Ecopia BioSciences Inc.: 2004 Operating Highlights and Financial Results.

MONTREAL -- Ecopia BioSciences Inc. (TSX:EIA) today announced operating highlights and financial results for the year ended November 30, 2004.

Operating highlights included:

- Ecopia presented animal data on the Company's lead anticancer drug
  candidate, ECO-4601, at three major international scientific
  conferences.  The data demonstrated the compound's efficacy as a
  potential chemotherapeutic treatment for brain cancer and its
  ability to cross the blood-brain barrier.  Preclinical pharmacology
  and toxicology trials are ongoing and the Company expects to file
  an Investigational New Drug application in 2005.

- Ecopia announced the discovery of 14 new chemical entities using
  its DECIPHER(R) technology and selected four for further profiling.

- Ecopia expanded its drug development team by hiring a seven-member
  team with experience in the field of oncology in order to rapidly
  advance the development of ECO-4601.

- The first animal data on ECO-0501, revealing the compounds
  potential as an effective antibacterial agent, was presented at the
  44th annual Interscience Conference on Antimicrobial Agents and
  Chemotherapy.

- Ecopia's leading edge DECIPHER(R) technology was recognized with
  three prestigious industry awards:  The Prix Galien Canada -
  Biotechnology, the Prix de l'Emergence from the Armand-Frappier
  Foundation and, for the second year in a row, Canada's Top Ten Life
  Science Companies from the Ottawa Life Sciences Council.

Financial highlights included:

- On February 12, 2004, Ecopia raised $8.5 million of Units, each
  Unit consisting of one common share and one-half warrant.

- Ecopia's liquidity position, measured in terms of cash, bonds and
  tax credits receivable, amounted to $9.8 million at year end.  The
  burn rate for the year ended November 30, 2004 was $7,314,855
  compared with $7,177,837 for the comparable period in 2003. Burn
  rate is represented by cash flows from operating activities and
  investing activities (excluding transactions on bonds).

- Interest income was $59,100 for the quarter ended November 30, 2004
  and $292,906 for the year ended on the same date, compared with
  $85,389 and $434,602 for the respective periods in 2003.

- R&D expenditures, before tax credits and grants, were $1,756,976
  for the three months ended November 30, 2004 and $6,818,996 for the
  year ended on the same date, compared with $1,723,519 and
  $6,386,071 in 2003.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following Management's Discussion and Analysis provides information on the activities of Ecopia BioSciences Inc. ("Ecopia" or the "Company") and a comparison of the financial position and operating results for the years ended November 30, 2004 and November 30, 2003. This information should be read in conjunction with the financial statements and the accompanying notes.

OVERVIEW

Ecopia started the 2004 financial year with the accomplishment of a proven drug discovery platform and a minimum of five novel preclinical candidates having anticancer, antibacterial or antifungal activity.However enviable this collection of assets, the Company still faced three challenges to improve their value.Firstly, in order to initiate the build-up of a product pipeline, Ecopia had to select the best of its five discoveries for advancement in the development process.Secondly, other discoveries of preclinical candidates were required to reduce development risk. Finally, financing was needed to fund the Company's ongoing operations.

i) Development Activities

Our development activities in the early part of 2004 revolved around the first two compounds coming from our DECIPHER(R) technology, namely our anticancer agent ECO-4601 and our antifungal agent ECO-2301.It became clear to management that ECO-4601 would be the compound of choice, given its potential to become the chemotherapy of choice in the treatment of gliomas, a very aggressive form of cancer that originates in the brain.Moreover, management estimates that ECO-4601 has a chance for conditional approval by the regulatory authorities after a pivotal phase II clinical trial  because of the lack of effective products in the present therapeutic arsenal.

Towards the end of the first quarter of the year, the Company presented preliminary data at the Association of French-Speaking Neuro-oncologists (ANOCEF) meeting in Monaco showing that the compound significantly inhibits tumor growth in an animal model of glioma.The anticancer efficacy of ECO-4601 was tested in animals against C6 glioma tumour cells in a xenograft mouse model. Treating the animals with ECO-4601 significantly reduced tumour growth in this exceptionally aggressive model where most cytotoxic agents failed.

ECO-4601's progress continued in the second and third quarters as the Company conducted several studies to understand the compound's bioavailability and its toxicity profile.The Company's development group also worked on scaling up the production and have defined a manufacturing process.

In the fourth quarter, ECO-4601's potential as a chemotherapy for primary brain cancer was further strengthened when the Company presented data at the EORTC-NCI -AACR Symposium in Geneva, demonstrating that the compound crosses the blood-brain barrier, regardless of the route of administration.This advantage eliminates the need for the invasive techniques and provides ECO-4601 with a competitive edge in developing this compound for treating brain tumours.

Finally, on December 14, 2004, ECO-4601 entered into preclinical pharmacology and toxicology trials. The trials are a precursor to the Company's filing of an Investigational New Drug (IND) application with regulatory agencies in North America, expected in the latter part of 2005. Recruitment of patients for a Phase I clinical trial  will follow the IND application.

In addition to ECO-4601, other compounds were tested and advanced by Ecopia's development group.In October, Ecopia presented data on ECO-0501 in the form of three posters at ICAAC held in Washington, revealing that this new antibacterial agent is effective in a lethally infected animal model and has a good safety profile. The results also demonstrated that the potential for bacteria to develop resistance to ECO-0501 is very low, an important finding in view of the growing drug-resistance problem.The compound kills bacteria rapidly by exerting action through cell membrane disruption. This is an important feature in an antibacterial compound because it selectively targets the bacteria causing the infections.

ii) Discovery Activities

Ecopia's DECIPHER (R) technology continued to deliver discoveries of new chemical entities (NCEs) in 2004.Previously, in 2003, five discoveries had been announced, including ECO-4601 and ECO-0501. This number increased significantly to 14 NCEs in 2004.

The Company's discovery activities depend on a group of scientists who produce these NCEs.Once an NCE can be produced in sufficient quantity, they conduct profiling activities that consist of a series of assays to obtain early data on its spectrum of activity, efficacy and toxicity.Profiling work was initiated on all of our NCEs to allow the Company to select the most promising preclinical candidates.Ecopia can thus reduce its medium- and long-term business risks by relying on several development candidates. Subsequent to their profiling, Ecopia is currently focusing on a few of its new discoveries in order to obtain more detailed data as to their preclinical potential.

Moreover, the discovery group has initiated a program designed to find and synthesize analogues of ECO-4601.The characterization of analogues is particularly important in order to broaden patent protection and to ensure second and third generations of products.

Ecopia's intellectual property group continues to prosecute several patent applications designed to protect the Company's molecules and its DECIPHER (R) technology.In 2004, Ecopia received a patent issued by the Canadian Patent Office directed to genes that guide in the discovery of new anticancer drugs using DECIPHER (R) technology.Patent applications corresponding to the issued Canadian patent are pending in the US, Europe and Japan. A total of 27 patent applications were filed in 2004.

iii) Financing Activities

Before the end of the first quarter of 2004, Ecopia entered into a bought deal with a major securities firm to raise $8.5 million. This allowed the Company to fund its working capital requirements for 2004 and to provide it with the funding necessary to move ECO-4601 towards Ecopia's first IND application in 2005.

LOOKING FORWARD

Ecopia initiated its pipeline-building efforts by using its DECIPHER (R) technology to discover NCEs having anticancer, antibacterial and antifungal activity and successfully found compounds in all of these fields.Recently, Ecopia decided to focus its future resources primarily on cancer for several reasons.Most importantly, the Company's foreseeable success is built around its most promising compound, ECO-4601.Secondly, cancer is the second leading cause of death in developed countries, making cancer therapy one of the largest drug markets today with a forecasted double digit  growth that is expected to reach US$44 billion by 2010.Thirdly, management of Ecopia is of the opinion that its ability to deliver novel chemotherapeutic candidates to this market will provide the Company with an appealing niche within a highly competitive field.

Ecopia will continue to allocate certain resources to its non-cancer compounds in order to improve their attractiveness as licensing candidates.Ecopia's priority in 2005, however, is advancing its cancer franchise by filing its first IND application with respect to ECO-4601, a new class of compounds designed to fight this deadly disease.

SUMMARY OF OPERATING RESULTS

Years ended November 30 (in thousands of dollars, except per-share
amounts) - (audited)
-------------------------------------------------------------------
                                        2004      2003     Variance
-------------------------------------------------------------------
                                             (restated)(i)
                                           $         $          %
Interest revenues                        293       435       (32.6)
License Revenues                         120         -         n.a.
Research and development expenditures,
 before tax credits and grants         6,819     6,386         6.8
General and administrative
 expenditures                          2,735     2,436        12.3
Net loss                               8,214     7,147        14.9
Net loss per share                      0.14      0.14           -
-------------------------------------------------------------------
Weighted average shares outstanding
 (in thousands)                       57,172    50,422       13.4%
-------------------------------------------------------------------
-------------------------------------------------------------------

(i) Restated to reflect the adoption by anticipation of the new
    accounting method to determine the compensation costs with
    respect to share options.  See note 1(b) under the Notes to
    the Financial Statements

Revenues

Total revenues amounted to $412,956 for the year ended November 30, 2004, compared with $434,602 for the year ended November 30, 2003, representing a decrease of approximately 5%.Interest revenues for 2004 amounted to $292,906, compared with $434,602 for 2003. These variances are attributable to lower interest yields earned on our bond investments.Ecopia also earned revenues of US$100,000 under the terms of a license transfer agreement for the use of some of its gene clusters in the licensee's drug discovery efforts.The licensee has future exclusivity options to use these gene clusters within a specified field of use.Additional revenues may be earned if these options are exercised.

R&D Activities

Research and development ("R&D") expenditures, before tax credits and grants, amounted to $6,818,996 for the year ended November 30, 2004, compared with $6,386,071 for the year ended November 30, 2003, an increase of 6.8%.This increase in R&D expenses results from higher preclinical expenses to develop ECO-4601 and profiling activities with respect to other NCEs.Moreover, chemistry expenses were higher on account of new discoveries and compound production. This change in the nature of the Company's R&D expenses is consistent with the business strategy of using the NCEs originating from DECIPHER(R) technology in order to build a proprietary product pipeline.

General and Administrative Expenditures

General and administrative ("G&A") expenses amounted to $2,734,522 for the year ended November 30, 2004, compared with $2,436,211 for 2003, an increase of 12.3%.These increases are largely explained by higher costs related to the Company's intellectual property activities, the recognition in 2004 of the accounting costs related to stock options and higher listing fees.

Earnings Results

The Company recorded a net loss of $8,214,000 for the year ended November 30, 2004, compared with $7,147,000 for the year ended November 30, 2003.The loss per share amounted to $0.14 for both years. The increase in the loss reflects higher R&D expenditures and G&A expenditures discussed above.

Recent Accounting Pronouncements

Changes in Accounting Policies

In accordance with the changes made to Section 3870 of the Canadian Institute of Chartered Accountants ("CICA") Handbook, "Stock-Based Compensation and Other Stock-Based Payments", the Company implemented by anticipation the recommendation to account for stock option awards to employees using the fair value method on a retroactive basis and by restating the comparative figures for 2003 in order to take into account the cost relating to these awards, which had been included in the pro forma information note for prior periods since December 1, 2001. Please refer to note 2 (a) to the Financial Statements.

Revenue Arrangements with Multiple Deliverables

The Company will adopt the recommendations mentioned in EIC-142 of the Canadian Institute of Chartered Accountant Handbook, which addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue generating activities.It contains guidance on how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and if so, how to allocate the arrangement consideration to each unit.

Contractual Commitments

As at November 30, 2004, Ecopia's future contractual commitments are principally for an operating lease for facilities. Future rental payments under the operating lease agreement are presented below. The Company does not have any purchase obligations as of November 30, 2004. The Company has not engaged in off-balance sheet financing or commodity contract trading.

-------------------------------------------------------------------
Payments Due by Period                                       $
-------------------------------------------------------------------
Less than one year                                        559,000
1-3 years                                               1,138,000
4-5 years                                               1,166,000
After 5 years                                           1,194,000
-------------------------------------------------------------------
Total                                                   4,057,000
-------------------------------------------------------------------
-------------------------------------------------------------------


LIQUIDITY AND FINANCIAL POSITION

-------------------------------------------------------------------
November 30 (in thousands of dollars) - (audited)   2004      2003
-------------------------------------------------------------------
                                                          (restated)

Cash and bonds(i)                                 $6,266    $6,216
Tax credits receivable                              $797    $1,024
Bonds(ii)                                         $2,753    $2,330
Total assets                                     $13,466   $14,052
Capital stock and contributed surplus            $44,878   $36,146
Shareholders' equity                             $12,027   $12,227
-------------------------------------------------------------------
-------------------------------------------------------------------


(i)  Cash invested in investment-grade bonds due in less than one
     year.
(ii) Cash invested in investment-grade bonds due in more than one
     year.

On November 30, 2004, the Company's cash position amounted to $9,019,454 measured in terms of cash and investments in investment-grade bonds. Tax credits receivable amounted to $796,936. Thus, the Company's liquidity position, measured in terms of cash, bonds and tax credits receivable, amounted to $9,816,390 on November 30, 2004, compared with $9,569,945 on November 30, 2003.The increase in the Company's cash position takes into account the issuance of units on February 12, 2004 for gross proceeds of $8.5 million.

In 2004, the Company disbursed $994,088 for additions to capital assets and for costs related to patent acquisitions.Capitalized  patent costs totalling $66,295 were written-off because of a decision not to pursue patent applications relating to certain genetic pathways that did not assist in discovering NCEs.These applications were abandoned in order to keep our resources for patent applications relating to the discovery of new compounds.Capitalized costs relating to scientific equipment were also written-off by $95,200 because of the reduction in our genomic activities in late 2003.

Shareholders' equity amounted to $12,027,374 on November 30, 2004, compared with $12,226,941 on November 30, 2003.Total assets amounted to $13,466,285 on November 30, 2004, compared with $14,051,760 on November 30, 2003. The decreases in shareholders' equity and assets take into account the loss for the year and the issuance of the unit offering for proceeds of $8.5 million less share issue costs.

The Company's liquidity position, both in the short term and long term, is allocated to salaries, the funding of R&D activities, patent filings and the acquisition of capital assets. In a manner consistent with a goal of capital preservation, liquidity and with limited credit risk the Company invests available cash resources in liquid securities with varying terms to maturity, selected with regard to the expected timing of expenditures to be incurred from continuing operations and prevailing interest rates. The Company's management believes that its liquidity position will be sufficient to meet anticipated cash needs to the end of 2005.

On January 12, 2005, the number of common shares outstanding totalled 58,851,584, while 4,276,850 options were granted under the share purchase option plan and 4,154,167 share purchase warrants are outstanding pursuant to the unit offering completed in February 2004. The outstanding options are exercisable at a weighted average price of $1.50 per share and the share purchase warrants are exercisable at a price of $1.28 each.

CRITICAL ACCOUNTING POLICIES

In preparing the Company's consolidated financial statements in conformity with GAAP, management is required to make certain estimates, judgments and assumptions that the Company believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The accounting policies which the Company considers to be critical are those that require the most difficult, subjective, or complex judgments and that are the most important to aid in fully understanding and evaluating its consolidated financial statements. These accounting policies are discussed in the following paragraphs.

Property, equipment and patents costs are stated at cost and are amortized on a straight-line or declining balance basis. The Company regularly reviews property, equipment and patent costs for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets exceeds the sum of the expected cash flows from its uses and disposal. Management's judgment regarding the existence of impairment indicators is based on legal factors, market conditions and operating performances. Future events could cause management to conclude that impairment indicators exist and that the carrying values of the Company's property, equipment or patent costs are impaired. Any resulting impairment loss could have a material adverse impact on the Company's financial position and results of operations.

Income taxes are accounted for under the asset and liability method.In the Company's case, recurrent operating losses during the development years create tax assets that may reduce future taxable earnings.In assessing whether future tax assets may be realized, management provides valuation allowances by considering the likelihood that some portion or all of the tax assets will not be realized.The ultimate use of these future tax assets is dependent upon the generation of future taxable income.Given the high level of risk that is inherent in its industry, management does not recognize any value in the future tax assets that are created in excess of its future tax liabilities.As a result, a valuation allowance was recognized on the same basis as prior years.

Research and development costs consist of direct and indirect expenditures, including a reasonable allocation of overhead expenses, associated with the Company's various research and development programs. Research and development costs are expensed as incurred. Overhead expenses comprise general and administrative support provided to the research and development programs and involve costs associated with support activities such as facility maintenance, utilities, office services, information technology and human resources.

QUARTERLY FINANCIAL DATA
(Unaudited)

Fiscal 2004
-----------
Quarters ended       February 29      May 31  August 31   November 30
---------------------------------------------------------------------
Revenues                 $68,970     $88,803     $76,033     $179,150
Research and
 development
 expenditures,
 before tax
 credits and grants   $1,488,238  $1,853,382  $1,720,400   $1,756,976
Net loss              $1,899,734  $2,271,839  $2,049,306   $1,993,121
Net loss per share         $0.04       $0.04       $0.03        $0.03
---------------------------------------------------------------------

Fiscal 2003 (restated)
----------------------
Quarters ended       February 28      May 31  August 31   November 30
---------------------------------------------------------------------
Revenues                $137,459    $102,500   $109,254       $85,389
Research and
 development
 expenditures,
 before tax
 credits and grants   $1,520,629  $1,534,704 $1,607,219    $1,723,519
Net loss              $1,873,659  $1,797,292 $1,689,436    $1,786,613
Net loss per share         $0.04       $0.04      $0.03         $0.03
---------------------------------------------------------------------

Risks and Uncertainties

The Company's operations involve certain risks and uncertainties that are inherent to the Company's industry. The most significant known risks and uncertainties faced by the Company are described below.

Development and Commercialization

The Company is at an early stage of development and has taken steps to commercialize its technologies and develop its products. The Company may not be able to continue to successfully develop or commercialize its technologies. In addition, the Company's novel bioactive molecules may not be developed as drug candidates for human diseases.

Scientific Uncertainties

The Company's research programs are based on certain scientific hypotheses and experimental approaches that may not lead to desired results. Further, the development of new drugs and drug development tools based on genomic information is unproven. To the Company's knowledge no new natural product whose discovery is based on genomic information has been developed and commercialized. To date, no one has developed or commercialized any pharmaceutical or drug development products based on the Company's technologies.

History of Operating Losses and Expectations to Incur Losses in the Future

The Company has experienced operating losses since its inception and expects that losses will continue for the next several years. The Company may never be profitable or achieve significant revenues. In order to develop and commercialize its technologies and its products, the Company expects to incur significant increases in expenses over the next several years.

Ability to Adapt to Changing Priorities

The Company has recently experienced changes in its employees and the scope of its operations given its added priorities in drug development. These changes have placed, and may continue to place, a significant strain on the Company's management and operations. The Company's ability to manage effectively such growth will depend on its ability to strengthen its management team and on its ability to attract and retain skilled employees.

Additional Funding

The current capital resources of the Company will not be sufficient to fund its long-term business strategy and the Company will therefore need to raise additional capital. To obtain the necessary capital, the Company must rely on government grants and tax credits, additional share issues and collaboration agreements or corporate partnerships to provide full or partial funding for its activities. Should the Company fail to obtain the necessary capital, it will have to considerably reduce, even cease its operations, unless it is able to enter into agreements to obtain financial support from third parties, which may require that the Company waive  its rights to some of its eventual products or technologies.

Patents

The Company's success will depend in part on its ability to obtain patents, protect its trade secrets and operate without infringing the exclusive rights of third parties. There is no guarantee that any patent that will be granted to the Company will bring any competitive advantage to the Company, that its patent protection will not be contested by third parties, or that the patents of competitors will not be detrimental to the Company's commercial activities. It cannot be assured that competitors will not independently develop products similar to the Company's products, that they will not imitate any of the Company's products or that, if the Company obtains its patents, its competitors will not manufacture products designed to circumvent the exclusive patent rights granted to the Company.

Competition

The Company is subject to significant competition from (i) pharmaceutical companies, (ii) biotechnology companies, (iii) academic and research institutions and (iv) government agencies or other organizations that are pursuing technologies and products that are the same as or similar to its technology and products.Many of the organizations competing with the Company have greater capital resources, research and development staffs and facilities and marketing capabilities.

Webcast

February 1, 2005 at 4:00 p.m. - Dr. Pierre Falardeau, President and Chief Executive Officer and Mr. Gary Littlejohn, Executive Vice-President and Chief Financial Officer, will discuss the 2004 operating highlights and year-end financial results.To listen to the live Webcast or an archived version that will be available shortly after the conference, please visit Ecopia's website at www.ecopiabio.com.

About Ecopia

Ecopia is advancing its most promising compound ECO-4601, a potential new drug to treat brain cancer, through preclinical trials and expects to file an IND in 2005.Using its innovative DECIPHER(R) technology, the Company employs a radically different approach to discover new drugs, with anticancer, antibacterial or antifungal activity, from bacteria called actinomycetes.The most promising anticancer discoveries are added to Ecopia's rapidly growing pipeline for further development while other compounds will be leveraged to generate revenue through licensing and partnerships.Ecopia's shares are listed on the Toronto Stock Exchange (ticker symbol: EIA).

Additional information about the Company can be obtained from Ecopia's website at www.ecopiabio.com.

This press release may contain forward-looking statements that reflect the Company's current expectations regarding future events. The forward-looking statements, including expectations as to the pharmaceutical potential of compounds discovered by the Company's platform, the timeframe for preclinical and clinical development of the compounds into new medications, and expansion of the Company's product pipeline involve risk and uncertainties.Actual events could differ materially from those projected here and depend on a number of factors, including scientific uncertainties relating to scientific hypotheses and experimental approaches in regard to the drug discovery platform, uncertainties related to the regulatory process for drug development and the success and timely completion of clinical studies and trials, and the impact of general economic conditions.Investors are cautioned against placing undue reliance on forward-looking statements.A more complete discussion of the risks and uncertainties facing the Company appears in Ecopia's 2003 Annual Report.

ECOPIA BIOSCIENCES INC.

Balance Sheets

November 30, 2004 and 2003


---------------------------------------------------------------------
---------------------------------------------------------------------
                                          2004                 2003
---------------------------------------------------------------------
                                                        (Restated -
                                                        note 2 (a))

Assets

Current assets:
   Cash                               $152,763              $71,262
   Bonds                             6,113,689            6,145,191
   Sales tax receivable and other       45,351              121,680
   Tax credits receivable              796,936            1,023,656
   Research supplies, at cost           29,646               42,000
   Deposits and prepaid expenses       170,044              284,064
--------------------------------------------------------------------
                                     7,308,429            7,687,853

Bonds                                2,753,002            2,329,836

Capital assets (note 3)              2,818,817            3,676,547

Patents (note 4)                       586,037              357,524

---------------------------------------------------------------------
                                   $13,466,285          $14,051,760
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities and
 Shareholders' Equity

Current liabilities:
   Accounts payable and
    accrued liabilities             $1,438,911           $1,824,819

Shareholders' equity:
   Capital stock (note 5)           44,655,975           36,075,613
   Contributed surplus (note
    2 (a))                             222,469               70,768
   Deficit                         (32,851,070)         (23,919,440)
---------------------------------------------------------------------
                                    12,027,374           12,226,941

Commitments (note 8)

---------------------------------------------------------------------
                                   $13,466,285          $14,051,760
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to financial statements.



ECOPIA BIOSCIENCES INC.
Statements of Earnings

Years ended November 30, 2004 and 2003

---------------------------------------------------------------------
---------------------------------------------------------------------
                                             2004               2003
---------------------------------------------------------------------
                                                         (Restated -
                                                         note 2 (a))

Revenues:
   Interest                              $292,906           $434,602
   License                                120,050                  -
---------------------------------------------------------------------
                                          412,956            434,602

Costs and expenses:
   Research and development             6,818,996          6,386,071
   Tax credits and grants                (926,562)        (1,240,680)
---------------------------------------------------------------------
                                        5,892,434          5,145,391
General and administrative              2,734,522          2,436,211
---------------------------------------------------------------------
                                        8,626,956          7,581,602

---------------------------------------------------------------------
Net loss                               $8,214,000         $7,147,000
---------------------------------------------------------------------
---------------------------------------------------------------------

Net basic and diluted loss
 per share                                  $0.14              $0.14
---------------------------------------------------------------------
---------------------------------------------------------------------

Weighted average number of
 outstanding shares                    57,172,017         50,421,507
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to financial statements.



ECOPIA BIOSCIENCES INC.

Statements of Deficit

Years ended November 30, 2004 and 2003

---------------------------------------------------------------------
---------------------------------------------------------------------
                                               2004             2003
---------------------------------------------------------------------

Deficit, beginning of year,
 restated (note 2 (a))                  $23,919,440      $16,772,440

Net loss                                  8,214,000        7,147,000

Share issue costs                           717,630                -

---------------------------------------------------------------------
Deficit, end of year                    $32,851,070      $23,919,440
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to financial statements.



ECOPIA BIOSCIENCES INC.

Statements of Cash Flows

Years ended November 30, 2004 and 2003

---------------------------------------------------------------------
---------------------------------------------------------------------
                                          2004                 2003
---------------------------------------------------------------------
                                                          (Restated
                                                        note 2 (a))

Cash flows from operating
 activities:
  Net loss                         $(8,214,000)         $(7,147,000)
  Adjustments for:
   Depreciation on capital assets      978,383            1,064,431
   Depreciation on patents              25,206               11,741
   Write-off of capital assets          95,200                    -
   Write-off of patents                 66,295                    -
   Stock-based compensation            155,403               55,668
--------------------------------------------------------------------
                                    (6,893,513)          (6,015,160)

  Changes in operating
   assets and liabilities:
    Interest receivable on bonds        71,010              136,311
    Sales tax receivable and other      76,329               19,978
    Tax credits receivable             226,720             (305,035)
    Research supplies                   12,354                3,570
    Deposits and prepaid expenses      114,020              200,921
    Accounts payable and accrued
     liabilities                        68,513              366,459
---------------------------------------------------------------------
                                       568,946              422,204
---------------------------------------------------------------------

---------------------------------------------------------------------
                                    (6,324,567)          (5,592,956)

Cash flows from financing
 activities:
  Proceeds from issuance of shares   8,576,660               77,600
  Share issue costs                   (717,630)                   -
---------------------------------------------------------------------
                                     7,859,030               77,600

Cash flows from investing
 activities:
  Acquisition of bonds              (7,999,921)             (931,538)
  Proceeds from disposal of bonds    7,537,247             7,958,070
  Additions to capital assets         (594,457)           (1,404,937)
  Costs relating to patent
   acquisitions                       (399,631)             (179,944)
  Proceeds from disposal of
   capital assets                        3,800                     -
---------------------------------------------------------------------
                                    (1,452,962)            5,441,651

---------------------------------------------------------------------
Net increase (decrease) in cash         81,501               (73,705)

Cash, beginning of year                 71,262               144,967

---------------------------------------------------------------------
Cash, end of year                     $152,763               $71,262
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental cash flow information (note 6)

See accompanying notes to financial statements.



ECOPIA BIOSCIENCES INC.
Notes to Financial Statements

Years ended November 30, 2004 and 2003
---------------------------------------------------------------------
---------------------------------------------------------------------

1.Organization and business activities:

Ecopia BioSciences Inc. (the "Company"), incorporated under the
Canada Business Corporations Act, searches for new antibacterial,
antifungal and anticancer drugs from microorganisms.  The Company
applies proprietary genomics technologies to families of
microorganisms that naturally produce such drugs in order to rapidly
discover new small molecules with pharmaceutical potential.

The Company is considered to be in the development stage.
Substantially all of the Company's research and development
expenditures, and all revenues from research contracts, since
inception, relate to the Company's core technology platform.  In
addition, the Company's capital expenditures since inception relate
principally to the Company's core technology platform.

The following table provides cumulative information for research
revenues, and research and development expenditures, since the
beginning of operations in 1998:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                     2004                       2003
---------------------------------------------------------------------

Revenues from research
 contracts and license           $256,310                   $136,260
---------------------------------------------------------------------
---------------------------------------------------------------------

Research and development
 expenditures:
  Gross                       $25,462,893                $18,643,897
  Research tax credits and
   grants                      (4,953,967)                (4,027,405)
---------------------------------------------------------------------
                              $20,508,926                $14,616,492
---------------------------------------------------------------------
---------------------------------------------------------------------

As part of its activities, the Company faces certain risks, namely risks that are inherent to the research and development of its technologies and the commercialization of its products or services, the protection of its intellectual property, retaining key employees as well as obtaining sufficient financing in order to achieve its business plan.

2. Significant accounting policies:

(a) Change in accounting policy:

The Company implemented by anticipation, on December 1, 2001, the recommendations issued in Section 3870 of the Canadian Institute of Chartered Accountants ("CICA") Handbook, "Stock-Based Compensation and Other Stock-Based Payments".Only awards granted as of the implementation date were covered by the new standard.Under this standard, awards of stock options to non-employees must be accounted for on a fair value basis.No compensation cost was recognized for stock option awards to employees.However, the pro forma information on the net loss and net loss per share was disclosed as if the Company had accounted for these awards on a fair value basis for options granted since the implementation date.Any consideration resulting from the exercise of stock options was credited to share capital.

In accordance with the changes made to Section 3870, the Company early implemented the recommendation to account for stock option awards to employees using the fair value method on a retroactive basis and by restating the comparative figures for 2003 in order to take into account the cost relating to these awards, which had been included in the pro forma information note for prior periods since December 1, 2001.Consequently, the deficit at the beginning of 2004 and 2003 increased by $70,768 and $15,100, respectively, and a compensation cost of $55,668 was recognized for the year ended November 30, 2003.

(b) Cash equivalents:

Cash equivalents are limited to investments with maturities of three months or less that are highly liquid and readily convertible into cash.These investments are recorded at cost.As at November 30, 2004 and 2003, there were no cash equivalents.

(C) Bonds:

Bonds are recorded at the lesser of cost and market value for those classified in current assets.Bonds are classified in current assets with respect to their maturity date or management estimates of cash flow needs for the next year.These bonds consist of investment-grade instruments that are readily convertible into cash.

(d) Capital assets:

Capital assets are stated at cost.Depreciation is provided using the following methods and annual rates/periods:

---------------------------------------------------------------------
---------------------------------------------------------------------
Asset                                  Method             Rate/period
---------------------------------------------------------------------

Specialized computer
 equipment                      Straight-line                 5 years
Machinery and equipment     Declining balance         From 20% to 50%
Leasehold improvements          Straight-line           Term of lease
---------------------------------------------------------------------
---------------------------------------------------------------------

The Company performs a review for the impairment of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of property and equipment may not be recoverable.An impairment loss would be recognized when the recoverable value of the capital asset is less than its carrying amount.Fair value, at which the capital asset would be measured, can be established on a quotation price basis or by other valuation methods.Some specialized computer equipment is no longer utilized in the activities of the Company.As a result, net book value of the related equipment was reduced by $95,200 in order to reflect no recoverable value on the market of used equipment.

(e) Patents:

The costs relating to patent acquisitions are amortized over a period of 20 years, using the straight-line method.The cost of the patents does not necessarily reflect the present or future value of patents and the amount ultimately recoverable is dependent upon the successful commercialization of the related products.Management reviews the unamortized balance of patent costs on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, and recognizes any impairment in carrying values in the year of impairment.

An impairment would be recognized when the recoverable value of the asset is less than its carrying amount.The fair value, at which the asset would be measured, can be established on the basis of comparable information or transaction or by other valuation methods. In 2004, a write-down of $66,295 (2003 - nil) was recorded.

(f) Revenue recognition:

Revenue from research contracts consists of non-refundable research and development funding under collaborative and other agreements.Contract research and development funding generally compensates the Company for discovery, preclinical and clinical expenses related to the collaborative development programs for certain products and product candidates of the Company.Such finding is recognized as revenue at the time research and development activities are performed under the terms of the agreements.

License revenues are recorded when the conditions or the obligations have been satisfied under the license agreement and collection is reasonably assured.

(g) Research and development:

Research expenditures, net of related research tax credits and grants, are charged to earnings in the year in which they are incurred.Development expenditures, net of tax credits, if any, are capitalized when they meet the appropriate criteria for capitalization in accordance with generally accepted accounting principles.At November 30, 2004 and 2003, no development cost was capitalized.

(h) Government assistance:

Government assistance, consisting of research tax credits and grants, is recorded as a reduction of the related expense or the cost of the asset acquired.Government assistance is recognized when there is reasonable assurance that the Company has met the requirements of the approved grant program or, with regard to tax credits, when there is reasonable assurance that they will be realized.

(i) Income taxes:

The Company uses the asset and liability method of accounting for income taxes.Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.As appropriate, a valuation allowance is recorded to bring future assets back to an amount of which the realization is more probable than not.Future tax assets and liabilities are measured using enacted or substantively enacted tax rates at the balance sheet date which are expected to apply when the asset is realized or the liability settled.The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

(j) Earnings per share:

Basic earnings per share are determined using the weighted average number of common shares outstanding during the period.

The treasury stock method is used for calculating diluted earnings per share.In connection with such calculation, a number of additional shares is calculated by assuming that outstanding options and warrants were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the reporting period.

(k) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

3. Capital assets:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                                                 2004
---------------------------------------------------------------------

                                            Accumulated
                                       depreciation and      Net book
                                    Cost   amortization         value
---------------------------------------------------------------------
Specialized computer
 equipment                    $ 1,205,621   $ 1,109,374    $   96,247
Machinery and equipment         4,572,226     2,738,005     1,834,221
Leasehold improvements          1,175,622       287,273       888,349

---------------------------------------------------------------------
                               $6,953,469    $4,134,652    $2,818,817
---------------------------------------------------------------------
---------------------------------------------------------------------


---------------------------------------------------------------------
---------------------------------------------------------------------
                                                                2003
---------------------------------------------------------------------

                                            Accumulated
                                       depreciation and      Net book
                                     Cost  amortization         value
---------------------------------------------------------------------

Specialized computer
 equipment                     $1,462,668    $1,036,405      $426,263
Machinery and equipment         4,375,662     2,104,890     2,270,772
Leasehold improvements          1,152,533       173,021       979,512
---------------------------------------------------------------------
                               $6,990,863    $3,314,316    $3,676,547
---------------------------------------------------------------------
---------------------------------------------------------------------

4. Patents:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                                   2004          2003
---------------------------------------------------------------------

Cost                                           $620,727      $370,544
Accumulated amortization                         34,690        13,020

---------------------------------------------------------------------
                                               $586,037      $357,524

5. Capital stock:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                                  2004          2003
---------------------------------------------------------------------

Authorized in unlimited number and without
 par value:
  Common shares
  Preferred shares, issuable in series

Issued:
  58,851,584 common shares
   (50,465,200 in 2003)                    $44,655,975   $36,075,613
---------------------------------------------------------------------
---------------------------------------------------------------------

(a) Changes in the issued and outstanding
    capital stock were as follows:
---------------------------------------------------------------------
---------------------------------------------------------------------
                                               Number       Amount
---------------------------------------------------------------------

Balance, November 30, 2002                 50,197,200  $35,998,013


Shares issued pursuant to
 exercise of options                          268,000       77,600

---------------------------------------------------------------------
Balance, November 30, 2003                 50,465,200   36,075,613

Shares issued pursuant to a private
 placement                                  8,333,334    8,500,001
Shares issued pursuant to exercise of
 options                                       40,550       64,361
Shares issued pursuant to exercise of
 warrants                                      12,500       16,000

---------------------------------------------------------------------
Balance, November 30, 2004                 58,851,584  $44,655,975
---------------------------------------------------------------------
---------------------------------------------------------------------

In February 2004, the Company closed a private placement for the issuance of 8,333,334 units, each unit comprised of one share and one half of one common share purchase warrant.Each unit was sold at $1.02, allowing the Company to raise gross proceeds of approximately $8.5 million.Each full share purchase warrant will allow the holders to purchase one common share of the Company at an exercise price of $1.28 and will expire in February 2008.

During the year ended November 30, 2004, the Company issued 40,550 shares pursuant to exercise of options for a gross consideration of $60,659.In addition, the cost relating to these awards, which had been included in the contributed surplus and then credited to the capital stock during the year, amounted to $3,702.

The Company also issued 12,500 shares pursuant to exercise of warrants for a gross consideration of $16,000.At November 30, 2004, 4,154,167 warrants were outstanding as a result of issuance of units previously mentioned.

All issues of shares were made for cash consideration.

(b) Stock option plan:

The Company has established a stock option plan under which it can grant to its directors, management, employees, researchers and its consultants non-transferable options for the purchase of common shares.Under this plan, a maximum number of 5,000,000 common shares can be granted.Options expire ten years after their initial release.

Changes in the number of options outstanding during the past two fiscal years were as follows:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                                 Weighted average
                                                   exercise price
                                        Options         per share
---------------------------------------------------------------------

Options, November 30, 2002            3,932,500             $1.60

Granted                                 592,750              0.90
Exercised                              (268,000)             0.29
Cancelled                              (488,900)             2.19

---------------------------------------------------------------------
Options, November 30, 2003            3,768,350             $1.51

Granted                              660,500                 1.41
Exercised                            (40,550)                1.50
Cancelled                           (111,450)                1.04
---------------------------------------------------------------------
Options, November 30, 2004         4,276,850                $1.50
---------------------------------------------------------------------
---------------------------------------------------------------------

The following table summarizes the information on outstanding stock
options at November 30, 2004:

---------------------------------------------------------------------
---------------------------------------------------------------------
                 Outstanding options            Exercisable options
---------------------------------------------------------------------
                           Weighted
                            average
                       of remaining  Weighted              Weighted
Price and        Number contractual   average   Number of   average
range of     of options        life  exercise exercisable  exercise
prices      outstanding      (years)    price     options     price

$0.20           325,000        3.30     $0.20     325,000     $0.20
$0.35 - $0.50 1,340,600        5.89      0.41     990,240      0.40
$0.67 - $0.90   182,500        7.44      0.85      73,000      0.85
$1.03 - $1.35   905,750        9.36      1.14      82,050      1.04
$1.65 - $2.15   958,000        6.34      1.86     704,200      1.85
$3.02            15,000        6.35      3.02       9,000      3.02
$5.00 - $5.35   550,000        5.67      5.10     390,000      5.08

---------------------------------------------------------------------
              4,276,850        6.57     $1.50   2,573,490     $1.52
---------------------------------------------------------------------
---------------------------------------------------------------------

The fair value of the options granted during the year ended November 30, 2004 was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 4.5%, expected dividend yield of nil, expected volatility ranging from 68% to 92% and expected average option life of 5 years.The weighted average fair value of the options granted during the year ended November 30, 2004 is $0.95 ($0.57 in 2003).

The Black-Scholes model, used by the Company to calculate option values, was developed to estimate fair value of freely tradable, fully transferable options without vesting restrictions, which significantly differs from the Company's stock option awards.These models also require four highly subjective assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated values.

(C) Diluted loss per share:

Diluted loss per share was not presented as the effect of options and warrants would have been anti-dilutive.Furthermore, for the year ended November 30, 2004, the exercise of 1,918,500 options (1,620,200 options in 2003) would not have been considered in such computation since the exercise price of these options was higher than the average market price.

6. Supplemental cash flow information:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                      2004                      2003

Costs relating to patent
 acquisitions included in accounts
 payable and accrued liabilities    $5,770                   $85,386
Acquisition of capital assets
 included in accounts payable
 and accrued liabilities             2,894                   377,699

---------------------------------------------------------------------
---------------------------------------------------------------------

7.Income taxes:

Details of the components of income taxes are as follows:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                     2004                        2003
---------------------------------------------------------------------

Loss before recovery
 of income taxes               $8,214,000                  $7,147,000

Basic income tax rate               31.2%                       33.0%

---------------------------------------------------------------------

Computed income tax recovery    2,562,768                   2,358,510

Adjustment in income taxes
 resulting from:
Unrecorded potential tax benefits
 of operating losses            (2,548,015)               (2,614,782)
Permanent differences and other    (14,753)                  256,272

---------------------------------------------------------------------
                                        $-                        $-
---------------------------------------------------------------------
---------------------------------------------------------------------



The income tax effect of temporary differences that give rise to net
future tax assets and future tax liabilities is presented below:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                2004                  2003
---------------------------------------------------------------------

Future tax assets:
  Net operating loss
   carryforwards          $4,141,232            $3,221,720
  Unused research and
   development
   expenditures            6,126,756             4,496,807
  Share issue costs          366,338               443,462
  Costs relating to
   patents and other          33,771                 9,767
---------------------------------------------------------------------
                          10,668,097             8,171,756

Future tax liabilities:
Capital assets              (307,261)             (581,581)
---------------------------------------------------------------------
                          10,360,836             7,590,175

Less valuation
 allowance               (10,360,836)           (7,590,175)
---------------------------------------------------------------------
Net future tax asset              $-                    $-
---------------------------------------------------------------------
---------------------------------------------------------------------

In assessing the ability to realize future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized.The ultimate realization of future tax assets is dependent upon the generation of future taxable income and tax planning strategies in making this assessment.Since the Company is a development stage corporation, the generation of future taxable income is dependent on the successful commercialization of its products and technologies.

At November 30, 2004, the Company had the following operating loss carryforwards and unclaimed deductions and credits available forcarry forward:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                   Federal             Provincial
 --------------------------------------------------------------------

Research and development
 expenditures, without time
 limitation                    $17,873,000            $24,416,000
---------------------------------------------------------------------
---------------------------------------------------------------------

Losses carried forward:
 Expiring:
     2005                         $225,000               $225,000
     2006                          417,000                250,000
     2007                          419,000                198,000
     2008                        2,531,000              1,655,000
     2009                        3,485,000              2,448,000
     2010                        4,280,000              2,803,000
     2014                        3,073,000              3,088,000

---------------------------------------------------------------------
                               $14,430,000            $10,667,000
---------------------------------------------------------------------
---------------------------------------------------------------------

Share issue costs               $1,180,973             $1,180,973
---------------------------------------------------------------------
---------------------------------------------------------------------

Unused tax credits:
 Expiring:
    2007                          $119,000
    2008                            18,000
    2009                           213,000
    2010                           228,000
    2011                           738,000
    2012                           883,000
    2013                         1,005,000
    2014                           998,000
---------------------------------------------------------------------
                                $4,202,000
---------------------------------------------------------------------
---------------------------------------------------------------------


8. Commitments:

Rental of premises:

The Company rents premises under an operating lease expiring in
November 2011.  The minimum payments required, including additional
rent representing operating costs under the terms of the lease, are
as follows:

---------------------------------------------------------------------
---------------------------------------------------------------------

   2005                                                     $559,000
   2006                                                      566,000
   2007                                                      572,000
   2008                                                      579,000
   2009                                                      587,000
   Thereafter                                              1,194,000

---------------------------------------------------------------------
                                                          $4,057,000
---------------------------------------------------------------------
---------------------------------------------------------------------

In addition, the Company has issued an irrevocable letter of credit amounting to $389,282, along with a first rank movable hypothec, which can be subordinated in regard to lending institutions, of $1,000,000 covering the Company's tangible assets  located in the rented premises.The lease comprises progressive reduction clauses with respect to the amount of the letter of credit beginning in 2005, and an option for the purchase of the land and building.

8. Financial instruments:

The Company has determined that the carrying value of its short-term financial assets and liabilities, including cash, sales tax receivable and other, tax credits receivable and accounts payable and accrued liabilities, approximates their fair value because of the relatively short periods to maturity of these instruments.

Bonds are composed of financial instruments issued from municipal and paragovernmental bodies as well as companies with investment-grade ratings.These investments bear interest at rates varying between 2.10% and 8.80% based on nominal value and mature at various dates over the next two years.Fair value of bonds amounted to $9,950,429 and $8,514,312 as at November 30, 2004 and 2003, respectively.

ECOPIA BIOSCIENCES INC. (TSX:EIA)