1. Comments on Professor Lerner’s Paper Calvin R. Stiller, Chairman & CEO Canadian Medical Discoveries Fund Inc. London, Ontario May 4, 2002 C anadian Experience with Venture Capital Sources

2. Job Creation: VC - Backed versus Non VC - Backed Source: BDC Report 2000; Economic Impact of Venture Capital Note: CB100 = top 100 companies (by sales) Job Creation (Annual Growth Rate %) Job Creation (1995 – 1999)

3. Life Sciences Venture Capital Investments in Canada Cdn $ Million Source: Macdonald & Associates 1995, 2001, 2002; CMDF Internal Life sciences VC CMDF net assets

4. IPO Performance: VC Backed versus Non Source: BDC Report 2000; Economic Impact of Venture Capital

5. Public and private companies Listed public companies What Are LSVCCs? Traditional Mutual Funds Company Composition Investee Ownership % Restricted to less than 10% May have up to 50% (max. $15M in any one company) Other Investment Restrictions None / as per fund mandate Geographic, Company Size (<$50M assets, 500 employees) Redemption Restrictions Few restrictions Can redeem at any time, but must repay tax credits if prior to 8 years Closed End VC Funds None No Maximum Cannot redeem before expiration Private and public companies LSVCCs Investment as % of Fund Net Assets Aspire to 100% Aspire to 80%, as 20% must be held for potential redemptions 100%

6. Advantages of LSVCC Funds Tax Credits federal and provincial of up to 35% (depending on the province) 1 Private company investment opportunities unavailable to average investor 2 Higher returnpotential versus traditional investments 3 Foreign Content retirement savings limit can be increased Diversificationbeyond pure equities and bonds 5 4

7. Top Investors in Canadian Life Sciences Source: Macdonald & Associates Top Investors in Canadian Life Sciences (1996 – Q2 2001) Based on Number of Investments: 1.CMDF/ MDS CC 2.BioCapital Inc. 3.CDP Capital-Sofinov 4.Innovatech du Grand Montréal 5.BDC Venture Capital Group 6.Ventures West Management Inc. 7.Fonds de Solidarité 8.Working Ventures Canadian Fund 9.Royal Bank Capital Partners 10.T2C2 Capital Based on Total Dollars Invested: 1.CMDF/ MDS CC 2.CDP Capital-Sofinov 3.TD Capital 4.BioCapital Inc. 5.Fonds de Solidarité 6.Innovatech du Grand Montréal 7.BDC Venture Capital Group 8.Working Ventures Canadian Fund 9.Royal Bank Capital Partners 10.Ventures West Management Inc.

8. British Columbia (7) AnorMED Micrologix Biotech NeuroMed Phytogen Life Sciences StressGen Biotechnologies Synapse Technologies Xillix Technologies Ontario (18) Cytochroma Drug Royalty Ellipsis Biotherapeutics GenSci Regeneration GLYCODesign Hemosol Life Imaging Systems MedTech Partners Microbix Biosystems Prairies (2) Alberta Networc Health Care Saskatchewan Star Biotech Quebec (9) Acta-Med AEgera Therapeutics CryoCath Technologies Gemin X Biotechnologies Methylgene Nexia Biotechnologies PhageTech T 2 C 2 Ultravision USA (5) Cubist Pharmaceuticals, Cambridge, MA Genzyme Molecular, Cambridge, MA Neurocrine Biosciences, San Diego, CA NPS Pharmaceuticals, Salt Lake City, UT Variagenics, Cambridge, MA Morphometrix NPS Allelix Neuroscience Development Queen’s Scientific Breakthrough Fund Systems Xcellence Tm Bioscience UMDI Vaxis Therapeutics XLTEK CMDF Portfolio Geographic Distribution Maritimes (1) MedInnova Partners Over 40 investments and 90,000 investors across Canada

9. LSVCC Capital Raised – Impact of Regulations Source: Macdonald & Associates Cdn $ M Total VC Raised ($ Bn) 1.92.44.24.6 Hold period, Tax credits 1.71.6

10. Life Sciences Venture Capital Invested US$Bn Life Sciences VC / Capita Total Life Sciences VC US $ Cdn $Bn Source: Macdonald & Associates, Venture Economics, Statistics Canada, US Census Bureau, Bank of Canada

11. Life Sciences Venture Capital Invested Life Sciences VC / Capita Total Life Sciences VC US $Cdn $ Source: Macdonald & Associates, Venture Economics, Statistics Canada, US Census Bureau Cdn $BnUS$Bn

12. Venture Capital Invested US$Bn VC / Capita Total VC US $ Cdn $ Cdn $Bn Source: Macdonald & Associates, Venture Economics, Statistics Canada, US Census Bureau

13. Venture Capital Invested VC / Capita Total VC US $ Source: Macdonald & Associates, Venture Economics, Statistics Canada, US Census Bureau, Bank of Canada US$BnCdn $Bn

14. LSVCC Investment in Canada Venture Capital Under Management (1996 – 2001) Cdn $ Billion Source: Macdonald & Associates

15. Supply Stability LSVCC Capital Raised Private Investor Capital Raised Corporate Capital Raised Source: Macdonald & Associates Cdn $ M Government Capital Raised

16. Deal Size Focus: LSVCC versus Other VC All Deal Sizes Deals< $500K Deals $500K - $999K Source: Macdonald & Associates