EX-99.1 2 ex991-interimfsjune302025.htm EX-99.1 2025 SECOND QUARTER INTERIM FINANCIAL STATEMENTS Document



















Condensed Interim Consolidated Financial Statements
(unaudited)

Oncolytics Biotech® Inc.
For the three and six months ended June 30, 2025



ONCOLYTICS BIOTECH INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited)
(in thousands of Canadian dollars, except share amounts)
As at June 30,
2025		December 31,
2024
Assets  
Current assets  
Cash and cash equivalents (note 4)$14,626 $15,942 
Other receivables72 68 
Prepaid expenses3,174 1,885 
Warrant derivative (note 6)1,024 980 
Total current assets18,896 18,875 
Property and equipment351 411 
Right-of-use assets (note 5)727 901 
Total assets$19,974 $20,187 
Liabilities and Shareholders' Equity  
Current liabilities  
Accounts payable and accrued liabilities (note 4)$5,285 $4,792 
Other liabilities (note 4)982 1,618 
Lease liabilities (note 5)291 277 
Total current liabilities6,558 6,687 
Contract liability 6,730 6,730 
Lease liabilities (note 5)597 787 
Total liabilities13,885 14,204 
Commitments (note 10)
Shareholders' equity   
Share capital (note 7)
  Authorized: unlimited
  Issued: June 30, 2025 – 97,407,903
  December 31, 2024 – 80,020,131
451,142 438,193 
Contributed surplus (note 8)44,792 44,542 
Accumulated other comprehensive income720 961 
Accumulated deficit(490,565)(477,713)
Total shareholders' equity 6,089 5,983 
Total liabilities and shareholders' equity$19,974 $20,187 
See accompanying notes
2





ONCOLYTICS BIOTECH INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands of Canadian dollars, except share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2025202420252024
Expenses  
   Research and development (note 14)$2,809 $4,558 $6,892 $10,301 
   General and administrative (note 14)2,897 3,362 5,813 6,345 
Loss before the following(5,706)(7,920)(12,705)(16,646)
   Change in fair value of warrant derivative (note 6)(196)235 44 1,104 
   Foreign exchange (loss) gain(282)184 (333)701 
   Interest income, net104 340 227 786 
Loss before income taxes(6,080)(7,161)(12,767)(14,055)
   Income tax expense(85)(95)(85)(95)
Net loss(6,165)(7,256)(12,852)(14,150)
Other comprehensive (loss) income items that may be reclassified to net loss
  Translation adjustment(238)52 (241)178 
Comprehensive loss$(6,403)$(7,204)$(13,093)$(13,972)
Basic and diluted loss per common share (note 9)$(0.07)$(0.10)$(0.15)$(0.19)
Weighted average number of shares (basic and diluted) (note 9)90,999,586 76,090,406 87,833,107 75,667,521 
    See accompanying notes
3



ONCOLYTICS BIOTECH INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)
(in thousands of Canadian dollars)
Share CapitalContributed SurplusAccumulated Other Comprehensive IncomeAccumulated DeficitTotal
As at December 31, 2023$430,906 $42,116 $544 $(446,003)$27,563 
Net loss and other comprehensive income— — 178 (14,150)(13,972)
Issued pursuant to incentive share award plan (notes 7, 8)3 (3)— — — 
Issued pursuant to "At the Market" Agreement (note 7)3,840 — — — 3,840 
Share issue costs (note 7)(202)— — — (202)
Share-based compensation expense (note 8)— 1,082 — — 1,082 
As at June 30, 2024$434,547 $43,195 $722 $(460,153)$18,311 
As at December 31, 2024$438,193 $44,542 $961 $(477,713)$5,983 
Net loss and other comprehensive loss— — (241)(12,852)(13,093)
Issued pursuant to incentive share award plan (notes 7, 8)1,481 (1,481)— — — 
Issued pursuant to "At the Market" Agreement (note 7)8,714 — — — 8,714 
Issued pursuant to share purchase agreement (note 7)3,841 — — — 3,841 
Share issue costs (note 7)(1,087)— — — (1,087)
Share-based compensation expense (note 8)— 1,731 — — 1,731 
As at June 30, 2025$451,142 $44,792 $720 $(490,565)$6,089 
See accompanying notes

4





ONCOLYTICS BIOTECH INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands of Canadian dollars) 
Six Months Ended June 30,
20252024
Operating Activities  
Net loss for the period$(12,852)$(14,150)
Depreciation - property and equipment (note 14)51 56 
Depreciation - right-of-use-assets (note 14)140 165 
Share-based compensation expense (notes 8, 14, 15)1,731 1,082 
Interest expense on lease liabilities74 57 
Unrealized foreign exchange loss (gain)1 (576)
Change in fair value of warrant derivative (note 6)(44)(1,104)
Net change in non-cash working capital (note 13)(1,070)182 
Cash used in operating activities(11,969)(14,288)
Investing Activities  
Acquisition of property and equipment— (201)
Cash used in investing activities— (201)
Financing Activities  
Proceeds from "At the Market" equity distribution agreement, net (note 7)8,386 3,638 
Proceeds from share purchase agreement, net (note 7)3,082 — 
Payment of lease liabilities(205)(168)
Cash provided by financing activities11,263 3,470 
Decrease in cash and cash equivalents(706)(11,019)
Cash and cash equivalents, beginning of period15,942 34,912 
Impact of foreign exchange on cash and cash equivalents(610)957 
Cash and cash equivalents, end of period$14,626 $24,850 
See accompanying notes
5

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)


Note 1: Nature of Operations and Going Concern
Oncolytics Biotech Inc. was incorporated on April 2, 1998, under the Business Corporations Act (Alberta) as 779738 Alberta Ltd. On April 8, 1998, we changed our name to Oncolytics Biotech Inc. We are a limited company incorporated and domiciled in Canada. Our shares are publicly traded on the Nasdaq Capital Market (the "Nasdaq") and the Toronto Stock Exchange (the "TSX"). Our principal place of business is located at 804, 322 11th Avenue S.W., Calgary, Alberta, Canada.
We are a clinical-stage biopharmaceutical company developing pelareorep, a well-tolerated intravenously delivered
immunotherapeutic agent that activates the innate and adaptive immune systems and weakens tumor defense mechanisms. This improves the ability of the immune system to fight cancer, making tumors more susceptible to a broad range of oncology treatments. Our primary focus is to advance our first-line metastatic pancreatic ductal adenocarcinoma program to a registration-enabled clinical study. In addition, we are exploring opportunities for registrational programs and investigator sponsored trials in hormone receptor-positive / human epidermal growth factor 2-negative (HR+/HER2-) advanced and metastatic breast cancer and other gastrointestinal cancers, including anal cancer, through our GOBLET platform study, and colorectal cancer through potential investigator sponsored trials.
We have not been profitable since our inception and expect to continue to incur substantial losses as we continue our research and development efforts. As at June 30, 2025, we had an accumulated deficit of $490,565. We do not expect to generate significant revenues until and unless pelareorep becomes commercially viable. To date, we have funded our operations mainly through issuing additional capital via public offerings, equity distribution arrangements, and the exercise of warrants and stock options.
Going concern
Management assesses our ability to continue as a going concern when preparing our condensed interim consolidated financial statements. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. As at June 30, 2025, we had cash and cash equivalents of $14,626. We estimate we can currently fund our operations into the first quarter of 2026. Factors that will affect our anticipated cash needs for the next twelve months include, but are not limited to, expansion of our clinical trial program, the timing of patient enrollment in our clinical trials, the actual costs incurred to support each clinical trial, the number of treatments each patient will receive, the timing of activity with our clinical trial research collaborations, the number, timing and costs of manufacturing runs required to conclude the validation process and supply product to our clinical trial program, and the level of collaborative activity undertaken.
Our ability to continue as a going concern is dependent upon raising additional financing through equity or strategic collaborations and transactions. We plan on raising additional funds through the sale of our common shares or other capital resources, such as strategic collaborations and debt, to fund our ongoing operations. However, given the difficulty for micro-cap market capitalization companies to raise significant capital, there can be no assurance that additional liquidity will be available under acceptable terms or at all. Furthermore, if we are unable to obtain additional financing when required, there can be no assurance that we will be able to sufficiently reduce or eliminate our planned expenditures to extend our operating runway. These material uncertainties raise substantial doubt on our ability to continue as a going concern and meet our obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.
These condensed interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern. However, the use of the going concern assumption on which these condensed interim consolidated financial statements are prepared may not be appropriate based on the factors described above.
These condensed interim consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statements of financial position classifications that would be necessary if we were unable to realize our assets and settle our liabilities as a going concern in the normal course of operations. Such adjustments could be material.

6

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

Note 2: Basis of Presentation

Statement of compliance
These condensed interim consolidated financial statements have been prepared in accordance with IFRS and in compliance with International Accounting Standard ("IAS") 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB").
Our condensed interim consolidated financial statements for the three and six months ended June 30, 2025, were authorized for issue in accordance with a resolution of the Board of Directors on August 7, 2025.
Basis of presentation
These condensed interim consolidated financial statements have been prepared on the historical cost basis, except for certain assets and liabilities which are measured at fair value as explained in the notes to these financial statements.
The notes presented in these condensed interim consolidated financial statements include only significant events and transactions occurring since our last fiscal year end and are not fully inclusive of all matters required to be disclosed in our annual audited consolidated financial statements. Accordingly, these condensed interim consolidated financial statements should be read in conjunction with our most recent annual audited consolidated financial statements for the year ended December 31, 2024.
Our condensed interim consolidated financial statements include our financial statements and the financial statements of our subsidiaries, Oncolytics Biotech (Barbados) Inc. and Oncolytics Biotech (U.S.) Inc., and are presented in Canadian dollars, our functional currency.
Use of estimates
The preparation of our condensed interim consolidated financial statements in conformity with IFRS requires us to make judgments, estimates, and assumptions that affect the application of accounting policies, the reported amounts, and disclosures in our condensed interim consolidated financial statements and accompanying notes. Management makes estimates based on our best knowledge of current events and actions that the Company may undertake in the future. We consider the potential impact of certain external factors outside of our control, including global political conflicts, supply chain disruptions, inflation, fluctuating interest rates, and liquidity, when making certain estimates and judgments relating to the preparation of these condensed interim consolidated financial statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Actual results could differ from these estimates, and such differences could be material.

Note 3: Material Accounting Policies
The accounting policies applied in these condensed interim consolidated financial statements are the same as those applied in our audited consolidated financial statements for the year ended December 31, 2024.
Accounting standards and interpretations issued but not yet effective
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of Financial Statements. IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified roles of the primary financial statements and the notes. Narrow scope amendments have been made to IAS 7 Statement of Cash Flows and some requirements previously included within IAS 1 have been moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which has also been renamed IAS 8 Basis of Preparation of Financial Statements. IAS 34 Interim Financial Reporting has also been amended to require disclosure of management-defined performance measures. IFRS 18 and the amendments to the other standards are effective for annual periods beginning on or after January 1, 2027, with early
7

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

application permitted. IFRS 18 applies retrospectively to both annual and interim financial statements. We are assessing the impact of adopting this standard on our consolidated financial statements.
Note 4: Balance Sheet Details
Cash equivalents
Cash equivalents consist of interest-bearing deposits with our bank totaling $10,569 as at June 30, 2025 (December 31, 2024 – $12,312).  
Other liabilities
In 2023, we were selected by the Pancreatic Cancer Action Network (PanCAN) as the recipient of its Therapeutic Accelerator Award to conduct a clinical trial with pelareorep in combination with modified FOLFIRINOX chemotherapy with or without an immune checkpoint inhibitor in pancreatic cancer patients. Under the terms of the award agreement, we are entitled to receive up to US$5 million in funding for eligible research expenses, and we must comply with the conditions set out with the award agreement, including providing periodic performance progress reports. As at June 30, 2025, we recorded US$719 ($982) (December 31, 2024 – US$1,125 ($1,618)) in other liabilities representing unapplied funding received from PanCAN.
Accounts payable and accrued liabilities
 June 30,
2025		December 31,
2024
Trade payables$1,331 $1,087 
Accrued liabilities3,954 3,705 
$5,285 $4,792 

Note 5: Leases
We have office space leases with initial lease terms generally between 3 to 6 years. We currently do not have leases with residual value guarantees or leases not yet commenced to which we are committed. We have variable lease payments related to office space lease operating costs that are not material. Lease liabilities have been measured by discounting future lease payments using our incremental borrowing rate, as rates implicit in the leases were not readily determinable. The weighted average rate applied was 15%.
Our total undiscounted lease liabilities as at June 30, 2025, were as follows:
June 30,
2025
Less than one year$405 
One to five years743 
More than five years— 
Total undiscounted lease liabilities$1,148 

Note 6: Warrant Derivative
Our common share purchase warrants ("warrants") with a U.S. dollar exercise price, which differs from our functional currency, are treated as a derivative measured at fair value, and revalued each period end at fair value through profit and loss. There is no cash flow impact as a result of the accounting treatment for changes in the fair value of the warrant derivative or when warrants expire unexercised.
8

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

Changes in the value of our warrant derivative were as follows:
Number of Warrants Fair Value of Warrant Derivative
As at December 31, 20237,731,085 $200 
Exercised(52,456)(6)
Expired(11,579)(1)
Amortization of discount on warrants issued— 365 
Change in fair value— (1,605)
Foreign exchange impact— 67 
As at December 31, 20247,667,050 $(980)
Amortization of discount on warrants issued— 182 
Change in fair value— (226)
As at June 30, 20257,667,050 $(1,024)
The following table summarizes our outstanding warrant derivative as at June 30, 2025:
Exercise priceIssuance dateExpiry dateNumber of Warrants Outstanding
US$2.81August 8, 2023August 8, 20286,667,000 
US$2.81September 7, 2023August 8, 20281,000,050 
7,667,050 
On August 8, 2023, pursuant to an underwritten public offering, we issued 6,667,000 units for gross proceeds of $20,185 (US$15,001) at a price of US$2.25 per unit. On September 7, 2023, pursuant to the over-allotment option exercised by the underwriter, we issued an additional 1,000,050 units for gross proceeds of $3,077 (US$2,250) at a price of US$2.25 per unit. Each unit consisted of one common share and one common share purchase warrant ("warrant"), which were immediately separable and issued separately in this offering. Each warrant entitles the holder to purchase one common share at an exercise price of US$2.81 up to 60 months from the date of issuance. Proceeds were allocated amongst common shares and warrants by applying a relative fair value approach, which resulted in $17,724 recorded in share capital and an initial warrant derivative liability of $7,360. The difference between the fair value of the warrants and their allocated proceeds was a discount of $1,822, which is amortized on a straight-line basis over the five-year expected life of the warrants and recorded under change in fair value of warrant derivative on our consolidated statement of loss and comprehensive loss.
At June 30, 2025, as the unamortized discount balance was greater than the fair value of the warrant derivative liability, the net balance was presented as an asset on our condensed interim consolidated statement of financial position.
We use the Black-Scholes valuation model to estimate fair value. The expected volatility is based on the Company's common share historical volatility less an estimated market participant risk adjustment. The risk-free interest rate is based on the Government of Canada benchmark bond yield rates with an approximate equivalent remaining term in effect at the time of valuation, and the expected life represents the estimated length of time the warrants are expected to remain outstanding.
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ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

The estimated fair value of the warrant derivative was determined using the following assumptions:
June 30,
2025		December 31,
2024
Underlying share priceUS$0.76US$0.92
Risk-free interest rate2.6%2.9%
Expected life3.1 years3.6 years
Expected volatility36.5%36.5%
Expected dividend yieldNilNil
Fair value per warrantUS$0.01US$0.03

Note 7: Share Capital
Authorized
Unlimited number of no par value common shares
Shares
NumberAmount
As at December 31, 202374,423,960 $430,906 
Issued pursuant to incentive share award plan133,572 297 
Issued pursuant to "At the Market" (ATM) equity distribution agreement(a)
5,410,143 7,670 
Issued pursuant to warrant derivative exercised52,456 71 
Share issue costs— (751)
As at December 31, 202480,020,131 $438,193 
Issued pursuant to incentive share award plan1,256,646 1,481 
Issued pursuant to "At the Market" (ATM) equity distribution agreement(b)
8,568,974 8,714 
Issued pursuant to share purchase agreement(c)
7,562,152 3,841 
Share issue costs— (1,087)
As at June 30, 202597,407,903 $451,142 
(a)On June 17, 2022, we entered into an ATM equity distribution agreement with Canaccord Genuity Inc. The ATM allowed us to issue common shares, at prevailing market prices, with an aggregate offering value of up to US$65,000 over a 25-month period through the facilities of the Nasdaq in the United States. This sales agreement was terminated on July 17, 2024. During the six months ended June 30, 2024, we sold 2,432,099 common shares for gross proceeds of $3,840 (US$2,835) at an average price of $1.58 (US$1.17). We received proceeds of $3,725 (US$2,750) after commissions of $115 (US$85). In total, we incurred share issue costs (including commissions) of $202.
(b)On August 2, 2024, we entered into an ATM equity distribution agreement with Cantor Fitzgerald & Co. (Cantor). The ATM allows us to issue common shares, at prevailing market prices, with an aggregate offering value of up to US$50,000 over a 25-month period through the facilities of the Nasdaq in the United States. During the six months ended June 30, 2025, we sold 8,568,974 common shares for gross proceeds of $8,714 (US$6,150) at an average price of $1.02 (US$0.72). We received proceeds of $8,453 (US$5,965) after commissions of $261 (US$185). In total, we incurred share issue costs (including commissions) of $328. On August 8, 2025, we voluntarily delisted from the TSX, effective August 22, 2025, causing us to terminate our ATM agreement (see note 16).
(c)On April 10, 2025, we entered into a share purchase agreement with Alumni Capital LP (Alumni), an institutional investor. Under the terms of the agreement, we have the right to sell, and Alumni has the obligation to purchase up to US$20 million worth of common shares over a 15-month period based on the market price at the time of each sale to Alumni. The agreement limits Alumni's beneficial ownership to 4.99% of our common shares outstanding immediately prior to each
10

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

sale, which can be increased to 9.99% upon mutual agreement. The agreement also limits our sale of common shares to 19.99% of our total outstanding common shares as at the date that the share purchase agreement was entered into, unless and until we have obtained shareholder approval under applicable Nasdaq rules. Subject to the terms of the agreement, we have sole discretion over the timing and amount of all common share sales. We issued an initial commitment fee of 816,326 common shares at the execution of the agreement. An additional 816,326 common shares will be issued on a pro rata basis upon the delivery of purchase notices as an additional commitment fee.
During the six months ended June 30, 2025, we sold 6,650,000 common shares for gross proceeds of $3,233 (US$2,348) at an average price of $0.49 (US$0.35). We also issued 816,326 initial commitment and 95,826 additional commitment shares fair valued at $608 (US$435). In total, we incurred share issue costs (including the initial commitment and additional commitment fees) of $759. On August 8, 2025, we voluntarily delisted from the TSX, effective August 22, 2025, causing us to terminate the share purchase agreement (see note 16).
Note 8: Share-Based Compensation
Stock options and share awards
(a)Our amended and restated Stock Option Plan and Share Award Plan (collectively, the "Equity Incentive Plans") were approved by our shareholders at the annual general meeting of shareholders on May 9, 2023. Pursuant to our Equity Incentive Plans, we may grant stock options, restricted share awards, and performance share awards. The number of common shares reserved for issuance under our Equity Incentive Plans in aggregate shall not exceed 14% of the total number of issued and outstanding common shares from time to time. As at June 30, 2025, there were 6,269,415 common shares available for grant under the Equity Incentive Plans.
In June 2025, we granted inducement equity awards to our new Chief Executive Officer ("New CEO") and Chief Business Officer ("CBO"). These awards included stock options and performance-based stock options ("Inducement Stock Options") and performance restricted share awards ("Inducement Share Awards"). The grants were made as a material inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4), and therefore did not require shareholder approval.
Our share-based compensation expense was $523 and $1,731 for the three and six months ended June 30, 2025 (June 30, 2024 - $506 and $1,082, respectively).
(b)Our stock option activity related to the Equity Incentive Plan and Inducement Stock Options for the six months ended June 30 was as follows:
20252024
Stock OptionsWeighted Average Exercise Price
$		Stock OptionsWeighted Average Exercise Price
$
Outstanding, beginning of the period6,876,345 2.147,063,333 2.72
Granted5,500,000 0.62310,000 1.57
Forfeited(286,733)1.84(95,535)2.25
Expired (5,263)7.60(65,263)5.93
Outstanding, end of the period12,084,349 1.457,212,535 2.65
Exercisable, end of the period5,116,947 2.355,255,889 2.83
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ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

The following table summarizes information about the stock options outstanding and exercisable at June 30, 2025:
Range of Exercise PricesNumber OutstandingWeighted Average Remaining Contractual Life (years)
Weighted Average Exercise Price
$
Number Exercisable
Weighted Average Exercise Price
$
$0.57 - $1.125,500,000 5.00.62— —
$1.13 - $1.501,720,900 3.81.14785,658 1.13
$1.51 - $2.202,099,517 2.51.901,665,209 1.92
$2.21 - $3.111,610,489 2.02.601,512,637 2.59
$3.12 - $5.421,153,443 0.73.501,153,443 3.50
12,084,349 3.61.455,116,947 2.35

Our option grants vest either immediately or annually over periods ranging from one to three years, except for our performance-based option grant, which vests upon achieving certain financing objectives during the service period.

We use the Black-Scholes valuation model to estimate fair value. We use historical data to estimate the expected dividend yield and expected volatility of our stock in determining the fair value of the stock options. The risk-free interest rate is based on the Government of Canada benchmark bond yield rates in effect at the time of grant. The expected life of the options represents the estimated length of time the options are expected to remain outstanding.

The estimated fair value of stock options granted during the six months ended June 30 were determined using the following weighted average assumptions:
20252024
Risk-free interest rate2.9%4.0%
Expected life5.0 years3.0 years
Expected volatility76.7%64.8%
Expected dividend yieldNilNil
Weighted average fair value of options$0.40$0.72
(c)Our share award activity related to the Equity Incentive Plan and Inducement Share Awards for the six months ended June 30 was as follows:
 20252024
Outstanding, beginning of the period1,118,510 398,440 
Granted(1)
3,369,636 — 
Released(1,256,646)(1,140)
Outstanding, end of the period3,231,500 397,300 
(1)The weighted average fair value of the restricted share awards granted was $0.72 in 2025.
During the six months ended June 30, 2025, we granted restricted share awards ("RSA") to our independent members of the Board of Directors, our Interim Chief Executive Officer ("Interim CEO), and our Former Chief Executive Officer ("Former CEO").
The RSAs granted to our independent Board of Director members were in lieu of their cash compensation for the first half of 2025. These RSA's and those granted to the Former CEO vested immediately upon grant. RSAs granted to our Interim CEO were subject to immediate vesting or cliff vesting in two years, depending on the terms of the individual award.
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ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

The Inducement Share Awards granted to our New CEO and CBO will vest upon our entry into a definitive agreement involving either (i) the acquisition of our company or (ii) the exclusive license of pelareorep. Upon such triggering event, our New CEO will be entitled to receive a number of common shares equal to 2% of our then-outstanding common shares, and our CBO will be entitled to receive 500,000 common shares.
Compensation warrants
In consideration of the services rendered by the underwriter as part of a public offering in 2023, we issued 536,693 compensation warrants. Each compensation warrant is exercisable into one common share at an exercise price of US$2.25 up to 60 months from the date of issuance. At issuance date, we used the Black-Scholes valuation model to estimate the fair value of the services rendered. As at June 30, 2025, and June 30, 2024, there were 536,693 compensation warrants outstanding.

Note 9: Loss Per Common Share
 
Loss per common share is calculated by dividing net loss for the period and the weighted average number of common shares outstanding for the three and six months ended June 30, 2025, of 90,999,586 and 87,833,107, respectively (June 30, 2024 - 76,090,406 and 75,667,521, respectively). The effect of any potential exercise of our stock options, share awards, and warrants outstanding during the period has been excluded from the calculation of diluted loss per common share, as it would be anti-dilutive.

Note 10: Commitments
 
We are committed to payments of approximately $5,300 for activities mainly related to our clinical trial and manufacturing programs, which are expected to occur over the next two years. Approximately half of the committed payments relate to a
production service agreement with our primary toll manufacturer, which cannot be canceled without a significant penalty. We
are able to cancel most of the remaining agreements with notice.

Note 11: Capital Disclosures
 
Our objective when managing capital is to maintain adequate cash resources to support planned activities, including our clinical trial program, product manufacturing, administrative costs, and intellectual property expansion and protection. See note 1 for the discussion on our ability to continue as a going concern. We include shareholders' equity and cash and cash equivalents in the definition of capital.
 June 30,
2025		December 31,
2024
Cash and cash equivalents$14,626 $15,942 
Shareholders' equity$6,089 $5,983 

We have no debt other than accounts payable and accrued liabilities and lease liabilities. We also have commitments relating to completing our research and development of pelareorep.
In managing our capital, we estimate our future cash requirements by preparing a budget and a multi-year plan annually for review and approval by our Board. The budget establishes the approved activities for the upcoming year and estimates the associated costs. The multi-year plan estimates future activity along with the potential cash requirements and is based on our assessment of our current clinical trial progress along with the expected results from the coming year’s activity. Budget to actual variances are prepared and reviewed by management and are presented quarterly to the Board.
Historically, funding for our plan is primarily managed through the issuance of additional common shares and common share purchase warrants that are converted to common shares upon exercise. Management regularly monitors the capital markets attempting to balance the timing of issuing additional equity with our progress through our clinical trial program, general market conditions, and the availability of capital. There are no assurances that funds will be made available to us when required.
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ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

On June 30, 2025, we had an effective Form F-10 short form base shelf prospectus (the "Form F-10") that qualified for distribution of up to $150 million of common shares, subscription receipts, warrants, or units (the "Securities") in either Canada, the U.S. or both. Under the Form F-10, we may sell Securities to or through underwriters, dealers, placement agents, or other intermediaries. We may also sell Securities directly to purchasers or through agents, subject to obtaining any applicable exemption from registration requirements. The distribution of Securities may be performed from time to time in one or more transactions at a fixed price or prices, which may be subject to change, at market prices prevailing at the time of sale or at prices related to such prevailing market prices to be negotiated with purchasers and as set forth in an accompanying Prospectus Supplement.

Subsequent to June 30, 2025, the Company voluntarily delisted from the TSX effective August 22, 2025 (see note 16). Consequently, our Form F-10 will no longer be effective on August 22, 2025.
We are not subject to externally imposed capital requirements, and there have been no changes in how we define or manage our capital in 2025.

Note 12: Financial Instruments
 
Fair value of financial instruments

As at June 30, 2025, and December 31, 2024, the carrying amount of our cash and cash equivalents, other receivables, accounts payable and accrued liabilities, and other liabilities approximated their fair value due to their short-term maturity. The warrant derivative is a recurring Level 2 fair value measurement as these warrants have not been listed on an exchange and, therefore, do not trade on an active market. As at June 30, 2025, the fair value of our warrant derivative was presented as an asset of $1,024 (December 31, 2024 - $980) (see note 6).
Financial risk management
Credit risk
Credit risk is the risk of a financial loss if a counterparty to a financial instrument fails to meet its contractual obligations. As at June 30, 2025, we were exposed to credit risk on our cash and cash equivalents in the event of non-performance by counterparties, but we do not anticipate such non-performance. Our maximum exposure to credit risk at the end of the period is the carrying value of our cash and cash equivalents.
We mitigate our exposure to credit risk connected to our cash and cash equivalents by maintaining our primary operating and investment bank accounts with Schedule I banks in Canada. For our foreign-domiciled bank accounts, we use referrals or recommendations from our Canadian banks to open foreign bank accounts. Our foreign-domiciled bank accounts are used solely for the purpose of settling accounts payable and accrued liabilities or payroll.
Interest rate risk
Interest rate risk is the risk that a financial instrument's fair value or future cash flows will fluctuate because of changes in market interest rates. We hold our cash and cash equivalents in bank accounts or high-interest investment accounts with variable interest rates. We mitigate interest rate risk through our investment policy that only allows the investment of excess cash resources in investment-grade vehicles while matching maturities with our operational requirements.
Fluctuations in market interest rates do not significantly impact our results of operations due to the short-term maturity of the investments held.
Foreign exchange risk
Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows of our financial assets or liabilities. For the six months ended June 30, 2025, we were primarily exposed to the risk of changes in the Canadian dollar relative to the U.S. dollar and Euro, as a portion of our financial assets and liabilities were denominated in such currencies. The impact of a $0.01 increase in the value of the U.S. dollar against the Canadian dollar would have decreased our comprehensive loss in 2025 by approximately $44 (June 30, 2024 - $179). The impact of a $0.01 increase in the value of the
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ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

Euro against the Canadian dollar would have increased our comprehensive loss in 2025 by approximately $30 (June 30, 2024 - $19).
We mitigate our foreign exchange risk by maintaining sufficient foreign currencies by purchasing foreign currencies or receiving foreign currencies from financing activities to settle our foreign accounts payable.
Significant balances denominated in U.S. dollars were as follows:
June 30,
2025		December 31,
2024
Cash and cash equivalents$9,270 $9,534 
Accounts payable and accrued liabilities(2,228)(1,722)
$7,042 $7,812 
Significant balances denominated in Euros were as follows:
June 30,
2025		December 31,
2024
Accounts payable and accrued liabilities€(1,072)€(1,114)
Liquidity risk
Liquidity risk is the risk that we will encounter difficulty in meeting obligations associated with financial liabilities. See note 1 for the discussion on our ability to continue as a going concern. We manage liquidity risk by managing our capital structure as outlined in note 11. Accounts payable and accrued liabilities are all due within the current operating period. Other liabilities associated with funding received from PanCAN (see note 4) are expected to be applied within the current operating period. See note 5 for a maturity analysis of our lease liabilities.

Note 13: Additional Cash Flow Disclosures
 
Change in non-cash working capital
Six Months Ended June 30,
20252024
Change in:  
Other receivables$(4)$(1,556)
Prepaid expenses(1,289)(118)
Accounts payable and accrued liabilities493 1,081 
Other liabilities(636)927 
Non-cash impact of foreign exchange366 (152)
Change in non-cash working capital related to operating activities$(1,070)$182 

Other cash flow disclosures
Six Months Ended June 30,
20252024
Cash interest received$301 $843 
Cash taxes paid$85 $147 

15

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

Note 14: Components of Expenses
Three Months Ended June 30, Six Months Ended June 30,
2025202420252024
Research and development expenses
Clinical trial expenses$588 $2,164 $1,104 $2,966 
Manufacturing and related process development expenses592 662 1,170 3,840 
Intellectual property expenses119 72 268 198 
Personnel-related expenses1,256 1,288 3,156 2,559 
Share-based compensation expense219 310 1,111 650 
Other expenses35 62 83 88 
$2,809 $4,558 $6,892 $10,301 
General and administrative expenses
Public company-related expenses$1,435 $2,275 $3,108 $4,119 
Personnel-related expenses935 667 1,647 1,320 
Office expenses129 126 247 253 
Share-based compensation expense304 196 620 432 
Depreciation - property and equipment25 28 51 56 
Depreciation - right-of-use assets69 70 140 165 
$2,897 $3,362 $5,813 $6,345 
Our research and development personnel-related expenses included employee compensation and benefits of $1,127 and $2,820 for the three and six months ended June 30, 2025, respectively (June 30, 2024 - $1,253 and $2,524, respectively).
Our general and administrative personnel-related expenses included employee compensation and benefits of $935 and $1,647 for the three and six months ended June 30, 2025, respectively (June 30, 2024 - $577 and $1,121, respectively).

16

ONCOLYTICS BIOTECH INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the three and six months ended June 30, 2025
(in thousands of Canadian dollars, except share amounts and where indicated)

Note 15: Related Party Transactions

Compensation of Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling our activities as a whole. We have determined that key management personnel comprise the Board of Directors, Executive Officers, President, and Vice Presidents.
Three Months Ended June 30, Six Months Ended June 30,
2025202420252024
Compensation and short-term benefits$886 $985 $1,791 $1,913 
Termination benefits286 — 1,476 — 
Share-based compensation expense430 436 793 934 
$1,602 $1,421 $4,060 $2,847 
Termination benefits included both cash and share-based compensation.

Note 16: Subsequent Events
On August 8, 2025, we announced that we are voluntarily delisting from the TSX, effective August 22, 2025. Once delisted from the TSX, our common shares will continue to trade on the Nasdaq. As a result of our voluntary delisting from the TSX, we have terminated our ATM equity distribution agreement with Cantor and our share purchase agreement with Alumni.
17