ex991.htm

210, 1167 Kensington Cr. N.W

Calgary, Alberta

Canada T2N 1X7

For Immediate Release

Oncolytics Biotech® Inc. Reports Highlights and Financial Results for 2008

CALGARY, AB, March 4, 2009 --- Oncolytics Biotech Inc. (TSX:ONC, NASDAQ:ONCY) (“Oncolytics” or the “Company”) today reported its financial results for the year ended December 31, 2008.

“In 2008, we selected our first pivotal program for REOLYSIN®,” said Dr. Brad Thompson, President and CEO of Oncolytics. “The selection of head and neck cancers was supported by interim results reported in our US and UK clinical studies, and the successful development of a manufacturing process capable of supplying REOLYSIN for large clinical studies.”

Selected Highlights:

Clinical Trial Results

Announced positive interim results from our Phase I/II UK combination REOLYSIN and carboplatin/paclitaxel trial. Of 14 patients evaluable for response, four had partial responses and five patients had stable disease. Of note, all partial responses and 4/5 stable diseases were in head and neck disease;

·	Announced positive interim results from our UK combination REOLYSIN and docetaxel trial. Of the 11 patients evaluable for response, five had partial or minor responses, and six patients had stable disease; and

Exceeded the primary statistical endpoint in our US multicentre, Phase 2 clinical trial to evaluate the intravenous administration of REOLYSIN in patients with various sarcomas that had metastasized to the lung. We reported that of 33 patients evaluable for response, five had stable disease for more than six months, and an additional 10 patients had stable disease ranging from 3-6 cycles (cycle = 28 days).

Clinical Trial Progress

·	Selection of first pivotal program using REOLYSIN in combination with paclitaxel and carboplatin for patients with platinum-failed head & neck cancers;

·	Start of patient enrolment in five new trials:

o	NCI-sponsored Phase I/II systemic and peritoneal administration trial in patients with ovarian, peritoneal and fallopian tube cancers;

o	NCI-sponsored Phase II systemic administration trial in patients with metastatic melanoma;

o	UK Phase II REOLYSIN/paclitaxel/carboplatin trial for patients with refractory head and neck cancers;

o	US Phase II REOLYSIN/paclitaxel/carboplatin trial for patients with refractory head and neck cancers;

o	UK Phase I REOLYSIN/cyclophosphamide trial;

·	Approval for a US Phase II REOLYSIN/paclitaxel/carboplatin trial for Non-Small Cell Lung Cancer patients with K-RAS or EGFR-activated tumours;

·	Completion of patient enrolment in two trials:

o	UK Phase II local administration REOLYSIN and radiation trial for patients with various advanced cancers, including head & neck;

o	UK REOLYSIN and docetaxel clinical trial;

·	In early 2009, start of patient enrolment in a University of Leeds-sponsored translational clinical trial examining REOLYSIN in patients with metastatic colorectal cancer; and

In early 2009, Oncolytics and the Cancer Therapy & Research Center at The University of Texas Health Science Center in San Antonio, (CTRC at UTHSCSA) announced a broad preclinical and clinical collaboration involving up to five, open-label, Phase II studies exploring the use of REOLYSIN in combination with chemotherapy for various cancer indications.

Manufacturing

·	Successfully transferred cGMP manufacturing process for REOLYSIN at the 40L scale and completed initial scale up of manufacturing process for REOLYSIN to commercial scale.

Financial and Intellectual Property

·	In December, Oncolytics closed a public offering that added a net $3.4 million to Oncolytics’ financial reserves, bringing the total to $13.3 million in cash and equivalents at December 31, 2008; and,

·	Secured five U.S. and three Canadian patents in 2008. Currently more than 200 patents have been issued worldwide, including 31 US and 9 Canadian.

“We are greatly encouraged by the clinical results we are seeing in our clinical trials, and by the continued enthusiasm displayed by our collaborators,” said Dr. Thompson. “We look forward to taking REOLYSIN into to the final stages of development in 2009.”

Oncolytics Biotech Inc.

CONSOLIDATED BALANCE SHEETS

As at December 31

	$	2008		$	2007
ASSETS
Current
Cash and cash equivalents		7,429,895			6,715,096
Short-term investments		5,846,634			18,498,733
Accounts receivable		86,322			80,085
Prepaid expenses		179,668			260,300
		13,542,519			25,554,214
Property and equipment Intellectual property		263,926 180,750			201,103 542,250
		13,987,195			26,297,567
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities		4,534,111			2,821,227

Commitments and contingency
Shareholders' equity
Share capital
Authorized: unlimited
Issued: 43,830,748 (2006 – 41,180,748)		95,234,924			92,759,665
Warrants		3,425,110			5,346,260
Contributed surplus		13,349,801			10,376,962
Deficit		(102,556,751	)		(85,006,547	)
		9,453,084			23,476,340
		13,987,195			26,297,567

Oncolytics Biotech Inc.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHESIVE LOSS

For the periods ended December 31

	$	2008		$	2007		$	2006		Cumulative from inception on April 2, 1998 to December 31, 2008 $
Revenue
Rights revenue		¾			¾			¾			310,000
		¾			¾			¾			310,000
Expenses
Research and development		13,351,875			12,385,743			11,378,998			74,531,777
Operating		4,311,575			3,826,195			3,630,144			24,837,025
Stock based compensation		64,039			539,156			403,550			4,768,844
Foreign exchange (gain) loss		(68,283	)		8,862			35,270			589,427
Amortization – intellectual property		361,500			361,500			361,500			3,434,250
Amortization – property and equipment		48,754			40,714			52,638			497,151
		18,069,460			17,162,170			15,862,100			108,658,474
Loss before the following		18,069,460			17,162,170			15,862,100			108,348,474
Interest income		(519,256	)		(1,211,744	)		(1,233,809	)		(6,534,005	)
Gain on sale of BCY LifeSciences Inc.		¾			¾			¾			(299,403	)
Loss on sale of Transition Therapeutics Inc.		¾			¾			¾			2,156,685
Loss before income taxes		17,550,204			15,950,426			14,628,291			103,671,751
Future income tax recovery		¾			¾			¾			(1,115,000	)
Net loss and comprehensive loss for the period		17,550,204			15,950,426			14,628,291			102,556,751
Basic and diluted loss per share		(0.42	)		(0.39	)		(0.40	)

Oncolytics Biotech Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the periods ended December 31

	$	2008		$	2007		$	2006		Cumulative from inception on April 2, 1998 to December 31, 2008 $
OPERATING ACTIVITIES
Net loss and comprehensive loss for the period		(17,550,204	)		(15,950,426	)		(14,628,291	)		(102,556,751	)
Add/(deduct) non-cash items
Amortization – intellectual property		361,500			361,500			361,500			3,434,250
Amortization – property and equipment		48,754			40,714			52,638			497,151
Stock based compensation		64,039			539,156			403,550			4,768,844
Other non-cash items		—			—			—			1,383,537
Net change in non-cash working capital		1,787,279			586,964			812,622			4,268,121
Cash used in operating activities		(15,288,632	)		(14,422,092	)		(12,997,981	)		(88,204,848	)
INVESTING ACTIVITIES
Acquisition of property and equipment		(111,577	)		(92,221	)		(35,838	)		(813,744	)
Purchase of short-term investments		(347,901	)		(949,496	)		(1,035,427	)		(49,416,864	)
Redemption of short-term investments		13,000,000			6,573,000			13,808,000			43,151,746
Investment in BCY LifeSciences Inc.		—			—			—			464,602
Investment in Transition Therapeutics Inc.		—			—			—			2,532,343
Cash provided by (used in) investing activities		12,540,522			5,531,283			12,736,735			(4,081,917	)
FINANCING ACTIVITIES
Proceeds from exercise of stock options and warrants		41,600			51,000			241,400			15,301,068
Proceeds from private placements		—			—			—			38,137,385
Proceeds from public offerings		3,421,309			12,063,394			—			46,278,207
Cash provided by financing activities		3,462,909			12,114,394			241,400			99,716,660
Net increase (decrease) in cash and cash equivalents during the period		714,799			3,223,585			(19,846	)		7,429,895
Cash and cash equivalents, beginning of period		6,715,096			3,491,511			3,511,357			—
Cash and cash equivalents, end of period		7,429,895			6,715,096			3,491,511			7,429,895
Cash interest received		769,529			1,392,866			940,100

To view the Company’s Financial Statements and Management’s Discussion and Analysis, please see the Company’s 2008 Annual Filings which will be available on www.sedar.com and www.oncolyticsbiotech.com.

About Oncolytics Biotech Inc.

Oncolytics is a Calgary-based biotechnology company focused on the development of oncolytic viruses as potential cancer therapeutics. Oncolytics’ clinical program includes a variety of Phase I/II and Phase II human trials using REOLYSIN®, its proprietary formulation of the human reovirus, alone and in combination with radiation or chemotherapy. For further information about Oncolytics please visit www.oncolyticsbiotech.com

This press release contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and under applicable Canadian provincial securities legislation. Forward-looking statements, including the Company’s belief as to the potential of REOLYSIN as a cancer therapeutic; the Company’s expectations as to the success of its research and development programs in 2009 and beyond, the value of the additional patents and intellectual property; the Company’s expectations related to the applications of the patented technology; the Company’s expectations as to adequacy of its existing capital resources; the design, timing, success of planned clinical trial programs and the Company’s planned expansion of such programs; and other statements related to anticipated developments in the Company’s business and technologies involve known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue research and development projects, the efficacy of REOLYSIN as a cancer treatment, the success and timely completion of clinical studies and trials, the Company’s ability to successfully commercialize REOLYSIN, uncertainties related to the research and development of pharmaceuticals, uncertainties related to the regulatory process and general changes to the economic environment. Investors should consult the Company’s quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned against placing undue reliance on forward-looking statements. The Company does not undertake to update these forward-looking statements, except as required by applicable laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Oncolytics Biotech Inc.

Cathy Ward

210, 1167 Kensington Cr NW

Calgary, Alberta T2N 1X7

Tel: 403.670.7377

Fax: 403.283.0858

cathy.ward@oncolytics.ca

The Equicom Group

Nick Hurst

325, 300 5th Ave. SW

Calgary, Alberta T2P 3C4

Tel: 403.538.4845

Fax: 403.237.6916

nhurst@equicomgroup.com

The Investor Relations Group

Erika Moran

11 Stone St, 3rd Floor

New York, NY 10004

Tel: 212.825.3210

Fax: 212.825.3229

emoran@investorrelationsgroup.com

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