EDMONTON, March 9 /PRNewswire-FirstCall/ - Biomira Inc. (Nasdaq:BIOM - News TSX:BRA - News ) toda... Biomira Inc. announces yea

EDMONTON, March 9 /PRNewswire-FirstCall/ - Biomira Inc. (Nasdaq:BIOM - News TSX:BRA - News ) today reported financial results for the fiscal year ended December 31, 2005. Results are reported in Canadian dollars with a December 31, 2005 rate of $1.00 Canadian equaling $0.86 U.S.

Consolidated net losses for the years 2005, 2004, and 2003 were $19.0 million, $12.2 million, and $19.0 million, respectively. The increase in net loss in fiscal 2005, as compared to fiscal 2004, was primarily attributable to lower revenues as a result of the recognition into income in 2004 of the remaining deferred revenue balance related to Theratope vaccine due to the return of development and commercialization rights for this product candidate by Merck KGaA announced in June 2004. In addition, we experienced an increase in research and development expenditures, as compared to fiscal 2004, due to increased spending associated with the L-BLP25 phase 2 safety study commenced in the second quarter of this year, and the planned L-BLP25 phase 3 clinical trial that is expected to commence in mid 2006. We anticipate this increase in clinical trial expenditures experienced in the current year to reverse in the second half of 2006 as a result of the recently announced amendment to the license agreements for L-BLP25.

Results for 2005 indicate a $6.8 million or 56% increase in the year over year loss resulting from lower revenues of $4.5 million, and higher research and development expenditures of $3.5 million, offset by lower general and administrative expenses of $0.3 million, reduced marketing and business development expenses of $0.4 million, higher investment and other income of $0.4 million, and reduced other operating expenditures of $0.1 million.

As at December 31, 2005, Biomira's cash and cash equivalents and short-term investments were $21.4 million compared to $38.6 million at the end of 2004, a decrease of $ 17.2 million or 45%. Major contributors to the net change included $1.0 million in warrant and stock option exercises, offset by $17.7 million used in operations, $0.4 million used for the purchase of capital assets, and $0.1 million related to payment of accrued share issuance costs related to the December 2004 financing. In January of 2006, we were able to secure an additional U.S. $16.07 million, before issue costs, which should provide sufficient funding to operate well into the latter half of 2007 and potentially into early 2008.

The following is selected annual consolidated financial information from our audited annual financial statements for each of the three most recently completed years ending December 31, 2005.

For a further discussion of the Company's complete financial results for the fiscal year ended December 31, 2005, please refer to the Company's Management Discussion & Analysis of Financial Condition and Results of Operations included in this news release. The Company's Financial Package, including audited consolidated financial statements, is filed separately on SEDAR at www.sedar.com .

Biomira made important progress on the development of our lead product candidate, L-BLP25, during 2005, continuing to move the vaccine forward towards an extensive phase 3 clinical trial and working to secure the best possible financial framework in which to ensure its timely development.

The highlight of the year was the announcement in October of compelling survival data from our phase 2b study, which showed that patients with Stage IIIb locoregional non-small cell lung cancer who received the vaccine had a median survival of 30.6 months compared to 13.3 months for the unvaccinated group. Ensuring that these highly encouraging results can be fully tested in a phase 3 study has been the overriding focus of Biomira and Merck.

During the course of our regular discussions with Merck, we came to the conclusion, towards the end of 2005, that there would be considerable benefit for both sides in Merck's taking developmental and financial control of L-BLP25 in exchange for assuming most of the costs associated with L-BLP25. We were pleased to announce, on January 26, 2006 that a letter of intent had been signed whereby Merck would take full control of the development, regulatory and marketing costs related to L-BLP25. In return, Biomira has given up its U.S. co-marketing rights in exchange for a royalty arrangement which fully reflects the current stage and promise of the vaccine. The co-promotion arrangement in Canada remains unchanged, with, where appropriate, Biomira handling responsibility for a small specialized oncology sales force and Merck covering 50 per cent of the costs and receiving 50 per cent of sales.

We believe this is a significant and positive development for the progress of this important product candidate, for our patients and for the future of Biomira. By taking financial responsibility for the development and commercialization program, Merck has shown its strong and continued commitment to cancer vaccines and to L-BLP25 in particular. This new arrangement greatly facilitates the timely initiation of the phase 3 trial for L-BLP25 in NSCLC.

The revised arrangement with Merck has greatly reduced the financial risk to Biomira while retaining upside potential from a successful product candidate. It has also freed Biomira to focus on bringing our next vaccine, BGLP40, through the development process, and to concentrate on filling our pipeline with additional product candidates.

To this end, we were able to secure a U.S. $16.07 million financing at the end of January 2006. This money in our Treasury should provide sufficient funding to begin further development of BGLP40 and assessing in-licensing opportunities.

Pursuant to the letter of intent, Merck has now taken over most of the financial and administrative responsibility for L-BLP25 effective March 1, 2006. This includes the planned phase 3 study which is expected to get underway with patient enrolment commencing in mid 2006. Merck also intends to explore potential phase 2 studies of the vaccine in additional cancers, which will maximize both its clinical and commercial potential.

In return, Biomira's co-promotion interest in U.S. sales will be converted to a specified royalty rate, which will be higher than what Merck has agreed to pay on its sales of L-BLP25 in markets outside of North America (Rest of World (ROW)). The royalty and other arrangements with respect to the ROW will remain generally unchanged (Merck to assume a specified third party royalty obligation on behalf of Biomira). Similarly, the milestone payments to be made by Merck pursuant to the collaboration will remain essentially the same. The agreed upon royalty rate for the U.S. territory reflects the stage and promise of L-BLP25.

Biomira will retain the responsibility for manufacturing L-BLP25, both for clinical trials and following any market approval. Biomira will also retain the responsibility for marketing the product in Canada.

In October, 2005 Biomira announced that the median survival for patients with Stage IIIB locoregional NSCLC who received L-BLP25 in a phase 2b study had been determined. These results demonstrated a median survival of 30.6 months in the vaccinated group compared with 13.3 months for the unvaccinated group. A more comprehensive analysis of these data is expected in the second quarter of this year. In November, 2005 Biomira announced the interim results of a phase 2 NSCLC single-arm, multi-centre, open label safety study of L-BLP25. The results showed the new formulation of the vaccine to be used in the phase 3 clinical trial program is not different from the previous formulation from a safety perspective.

The reformulated vaccine incorporated manufacturing changes intended to secure the future commercial supply of the vaccine. Testing has demonstrated that the steps taken to address the manufacturing issue discovered in late 2005 have been successful. Manufacturing for the phase 3 trial is expected to resume in the first quarter of this year and vaccine should be available mid 2006 to start the trial.

With the development program of L-BLP25 now in the hands of Merck, we have the freedom to focus our resources and development skills on filling out and advancing our pipeline and building additional value for shareholders.

We recently began a limited restructuring process for the Company to ensure that we have the right people and expertise to carry out the new mandate of Biomira while we continue to carry out the handover of L-BLP25 to Merck. We still maintain our expertise in all necessary areas to take advantage of the opportunities presented to us. We expect further reductions in staff once we have clarity on how long the Merck handover will take and we understand more fully what expertise we need for potential new product candidates that we hope to in-license.

Our immediate focus will be on BGLP40. BGLP40 is a third generation vaccine program utilizing a liposomal formulation of a vaccine with human MUC1 peptide antigens, carbohydrate antigens and a synthetic adjuvant.

BGLP40 is Biomira's first fully synthetic vaccine. The program offers the potential to eliminate some of the consistency issues faced in manufacturing biological products, as well as a large market potential as MUC1 and certain carbohydrate epitopes are expressed on the majority of solid tumour cancers. It is our hope that we can now focus our efforts on moving this product candidate through the pre-clinical process and into clinical trials in late 2007. We plan to also take advantage of our out-licensing expertise to seek, by the first half of 2007, an appropriate licensing arrangement for the future development of BGLP40. We decided to suspend an earlier search for an appropriate arrangement until we could show more data on this product candidate. We hope to be able to more definitively plan for the future of BGLP40 by the third quarter of 2006.

Biomira will also focus on exploring the full potential of our Synthetic Biologics Business Unit (SBBU), headed by Dr. Rao Koganty. This business unit, set up in 2005, is designed to develop and commercialize specific synthetic mimics of important biological compounds such as bacterial and viral products, which interact with various toll like receptors (TLRs) to modulate the immune system. Our SBBU has already developed an extensive portfolio of synthetic analogues of Lipid A, a vaccine adjuvant of bacterial origin. These synthetic adjuvants, which are covered by a portfolio of world-wide patent applications, are well recognized for their consistency in performance and production. Significant demand for high performance adjuvants, in a highly competitive environment, in the vaccine world creates excellent business and out-licensing opportunities.

The chemistry expertise of our SBBU is further diversified to potentially assist in pharmaceutical developments for external organizations. The SBBU is actively seeking collaborations by leveraging its expertise in the area of design and synthesis of new chemical entities of biological origin for the development of stand alone therapeutic products that address the unmet needs of immune disorders.

We hope to conclude our first SBBU licensing agreement sometime in 2006 or early next year and we are excited about the growth and prospects for this business unit.

For the Company, now that Merck has the responsibility for moving L-BLP25 forward, we are in a position to take advantage of several promising in-licensing opportunities. Due diligence is already underway on a number of promising projects and we look forward to sharing these with you if we decide to move to an in-licensing agreement. We want to develop a program that builds on our core competencies in synthetic immunotherapy, but also in other targeted approaches in treating human cancers.

We also have a controlling interest in our spin-off company, Oncodigm BioPharma Inc. This company was created to fully exploit Liposomal Interleukin-2 (L-IL-2) technology that Biomira did not have the resources to fully develop. We are now well positioned to re-evaluate the strategy for the future of L-IL-2.

With Merck assuming the ongoing development and costs of L-BLP25, the future of L-BLP25 is now secure and our financial risk has been greatly reduced. We can now begin the restructuring process to meet the challenges of seeking new business and development opportunities. With the U.S. $16.07 million we raised at the end of January, we are also in a position to focus on bringing our next vaccine, BGLP40, through development and look at exploring our promising in-licensing and out-licensing opportunities. We face the future with renewed confidence and energy and will concentrate on building shareholder value through the development of a pipeline for the future of the Company. We appreciate your continued support for the Company and your dedication to moving with us in our new developments.

The Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), prepared as at February 28, 2006, should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2005. These financial statements, which follow the MD&A, have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP) that differ in some respects from those of the United States (U.S. GAAP). Unless otherwise indicated, all amounts shown are in Canadian dollars.

Biomira Inc. is an international biotechnology company headquartered in Canada which is engaged primarily in the research and development of innovative therapeutic approaches to cancer management. Our research and development efforts are currently focused on our core competency in immunotherapeutics, particularly developing synthetic vaccines and novel strategies for cancer immunotherapy. Our strategic mission is to build a sustainable and profitable company by bringing patients innovative, targeted therapeutics that extends quality and duration of life.

Corporate resources during 2005 were primarily directed towards the ongoing development of our lead product candidate L-BLP25. L-BLP25 is a synthetic MUC1 peptide vaccine incorporating a 25-amino acid sequence of the MUC1 cancer mucin that is encapsulated in a liposomal delivery system and is designed to induce an immune response to cancer cells. This product candidate has completed phase 2b clinical testing with the Company first releasing survival analysis data in April 2004. In October 2005 we provided an update to the survival data from our phase 2b study, which showed that patients with Stage IIIb locoregional non-small cell lung cancer (NSCLC) who received the vaccine had a median survival of 30.6 months compared to 13.3 months for the unvaccinated group, a difference of 17.3 months. Ensuring that these highly encouraging results can be fully tested in a phase 3 study has been the overriding focus of Biomira and Merck KGaA (Merck) of Darmstadt, Germany.

In September, Biomira and Merck, announced completion of enrolment of a phase 2 single arm, multi-centre open label safety study. This trial enrolled a total of 22 patients with NSCLC from eight clinical trial sites in Canada. The trial is designed to assess the safety of the formulation of L-BLP25 that is intended to be used in the planned phase 3 study. The new formulation incorporates manufacturing changes intended to secure the future commercial supply of the vaccine. In November, we announced the comparability results showing that the new formulation of the vaccine is not different from the previous formulation from a safety perspective.

In September, Biomira and Merck also announced a change to the anticipated timetable for the start of the planned L-BLP25 phase 3 study in the treatment of NSCLC. The change was to address an accelerated stability issue discovered during the manufacturing of the vaccine to be used in the phase 3 trial. An investigation with the contract manufacturer indicated that excess moisture in the product may have been the cause of the instability. Further testing has demonstrated that the corrective actions taken to resolve the stability issue have been successful. However, as a result of this delay, the start of the trial, which was planned for the end of 2005, is now expected to commence in mid 2006.

In January 2006, we announced the signing of a letter of intent to amend the agreements governing the collaboration between Biomira and Merck for L-BLP25. Under the letter of intent, approved by the Boards of both Companies, Merck will take over administrative and financial responsibility for the development and commercialization of L-BLP25, including the planned phase 3 trial in NSCLC. Merck also plans to investigate the use of L-BLP25 to treat other types of cancer. All future development, regulatory, commercialization and marketing costs for L-BLP25 (including the planned phase 3 trial, but excluding the Canadian territory) will be borne exclusively by Merck effective March 1, 2006.

In return, our co-promotion interest in U.S. sales will be converted to a specified royalty rate, which will be higher than what Merck has agreed to pay on its sales of L-BLP25 in markets outside of North America (the Rest of World (ROW)). The royalty and other arrangements with respect to the ROW will remain generally unchanged (Merck to assume a specified third party royalty obligation on behalf of Biomira). Similarly, the milestone payments to be made by Merck pursuant to the collaboration will remain essentially the same. The agreed upon royalty rate for the U.S. territory reflects the stage and promise of L-BLP25.

We will retain responsibility for manufacturing L-BLP25, both for clinical trials and following any marketing approval. The existing arrangements for Canada remain in place with Biomira responsible for the Canadian territory.

Under the terms of the letter of intent, the parties have agreed to use commercially reasonable efforts to execute the amendments to the agreements governing the collaboration within 60-90 days of the effective date of January 26, 2006.

As a result of the signing of the letter of intent with Merck, we began a limited restructuring process for the Company to ensure that we have the right people and expertise to carry out the business of the Company, while we continue to carry out the transition of L-BLP25 responsibilities to Merck. Initially we will be reducing our workforce by 14 employees at an estimated severance cost of approximately $1.1 million; however we will continue to maintain our core expertise in all necessary areas to take advantage of the opportunities presented to us. We expect further reductions in staff once we have clarity on how long the Merck transition will take and we understand more fully what expertise we need for potential new product candidates that we hope to in-license.

With the development program of L-BLP25 now in the hands of Merck, we can focus our efforts and direct more of our resources to fill out and advance our pipeline to build additional value for our shareholders.

Our immediate focus will be on gathering more data and advancing our follow-on vaccine, BGLP40, a third generation vaccine. It is a completely synthetic MUC1 based liposomal, multiple target cancer vaccine, which we believe may provide benefit in several cancer indications. BGLP40 is a vaccine designed to evoke both a cellular and humoral immune response against major cancer-associated target epitopes expressed on adenocarcinomas. We anticipate being able to more definitively plan for the future of BGLP40 by the third quarter of 2006, with the hope that we can move this product through the pre-clinical process and into clinical trials in late 2007.

In April 2005, we created a Synthetic Biologics Business Unit which continues to focus on exploring the full potential of chemically synthesized biologicals for use in protective and therapeutic vaccines. We have developed technologies that can be used by other companies developing non-competing vaccine technology. Our expertise in this area complements our current programs and provides new upside business potential as we continue to actively seek licensing opportunities for our synthetic adjuvants.

Now that Merck has the responsibility for moving L-BLP25 forward, we can also focus on taking advantage of several potential in-licensing opportunities. Due diligence is already underway on a number of encouraging projects as we work towards developing a program that builds on our core competencies in synthetic immunotherapy, but also in other targeted approaches in treating human cancers.

We also have a controlling interest in our spin-off company, Oncodigm BioPharma Inc. This company was created to fully exploit Liposomal Interleukin-2 (L-IL-2) technology that Biomira did not have the resources to fully develop. We are now well-positioned to re-evaluate the strategy for the future of L-IL-2.

In February we announced the resignation from the Board of Directors of Dr. Sheila Moriber Katz and the subsequent appointment of Christopher S. Henney, PhD, DSc. Dr. Henney is a co-founder of three major publicly held U.S. biotechnology companies, Immunex Corporation, ICOS (Nasdaq:ICOS - News ) and Dendreon Corporation (Nasdaq:DNDN - News ). Dr. Henney was also the Chairman and Chief Executive Officer of Dendreon Corporation. He serves on the Board of Directors of Bionomics Ltd. (ASX:BNO; OCT:BMICY), in Adelaide, South Australia, and as Chairman of SGX Pharmaceuticals, Inc. (Nasdaq:SGXP - News formerly Structural Genomix), in San Diego, CA. In March of 2005, Dr. Henney was appointed as Chairman of Xcyte Therapies Inc. (Nasdaq:XCYT - News ).

In July we exercised our right to acquire a 1.62% equity position in Prima BioMed Ltd. (ASX: PRR - News "Prima"), an Australian biotech company. In March 2004, we announced a technology licensing and commercial agreement with Cancer Vac Pty. Ltd. (Cancer Vac), a subsidiary of Prima, acquiring a 10 percent equity stake in Cancer Vac. Biomira had the right to convert this stake to shares in Prima, which we have now exercised.

In January 2006, we completed a financing totaling U.S. $16.07 million, before issue costs, with Rodman & Renshaw, LLC of New York acting as exclusive placement agent. The Company issued 10,572,368 units, each consisting of one common share and 0.25 of a warrant, at an issue price of U.S. $1.52. Each warrant entitles the holder thereof to purchase one common share at an exercise price of U.S. $2.50. The warrants have a 42-month term, from the date of closing, and a no-exercise period of six months. The financing closed at the end of January and was fully subscribed.

With this additional money in our treasury and the development program of L-BLP25 now in the hands of Merck, we are well positioned to begin further development of BGLP40 and assessing potential in-licensing opportunities. We are excited about the challenges of seeking new business and development opportunities and we face the future with renewed confidence and energy. In 2006 we will move forward with focusing on building additional shareholder value through the development of a pipeline for the future of the Company.

Consolidated net losses for the years 2005, 2004, and 2003 were $19.0 million, $12.2 million, and $19.0 million, respectively. The increase in net loss in fiscal 2005, as compared to fiscal 2004, was primarily attributable to lower revenues as a result of the recognition into income in 2004 of the remaining deferred revenue balance related to Theratope vaccine due to the return of development and commercialization rights for this product candidate by Merck announced in June 2004. In addition, we experienced an increase in research and development expenditures, as compared to fiscal 2004, due to increased spending associated with the L-BLP25 phase 2 safety study commenced in the second quarter of 2005 and the planned L-BLP25 phase 3 clinical trial that is expected to commence in mid 2006. We anticipate this increase in clinical trial expenditures experienced in the current year to reverse in the second half of 2006 as a result of the recently announced amendment to the licensing agreement for L-BLP25.

Results for 2005 indicate a $6.8 million or 56% increase in the year over year loss resulting from lower revenues of $4.5 million, and higher research and development expenditures of $3.5 million, offset by lower general and administrative expenses of $0.3 million, reduced marketing and business development expenses of $0.4 million, higher investment and other income of $0.4 million, and reduced other operating expenditures of $0.1 million.

Revenues from operations for the years ended 2005, 2004, and 2003 were $4.4 million, $8.9 million, and $3.4 million, respectively. The 2005 year over year decrease of $4.5 million or 51% primarily stems from lower licensing revenues recognized into income as a result of the return of Theratope development and commercialization rights by Merck announced in June 2004.

Revenues from contract research and development for fiscal 2005, totaling $3.8 million compared to $2.1 million for the same period in 2004, represents contract research and development funding received from Merck associated with L-BLP25 and Theratope. The increase in funding received from Merck in 2005 is primarily attributable to increased clinical expenditures incurred by Biomira in relation to the L-BLP25 phase 2 safety study commenced in the second quarter of this year, and in preparation of the planned phase 3 clinical trial expected to commence in mid 2006.

Licensing revenues from collaborative arrangements for fiscal 2005 of $0.2 million compared to $6.5 million for fiscal 2004, represents the amortization of upfront payments received from Merck and an upfront sublicensing fee from Cancer Vac upon commencement of the respective collaborations. The decreased revenue primarily results from return of the Theratope development and commercialization rights by Merck in June 2004 and the immediate recognition into income of the remaining related deferred revenues totalling $5.9 million.

Licensing, royalties and other revenue for fiscal 2005, totalling $0.3 million, was similar to the same period in 2004. Licensing, royalties and other revenue relates to contract manufacturing activities utilizing various Biomira patented technologies and compounds for external customers.

Operating revenues are not expected to increase significantly until certain milestone payments tied to clinical advancement/success have been earned, and commercialization of one or more of our products has occurred. Under the terms of the recently signed letter of intent with Merck we will be eligible for milestone payments upon execution of the amendments to the licensing agreement, and upon enrolment of the first patient into the planned phase 3 pivotal study in NSCLC. These payments may occur in fiscal 2006 depending on the timing of the triggering events. In addition to the potential outcomes related to our lead technology, we will continue to explore licensing opportunities and collaborative alliances for emerging technologies in our pipeline that may contribute to future revenue generation. The extent and timing of such additional licensing fees and contract revenue, if any, will be dependent upon the overall structure, terms, and conditions of any future arrangements.

We are a development company that dedicates the majority of our cash resources to product and clinical development activities. The majority of our costs are associated with our clinical development programs. In order to align our cash and other resources on activities that have a higher probability of generating product commercialization opportunities, we do not perform discovery research activities. Rather, we have adopted a defined strategy to capitalize on pre-clinical and clinical product opportunities via in-licensing and collaborative arrangements with third parties.

For the three years ended 2005, 2004, and 2003, we incurred $16.9 million, $13.6 million, and $14.7 million respectively in direct research and development costs. The increase in research and development expenditures is attributable to increased spending associated with the L-BLP25 phase 2 safety study commenced in the second quarter of 2005 and the planned L-BLP25 phase 3 clinical trial that is expected to commence in mid 2006. Expenditures for fiscal 2005 include development of clinical protocols and procurement and manufacturing of clinical materials along with ongoing costs associated with clinical site wrap up expenses of existing clinical trials.

We anticipate product development expenditures to decrease in 2006 now that the development program for L-BLP25 is in the hands of Merck effective March 1, 2006. Further, we anticipate that the majority of the expenditures in 2006 and beyond will be concentrated towards two primary areas of focus: 1) manufacturing and related process development expenditures related to ensuring adequacy of clinical drug supply and related manufacturing activities for the planned large multi-national L-BLP25 phase 3 trial, and 2) advancement of other promising products in our pipeline including BGLP40 and L-IL-2. The manufacturing and related process development expenditures will be partially offset by funding revenues received from Merck under the terms of the supply agreement.

General and administrative expenses for 2005, 2004, and 2003 were $6.3 million, $6.6 million, and $5.4 million, respectively. The 2005 expenditures represent a decrease of $0.3 million (5%) over the previous year and are primarily attributable to incremental costs incurred in the first half of 2004 relating to the settlement of an outstanding litigation.

For 2006, our general and administrative expenses are anticipated to remain at similar levels compared to 2005 in order to adequately support the continued advancement of our product candidates and the continued implementation of corporate governance compliance initiatives.

Marketing and business development expenses for 2005, 2004, and 2003 were $1.0 million, $1.4 million, and $1.8 million respectively and represent corporate administrative expenses associated with these functions, as well as costs associated with licensing activities related to pre-clinical and early stage technologies. Expenditures in 2003 included pre-commercialization activities related to Theratope that were subsequently discontinued following the June 30, 2003 phase 3 final analysis.

For 2006, we anticipate our business development expenditures to remain at similar levels compared to 2005 in order to adequately support our renewed focus on exploring potential in-licensing and out-licensing opportunities.

Amortization expense relates to facility leaseholds and equipment, certain licensing rights, and other assets. Amortization expense for fiscal 2005 of $0.4 million was similar to the same periods in 2004 and 2003. We anticipate amortization expense to remain constant in 2006.

Investment revenue for 2005, 2004, and 2003 were $0.8 million, $0.7 million, and $1.0 million respectively. The 2005 investment revenue represent an increase of $0.1 million (14%) over the previous year and is primarily attributable to a modest improvement in the interest rate environment coupled with comparable average investment balances year over year. Other expense primarily consists of a net foreign exchange loss of nil (2004 - $0.3 million, 2003 - $1.3 million) on U.S. dollar holdings attributable to significant fluctuations of the Canadian dollar against the U.S. dollar in 2003 and to a much lesser extent in 2004 and 2005.

With the additional U.S. $16.07 million, before issue costs, in financing that we were able to secure at the end of January 2006, coupled with ongoing redemption of investments and analyst expectations of continuing low market yields relative to Canadian dollar denominated investments for 2006 we anticipate that, in the coming year, investment income will be at approximately the same level of return as in 2005.

The income tax benefit of $0.3 million recorded in 2005 compared to $0.4 million and $0.3 million in 2004 and 2003 respectively, is due to proceeds of $0.3 million realized in the fourth quarter from the sale of New Jersey State tax losses attributable to Biomira's U.S. subsidiary. The $0.1 million decrease in 2005 is due to a lower level of proceeds received from the sale of New Jersey State tax losses.

As at December 31, 2005, Biomira's cash and cash equivalents and short-term investments were $21.4 million compared to $38.6 million at the end of 2004, a decrease of $ 17.2 million or 45%. Major contributors to the net change included $1.0 million in warrant and stock option exercises, offset by $17.7 million used in operations, $0.4 million used for the purchase of capital assets, and $0.1 million related to payment of accrued share issuance costs related to the December 2004 financing. In January of 2006, we were able to secure an additional U.S. $16.07 million, before issue costs, in financing which should provide sufficient funding to begin further development of BGLP40 and assessing in-licensing opportunities.

Working capital, defined as current assets less current liabilities, decreased by $17.2 million from 2004, to $19.9 million from $37.1 million and is primarily attributable to the $17.2 million decrease in cash reserves coupled with an increase of $0.8 million in accrued liabilities, offset by an increase of $0.5 million in accounts receivable and a decrease of $0.3 million in the current portion of deferred revenue. The increase in both current liabilities and accounts receivable is attributable to the increased clinical development expenditures associated with activities for the planned large multi-national L-BLP25 phase 3 trial.

We believe that we have taken prudent measures relative to managing our cash reserves and operating expenditures. We have focused the majority of our planned activities and expenditures towards advancing our lead product candidate L-BLP25 while continuing to build a pipeline of technologies through in-licensing activities. Now that the development program for L-BLP25 is in the hands of Merck effective March 1, 2006, coupled with the additional U.S. $16.07 million, before issue costs, in financing which we were able to secure in January 2006, we believe that sufficient cash reserves are in place to operate well into the latter half of 2007 and potentially into early 2008. Additional capital resources may be required depending on the outcomes associated with activities related to the in-licensing of new product candidates, and activities associated with the further development of other products in our pipeline including BGLP40 and L-IL-2. Such additional capital resources could be derived from future financings under our current Base Shelf Prospectus, which expires in the third quarter of 2006, or receipt of milestone payments from Merck.

Anticipating future funding requirements to further our product pipeline and in-licensing activities, we registered a U.S. $100 million Base Shelf Prospectus with the applicable regulatory authorities in Canada and the U.S. in July 2004. This financing mechanism, unless fully exhausted prior to expiry, will remain in place into the third quarter of 2006. Thereafter, it is our current expectation that we will register a new Base Shelf Prospectus to ensure that a financing mechanism remains in place to allow us to take advantage of future favorable financing opportunities in a timely manner.

In January 2006, following the announcement to amend the licensing agreement for L-BLP25, we were able to raise gross U.S. $16.07 million by issuing 10,572,368 units, each unit consisting of one common share and 0.25 of a warrant, at an issue price of U.S. $1.52. Each warrant entitles the holder thereof to purchase one common share at an exercise price of U.S. $2.50. The warrants have a 42 month term and a no-exercise period of six months.

Under the U.S. $100 million Base Shelf Prospectus, just over U.S. $71 million is still available for future financings. In addition, at December 31, 2005 there were 1.1 million warrants outstanding, at a weighted-average exercise price of U.S. $3.45. Based on our NASDAQ closing share price of $1.40 on December 31, 2005, the warrants outstanding are currently not in the money. Assuming continuing investor support for our equity offerings, and the successful registration of a new Base Shelf Prospectus in the third or fourth quarter of 2006, this form of financing mechanism should allow us to pursue financing opportunities in the foreseeable future.

From inception, we have financed our research and development, operations, and capital expenditures primarily through public and private sales of our equity securities, licensing and collaborative arrangements, and investment income. To maximize value from our capital resources and ensure overall financial stability, we maintain a comprehensive financial planning, budgeting, monitoring, and governance system that imposes a disciplined approach to fiscal management. Our investment guidelines focus on capital preservation and security of income and restrict the portfolio to holding only liquid, investment-grade securities with maturities aligned to projected cash requirements.

To meet future requirements, we intend to raise cash or improve liquidity through some or all of the following methods: public or private equity or debt financing; capital leases; achievement of milestone payments on existing collaborative agreements; and the execution of new collaborative and licensing agreements related to our proprietary technologies. However, there is no assurance of obtaining additional financing through these arrangements on acceptable terms, if at all. The dynamics of the biotechnology sector, and in particular the uncertainty inherent in our clinical programs, may make it difficult to raise significant new capital at reasonable cost. Consequently, our ability to generate additional cash is contingent on many external factors beyond our control, as described in "Risks and Uncertainties." Should sufficient capital not be raised, we may have to delay, reduce the scope of, eliminate, or divest our technologies, programs and related personnel, any of which could impair the current and future value of the business.

In our operations, we have entered into long-term contractual arrangements from time to time for our facilities, debt financing, the provision of goods and services, and acquisition of technology access rights, among others. The following table presents contractual obligations arising from these arrangements currently in force over the next ten years.

We have exercised our right to renew the corporate facilities lease for a further 2 year term and expect the renewal rates to be similar to the previous term. As well, we have entered into new 3 year capital lease agreements for computer equipment and renewed our software licensing agreement for a further 3 years.

With the exception of capital leases, the obligations described above are non-cancellable operating leases or commitments that do not meet the criteria for accounting recognition of an asset and an obligation under the Canadian Institute of Chartered Accountants ("CICA") Handbook section 3065 Leases. The contractual terms provide for periodic lease payments and return of the equipment at the end of the lease. For the current fair values of the capital leases, refer to Note 16 Financial Instruments in the notes to the 2005 consolidated financial statements.

Under certain licensing arrangements for technologies incorporated into our product candidates, we are contractually committed to payment of ongoing licensing fees and royalties, as well as contingent payments when certain milestones as defined in the agreements have been achieved.

With respect to our contingent liabilities, we have no new items to report in 2005. For a discussion of our current contingencies, commitments, and guarantees, refer to Note 15 Contingencies, Commitments, and Guarantees in the notes to the 2005 consolidated financial statements.

As at December 31, 2005, we have not entered into any off-balance sheet arrangements except as disclosed in Note 15 Contingencies, Commitments, and Guarantees in the notes to the 2005 consolidated financial statements.

In 2005, we did not enter into any material transactions with related parties. In order to effectively execute our business strategy, we expect to continue outsourcing various functions to the expertise of third parties such as contract manufacturing organizations, and other research organizations. These relationships are with non-related third parties and occur at arm's length and on normal commercial terms.

At the start of 2006, we believe that we have in place several key value drivers that may increase shareholder value in the future. These include: a strong corporate alliance with Merck; the planned advancement by Merck of L-BLP25 into a pivotal phase 3 registration trial; the possible advancement of clinical programs related to early stage technologies under collaborative arrangements; and out-licensing opportunities for early stage product technologies. In addition, we may be able to garner value to our shareholders from the potential advancement of BGLP40 if we are successful in negotiating a funding arrangement with a partner for this program. The key value drivers described above could be negatively impacted by many factors including: a decision by Merck not to move forward with or abandon the planned L-BLP25 phase 3 registration trial, Merck's inability to successfully complete the planned L-BLP25 phase 3 registration trial, unfavorable results from the planned L-BLP25 phase 3 registration trial, and ultimately denial or delay of regulatory approval.

In our view, other value drivers enable us to exploit our leading technologies in synthetic cancer vaccines. These competitive advantages include, among others, our strong intellectual and human capital, a lean and focused work force, proven management, and well-established financing relationships and access to risk capital. Our future success will largely depend on focusing the creative talents and energy of our employees towards the timely and prudent commercialization of our intellectual property.

Financing is both a key element of our corporate strategy as well as a critical resource in executing that strategy. We have had demonstrable success in attracting, and establishing relationships with risk capital providers. To facilitate timely access to financing opportunities that may emerge, we registered a U.S. $100 million Base Shelf Prospectus in 2004 in Canada and the U.S., which expires in the third quarter of 2006, with $33.6 million (U.S. $28.7 million), before issue costs, in new equity realized to date through this vehicle. Currently, it is our expectation that we will register a new Base Shelf Prospectus to ensure that a financing mechanism remains in place to allow us to take advantage of favorable financing opportunities in a timely manner.

We expect that clinical development expenses will decline considerably in the second half of 2006 now that the development program for L-BLP25 is in the hands of Merck effective March 1, 2006. Coupling this with the U.S. $16.07 million, before issue costs, in financing we were able to secure in January 2006 and the expected cash inflows from collaborative funding arrangements, investment income, and technology licensing efforts; we believe that our cash and short-term investments in place will be sufficient to meet operating and capital requirements into the latter half of 2007 and potentially into early 2008. However, until one of our products receives regulatory approval and is successfully commercialized we anticipate losses for at least the foreseeable future as our lead product candidate undergoes the final stages of clinical development.

Our ability to continue to generate cash to fund the advancement of clinical programs related to early stage technologies and out-licensing opportunities for early stage product technologies will depend on several factors. Among others, these include regulatory support for the Merck-led phase 3 pivotal L-BLP25 registration trial; the availability of new financing through private and/or public offerings on acceptable terms; the timely advancement of clinical studies; the costs in obtaining regulatory approvals for our products; and the value and timing of securing licensing and collaborative arrangements in building our pipeline.

The coming year will be critical in shaping our future direction, hinging on our ability to develop a viable product strategy and to attract ongoing investment. We remain firmly committed to our long-term goal to deliver value for our shareholders.

Except for historical information, certain matters discussed in this document are by their nature forward-looking and are therefore subject to many risks and uncertainties, which may cause actual results to differ materially from the statements made herein. Some of these risks and uncertainties are inherent to the biotechnology industry, while others are specific to Biomira; some of these factors are predictable or within our control, others are not. These include, but are not limited to: changing market and industry conditions; clinical trial results; the establishment of new and continuation of existing corporate alliances; the impact of competitive products and their pricing; timely development of existing and new products; the difficulty of predicting regulatory approval and market acceptance for our products; availability of capital or other funding; the ability to retain and recruit qualified personnel; and other risks, known or unknown.

Based on an ongoing assessment of our risk profile, we have concluded that there has been no material change in the nature and magnitude of the risks described below, except as noted otherwise.

The future performance of Biomira is contingent on a number of critical factors: our success in bringing new products to the marketplace; our ability to generate royalty or other revenues from licensed technology; our ability to generate positive cash flow from operations and equity financing; and our ability to maintain effective collaborative relationships with corporate partners. In addition, future success will depend on the efficacy and safety of our products, timely regulatory approval for new products and new indications, and the degree of patent protection afforded to particular products. After overcoming regulatory and patent hurdles, in order to succeed, we must continue to secure adequate manufacturing capacity to produce commercial quantities of our products, ensure that the processes and facilities of our manufacturing partners meet the highest standards of production quality, and develop an effective distribution and marketing network. Commercial viability requires widespread acceptance of our products by the medical community, as well as by a majority of health care plans and payers in the key markets. Last, but not least, over the long term, operating effectiveness depends critically on our ability to recruit, retain, and develop our human resources, which is exposed to the risks and uncertainties of a tight labour market for unique skills relating to biotechnology research, development, and management.

There can be no assurance that new competitive products will not be more efficacious, brought to market sooner and/or marketed more effectively, or at lower cost, than any that we may develop. Competitors may also be able to develop non-patent infringing product strategies that may be as good as or better than our patent-protected products. We believe that we have strong proprietary and/or patent protection, or the potential for strong patent protection, for a number of our products currently under development; however, the ultimate power of patent protection may be determined by the courts and/or changes in patent legislation in various countries.

As part of our risk management strategy, we transfer some risks through a general insurance program. In addition to insurance for our standard business risks, we have obtained aggregate blanket insurance coverage of U.S. $10 million for potential clinical trial liability. Given the scope and complexity of the clinical development process, the uncertainty of product liability litigation, and the shrinking capacity of insurance underwriters, it is not possible at this time to assess the adequacy of our current clinical trial insurance coverage, nor the ability to secure continuing coverage at the same level and at reasonable cost in the foreseeable future.

Our investment earnings are exposed to financial market risks arising from volatility in interest and foreign currency exchange rates, as well as to overall market conditions. We also have exposure to exchange risk through our collaboration revenues, licensing and royalty commitments, product manufacturing costs, and clinical development expenses. Of our total expenditures in 2005, a large portion was denominated in U.S. currency. Since our primary cash flows from collaboration revenues and our equity financings are likewise denominated, they predominantly offset U.S. cash requirements. We minimize our exchange risk through prudent cash management to ensure that foreign currency requirements and surpluses are handled effectively; and, from time to time, we may engage in hedging or use derivatives to manage specific financial exposures. However, we do not use derivatives for speculative or trading purposes.

Interest rate risk is the exposure of interest revenue and expense to rate fluctuation; inflation risk is loss of purchasing power due to rising prices. Economic forecasts project a stable outlook for low inflation and interest rates in the near future; hence, these risks are expected to be negligible. Furthermore, our debt obligations, primarily capital and operating leases at this time, have fixed rates over the terms of the commitments.

Due to the intrinsic uncertainty in our business prospects and of the life sciences sector in general, the equity markets have amplified the company risk factor for Biomira. Our share price is therefore subject to equity market price risk, which may result in significant market speculation and volatility of trading. Given the current low share price and the possibility of further decline, there is a risk that future issuance of common shares under the remainder of the U.S. $100 million Base Shelf Prospectus, which expires in the third quarter of 2006, and the potential exercise or conversion of stock options, restricted share units and warrants, may result in material dilution of share value, which may then lead to even lower share prices. Finally, the investment guidance and decisions of securities analysts and major investors in response to our financial or scientific results, and/or the timing of such results and expectations about future prospects, could also have a significant effect on investor support and future share price.

All of our accounting policies are in accordance with Canadian GAAP including some which require management to make assumptions and estimates that could significantly affect the results of operations and financial position. The significant accounting policies that we believe are the most critical in fully understanding and evaluating the reported financial results are described below. Our significant accounting policies are disclosed in Note 2 Significant Accounting Policies of the notes to the consolidated financial statements.

Licensing, royalty, and contract research revenues are recognized as services are performed under the terms of the related contractual agreements. Currently, we also earn revenue from collaborative agreements, which typically consists of initial technology access or licensing fees and milestone payments triggered by specified events. Initial lump sum payments for such fees and licenses are recorded as deferred revenue when received and recognized as revenue on a straight-line basis over the term of the collaborative agreement or the related product life cycle, whichever is shorter. Milestone payments are recognized as revenue upon performance of obligations defined as milestones in the agreements.

Application of this policy affects primarily the timing, rather than the amount, of revenue recognition for up-front payments. Such up-front payments from collaborative agreements are amortized over the estimated product life cycle, as this is determined to best match the future benefits derived from such agreements.

Research and development costs consist of direct and indirect expenditures related to our research and development programs that may include technology access and licensing fees related to the use of proprietary third party technologies. Research and development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. We assess whether any costs have met the relevant criteria for deferral and amortization at each reporting date. To date, no product research and development costs have been deferred. Should the regulatory agencies approve a clinical product, management will determine whether conditions exist for deferral and amortization of any qualifying development costs. Earnings will be impacted in the period that such development costs are capitalized, and also in each subsequent accounting period as they are amortized.

Effective January 1, 2005, we adopted the recommendations of CICA Handbook Accounting Guideline 15 (AcG-15), Consolidation of Variable Interest Entities, effective for annual and interim periods beginning on or after November 1, 2004. Variable interest entities (VIEs) refer to those entities that are subject to control on a basis other than ownership of voting interests. AcG-15 provides guidance for identifying VIEs and criteria for determining which entity, if any, should consolidate them.

We have determined that adoption of AcG-15 does not have an effect on our financial position, results of operations or cash flows in the current period or the prior period presented.

Effective January 1, 2005, we adopted the amended recommendations of CICA Handbook Section 3860, Financial Instruments - Disclosure and Presentation, effective for fiscal years beginning on or after November 1, 2004. Section 3860 requires that certain obligations that may be settled at the issuer's option in cash or the equivalent value by a variable number of the issuer's own equity instruments be presented as a liability.

We have determined that adoption of Section 3860 does not have a material effect on the Company's financial position or results of operations in the current period or the prior periods presented.

In January 2005, the Accounting Standards Board ("AcSB") of the CICA issued Handbook Section 3855, Financial Instruments - Recognition and Measurement. The new accounting standard requires that all financial instruments, including derivatives are to be included on a company's balance sheet and measured, either at their fair value or, in limited circumstances when fair value may not be considered most relevant, at cost or amortized cost. The standards also specify when gains and losses as a result of changes in fair values are to be recognized in the income statement.

In January 2005, the AcSB of the CICA issued new Handbook Section 1530, Comprehensive Income, and Section 3251, Equity. Section 1530 establishes standards for reporting and display of comprehensive income. It defines other comprehensive income to include revenues, expenses, gains and losses that, in accordance with primary sources of GAAP, are recognized in comprehensive income, but excluded from net income. The section does not address issues of recognition or measurement for comprehensive income and its components. Section 3251 establishes standards for the presentation of equity and changes in equity during the reporting period. The requirements in this section are in addition to Section 1530 and recommends that an enterprise should present separately the following components of equity: retained earnings, accumulated other comprehensive income, the total for retained earnings and accumulated other comprehensive income, contributed surplus, share capital and reserves.

In January 2005, the AcSB of the CICA issued Handbook Section 3865, Hedges. The new accounting standard extends existing requirements for hedge accounting and comprehensively specifies how hedge accounting should be performed.

The mandatory effective date for the new Sections 1530, 3251, 3855 and 3865 is for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006. Earlier adoption is permitted only as of the beginning of a fiscal year ending on or after December 31, 2004. We are in the process of evaluating the impact of these recently issued standards on our financial position and results of operations.

In June 2005, the AcSB issued Handbook Section 3831, Non-Monetary Transactions, replacing Section 3830 of the same title. The new accounting standard requires all non-monetary transactions be measured at fair value unless certain conditions are satisfied. The new requirements are effective for non-monetary transactions initiated in periods beginning on or after January 1, 2006.

In October 2005, the Emerging Issues Committee of the CICA (the "EIC") issued Abstract No. 157, Implicit Variable Interests under AcG-15 (EIC-157), to address whether a company has an implicit variable interest in a VIE or potential VIE when specific conditions exist. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing and/or receiving of variability indirectly from the entity (rather than directly). The identification of an implicit variable interest is a matter of judgment that depends on the relevant facts and circumstances. EIC-157 will be effective in the first quarter of 2006.

The following is selected annual consolidated financial information from our audited annual financial statements for each of the three most recently completed years ending December 31, 2005.

The following is selected quarterly consolidated financial information from our unaudited quarterly financial statements for each of the eight most recently completed quarters ending December 31, 2005.

------------------------------------------------------------------------- (expressed in 000's except per share data) Q1 Q2 Q3 Q4 Annual ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2005 ------------------------------------------------------------------------- Total revenues ------------------------------------------------------------------------- Research and development costs $3,507 $4,320 $4,625 $4,455 $16,907 ------------------------------------------------------------------------- Net loss $(4,358) $(4,803) $(5,476) $(4,388) $(19,025) ------------------------------------------------------------------------- Basic and diluted loss per share $(0.06) $(0.06) $(0.07) $(0.05) $(0.24) ------------------------------------------------------------------------- Common shares outstanding 78,360 78,817 78,817 78,817 78,817 ------------------------------------------------------------------------- Weighted average number of common shares outstanding 78,352 78,500 78,607 78,660 78,660 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2004 ------------------------------------------------------------------------- Total revenues ------------------------------------------------------------------------- Research and development costs $3,791 $3,358 $3,229 $3,198 $13,576 ------------------------------------------------------------------------- Net (loss) income $(4,852) $1,012 $(4,804) $(3,581) $(12,225) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted (loss) income per share $(0.07) $0.01 $(0.06) $(0.05) $(0.17) ------------------------------------------------------------------------- Common shares outstanding 72,559 72,562 72,562 78,340 78,340 ------------------------------------------------------------------------- Weighted average number of common shares outstanding 72,555 72,558 72,560 72,941 72,941 ------------------------------------------------------------------------- (1) The increased revenues in the second quarter of 2004 resulted from the recognition into income of the remaining deferred licensing revenues related to Theratope, totalling $5.9 million, due to the return of the Theratope development and commercialization rights from Merck announced in June 2004.

Upon exercise or conversion, the stock options, restricted share units and warrants are convertible into an equal number of common voting shares. Had the outstanding stock options, restricted share units and warrants been fully exercised or converted, the aggregate number of common shares outstanding would be 97,543,434 as at December 31, 2005.

For details relating to the stock options, restricted share units and warrants, please refer to Notes 10 and 11 of the notes to the 2005 audited consolidated financial statements.

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining Biomira's disclosure controls and procedures, and intend to so certify, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the "Act"), and the corresponding SEC rules implementing these Sections of the Act, as well as Multilateral Instrument 52-109 ("MI 52-109") Certification of Disclosure in Issuers' Annual and Interim Filings. These officers have evaluated the effectiveness of Biomira's disclosure controls and procedures and have concluded that they provide management with a reasonable level of assurance that the information we are required to disclose on a continuous basis in annual and interim filings and other reports is recorded, processed, summarized and reported or disclosed on a timely basis as required. As a cross-border public company we are permitted to file the annual form of certification filed under Section 302 and 906 of the Act in lieu of the Canadian form of certification under MI 52-109.

This report may contain forward-looking statements. Various factors could cause actual results to differ materially from those projected in forward- looking statements, including those predicting the timing or availability of clinical trial analyses; efficacy, safety and clinical benefit of products; ability to secure, and timing of, regulatory clearances; timing of product launches in different markets; ability to retain or secure collaborative partners; ability to secure and manufacture vaccine supplies; adequacy of financing and reserves on hand; scope and adequacy of insurance coverage; retention and performance of contractual third parties, including key personnel; the achievement of contract milestones; currency exchange rate fluctuations; changes in general accounting policies; and general economic factors. Although we believe that the forward-looking statements contained herein are reasonable, we can give no assurance that our expectations are correct. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. For a detailed description of our risks and uncertainties, you are encouraged to review the official corporate documents filed with the securities regulators in Canada and the United States.

Additional information relating to Biomira, including a copy of our Annual Information Form and Proxy Circular filed annually at the end of March, can be found on SEDAR at www.sedar.com or U.S. EDGAR at www.sec.gov .

The accompanying consolidated financial statements of Biomira Inc., and all information presented in this annual report, are the responsibility of management and have been approved by the Board of Directors.

The financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles, which differ in some respects from those used in the United States of America. The significant differences in accounting principles, as they pertain to the financial statements, are identified in the related notes. The financial statements include some amounts that are based on best estimates and judgments of management. Financial information used elsewhere in this annual report is consistent with that in the financial statements.

To further the integrity and objectivity of data in the financial statements, the management of the Company has developed and maintains a system of internal controls over financial reporting, which management believes provides reasonable assurance that financial records are reliable and form a proper basis for preparation of financial statements, and that assets are properly accounted for and safeguarded.

The Board of Directors carries out its responsibility for oversight of the financial statements in this annual report principally through its Audit Committee. The Board appoints the Audit Committee and the majority of its members is comprised of outside and unrelated directors. In addition to being independent of management, at least one member of the Audit Committee must be qualified as a financial expert as required under the Sarbanes-Oxley Act of 2002. The committee meets periodically with management as well as quarterly with the external auditors, to discuss internal controls over the financial reporting process and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to review quarterly reports, the annual report, the annual financial statements, and the external auditors' report. The committee reports its findings to the Board for consideration when approving the financial statements for issuance to the shareholders. The Company's auditors have full access to the Audit Committee, with and without management being present.

This release/report may contain forward-looking statements. Various factors could cause actual results to differ materially from those projected in such statements, a number of which are set forth under the Management Discussion and Analysis section above. All forward-looking statements in this release/report are expressly qualified in their entirety by this cautionary statement and by the section on Forward-Looking Statements under the Management Discussion and Analysis section.

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