6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the Month of April, 2010

Commission File Number 1-32001

Lorus Therapeutics Inc.

(Translation of registrant’s name into English)

2 Meridian Road, Toronto, Ontario M9W 4Z7

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x  Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨  No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-_______________.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of  1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Lorus Therapeutics Inc.
Date: April 14, 2010	By:	/s/ “Elizabeth Williams”
		Elizabeth Williams
		Director of Finance and Controller

EXHIBIT INDEX

99.1	News Release dated April 14, 2010 - Lorus Therapeutics Reports Third Quarter Results for Fiscal Year 2010
99.2	Q3 Interim Financial Statements
99.3	Q3 Management Discussion and Analysis
99.4	Supplementary Information
99.5	CEO/CFO Certificates

EX-99.1

Exhibit 99.1

NEWS RELEASE

Lorus Therapeutics Reports Third Quarter Results for Fiscal Year 2010

TORONTO, CANADA - April 14, 2010 - Lorus Therapeutics Inc. (the “Company” or “Lorus”), a biopharmaceutical company specializing in the research and development of pharmaceutical products and technologies for the management of cancer, today reported financial results for the three and nine months ended February 28, 2010. Unless specified otherwise, all amounts are in Canadian dollars.

Q3 2010 HIGHLIGHTS

Corporate Highlights

• April 6, 2010, the Company filed a Registration Statement on Form F-1 with the United States Securities and Exchange Commission for an offering of up to US$17.5 million of units in the United States.

Drug Development Highlights

• April 12, 2010, the Company announced successful production of first clinical batch of anticancer drug LOR-253

• March 10, 2010, the Company announced allowance of a patent on its small molecule program.

• February 24, 2010, the Company announced a publication demonstrating antitumor efficacy of Interleukin 17E.

FINANCIAL RESULTS

The Company’s net loss for the three months ended February 28, 2010 decreased to $1.3 ($nil per share) million compared to $2.5 million ($0.01 per share) in the same period in the prior year.  The Company had net earnings of $7.2 million ($0.03 per share) for the nine months ended February 28, 2010 compared to a net loss of $7.0 million ($0.03 per share) during the same period in the prior year. The year-to-date net earnings are primarily a result of the $11.0 million gain on sale recognized on the repurchase and extinguishment of the Company’s convertible debentures in the first quarter of fiscal 2010.

We utilized cash of $1.8 million in our operating activities in the three-month period ended February 28, 2010 compared with $1.8 million during the same period in fiscal 2009.   For the nine months ended February 28, 2010 the Company utilized cash of $3.5 million compared with $5.7 million in the same period last year.  Today, the Company secured a loan of $1 million from Trapeze Capital Corp., an entity in which Herbert Abramson, one of our directors, is a director and officer.  The loan is unsecured, has a six month term, bears interest at the annual rate of 10% and is intended as interim financing.

At February 28, 2010, the Company had cash, cash equivalents and short-term investments of $1.1 million compared to $5.9 million at May 31, 2009.

1

Research and development expenses totaled $718 thousand in the three-month period ended February 28, 2010 compared to $1.1 million during the same period in the prior year and decreased to $1.9 million from $3.1 million in the nine-month period ended February 28, 2010 as compared to the same period in fiscal 2009.

The decrease in research and development expenditures during the nine-month period ended February 28, 2010 compared to the same period in the prior year of $1.1 million is primarily a result of the cost of toxicity studies for small molecule conducted and completed in fiscal 2009.   No similar costs were incurred in the current year.  In addition, we reduced overall, non-critical research and development costs in response to the current cash position.

General and administrative expenses totaled $515 thousand in the three-month period ended February 28, 2010 compared to $775 thousand in same period in the prior year.  For the nine-month period ended February 28, 2010, general and administrative expenses were $1.8 million compared with $2.4 million in the same period in the prior year.

The decrease in general and administrative costs for the three and nine-month periods ended February 28, 2010 is the result of reduced personnel and legal and accounting costs in comparison with the prior year.

Management has forecasted that the Company’s current level of cash and cash equivalents and short-term investments will not be sufficient to execute its current planned expenditures for the next twelve months without further investment.  The Company continues to pursue additional funding and partnership opportunities to execute its planned expenditures in the future.

Lorus Therapeutics Inc.
Interim Consolidated Statements of Earnings (Loss) (unaudited)
	Three			Three			Nine			Nine
(amounts in 000's except for per common share data)	months ended			months ended			months ended			months ended
(Canadian dollars)	Feb. 28, 2010			Feb. 28, 2009			Feb. 28, 2010			Feb. 28, 2009
REVENUE	$	3		$	64		$	131		$	106
EXPENSES
Research and development		718			1,090			1,916			3,056
General and administrative		515			775			1,791			2,442
Stock-based compensation		94			111			110			347
Depreciation and amortization of fixed assets		21			55			64			141
Operating expenses		1,348			2,031			3,881			5,986
Interest expense		-			160			41			578
Accretion in carrying value of convertible debentures		-			407			80			1,175
Interest income		(2	)		(65	)		(16	)		(218	)
Loss from operation for the period		(1,343	)		(2,469	)		(3,855	)		(7,415	)
Gain on repurchase of convertible debentures		-			-			11,006			-
Gain on sale of shares		-			-			-			450
Net earnings (loss) and other comprehensive income for the period		(1,343	)		(2,469	)		7,151			(6,965	)
Basic earnings (loss) per common share	$	-		$	(0.01	)	$	0.03		$	( 0.03	)
Weighted average number of common shares outstanding used in the calculation of:(1)
Basic earnings (loss) per share		298,010			253,538			275,232			244,039
Diluted earnings (loss) per share		298,010			253,538			278,377			244,039

(1) During periods of net loss, the calculation of diluted loss per share excludes all common shares potentially issuable upon the exercise of stock options, warrants and the convertible debenture that could dilute basic loss per share, because to do so would be anti-dilutive.

2

About Lorus

Lorus is a biopharmaceutical company focused on the research and development of novel therapeutics in cancer.  Lorus’ goal is to capitalize on its research, preclinical, clinical and regulatory expertise by developing new drug candidates that can be used, either alone, or in combination with other drugs, to successfully manage cancer.  Through its own discovery efforts and an acquisition and in-licensing program, Lorus is building a portfolio of promising anticancer drugs.  Lorus Therapeutics Inc. is listed on the Toronto Stock Exchange under the symbol LOR.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Canadian and U.S. securities laws. Such statements include, but are not limited to, statements relating to: financings and corporate reorganizations, the establishment of corporate alliances, the Company’s plans, objectives, expectations and intentions and other statements including words such as “continue”, “expect”, “intend”, “will”, “should”, “would”, “may”, and other similar expressions.  Such statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us are inherently subject to significant business, e conomic, competitive, political and social uncertainties and contingencies.  Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements described in this press release.  Such expressed or implied forward looking statements could include, among others: our ability to continue to operate as a going concern; our ability to obtain the capital required for research and operations; the inherent risks in early stage drug development including demonstrating efficacy; development time/cost and the regulatory approval process; the progress of our clinical trials; our ability to find and enter into agreements with potential partners; our ability to attract and retain key personnel; changing market conditions; and other risks detailed from time-to-time in our ongoing quarterly filings, annual information forms, annual reports and annual filings with Canadian securities regulators and the United States Securi ties and Exchange Commission.

Should one or more of these risks or uncertainties materialize, or should the assumptions set out in the section entitled “Risk Factors” in our filings with Canadian securities regulators and the United States Securities and Exchange Commission underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein.  These forward-looking statements are made as of the date of this press release and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.  We cannot assure you that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.  Investors are cautioned that forward-looking statement s are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.

Lorus Therapeutics Inc.’s recent press releases are available through its website at www.lorusthera.com.   For Lorus' regulatory filings on SEDAR, please go to www.Sedar.com.  For SEDAR filings prior to July 10, 2007 you will find these under the company profile for Global Summit Real Estate Inc. (Old Lorus).

For further information, please contact:

Lorus Therapeutics Inc.

Dr. Saeid Babaei, 1-416-798-1200 ext. 490

ir@lorusthera.com

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EX-99.2

Exhibit 99.2

Lorus Therapeutics Inc.
Consolidated Balance Sheets - Unaudited
(amounts in 000's)	As at			As at
(Canadian dollars)	February 28, 2010			May 31, 2009
ASSETS
Current
Cash and cash equivalents	$	888		$	5,374
Short-term investments (note 7)		244			490
Prepaid expenses and other assets		685			826
		1,817			6,690
Fixed assets		167			231
Goodwill		606			606
		773			837
	$	2,590		$	7,527
LIABILITIES
Current
Accounts payable	$	594		$	299
Accrued liabilities		836			1,131
Secured convertible debentures (note 8)		-			14,448
		1,430			15,878
SHAREHOLDERS' EQUITY
Share capital (note 5)
Common shares		163,881			162,240
Equity portion of secured convertible debentures		-			3,814
Stock options (note 6)		3,679			3,845
Contributed surplus		14,834			10,744
Warrants		1,026			417
Deficit accumulated during development stage		(182,260	)		(189,411	)
		1,160			(8,351	)
	$	2,590		$	7,527
See accompanying notes to the interim consolidated financial statements (unaudited)
Basis of Presentation Note 1

1

Lorus Therapeutics Inc.
Consolidated Statements of Operations, Comprehensive Income and Deficit - Unaudited
													Period
	Three			Three			Nine			Nine			from inception
(amounts in 000's except for per common share data)	months ended			months ended			months ended			months ended			Sept. 5, 1986 to
(Canadian dollars)	Feb. 28, 2010			Feb. 28, 2009			Feb. 28, 2010			Feb. 28, 2009			Feb. 28, 2010
REVENUE	$	3		$	64		$	131		$	106		$	1,171
EXPENSES
Research and development		718			1,090			1,916			3,056			125,913
General and administrative		515			775			1,791			2,442			59,666
Stock-based compensation		94			111			110			347			8,528
Depreciation and amortization of fixed assets		21			55			64			141			9,795
Cost of sales		-			-			-			-			105
Operating expenses		1,348			2,031			3,881			5,986			204,007
Interest expense		-			160			41			578			4,009
Accretion in carrying value of convertible debentures		-			407			80			1,175			4,983
Amortization of deferred financing charges		-			-			-			-			412
Interest income		(2	)		(65	)		(16	)		(218	)		(12,252	)
Loss from operations for the period		(1,343	)		(2,469	)		(3,855	)		(7,415	)		(199,988	)
Gain on repurchase of convertible debentures and transfer of assets (note 8)		-			-			11,006			-			11,006
Gain on sale of shares		-			-			-			450			6,749
Net earnings (loss) and other comprehensive income for the period		(1,343	)		(2,469	)		7,151			(6,965	)		(182,233	)
Deficit, beginning of period	$	(180,917	)	$	(185,047	)		(189,411	)		(180,551	)		-
Change in accounting policy		-			-			-			-			(27	)
Deficit, end of period	$	(182,260	)	$	(187,516	)	$	(182,260	)	$	(187,516	)	$	(182,260	)
Basic and diluted earnings (loss) per common share	$	-		$	(0.01	)	$	0.03		$	(0.03	)
Weighted average number of common shares
outstanding used in the calculation of: (note 5)
Basic earnings (loss) per share		298,010			253,538			275,232			244,039
Diluted earnings (loss) per share		298,010			253,538			278,377			244,039
See accompanying notes to the interim consolidated financial statements (unaudited)

2

Lorus Therapeutics Inc.
Consolidated Statements of Cash Flows - Unaudited
													Period
	Three			Three			Nine			Nine			from inception
(amounts in 000's)	months ended			months ended			months ended			months ended			Sept. 5, 1986 to
(Canadian Dollars)	Feb. 28, 2010			Feb. 28, 2009			Feb. 28, 2010			Feb. 28, 2009			Feb. 28, 2010
Cash flows from operating  activities:
Net earnings (loss) for the period	$	(1,343	)	$	(2,469	)	$	7,151		$	(6,965	)	$	(182,233	)
Less: Gain on repurchase of convertible debentures and transfer of assets (note 8)		-			-			(11,006	)		-			(11,006	)
Gain on sale of shares		-			-			-			(450	)		(6,749	)
Items not involving cash:
Stock-based compensation		94			111			110			347			8,528
Interest on convertible debentures		-			160			15			578			3,983
Accretion in carrying value of convertible debentures		-			407			80			1,175			4,983
Amortization of deferred financing charges		-			-			-			-			412
Depreciation, amortization and write-down of fixed assets and acquired patents and licenses		21			55			64			141			22,356
Other		(1	)		(9	)		(5	)		(9	)		440
Change in non-cash operating working capital		(583	)		(44	)		141			(477	)		(313	)
Cash used in operating activities		(1,812	)		(1,789	)		(3,450	)		(5,660	)		(159,599	)
Cash flows from financing activities:
Issuance of convertible debentures, net of issuance costs		-			-			-			-			12,948
Payment on settlement of convertible debentures,including transaction costs (note 8)		-			-			(3,521	)		-			(3,521	)
Issuance of warrants		-			-			-			417			-
Proceeds on sale of shares, net of arrangement costs (note 1)		-			-			-			450			6,899
Issuance of common shares and warrants, net of issuance costs		-			-			2,235			2,790			151,620
Cash (used in) provided by financing activities		-			-			(1,286	)		3,657			167,946
Cash flows from investing activities:
Maturity (purchase) of marketable securities and other investments, net		250			1,566			250			5,162			(250	)
Business acquisition, net of cash received		-			-			-			-			(539	)
Acquired patents and licenses		-			-			-			-			(715	)
Additions to fixed assets		-			(163	)		-			(167	)		(6,303	)
Proceeds on sale of fixed assets		-			-			-			-			348
Cash (used in) provided by investing activities		250			1,403			250			4,995			(7,459	)
(Decrease) increase in cash and cash equivalents during the period		(1,562	)		(386	)		(4,486	)		2,992			888
Cash and cash equivalents, beginning of period		2,450			6,030			5,374			2,652			-
Cash and cash equivalents, end of period	$	888		$	5,644		$	888		$	5,644		$	888
Supplemental cash flow information
Interest paid in cash	$	-		$	-		$	26		$	-
See accompanying notes to the interim consolidated financial statements (unaudited)

3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

1. Basis of presentation

These unaudited interim consolidated financial statements of Lorus Therapeutics Inc., (the “Company” or “Lorus”) have been prepared by the Company in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all the information required for complete financial statements.  The unaudited interim financial statements follow the same accounting policies and methods of application as the audited annual financial statements for the year ended May 31, 2009.  These statements should be read in conjunction with the audited consolidated financial statements for the year ended May 31, 2009.  These financial statements are prepared based on the assumption that Lorus will continue its operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business which may not be appropriate given the discussion in section (a) “Going concern,” below.

The information presented as at February 28, 2010 and February 28, 2009 reflect, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.  Interim results are not necessarily indicative of results for a full year.

a) Going concern

The Company has not earned substantial revenue from its drug candidates and is, therefore, considered to be in the development stage.  The continuation of the Company's research and development activities is dependent upon the Company's ability to successfully fund its cash requirements through a combination of equity financing, debt and payments from strategic partners.  The Company has no current sources of payments from strategic partners.

Management has forecasted that the Company’s current level of cash and cash equivalents and short-term investments will not be sufficient to execute its current planned expenditures for the next twelve months without further investment.  On April 14, 2010, the Company secured a six-month loan amounting to $1 million from a company related to a member of its Board of Directors (See “Subsequent events”).  In addition, on April 6, 2010, the Company filed a Registration Statement on form F-1 with the United States Securities and Exchange Commission (the “SEC”) for an offering of up to US$17,500,000 of units in the United States (see “Subsequent events”). The Company continues to pursue additional funding and partnership opportunities to execute its planned expenditures in the future.  However, there can be no assurance that the capital or partnerships will be available as necessary to meet these continuing expenditures, or if the capital or partnerships are available, that they will be on terms acceptable to the Company.  Further, there can be no assurance that the SEC will cause our Registration Statement to be effective and register the units or that we will be successful in issuing any units. The issuance of common shares by the Company could result in significant dilution in the equity interest of existing shareholders.  The Company has implemented a number of cost conservation strategies including delaying certain non-critical research programs until financing is available.  There can be no assurance that the Company will be able to obtain sufficient financing to meet future operational needs.  As a result, there is a significant doubt as to whether the Company will be able to continue as a going concern and realize its assets and pay its liabilities as they fall due.

The interim consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate.  If the going concern basis were not appropriate for these financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenue and expenses and the balance sheet classifications used.

b) Reorganization

On July 10, 2007 (the “Arrangement Date”), the Company (or “New Lorus”) completed a plan of arrangement and corporate reorganization with, among others, 4325231 Canada Inc., formerly Lorus Therapeutics Inc. (“Old Lorus”), 6707157 Canada Inc. and Pinnacle International Lands, Inc (the “Arrangement”).  As a result of the plan of arrangement and reorganization, among other things, each common share of Old Lorus was exchanged for one common share of the Company and the assets (excluding certain future tax attributes and related valuation allowance) and liabilities of Old Lorus (including all of the shares of its subsidiaries held by it) were transferred, directly or indirectly, to the Company and/or its subsidiaries.  The Company continued the business of Old Lorus after the Arrangement Date with the same officers and employees and continued to be governed by the same directors as Old Lorus prior to the Arrangement Date.  Therefore, the Company’s operations have been accounted for on a continuity of interest basis and accordingly, the consolidated financial statement information included in these financial statements reflect that of the Company as if it had always carried on the business formerly carried on by Old Lorus.  Following completion of the Arrangement, New Lorus is not related to Old Lorus, which was subsequently renamed Global Summit Real Estate Inc.

Under the Arrangement, the Company has agreed to indemnify Old Lorus and its directors, officers and employees from and against all damages, losses, expenses (including fines and penalties), other third party costs and legal expenses, to which any of them may be subject arising out of any matter occurring:

(i) prior to, at or after the effective time of the Arrangement ("Effective Time") and directly or indirectly relating to any of the assets of Old Lorus transferred to New Lorus pursuant to the Arrangement (including losses for income, sales, excise and other taxes arising in connection with the transfer of any such asset) or conduct of the business prior to the Effective Time;

(ii) prior to, at or after the Effective Time as a result of any and all interests, rights, liabilities and other matters relating to the assets transferred by Old Lorus to New Lorus pursuant to the Arrangement; and

4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

(iii) prior to or at the Effective Time and directly or indirectly relating to, with certain exceptions, any of the activities of Old Lorus or the Arrangement.

In connection with the Arrangement, the Company received cash consideration of approximately $8.5 million, before transaction costs. This amount includes $600 thousand related to the indemnification, above, which was received in July 2008.   The Company has recorded a liability of $150 thousand, which it believes is a reasonable estimate of the fair value of the obligation for the indemnifications provided.  There have been no claims under this indemnification to date.  This amount is included on the balance sheet in Accrued Liabilities as at February 28, 2010.

2. Changes in accounting policy

For the three and nine month periods ended February 28, 2010, the Company adopted the following accounting policies:

(a) Goodwill and Intangible Assets

Effective June 1, 2009, the Company adopted Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Other Intangible Assets ("Section 3062"), and Section 3450, Research and Development Costs which established standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises.  Standards concerning goodwill are unchanged from the standards included in the previous Section 3062.  The adoption of this new section has had no impact on the Company’s interim consolidated financial statements.

(b) Financial Instruments

Effective June 1, 2009, the Company adopted the amendments under Section 3862, Financial Instruments - Disclosures  ("Section 3862"), to include additional disclosure requirements about fair value measurement for financial instruments and liquidity risk disclosures.  These amendments require a three level hierarchy that reflects the significance of the inputs used in making the fair value measurements.  Fair value of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities.  Assets and liabilities in Level 2 include valuations using inputs other than the quoted prices for which all significant inputs are based on observable market data, either directly or indirectly.  Level 3 valuations are based on inputs that are not based on observable market data.  These disclosures are applicable effective the Company’s annual financial statements for the year ended May 31, 2010; therefore, the disclosures required by this new section have had no impact on the Company’s current interim consolidated financial statements.

3. Capital risk management

The Company’s objectives when managing capital are to:

• Maintain its ability to continue as a going concern in order to provide returns to shareholders and benefits to other stakeholders;

• Maintain a flexible capital structure which optimizes the cost of capital at acceptable risk;

• Ensure sufficient cash resources to fund its research and development activity, to pursue partnership and collaboration opportunities and to maintain ongoing operations.

The capital structure of the Company consists of equity comprised of share capital, share purchase warrants, stock options, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances, acquiring or disposing of assets, adjusting the amount of cash and short-term investments balances or by undertaking other activities as deemed appropriate under the specific circumstances.

In October 2009 the Board of Directors approved a short-term loan in the amount of $1.0 million from one of its directors to provide working capital while the Company sought additional capital.  On November 27, 2009, the Company completed a private placement resulting in the issuance of 41.0 million units of the Company at a price of $0.06 per unit.  See note 5 for details. The Company is not subject to externally imposed capital requirements.

While the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended May 31, 2009, the Company has forecasted that its current capital resources are not sufficient to carry out its research and development plans and operations for the next twelve months and continues to investigate various alternatives to obtain sufficient capital to continue its operations (note 1).

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

4. Financial instruments

(a) Financial instruments

The Company has classified its financial instruments as follows:

	As at		As at
(amounts in 000's)	February 28, 2010		May 31, 2009
Financial assets
Cash and cash equivalents, consisting of term deposits, and guaranteed investment certificates, held-for-trading, measured at fair value	$	888	$	5,374
Short-term investments, held-for-trading, recorded at fair value		244		490
Financial liabilities
Accounts payable, measured at amortized cost		594		299
Accrued liabilities, measured at amortized cost		836		1,131
Secured convertible debentures, measured at amortized cost				14,448

 (b) Financial risk management

The Company has exposure to credit risk, liquidity risk and market risk. The Company’s Board of Directors has the overall responsibility for the oversight of these risks and reviews the Company’s policies on an ongoing basis to ensure that these risks are appropriately managed.

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer, partner or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash and cash equivalents and short-term investments. The carrying amount of the financial assets represents the maximum credit exposure.

The Company manages credit risk for its cash and cash equivalents and short-term investments by maintaining minimum standards of R1 low or A low investments and Lorus invests only in highly rated Canadian corporations with debt securities that are traded on active markets and are capable of prompt liquidation.

(ii) 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 considers securing additional funds through equity, debt or partnering transactions. The Company manages its liquidity risk by continuously monitoring forecasts and actual cash flows.  Refer to note 1 for further discussion on the Company’s ability to continue as a going concern.

(iii) Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, and equity prices will affect the Company’s income or the value of its financial instruments.

The Company is subject to interest rate risk on its cash and cash equivalents and short-term investments.  The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to interest rates on the investments, owing to the relative short-term nature of the investments.  In June 2009, the Company extinguished its secured convertible debentures and does not currently have any interest bearing debt.

Financial instruments potentially exposing the Company to foreign exchange risk consist principally of accounts payable and accrued liabilities.  The Company holds minimal amounts of U.S. dollar denominated cash, purchasing on an as needed basis to cover U.S. dollar denominated payments.  At February 28, 2010 U.S. dollar denominated accounts payable and accrued liabilities amounted to $42 thousand.  Assuming all other variables remain constant, a 10% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an increase or decrease in net loss and comprehensive loss of $4 thousand.  The Company does not have any forward exchange contracts to hedge this risk.

The Company does not invest in equity instruments of other corporations.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

5. Share capital

(a) Continuity of common shares and warrants

	Common Shares			Warrants
(amounts in 000's)	Number		Amount	Number		Amount
Balance at May 31, 2008	217,649	$	158,743		$	
Interest payments (b)	2,038		217			
Issuance of 2008 Units (c)	28,539		2,790	14,269		417
Balance at November 30, 2008	248,226		161,750	14,269		417
Interest payments (b)	2,989		201			
Balance at November 30, 2008	251,215		161,951	14,269		417
Interest payments (b)	3,406		160	
Balance at February 28, 2009	254,621		162,111	14,269		417
Interest payments (b)	2,187		129			
Balance at May 31, 2009	256,808		162,240	14,269		417
Interest payments (b)	202		15			
Balance at August 31, 2009	257,010		162,255	14,269		417
Issuance of Units (c)	41,000		1,626	20,500		532
Broker warrants re issuance of Units				2,152		77
Balance at November 30, 2009 and February 28, 2010	298,010	$	163,881	36,921	$	1,026

(b) Interest payments

Interest payments relate to interest payable on the $15.0 million convertible debentures payable at a rate of prime +1% up to June 19, 2009.  Effective that date, the Company repurchased the convertible debentures, see note 8.  Common shares issued in payment of interest were issued at an amount equal to the weighted average trading price of such shares for the ten trading days immediately preceding their issue in respect of each interest payment.

(c) Equity issuances

On November 27, 2009, pursuant to a private placement, the Company issued 41.0 million common shares and 20.5 million common share purchase warrants in exchange for cash consideration of $2.5 million. This amount includes the principal amount of $1.0 million originally received by way of a loan from a director on October 6, 2009 which was applied to subscribe for Units as part of the private placement. In addition, the Company issued 2.2 million brokers’ warrants to purchase an equivalent number of common shares at $0.08 until May 27, 2011.  The total costs associated with the transaction were approximately $302 thousand which included the $77 thousand which represented the fair value of  the brokers’ warrants.  The Company has allocated the net proceeds of the private placement to the common shares and the common share purchase warrants based on their relative fair values.  Based on relative fair values, $1.6 million of the net proceeds was allocated to the common shares and  $532 thousand to the common share purchase warrants.

On June 25, 2008, the Company filed a short-form prospectus for a rights offering to its shareholders.  Under the rights offering, holders of the Company's common shares as of July 9, 2008 (the "Record Date") received one right for each common share held as of the Record Date.  Each four rights entitled the holder thereof to purchase a unit of Lorus ("2008 Unit").  Each 2008 Unit  issued at $0.13 each consisted of one common share of Lorus and one half common share purchase warrant.  Each whole purchase warrant entitles the holder to purchase additional common shares of Lorus at $0.18 until August 7, 2010.  All unexercised rights expired on August 7, 2008.

Pursuant to the rights offering the Company issued 28.5 million common shares and 14.2 million common share purchase warrants in exchange for cash consideration of $3.7 million.  The total costs associated with the transaction were approximately $500 thousand.  The Company has allocated the net proceeds of $3.2 million to the common shares and the common share purchase warrants based on their relative fair values.    Based on relative fair values, $2.8 million of the net proceeds were allocated to the common shares and $417 thousand to the common share purchase warrants.

 (d) Earnings/Loss per share

For the nine months ended February 28, 2010, the determination of diluted earnings per share includes in the calculation all common shares potentially issuable upon the exercise of stock options and share purchase warrants, using the “treasury stock method.”

Diluted earnings per share, using the treasury stock method, assumes outstanding stock options and share purchase warrants are exercised at the beginning of the period, and the Company’s common shares are purchased at the average market price during the period from the funds derived on the exercise of these outstanding options and share purchase warrants.  Stock options and share purchase warrants with a strike price above the average market price for the period were excluded from the calculation of fully diluted earnings per share as to include them would have increased the earnings per share.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

For the three months ended February 28, 2010 as well as the three and nine month periods ended February 28, 2009 the Company has excluded from the calculation of diluted loss per share all common shares potentially issuable upon the exercise of stock options, share purchase warrants and the convertible debenture that could dilute basic loss per share, because to do so would be anti-dilutive.

 (e) Continuity of contributed surplus

	Nine months ended February 28, 2010		Nine months ended February 28, 2009
Balance, Beginning of year	$	10,744	$	9,181
Equity portion of secured convertible debentures (note 8)		3,814	
Forfeiture of stock options		276		1,545
Balance, end of period	$	14,834	$	10,726

As a result of repurchasing the convertible debentures, the Company reallocated the equity portion of the debentures to contributed surplus - see note 8.

6. Stock options

(a) Stock options outstanding

	Nine months ended					Nine months ended
	February 28, 2010					February 28, 2009
	Options (in 000’s)			Weighted average exercise price		Options (in 000’s)			Weighted average exercise price
Outstanding, Beginning of year		16,873		$	0.29		16,438		$	0.45
Granted		5,682			0.08		5,124			0.10
Exercised									
Forfeited		(2,015	)		0.40		(4,572	)		0.67
Outstanding, end of period		20,540		$	0.22		16,990		$	0.29

During the three and nine months ended February 28, 2010, there were no stock options exercised (three and nine months ended February 28, 2009 - nil)

In the three-month period ended February 28, 2010, the Company recognized a stock-based compensation expense of $94 thousand (2008 -$111 thousand).  For the nine-month period ended February 28, 2010 the Company recognized an expense of $110 thousand (2008 - $347 thousand).  The expense represents the amortization applicable to the current periods of the estimated fair value of options granted since June 1, 2002 net of the recovery of expense related to the forfeiture of unvested options in the current periods.

(b) Fair value assumptions

The Company did not grant any stock options during the three-month period ended February 28, 2009.

The following assumptions were used in the Black-Scholes option-pricing model to determine the fair value of stock options granted during the following periods:

	Three months ended  February 28				Nine months ended February 28
	2010			2009	2010		2009
Risk free interest rate		0.3%				0.3%		2.0-4.75%
Expected dividend yield		0%				0%		0%
Expected volatility		206%				178-206%		80%
Expected life of options	5 years				5 years		5 years
Weighted average fair value of options granted in the period	$	0.078	$			0.07	$	0.07

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

(c) Continuity of stock options

	Nine months ended			Nine months ended
(amounts in 000's)	February 28, 2010			February 28, 2009
Balance at beginning of the year		$	3,845	$	4,961
Stock option expense			283		347
Forfeiture of stock options			(449)		(1,545)
Balance, end of period		$	3,679	$	3,763

7. Short term investments, marketable securities and other investments

As at February 28, 2010
(amounts in 000's)	Less than  one year maturities			Greater than one year maturities	Total
Guaranteed investment certificates	$	244	$		$	244

As at May 31, 2009
(amounts in 000's)	Less than  one year maturities		Greater than one year maturities		Total
Guaranteed investment certificates	$	248	$	242	$	490

The Company’s guaranteed Investment certificates totaling $244 thousand at February 28, 2010 (May 31, 2009 - $490 thousand) have been designated as “held-for-trading”, and have been classified as short-term investments on the balance sheet.  These investments are carried at fair value and have maturities varying from one to three months.  The net increase in fair value of these investments for the three months and nine months ended February 28, 2010 amounted to $nil thousand and $3 thousand, respectively, and has been included in the statement of earnings (loss).

At May 31, 2009, the Company’s highly liquid investments with maturities of less than one year are classified as “held-for-trading” investments and are carried at fair value.

8. Convertible debentures

The terms of the secured convertible debentures are described in note 13 to the Company's annual financial statements for the period ended May 31, 2009.  The Company repurchased these debentures, which were originally due on October 6, 2009, on June 19, 2009.

Under the agreement, Lorus purchased all of the convertible debentures from The Erin Mills Investment Corporation (“TEMIC “) for consideration that included a cash payment on close of the transaction of $3.3 million, the assignment of the rights under the license agreement with ZOR Pharmaceuticals Inc, LLC (“ZOR”) certain intellectual property associated with Virulizin and all of Lorus' shares in its wholly owned subsidiary, Pharma Immune, which held an equity interest in ZOR (the "Consideration").  Under the agreement, Lorus is entitled to 50% of any royalties received under the ZOR license agreement and 50% of the value of any transaction completed in territories not covered by the ZOR license agreement.  Lorus also retains a perpetual royalty free license for the animal use of Virulizin.  TEMIC will be fully responsible for all clinical and regulatory costs associated with the commercialization of Virulizin in territories not covered by the ZOR license agreement.  Lorus will assist TEMIC with certain agreed upon services.

For receipt of this Consideration, TEMIC has released all security interest in the assets of Lorus.

As a result of the transaction, the Company recognized a gain on the repurchase of the debentures of $11.0 million reflecting the difference between the fair value of the debentures at the repurchase date, net of transaction costs of approximately $221 thousand, and the cash payment amount of $3.3 million.  In addition, as a result of extinguishing the debentures, $3.8 million, the equity portion of the debentures, was transferred to contributed surplus. The gain on repurchase of the debentures does not result in income taxes payable as the Company has sufficient capital loss and non-capital loss carryforwards to shelter these gains.  Capital loss and non-capital loss carryforwards, and the associated valuation allowance have been reduced accordingly.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and nine months ended February 28, 2010 and 2009

9. Subsequent events

In April 2010, the Company entered into a loan agreement with a company related to a member of its Board of Directors to borrow $1 million.  The loan amount, which was received on April 14, 2010, is unsecured, evidenced by a promissory note and bears interest at the annual rate of 10%. The principal and interest amount are due in six months.  The funds will be used for general working capital purposes.

In April 2010, the Company filed a Registration Statement on Form F-1 (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) for an offering of up to US$17,500,000 of units in the United States.

This registration will allow Lorus to offer and issue units, each unit consisting of one common share and one half of a warrant (a “Warrant”) to purchase common shares (collectively referred to as the “Units”). Each whole Warrant will permit the holder to purchase one common share, at an initial exercise price of 125% of the unit offering price (which will be determined at the time of the offering), and subsequently at a premium to the unit offering price which rises 5% on each anniversary of the closing date, to a maximum exercise price of 145% of the unit offering price on the fourth anniversary of the closing. Lorus may also require the exercise of the Warrants if the closing price of the common shares on the principal market upon which they are traded equals or exceeds 225% of the unit offering price for five consecutive trading days.

The Registration Statement relating to the Units has been filed with the SEC but has not yet become effective. The Units may not be sold, nor may offers to buy be accepted, before the Registration Statement becomes effective. The details of the offering (including the terms of the Units) are subject to change based on market conditions at the time the Registration Statement becomes effective. The offering is subject to regulatory approval, including the approval of the Toronto Stock Exchange.

10

EX-99.3

Exhibit 99.3

MANAGEMENT’S DISCUSSION AND ANALYSIS

April 14, 2010

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This management discussion and analysis may contain forward-looking statements within the meaning of securities laws.  Such statements include, but are not limited to, statements relating to:

• our ability to obtain the substantial capital required to fund research and operations;

• our plans to obtain partners to assist in the further development of our product candidates;

• our expectations with respect to existing and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be made by us or to us in respect of such arrangements;

• our expectations regarding future financings;

• our plans to conduct clinical trials;

• our expectations regarding the progress and the successful and timely completion of the various stages of our drug discovery, pre-clinical and clinical studies and the regulatory approval process;

• our plans, objectives, expectations and intentions; and

• other statements including words such as “anticipate”, “contemplate”, “continue”, “believe”, “plan”, “estimate”, “expect”, “intend”, “will”, “should”, “may”, and other similar expressions.

Such statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others:

• our ability to continue to operate as a going concern;

• our ability to obtain the substantial capital required to fund research and operations;

• our lack of product revenues and history of operating losses;

• our early stage of development, particularly the inherent risks and uncertainties associated with (i) developing new drug candidates generally, (ii) demonstrating the safety and efficacy of these drug candidates in clinical studies in humans, and (iii) obtaining regulatory approval to commercialize these drug candidates;

• the progress of our clinical trials;

• our liability associated with the indemnification of Old Lorus and its directors, officers and employees

• our ability to find and enter into agreements with potential partners;

• our drug candidates require time-consuming and costly preclinical and clinical testing and regulatory approvals before commercialization;

• clinical studies and regulatory approvals of our drug candidates are subject to delays, and may not be completed or granted on expected timetables, if at all, and such delays may increase our costs and could delay our ability to generate revenue;

• the regulatory approval process;

• our ability to attract and retain key personnel;

• our ability to obtain patent protection and protect our intellectual property rights;

• our ability to protect our intellectual property rights and to not infringe on the intellectual property rights of others;

• our ability to comply with applicable governmental regulations and standards;

• development or commercialization of similar products by our competitors, many of which are more established and have greater financial resources than we do;

• commercialization limitations imposed by intellectual property rights owned or controlled by third parties;

• our business is subject to potential product liability and other claims;

• our ability to maintain adequate insurance at acceptable costs;

• further equity financing may substantially dilute the interests of our shareholders;

• changing market conditions; and

• other risks detailed from time-to-time in our ongoing quarterly filings, annual information forms, annual reports and annual filings with Canadian securities regulators and the United States Securities and Exchange Commission, and those which are discussed under the heading “Risk Factors”.

Should one or more of these risks or uncertainties materialize, or should the assumptions set out in the section entitled “Risk Factors” underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein.  These forward-looking statements are made as of the date of this management, discussion and analysis or, in the case of documents incorporated by reference herein, as of the date of such documents, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.  We cannot assure you that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.  Investors are cautioned that forward-looki ng statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.

1

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, Lorus has financed its operations and technology acquisitions primarily from equity and debt financing, the proceeds from the exercise of warrants and stock options, and interest income on funds held for future investment.  The remaining costs associated with the completion of the LOR-2040 Phase I/II clinical trial program with the US National Cancer Institute (“NCI”) will be borne by the NCI.  Lorus has, in the past, undertaken additional LOR-2040 trials and acquired additional quantities of LOR-2040 drug to support ongoing trials and undertaken further development of LOR-2040 at its own cost.    We will continue the development of our small molecule programs from internal resources.

We have not earned substantial revenues from our drug candidates and are therefore considered to be in the development stage.  The continuation of our research and development activities and the commercialization of the targeted therapeutic products are dependent upon our ability to successfully finance and complete our research and development programs through a combination of equity financing and payments from strategic partners.  We have no current sources of payments from strategic partners.

Management has forecasted that the Company’s current level of cash and cash equivalents and short-term investments will not be sufficient to execute its current planned expenditures for the next twelve months without further investment. On April 14, 2010, the Company secured a six-month, $1 million, loan from a company related to a member of its Board of Directors (See “Subsequent events”).  In addition, on April 6, 2010, the Company filed a Registration Statement on form F-1 with the United States Securities and Exchange Commission (the “SEC”), which if made effective may lead to an offering of up to US$17,500,000 of units in the United States (see “Subsequent events”) Management believes that it has sufficient funding, including the proceeds of the loan above, to continue to execu te its planned expenditures without interruption to about July 2010.  The Company continues to pursue additional funding and partnership opportunities to execute its planned expenditures in the future.  However, there can be no assurance that the capital or partnerships will be available as necessary to meet these continuing expenditures, or if the capital or partnerships are available, that they will be on terms acceptable to the Company.  Further, there can be no assurance that the SEC will cause our Registration Statement to be effective and register the units or that we will be successful in issuing any units. The issuance of common shares by the Company could result in significant dilution in the equity interest of existing shareholders.  The Company has implemented a number of cost conservation strategies including delaying certain research programs until financing is available.  There can be no assurance that the Company will be able to obtain sufficie nt financing to meet future operational needs.  As a result, there is a significant doubt as to whether the Company will be able to continue as a going concern and realize its assets and pay its liabilities as they fall due.

The interim consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate.  If the going concern basis were not appropriate for those financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications used.

The following discussion should be read in conjunction with the audited financial statements for the year ended May 31, 2009 and the accompanying notes (the "Financial Statements") contained in the Company’s annual report.  The Financial Statements, and all financial information discussed below, have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”).  All amounts are expressed in Canadian dollars unless otherwise noted.  All comparative figures presented in these consolidated financial statements include those of those of Old Lorus prior to the Arrangement Date (as defined below) and the Company after the Arrangement Date.  References in this Management’s Discussion and Analysis to the “Company”, “Lorus”, “we”, “our”, “us” and similar expressions, unless otherwise stated, refers to Lorus Therapeutics Inc.

OVERVIEW

Lorus is a life sciences company focused on the discovery, research and development of effective anticancer therapies with a high safety profile.  Lorus has worked to establish a diverse anticancer product pipeline, with products in various stages of development ranging from pre-clinical to an advanced Phase II clinical trial.  A growing intellectual property portfolio supports our diverse product pipeline.  Lorus’ pipeline is a combination of internally developed products and products licensed in from other entities at a pre-clinical stage.

We believe that the future of cancer treatment and management lies in drugs that are effective, safe and have minimal side effects, and therefore improve a patient's quality of life.  Many of the cancer drugs currently approved for the treatment and management of cancer are toxic with severe side effects, and we therefore believe that a product development plan based on effective and safe drugs could have broad applications in cancer treatment.  Lorus' strategy is to continue the development of our product pipeline using several therapeutic approaches. Each therapeutic approach is dependent on different technologies, which we believe mitigates the development risks associated with a single technology platform.  We evaluate the merits of each product throughout the clinical trial process and consider comm ercial viability as appropriate.  The most advanced anticancer drugs in our pipeline, each of which flow from different platform technologies, are antisense, small molecules and immunotherapeutics.

Our business model is to take our product candidates through pre-clinical testing and into Phase I and Phase II clinical trials.  It is our intention to then partner or co-develop these product candidates after successful completion of Phase I or II clinical trials.  Lorus will give careful consideration in the selection of partners that can best advance the drug candidates into a pivotal Phase III clinical trial and, upon successful results, commercialization.  Our objective is to receive cash for milestone payments and royalties from such partnerships which will support continued development of our product pipeline.  We assess each product candidate and determine the optimal time to work towards partnering out that product candidate.

Our success is dependent upon several factors, including, maintaining sufficient levels of funding through public and/or private financing, establishing the efficacy and safety of our products in clinical trials and securing strategic partnerships.

2

Our net loss for the three months ended February 28, 2010 decreased to $1.3 million ($nil per share) compared to $2.5 million ($0.01 per share) in the same period in the prior year.  The Company had net earnings of $7.2 million ($0.03 per share) for the nine months ended February 28, 2010 compared to a net loss of $7.0 million ($0.03 per share) during the same period in the prior year.  The year-to-date net earnings are primarily a result of the $11.0 million gain on sale recognized on the extinguishment of its convertible debentures in June 2009.  During the nine months ended February 28, 2009 the Company recorded a gain on sale of shares related to the Arrangement (defined below) of $450 thousand.

We utilized cash of $1.8 million our operating activities in three-month period ended February 28, 2010 compared with $1.8 million during the same period in fiscal 2009.   For the nine months ended February 28, 2010 we utilized cash of $3.5 million compared with $5.7 million in the same period last year.  The decrease in year-to-date cash used in operating activities is primarily a result of a reduced net loss in the period compared to the prior year.  During the three month period ended February 28, 2010, the Company’s change in non-cash working capital primarily as a result of decreased short-term investments and prepaid expense balances compared to the same period in the prior year.

At February 28, 2010, we had cash, cash equivalents and short-term investments of $1.1 million compared to $5.9 million at May 31, 2009.

As a result of the Company's current cash position, management has implemented a series of strategies to reduce costs and is actively pursuing investment and other opportunities aimed at funding its research and development programs.  As part of its cost reduction strategies, management has reduced its research and development costs by limiting non-critical activities and reduced its general and administrative costs by limiting expenditures and reducing its personnel costs, among other things, and will continue to do so until such time as the Company has sufficient capital to support a full development program.

RESULTS OF OPERATIONS

Revenue

Revenues for the three-month period ended February 28, 2010 decreased to $3 thousand compared with revenue of $64 thousand for the same period in the prior year.  For the nine-month period ended February 28, 2010, total revenue increased to $131 thousand from $106 thousand in the same period last year.  This increase in revenue for the nine-months ended February 28, 2010 is related to an increase in milestone revenues associated with the license of Virulizin to ZOR Pharmaceuticals (“ZOR”) as a result of ZOR achieving a financing milestone. This milestone revenue was recognized over the period of a service contract period whereby Lorus agreed to provide consulting services to ZOR.  The milestone revenue was fully recognized by the end of the second quarter of 2010 as the service agreement with ZOR expired in October 2009 resulting in a reduction in revenue during the three-month period ended February 28, 2010 compared to the same period in the prior year.

Research and Development

Research and development expenses totaled $718 thousand in the three-month period ended February 28, 2010 compared to $1.1 million during the same period in the prior year and decreased to $1.9 million from $3.1 million in the nine-month period ended February 28, 2010 as compared to the same period in fiscal 2009.

The decrease in expenditures during the nine-month period ended February 28, 2010 compared to the same period in the prior year of $1.1 million is primarily a result of the cost of toxicity studies for small molecule conducted and completed in fiscal 2009.   No similar costs were incurred in the current year.  In addition, we reduced overall, non-critical research and development costs in response to the current cash position.

General and Administrative

General and administrative expenses totaled $515 thousand in the three-month period ended February 28, 2010 compared to $775 thousand in same period in the prior year.  For the nine-month period ended February 28, 2010, general and administrative expenses were $1.8 million compared with $2.4 million in the same period in the prior year.

The decrease in general and administrative costs for the three and nine-month periods ended February 28, 2010 is the result of reduced personnel and legal and accounting costs in comparison with the prior year.

Stock-Based Compensation

In the three-month period ended February 28, 2010, the Company recognized a stock-based compensation expense of $94 thousand compared with $111 thousand in the same period last year.   In the nine-month period ended February 28, 2010 the Company recognized an expense of $110 thousand compared with $347 thousand for the same period in the prior year.  The reduction in expense in the current year-to-date period is a function of the reduced headcount and share price as well as the recovery related to the forfeiture of unvested options in the second quarter of the current year.

Depreciation and Amortization

Depreciation and amortization expenses decreased to $21 thousand in the three-month period and $64 thousand in the nine-month period ended February 28, 2010 as compared to $55 thousand and $141 thousand in the same periods, respectively, in the prior year.  The decrease in depreciation and amortization expense is the result of reduced capital asset purchases over the past three fiscal years.

Interest Expense

The Company did not incur interest expense during the three-month period ended February 28, 2010 compared with $160 thousand in the same period last year.  For the nine-month period ended February 28, 2010 interest expense was $41 thousand compared with $578 thousand for the same period last year.  Interest expense during the year and in the prior year related primarily to the interest payable at a rate of prime plus 1% on the $15.0 million convertible debentures which were repurchased in June 2009.

3

Accretion in Carrying Value of Secured Convertible Debentures

In the three months ended February 28, 2010, the Company did not recognize any accretion expense as the convertible debentures were repurchased on June 19, 2009.  The year-to-date accretion expense of $80 thousand relates to the period in the current year during which the convertible debentures were outstanding, June 1, 2009 to June 19, 2009.

Interest  Income

Interest income totaled $2 thousand in the three-month period ended February 28, 2010 compared to $65 thousand in the same period last year.  For the nine-month period ended February 28, 2010 interest income totaled $16 thousand compared with $218 thousand in the same period last year.  The decrease in interest income during both the three and nine month periods ended February 28, 2010 is due to a lower average cash and investment balances and significantly lower interest rates available on investments compared to the same periods in the prior year.

Net earning (loss) for the period

Our net loss for the three months ended February 28, 2010 decreased to $1.3 million ($nil per share) compared to $2.5 million in the same period in the prior year.  The Company had net earnings of $7.2 million ($0.03 per share) for the nine months ended February 28, 2010 compared to a loss of $7.0 million ($0.03 per share) during the same period in the prior year. The net earnings are primarily a result of the $11.0 million gain on sale recognized on the extinguishment of the convertible debentures.  During the nine months ended February 28, 2009 the Company recorded a gain on sale of shares related to the Arrangement of $450 thousand.  Costs were lower in the current three and nine-month periods ended February 28, 2010 as a result of reduced research and development activities, the repurchase of the con vertible debentures and the implementation of costs savings strategies in response to the current cash position.  These reductions are partly offset by increased legal costs for patents in the second quarter of fiscal 2010 relating to the assignment of patents to Lorus from GeneSense on the windup of GeneSense into Lorus.

The loss from operations for the three and nine month periods ended February 28, 2010 (before the gain on repurchase of the convertible debentures) decreased by $1.1 million and $3.6 million compared with the same periods in the prior year due primarily to a reduction in interest and accretion expense of $567 thousand and $1.6 million in the current three and nine-month periods ended February 28, 2010, respectively, compared to the same periods in the prior year as a result of repurchasing the convertible debentures in June 2009.  In addition, the Company’s interest revenue was lower by $63 thousand and $202 thousand in the three and nine month periods ended February 28, 2010, respectively, compared to the same periods in the prior year.

In the nine month period ended February 28, 2010, research and development spending decreased by $1.1 million compared to the same period in the prior year as small molecule toxicity studies in fiscal 2009 were completed.   No similar costs were incurred in the current year.

PLAN OF ARRANGEMENT AND CORPORATE REORGANIZATION

On July 10, 2007 (the “Arrangement Date”), the Company (or “New Lorus”) completed a plan of arrangement and corporate reorganization with, among others, 4325231 Canada Inc., formerly Lorus Therapeutics Inc. (“Old Lorus”), 6707157 Canada Inc. and Pinnacle International Lands, Inc (the “Arrangement”).  As a result of the plan of arrangement and reorganization, among other things, each common share of Old Lorus was exchanged for one common share of the Company and the assets (excluding certain future tax attributes and related valuation allowance) and liabilities of Old Lorus (including all of the shares of its subsidiaries held by it) were transferred, directly or indirectly, to the Company and/or its subsidiaries.  The Company continued the business of Old Lorus after the Arrangement Date with the same officers and employees and continued to be governed by the same directors as Old Lorus prior to the Arrangement Date.  Therefore, the Company’s operations have been accounted for on a continuity of interest basis and accordingly, the interim consolidated financial statement information included in this MD&A reflect that of the Company as if it had always carried on the business formerly carried on by Old Lorus.

REGULATORY MATTERS

On October 31, 2008 Lorus voluntarily delisted its common shares from trading on the NYSE Alternext US LLC (formerly the American Stock Exchange or AMEX).  We currently maintain our registration with the Securities Exchange Commission in the United States.

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The selected financial information provided below is derived from the Company’s unaudited quarterly financial statements for each of the last eight quarters.

Research and development expenditures were higher in the previous six of the last seven quarters as compared to the most recent quarter ended February 28, 2010 primarily as a result of increased development activity related to the LOR-2040 and LOR-253 programs for which development during these periods as compared to the current period.  In particular, research and development costs were significantly higher during the quarters ended February 28, 2008 and May 31, 2008 as the Company incurred manufacturing costs associated with production of additional quantities of LOR-2040 to support the ongoing Phase II clinical trial in AML.

General and administrative expenses during the current quarter ended February 28, 2010 were lower than in the previous two quarters as the Company incurred costs related to its annual meeting, business development and financing activities as well as additional patent costs not incurred in these prior quarters.

The Company recognized a gain on the repurchase of its convertible debentures and transfer of assets of $11.0 million in the quarter ended August 31, 2009.   For the quarter ended August 31, 2008 the Company recognized a gain on sale of shares of $450 thousand related to the Arrangement, as discussed above.

(Amounts in 000’s except for per common share data)	Feb 28, 2010			Nov 30, 2009			Aug 31, 2009			May 31, 2009			Feb 28, 2009			Nov. 30, 2008			Aug. 31, 2008			May 31, 2008
Revenue	$	3		$	79		$	49		$	78		$	64		$	39		$	3		$	13
Research and development expense (1)		718			658			540			701			1,090			741			1,225			1,880
General and administrative expense(1)		515			743			533			516			775			873			794			1,142
Net earnings (loss)		(1,343	)		(1,266	)		9,760			(1,895	)		(2,469	)		(2,284	)		(2,212	)		(3,650	)
Basic and diluted(2)
net earnings (loss) per share	$	-		$	(0.01	)	$	0.04		$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Cash used in operating activities	$	(1,812	)	$	(651	)	$	(987	)	$	(1,394	)	$	(1,789	)	$	(2,080	)	$	(1,950	)	$	(2,722	)

(1) Quarterly information prior to August 31, 2009 has been reclassified to conform to the financial statement presentation subsequent to that date.

(2) During periods of net loss, the calculation of diluted loss per share excludes all common shares potentially issuable upon the exercise of stock options, warrants and the convertible debenture that could dilute basic loss per share, because to do so would be anti-dilutive.

CAPITAL RISK MANAGEMENT

The Company’s objectives when managing capital are to:

• Maintain its ability to continue as a going concern in order to provide returns to shareholders and benefits to other stakeholders;

• Maintain a flexible capital structure which optimizes the cost of capital at acceptable risk;

• Ensure sufficient cash resources to fund its research and development activity, to pursue partnership and collaboration opportunities and to maintain ongoing operations.

The capital structure of the Company consists of equity comprised of share capital, share purchase warrants, stock options, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances, acquiring or disposing of assets, adjusting the amount of cash and short-term investments balances or by undertaking other activities as deemed appropriate under the specific circumstances.

While the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended May 31, 2009, the Company has forecasted that its current capital resources are not sufficient to carry out its research and development plans and operations for the next twelve months and continues to investigate various alternatives to obtain sufficient capital to continue its operations.

The Company is not subject to externally imposed capital requirements.

Private placement

On November 27, 2009, the Company completed a private placement resulting in the issuance of 41.0 million units of the Company at a price of $0.06 per unit (“Unit”).  Each Unit consisted of one common share of the Company and a one-half common share purchase warrant. Each whole warrant permits the holder to purchase an additional common share of Lorus at $0.08 until May 27, 2011.

Pursuant to the private placement, the Company issued 41.0 million common shares and 20.5 million common share purchase warrants in exchange for cash consideration of $2.5 million. This amount includes the principal amount of $1.0 million originally received by way of a loan from a director on October 6, 2009 which was applied to subscribe for Units as part of the private placement. In addition, the Company issued 2.2 million brokers’ warrants to purchase an equivalent number of common shares at $0.08 until May 27, 2011.  The total costs associated with the transaction were approximately $302 thousand including $77 thousand which represented the fair value of the brokers’ warrants.  The Company has allocated the net proceeds of the private placement, to the common shares, and the common share purchase warrants based on their relative fair values.  Based on relative fair values, $1.6 million of the net proceeds was allocated to the common shares, $532 thousand to the common share purchase warrants.

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Rights offering

On June 25, 2008, the Company filed a short-form prospectus for a rights offering to its shareholders.   Under the rights offering, holders of the Company's common shares as of July 9, 2008 (the "Record Date") received one right for each common share held as of the Record Date.  Each four rights entitled the holder thereof to purchase a unit of Lorus ("2008 Unit").   Each 2008 Unit issued at $0.13 each consisted of one common share of Lorus and one half common share purchase warrant   Each whole purchase warrant entitles the holder to purchase additional common shares of Lorus at $0.18 until August 7, 2010.  All unexercised rights expired on August 7, 2008.

Pursuant to the rights offering the Company issued 28.5 common shares and 14.3 common share purchase warrants in exchange for cash consideration of $3.7 million.  The total costs associated with the transaction were $500 thousand.  The Company has allocated the net proceeds of $3.2 million received from the issuance of the units to the common shares and the common share purchase warrants based on their relative fair values.  Based on relative fair values, $2.8 million of the net proceeds were allocated to the common shares and $417 thousand to the common share purchase warrants.

Cash Position

At February 28, 2010, Lorus had cash, cash equivalents and short-term investments totaling $1.1 million compared to $5.9 million at May 31, 2009.  The Company invests excess cash in highly rated and liquid debt instruments.  Investment decisions are made in accordance with an established investment policy administered by senior management and overseen by the board of directors.  Working capital (representing primarily cash, cash equivalents, short term investments and other current assets less current liabilities) at February 28, 2010 was $387 million.

As discussed above, management has forecasted that the Company’s current level of cash, cash equivalents and short-term investments is not sufficient to execute its current planned expenditures for the next twelve months without further investment. The Company continues to investigate various options to obtain sufficient capital to continue its operations and has implemented a series of strategies to reduce research, development and overhead expenditures until such time as it can obtain additional capital to fund its operations.

If we are able to secure additional financing, we intend to use these resources to fund our existing drug development programs and develop new programs from our portfolio of preclinical research technologies. The amounts actually expended for research and drug development activities and the timing of such expenditures will depend on many factors, including the ability of the Company to raise additional capital, the progress of the Company's research and drug development programs, the results of preclinical and clinical trials, the timing of regulatory submissions and approvals, the impact of any internally developed, licensed or acquired technologies, our ability to find suitable partnership agreements to assist financially with future development, the impact from technological advances, determinations as to the commercial potential of the Company's compounds and the timing and development status of competitive products.

We do not expect to generate positive cash flow from operations in the next several years due to additional research and development costs, including costs related to drug discovery, preclinical testing, clinical trials, manufacturing costs and operating expenses associated with supporting these activities. Negative cash flow will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or royalty or milestone revenue from any such products exceeds expenses.

Contractual Obligations and Off-Balance Sheet Financing

At February 28, 2010, we had contractual obligations requiring annual payments as follows:

(Amounts in 000’s)	Less than  1 year		1-3 years		Total
Operating leases	$	152	$	35	$	187
Total	$	152	$	35	$	187

In addition, the Company is party to certain licensing agreements that require it to pay a proportion of any fees that it may receive from future revenues or milestone payments. As of February 28, 2010 the Company has not received any amounts related to these licensing agreements and therefore, no amounts are owing.  The amount of future fees, if any, is not determinable.

The Company has entered into various consulting agreements that upon execution of a partnership agreement could result in liabilities owing to such consultants.  The amounts payable in these agreements are contingent on the amounts receivable by Lorus under such partnership agreements.  As of February 28, 2010 no amounts were owed and the amount of future fees payable to the consultants, if any, are not determinable.

As at February 28, 2010, we have not entered into any off-balance sheet arrangements.

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Indemnification

Under the Arrangement, Lorus agreed to indemnify Old Lorus and its directors, officers and employees from and against all damages, losses, expenses (including fines and penalties), other third party costs and legal expenses, to which any of them may be subject arising out of any matter occurring:

(i) prior to, at or after the Effective Time of the Arrangement and directly or indirectly relating to any of the assets of Old Lorus transferred to New Lorus pursuant to the Arrangement (including losses for income, sales, excise and other taxes arising in connection with the transfer of any such asset) or conduct of the business prior to the Effective Time;

(ii) prior to, at or after the Effective Time as a result of any and all interests, rights, liabilities and other matters relating to the assets transferred by Old Lorus to New Lorus pursuant to the Arrangement; and

(iii) prior to or at the Effective Time and directly or indirectly relating to, with certain exceptions, any of the activities of Old Lorus or the Arrangement.

Lorus has recorded a liability of $150 thousand, which management believes is a reasonable estimate of the fair value of the obligation for the indemnifications provided.  There have been no claims under this indemnification to date.  This amount is included on the balance sheet in Accrued Liabilities at February 28, 2010.

FINANCIAL INSTRUMENTS

The Company has classified its financial instruments as follows:

	As at		As at
(Amounts in 000’s)	February 28, 2010		May 31, 2009
Financial assets
Cash and cash equivalents, consisting of term deposits, and guaranteed investment certificates, held for trading, measured at fair value	$	888	$	5,374
Short-term investments, held-for-trading, recorded at fair value		244		490
Financial liabilities
Accounts payable, measured at amortized cost		594		299
Accrued liabilities, measured at amortized cost		836		1,131
Secured convertible debentures, measured at amortized cost				14,448

Financial risk management

The Company has exposure to credit risk, liquidity risk and market risk. The Company’s Board of Directors has the overall responsibility for the oversight of these risks and reviews the Company’s policies on an ongoing basis to ensure that these risks are appropriately managed.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer, partner or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash and cash equivalents and short-term investments. The carrying amount of the financial assets represents the maximum credit exposure.

The Company manages credit risk for its cash and cash equivalents and short-term investments by maintaining minimum standards of R1 low or A low investments and invests only in highly rated Canadian securities with debt securities that are traded on active markets and are capable of prompt liquidation.

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 considers securing additional funds through equity, debt or partnering transactions. The Company manages its liquidity risk by continuously monitoring forecasts and actual cash flows.  Refer to note 1 of the financial statements for further discussion on the Company’s ability to continue as a going concern.

Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, and equity prices will affect the Company’s income or the value of its financial instruments.

The Company is subject to interest rate risk on its cash and cash equivalents and short-term investments.  The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to interest rates on the investments, owing to the relative short-term nature of the investments.  Following the fiscal 2009 year end, the Company extinguished its secured convertible debentures and does not currently have any interest bearing debt.

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Financial instruments potentially exposing the Company to foreign exchange risk consist principally of accounts payable and accrued liabilities.  The Company holds minimal amounts of U.S. dollar denominated cash, purchasing on an as needed basis to cover U.S. dollar denominated payments.  At February 28, 2010, U.S. dollar denominated accounts payable and accrued liabilities amounted to $42 thousand.  Assuming all other variables remain constant, a 10% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an decrease or increase in net earning, respectively, and other comprehensive income of $4 thousand.  The Company does not have any forward exchange contracts to hedge this risk.

The Company does not invest in equity instruments of other corporations.  On June 19, 2009, the Company disposed of the shares of Pharma Immune Inc., a wholly owned subsidiary, as part of the consideration in extinguishing its convertible debentures.

OUTLOOK

The Company does not currently have sufficient cash and cash equivalents to execute its operating strategies for the next 12 months.  Management is currently seeking additional investment and believes that it will obtain such investment in sufficient time to continue to execute its planned expenditures without interruption (see “Subsequent events”).  As a result of the Company's current cash position, management is currently undertaking actions to reduce expenditures while at the same time pursuing investment and other opportunities aimed at funding its research and development programs.  As part of its cost reduction strategies, management has reduced its research and development costs by limiting non-critical activities and reduced its general and administrative costs by limiting expenditures an d reducing its personnel costs, among other things, until such time as the Company has sufficient capital to support a full development program.  There can be no assurance that the capital will be available as necessary to meet these continuing expenditures, or if the capital is available, that it will be on terms acceptable to the Company.

Until one of our drug candidates receives regulatory approval and is successfully licensed or commercialized, Lorus will continue to incur operating losses.  The magnitude of these operating losses will be largely affected by the timing and scope of future research and development, clinical trials and the Company’s ability to raise additional working capital and/or establish effective partnerships to share the costs of development and clinical trials.

SUBSEQUENT EVENTS

In April 2010, the Company entered into a loan agreement with a company related to a member of its Board of Directors to borrow $1 million.  The loan amount, which was received on April 14, 2010, is unsecured, evidenced by a promissory note and bears interest at the annual rate of 10%. The principal and interest amount are due in six months.  The funds will be used for general working capital purposes.

In April 2010, the Company filed a Registration Statement on Form F-1 (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) for an offering of up to US$17.5 million of units in the United States.

This registration will allow Lorus to offer and issue units, each unit consisting of one common share and one half of a warrant (a “Warrant”) to purchase common shares (collectively referred to as the “Units”). Each whole Warrant will permit the holder to purchase one common share, at an initial exercise price of 125% of the unit offering price (which will be determined at the time of the offering), and subsequently at a premium to the unit offering price which rises 5% on each anniversary of the closing date, to a maximum exercise price of 145% of the unit offering price on the fourth anniversary of the closing. Lorus may also require the exercise of the Warrants if the closing price of the common shares on the principal market upon which they are traded equals or exceeds 225% of the unit offering price for f ive consecutive trading days.

The Registration Statement relating to the Units has been filed with the SEC but has not yet become effective. The Units may not be sold, nor may offers to buy be accepted, before the Registration Statement becomes effective. The details of the offering (including the terms of the Units) are subject to change based on market conditions at the time the Registration Statement becomes effective. The offering is subject to regulatory approval, including the approval of the Toronto Stock Exchange.

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RISK FACTORS

Before making an investment decision with respect to our common shares, you should carefully consider the following risk factors, in addition to the other information included or incorporated by reference into this report. The risks set out below are not the only risks we face. If any of the following risks occur, our business, financial condition, prospects or results of operations would likely suffer. In that case, the trading price of our common shares could decline and you may lose all or part of the money you paid to buy our common shares.

Please refer to the MD&A included in our 2009 Annual Report for a complete discussion of risks and uncertainties.

• Our ability to continue as a going concern.

• The cash and cash equivalents on hand are not sufficient to execute our operating strategies for the next twelve months and we may not be able to raise sufficient funds to continue operations.

• We have a history of operating losses. We expect to incur net losses and we may never achieve or maintain profitability.

• We have indemnified Old Lorus and its directors officers and employees in respect of the Arrangement.

• We may be unable to obtain partnerships for one or more of our product candidates which could curtail future development and negatively impact our share price.

• Clinical trials are long, expensive and uncertain processes and Health Canada or the FDA may ultimately not approve any of our product candidates. We may never develop any commercial drugs or other products that generate revenues.

• As a result of intense competition and technological change in the pharmaceutical industry, the marketplace may not accept our products or product candidates, and we may not be able to compete successfully against other companies in our industry and achieve profitability.

• We may be unable to obtain patents to protect our technologies from other companies with competitive products, and patents of other companies could prevent us from manufacturing, developing or marketing our products.

• Our products and product candidates may infringe the intellectual property rights of others, which could increase our costs.

• Our share price has been and may continue to be volatile and an investment in our common shares could suffer a decline in value.

• Future sales of our common shares by us or by our existing shareholders could cause our share price to fall.

CRITICAL ACCOUNTING POLICIES

Critical Accounting Policies and Estimates

The Company periodically reviews its financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, the Company has reviewed its selection, application and communication of critical accounting policies and financial disclosures. Management has discussed the development and selection of the critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure relating to critical accounting policies in this MD&A. Other important accounting polices are described in note 2 of the Financial Statements.

(a) Drug Development Costs

We incur costs related to the research and development of pharmaceutical products and technologies for the management of cancer. These costs include internal and external costs for preclinical research and clinical trials, drug costs, regulatory compliance costs and patent application costs. All research costs are expensed as incurred as required under GAAP.

Development costs, including the cost of drugs for use in clinical trials, are expensed as incurred unless they meet the criteria under GAAP for deferral and amortization. The Company continually assesses its activities to determine when, if ever, development costs may qualify for capitalization. By expensing the research and development costs as required under GAAP, the value of the product portfolio is not reflected on the Company's Financial Statements.

(b) Stock-Based Compensation

We have applied the fair value based method to expense stock options awarded since June 1, 2002 using the Black-Scholes option-pricing model as allowed under Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870. The option pricing model calculates the theoretical fair value of fully transferable options, without vesting restrictions, which significantly differs from the stock option awards granted by Lorus. The option pricing model also requires four highly subjective assumptions including future stock price volatility and expected time until exercise, which greatly affect the calculated fair values. The increase or decrease of one of these assumptions could materially increase or decrease the fair value of stock options issued and the associated expense.

(c) Valuation Allowance for Future Tax Assets

We have a net tax benefit resulting from non-capital losses carried forward, and scientific research and experimental development expenditures. In light of the continued net losses and uncertainty regarding our future ability to generate taxable income, management is of the opinion that it is not more likely than not that these tax assets will be realized in the foreseeable future and hence, a full valuation allowance has been recorded against these income tax assets. Consequently, no future income tax assets or liabilities are recorded on the balance sheets.

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The generation of future taxable income could result in the recognition of some portion or all of the remaining benefits, which could result in an improvement in our results of operations through the recovery of future income taxes.

(d) Valuation of Goodwill and Long Lived Assets

We periodically review the useful lives and the carrying values of our long-lived assets and annually test for impairment of goodwill or more frequently if there are any triggering events. We review for impairment in long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of a long-lived asset is less than its carrying amount, it is considered to be impaired. An impairment loss is measured at the amount by which the carrying amount of the asset exceeds its fair value; which is estimated as the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset.

Recently Adopted Accounting Recommendations

(a) Goodwill and Intangible Assets

Effective June 1, 2009, the Company adopted Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Other Intangible Assets ("Section 3062"), and Section 3450, Research and Development Costs which established standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises.  Standards concerning goodwill are unchanged from the standards included in the previous Section 3062.  The adoption of these new sections has had no impact on the Company’s interim consolidated financial statements.

(b) Financial Instruments

Effective June 1, 2009, the Company adopted the amendments under Section 3862, Financial Instruments - Disclosures  ("Section 3862"), to include additional disclosure requirements about fair value measurement for financial instruments and liquidity risk disclosures.  These amendments require a three level hierarchy that reflects the significance of the inputs used in making the fair value measurements.  Fair value of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities.  Assets and liabilities in Level 2 include valuations using inputs other than the quoted prices for which all significant inputs are based on observable market data, either directly or indirectly.  Level 3 valuations are based on inputs that are not based on observable market data.  These disclosures are applicable effective the Company’s annual financial statements for the year ended May 31, 2010; therefore, the disclosures required by this new section has had no impact on the Company’s current interim consolidated financial statements.

Recent Accounting Recommendations not yet adopted

The CICA has issued standards and guidance to converge Canadian GAAP with International Financial Reporting Standards (IFRS) over a transition period that will end on May 31, 2011 for the Company. The Company has begun to assess the impact of the transition to IFRS on the Company’s financial statements and has initiated the process of evaluating the impact of IFRS on its financial reporting but has yet to determine the extent to which it will affect the financial statements when these standards are implemented.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company has implemented a system of internal controls that it believes adequately protects the assets of the Company and is appropriate for the nature of its business and the size of its operations. These internal controls include disclosure controls and procedures designed to ensure that information required to be disclosed by the Company is accumulated and communicated as appropriate to allow timely decisions regarding required disclosure.

Internal controls over financial reporting means a process designed by or under the supervision of the Chief Executive Officer and the acting Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  The internal controls are not expected to prevent and detect all misstatements due to error or fraud.  Management advises that there have been no changes in the Company’s internal controls over financial reporting during the three months ended February 28, 2010 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

As at February 28, 2010, the Company’s Chief Executive Officer and the acting Chief Financial Officer have certified that these controls and procedures are effective to provide reasonable assurance that material information is made known to them by others in the Company.  Management has identified the following two areas of concern, but believes that the Company’s limited number of transactions, day-to-day management involvement in operations and reporting and access to third party experts are sufficient compensating controls to limit our risk of material misstatement.

Segregation of Duties

Given our limited staff, certain duties within the accounting and finance department cannot be effectively segregated. We believe that none of the segregation of duty concerns has resulted in a misstatement to the financial statements as we rely on certain compensating controls, including substantive periodic review of the financial statements by the Chief Executive Officer and Audit Committee. .We believe that our current level of staffing is commensurate with the size of our operations and nature of our business.

Complex and Non-Routine Transactions

As required, we record complex and non-routine transactions in our financial statements. These transactions are extremely technical in nature and require an in-depth understanding of GAAP. Our accounting staff has a fair and reasonable knowledge of the rules related to GAAP but there is a risk that these transactions may not be recorded correctly, potentially resulting in material misstatement of our financial statements.

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To address this risk, we consult with our third party expert advisors as needed in connection with the identification, recording and reporting of complex and non-routine transactions. In addition, an annual audit is completed by our auditors, and presented to the Audit Committee for its review and approval. During the audit for the fiscal year ended May 31, 2009, no material misstatements were identified.

UPDATED SHARE INFORMATION

As at April 14, 2010, the Company had 298,009,677 common shares issued and outstanding and 36,921,440 common share purchase warrants convertible into an equal number of common shares. In addition, the Company had issued and outstanding 20,540,041 stock options to purchase an equal number of common shares.

ADDITIONAL INFORMATION

Additional information relating to Lorus, including Lorus' 2009 annual information form and other disclosure documents, is available on SEDAR at www.sedar.com.  For any information filed prior to July 10, 2007 please access the information on SEDAR for Global Summit Real Estate Inc. (Old Lorus).

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EX-99.4

Exhibit 99.4

Supplementary Information:

Reconciliation of Canadian and United States Generally Accepted

Accounting Principles - Unaudited

(In Canadian dollars)

LORUS THERAPEUTICS INC.

For three and nine months ended February 28, 2010 and 2009

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

The unaudited interim consolidated financial statements of Lorus Therapeutics Inc. as at February 28, 2010 and for the three and nine months ended February 28, 2010 and 2009 have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") which differ in some respects from accounting principles generally accepted in the United States ("U.S. GAAP").  The following reconciliation identifies material differences in the Company's unaudited interim consolidated statements of operations and comprehensive income and consolidated balance sheets.  The unaudited interim financial statements, including this Supplementary Information, follow the same accounting policies and methods of application as the audited annual financial statements for the year ended May 31, 2009.  The se statements should be read in conjunction with the audited consolidated financial statements, including the Supplementary Information for the year ended May 31, 2009.

(a) Consolidated statements of operations and comprehensive income (unaudited):

(amounts in 000's)	Three months ended February						Nine months ended February
	2010			2009			2010			2009
Earnings (loss) for the period per Canadian GAAP	$	(1,343	)	$	(2,469	)	$	7,151		$	(6,965	)
Gain on repurchase of convertible debentures and transfer of assets (i)		-			-			328			-
Accretion of convertible debentures (i)		-			336			54			889
Amortization and write-off of debt issue costs (i)		-			(9	)		(4	)		(38	)
Stock-based compensation expense (ii)		(19	)		(9	)		(13	)		(30	)
Short-term investments (iii)		-			(6	)		(3	)		(6	)
Earnings (loss) for the period per U.S. GAAP		(1,362	)		(2,157	)		7,513			(6,150	)
Other comprehensive income:
Unrealized gain on short-term investments (iii)		-			6			3			6
Earnings (loss) for the period and comprehensive income per U.S. GAAP	$	(1,362	)	$	(2,151	)	$	7,516		$	(6,144	)
Basic and diluted earnings (loss) per share per U.S. GAAP	$	-		$	(0.01	)	$	0.03		$	(0.03	)

Under U.S. GAAP, the number of weighted average common shares outstanding for basic and diluted loss per share is the same as under Canadian GAAP.

1

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(b) Consolidated balance sheets (unaudited):

February 28, 2010

				Adjustments
(amounts in 000's)	Canadian GAAP			Convertible Debentures			Stock Options			Other			U.S. GAAP
				(i)			(ii)			(iii)
Stock options	$	(3,679	)	$	-		$	3,679		$	-		$	-
Contributed surplus/ additional paid-in capital		(14,834	)		3,757			1,429						(9,648	)
Warrants		(1,026	)		-			-			-			(1,026	)
Accumulated other comprehensive loss		-			-			-			7			7
Deficit	$	182,260		$	(3,757	)	$	(5,108	)	$	(7	)	$	173,388

May 31, 2009

				Adjustments
(amounts in 000's)	Canadian GAAP			Convertible Debentures			Stock Options			Other			U.S. GAAP
				(i)			(ii)			(iii)
Deferred financing charges	$	-		$	65		$	-		$	-		$	65
Secured convertible debentures		(14,448	)		(444	)		-			-			(14,892	)
Equity portion of secured convertible debentures		(3,814	)		3,814			-			-			-
Stock options		(3,845	)		-			3,845			-			-
Contributed surplus/ additional paid-in capital		(10,744	)		(57	)		1,276			-			(9,525	)
Warrants		(417	)		-			-			-			(417	)
Accumulated other comprehensive loss		-			-			-			10			10
Deficit	$	189,411		$	(3,379	)	$	(5,121	)	$	(10	)	$	180,901

2

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(i) Convertible debentures:

On June 22, 2009, the Company reached a settlement with the debenture holders with respect to the purchase and settlement of the convertible debentures.

Under the agreement, Lorus purchased all of the convertible debentures from The Erin Mills Investment Corporation (“TEMIC “) for consideration that included a cash payment on close of the transaction of $3.3 million, the assignment of the rights under the license agreement with ZOR Pharmaceuticals Inc, LLC (“ZOR”), certain intellectual property associated with Virulizin and all of Lorus' shares in its wholly owned subsidiary, Pharma Immune, which held an equity interest in ZOR (the "Consideration").  Under the agreement, Lorus is entitled to 50% of any royalties received under the ZOR license agreement and 50% of the value of any transaction completed in territories not covered by the ZOR license agreement.  Lorus also retains a perpetual royalty free license for the animal use of Virulizi n.  TEMIC will be fully responsible for all clinical and regulatory costs associated with the commercialization of Virulizin in territories not covered by the ZOR license agreement.  Lorus will assist TEMIC with certain agreed upon services.

As a result of the transaction, the Company recognized a gain on the repurchase of the debentures of $11.3 million reflecting the difference between the fair value of the debentures at the repurchase date, net of transaction costs of approximately $221 thousand, and the cash payment amount of $3.3 million. The gain on repurchase of the debentures does not result in income taxes payable as the Company has sufficient capital loss and non-capital loss carryforwards to shelter these gains.  Capital loss and non-capital loss carryforwards, and the associated valuation allowance have been reduced accordingly.  As a result of the settlement of the convertible debentures, the deferred financing charges amounting to $52 thousand were written off in the nine months ended February 28, 2010. As the carrying value of the conv ertible debenture was different under U.S, GAAP, as explained below, the Company recognized an additional gain of $328 thousand on the repurchase of the convertible debentures and transfer of assets including the write-down of the deferred financing charges compared to under Canadian GAAP in the nine months ended February 28, 2010.

Under Canadian GAAP, the conversion option embedded in the convertible debentures was presented separately as a component of shareholders' equity (deficiency).  Under U.S. GAAP, the embedded conversion option was not subject to bifurcation since, as a conventional convertible debt, the holder of the debentures may have only realized the value of the conversion option by exercising the option and receiving the entire proceeds in a fixed number of shares.  Accordingly, the conversion option was included in the carrying amount of the secured convertible debentures, presented as a liability resulting in a higher carrying amount of the convertible debenture than that measured under Canadian GAAP.  In accordance with U.S. GAAP, the warrants issued in connection with the convertible debentures financing were r ecorded as additional paid-in capital ("APIC") and a reduction to the proceeds from the issuance of convertible debentures.  The warrants were presented as a separate component of shareholders' equity (deficiency) for Canadian GAAP purposes.  Under U.S. GAAP, the Company allocated the total proceeds received from the issuance of the convertible debentures to the debt and warrant components based on their relative fair values.  The fair value of the warrants was determined based on an option pricing model.  The resulting allocation based on relative fair values on issuance of the convertible debentures resulted in the allocation of $13.9 million to the debt instrument and $1.1 million to the warrants.  The financing costs totalling $1.1 million related to the issuance of the convertible debentures were allocated on a pro rata basis to deferred financing charges of $964 thousand and to the warrants of $97 thousand.  This allocation resulted in the net amount allocated to the warrants of $1.0 million.  In May 2007, the Company entered into an agreement with the holder of the convertible debentures to repurchase its outstanding 3,000,000 common share purchase warrants at a purchase price of $252 thousand in connection with the Arrangement.  The difference between the repurchase liability and the carrying amount of the warrants has been recorded as APIC.

3

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

Under Canadian GAAP, prior to the adoption of Section 3855, deferred financing costs were amortized over the five-year life of the debentures.  As a consequence of the adoption of Section 3855, deferred financing costs at June 1, 2007 were reclassified and reduced the carrying value of the debentures.  Under Canadian GAAP, deferred financing costs were recognized in the consolidated statements of operations and comprehensive income as accretion expense.

Each reporting period, the Company was required to accrete the carrying value of the convertible debentures such that at maturity on October 6, 2009, the carrying value of the debentures would have been their face value of $15.0 million.  Up to May 31, 2009, the Company has recognized $1.0 million in accretion expense.  This accretion expense had increased the carrying value of the convertible debentures from $13.9 million to $14.9 million at May 31, 2009.

(ii)           Stock-based compensation:

Under Canadian GAAP, effective June 1, 2004, the Company adopted the fair value-based method of accounting for employee stock options granted on or after June 1, 2002, retroactively without restatement as allowed under the transitional provisions of The Canadian Institute of Chartered Accountants' ("CICA") Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments.  As a result, the opening balances of deficit and stock options were increased by $2.8 million at June 1, 2004.

Under U.S. GAAP, effective June 1, 2006, the Company recognizes in the statement of operations and comprehensive income all share-based payments to employees, including grants of employee stock options, based on their fair values.  Previously under U.S. GAAP the Company accounted for share-based compensation transactions with employees, using the intrinsic value method.

 The Company adopted the fair value method using the modified prospective method, which requires the application of the accounting standards as of June 1, 2006.  In accordance with the modified prospective method, the consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of the change in accounting principle.

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest.  Stock-based compensation expense recognized in the consolidated statement of operations and comprehensive income during fiscal 2007 included compensation expense for stock-based payment awarded prior to, but not yet vested as of June 1, 2006 based on the estimated fair value at grant date.   Stock-based compensation expense recognized in statement of operations and comprehensive income for awards granted commencing fiscal 2007 is based on estimated fair value at grant date, and has been reduced for estimated forfeitures.  Under U.S GAAP, the Company estimates forfeitures at the time of grant and revises, if necessary, in subsequent pe riods if actual forfeitures differ from those estimates.  There was no material cumulative effect adjustment to APIC relating to estimating forfeitures on recognized stock-based compensation cost in prior periods.

4

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

In the three-month period ended February 28, 2010, the Company recognized a stock-based compensation expense of $113 thousand (2008 - $120 thousand) which compares to an expense of $94 thousand (2008 -$111 thousand) under Canadian GAAP resulting in a higher expense by $19 thousand (2008 - $9 thousand) under U.S. GAAP.  For the nine-month period ended February 28, 2010 the Company recognized an expense of $123 thousand (2008 - $377 thousand) which compares to $110 thousand (2008 - $347 thousand) under Canadian GAAP resulting in a higher expense by $13 thousand (2008 - $30 thousand).  The expense represents the amortization applicable to the current periods of the estimated fair value of options granted since June 1, 2002 net of the recovery of expense related to the forfeiture of unvested options in the current pe riods.

The allocation of stock-based compensation expense in the unaudited interim consolidated statements of operation is as follows:

(amounts in 000's)	Three months ended February				Nine months ended February
	2009		2008		2009		2008
Research and development	$	61	$	34	$	67	$	107
General and administrative		52		86		56		270
Total	$	113	$	120	$	123	$	377

The Company used the Black-Scholes valuation model to determine the fair value of options granted in each of the fiscal years beginning in 2007 and valuation assumptions are consistent with those used under Canadian GAAP for each period presented.

As at February 28, 2010, the aggregate intrinsic values for options outstanding and options exercisable are $205 thousand and $41 thousand, respectively.  There were no options exercised during the three and nine month periods ended February 28, 2010 and 2009.

The weighted average remaining contractual term of options exercisable as at February 28, 2010 is 6.9 years.

Total unrecognized compensation cost relating to unvested stock options at February 28, 2010, prior to the consideration of expected forfeitures, is approximately $340 thousand and is expected to be recognized over a weighted average period of 1.6 years.

(iii)           Short-term investments:

Under U.S. GAAP, as of May 31, 2008, the Company reclassified short-term investments as “available for sale” due to the uncertainty of the Company’s ability to hold these investments until their stated maturity date In the consolidated statement of operations and comprehensive income for the three and nine months ended February 28, 2010 the Company recognized a net unrealized gain of $nil and $3 thousand, respectively that has been reclassified to other comprehensive income in accordance with U.S. GAAP (2009 - $6 thousand during the three and nine month periods).

5

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(c) Consolidated statements of cash flows:

There are no differences between Canadian and U.S. GAAP that impact the consolidated statements of cash flows.

(d) Investment tax credits:

Prepaid expenses and other assets as at February 28, 2010 include investment tax credits receivable of $200 thousand (May 31, 2009 - $600 thousand).

Under Canadian GAAP, investment tax credits and other research and development credits are deducted from research and development expense for items of a current nature, and deducted from property and equipment for items of a capital nature.  Under U.S. GAAP, these tax credits would be reclassified as a reduction of income tax expense.  The tax credit results in higher research and development expense and corresponding income tax recovery with no net impact on earnings (loss) during the three and nine month periods ended February 28, 2010 and 2009.

(e) Income taxes:

In accordance with U.S. GAAP, the Company uses enacted tax rates to record the future tax balances arising from temporary differences, whereas, under Canadian GAAP, the Company uses substantively enacted tax rates to record its future tax balances. As a result of the difference between substantively enacted tax rates and enacted tax rates at February 28, 2010, the gross future tax asset recognized under U.S. GAAP would be lower than that recorded in accordance with Canadian GAAP.  However, since the Company has a full valuation allowance against the future tax assets, there are no measurement differences in the net future tax assets between Canadian and U.S. GAAP as of February 28, 2010.

 The Company does not expect significant changes in its unrecognized tax benefits for the next 12 months.

The Company and its Canadian subsidiary each file Canadian federal and provincial income tax returns.  The Company, its subsidiaries and former subsidiary remain open to tax examinations by the Canadian federal and provincial tax authorities for years ended after the 2003 and 2002 taxation years, respectively.

The Company's former U.S. subsidiary filed U.S. federal and state income tax returns.  The former U.S. subsidiary is subject to federal and state income tax examinations by U.S. tax authorities for taxation years ended May 31, 2008 and 2009.

The Company recognizes any interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  During the three and nine months ended February 28, 2010 and 2009, there was no such interest or penalties.

6

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(f) Fair value of financial assets:

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The adoption of this standard did not have an impact on the results of operations or financial position other than the additional disclosures as shown below.

 (i)  Fair value hierarchy:

The Company maximizes the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Company utilizes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The Company prioritizes the inputs into three levels that may be used to measure fair value:

• Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

• Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

• Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(ii)      Assets measured at fair value on a recurring basis:

Assets measured at fair value on a recurring basis as of February 28, 2010 and May 31, 2009 were as follows:

February 28, 2010

(amounts in 000’s)	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	888	$	-	$	-	$	888
Short-term investments, consisting of guaranteed investment certificates		-		244		-		244
Total	$	888	$	244	$	-	$	1,132

7

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

May 31, 2009

(amounts in 000’s)	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	5,374	$	-	$	-	$	5,374
Short-term investments, consisting of guaranteed investment certificates		-		490		-		490
Total	$	5,374	$	490	$	-	$	5,864

Level 2 fixed income securities are priced using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data.

The Company does not carry any liabilities that are measured at fair value on a recurring basis.

(g) Adoption of new accounting pronouncements under U.S. GAAP:

In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”), which is primarily codified in ASC Topic 820 and delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of the Company’s fiscal 2010 year.  The adoption of this standard, when applied to non-financial assets and non-financial liabilities, did not have a material impact on the results of operations or financial position.

In December 2007, the FASB issued Statement No. 141R, which is primarily codified in ASC Topic 805,and requires most identifiable assets, liabilities, non-controlling interests and goodwill acquired in a business combination to be recorded at full fair value.  ASC Topic 805 applies to all business combinations, including combinations among mutual entities and combinations by contract alone.  Under ASC Topic 805, all business combinations will be accounted for by applying the acquisition method.  ASC Topic 805 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, specifically June 1, 2009 for the Company. As the Company did not enter into any business combination transactions on or a fter June 1, 2009, the adoption of this standard did not have any impact on the consolidated interim financial statements.

In December 2007, the FASB issued Statement No. 160, which is primarily codified in ASC Subtopic 810-10,  and requires non-controlling interests (previously referred to as minority interests) to be treated as a separate component of equity, not as a liability or other item outside permanent equity.  ASC Subtopic 810-10 applies to the accounting for non-controlling interests and transactions with non-controlling interest holders in consolidated financial statements.  ASC Subtopic 810-10  is effective for annual periods beginning on or after December 15, 2008, specifically June 1, 2009 for the Company.  The adoption of this standard did not have an impact on the results of operations or financial position.

In December 2007, the FASB ratified EITF No. 07-1, Accounting for Collaborative Agreements ("EITF 07-1"), which is primarily codified in ASC Topic 808 and provides guidance on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure requirements.  ASC Topic 808 is effective for the first annual or interim reporting period beginning after December 15, 2008, specifically June 1, 2009 for the Company and should be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. The adoption of this standard did not have an impact on the results of operations or fina ncial position.

In June 2009, the FASB issued Statement No. 168 ("SFAS 168"), The FASB Accounting Standards Codification™ ("Codification") and the Hierarchy of Generally Accepted Accounting Principles to replace SFAS 162, The Hierarchy of Generally Accepted Accounting Principles, which became effective November 13, 2008.  The Codification will become the source of authoritative United States GAAP recognized by the FASB to be applied by non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative United States GAAP for SEC registrants. On the effective date of this statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards.  All other non-grandfathered non- SEC accounting literature not included in the Codification will become non-authoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of SFAS 168 did not have an impact on the Company’s interim consolidated financial statements other than changes to note disclosures.

8

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(h) ASC Topic 855 “Subsequent Events” formerly SFAS 165 (“ASC 855”) enhances the current guidance on accounting and disclosure requirements for subsequent events.  The Company adopted ASC 855 effective June 1, 2009; however the adoption did not have a material impact on our results of operations, cash flows or financial position. We have evaluated subsequent events and determined no additional disclosures are required.

(i) New accounting pronouncements not yet adopted under U.S. GAAP:

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 - Measuring Liabilities at Fair Value”, which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures - Overall, for the fair value measurement of liabilities.  This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as assets. 2. Another valuation technique that is consistent with the p rinciples of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements.  The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cas h flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share - Amendments to Section 260-10-S99”, which represents technical corrections to topic 260-10-S99, Earnings per share.  The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances than under existing US GAAP. This amendment has eliminated the residual method of allocation and is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.

9

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

(j) Consolidated statement of shareholders' equity (deficiency) for the period from May 31, 1998 to February 28, 2010:

	Number of Shares (000's)		Amount			Warrants		Contributed Surplus/AIPC			Accumulated Other Comprehensive income ( loss)	Deficit			Total
Balance May 31, 1998		36,785	$	37,180		$	-	$	667			$	(32,946	)	$	4,901
Exercise of special warrants		5,333		1,004					(1,217	)						(213	)
Exercise of stock options		46		48												48
Issue of warrants									1,217							1,217
Issue of special warrants									213							213
Other issuances		583		379												379
Deficit													(4,623	)		(4,623	)
Balance May 31, 1999		42,747	$	38,611		$	-	$	880			$	(37,569	)	$	1,922
Exercise of warrants		12,591		7,546					(534	)						7,012
Issuance of special and purchase warrants									8,853							8,853
Issuance of public offering		15,333		41,952					659							42,611
Issued on acquisition		36,050		14,000												14,000
Exercise of units		893		1,821					(321	)						1,500
Issuance under alternate compensation plan		18		15												15
Exercise of special warrants		30,303		8,438					(8,438	)						-
Exercise of stock options		1,730		1,113												1,113
Stock based compensation				869												869
Deficit													(8,599	)		(8,599	)
Balance May 31, 2000		139,665	$	114,365		$	-	$	1,099			$	(46,168	)	$	69,296
Exercise of warrants		168		93					(25	)						68
Issuance under alternate compensation plan		28		49												49
Exercise of stock options		2,550		1,866												1,866
Stock based compensation				351												351
Deficit				82									(15,213	)		(15,131	)
Balance May 31, 2001		142,411	$	116,806		$	-	$	1,074			$	(61,381	)	$	56,499
Exercise of compensation warrants		476		265					(71	)						194
Exercise of stock options		1,525		1,194												1,194
Stock based compensation				(100	)											(100	)
Deficit													(13,488	)		(13,488	)
Balance May 31, 2002		144,412	$	118,165		$	-	$	1,003			$	(74,869	)	$	44,299
Exercise of stock options		873		715												715
Stock based compensation				558												558
Deficit													(16,634	)		(16,634	)
Balance May 31, 2003		145,285	$	119,438		$	-	$	1,003			$	(91,503	)	$	28,938
Share issuance		26,220		24,121					4,325							28,446
Exercise of stock options		289		171												171
Stock based compensation				(88	)											(88	)
Other issuances				28												28
Deficit													(30,301	)		(30,301	)

10

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

	Number of Shares (000's)		Amount		Warrants		Contributed Surplus/AIPC			Accumulated Other Comprehensive income ( loss)			Deficit			Total
Balance May 31, 2004		171,794	$	143,670	$	-	$	5,328					$	(121,804	)	$	27,194
Interest payment		421		300													300
Exercise of stock options		276		112													112
Expiry of compensation options								1,405									1,405
Issuance under alternate compensation plan		50		37													37
Issuance of warrants								1,048									1,048
Deficit														(20,298	)		(20,298	)
Balance May 31, 2005		172,541	$	144,119	$	-	$	7,781					$	(142,102	)	$	9,798
Interest payment		2,153		882													882
Stock based compensation								56									56
Deficit														(16,388	)		(16,388	)
Balance May 31, 2006		174,694	$	145,001	$	-	$	7,837					$	(158,490	)	$	(5,652	)
Share issuance		33,800		11,641													11,641
Interest payment		3,726		1,050													1,050
Exercise of stock options		46		22				(9	)								13
Repurchase of Warrants								(252	)								(252	)
Stock Based Compensation								697									697
Deficit														(9,150	)		(9,150	)
Balance May 31, 2007		212,266	$	157,714	$	-	$	8,273		$	-		$	(167,640	)	$	(1,653	)
Interest payment		5,383		1,029													1,029
Stock Based Compensation								767									767
Other comprehensive loss											(20	)					(20	)
Deficit														(5,526	)		(5,526	)
Balance May 31, 2008		217,649	$	158,743	$	-	$	9,040		$	(20	)	$	(173,166	)	$	(5,403	)
Interest payment		2,038		217													217
Share issuance		28,539		2,790				99									2,889
Warrants issued						417											417
Deficit														(1,971	)		(1,971	)
Balance August 31, 2008		248,226	$	161,750	$	417	$	9,139		$	(20	)	$	(175,137	)	$	(3,851	)
Interest payment		2,989		201													201
Stock Based Compensation								158									158
Deficit														(2,021	)		(2,021	)
Balance November 30, 2008		251,215	$	161,951	$	417	$	9,297		$	(20	)	$	(177,158	)	$	(5,513	)
Interest payment		3,406		160													160
Stock Based Compensation								120									120
Other comprehensive income											6						6
Deficit														(2,157	)		(2,157	)
Balance February 28, 2009		254,621	$	162,111	$	417	$	9,417		$	(14	)	$	(179,315	)	$	(7,384	)
Interest payment		2,187		129													129
Stock Based Compensation								108									108
Other comprehensive income											4						4
Deficit														(1,586	)		(1,586	)

11

SUPPLEMENTARY INFORMATION

Reconciliation of Canadian and United States Generally Accepted Accounting Principles - Unaudited

Three and nine months ended February 28, 2010 and 2009

	Number of Shares (000's)		Amount		Warrants		Contributed Surplus/AIPC			Accumulated Other Comprehensive income ( loss)			Deficit			Total
Balance May 31, 2009		256,808	$	162,240	$	417	$	9,525		$	(10	)	$	(180,901	)	$	(8,729	)
Interest payment		202		15													15
Stock Based Compensation								99									99
Other comprehensive income											1						1
Deficit														10,143			10,143
Balance August 31, 2009		257,010	$	162,255	$	417	$	9,624		$	(9	)	$	(170,758	)	$	1,529
Share issuance		41,000		1,626													1,626
Warrants issued						609											609
Stock Based Compensation								(89	)								(89	)
Other comprehensive income											2						2
Deficit														(1,268	)		(1,268	)
Balance November 30, 2009		298,010	$	163,881	$	1,026	$	9,535		$	(7	)	$	(172,026	)	$	2,409
Stock Based Compensation								113									113
Deficit														(1,362	)		(1,362	)
Balance February 28, 2010		298,010	$	163,881	$	1,026	$	9,648		$	(7	)	$	(173,388	)	$	1,160

12

EX-99.5

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS - FULL CERTIFICATE

I, Aiping Young, President and Chief Executive Officer of Lorus Therapeutics Inc. certify the following:

1. Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Lorus Therapeutics Inc. (the “issuer”) for the interim period ended February 28, 2010.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared;

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR - material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3           Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on December 1, 2009 and ended on February 28, 2010 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 14, 2010

/s/ Aiping Young

Aiping Young

President and CEO

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS- FULL CERTIFICATE

I, Elizabeth Williams, Director of Finance and Acting Chief Financial Officer of Lorus Therapeutics Inc. certify the following:

1. Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Lorus Therapeutics Inc. (the “issuer”) for the interim period ended February 28, 2010.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared;

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR - material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3           Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on December 1, 2009 and ended on February 28, 2010 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 14, 2010

/s/ Elizabeth Williams

Elizabeth Williams

Director of Finance and Acting CFO