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Annual & Special Meeting of Shareholders November 7, 2006

Annual & Special Meeting of Shareholders November 7, 2006. Safe Harbour Statement. Except for historical data, the financial information circulated during this presentation contains statements that, by their very nature, are forward-looking and, therefore, involve time periods,

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Annual & Special Meeting of Shareholders November 7, 2006

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  1. Annual & Special Meeting of ShareholdersNovember 7, 2006

  2. Safe Harbour Statement Except for historical data, the financial information circulated during this presentation contains statements that, by their very nature, are forward-looking and, therefore, involve time periods, risks and other factors, known or unknown, which are beyond the Company’s control. Each of these factors may produce results or performances that differ significantly from expectations. No liability, present or future, derived from this can be assumed by Bioniche in any investment decision made following this presentation. 1

  3. Our Business Model • Late stage development of proprietary, large market human cancer therapies. • Supported by cash flow from globally marketed products in animal health. • Today: revenues, Phase III product (Urocidin for bladder cancer). 2

  4. Corporate Highlights • Phase III oncology product • UrocidinTM(MCC) - for non-muscle invasive bladder cancer in humans - promising Phase II safety and efficacy • Most significant pipeline products • MCC for other human cancers • E. coli O157:H7 cattle vaccine (in North American regulatory pathway) • High margin animal health business • Revenues of C$25M in Fiscal ’06 • Contributes significant earnings before interest, taxes, depreciation and amortization (EBITDA) 3

  5. Corporate Structure 4

  6. Sale of Non-Core Assets 5

  7. Areas of Focus • Licensing of E. coli O157:H7 cattle vaccine. • Signing of a marketing partnership agreement for Urocidin. • Successful completion of Phase III trials with Urocidin in the treatment of non-muscle invasive bladder cancer. • Liquidation of non-core assets to support strategic priorities. • Obtaining financing to complete priority projects. 6

  8. Preferred Staging of Events 1 2 3 E. coli O157:H7 vaccine license in Canada &/or U.S. Signing of marketing partnership for Urocidin Corporate financing 7

  9. Development of the E. coli O157:H7 Vaccine • Brett Finlay, PhD, Professor in the Michael Smith Laboratories, and the • Departments of Biochemistry and Molecular Biology, and Microbiology and • Immunology at the University of British Columbia (Canada) • Was conducting basic research in the laboratory in 1995 and • made two fundamental discoveries: • 1. The E. coli O157:H7 bacteria secrete attachment proteins; • 2. When injected directly into a cell wall, one of these proteins • serves as a receptor, to which the bacteria adhere, allowing • them to colonize the intestine. • Realized that it might be possible to immunize against the • attachment proteins of the bacteria (initially thought useful in • childhood vaccines; then realized that a cattle vaccine might be • the better opportunity to pursue) 8

  10. Development of the E. coli O157:H7 Vaccine • Dr. Finlay contacted Dr. Andy Potter at the Vaccine & Infectious • Diseases Organization (VIDO - University of Saskatchewan, Canada) • and suggested they try and make secreted proteins to immunize • cows. • The pair demonstrated in a pilot study that the vaccine appeared • to reduce shedding of E. coli O157:H7 in cattle manure. • VIDO and Dr. Finlay approached Bioniche, who has become the • global commercial partner responsible for the technology transfer, • development, scale-up, and commercial manufacture of the vaccine. • The Company has invested $13 million to date. 9

  11. About E. coli O157:H7 • One of hundreds of strains of the bacterium Escherichia coli • Most strains are harmless; live in intestines of healthy humans • and animals • O157:H7 produces powerful toxin (Shiga/Vero toxin) and can cause severe • illness • O157:H7 appears to be a mutant that was first seen in South America ~20 years ago and has drifted north and internationally • This strain first recognized as a cause of illness in 1982 during • an outbreak of severe bloody diarrhea (traced to contaminated • hamburgers in the U.S.) • Until recently, most infections have come from eating undercooked ground beef (beef industry has spent hundreds of millions of dollars to improve production safety by implementing post-slaughter procedures; FDA has implemented holding and testing of meat products prior to shipping) • (Centers for Disease Control - CDC) 10

  12. The Latest E. coli O157:H7 Outbreak • September, 2006; 26 U.S. states: • 199 people affected (at 10.06); 3 deaths; 31 with HUS • Linked to consumption of fresh spinach • Spinach likely contaminated with E. coli O157:H7 in irrigation water downstream from large Californian dairy operations (three counties) or with E. coli O157:H7 in rinse water used prior to packaging Common denominator in all outbreaks: the cow 11

  13. Vaccination has been efficacious as a pre-harvest intervention in phase II and phase III studies (>25,000 doses) Significantly reduced probability for shedding in feces Significantly reduced colonization (terminal rectum mucosal scrapings) Significantly reduced environmental detection/ oral exposure (ROPES) Herd-immunity / group-regional dynamics Pre-clinical Phase II Phase III Phase I What the Researchers are Saying Clinical Trials Process Proof of concept Safety, Immune response, Challenge studies Safety, Dosage, Limited field studies Does it really work? Large numbers 12

  14. What the Researchers are Saying “The vaccine has been efficacious in field trials, under conditions of natural exposure to E. coli O157:H7.  Pens of vaccinated cattle are less likely to be colonized with E. coli O157:H7, shed the organism in feces, have environmental exposure to the agent, or have E. coli O157:H7 contaminated hides.” David R. Smith, DVM, PhD, DACVPM (Epidemiology) Department of Veterinary and Biomedical Sciences University of Nebraska-Lincoln 13

  15. E. coli O157:H7 Vaccine Status • Completed: • proof of concept a • field studies a • adjuvant withdrawal trial a • pre-license serials a • field safety trials a • To complete: • efficacy trials (ongoing) • human safety study (Canada) • USDA registration in progress. • Canadian dossier complete later in 2006 (for CFIA). 14

  16. The Latest from the CFIA “Incoming documentation will be reviewed on a high priority basis, in collaboration with our colleagues at Health Canada …” “The Veterinary Biologics Section recently received a study report on the lack of vaccine toxicity in piglets. This study had been conducted to investigate potential adverse effects, in the event of accidental injection, using a piglet model as a potential indicator of pathologic effects in people exposed to the vaccine.” “We will be working closely with Bioniche’s manufacturing and quality assurance representatives to establish manufacturing and testing protocols to fulfill the Canadian regulatory requirements, as well as conforming with international standards where applicable, to facilitate export certification for vaccine manufactured in Canada.” Glenn Gifford, DVM, MSc National Manager, Veterinary Biologics Section 15

  17. Management Conclusions • Bioniche Life Sciences, with the University of Nebraska-Lincoln and • VIDO, has demonstrated that the vaccine is efficacious. There are no • other vaccine technologies demonstrating efficacy against O157:H7. • The beef, dairy and vegetable industries cannot afford ongoing lawsuits • as a result of supplying adulterated food to consumers. • Lawsuits are currently being filed from Canada, in addition to the U.S., • as a result of the spinach contamination. • Litigation will be the most effective sales tool. • Vaccination is clearly the logical solution to reducing the hazard of this • bacterium at the source. 16

  18. Cattle Population (2004) • Canada: 14.6 million • U.S.: 94.8 million • Australia: 26.4 million • Argentina: 50.7 million • European Union: 134.8 million • Japan: 4.5 million • Brazil: 192.0 million TOTAL 517.8 million Vaccine Cost (U.S. only): approximately $6 per animal Vaccine Cost (Europe): approximately 10 Euros per animal Market Potential for Vaccine 17

  19. Urocidin Marketing Partnership • A number of companies have expressed an interest in • working with Bioniche to market this technology. • Ferghana Partners has been retained as agent in this • partnering transaction. • The Bioniche Urocidin team includes: • Dr. Nigel Phillips, Chief Scientific Officer • Dr. François Charette, Chief Medical Officer • Ms. Gail Garland, VP, Business Development • Ms. Cindy Benning, VP, Regulatory Affairs • Mr. Mohamed Elrafih, VP, Manufacturing 18

  20. Mycobacterial Cell Wall-DNA Complexand Bladder CancerDr. Nigel C. PhillipsChief Scientific Officer 19

  21. Bladder Cancer – Treatment Issues CARCINOMA IN SITU ± TCC CIS/TCC OF THE BLADDER MUTATIONAL STATUS AND INTRINSIC RESISTANCE TO THERAPY FIELD EFFECTS VS CLONALITY RESIDENCE TIME IN THE BLADDER (1-3 HOURS) PROGRESSION, METASTASIS AND DEATH 20

  22. Normal Urothelium "p53/p21/pRb pathway" "FGFR3 pathway" Hyperplasia Hyperplasia/Dysplasia Dysplasia Chromosomal deletion, mutation TCC Low Grade TCC High Grade Carcinoma in situ GENETICALLY STABLE, NON-INVASIVE CARCINOMA GENETICALLY UNSTABLE, INVASIVE CARCINOMA Bladder Cancer Pathways Adapted in part from Knowles, M.A. Carcinogenesis 27:361-373, 2006 21

  23. Bladder Cancer and p53/p21/pRb p53/p21/pRb status 5 year recurrence rate 5 year survival rate No alterations 23% 70% Any one altered 32% 58% Any two altered 57% 33% All three altered 93% 8% Chatterjee, S.J. et al., J. Clin. Oncol. 15:1007-13 (2004). Combined effects of p53, p21 and pRb expression in the progression of bladder transitional cell carcinoma. 22

  24. MCC is a mycobacterial cell wall composition containing DNA oligonucleotides The DNA is associated with immune stimulant and anticancer activity The cell wall functions as a biological drug delivery system (recognition by cell receptors such as TLR2, TLR9) Commercial name: Urocidin (MCC suspension for bladder cancer) Mycobacterial Cell Wall-DNA Complex 23

  25. Bladder Cancer Cell Lines 24

  26. MCC Antiproliferative Activity 25

  27. MCC Versus Chemotherapeutic Drugs Inhibition of proliferation, 3 h assay 26

  28. MCC SUSPENSION INDUCES: IL-1 IL-2 IL-6 IL-10 IL-12 IL-18 IFN- TNF- IL-8 MCP-1 RANTES MCC -Cytokine/Chemokine Induction • MCC SUSPENSION DOES NOT INDUCE: • IL-4* • IFN-* *In vitro • PRIMARY CELL TARGETS • Macrophages • Monocytes • Dendritic cells • Cancer cells 27

  29. MCC Versus BCG MCC suspension BCG • Sterile Viable • No biocontainment requirement Biocontainment required • No infection Potential for infection • Defined dose Variable dose ( ~10 fold range in CFU) • Inhibition of proliferation Weak inhibition • Induces apoptosis Does not induce apoptosis • Anticancer cytokines/ chemokines Inflammatory cytokines • Independent of p21/p53/pRb Dependent on p53/p21/pRb? • Bifunctional agent Immune stimulant • Formal toxicology studies Vaccine ð bladder cancer 28

  30. MCC – Mechanism of Action MCC “DIRECT” “INDIRECT” Inhibition of proliferation, cell cycle arrest and apoptosis Interaction and uptake Cancer cells Monocytes, Macrophages, Dendritic cells ? Activation Cellular cytotoxicity Monokine synthesis IL-6, IL-12, IL-18, TNF- NK-cell activation T-lymphocyte activation Cytokine-mediated anticancer responses N.C. Phillips, 1997 29

  31. The Phase III Bladder Cancer Clinical Program Dr. François CharetteChief Medical Officer 30

  32. A frequent cancer 4th in men 8th in women A difficult to treat cancer 30-40% do not respond to therapy Few are able to tolerate full dose treatment An under-researched cancer No new treatments for decades Patients left with unmet needs Bladder Cancer Facts 31

  33. The Road to Market • Pre-clinical: Scientific basis • Studies in the laboratory • Studies in cell lines • Studies in animals • Clinical Phase I-II: Proof of concept trials • Is it safe? • Does it work? • Clinical Phase III: Registration trials • Confirmation of safety • Confirmation of efficacy 32

  34. First Registration Trial • Evaluation of the efficacy and safety of Urocidin in patients who are refractory to BCG. • First patient today! (Victoria, B.C.) • We will recruit 105 patients within one year. • All patients will be followed for one year. • The data will be reviewed on a fast track basis by the U.S. Food and Drug Administration (FDA). 33

  35. Refractory Trial Sites Centres: -BCG Oncology (AZ) -Can-Med Clinical Research Inc. (BC) -Center for Urologic Care (NJ) -Centre for Advanced Urological Research (ON) -Clinical Research Solutions (NV) -Columbia Presbyterian Medical Center (NY) -Connecticut Urological Research at Grove Hill (CT) -Dr. Steinhoff Clinical Research (BC) -Hopital St. Luc (QC) -La Clinique d’Urologie Berger (QC) -McGill University Health Centre (QC) -Memorial Sloan Kettering Cancer Center (NY) -Johns Hopkins Brady Urological Institute (MD) -London Health Sciences Centre (ON) -Princess Margaret Hospital/University Health Network (ON) -Sunnybrook & Women’s Health Science Centre (ON) -The Male/Female Health Centre (ON) -University of Miami (FL) -University of Rochester (NY) -University of Texas MD Anderson (TX) -Urology of Virginia at Devine – Tidewater Urology (VA) -Urology San Antonio Center for Clinical Trials (TX) -Vanderbilt University Medical Center (TN) -Winter Park Urology Associates P.A. (FL) 34

  36. Second Registration Trial • Evaluation of the efficacy and safety of Urocidin in • all patients who have bladder cancer at high risk • of recurrence or progression. • Comparing directly with BCG. • First patient next year. • We will recruit 700 patients worldwide. • All patients will be followed for two years. 35

  37. Strong Clinical Team • Monique Champagne • Zvi Cohen • Sylvie Devost • Brigitte Robert • Poonam Tanwani • Jason Singh • Kevin Darbyson • Liz McGunnigle • Sylvia Filadelfi • Caterina Beddia 36

  38. The Bladder Cancer Market Opportunity Ms. Gail GarlandVP, Business Development 37

  39. What will a New Entry Mean to the Bladder Cancer Market? Urocidin will deliver: • Branded pricing in a ‘generic’ market • Significant price premium over existing standard of care • Peak world wide net sales of $500M to $1.5B • 100 - 200% increase in the size of the entire bladder cancer market UrocidinTM 38

  40. Bladder Cancer Market 39

  41. Bladder Cancer Treatment 40

  42. Market for Urocidin 41

  43. 1. Urologists are anxiously awaiting a product which will replace BCG. 2. Urocidin will be reimbursed at a price premium to generic products. 3. World - wide market potential of more than $1B annually. Market for Urocidin 42

  44. Financial Highlights for Fiscal 2006announced September 28, 2006 • Revenues remained flat at C$26.7M • Gross margin constant at 57% • Positive EBITDA before R&D of C$1.9M • Gross R&D stable at C$12.9M • Gains from sale non-core assets totalling C$17.8M • Net loss for the year was of (C$1.1M) or (C$0.03) per share; compares to (C$ 15.6M) or (C$0.43) per share in 2005. 43

  45. Strategic Corporate Financing • Completion of non-core asset sale (December, 2006). • Pursuing financing options: • Debt • Equity • Investment in Animal Health to grow revenues • Completion of Urocidin marketing partnership deal. 44

  46. Value Creating Eventsanticipated timing – subject to change 45

  47. Please join us for a Wine & Cheese Receptionin Trinity IV(this level, opposite)

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