

Securityholder

Name: Simon Lockie

Address for Notice:

204 Berkeley Street

Toronto, Ontario M5A 2X4

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	141,045
Warrants	70,522

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 50

Securityholder

Name: David Roff

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	317,352
Warrants	158,676

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 51

Securityholder

Name: John Zammit

Address for Notice:

48 Yonge Street, Suite 1000

Toronto, Ontario M5E 1G6

Securities:
Class or description	Number	Certificate(s) (if applicable)
Common	317,352
Warrants	158,676

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 52

SCHEDULE B(1)

(to Assignment Agreement)

CPC ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	10% 1/10 of your escrow securities	634,703
[Insert date 6 months following Final Exchange Bulletin]	1/6 of your remaining escrow securities	952,055
[Insert date 12 months following Final Exchange Bulletin]	1/5 of your remaining escrow securities	952,055
[Insert date 18 months following Final Exchange Bulletin]	1/4 of your remaining escrow securities	952,055
[Insert date 24 months following Final Exchange Bulletin]	1/3 of your remaining escrow securities	952,055
[Insert date 30 months following Final Exchange Bulletin]	1/2 of your remaining escrow securities	952,055
[Insert date 36 months following Final Exchange Bulletin]	all of your remaining escrowed securities	952,060
TOTAL	100%	6,347,038

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Final Exchange Bulletin.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 53

SCHEDULE B(2)

(to Amendment Agreement)

TIER 1 ISSUER - ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	1/4 of your escrow securities	1,586,759
[Insert date 6 months following Final Exchange Bulletin]	25% 1/3 of your remaining escrow securities	1,586,759
[Insert date 12 months following Final Exchange Bulletin]	1/2 of your remaining escrow securities	1,586,759
[Insert date 18 months following Final Exchange Bulletin]	all of your remaining escrowed securities	1,586,761
TOTAL	100%	6,347,038

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

FORM 2F (as at April 13, 2005) CPC ESCROW AGREEMENT Page 54

EX-4.10

EXHIBIT 4.10

FORM 2F

CPC ESCROW AGREEMENT

THIS AGREEMENT is made as of the 6th day of February, 2007

AMONG:	Corporation Capital SEP, a corporation incorporated under the Canada Business Corporations Act, having its principal place of business at 500, Grande Allée East, Suite 200, in the city of Quebec, Province of Quebec, represented by its President, Stéphane Bergeron, and by its Secretary, Mtre Michel Carrier, duly authorized for the purposes hereof, as they so declare;
(the Issuer)
AND:	Computershare Investors Services Inc., a corporation incorporated under the Canada Business Corporations Act, having a place of business at 1500, University Street, Suite 700, Montreal, Province of Quebec, H4A 3S8;
(the Escrow Agent)
AND:

EACH OF THE UNDERSIGNED SECURITYHOLDERS OF THE ISSUER (a Securityholder or you)

(collectively, the Parties)

This Agreement is being entered into by the Parties under Exchange Policy 2.4 - Capital Pool Companies (the Policy) in connection with a listing of a Capital Pool Company on the TSX Venture Exchange (the Exchange).

For good and valuable consideration, the Parties agree as follows:

PART 1 ESCROW

1.1 Appointment of Escrow Agent

The Issuer and the Securityholders appoint the Escrow Agent to act as escrow agent under this Agreement. The Escrow Agent accepts the appointment.

1.2 Deposit of Escrow Securities in Escrow

(1) You are depositing the securities (escrow securities) listed opposite your name in Schedule “A” with the Escrow Agent to be held in escrow under this Agreement. You

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will immediately deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of these securities which you have or which you may later receive.

(2) If you receive any shares of the Issuer upon exercise of a stock option granted by the Issuer prior to Completion of the Qualifying Transaction, (option securities) you will deposit them with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those option securities. When this Agreement refers to escrow securities, it includes option securities.

(3) If you receive any other securities (additional escrow securities):

(a) as a dividend or other distribution on escrow securities;

(b) on the exercise of a right of purchase, conversion or exchange attaching to escrow securities, including securities received on conversion of special warrants;

(c) on a subdivision, or compulsory or automatic conversion or exchange of escrow securities; or

(d) from a successor issuer in a business combination, if Part 7 of this Agreement applies,

you will deposit them in escrow with the Escrow Agent. You will deliver or cause to be delivered to the Escrow Agent any share certificates or other evidence of those additional escrow securities. When this Agreement refers to escrow securities, it includes additional escrow securities.

(4) You will immediately deliver to the Escrow Agent any replacement share certificates or other evidence of option securities or additional escrow securities issued to you.

1.3 Direction to Escrow Agent

The Issuer and the Securityholders direct the Escrow Agent to hold the escrow securities in escrow until they are released from escrow under this Agreement.

PART 2 RELEASE OF ESCROW SECURITIES

2.1 Release Provisions

The provisions of Schedule(s) B(1) are incorporated into and form part of this Agreement.

2.2 Release Provisions for Option Securities

The Escrow Agent will release any option securities upon receiving notice from the Exchange that the Issuer has completed a Qualifying Transaction.

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2.3 Additional escrow securities

If you acquire additional escrow securities in connection with the transaction to which this agreement relates, those securities will be added to the securities already in escrow, to increase the number of remaining escrow securities. After that, all of the escrow securities will be released in accordance with the applicable release schedule.

2.4 Delivery of Share Certificates for Escrow Securities

The Escrow Agent will send to each Securityholder any share certificates or other evidence of that Securityholder’s escrow securities in the possession of the Escrow Agent released from escrow as soon as reasonably practicable after the release.

2.5 Replacement Certificates

If, on the date a Securityholder’s escrow securities are to be released, the Escrow Agent holds a share certificate or other evidence representing more escrow securities than are to be released, the Escrow Agent will deliver the share certificate or other evidence to the Issuer or its transfer agent and request replacement share certificates or other evidence. The Issuer will cause replacement share certificates or other evidence to be prepared and delivered to the Escrow Agent. After the Escrow Agent receives the replacement share certificates or other evidence, the Escrow Agent will send to the Securityholder or at the Securityholder’s direction, the replacement share certificate or other evidence of the escrow securities released. The Escrow Agent and Issuer will act as soon as reasonably practicable.

2.6 Release upon Death

(1) If a Securityholder dies, the Securityholder’s escrow securities will be released from escrow. The Escrow Agent will deliver any share certificates or other evidence of the escrow securities in the possession of the Escrow Agent to the Securityholder’s legal representative provided that:

(a) the legal representative of the deceased Securityholder provides written notice to the Exchange of the intent to release the escrow securities as at a specified date which is at least 10 business days and not more than 30 business days prior to the proposed release; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to delivery the Escrow Agent must receive:

(a) a certified copy of the death certificate; and

(b) any evidence of the legal representative’s status that the Escrow Agent may reasonably require.

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2.7 Exchange Discretion to Terminate

If the Escrow Agent receives a request from the Exchange to halt or terminate the release of escrow securities from escrow, then the Escrow Agent will comply with that request, and will not release any escrow securities from escrow until it receives the written consent of the Exchange.

2.8 Discretionary Applications

The Exchange may consent to the release from escrow of escrow securities in other circumstances and on terms and on conditions it deems appropriate. Escrow securities may be released from escrow provided that the Escrow Agent receives written notice from the Exchange.

PART 3 EARLY RELEASE ON CHANGE OF ISSUER STATUS

3.1 Early Release – Graduation to Tier 1

(1) When a CPC or Resulting Issuer becomes a Tier 1 Issuer, the release schedule for its escrow securities changes.

(2) If the Issuer reasonably believes that it meets the Minimum Listing Requirements of a Tier 1 Issuer as described in Policy 2.1 – Minimum Listing Requirements, the Issuer may make application to the Exchange to be listed as a Tier 1 Issuer. The Issuer must also concurrently provide notice to the Escrow Agent that it is making such an application.

(3) If the graduation to Tier 1 is accepted by the Exchange, the Exchange will issue an Exchange Bulletin confirming final acceptance for listing of the Issuer on Tier 1. Upon issuance of this Bulletin the Issuer must immediately:

(a) issue a news release disclosing:

(i) that it has been accepted for graduation to Tier 1; and

(ii) the number of escrow securities to be released and the dates of release under the new schedule; and

(b) provide the news release, together with a copy of the Exchange Bulletin, to the Escrow Agent.

(4) Upon completion of the steps in section 3.1(3) above, the Issuer’s release schedule B(1) will be replaced with release schedule B(2).

(5) Within 10 days of the Exchange Bulletin confirming the Issuer’s listing on Tier 1, the Escrow Agent must release any escrow securities from escrow which under the new release schedule would have been releasable at a date prior to the Exchange Bulletin.

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PART 4 CANCELLATION OF ESCROWED SECURITIES

4.1 Delisting of the CPC

If the Issuer fails to complete a Qualifying Transaction, as defined in the applicable Exchange Policy, within 24 months following the date of listing of the Issuer and the Exchange issues an Exchange Bulletin that the Issuer will be delisted, the Issuer must immediately notify the Escrow Agent.

4.2 Cancellation of Certain Escrow Securities Held by Related Parties of the CPC

(1) If the Issuer is delisted prior to Completion of a Qualifying Transaction,

(a) the Escrow Agent will deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrow securities held by Related Parties to the CPC which were purchased prior to the IPO of the CPC at a discount to the IPO price (the Discount Seed Shares); and

(b) the Issuer and the Escrow Agent must take such action as is necessary to cancel the Discount Seed Shares pursuant to the Policy.

(2) For the purposes of cancellation of Discount Seed Shares, each Securityholder irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

4.3 Cancellation of Other Escrow Securities

(1) Any escrow securities which have not been released from escrow under this Agreement as at 4:30 p.m. (Vancouver time) or 5:30 p.m. (Calgary time) on the date which is the 10^th anniversary of the date of delisting from the Exchange must immediately be cancelled. The Escrow Agent must deliver a notice to the Issuer, including any certificates possessed by the Escrow Agent which evidence the escrowed securities. The Issuer and Escrow Agent must take all actions as may be necessary to expeditiously effect cancellation.

(2) For the purposes of cancellation of escrow securities under this Agreement, each Securityholder hereby irrevocably appoints the Escrow Agent as his or her attorney, with authority to appoint substitute attorneys, as necessary.

PART 5. DEALING WITH ESCROW SECURITIES

5.1 Restriction on Transfer

Unless it is expressly permitted in this Agreement, you will not sell, transfer, assign, mortgage, enter into a derivative transaction concerning, or otherwise deal in any way with your escrow securities or any related share certificates or other evidence of the escrow securities. If a

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Securityholder is a private company controlled by one or more Principals of the Issuer, the Securityholder may not participate in a transaction that results in a change of its control or a change in the economic exposure of the Principals to the risks of holding escrow securities.

5.2 Pledge, Mortgage or Charge as Collateral for a Loan

Subject to Exchange Acceptance, you may pledge, mortgage or charge your escrow securities to a financial institution as collateral for a loan, provided that no escrow securities or any share certificates or other evidence of escrow securities will be transferred or delivered by the Escrow Agent to the financial institution for this purpose. The loan agreement must provide that the escrow securities will remain in escrow if the lender realizes on the escrow securities to satisfy the loan.

5.3 Voting of Escrow Securities

Although you may exercise voting rights attached to your escrow securities, you may not, while your securities are held in escrow, exercise voting rights attached to any securities (whether in escrow or not) in support of one or more arrangements that would result in the repayment of capital being made on the escrow securities prior to a winding up of the Issuer.

5.4 Dividends on Escrow Securities

You may receive a dividend or other distribution on your escrow securities, and elect the manner of payment from the standard options offered by the Issuer. If the Escrow Agent receives a dividend or other distribution on your escrow securities, other than additional escrow securities, the Escrow Agent will pay the dividend or other distribution to you on receipt.

5.5 Exercise of Other Rights Attaching to Escrow Securities

You may exercise your rights to exchange or convert your escrow securities in accordance with this agreement.

PART 6 PERMITTED TRANSFERS WITHIN ESCROW

6.1 Transfer to Directors and Senior Officers

(1) You may transfer escrow securities within escrow to existing or, upon their appointment, incoming directors or senior officers of the Issuer or any of its material operating subsidiaries, if the Issuer’s board of directors has approved the transfer and provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

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(2) Prior to the transfer the Escrow Agent must receive:

(a) a certified copy of the resolution of the board of directors of the Issuer approving the transfer;

(b) a certificate signed by a director or officer of the Issuer authorized to sign, stating that the transfer is to a director or senior officer of the Issuer or a material operating subsidiary and that any required acceptance from the Exchange on which the Issuer is listed has been received;

(c) an acknowledgment in the form of Form 5E signed by the transferee; and

(d) a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

(3) A transfer within escrow is a trade within the meaning of securities legislation and may require an exemption or discretionary order.

6.2 Transfer to Other Principals

(1) You may transfer escrow securities within escrow:

(a) to a person or company that before the proposed transfer holds more than 20% of the voting rights attached to the Issuer’s outstanding securities; or

(b) to a person or company that after the proposed transfer

(i) will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities, and

(ii) has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries,

provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

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(2) Prior to the transfer the Escrow Agent must receive:

(a) a certificate signed by a director or officer of the Issuer authorized to sign, stating that:

(i) the transfer is to a person or company that the officer believes, after reasonable investigation, holds more than 20% of the voting rights attached to the Issuer’s outstanding securities before the proposed transfer; or

(ii) the transfer is to a person or company that:

(A) the officer believes, after reasonable investigation, will hold more than 10% of the voting rights attached to the Issuer’s outstanding securities; and

(B) has the right to elect or appoint one or more directors or senior officers of the Issuer or any of its material operating subsidiaries

after the proposed transfer; and

(iii) any required approval from the Exchange has been received;

(b) an acknowledgment in the form of Form 5E signed by the transferee; and

(c) a transfer power of attorney, completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent.

6.3 Transfer upon Bankruptcy

(1) You may transfer escrow securities within escrow to a trustee in bankruptcy or another person or company entitled to escrow securities on bankruptcy provided that

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer, the Escrow Agent must receive:

(a) a certified copy of either

(i) the assignment in bankruptcy filed with the Superintendent of Bankruptcy, or

(ii) the receiving order adjudging the Securityholder bankrupt;

(b) a certified copy of a certificate of appointment of the trustee in bankruptcy;

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 8

(c) a transfer power of attorney, duly completed and executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(d) an acknowledgment in the form of Form 5E signed by

(i) the trustee in bankruptcy or

(ii) on direction from the trustee, with evidence of that direction attached to the acknowledgment form, another person or company legally entitled to the escrow securities.

6.4 Transfer Upon Realization of Pledged, Mortgaged or Charged Escrow Securities

(1) You may transfer within escrow to a financial institution provided that:

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer the Escrow Agent must receive:

(a) a statutory declaration of an officer of the financial institution that the financial institution is legally entitled to the escrow securities;

(b) evidence that the Exchange has accepted the pledge, mortgage or charge of escrow securities to the financial institution;

(c) a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent;

and

(d) an acknowledgement in the form of Form 5E signed by the financial institution.

6.5 Transfer to Certain Plans and Funds

(1) You may transfer escrow securities within escrow to or between a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or other similar registered plan or fund with a trustee, where the beneficiaries of the plan or fund are limited to you and your spouse, children and parents provided that.

(a) you make application under the applicable Exchange Policy of the intent to transfer at least 10 business days and not more than 30 business days prior to the date of the proposed transfer; and

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(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date.

(2) Prior to the transfer the Escrow Agent must receive:

(a) evidence from the trustee of the transferee plan or fund, or the trustee’s agent, stating that, to the best of the trustee’s knowledge, the annuitant of the RRSP or RRIF or the beneficiaries of the other registered plan or fund do not include any person or company other than you and your spouse, children and parents;

(b) a transfer power of attorney, executed by the transferor in accordance with the requirements of the Issuer’s transfer agent; and

(c) an acknowledgement in the form of Form 5E signed by the trustee of the plan or fund.

6.6 Effect of Transfer Within Escrow

After the transfer of escrow securities within escrow, the escrow securities will remain in escrow and released from escrow under this Agreement as if no transfer has occurred, on the same terms that applied before the transfer. The Escrow Agent will not deliver any share certificates or other evidence of escrow securities to the transferees under this Part 6.

6.7 Discretionary Applications

The Exchange may consent to the transfer within escrow of escrow securities in other circumstances and on such terms and conditions as it deems appropriate.

PART 7 BUSINESS COMBINATIONS

7.1 Business Combinations

This Part applies to the following (business combinations):

(a) a formal take-over bid for all outstanding equity securities of the Issuer or which, if successful, would result in a change of control of the Issuer

(b) a formal issuer bid for all outstanding equity securities of the Issuer

(c) a statutory arrangement

(d) an amalgamation

(e) a merger

(f) a reorganization that has an effect similar to an amalgamation or merger

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 10

7.2 Delivery to Escrow Agent

You may tender your escrow securities to a person or company in a business combination. At least five business days prior to the date the escrow securities must be tendered under the business combination, you must deliver to the Escrow Agent:

(a) a written direction signed by you that directs the Escrow Agent to deliver to the depositary under the business combination any share certificates or other evidence of the escrow securities, and a completed and executed cover letter or similar document and, where required, transfer power of attorney completed and executed for transfer in accordance with the requirements of the Issuer’s depository, and any other documentation specified or provided by you and required to be delivered to the depositary under the business combination;

(b) written consent of the Exchange; and

(c) any other information concerning the business combination as the Escrow Agent may reasonably require.

7.3 Delivery to Depositary

As soon as reasonably practicable, and in any event no later than three business days after the Escrow Agent receives the documents and information required under section 7.2, the Escrow Agent will deliver to the depositary, in accordance with the direction, any share certificates or other evidence of the escrow securities and a letter addressed to the depositary that

(a) identifies the escrow securities that are being tendered;

(b) states that the escrow securities are held in escrow;

(c) states that the escrow securities are delivered only for the purposes of the business combination and that they will be released from escrow only after the Escrow Agent receives the information described in section 7.4;

(d) if any share certificates or other evidence of the escrow securities have been delivered to the depositary, requires the depositary to return to the Escrow Agent, as soon as practicable, the share certificates or other evidence of escrow securities that are not released from escrow into the business combination; and

(e) where applicable, requires the depositary to deliver or cause to be delivered to the Escrow Agent, as soon as practicable, share certificates or other evidence of additional escrow securities that you acquire under the business combination.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 11

7.4 Release of Escrow Securities to Depositary

(1) The Escrow Agent will release from escrow the tendered escrow securities provided that:

(a) you or the Issuer make application under the applicable Exchange Policy of the intent to release the tendered securities on a date at least 10 business days and not more than 30 business days prior to the date of the proposed release date; and

(b) the Exchange does not provide notice of its objection to the Escrow Agent prior to 10:00 a.m. (Vancouver time) or 11:00 a.m. (Calgary time) on such specified date;

(c) the Escrow Agent receives a declaration signed by the depositary or, if the direction identifies the depositary as acting on behalf of another person or company in respect of the business combination, by that other person or company, that

(i) the terms and conditions of the business combination have been met or waived; and

(ii) the escrow securities have either been taken up and paid for or are subject to an unconditional obligation to be taken up and paid for under the business combination.

7.5 Escrow of New Securities

If you receive securities (new securities) of another issuer (successor issuer) in exchange for your escrow securities, the new securities will be subject to escrow in substitution for the tendered escrow securities.

7.6 Release from Escrow of New Securities

(1) The Escrow Agent will send to a Securityholder share certificates or other evidence of the Securityholder’s new securities as soon as reasonably practicable after the Escrow Agent receives:

(a) a certificate from the successor issuer signed by a director or officer of the successor issuer authorized to sign

(i) stating that it is a successor issuer to the Issuer as a result of a business combination;

(ii) containing a list of the securityholders whose new securities are subject to escrow under section 7.5;

(iii) containing a list of the securityholders whose new securities are not subject to escrow under section 7.5; and

(b) written confirmation from the Exchange that it has accepted the list of Securityholders whose new securities are not subject to escrow under section 7.5; and

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 12

(2) If your new securities are subject to escrow, unless subsection (3) applies, the Escrow Agent will hold your new securities in escrow on the same terms and conditions, including release dates, as applied to the escrow securities that you exchanged.

(3) If the Issuer is a Tier 2 Issuer, and the successor issuer is a Tier 1 Issuer, the release provisions relating to graduation will apply.

PART 8 RESIGNATION OF ESCROW AGENT

8.1 Resignation of Escrow Agent

(1) If the Escrow Agent wishes to resign as escrow agent, the Escrow Agent will give written notice to the Issuer and the Exchange.

(2) If the Issuer wishes to terminate the Escrow Agent as escrow agent, the Issuer will give written notice to the Escrow Agent and the Exchange.

(3) If the Escrow Agent resigns or is terminated, the Issuer will be responsible for ensuring that the Escrow Agent is replaced not later than the resignation or termination date by another escrow agent that is acceptable to the Exchange and that has accepted such appointment, which appointment will be binding on the Issuer and the Securityholders.

(4) The resignation or termination of the Escrow Agent will be effective, and the Escrow Agent will cease to be bound by this Agreement, on the date that is 60 days after the date of receipt of the notices referred to above by the Escrow Agent or Issuer, as applicable, or on such other date as the Escrow Agent and the Issuer may agree upon (the “resignation or termination date”), provided that the resignation or termination date will not be less than 10 business days before a release date.

(5) If the Issuer has not appointed a successor escrow agent within 60 days of the resignation or termination date, the Escrow Agent will apply, at the Issuer’s expense, to a court of competent jurisdiction for the appointment of a successor escrow agent, and the duties and responsibilities of the Escrow Agent will cease immediately upon such appointment.

(6) On any new appointment under this section, the successor Escrow Agent will be vested with the same powers, rights, duties and obligations as if it had been originally named herein as Escrow Agent, without any further assurance, conveyance, act or deed. The predecessor Escrow Agent, upon receipt of payment for any outstanding account for its services and expenses then unpaid, will transfer, deliver and pay over to the successor Escrow Agent, who will be entitled to receive, all securities, records or other property on deposit with the predecessor Escrow Agent in relation to this Agreement and the predecessor Escrow Agent will thereupon be discharged as Escrow Agent.

(7) If any changes are made to Part 9 of this Agreement as a result of the appointment of the successor Escrow Agent, those changes must not be inconsistent with the Policy and the

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terms of this Agreement and the Issuer to this Agreement will file a copy of the new Agreement with the securities regulators with jurisdiction over this Agreement and the escrow securities.

PART 9 OTHER CONTRACTUAL ARRANGEMENTS

9.1 Escrow Agent Not a Trustee

The Escrow Agent accepts duties and responsibilities under this Agreement, and the escrow securities and any share certificates or other evidence of these securities, solely as a custodian, bailee and agent. No trust is intended to be, or is or will be, created hereby and the Escrow Agent shall owe no duties hereunder as a trustee.

9.2 Escrow Agent Not Responsible for Genuineness

The Escrow Agent will not be responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any escrow security deposited with it.

9.3 Escrow Agent Not Responsible for Furnished Information

The Escrow Agent will have no responsibility for seeking, obtaining, compiling, preparing or determining the accuracy of any information or document, including the representative capacity in which a party purports to act, that the Escrow Agent receives as a condition to a release from escrow or a transfer of escrow securities within escrow under this Agreement.

9.4 Escrow Agent Not Responsible after Release

The Escrow Agent will have no responsibility for escrow securities that it has released to a Securityholder or at a Securityholder’s direction according to this Agreement.

9.5 Indemnification

The Issuer and each Securityholder hereby jointly and severally agree to indemnify and hold harmless the Escrow Agent, its affiliates, and their current and former directors, officers, employees and agents from and against any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including, without limitation, legal fees and expenses, directly or indirectly arising out of, in connection with, or in respect of, this Agreement, except where same result directly and principally from gross negligence, wilful misconduct or bad faith on the part of the Escrow Agent. This indemnity survives the release of the escrow securities, the resignation or termination of the Escrow Agent and the termination of this Agreement.

9.6 Additional Provisions

(1) The Escrow Agent will be protected in acting and relying reasonably upon any notice, direction, instruction, order, certificate, confirmation, request, waiver, consent, receipt, statutory declaration or other paper or document furnished to it and purportedly signed by any officer or person required to or entitled to execute and deliver to the Escrow Agent any such Document in connection with this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth or accuracy of any information therein contained, which it in good faith believes to be genuine.

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(2) The Escrow Agent will not be bound by any notice of a claim or demand with respect thereto, or any waiver, modification, amendment, termination or rescission of this Agreement unless received by it in writing, and signed by the other Parties and approved by the securities regulators with jurisdiction as set out in section 10.6, and, if the duties or indemnification of the Escrow Agent in this Agreement are affected, unless it has given its prior written consent.

(3) The Escrow Agent may consult with or retain such legal counsel and advisors as it may reasonably require for the purpose of discharging its duties or determining its rights under this Agreement and may rely and act upon the advice of such counsel or advisor. The Escrow Agent will give written notice to the Issuer as soon as practicable that it has retained legal counsel or other advisors. The Issuer will pay or reimburse the Escrow Agent for any reasonable fees, expenses and disbursements of such counsel or advisors.

(4) In the event of any disagreement arising under the terms of this Agreement, the Escrow Agent will be entitled, at its option, to refuse to comply with any and all demands whatsoever until the dispute is settled either by a written agreement among the Parties or by a court of competent jurisdiction.

(5) The Escrow Agent will have no duties or responsibilities except as expressly provided in this Agreement and will have no duty or responsibility under the Policy or arising under any other agreement, including any agreement referred to in this Agreement, to which the Escrow Agent is not a party.

(6) The Escrow Agent will have the right not to act and will not be liable for refusing to act unless it has received clear and reasonable documentation that complies with the terms of this Agreement. Such documentation must not require the exercise of any discretion or independent judgment.

(7) The Escrow Agent is authorized to cancel any share certificate delivered to it and hold such Securityholder’s escrow securities in electronic, or uncertificated form only, pending release of such securities from escrow.

(8) The Escrow Agent will have no responsibility with respect to any escrow securities in respect of which no share certificate or other evidence or electronic or uncertificated form of these securities has been delivered to it, or otherwise received by it.

(9) Any entity resulting from the merger, amalgamation or continuation of Computershare or succeeding to all or substantially all of its transfer agency business (by sale of such business or otherwise), shall thereupon automatically become the Escrow Agent hereunder without further act or formality. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their successors and assigns.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 15

9.7 Limitation of Liability of Escrow Agent

The Escrow Agent will not be liable to any of the Parties hereunder for any action taken or omitted to be taken by it under or in connection with this Agreement, except for losses directly, principally and immediately caused by its bad faith, wilful misconduct or gross negligence. Under no circumstances will the Escrow Agent be liable for any special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages hereunder, including any loss of profits, whether foreseeable or unforeseeable. Notwithstanding the foregoing or any other provision of this Agreement, in no event will the collective liability of the Escrow Agent under or in connection with this Agreement to any one or more Parties, except for losses directly caused by its bad faith or willful misconduct, exceed the amount of its fees under this Agreement or the amount of three thousand dollars ($3,000.00), whichever amount shall be greater.

9.8 Remuneration of Escrow Agent

The Issuer will pay the Escrow Agent reasonable remuneration for its services under this Agreement, which fees are subject to revision from time to time on 30 days’ written notice. The Issuer will reimburse the Escrow Agent for its expenses and disbursements. Any amount due under this section and unpaid 30 days after request for such payment, will bear interest from the expiration of such period at a rate per annum equal to the then current rate charged by the Escrow Agent, payable on demand.

PART 10 INDEMNIFICATION OF THE EXCHANGE

10.1 Indemnification

(1) The Issuer and each Securityholder jointly and severally:

(a) release, indemnify and save harmless the Exchange from all costs (including legal cost, expenses and disbursements), charges, claims, demands, damages, liabilities, losses and expenses incurred by the Exchange;

(b) agree not to make or bring a claim or demand, or commence any action, against the Exchange; and

(c) agree to indemnify and save harmless the Exchange from all costs (including legal costs) and damages that the Exchange incurs or is required by law to pay as a result of any person’s claim, demand or action,

arising from any and every act or omission committed or omitted by the Exchange, in connection with this Agreement, even if said act or omission was negligent, or constituted a breach of the terms of this Agreement.

(2) This indemnity survives the release of the escrow securities and the termination of this Agreement.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 16

PART 11 NOTICES

11.1 Notice to Escrow Agent

Documents will be considered to have been delivered to the Escrow Agent on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Computershare Investors Services Inc.

1500, University Street, Suite 700

Montreal (Quebec) H4A 3S8

Attn: Executive Director, Stock Transfer Services

Fax: (514) 982-7850

11.2 Notice to Issuer

Documents will be considered to have been delivered to the Issuer on the next business day following the date of transmission, if delivered by fax, the date of delivery, if delivered by hand during normal business hours or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the following:

Corporation Capital SEP

500, Grande Allée East, Suite 200

Quebec City (Quebec) G1R 2J7

Attn: Mr. Stéphane Bergeron

Fax: (418) 640-1500

With a copy to :

Ogilvy Renault, S.E.N.C.R.L., s.r.l.

500, Grande Allée East, Suite 200

Quebec City (Quebec) G1R 2J7

Attn: Mr. Henrick Simard

Fax: (418) 640-1500

11.3 Deliveries to Securityholders

Documents will be considered to have been delivered to a Securityholder on the date of delivery, if delivered by hand or by prepaid courier, or 5 business days after the date of mailing, if delivered by mail, to the address on the Issuer’s share register.

Any share certificates or other evidence of a Securityholder’s escrow securities will be sent to the Securityholder’s address on the Issuer’s share register unless the Securityholder has advised

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 17

the Escrow Agent in writing otherwise at least ten business days before the escrow securities are released from escrow. The Issuer will provide the Escrow Agent with each securityholder’s address as listed on the Issuer’s share register.

11.4 Change of Address

(1) The Escrow Agent may change its address for delivery by delivering notice of the change of address to the Issuer and to each Securityholder.

(2) The Issuer may change its address for delivery by delivering notice of the change of address to the Escrow Agent and to each Securityholder.

(3) A Securityholder may change that Securityholder’s address for delivery by delivering notice of the change of address to the Issuer and to the Escrow Agent.

11.5 Postal Interruption

A party to this Agreement will not mail a Document if the party is aware of an actual or impending disruption of postal service.

PART 12 GENERAL

12.1 Interpretation – holding securities

Unless the context otherwise requires, all capitalized terms that are not otherwise defined in this Agreement, shall have the meanings as defined in Policy 1.1 - Interpretation or in Policy 5.4 - Escrow, Vendor Consideration and Resale Restrictions.

When this Agreement refers to securities that a Securityholder “holds”, it means that the Securityholder has direct or indirect beneficial ownership of or control or direction over the securities.

12.2 Enforcement by Third Parties

The Issuer enters this Agreement both on its own behalf and as trustee for the Exchange and the Securityholders of the Issuer, and this Agreement may be enforced by either the Exchange, or the Securityholders of the Issuer, or both.

12.3 Termination, Amendment, and Waiver of Agreement

(1) Subject to subsection 12.3(3), this Agreement shall only terminate:

(a) with respect to all the Parties:

(i) as specifically provided in this Agreement;

(ii) subject to section 12.3(2), upon the agreement of all Parties; or

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 18

(iii) when the escrow securities of all Securityholders have been released from escrow pursuant to this Agreement; and

(b) with respect to a Party:

(i) as specifically provided in this Agreement; or

(ii) if the Party is a Securityholder, when all of the Securityholder’s escrow securities have been released from escrow pursuant to this Agreement.

(2) An agreement to terminate this Agreement pursuant to section 12.3(1)(a)(ii) shall not be effective unless and until the agreement to terminate

(a) is evidenced by a memorandum in writing signed by all Parties;

(b) if the Issuer is listed on the Exchange, the termination of this Agreement has been consented to in writing by the Exchange; and

(c) has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(3) Notwithstanding any other provision in this Agreement, the obligations set forth in section 10.1 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

(4) No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

(a) is evidenced by a memorandum in writing signed by all Parties;

(b) if the Issuer is listed on the Exchange, the amendment or waiver of this Agreement has been approved in writing by the Exchange; and

(c) has been approved by a majority vote of securityholders of the Issuer excluding in each case, Securityholders.

(5) No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether similar or not), nor shall any waiver constitute a continuing waiver, unless expressly provided.

12.4 Severance of Illegal Provision

Any provision or part of a provision of this Agreement determined by a court of competent jurisdiction to be invalid, illegal or unenforceable shall be deemed stricken to the extent necessary to eliminate any invalidity, illegality or unenforceability, and the rest of the Agreement and all other provisions and parts thereof shall remain in full force and effect and be binding upon the parties hereto as though the said illegal and/or unenforceable provision or part thereof had never been included in this Agreement.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 19

12.5 Further Assurances

The Parties will execute and deliver any further documents and perform any further acts reasonably requested by any of the Parties to this Agreement which are necessary to carry out the intent of this Agreement.

12.6 Time

Time is of the essence of this Agreement.

12.7 Consent of Exchange to Amendment

The Exchange must approve any amendment to this Agreement if the Issuer is listed on the Exchange at the time of the proposed amendment.

12.8 Additional Escrow Requirements

A Canadian exchange may impose escrow terms or conditions in addition to those set out in this Agreement.

12.9 Governing Laws

The laws of the Province of Quebec and the applicable laws of Canada will govern this Agreement.

12.10 Counterparts

The Parties may execute this Agreement by fax and in counterparts, each of which will be considered an original and all of which will be one agreement.

12.11 Singular and Plural

Wherever a singular expression is used in this Agreement, that expression is considered as including the plural or the body corporate where required by the context.

12.12 Language

This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

12.13 Benefit and Binding Effect

This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 20

12.14 Entire Agreement

This is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

12.15 Successor to Escrow Agent

Any corporation with which the Escrow Agent may be amalgamated, merged or consolidated, or any corporation succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent under this Agreement without any further act on its part or on the part or any of the Parties, provided that the successor is recognized by the Exchange.

The Parties have executed and delivered this Agreement as of the date set out above.

Comptershare Investors Services Inc.

/s/ MARK THOMPSON

Mark Thompson

/s/ JEFF MACKEAN

Jeff Mackean

Corporation Capital SEP

/s/ STÉPHANE BERGERON

Stéphane Bergeron

/s/ MTRE MICHEL CARRIER

Mtre Michel Carrier

If the Securityholder is an individual:

Signed, sealed and delivered by Stéphane Bergeron in the presence of:	) ) )
Francine Martineau	)
Name	) )
108 Ave Des Monts	)	/s/ STEPHANE BERGERON
Address	) )	Stéphane Bergeron
Lac Delage, QC G0A-4PO	)
Adjointe	) ) )
Occupation	)

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 21

Signed, sealed and delivered by	)
Hugues Pelletier in the presence of:	) )
Danielle Landry	)
Name	) )
101 Monsadel	)	/S/ HUGUES PELLETIER
Address	) )	Hugues Pelletier
Kirkland, QC H9J 3Y9	) ) )
Infirmiere	)
Occupation	)
Signed, sealed and delivered by	)
Me Michel Carrier in the presence of:	) )
Lise Thiffault	)
Name	) )
28 Rue Nicolas-Rivard	)	/S/ MTRE MICHEL CARRIER
Address	) )	Me Michel Carrier
Trois-Rivieres, QC G8T 6P3	) ) )
Secretaire	)
Occupation	)

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 22

If the Securityholder is not an individual:

Gestion A. Pelchat Inc.

/S/ ANDRES PELCHAT

André Pelchat

Daleco Inc.

/S/ DANIEL LECLAIR

Daniel Leclair

3188302 Canada Inc.

/S/ JEAN PELCHAT

Jean Pelchat

9082-4418 Québec Inc.

/S/ DANNY MACDONALD

Danny Macdonald

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 23

Signed, sealed and delivered by Marie Helene Drapeau in the presence of:	) ) )
Francine Martineau	)
Name	) )
108 Ave Des Monts	)	/S/ MARIE HELENE DRAPEAU
Address	) )	Marie Helene Drapeau
Lac Delage, QC G0A-4PO	)
Adjointe	) ) )
Occupation	)
Signed, sealed and delivered by Madame Esperance Nazi in the presence of:	) )
Mireille Pelletier	) )
Name	) )
105 Arthur-Oimet	)	/S/ ESPERANCE NAZI
Address	) )	Esperance Nazi
Terrebonne, QC J6Y 1O8	)
Technicienne en Administration	) ) )
Occupation	)

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 24

Signed, sealed and delivered by	)
Monsieur Daniel Leclair, in trust for William Leclair in the presence of:	) ) )
Mireille Pelletier	)
Name	) )
105 Arthur-Oimet	)	/s/ DANIEL LECLAIR
Address	) ) )	Daniel Leclair, in trust for William Leclair
Terrebonne, QC J6Y 1O8	) ) )
Technicienne en Administration	)
Occupation	)

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 25

Schedule “A” to Escrow Agreement

Securityholder

Name:	Stéphane Bergeron
SIGNATURE:	/S/ STEPHANE BERGERON

Address for Notice:

7305, rue Félicité-Angers

Quebec City (Quebec) H9J 3Y9

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	515 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 26

Schedule “A” to Escrow Agreement

Securityholder

Name:	Hugues Pelletier
Signature:	/S/ HUGUES PELLETIER

Address for Notice:

101, Monfadel

Kirkland (Québec) H9J 3Y9

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common shares	500 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 27

Schedule “A” to Escrow Agreement

Securityholder

Name:	Mtre Michel Carrier
Signature:	/S/ MTRE MICHEL CARRIER

Address for Notice:

232, de la Madone            

Trois-Rivières (Québec) G8T 4Z3            

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	500 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 28

Schedule “A” to Escrow Agreement

Securityholder

Name:	Gestion A. Pelchat Inc.
Signature:	/S/ ANDRE PELCHAT

Address for Notice:

902, rue des Chenaux

St-Jean-Chrysostome (Québec) G6Z 2L1

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	250 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 29

Schedule “A” to Escrow Agreement

Securityholder

Name:	Daleco Inc.
Signature:	/S/ DANIEL LECLAIR

Address for Notice:

4410, blvd. St-Martin West            

Laval (Québec) H7T 1C3            

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	1 250 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 30

Schedule “A” to Escrow Agreement

Securityholder

Name:	3188302 Canada Inc.
Signature:	/S/ JEAN PELCHAT

Address for Notice:

3925, Bel-Air            

Sherbrooke (Québec) J1L 1A9            

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	250 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 31

Schedule “A” to Escrow Agreement

Securityholder

Name:	9082-4418 Québec Inc.
Signature:	/S/ DANNY MACDONALD

Address for Notice:

1175, Côte-Vertu

St-Laurent (Québec) H4L 5J1

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	1 000 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 32

Schedule “A” to Escrow Agreement

Securityholder

Name:	Marie-Helene Drapeau
Signature:	/S/ MARIE-HELENE DRAPEAU

Address for Notice:

7305, rue Felcite-Angers

Quebec, QC G2K 2C4

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	15 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 33

Schedule “A” to Escrow Agreement

Securityholder

Name:	Esperance Nazi
Signature:	/S/ ESPERANCE NAZI

Address for Notice:

25, Rue des Erables

Laval (Québec) H7R 1A3

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	40 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 34

Schedule “A” to Escrow Agreement

Securityholder

Name:	Monsieur Daniel Leclair, in trust for William Leclair
Signature:	/S/ DANIEL LECLAIR

Address for Notice:

25, Rue des Erables

Laval (Québec) H7R 1A3

Securities:

Class or description	Number	Certificate(s) (if applicable)
Common Shares	15 000

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 35

SCHEDULE B(1) – CPC ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	10% 1/10 of your remaining Escrowed Securities	425 000
[Insert date 6 months following Final Exchange Bulletin]	1/6 of your remaining Escrowed Securities	637 500
[Insert date 12 months following Final Exchange Bulletin]	1/5 of your remaining Escrowed Securities	637 500
[Insert date 18 months following Final Exchange Bulletin]	1/4 of your remaining Escrowed Securities	637 500
[Insert date 24 months following Final Exchange Bulletin]	1/3 of your remaining Escrowed Securities	637 500
[Insert date 30 months following Final Exchange Bulletin]	1/2 of your remaining Escrowed Securities	637 500
[Insert date 36 months following Final Exchange Bulletin]	All your remaining Escrowed Securities	637 500
TOTAL	100%	4 250 000

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Final Exchange Bulletin.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 36

SCHEDULE B(2) – TIER 1 ISSUER - ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	1/4 of your remaining Escrowed Securities	1 062 500
[Insert date 6 months following Final Exchange Bulletin]	1/3 of your remaining Escrowed Securities	1 062 500
[Insert date 12 months following Final Exchange Bulletin]	1/2 of your remaining Escrowed Securities	1 062 500
[Insert date 18 months following Final Exchange Bulletin]	All your remaining Escrowed Securities	1 062 500
TOTAL	100%	4 250 000

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 37

ASSIGNMENT AGREEMENT

This Assignment Agreement (this “Agreement”) is being executed and delivered as of September 11, 2009 by SEP Capital Corporation, a corporation existing under the laws of Canada (“Assignor”), Med BioGene Inc., a corporation existing under the laws of the Province of British Columbia (“Assignee”), Computershare Investor Services Inc. (“Escrow Agent”) and those individuals (“Escrow Holders”) holding escrowed securities of the Assignor (the “Assignor Securities”), in connection with the closing of the Assignor’s Alternative Transaction to its Qualifying Transaction (as that term is defined in Policy 2.4 of the TSX Venture Exchange (the “TSXV”) Corporate Finance Manual (the “Manual”)). Assignor, Assignee, Escrow Agent and Escrow Holders are sometimes referred to hereafter as the “Parties”.

RECITALS

WHEREAS, Assignor, Escrow Agent and Escrow Holders are parties to a Form 2F CPC Escrow Agreement dated February 6, 2007 (the “Escrow Agreement”), which provides for the Assignor Securities to be held in escrow by the Escrow Agent and released by the Escrow Agent in accordance therewith upon the completion of a Qualifying Transaction of Assignor.

WHEREAS, Assignor and Assignee have entered into a subscription agreement dated as of the date hereof, whereby Assignor subscribed for and purchased $357,000 of units of the Assignee in a private placement of the Assignee as its Qualifying Transaction (the “Alternative Transaction”).

WHEREAS, following the date hereof, Assignor will, as promptly as practicable, undertake the necessary steps to allow it to distribute the Assignee common shares and warrants underlying the Assignee Units (the “Assignee Securities”) pro rata to its Escrow Holders and thereafter to be delisted from the TSXV and dissolved. The securities of Assignor will cease to exist upon Assignor’s dissolution.

WHEREAS, in order to ensure that all Assignee Securities distributed to the Escrow Holders will be held in escrow under the same terms as the Assignor Securities are held in escrow, the Parties desire to effect an assignment of the Escrow Agreement from Assignor to Assignee and specify that, upon completion of the Assignor’s Alternative Transaction, the Assignee Securities held by the Escrow Holders as a result of the aforementioned distribution will be held in escrow pursuant to the terms and conditions of the Escrow Agreement.

NOW THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

1. Assignment. Effective on the date hereof, Assignor hereby assigns the Escrow Agreement and all rights and obligations thereunder to Assignee and Assignee, Escrow Agent and Escrow Holders hereby consent to the assignment of the Escrow Agreement (the “Assignment”). The Assignee Securities received by the Escrow Holders based on their pro rata ownership of Assignor in connection with the Alternative Transaction shall remain subject to the terms and conditions of the Escrow Agreement. In connection with

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 38

the Assignment, Assignee hereby assumes all of Assignor’s rights and obligations under the Escrow Agreement, subject to the policies of the TSXV. The parties hereto acknowledge and agree that the Escrow Agreement shall continue in full force and effect in accordance with its terms.

2. Alternative Transaction: The Parties understand and agree that the Alternative Transaction shall be considered as the Qualifying Transaction for the purpose of the application of the provisions of the Escrow Agreement and of the present assignment.

3. Consent of TSXV. The Parties understand and acknowledge that the consent of the TSXV to this Agreement is required prior to its effectiveness.

4. Miscellaneous.

(a) Governing Law. The laws of the Province of Quebec and the applicable laws of Canada will govern this Agreement.

(b) Counterparts. The Parties may execute this Agreement by fax or other means of electronic transmission and in counterparts, each of which will be considered an original and all of which will be one agreement.

(c) Amendment/Waiver. No amendment or waiver of this Agreement or any part of this Agreement shall be effective unless the amendment or waiver:

(i) is evidenced by a memorandum in writing signed by all Parties;

(ii) has been approved in writing by the TSXV; and

(iii) has been approved by a majority of security holders of the Assignee who are not Escrow Holders.

(d) Language. This Agreement has been drawn up in the English language at the request of all parties. Cet acte a été rédigé en anglais à la demande de toutes les parties.

(e) Benefit and Binding Effect. This Agreement will benefit and bind the Parties and their heirs, executors, administrators, successors and permitted assigns and all persons claiming through them as if they had been a Party to this Agreement.

(f) Entire Agreement. The Escrow Agreement, as assigned by this Agreement, is the entire agreement among the Parties concerning the subject matter set out in this Agreement and supersedes any and all prior understandings and agreements.

[Remainder of page intentionally left blank]

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 39

The Parties have executed and delivered this Agreement as of the date set out above.

COMPUTERSHARE INVESTOR SERVICES INC.

/s/ JEFFREY MACKEAN

Authorized signatory

/s/ YVES-DIALLO SEBAGENZI

Authorized signatory

SEP CAPITAL CORPORATION

/s/ STÉPHANE BERGERON

Authorized signatory

/s/ MTRE MICHEL CARRIER

Authorized signatory

ESCROW HOLDERS DALECO INC.
By:	/s/ DANIEL LECLAIR
	Daniel Leclair
DAMACO CAPITAL INC.
By:	/s/ DANNY MACDONALD
	Danny Macdonald
GESTION A. PELCHAT INC.
By:	/s/ ANDRÉ PELCHAT
	André Pelchat
3188302 CANADA INC.
By:	/s/ JEAN PELCHAT
	Jean Pelchat

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 40

/s/ STÉPHANE BERGERON

STÉPHANE BERGERON

/s/ HUGUES PELLETIER

HUGUES PELLETIER

/s/ MICHEL CARRIER

MICHEL CARRIER

/s/ MARIE-HELENE DRAPEAU

MARIE-HELENE DRAPEAU

/s/ ESPERANCE NAZI

ESPERANCE NAZI

DANIEL LECLAIR IN TRUST FOR WILLIAM LECLAIR
By:	/s/ DANIEL LECLAIR
	Daniel Leclair

The Parties have executed and delivered this Agreement as of the date set out above.

MED BIOGENE INC.

/s/ ERINN BROSHKO

Authorized signatory

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 41

SCHEDULE B(1) – CPC ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	10% 1/10 of your remaining Escrowed Securities	462,500 Common Shares 231,250 Warrants
[Insert date 6 months following Final Exchange Bulletin]	1/6 of your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
[Insert date 12 months following Final Exchange Bulletin]	1/5 of your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
[Insert date 18 months following Final Exchange Bulletin]	1/4 of your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
[Insert date 24 months following Final Exchange Bulletin]	1/3 of your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
[Insert date 30 months following Final Exchange Bulletin]	1/2 of your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
[Insert date 36 months following Final Exchange Bulletin]	All your remaining Escrowed Securities	693,750 Common Shares 346,875 Warrants
TOTAL	100%	4,625,000 Common Shares 2,312,500 Warrants

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, the release schedule outlined above results in the escrow securities being released in equal tranches of 15% after completion of the release on the date of the Final Exchange Bulletin.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 42

SCHEDULE B(2) – TIER 1 ISSUER – ESCROW SECURITIES

RELEASE SCHEDULE

Timed Release

Release Dates	Percentage of Total Escrowed Securities to be Released	Total Number of Escrowed Securities to be Released
[Insert date of Final Exchange Bulletin]	1/4 of your remaining Escrowed Securities	1,156,250 Common Shares 578,125 Warrants
[Insert date 6 months following Final Exchange Bulletin]	1/3 of your remaining Escrowed Securities	1,156,250 Common Shares 578,125 Warrants
[Insert date 12 months following Final Exchange Bulletin]	1/2 of your remaining Escrowed Securities	1,156,250 Common Shares 578,125 Warrants
[Insert date 18 months following Final Exchange Bulletin]	All your remaining Escrowed Securities	1,156,250 Common Shares 578,125 Warrants
TOTAL	100 %	4,625,000 Common Shares 2,312,500 Warrants

* In the simplest case, where there are no changes to the escrow securities initially deposited and no additional escrow securities, then the release schedule outlined above results in the escrow securities being released in equal tranches of 25%.

FORM 2F (as at December 15, 2008) CPC ESCROW AGREEMENT Page 43

EX-4.11

Exhibit 4.11

MED BIOGENE INC.

SHAREHOLDER RIGHTS PLAN AGREEMENT

dated as of January 15, 2010

between

Med BioGene Inc.

and

Computershare Investor Services Inc.

As Rights Agent

MED BIOGENE SHAREHOLDER RIGHTS PLAN

Table of Contents

		Page
ARTICLE 1 - INTERPRETATION		2
1.1	Definitions	2
1.2	Currency	17
1.3	Grandfather Provision	17
1.4	Holder	17
1.5	Acting in Good Faith	17
1.6	Acting Jointly or in Concert	18
1.7	Headings and References	18
1.8	Singular, Plural etc.	18
1.9	Schedule	18
ARTICLE 2 - THE RIGHTS		18
2.1	Legend on Certificates	18
2.2	Initial Exercise Price; Exercise of Rights; Detachment of Rights	19
2.3	Adjustments to Exercise Price; Number of Rights	22
2.4	Date on which Exercise is Effective	28
2.5	Execution, Authentication, Delivery and Dating of Rights Certificates	28
2.6	Registration, Registration of Transfer and Exchange	28
2.7	Mutilated, Destroyed, Lost and Stolen Rights Certificates	29
2.8	Persons Deemed Owners	30
2.9	Delivery and Cancellation of Certificates	30
2.10	Agreement of Rights Holders	30
2.11	Rights Held by the Company and Subsidiaries	31
ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS		31
3.1	Flip-in Event	31
ARTICLE 4 - THE RIGHTS AGENT		33
4.1	General	33
4.2	Merger, Amalgamation or Consolidation or Change of Name of Rights Agent	34
4.3	Duties of Rights Agent	35
4.4	Change of Rights Agent	37
4.5	Compliance with Money Laundering Legislation	37
4.6	Privacy Provision	38
ARTICLE 5 - MISCELLANEOUS		38
5.1	Redemption and Waiver	38
5.2	Expiration	39

5.3	Issuance of New Rights Certificates	39
5.4	Supplements and Amendments	40
5.5	Fractional Rights and Fractional Shares	40
5.6	Rights of Action	40
5.7	Holder of Rights Not Deemed a Shareholder	41
5.8	Notice of Proposed Actions	41
5.9	Notices	41
5.10	Costs of Enforcement	42
5.11	Successors	42
5.12	Benefits of this Agreement	42
5.13	Governing Law	43
5.14	Counterparts	43
5.15	Severability	43
5.16	Effective Date	43
5.17	Reconfirmation After Five Years	43
5.18	Determinations and Actions by the Board of Directors	44
5.19	Declaration as to Non-Canadian Holders	44
5.20	Successor Companies	45
5.21	Time of Essence	46

Exhibit A – Form of Rights Certificate

Exhibit 1 – Form of Election to Exercise

Exhibit 2 – Form of Assignment

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MED BIOGENE SHAREHOLDER RIGHTS PLAN AGREEMENT

THIS SHAREHOLDER RIGHTS PLAN AGREEMENT was made as of January 15, 2010.

BETWEEN:

Med BioGene Inc., a company amalgamated under the laws of the Province of British Columbia.

(the “Company”)

OF THE FIRST PART

AND:

Computershare Investor Services Inc., a corporation existing under the laws of Canada.

(the “Rights Agent”)

OF THE SECOND PART

WHEREAS the Board of Directors has determined that it is advisable to adopt a shareholder rights plan (the “Rights Plan”), inter alia, in order to:

(a) facilitate the maximization of shareholder values if a substantial portion of the Voting Shares of the Company are to be acquired by any Person;

(b) protect the Company and its shareholders from abusive acquisition tactics or acquisitions which may not be in the best interests of the Company and its shareholders; and

(c) provide a framework in which appropriate take-over bids for the Company can be put before its shareholders in a fair and proper manner so that its shareholders can make a fully informed decision with respect to such take-over bids;

AND WHEREAS the Board of Directors has been advised that, based upon the experiences of other companies and taking into account the circumstances itself, the adoption of the Rights Plan will assist the Company to achieve the intended results;

AND WHEREAS it is not the intention of the Board of Directors to adopt the Rights Plan as a means of preventing or deterring any Person from seeking to acquire the Voting Shares or the assets of the Company, provided they do so in a manner that is fair to all

shareholders, or of foreclosing the ability of the Board of Directors to take any action that it, at its discretion, considers reasonable in the circumstances of any such transaction having regard for the best interests of the Company and its shareholders;

AND WHEREAS in order to implement the Rights Plan, the Board of Directors has:

(a) authorized and declared effective 5:00 P.M. (Vancouver time) on the Effective Date (as hereinafter defined) a distribution of one right (a “Right”) in respect of each Common Share outstanding at the Close of Business on the Effective Date (the “Record Time”); and

(b) authorized the issuance of one Right in respect of each Common Share issued after the Record Time and prior to the earlier of the Separation Time (as hereinafter defined) and the Expiration Time (as hereinafter defined);

AND WHEREAS each Right entitles the holder thereof, after the Separation Time but before the Expiration Time, to purchase securities of the Company (or, in certain cases, of certain other entities) pursuant to the terms and subject to the conditions set forth herein;

AND WHEREAS the Company desires to appoint the Rights Agent to act on behalf of the Company and the holders of Rights, and the Rights Agent is willing to so act, in connection with the issuance, transfer, exchange and replacement of Rights Certificates (as hereafter defined), the exercise of Rights and other matters referred to herein;

NOW, THEREFORE, in consideration of the premises and the respective agreements set forth herein, the parties hereto hereby agree as follows:

ARTICLE 1 - INTERPRETATION

1.1 Definitions

For purposes of this Agreement, the following terms have the meanings indicated:

(a) “Acquiring Person” shall mean any Person who is the Beneficial Owner of 20% or more of the outstanding Voting Shares of the Company provided, however, that the term “Acquiring Person” shall not include:

(i) the Company or any Subsidiary or Affiliate, any employee, executive or director stock ownership or other benefit plan, any trust for the benefit of employees of the Company or any Subsidiary or Affiliate, or any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan or trust;

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(ii) any Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares of the Company after the Record Time and such Person’s Beneficial Ownership does not exceed the number of Voting Shares Beneficially Owned by such Person immediately prior to the Record Time other than as a result of any one or a combination of:

(A) acquisitions or redemptions by the Company of Voting Shares of the Company which, by reducing the number of Voting Shares outstanding, increases the proportionate number of Voting Shares Beneficially Owned by such Person to 20% or more of the Voting Shares of the Company then outstanding (“Voting Share Reductions”);

(B) share acquisitions made pursuant to a Permitted Bid or a Competing Permitted Bid (“Permitted Bid Acquisitions”);

(C) share acquisitions (1) in respect of which the Board of Directors of the Company has waived the application of Section 3.1 pursuant to the provisions of subsections 5.1(b) and 5.1(c) or (2) which were made prior to the date of this Agreement; or (3) pursuant to an amalgamation, merger or other statutory procedure requiring shareholder approval (“Exempt Acquisition”);

(D) the acquisition of Voting Shares upon the exercise of Convertible Securities received by such Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or a Pro Rata Acquisition (as defined below) (“Convertible Security Acquisitions”); or

(E) a Pro-rata Acquisition;

provided, however, that if a Person shall become the Beneficial Owner of 20% or more of the Voting Shares of the Company then outstanding by reason of any one or a combination of (i) Permitted Bid Acquisitions, (ii) Voting Share Reductions, (iii) Exempt Acquisitions, or (iv) Convertible Security Acquisitions, or (v) Pro-rata Acquisitions and, after such Permitted Bid Acquisitions, Voting Share Reductions, Exempt Acquisitions, Convertible Security Acquisitions or Pro-rata Acquisitions, and such Person is, at the time such Person becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares, or becomes, at any time thereafter while such Person is the Beneficial Owner of 20% or more of the Voting Shares of the Company then outstanding, the Beneficial Owner of any additional Voting Shares constituting more than 1% of the Voting Shares then outstanding of the Company (other than pursuant to any one or combination of Permitted Bid Acquisitions, Voting Share Reductions, Exempt Acquisitions, Convertible Security Acquisitions or Pro-rata Acquisitions) then as of the date such Person becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares while holding

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such additional Voting Shares, or becomes the beneficial holder of such additional Voting Shares, while the Beneficial Owner of 20% or more of the Voting Shares, as the case may be, such Person shall be deemed to be an “Acquiring Person”;

(iii) for the period of 10 days after the Disqualification Date (as hereinafter defined), any Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares of the Company as a result of such Person becoming disqualified from relying on paragraph 1.1(g)(v) hereof solely because such Person has made or proposes to make a tender or exchange offer or Take-over Bid in respect of securities of the Company alone or by acting jointly or in concert with any other Person; the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 102.1 of the Securities Act (Ontario), Section 5.2 of MI 62-104 or Section 13(d) under the 1934 Exchange Act) by such Person or the Company of the intent to commence such a tender or exchange offer or Take-over Bid (or pursuant to any comparable or successor laws, rules or regulations) being herein referred to as the “Disqualification Date”; or

(iv) an underwriter or member of a banking or selling group that becomes the Beneficial Owner of 20% or more of the Voting Shares in connection with a distribution of securities by way of prospectus or private placement.

(b) “Adjusted Exercise Price” means the price at which a holder may purchase the securities issuable upon exercise of Rights pursuant to the terms of paragraph 3.1(a)(ii) which, until adjustment thereof in accordance with the terms hereof, shall be equal to the Exercise Price multiplied by a fraction in which:

(i) the numerator is the number of Shares per Right that may be purchased pursuant to paragraph 3.1(a)(ii); and

(ii) the denominator is the number of Shares per Right that could have been purchased pursuant to paragraph 3.1(a)(i) in the event that there had been sufficient authorized but unissued Common Shares to permit each holder of a Right (other than an Acquiring Person or a transferee of the kind described in paragraph 3.1(b)(ii)) to purchase the number of Common Shares to which they would have been entitled under paragraph 3.1(a)(i);

(c) “Adjustment Factor” shall mean a fraction in which:

(i) the numerator is equal to the Company’s authorized but unissued Voting Shares; and

(ii) the denominator is equal to the Company’s issued and outstanding Voting Shares minus those Voting Shares that the Acquiring Person Beneficially owns;

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(d) “Affiliate” shall mean, when used to indicate a relationship with a specified body corporate, a Person that directly or indirectly through one or more intermediaries controls, or is a body corporate controlled by, or under common control with, such specified body corporate;

(e) “Agreement” means this Rights Agreement as amended, modified or supplemented from time to time;

(f) “Associate” shall mean, when used to indicate a relationship with a specified Person, (i) a spouse of that Person, (ii) any Person of the same or opposite sex with whom that Person is living in a conjugal relationship outside marriage, (iii) any relative of that Person if that relative has the same residence as that Person or (iv) any relative of such spouse or other Person referred to in the immediately preceding clauses (i), (ii) or (iii) above, if that relative has the same residence as the specified Person;

(g) Subject to Section 1.3, a Person shall be deemed the “Beneficial Owner”, and to have “Beneficial Ownership”, of, and to “Beneficially Own”:

(i) any securities of which such Person or any such Person’s Affiliates or Associates is an owner at law or in equity,

(ii) any securities as to which such Person or any of such Person’s Affiliates or Associates has

(A) the right to acquire upon the exercise of Convertible Securities; or

(B) the right to acquire (whether such right is exercisable immediately or the lapse or after the passage of time or upon the occurrence of a contingency or otherwise) pursuant to any agreement, arrangement, pledge or understanding,

in either case where such right is exercisable within 60 days and whether or not on condition or the happening of any contingency (other than customary agreements with and between underwriters and banking group or selling group members with respect to a distribution of securities and other than pledges of securities in the ordinary course of business), or

(iii) any securities which are Beneficially Owned, directly or indirectly, within the meaning of paragraphs 1.1(g)(i) or (ii) by any other Person with which such Person or any of such Person’s Affiliates or Associates in acting jointly or in concert;

provided, however, that a Person shall not be deemed the “Beneficial Owner”, or to have “Beneficial Ownership” of, or to “Beneficially Own”, any security:

(iv) because such security has been agreed to be deposited or tendered pursuant to a Permitted Lock-up Agreement, or is otherwise deposited or

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tendered, to any Take-over Bid made by such Person, made by any of such Person’s Affiliates or Associates or made by any other Person acting jointly or in concert with such Person until such deposited or tendered security has been taken up or paid for, whichever shall first occur;

(v) because such Person, or any of such Persons’ Affiliates or Associates or any other Person referred to in paragraph 1.1(g)(iii), holds such security provided that:

(A) the ordinary business of any such Person (the “Investment Manager”) includes the management of investment funds for others (which, without limitation, may include or be limited to one or more employee benefit plans or pension plans) and such security is held by the Investment Manager in the ordinary course of such business in the performance of such Investment Manager’s duties for the account of any other Person, including the acquisition or holding of securities for non-discretionary accounts on behalf of a client by a broker or dealer registered under applicable securities laws (a “Client”);

(B) such Person (the “Trust Company”) is licensed to carry on the business of a trust company under applicable laws and, as such, acts as trustee or administrator or in a similar capacity in relation to the estates of deceased or incompetent Persons (each an “Estate Account”) or in relation to other accounts (each an “Other Account”) and holds such security in the ordinary course of such duties for such Estate Accounts or Other Accounts;

(C) the ordinary business of such person includes, acting as an agent of the Crown in the management of public assets (the “Crown Agent”);

(D) the Person is an independent person (the “Independent Person”) established by statute for, among other things, and the ordinary business or activity of such Person includes, the administration of investment funds for employee benefit plans, pension plans, insurance plans or various public bodies; or

(E) such Person (the “Administrator”) is the administrator or trustee of one or more pension funds, plans or related trusts (a “Plan”) registered or qualified under the laws of Canada or any Province thereof or the laws of the United States of America or any State thereof or is a Plan;

provided that the Investment Manager, the Trust Company, the Crown Agent, the Independent Person, the Administrator and the Plan, as the case may be, is not then making, or has not announced a current intention to

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make, a Take-over Bid alone or by acting jointly or in concert with any other Person, other than an Offer to Acquire Voting Shares or other securities pursuant to a distribution by the Company or by means of ordinary market transactions (including pre-arranged trades entered into in the ordinary course of business of such Person) executed through the facilities of a stock exchange, securities quotation system or organized over-the-counter market, alone, through its Affiliates or Associates or by acting jointly or in concert with any other Person;

(vi) because such Person is (1) a Client of the same Investment Manager as another Person on whose account the Investment Manager holds such security, (2) because such Person is an Estate Account or an Other Account of the same Trust Company as another Person on whose account the Trust Company holds such security or (3) a Plan with the same Administrator as another Plan on whose account the Administrator holds such security;

(vii) where such Person is:

(A) a Client of an Investment Manager and such security is owned at law or in equity by the Investment Manager;

(B) an Estate Account or an Other Account of a Trust Company and such security is owned at law or in equity by the Trust Company; or

(C) a Plan and such security is owned at law or in equity by the Administrator of the Plan;

(viii) where such Person is a registered holder of such security as a result of carrying on the business of, or acting as a nominee of, a securities depository;

For the purposes of this Agreement in determining the percentage of the outstanding Voting Shares with respect to which a Person is or is deemed to be the Beneficial Owner, all Voting Shares as to which such Person is deemed the Beneficial Owner shall be deemed outstanding;

(h) “Board of Directors” shall mean the board of directors of the Company or, if duly constituted and whenever duly empowered, the executive committee of the board of directors of the Company;

(i) “Business Day” shall mean any day other than a Saturday, Sunday or a day that is treated as a holiday at the Company’s or the Rights Agent’s principal executive offices in Vancouver, British Columbia;

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(j) “Business Corporations Act (British Columbia)” shall mean the Business Corporations Act, S.B.C. 2002, c.57 as amended and the regulations thereunder, and any comparable or successor laws or regulations thereto;

(k) “Canadian Dollar Equivalent” of any amount which is expressed in United States dollars shall mean on any day the Canadian dollar equivalent of such amount determined by reference to the Canadian-U.S. Exchange Rate on such date;

(l) “Canadian-U.S. Exchange Rate” shall mean on any date the inverse of the U.S.-Canadian Exchange Rate;

(m) “Close of Business” on any given date shall mean the time on such date (or, if such date is not a Business Day, the time on the next succeeding Business Day) at which the office of the transfer agent for the Common Shares in the City of Vancouver, British Columbia (or, after the Separation Time, the offices of the Rights Agent in the City of Vancouver, British Columbia) becomes closed to the public;

(n) “Common Shares” shall mean Common Shares of the Company and, when used with reference to any Person other than the Company, shall mean the class or classes of shares (or similar equity interest) with the greatest per share voting power entitled to vote generally in the election of all directors of such other Person or the equity securities or other equity interest of an entity having power (whether or not exercised) to control or direct the management of such other Person; if such other Person is a Subsidiary of another person, “such other Person” as used herein shall mean the Person or Persons which ultimately control such first-mentioned Person;

(o) “Competing Permitted Bid” means a Take-over Bid that:

(i) is made for the Voting Shares after a Permitted Bid for Voting Shares has been made but prior to the expiry of such Permitted Bid;

(ii) satisfies all of the conditions of the definition of Permitted Bid subject to paragraph 1.1(o)(iii) below; and

(iii) contains, and the take-up and payment for securities tendered or deposited is subject to, an irrevocable and unqualified condition that no Voting Shares will be taken up and paid for pursuant to the Take-over Bid prior to the close of business on a date which is not earlier than the later of 35 days after the date of the Take-over Bid or the 60th day following the date of the earliest Permitted Bid;

(p) “Convertible Securities” means, at any time, any securities issued by the Company from time to time (other than the Rights) carrying any exercise, conversion or exchange right pursuant to which the holder thereof may acquire Voting Shares or other securities which are convertible into, exercisable into or exchangeable for Voting Shares;

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(q) “Convertible Security Acquisitions” has the meaning set forth in the definition of “Acquiring Person” herein;

(r) “Company” means Med BioGene Inc.;

(s) “Effective Date” means January 15, 2010;

(t) “Exempt Acquisition” shall have the meaning ascribed thereto in the definition of Acquiring Person;

(u) “Exercise Price” shall mean, as of any date, the price at which a holder may purchase the securities issuable upon exercise of one whole Right and until adjustment or amendment thereof in accordance with the terms hereof, the Exercise Price shall equal $100;

(v) “Expiration Time” shall mean the earlier of:

(i) the Termination Time; or

(ii) the Close of Business on that date which is the earlier of:

(A) the date of termination of the next annual general meeting of the shareholders of the Company after the date of this Agreement if this Agreement is not approved at such meeting as required by Section 5.16 herein;

(B) the date of termination of the meeting of the shareholders of the Company called to consider the reconfirmation of this Agreement as provided for in Section 5.17 herein if this Agreement is not reconfirmed at such meeting as required by Section 5.17 herein; and

(C) the tenth anniversary of the date of this Agreement, if this Agreement is approved and reconfirmed as required by Sections 5.16 and 5.17, respectively;

(w) “Flip-in Event” shall mean a transaction in which any Person shall become an Acquiring Person;

(x) “Independent Shareholders” shall mean holders of outstanding Voting Shares of the Company excluding (i) any Acquiring Person; or (ii) any Person (other than a Person who is deemed not to Beneficially Own such Voting Shares by reason of paragraph 1.1(g)(v)) that is making or has announced a current intention to make a Take-over Bid for Voting Shares of the Company (including a Permitted Bid or a Competing Permitted Bid) but excluding any such Person if the Take-over Bid

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so announced or made by such Person has been withdrawn, terminated or, expired; or (iii) any Affiliate or Associate of such Acquiring Person or a Person referred to in paragraph (ii); or (iv) any Person acting jointly or in concert with such Acquiring Person or a Person referred to in paragraph (ii); or (v) a Person who is a trustee of any employee benefit plan, share purchase plan, deferred profit sharing plan or any similar plan or trust for the benefit of employees of the Company or a Subsidiary of the Company, unless the beneficiaries of the plan or trust direct the manner in which the Voting Shares are to be voted or direct whether the Voting Shares are to be tendered to a Take-over Bid;

(y) “Market Price” per share of any securities on any date of determination shall mean the average of the daily Closing Price Per Share of such securities (determined as described below) on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date; provided, however, that if an event of a type analogous to any of the events described in Section 2.3 hereof shall have caused the closing prices used to determine the Market Price on any Trading Days not to be fully comparable with the closing price on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day, each such closing price so used shall be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 hereof in order to make it fully comparable with the closing price on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day. The “Closing Price Per Share” of any securities on any date shall be:

(i) the closing board lot sale price, or, if such price is not available, the average of the closing bid and asked prices, for each share as reported by the principal stock exchange in Canada on which such securities are listed and posted for trading (provided that if at the date of determination such securities are listed or admitted to trading on more than one stock exchange or national securities quotation system, such price or prices shall be determined based on the stock exchange or national securities quotation system on which such securities are then listed or admitted to trading on which the largest number of such securities were traded during the most recently completed calendar year);

(ii) if the securities are not listed or posted for trading on any stock exchange in Canada, the last sale price, regular way, or, in case no such sale takes place on such date, the average of the closing bid and asked prices, regular way, for each share of such securities as reported in the principal consolidated transaction reporting system with respect to securities listed or posted for trading on the principal national securities exchange in the United States on which such securities are listed or posted for trading;

(iii) if for any reason none of such prices is available on such date or the securities are not listed or admitted to trading on a stock exchange in Canada or a national securities exchange in the United States, the last quoted price, or if not so quoted, the average of the high bid and low asked prices for each share of such securities in the over-the-counter market; or

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(iv) if on any such date the securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the securities selected in good faith by the Board of Directors of the Company;

provided, however, that if on any such date the securities are not traded in the over-the-counter market, the closing price per share of such securities on such date shall mean the fair value per share of such securities on such date as determined in good faith by the Board of Directors of the Company, after consultation with a nationally and internationally recognized investment banking firm with respect to the fair value per share of such securities. The Market Price shall be expressed in United States dollars and if initially determined in respect of any day forming part of the 20 consecutive Trading Day period in question in Canadian dollars, such amount shall be translated into United States dollars at the U.S. Dollar Equivalent thereof;

(z) “1933 Securities Act” shall mean the Securities Act of 1933 of the United States, as amended, and the rules and regulations thereunder, and any comparable or successor laws or regulations thereto;

(aa) “1934 Exchange Act” shall mean the Securities Exchange Act of 1934 of the United States, as amended, and the rules and regulations thereunder, and any comparable or successor laws or regulations thereto;

(bb) “Offer to Acquire” shall include:

(i) an offer to purchase, or a solicitation of an offer to sell, Voting Shares; and

(ii) an acceptance of an offer to sell Voting Shares, whether or not such offer to sell has been solicited;

or any combination thereof, and the Person accepting an offer to sell shall be deemed to be making an Offer to Acquire to the Person that made the offer to sell;

(cc) “Offeror” shall mean a Person who has announced a current intention to make or who is making a Take-over Bid;

(dd) “Offeror’s Securities” means Voting Shares Beneficially Owned on the date of an Offer to Acquire by any Person who makes a Take-over Bid or by any Person acting jointly or in concert with such Person;

(ee) “MI 62-104” means Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids and any comparable or successor laws, instruments or rules thereto;

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(ff) “Permitted Bid” means a Take-over Bid made by means of a Take-over Bid circular and which also complies with the following additional provisions:

(i) the Take-over Bid is made to all holders of record of Voting Shares wherever resident as registered on the books of the Company, on identical terms;

(ii) the Take-over Bid contains irrevocable and unqualified provisions that all Voting Shares may be deposited pursuant to the Take-over Bid at any time prior to the Close of Business on the date referred to in paragraph 1.1(ff)(iii) and that all Voting Shares deposited pursuant to the Take-over Bid may be withdrawn at any time prior to the Close of Business on such date;

(iii) the Take-over Bid contains, and the take up and payment for securities tendered or deposited is subject to, an irrevocable and unqualified provision that no Voting Shares will be taken up or paid for pursuant to the Take-over Bid prior to the Close of Business on a date which is not less than 60 days following the date of the Take-over Bid and that Voting Shares shall not be taken up and paid for by the Offeror unless Independent Shareholders have deposited or tendered shares representing more than 50% of the Voting Shares then outstanding pursuant to the Take-over Bid and have not withdrawn such shares; and

(iv) the Take-over Bid contains an irrevocable and unqualified provision that, should the condition referred to in paragraph 1.1(ff)(iii) be met, the Offeror will make a public announcement of that fact, the Take-over Bid will be extended on the same terms for a period of not less than 10 days from the date referred to in paragraph 1.1(ff)(iii) and where a greater number of such Voting Shares is deposited pursuant thereto than the Offeror is bound or willing to acquire under the Take-over Bid, the Voting Shares shall be taken up and paid for on a pro rata basis;

(gg) “Permitted Bid Acquisitions” shall have the meaning ascribed thereto in the definition of Acquiring Person;

(hh) “Permitted Lock-up Agreement” means an agreement between an Offeror, any of its Affiliates or Associates or any other Person acting jointly or in concert with the Offeror and a Person (the “Locked-up Person”) (the terms of which are publicly disclosed and a copy of which is made available to the public (including the Company) not later than the date of the Lock-up Bid (as defined below), or if the Lock-up Bid has been made prior to the date of the Lock-up Agreement not later than the first Business Day following the date of the Lock-up Agreement) who is not an Affiliate or Associate of the Offeror or a Person acting jointly or in concert with the Offeror whereby the Locked-up Person agrees to deposit or tender the Voting Shares held by the Locked-up Person to the Offeror’s Take-over Bid or to any Take-over Bid made by any of the Offeror’s Affiliates or Associates or made by any other Person acting jointly or in concert with the Offeror (the “Lock-up Bid”), where the agreement:

(i) (A) permits the Locked-up Person to withdraw the Voting Shares in order to tender or deposit the Voting Shares to another Take-over Bid or to support another transaction that contains an offering price for each Voting Share that exceeds, or provides a value for each Voting Share that is greater than, the offering price contained or proposed to be contained in the Lock-up Bid;

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(B) permits the Locked-up Person to withdraw the Voting Shares in order to tender or deposit the Voting Shares to another Take-over Bid or to support another transaction that contains an offering price for each Voting Share that exceeds, or provides a value for each Voting Share that is greater than, the offering price contained in or proposed to be contained in, the Lock-up Bid by as much or more than a specified amount (the “Specified Amount”) and the Specified Amount is not greater than 7% of the offering price that is contained or proposed to be contained in the Lock-up Bid; or

(C) permits the Locked-up Person to withdraw the Voting Shares in order to tender or deposit the Voting Shares to another Take-over Bid for a number of Voting Shares at least 7% greater than the number of Voting Shares that were the subject of the Lock-up Bid at a price that is not less than the price or value per Voting Share offered under the Lock-up Bid; and

(ii) does not provide for any “break-up fees”, “top-up fees”, penalties, expenses or other amounts that exceed in the aggregate the cash equivalent of 2.5% of the price or value payable to the Locked-up Person under the Take-over Bid or one-half of the increased price or value that is paid pursuant to another Take-over Bid or transaction, whichever is the greater, in the event that the Locked-up Person fails to tender Voting Shares pursuant thereto in order to accept the other Take-over Bid or support another transaction;

and for greater clarity, the agreement may contain a right of first refusal or require a period of delay to give the Person who made the Lock-up Bid an opportunity to match a higher price in another Take-over Bid or other similar limitation on a Locked-up Person’s right to withdraw Voting Shares from the agreement, so long as the limitation does not preclude the exercise by the Locked-up Person of the right to withdraw Voting Shares during the period of the other Take-over Bid or transaction;

(ii) “Person” shall include any individual, firm, partnership, association, trust, trustee, personal representative, group, body corporate, company, unincorporated organization, syndicate, governmental entity, or other entity;

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(jj) “Pro-rata Acquisitions” means acquisitions by a Person of Voting Shares pursuant to (i) any dividend reinvestment plan, such purchase plan or other plan of the Company made available to all holders of Voting Shares (other than holders resident in any jurisdiction where participation in such plan is restricted or impractical as a result of applicable law); (ii) a stock dividend, a stock split or other event pursuant to which such Person becomes the Beneficial Owner of Voting Shares on the same pro rata basis as all other holders of Voting Shares of the same class or series; (iii) the acquisition or exercise of rights to purchase Voting Shares distributed to all holders of Voting Shares (other than holders resident in any jurisdiction where such distribution or exercise is restricted or impractical as a result of applicable law) by the Company pursuant to a rights offering (but only if such rights are acquired directly from the Company); or (iv) a distribution of Voting Shares or Convertible Securities in respect thereof offered pursuant to a prospectus or by way of a private placement by the Company or a conversion or exchange of any such Convertible Security, provided that, in the cases of (iii) and (iv) above, such Person does not thereby acquire a greater percentage of Voting Shares or Convertible Securities so offered than the Person’s percentage of Voting Shares Beneficially Owned immediately prior to such acquisition;

(kk) “Regular Periodic Cash Dividend” shall mean cash dividends paid at regular intervals in any fiscal year of the Company to the extent that such cash dividends do not exceed, in the aggregate, the greatest of:

(i) 200% of the aggregate amount of cash dividends declared payable by the Company on its Common Shares in its immediately preceding fiscal year;

(ii) 300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Company on its Common Shares in its three immediately preceding fiscal years; and

(iii) 100% of the aggregate consolidated net income of the Company, before extraordinary items, for its immediately preceding fiscal year;

(ll) “Rights” means the rights authorized to be issued by the Board of Directors and governed by this Agreement;

(mm) “Rights Agent” means Computershare Investor Services Inc.;

(nn) “Rights Certificate” shall mean the certificates representing the rights after the Separation Time, which shall be in the form attached hereto as Exhibit A;

(oo) “Securities Act (British Columbia)” shall mean the Securities Act, R.S.B.C. 1996, c.418 as amended, and the regulations thereunder, and any comparable or successor laws or regulations thereto;

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(pp) “Securities Act (Ontario)” shall mean the Securities Act, R.S.O. 1990, c.55 as amended, and the regulations thereunder, and any comparable or successor laws or regulations thereto;

(qq) “Separation Time” shall mean the Close of Business on the earlier of:

(i) the tenth Business Day after the Stock Acquisition Date; and

(ii) the tenth Business Day after the date of the commencement of, or first public announcement of the intent of any Person (other than the Company or any Subsidiary of the Company) to commence a Take-over Bid (other than a Permitted Bid or Competing Permitted Bid so long as such Take-over Bid continues to satisfy the requirements of a Permitted Bid or Competing Permitted Bid);

or such later date as may be determined by the Board of Directors provided that, if the Board of Directors determines pursuant to Section 5.1 to waive the application of Section 3.1 to a Flip-in Event, or if any Take-over Bid referred to in paragraph 1.1(qq)(ii) expires, is cancelled, terminated or otherwise withdrawn prior to the Separation Time, such offer shall be deemed, for purposes of this subsection 1.1(qq), never to have been made;

(rr) “Shares” shall mean shares in the capital of the Company;

(ss) “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 102.1 of the Securities Act (Ontario), Section 5.2 of MI 62-104 or Section 13(d) under the 1934 Exchange Act) by the Company or an Acquiring Person that a Person has become an Acquiring Person;

(tt) “Subsidiary” of any specified Person shall have the meaning ascribed thereto in the Business Corporations Act (British Columbia);

(uu) “Take-over Bid” means an Offer to Acquire Voting Shares or securities convertible into Voting Shares, where the Voting Shares subject to the Offer to Acquire, together with the Voting Shares into which the securities subject to the Offer to Acquire are convertible, and the Offeror’s Securities, constitute in the aggregate 20% or more of the outstanding Voting Shares at the date of the Offer to Acquire;

(vv) “Termination Time” shall mean the time at which the right to exercise Rights shall terminate pursuant to Sections 5.1, 5.16 or 5.17 hereof;

(ww) “Trading Day” when used with respect to any securities, shall mean a day on which the principal securities exchange on which such securities are listed or posted for trading is open for the transaction of business or, if the securities are not listed or posted for trading on any securities exchange, a Business Day;

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(xx) “U.S.-Canadian Exchange Rate” shall mean on any date:

(i) if on such date the Bank of Canada sets an average noon spot rate of exchange for the conversion of one United States dollar into Canadian dollars, such rate; and

(ii) in any other case, the rate for such date for the conversion of one United States dollar into Canadian dollars which is calculated in the manner which shall be determined by the Board of Directors of the Company from time to time acting in good faith;

(yy) “U.S. Dollar Equivalent” of any amount which is expressed in Canadian dollars shall mean on any day the United States dollar equivalent of such amount determined by reference to the U.S. - Canadian Exchange Rate on such date;

(zz) “Voting Shares” shall, when used with reference to the Company, mean collectively the Common Shares of the Company, and any other shares of capital stock of the Company to which is attached a right to vote generally for the election of directors and, when used with reference to any other Person other than the Company, means a Common Share of such Person and any other share of capital stock or voting interests of such person entitled to vote generally for the election of directors. The percentage of Voting Shares Beneficially Owned by any Person, shall, for the purposes of this Agreement be and be deemed to be the product determined by the formula:

100 x  A

           B

where

A = the number of votes for the election of all directors generally attaching to the Voting Shares Beneficially Owned by such Person; and

B = the number of votes for the election of all directors generally attaching to all outstanding Voting Shares;

and where any Person is deemed to Beneficially Own unissued Voting Shares which may be acquired pursuant to Convertible Securities, such Voting Shares shall be deemed to be outstanding for the purpose of calculating the percentage of Voting Shares Beneficially Owned by such Person, but no other unissued Voting Shares which may be acquired pursuant to any other outstanding Convertible Securities shall, for the purposes of the calculation, be deemed to be outstanding;

(aaa) “Voting Share Reduction” shall have the meaning attributed thereto in the definition of Acquiring Person.

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1.2 Currency

All sums of money which are referred to in this Agreement are expressed in lawful money of Canada , unless otherwise specified.

1.3 Grandfather Provision

For the purposes of determining whether a Person is an Acquiring Person and interpreting the definition of Acquiring Person, a Person shall not be and shall not be deemed to be an Acquiring Person if such Person:

(a) was the Beneficial Owner of 20% or more of the outstanding Voting Shares of the Company determined as at the Record Time; or

(b) becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares of the Company after the Record Time and such Person’s Beneficial Ownership of Voting Shares of the Company does not exceed the number of Voting Shares of the Company Beneficially Owned by such Person immediately prior to the Record Time by more than 2% of the then issued and outstanding Voting Shares of the Company,

provided, however, that this exception shall not be, and shall cease to be, applicable to a Person in the event that such Person shall, after the Record Time, become the Beneficial Owner of additional Voting Shares of the Company constituting more than 2% of the Voting Shares of the Company then outstanding other than pursuant to Permitted Bid Acquisitions, through Exempt Acquisitions, Voting Share Reductions or Pro-rata Acquisitions; and provided further that, in the event that this exception shall cease to be applicable to a Person as aforesaid, such a person shall be and shall be deemed to be an Acquiring Person as at and from the time that this exception shall cease to be applicable.

1.4 Holder

As used in this Agreement, unless the context otherwise requires the term “holder” when used with reference to Rights, means the registered holder of such rights or prior to the Separation Time, the Shares with which such Rights are associated.

1.5 Acting in Good Faith

For purposes of this Agreement, when any determination or decision is made by the Board of Directors pursuant to this Agreement, the Board of Directors shall exercise its powers and discharge its duties honestly and in good faith with a view to the best interests of the Company and each director shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances all in accordance with the requirements of the Business Corporations Act (British Columbia).

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1.6 Acting Jointly or in Concert

For the purposes of this Agreement, a Person is acting jointly or in concert with every Person who is a party to any agreement, commitment or understanding, whether formal or informal, with the first Person or any Associate or Affiliate thereof to acquire or offer to acquire Voting Shares (other than customary agreements with and between underwriters and/or banking group members and/or selling group members with respect to a public offering or private placement of securities or pledges of securities in the ordinary course of business).

1.7 Headings and References

The headings of the articles, sections and subsections of this Agreement and the table of contents are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement. All references to articles, sections, subsections and paragraphs are to articles, sections, subsections and paragraphs of this Agreement. The words “hereto”, “herein”, “hereof”, “hereunder”, “this Agreement”, “the Rights Agreement” and similar expressions refer to this Agreement including the schedule attached hereto as a whole, as the same may be amended, modified or supplemented at any time or from time to time.

1.8 Singular, Plural etc.

In this Agreement, where the context so requires, words importing the singular number include the plural and vice versa and words importing gender include the masculine, feminine and neuter genders.

1.9 Schedule

Any schedule attached hereto forms part of this Agreement.

ARTICLE 2 - THE RIGHTS

2.1 Legend on Certificates

Certificates for the Common Shares, including without limitation, Common Shares issued upon the conversion of Convertible Securities, issued after the Record Time but prior to the earlier of the Separation Time and the Expiration Time shall evidence one Right for each Common Share represented thereby and shall have impressed on, printed on, typewritten on or otherwise affixed to them the following legend:

“Until the Separation Time (as defined in the Rights Agreement referred to below), this certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Shareholder Rights Plan Agreement, dated as of January 15, 2010 as such may be from time to time amended, restated, varied or replaced, between Med BioGene Inc. (the “Company”) and Computershare Investor Services Inc., as Rights Agent (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and

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a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be amended or redeemed, may expire, may become void (if, in certain cases, they are “Beneficially Owned” by an “Acquiring Person”, as such terms are defined in the Rights Agreement) whether currently held or on behalf or such Person or any subsequent holder or may be evidenced by separate certificates and may no longer be evidenced by this certificate. The Company will mail or arrange for the mailing of a copy of the Rights Agreement to the holder of this certificate without charge within five days after the receipt of a written request therefor.”

Certificates representing Common Shares that are issued and outstanding at the Record Time shall evidence one Right for each Common Share evidenced thereby notwithstanding the absence of the foregoing legend until the earlier of the Separation Time and the Expiration Time.

2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights

(a) Subject to adjustment as herein set forth, each Right will entitle the holder thereof, from and after the Separation Time and prior to the Expiration Time, to purchase, for the Exercise Price or its Canadian Dollar Equivalent as at the Business Day immediately preceding the day of exercise of the Right, one Common Share.

(b) Until the Separation Time:

(i) no Right may be exercised; and

(ii) each Right will be evidenced by the certificate for the associated Share (which certificates shall also be deemed to be Rights Certificates) and will be transferable only together with, and will be transferred by a transfer of, such associated Share.

(c) From and after the Separation Time and prior to the Expiration Time, the Rights:

(i) may be exercised; and

(ii) will be registrable and transferable independent of Shares.

Promptly following the Separation Time the Rights Agent will mail to each holder of record of Common Shares as of the Separation Time and, in respect of each Convertible Security converted into Common Shares after the Separation Time and prior to the Expiration Time promptly after such conversion to the holder so converting (other than an Acquiring Person and other than, in respect of any Rights Beneficially Owned by such Acquiring Person which are not held of record by such Acquiring Person, the holder of Record of such Rights (a

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“Nominee”)), at such holder’s address as shown by the records of the Company (and the Company hereby agrees to furnish copies of such records to the Rights Agent for this purpose),

(A) a Rights Certificate in substantially the form of Exhibit A hereto appropriately completed, representing the number of Rights held by such holder at the Separation Time and having such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or quotation system on which the Rights may from time to time be listed or traded, or to conform to usage, and

(B) a disclosure statement describing the Rights;

provided that a Nominee shall be sent the materials provided for in (A) and (B) only in respect of all Common Shares held of record by it which are not Beneficially Owned by an Acquiring Person.

(d) Rights may be exercised in whole or in part on any Business Day after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent the Rights Certificate evidencing such Rights with an Election to Exercise (an “Election to Exercise”) substantially in the form attached to the Rights Certificate duly completed and executed by the holder or its executors or other personal representatives or its legal attorney duly appointed by an instrument in writing in form and manner satisfactory to the Rights Agent, accompanied by payment in cash, or by certified cheque, banker’s draft or money order payable to the order of the Company, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for the relevant Shares in a name other than that of the holder of the Rights being exercised.

(e) Upon receipt of a Rights Certificate, with a duly completed and executed Election to Exercise accompanied by payment as set forth in subsection 2.2(d) above, the Rights Agent will (unless otherwise instructed by the Company) forthwith:

(i) requisition from a transfer agent for the relevant Shares, certificates representing the number of Shares to be purchased (the Company hereby irrevocably authorizing its transfer agents to comply with all such requisitions);

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(ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuing fractional Shares;

(iii) after receipt of such certificates, deliver the same to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder; and

(iv) when appropriate, after receipt, deliver such cash to or to the order of the registered holder of the Rights Certificate.

(f) In case the holder of any Rights shall exercise less than all the Rights evidenced by such holder’s Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holder’s duly authorized assigns.

(g) The Company covenants and agrees that it will:

(i) take all such action as may be necessary and within its power to ensure that all Shares delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Shares (subject to payment of the Exercise Price), be duly and validly authorized, executed, issued and delivered as fully paid and non-assessable;

(ii) subject to Section 5.19, take all such action as may be necessary and within its power to comply with any applicable requirements of the Securities Act (British Columbia) or comparable legislation of each of the provinces of Canada, the 1933 Securities Act and the 1934 Exchange Act or the rules and regulations thereunder or any other applicable law, rule or regulation, in connection with the issuance and delivery of the Rights Certificates and the issuance of any Shares upon exercise of Rights;

(iii) use commercially reasonable efforts to cause all Shares issued upon exercise of Rights to be listed on the principal exchanges on which the Shares of such class or series were traded prior to the Stock Acquisition Date; and

(iv) pay when due and payable any and all Canadian and United States federal, provincial and state transfer taxes (for greater certainty not including any income taxes on capital gains of the holder or exercising holder or any liability of the Company to withhold tax) and charges which may be payable in respect of the original issuance or delivery of the Rights Certificates or certificates for Shares, provided that the Company shall not be required to pay any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for Shares in a name other than that of the holder of the Rights being transferred or exercised.

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2.3 Adjustments to Exercise Price; Number of Rights

The Exercise Price, the number and kind of Shares subject to purchase upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 2.3.

(a) In the event the Company shall at any time after the Record Time and prior to the Expiration Time:

(i) declare or pay a dividend on the Common Shares payable in Common Shares (or other securities exchangeable for or convertible into or giving a right to acquire Common Shares) other than pursuant to any optional stock dividend program, dividend reinvestment plan or a dividend payable in Common Shares in lieu of a Regular Periodic Cash Dividend;

(ii) subdivide or change the then outstanding Common Shares into a greater number of Common Shares;

(iii) consolidate or change the then outstanding Common Shares into a smaller number of Common Shares; or

(iv) issue any Common Shares (or other capital stock or securities exchangeable for or convertible into or giving a right to acquire Common Shares or other capital stock) in respect of, in lieu of, or in exchange for existing Common Shares, except as otherwise provided in this Section 2.3;

the Exercise Price and the number of Rights outstanding, or, if the payment or effective date therefor shall occur after the Separation Time, the Shares purchasable upon exercise of Rights shall be adjusted in the manner set forth below. If the Exercise Price and number of Rights outstanding are to be adjusted,

(A) the Exercise Price in effect after such adjustment will be equal to the Exercise Price in effect immediately prior to such adjustment divided by the number of Common Shares (or other capital stock) (the “Expansion Factor”) that a holder of one Common Share immediately prior to such dividend, subdivision, change, combination or issuance would hold thereafter as a result thereof, and

(B) each Right held prior to such adjustment will become that number of Rights equal to the Expansion Factor, and the adjusted number of Rights will be deemed to be allocated among the Shares with respect to which the original Rights were associated (if they remain outstanding) and the Shares issued in respect of such dividend, subdivision, change, combination or issuance, so that each such Share (or other capital stock) will have exactly one Right associated with it.

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If the Shares purchasable upon exercise of Rights are to be adjusted, the Shares purchasable upon exercise of each Right after such adjustment will be the Shares that a holder of the Shares purchasable upon exercise of one Right immediately prior to such dividend, subdivision, change, combination or issuance would hold thereafter as a result thereof. If after the Record Time and prior to the Expiration Time the Company shall issue any shares of capital stock other than Common Shares in a transaction of a type described in paragraphs 2.3(a)(i) to (iv), shares of such capital stock shall be treated herein as nearly equivalent to Common Shares as may be practicable and appropriate under the circumstances and the Company and the Rights Agent agree to amend this Agreement in order to effect such treatment, and will not consolidate with, amalgamate with or into or enter into a statutory arrangement with, any other Person unless such Person agrees to be bound by the terms of an amendment effecting such treatment.

In the event the Company shall at any time after the Record Time and prior to the Separation Time issue any Common Shares otherwise than in a transaction referred to in the preceding paragraph, each such Common Share so issued shall automatically have one new Right associated with it, which Right shall be evidenced by the Certificate representing such Share.

(b) In the event the Company shall at any time after the Record Time and prior to the Separation Time fix a record date for the making of a distribution to all holders of Common Shares of rights, options, or warrants entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Shares (or securities convertible into or exchangeable for or carrying a right to purchase or subscribe for Common Shares) at a price per Common Share (or, if a security convertible into or exchangeable for or carrying a right to purchase or subscribe for Common Shares, having a conversion, exchange or exercise price (including the price required to be paid to purchase such convertible or exchangeable security or right per share)) less than the Market Price per Common Share on such record date, the Exercise Price shall be adjusted. The Exercise Price in effect after such record date will equal the Exercise Price in effect immediately prior to such record date multiplied by a fraction, of which the numerator shall be the number of Common Shares outstanding on such record date plus the number of Common Shares which the aggregate offering price of the total number of Common Shares so to be offered (and/or the aggregate initial conversion, exchange or exercise price of the convertible or exchangeable securities or rights so to be offered (including the price required to be paid to purchase such convertible or exchangeable securities or rights)) would purchase at such Market Price and of which the denominator shall be the number of Common Shares outstanding on such record date plus the number of additional Common Shares to be offered for subscription or purchase (or into which the convertible or exchangeable securities or rights so to be offered are initially convertible, exchangeable or exercisable). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in

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a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. For purposes of this Agreement, the granting of the right to purchase Common Shares (whether from treasury shares or otherwise) pursuant to any dividend or interest reinvestment plan and/or any Common Share purchase plan providing for the reinvestment of dividends or interest payable on securities of the Company and/or the investment of periodic optional payments and/or employee benefit or similar plans (so long as such right to purchase is in no case evidenced by the delivery of rights or warrants) shall not be deemed to constitute an issue of rights, options or warrants by the Company; provided, however, that, in the case of any dividend or interest reinvestment plan, the right to purchase Common Shares is at a price per share of not less than 90 percent of the current market price per Common Share (determined as provided in such plans) of the Common Shares. Such adjustment shall be made successively whenever such a record date is fixed and, in the event that such rights, options or warrants are not so issued, the Exercise Price in respect of the Rights shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

(c) In the event the Company shall at any time after the Record Time and prior to the Separation Time fix a record date for the making of a distribution to all holders of Common Shares (including without limitation any distribution made in connection with a merger in which the Company is the continuing company) of evidences of indebtedness or assets (other than a Regular Periodic Cash Dividend or a dividend paid in Common Shares) or rights, options or warrants entitling them to subscribe for or purchase Common Shares (or Convertible Securities in respect of Common Shares) at a price per Common Share (or, in the case of a Convertible Security in respect of Common Shares having a conversion or exercise price per share (including the price required to be paid to purchase such Convertible Security) less than 90% of the Market Price per Common Share on such record date (excluding those referred to in subsection 2.3(b)), the Exercise Price shall be adjusted. The Exercise Price in effect after such record date will equal the Exercise Price in effect immediately prior to such record date less the fair market value as shall be determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights, of the portion of the assets, evidences of indebtedness, rights or warrants so to be distributed applicable to the securities purchaseable upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed and, in the event that such distribution is not so made, the Exercise Price in respect of the Rights shall be adjusted to be the Exercise Price in respect of the Rights which would have been in effect if such record date had not been fixed.

(d) Each adjustment made pursuant to this Section 2.3 shall be made as of:

(i) the payment or effective date for the applicable dividend, subdivision, consolidation, change, combination or issuance, in the case of an adjustment made pursuant to subsection 2.3(a) herein; and

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(ii) the record date for the applicable dividend or distribution, in the case of an adjustment made pursuant to subsections 2.3(b) or (c) herein.

Any adjustment pursuant to subsections 2.3(a), (b), (c) and (e) hereof shall be made successively whenever an event referred to herein shall occur, subject to the other subsections of this Section 2.3.

(e) In the event the Company shall at any time after the Record Time and prior to the Separation Time issue any Shares (other than Common Shares), or rights, options or warrants to subscribe for or purchase any such shares, or securities convertible into or exchangeable for any such shares, in a transaction referred to in paragraphs 2.3(a)(i) or (iv) above, if the Board of Directors of the Company acting in good faith determines that the adjustments contemplated by subsections 2.3(a), (b), and (c) above in connection with such transaction will not appropriately protect the interests of the holders of Rights, the Board of Directors of the Company may determine what other adjustments to the Exercise Price, number of Rights and/or securities purchaseable upon exercise of Rights would be appropriate and, notwithstanding subsections 2.3(a), (b), and (c) above, such adjustments, rather than the adjustments contemplated by subsections 2.3(a), (b), and (c) above, shall be made with the prior approval of the holders of shares in accordance with Section 5.4. The Company and the Rights Agent shall amend this Agreement as appropriate to provide for such adjustments.

(f) Notwithstanding anything herein to the contrary, no adjustment in an Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such Exercise Price; provided, however, that any adjustments which by reason of this subsection 2.3(f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. Each adjustment to the Exercise Price made pursuant to this Section 2.3 shall be calculated to the nearest cent or the nearest ten-thousandth of a Common Share or other Share as the case may be. Whenever an adjustment to the Exercise Price is made pursuant to this Section 2.3, the Company shall:

(i) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment; and

(ii) promptly file with the Rights Agent and with each transfer agent for the Common Shares a copy of such certificate and a brief summary thereof to each holder of Rights.

(g) Irrespective of any adjustment or change in an Exercise Price or the number of securities purchaseable upon exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the relevant Exercise Price per Share and the number of securities so purchaseable which were expressed in the initial Rights Certificates issued hereunder.

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(h) If as a result of an adjustment made pursuant to Section 3.1 herein, the holder of any Right thereafter exercised shall become entitled to receive any Shares other than Common Shares, thereafter the number of such other Shares so receivable upon exercise of any Right and the applicable Exercise Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in this Section 2.3, and the provisions of this Agreement with respect to the Common Shares shall apply on like terms to any such other Shares.

(i) Unless the Company shall have exercised its election as provided in subsection 2.3(j), upon each adjustment of an Exercise Price as a result of the calculations made in subsections 2.3(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares (calculated to the nearest one ten-thousandth), obtained by:

(i) multiplying (x) the number of such Shares covered by a Right immediately prior to this adjustment by (y) the relevant Exercise Price in effect immediately prior to such adjustment of the relevant Exercise Price; and

(ii) dividing the product so obtained by the relevant Exercise Price in effect immediately after such adjustment of the relevant Exercise Price.

(j) The Company may elect on or after the date of any adjustment of an Exercise Price to adjust the number of Rights, in lieu of any adjustment in the number of Shares purchaseable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number and kind of Shares for which such Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the relevant Exercise Price in effect immediately prior to adjustment of the relevant Exercise Price by the relevant Exercise Price in effect immediately after adjustment of the relevant Exercise Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the relevant Exercise Price is adjusted or any day thereafter but, if the Rights Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this subsection 2.3(j), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date, Rights Certificates evidencing, subject to Section 5.5, the additional Rights to which such holders shall be entitled as a result of such adjustment or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment,

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and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and may bear, at the option of the Company, the relevant adjusted Exercise Price and shall be registered in the names of holders of record of Rights Certificates on the record date specified in the public announcement.

(k) In any case in which this Section 2.3 shall require that an adjustment in an Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of the number of Shares and other securities of the Company, if any, issuable upon such existence over and above the number of Shares and other securities of the Company, if any, issuable upon such exercise on the basis of the relevant Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional Shares (fractional or otherwise) or other securities upon the occurrence of the event requiring such adjustment.

(l) Notwithstanding anything in this Section 2.3 to the contrary, the Company shall be entitled to make such reductions in each Exercise Price, in addition to those adjustments expressly required by this Section 2.3, as and to the extent that in their good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of Shares, (ii) issuance wholly for cash of any Shares at less than the applicable Market Price, (iii) issuance wholly for cash of any Common Shares or securities that by their terms are convertible into or exchangeable for Shares, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 2.3, hereafter made by the Company to holders of its Shares, shall not be taxable to such shareholders.

(m) Whenever an adjustment to the Exercise Price or a change in the securities purchaseable upon exercise of the Rights is made pursuant to this Section 2.3(m), the Company shall promptly and in any event, where such change or adjustment occurs prior to the Separation Time, not later than the Separation Time (i) file with the Rights Agent and with each transfer agent for the Common Shares a certificate specifying the particulars of such adjustment or change, and (ii) cause notice of the particulars of such adjustment or change to be given to the holders of the Rights. Failure to file such certificate or to cause such notice to be given as aforesaid, or any defect therein, shall not affect the validity of such adjustment or change.

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2.4 Date on which Exercise is Effective

Each person in whose name any certificate for Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Shares represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered (together with a duly completed Election to Exercise) and payment of the Exercise Price for such Rights (and any applicable transfer taxes and other governmental charges payable by the exercising holder hereunder) was made; provided, however, that if the date of such surrender and payment is a date upon which the relevant Share transfer books of the Company are closed, such person shall be deemed to have become the record holder of such Shares on, and such certificate shall be dated, the next succeeding Business Day on which the relevant Share transfer books of the Company are open.

2.5 Execution, Authentication, Delivery and Dating of Rights Certificates

(a) The Rights Certificates shall be executed on behalf of the Company by any one of its directors or officers, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Rights Certificates may be manual or facsimile.

(b) Rights Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper directors or officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and delivery of such Rights Certificates.

(c) Promptly after the Company learns of the Separation Time, the Company will notify the Rights Agent of such Separation Time and will deliver Rights Certificates executed by the Company to the Rights Agent for countersignature, and the Rights Agent shall countersign (manually or by facsimile signature in a manner satisfactory to the Company) and deliver such Rights Certificates to the holders of the Rights pursuant to subsection 2.2(c) hereof. No Rights Certificate shall be valid for any purpose until countersigned by the Rights Agent as aforesaid.

(d) Each Rights Certificate shall be dated the date of countersignature thereof.

2.6 Registration, Registration of Transfer and Exchange

(a) The Company will cause to be kept a register (the “Rights Register”) in which, subject to such reasonable regulations as it may prescribe, the Company will provide for the registration and transfer of Rights. The Rights Agent is hereby appointed “Rights Registrar” for the purpose of maintaining the Rights Register for the Company and registering Rights and transfers of Rights as herein provided. In the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times.

After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate, and subject to the provisions of subsection 2.6(c) below, the Company will execute, and the Rights Agent will countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificates so surrendered.

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(b) All Rights issued upon any registration of transfer or exchange of Rights Certificates shall be valid obligations of the Company, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such registration of transfer or exchange.

(c) Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company or the Rights Agent, as the case may be, duly executed by the holder thereof or such holder’s attorney duly authorized in writing. As a condition to the issuance of any new Rights Certificate under this Section 2.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) in connection therewith.

(d) The Company shall not be required to register the transfer or exchange of any Rights after the Rights have been terminated under Section 5.1 hereof.

2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates

(a) If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, the Company shall execute and the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so surrendered.

(b) If there shall be delivered to the Company and the Rights Agent prior to the Expiration Time:

(i) evidence to their satisfaction of the destruction, loss or theft of any Rights Certificate; and

(ii) such security or indemnity as may be required by them to save each of them and any of the agents harmless,

then, in the absence of notice to the Company or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen.

(c) As a condition to the issuance of any new Rights Certificate under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) in connection therewith.

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(d) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time enforceable by anyone and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Rights duly issued hereunder.

2.8 Persons Deemed Owners

Prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Share certificate) for registration of transfer, the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem and treat the person in whose name such Rights Certificate (or, prior to the Separation Time, such relevant Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever. As used in this Agreement, unless the context otherwise requires, the term “holder” of any Rights shall mean the registered holder of such Rights (or, prior to the Separation Time, the associated Shares).

2.9 Delivery and Cancellation of Certificates

All Rights Certificates surrendered upon exercise or for redemption, registration of transfer or exchange shall, if surrendered to any person other than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent. The Company may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall be promptly cancelled by the Rights Agent. No Rights Certificate shall be countersigned in lieu of or in exchange for any Rights Certificates cancelled as provided in this Section 2.9, except as expressly permitted by this Agreement. The Rights Agent shall destroy all cancelled Rights Certificates and deliver a certificate of destruction to the Company.

2.10 Agreement of Rights Holders

Every holder of Rights by accepting a Right consents and agrees with the Company and the Rights Agent and with every other holder of Rights that:

(a) it will be bound by and subject to the provisions of this Agreement, as amended from time to time in accordance with the terms hereof, in respect of all Rights held;

(b) prior to the Separation Time, each Right will be transferable only together with, and will be transferred by a transfer of, the associated Share;

(c) after the Separation Time, the Rights Certificates shall be transferable only upon the registration of the transfer on the Rights Register as provided herein;

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(d) prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Share certificate) for registration of transfer, the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem and treat the person in whose name the Rights Certificate (or, prior to the Separation Time, the associated Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on such Rights Certificate or the associated Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary;

(e) without the approval of any holder of Rights and upon the sole authority of the Board of Directors of the Company acting in good faith this Agreement may be supplemented or amended from time to time as provided herein;

(f) such holder of Rights has waived its right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided herein); and

(g) that notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or to any other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a government, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation.

2.11 Rights Held by the Company and Subsidiaries

Notwithstanding any other provision of this Agreement, any Rights held by the Company or any of its Subsidiaries shall not be exercisable for so long as they are held by the Company or its Subsidiaries.

ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE

EVENT OF CERTAIN TRANSACTIONS

3.1 Flip-in Event

(a) Subject to subsection 3.1(b), subsections 5.1(b) and 5.1(c) hereof, in the event that prior to the Expiration Time a Flip-in Event shall occur, the Company shall take such action as shall be necessary to ensure and provide, within 10 Business Days of such occurrence or such longer period as may be required to satisfy the requirements of the securities acts or comparable legislation of each of the Provinces and Territories of Canada then, except as provided below:

(i) each Right shall thereafter constitute the right to purchase from the Company upon exercise thereof in accordance with the terms hereof, that number of Common Shares of the Company having an aggregate Market

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Price on the date of consummation or occurrence of such Flip-in Event equal to twice the Exercise Price for an amount in cash equal to the Exercise Price (such right to be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 in the event that after such date of consummation or occurrence an event of a type analogous to any of the events described in Section 2.3 shall have occurred);

(ii) in the event that there are insufficient authorized but unissued Shares to permit each holder of a Right (other than an Acquiring Person or a transferee of the kind described in paragraph 3.1(b)(ii) to purchase from the Company that number of Common Shares per Right provided for in paragraph 3.1(a)(i), then until such time as holders of Common Shares approve an increase in the Company’s authorized capital such that there are sufficient authorized but unissued Common Shares to permit each holder of a Right (other than an Acquiring Person or a transferee of the kind described in paragraph 3.1(b)(ii) to purchase from the Company that number of Common Shares per Right provided for in paragraph 3.1(a)(i), each whole Right shall constitute, effective at the Close of Business on the eighth Trading Day after the Stock Acquisition Date, the right to purchase from the Company, upon exercise thereof in accordance with the terms hereof, that number of Common Shares that is equal to one Common Share multiplied by the Adjustment Factor for an amount in cash equal to the Adjusted Exercise Price (such right to be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 in the event that after the consummation or occurrence or event, an event of a type analogous to any of the events described in Section 2.3 shall have occurred).

(b) Notwithstanding the foregoing, upon the occurrence of any Flip-in Event, any Rights that are or were Beneficially Owned on or after the earlier of the Separation Time or the Stock Acquisition Date by:

(i) an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person of any Associate or Affiliate of an Acquiring Person); or

(ii) a transferee or other successor in title directly or indirectly (a “Transferee”) of Rights held by any Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Affiliate or Associate of an Acquiring Person) where such transferee becomes a transferee concurrently with or subsequent to the Acquiring Person becoming an Acquiring Person becoming such in a transfer that the Board of Directors has determined is part of a plan, arrangement or scheme of an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Associate or Affiliate of an Acquiring Person), that has the purpose or effect of avoiding paragraph 3.1(b)(i);

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shall become void and any holder of such Rights (including Transferees) shall thereafter have no right to exercise such Rights under any provision of this Agreement and shall not have thereafter any other rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise.

(c) Any Rights Certificate that represents Rights Beneficially Owned by a Person described in either paragraphs (i) or (ii) of subsection 3.1(b) or transferred to any nominee of any such Person, and any Rights Certificate issued upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain the following legend:

“The Rights represented by this Rights Certificate were issued to a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person or a Transferee (as such terms are defined in the Rights Agreement) or acting jointly or in concert with any of them. This Rights Certificate and the Rights represented hereby are void or shall become void in the circumstances specified in subsection 3.1(b) of the Rights Agreement.”

provided that the Rights Agent shall not be under any responsibility to ascertain the existence of facts that would require the imposition of such legend by shall be required to impose such legend only if instructed to do so by the Company or if a holder fails to certify upon transfer or exchange in the space provided on the Rights Certificate that such holder is not an Acquiring Person or an Affiliate or Associate thereof or acting jointly or in concert with any of them.

ARTICLE 4 - THE RIGHTS AGENT

4.1 General

(a) The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of Rights in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and co-Rights Agents shall be as the Company may determine. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees

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to indemnify the Rights Agent, its affiliates, their current and former directors, officers, employees and agents for, and to hold them harmless against, any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including without limitation, legal fees and expenses, directly or indirectly arising out of, or in connection with, or in respect of, this Agreement, except where same results from gross negligence, wilful misconduct or bad faith on the part of the Rights Agent, which right to indemnification shall survive the termination of this Agreement.

(b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any certificate for Shares, Rights Certificates, certificate for other securities of the Company, instrument of assignment of transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

(c) The Company shall inform the Rights Agent in a reasonably timely manner of events which may materially affect the administration of this Agreement by the Rights Agent and, at any time upon request, shall provide to the Rights Agent an incumbency certificate certifying the then current officers of the Company; provided that failure to inform the Rights Agent of any such events, or any defect therein shall not affect the validity of any action taken hereunder in relation to such events.

4.2 Merger, Amalgamation or Consolidation or Change of Name of Rights Agent

(a) Any company into which the Rights Agent or any successor Rights Agent may be merged or amalgamated or with which it may be consolidated, or any company resulting from any merger, amalgamation or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any company succeeding to the shareholder or stockholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such company would be eligible for appointment as a successor Rights Agent under the provisions of Section 4.4 hereof. In case at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt the counter signature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will have the full force provided in the Rights Certificates and in this Agreement.

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(b) In case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

4.3 Duties of Rights Agent

The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company, and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

(a) The Rights Agent may retain and consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion and the Rights Agent may also consult with such other experts as the Rights Agent shall consider necessary or appropriate to properly carry out the duties and obligations imposed under this Agreement (at the Company’s expense) and the Rights Agent shall be entitled to act and rely in good faith on the advice of any such expert.

(b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board, the President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

(c) The Rights Agent shall not be liable for any action taken or not taken by the Rights Agent under or in connection with this Agreement, except for losses arising directly and principally from its gross negligence, wilful misconduct or bad faith. Notwithstanding any other provision of this Agreement, and whether such losses or damages are foreseeable or unforeseeable, the Rights Agent shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages.

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(d) The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the certificates for Shares or the Rights Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Company only.

(e) The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Share certificate or Rights Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to subsection 3.1(b) hereof) or any adjustment required under the provisions of Section 2.3 hereof or responsible for the manner, method or amount of any such adjustment or the ascertainment of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt of the certificate contemplated by Section 2.3 describing any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization of any Share to be issued pursuant to this Agreement or any Rights or as to whether any Shares will, when issued, be duly and validly authorized, executed, issued and delivered as fully paid and nonassessable.

(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performance by the Rights Agent of the provisions of this Agreement.

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person believed by the Rights Agent to be the Chairman of the Board, the President, any Vice President, the Secretary or any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such persons for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such person.

(h) The Rights Agent and any shareholder or stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in Shares, Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

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(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised by the Rights Agent in the selection and continued employment thereof.

4.4 Change of Rights Agent

The Rights Agent may resign and be discharged from its duties under this Agreement upon 90 days’ notice (or such lesser notice as is acceptable to the Company) in writing mailed to the Company and to each transfer agent of Shares by registered or certified mail in accordance with Section 5.9. The Company may remove the Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent and to each transfer agent of the Shares by registered or certified mail, and to the holders of the Rights in accordance with Section 5.9. If the Rights Agent should resign or be removed or otherwise become incapable of acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of any Rights (which holder shall, with such notice, submit such holder’s Rights Certificate for inspection by the Company), then the holder of any Rights may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a company incorporated under the laws of Canada or a province thereof authorized to carry on the business of a trust company in the Province of British Columbia. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Shares, and mail a notice thereof in writing to the holders of the Rights in accordance with Section 5.9. Failure to give any notice provided for in this Section 4.4, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of any successor Rights Agent, as the case may be.

4.5 Compliance with Money Laundering Legislation

The Rights Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Rights Agent reasonably determines that such an act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Rights Agent reasonably determine at any time that its acting under this Agreement has resulted in it being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days’ written notice to the

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Company, provided: (i) that the Rights Agent’s written notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances are rectified to the Rights Agent’s satisfaction within such 10-day period, then such resignation shall not be effective.

4.6 Privacy Provision

The parties acknowledge that federal and/or provincial legislation that addresses the protection of individual’s personal information (collectively, “Privacy Laws”) applies to obligations and activities under this Agreement. Despite any other provision of this Agreement, neither party will take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws. The Company will, prior to transferring or causing to be transferred personal information to the Rights Agent, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or will have determined that such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws. The Rights Agent will use commercially reasonable efforts to ensure that its services hereunder comply with Privacy Laws.

ARTICLE 5 - MISCELLANEOUS

5.1 Redemption and Waiver

(a) The Board of Directors acting in good faith may, at its option, at any time prior to the Separation Time elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 herein if an event of the type analogous to any of the events described in Section 2.3 herein shall have occurred (such redemption price being herein referred to as the “Redemption Price”). The redemption of the Rights by the Board of Directors may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish.

(b) The Board of Directors may, until the expiration of 10 Business Days following the occurrence of a Flip-in Event, upon written notice delivered to the Rights Agent, waive the application of Section 3.1 to any particular Flip-in Event.

(c) Notwithstanding the provisions of subsection 5.1(b) herein, the Board of Directors may waive the application of Section 3.1 herein to any particular Flip-in Event, provided that both of the following conditions are satisfied:

(i) the Board of Directors has determined that the Acquiring Person became an Acquiring Person by inadvertence and without any intent or knowledge that he would become an Acquiring Person; and

(ii) such Acquiring Person has reduced its Beneficial Ownership of Voting Shares such that at the time of waiver pursuant to this subsection 5.1(c) herein it is no longer an Acquiring Person;

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and, in the event of any such waiver, for the purposes of this Agreement, such Flip-in Event shall be deemed not to have occurred as a result of such Person having inadvertently become an acquiring Person.

(d) The Board of Directors shall, without further formality, be deemed to have elected to redeem the Rights at the Redemption Price on the date of expiry of a Permitted Bid or a Competing Permitted Bid, provided that the Offeror takes up and pays for the Voting Shares pursuant to the terms and conditions of the Permitted Bid or Competing Permitted Bid.

(e) If the Board of Directors elects or is deemed to have elected to redeem the Rights, the right to exercise the Rights will thereupon, without further action and without notice, terminate and the only right thereafter of the holders of Rights, as such, shall be to receive the Redemption Price.

(f) Within 10 days after the Board of Directors has elected or been deemed to have elected to redeem the Rights, the Company shall give notice of redemption to the holders of the then outstanding Rights by mailing such notice to each such holder at his last address as it appears upon the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the Transfer Agent for the Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. The Company may not redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 5.1, and other than in connection with the purchase of Shares prior to the Separation Time.

5.2 Expiration

No Person shall have any rights pursuant to this Agreement or in respect of any Right after the Expiration Time, except the Rights Agent as specified in subsection 4.1(a) herein.

5.3 Issuance of New Rights Certificates

Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or change in the number or kind or class of Shares purchasable upon exercise of Rights made in accordance with the provisions of this Agreement.

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5.4 Supplements and Amendments

Subject in each case to the Company having obtained the prior consent of applicable stock exchanges, the Company may from time to time supplement or amend this Agreement as follows:

(a) to make any changes or amendments required hereunder or otherwise which the Board of Directors acting in good faith may deem necessary or desirable, including without limitation amend the Exercise Price, provided that no such supplement or amendment made on or after the Stock Acquisition Date shall materially adversely affect the interest of the holders of Rights generally and provided further that no such supplement or amendment shall be made to the provisions of Article 4 except with the written concurrence of the Rights Agent to such supplement or amendment; or

(b) in order to cure any ambiguity or to correct or supplement any provision contained herein which may be inconsistent with any other provision herein or be otherwise defective, provided the no such amendment or supplement shall be made to the provisions of Article 4 except with the written concurrence of the Rights Agent to such amendment or supplement.

5.5 Fractional Rights and Fractional Shares

(a) The Company shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights. After the Separation Time there shall be paid to the registered holders of the Rights Certificates with regard to which fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the Market Price of a whole Right in lieu of such Fractional Rights.

(b) The Company shall not be required to issue fractional Shares upon exercise of the Rights or to distribute certificates which evidence fractional Shares. In lieu of issuing fractional Shares, the Company shall pay to the registered holder of Rights Certificates at the time such Rights are exercised as herein provided, an amount in cash equal to the same fraction of the Market Price of one whole Share.

5.6 Rights of Action

Subject to the terms of this Agreement, all rights of action in respect to this Agreement, other than rights of action vested solely in the Rights Agent, are vested in the respective holders of the Rights and any holder of any Rights, without the consent of the Rights Agent or of the holder of any other Rights, may, on such holder’s own behalf and for such holder’s own benefit and the benefit of other holders of Rights, as the case may be, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of such holder’s right to exercise such holder’s Rights, or Rights to which it is entitled, in the manner provided in this Agreement, and in such holder’s Rights Certificate. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.

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5.7 Holder of Rights Not Deemed a Shareholder

No holder, as such, of any Right or Rights Certificate, shall be entitled to vote, receive dividends or be deemed for any purpose the holder of Shares or any other securities which may at any time be issuable on the exercise of Rights, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Right or Rights Certificate, as such, any of the rights of a shareholder of the Company or any right to vote at any meeting of shareholders of the Company whether for the election of directors or otherwise or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as expressly provided herein), or to receive dividends or subscription rights or otherwise, until such Rights, or Rights to which such holder is entitled, shall have been exercised in accordance with the provisions hereof.

5.8 Notice of Proposed Actions

In case the Company shall propose after the Separation Time and prior to the Expiration Time:

(a) to effect or permit (in cases where the Company’s permission is required) any Flip-in Event; or

(b) to effect the liquidation, dissolution or winding up of the Company or the sale of all or substantially all of the Company’s assets;

then, in each such case, the Company shall give to each holder of a Right, in accordance with Section 5.9 herein, a notice of such proposed action, which shall specify the date on which such Flip-in Event, liquidation, dissolution, or winding up is to take place, and such notice shall be so given at least 20 Business Days prior to the date of the taking of such proposed action by the Company.

5.9 Notices

Any Notice or other communication authorized or required by this Agreement to be given or made by the Rights Agent or by the holder of any Rights to or on the Company shall be delivered, telecopied or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

Med BioGene Inc.

#300 - 2386 East Mall

Gerald McGavin Building

Vancouver, British Columbia

V6T 1Z3

Attention: Chief Executive Officer

Fax: (604) 827-5120

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Any notice or other communication authorized or required by this Agreement to be given or made by the Company or by the holder of any Rights to or on the Rights Agent shall be delivered, telecopied or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

Computershare Investor Services Inc.

510 Burrard Street

Vancouver, British Columbia

V6C 3B9

Attention: Manager, Client Services

Fax: (604) 661-9401

Any Notices or other communication authorized or required by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Rights, shall be delivered or sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as it appears upon the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the Company for the Common Shares.

Any notice which is delivered or telecopied herewith shall be deemed to have been given and received on the business day next following the date of delivery or telecopying, as the case may be. Any notice mailed as aforesaid shall be deemed to have been given and received on the third business day following the date it is posted, provided that if between the time of mailing and actual receipt of the notice there shall be mail strike, slow-down or other labour dispute which might affect delivery of the notice by mail, then the notice shall be effective only when actually delivered. Each of the Company and the Rights Agent may from time to time change its address for notice by notice to the other given in the manner aforesaid.

5.10 Costs of Enforcement

The Company agrees that if the Company or any other Person the securities of which are purchasable upon exercise of Rights fails to fulfil any of its obligations pursuant to this Agreement, then the Company or such Person will reimburse the holder of any Rights for the costs and expenses (including legal fees) incurred by such holder in actions to enforce its rights pursuant to any Rights or this Agreement.

5.11 Successors

All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and enure to the benefit of their respective successors and assigns hereunder.

5.12 Benefits of this Agreement

Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the holders of the Rights any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the holders of the Rights.

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5.13 Governing Law

This Agreement and each Right issued hereunder shall be deemed to be a contract made under the laws of the Province of British Columbia and for all purposes shall be governed by and construed in accordance with the laws of British Columbia applicable to contracts to be made and performed entirely within British Columbia.

5.14 Counterparts

This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument.

5.15 Severability

If any term or provision hereof or the application thereof to any circumstances shall, in any jurisdiction and to any extent, be invalid or unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions hereof or the application of such term or provision to circumstances other than those as to which it is held invalid or unenforceable.

5.16 Effective Date

This Agreement is effective in accordance with its terms from the date hereof. If this Agreement is not confirmed by resolution passed by a majority of greater than 50% of the votes cast by Independent Shareholders who vote in respect of confirmation of this Agreement at the special meeting of the shareholders of the Company to be held on February 12, 2010, or on such date on which the meeting is adjourned or postponed to, then this Agreement and any then outstanding Rights shall be of no further force and effect from the Close of Business on the date of termination of such meeting.

5.17 Reconfirmation After Five Years

Notwithstanding the confirmation of this Agreement pursuant to Section 5.16 herein, if this Agreement is not reconfirmed by a resolution passed by a majority of greater than 50% of the votes cast by Independent Shareholders who vote in respect of such reconfirmation of this Agreement at a meeting of shareholders to be held not earlier then January 1, 2015 and not later than the date on which the 2015 annual general meeting of shareholders of the Company terminates, this Agreement and all outstanding Rights shall terminate and be void and of no further force and effect on and from the Close of Business on that date which is the earlier of the date of termination of the meeting called to consider the reconfirmation of this Agreement and the date of termination of the 2015 annual general meeting of shareholders of the Company; provided, however, that no Flip-in Event has occurred prior to the date upon which this Agreement would otherwise terminate pursuant to this Section 5.17, which has not been waived pursuant to Section 5.1 hereof.

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5.18 Determinations and Actions by the Board of Directors

(a) The Board of Directors shall have the exclusive power and authority to administer and amend this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to:

(i) interpret the provisions of this Agreement; and

(ii) make all actions, calculations, interpretations and determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not to redeem the Rights or to amend the Agreement in accordance with the terms hereof).

All such actions, calculations, interpretations and determinations (including, for purposes of item (iv) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors, in good faith shall:

(iii) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties; and

(iv) not subject the Board of Directors to any liability to the holders of the Rights.

(b) Nothing contained in this Agreement shall be deemed to be in derogation of the obligation of the Board of Directors to exercise its fiduciary duties. Without limiting the generality of the foregoing, nothing contained herein shall be construed to suggest or imply that the Board of Directors shall not be entitled to recommend that the holders of the Voting Shares reject any Permitted Bid or any Competing Permitted Bid or any Take-Over Bid, or to take any other action (including, without limiting the generality of the foregoing, the commencement, prosecution, defence or settlement of any litigation and the submission of additional or alternative Permitted Bids or Competing Permitted Bids or Take-Over Bids) with respect to any Permitted Bid or any Competing Permitted Bid or any Take-Over Bid or otherwise that the Board of Directors believes is necessary or appropriate in the exercise of its fiduciary duties.

5.19 Declaration as to Non-Canadian Holders

If in the opinion of the Board of Directors (who may rely upon the advice of counsel) any action or event contemplated by this Agreement would require compliance with the securities laws or comparable legislation of a jurisdiction outside Canada, the Board of Directors acting in good faith may take such actions as it may deem appropriate to ensure that such compliance is not required, including without limitation establishing procedures for the issuance

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to a Canadian resident trust company registered under the trust company legislation of Canada or any province thereof or a portfolio manager registered under the securities legislation of one or more provinces of Canada (herein called a “Fiduciary”) of Rights or securities issuable on exercise of Rights, the holding thereof in trust for the Persons entitled thereto (but reserving to the Fiduciary or to the Fiduciary and the Company, as the Company may determine, absolute instrument discretion with respect thereto) and the sale thereof and remittance of the proceeds of such sale, if any, to the Persons entitled thereto. In no event shall the Company or the Rights Agent be required to issue or deliver Rights or securities issuable on exercise of Rights to Persons who are citizens, residents or nationals of any jurisdiction other than Canada and any province or territory thereof in which such issue or delivery would be unlawful without registration of the relevant Persons or securities for such purposes.

5.20 Successor Companies

The Company shall not consummate or permit or suffer to occur any consolidation, amalgamation, merger or transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation (the “Successor Company”) unless the Successor Company resulting from such consolidation, amalgamation, merger or transfer (if not the Company) shall expressly assume, by supplemental agreement in form satisfactory to the Rights Agent and executed and delivered to the Rights Agent, the due and punctual performance and observance of each and every covenant and condition of this Agreement to be performed and observed by the Company.

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5.21 Time of Essence

Time shall be of the essence of this Agreement.

WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

MED BIOGENE INC.		COMPUTERSHARE INVESTOR SERVICES INC.
Per:	/S/ ERINN BROSHKO	Per:	/S/ JUNE GLOVER
	Authorized Signatory		Authorized Signatory
		Per:	/S/ BRIAN KIM
			Authorized Signatory

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EXHIBIT A

(Form of Rights Certificate)

Certificate No.                                                                                                                                    Rights

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID WITHOUT ANY FURTHER ACTION.

Rights Certificate

This certifies that ___________________________, or registered assigns, is the registered holder of the number of Rights set forth above, each of which entitles the registered holder thereof, subject to the terms, provisions and conditions of the Shareholder Rights Plan Agreement dated as of January 15, 2010, as such may from time to time be amended, restated, varied or replaced (the “Rights Agreement”) between Med BioGene Inc., a company amalgamated under the British Columbia Business Corporations Act (the “Company”) and Computershare Investor Services Inc., a trust company incorporated under the laws of Canada, as Rights Agent (the “Rights Agent”) which term shall include any successor Rights Agent under the Rights Agreement, to purchase from the Company at any time after the Separation Time (as such term is defined in the Rights Agreement) and prior to the Expiration Time (as such term is defined in the Rights Agreement), one fully paid common share of the Company (a “Common Share”) at the Exercise Price referred to below, upon presentation and surrender of this Rights Certificate with the Form of Election to Exercise duly executed and submitted to the Rights Agent at its principal office in any of the cities of Vancouver and Toronto. The Exercise Price shall initially be US$100 per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement. The number of Common Shares which may be purchased for the Exercise Price is subject to adjustment as set forth in the Rights Agreement.

This Rights Certificate is subject to all the terms, provisions and conditions of the Rights Agreement which terms and provisions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the registered office of the Company and are available upon written request.

This Rights Certificate, with or without other Rights Certificates, upon surrender at any of the offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificate of like tenor and date evidencing an aggregate number of Rights equal to the aggregate number of Rights evidenced by the Rights Certificate or

Rights Certificates surrendered. If this Rights Certificate is exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificate to the number of whole Rights not exercised. Any exercise of the Rights is subject to completion of the Form of Election to Exercise attached as Exhibit 1 hereto. Any assignment of Rights is subject to completion of the Form of Assignment attached as Exhibit 2 hereto.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at a redemption price of $0.001 per Right, subject to adjustment in certain events, under certain circumstances at its option.

No fractional Common Shares will be issued upon the exercise of any Right or Rights evidenced hereby nor will Rights Certificates be issued for less than one whole Right. After the Separation Time, in lieu of issuing fractional Rights a cash payment will be made as provided in the Rights Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Common Shares or of any other securities which may at any time be issuable upon the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the Rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

This Rights Certificate is not valid or obligatory for any purpose until it has been countersigned by the Rights Agent.

IN WITNESS the facsimile signature of the proper officers of the Company and its seal.

Date:
ATTEST:
	By:
Secretary

Countersigned: (By Rights Agent)
By
	Authorized Signature

EXHIBIT 1

FORM OF ELECTION TO EXERCISE

(To be attached to each Rights Certificate)

To:

The undersigned hereby irrevocably elects to exercise ______________ whole Rights represented by the attached Rights Certificate to purchase the Common Shares issuable upon the exercise of such Rights and requests that certificates for such shares be issued in the name of:

Name: 

Street: 

City, Province & Postal Code: 

Social Insurance Number or

other taxpayer identification number: 

If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, the undersigned requests that a new Rights Certificate for the balance of such Rights be issued in the name of and delivered to:

Name: 

Street: 

City, Province & Postal Code: 

Social Insurance Number or

other taxpayer identification number: 

Dated:
	Signature
Signature Guaranteed:	(The signature on this form must correspond with the name as recorded on the certificate(s) in every particular, without alteration or enlargement or any change whatsoever)

Signature must be guaranteed by a Canadian chartered bank, a member firm of a recognized stock exchange in Canada, a member of a registered national securities exchange in the United States, or a member of the Securities Transfer Association Medallion (STAMP) Program.

(To be completed if true)

The undersigned represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not, and, to the best of the knowledge of the undersigned, never have been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or a person “acting jointly or in concert” with an Acquiring Person or an Affiliate or Associate thereof. Capitalized terms and “acting jointly or in concert” have the meanings set out in the Rights Agreement.

Signature

Notice

If the certification set forth above is not completed, the Company shall deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof. The Company shall not issue Rights Certificates in exchange for a Rights Certificate owned or deemed to have been owned by an Acquiring Person or an Affiliate or Associate thereof or by a Person acting jointly or in concert with an Acquiring Person or an Affiliate or Associate thereof.

EXHIBIT 2

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Rights Certificate)

FOR VALUE RECEIVED 

hereby sells, assigns and transfers unto 

(Please print name and address of transferee)

the Rights represented by this Rights Certificate, together with all right, title and interest therein, and hereby irrevocably constitutes and appoints _______________, as attorney, to transfer the within Rights on the books of the within-named Company, with full power of substitution.

Dated:
	Signature
Signature Guaranteed:	(The signature on this form must correspond with the name as recorded on the certificate(s) in every particular, without alteration or enlargement or any change whatsoever)

Signature must be guaranteed by a Canadian chartered bank, a member firm of a recognized stock exchange in Canada, a member of a registered national securities exchange in the United States, or a member of the Securities Transfer Association Medallion (STAMP) Program.

(To be completed if true)

The undersigned represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not, and, to the best of the knowledge of the undersigned, never have been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or a person “acting jointly or in concert” with an Acquiring Person or an Affiliate or Associate thereof. Capitalized terms and “acting jointly or in concert” have the meanings set out in the Rights Agreement.

Signature

Notice

If the certification set forth above is not completed, the Company shall deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof. The Company shall not issue Rights Certificates in exchange for a Rights Certificate owned or deemed to have been owned by an Acquiring Person or an Affiliate or Associate thereof or by a Person acting jointly or in concert with an Acquiring Person or an Affiliate or Associate thereof.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the reference to our firm under the caption “Experts” in the registration statement on Amendment No. 1 to Form F-1 of Med BioGene Inc. (the “Registrant”) and the use of our report dated February 9, 2010 relating to the consolidated balance sheets of the Registrant as at December 31, 2009, 2008 and 2007 and the consolidated statements of operations, comprehensive loss and deficit, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2009.

/S/ PRICEWATERHOUSECOOPERS LLP

Chartered Accountants

Vancouver, British Columbia, Canada

February 16, 2010