Oncolytics Biotech Inc. Reports Highlights And Financial Results For 2005

CALGARY, March 3 /PRNewswire-FirstCall/ - Oncolytics Biotech Inc. ("Oncolytics" or the "Company") today reported its financial results for the year ended December 31, 2005.

"We are encouraged by the results we are observing and the progress we have made in both our preclinical and clinical programs," said Dr. Brad Thompson, President and CEO of Oncolytics Biotech Inc. "In 2005, we expanded our clinical program into the U.S., commenced our first co-therapy study in the U.K. and presented positive interim results from our first systemic administration study."

Selected Highlights: - Strengthened the financial base by raising net proceeds of $18.8 million to help fund the planned Phase II program; - Reported interim results from a Phase I systemic administration trial in the U.K that demonstrated REOLYSIN(R) was well tolerated and can be delivered to and show activity in a variety of tumour types and locations in the body; - Expanded the clinical program with the approval and commencement of enrolment for a Phase I combination REOLYSIN(R)/radiation trial in the U.K. and a Phase I systemic delivery trial in the U.S.; - Received clearance to commence a Phase I/II recurrent malignant glioma (brain cancer) study in the U.S., while concluding enrolment in a Phase I recurrent malignant glioma clinical trial in Canada; - Presented promising preclinical research at two AACR conferences in the areas of immune interaction and co-therapy with existing chemotherapies and radiation; - Appointed Dr. Karl Mettinger to the position of Chief Medical Officer; - Expanded the company's intellectual property portfolio with the issue of its first four Canadian patents and a second European patent in 2005, and a 14th U.S. patent in early 2006; and, - Announced in January 2006 that the U.S. National Cancer Institute is seeking proposals to conduct a Phase II systemic administration trial for patients with melanoma, and a Phase I/II systemic and intraperitoneal trial for patients with ovarian cancer. Oncolytics Biotech Inc. BALANCE SHEETS As at December 31 2005 2004 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 3,511,357 12,408,516 Short-term investments 36,894,810 21,510,707 Accounts receivable 47,390 47,767 Prepaid expenses 540,368 250,365 ------------------------------------------------------------------------- 40,993,925 34,217,355 Capital assets 189,863 261,688 Intellectual property 5,110,538 4,997,598 Investments - 12,000 ------------------------------------------------------------------------- 46,294,326 39,488,641 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 1,692,481 949,258 ------------------------------------------------------------------------- Alberta Heritage Foundation loan 150,000 150,000 ------------------------------------------------------------------------- Commitments and contingency Shareholders' equity Share capital Authorized: unlimited Issued: 36,236,748 (2004 - 31,915,496) 84,341,212 66,643,325 Warrants 4,429,932 3,347,630 Contributed surplus 6,413,243 6,349,139 Deficit (50,732,542) (37,950,711) ------------------------------------------------------------------------- 44,451,845 38,389,383 ------------------------------------------------------------------------- 46,294,326 39,488,641 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Oncolytics Biotech Inc. STATEMENTS OF LOSS AND DEFICIT For the periods ended December 31 Cumulative from inception on April 2, 1998 to December 31, 2005 2004 2003 2005 $ $ $ $ ------------------------------------------------------------------------- Revenue Rights revenue - - - 310,000 Interest income 783,456 699,757 313,305 3,569,196 ------------------------------------------------------------------------- 783,456 699,757 313,305 3,879,196 ------------------------------------------------------------------------- Expenses Research and development 9,308,977 7,107,998 2,818,962 32,835,505 Operating 3,084,897 2,803,669 2,449,478 13,090,691 Stock based compensation 64,104 2,668,570 996,707 3,762,099 Foreign exchange loss 253,608 358,068 2,881 613,578 Amortization - intellectual property 786,459 686,717 594,353 3,162,791 Amortization - capital assets 69,532 65,039 69,171 355,046 ------------------------------------------------------------------------- 13,567,577 13,690,061 6,931,552 53,819,710 ------------------------------------------------------------------------- Loss before the following: 12,784,121 12,990,304 6,618,247 49,940,514 Gain on sale of BCY LifeSciences Inc. (765) (34,185) (264,453) (299,403) Loss on sale of Transition Therapeutics Inc. - - 2,156,685 2,156,685 ------------------------------------------------------------------------- Loss before taxes 12,783,356 12,956,119 8,510,479 51,797,796 Capital tax (recovery) (1,525) - 33,552 49,746 Future income tax recovery - - - (1,115,000) ------------------------------------------------------------------------- Net loss for the year 12,781,831 12,956,119 8,544,031 50,732,542 Deficit, beginning of year 37,950,711 24,994,592 16,450,561 - ------------------------------------------------------------------------- Deficit, end of year 50,732,542 37,950,711 24,994,592 50,732,542 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share (0.39) (0.45) (0.35) ------------------------------------------------------------- ------------------------------------------------------------- Oncolytics Biotech Inc. STATEMENTS OF CASH FLOWS For the periods ended December 31 Cumulative from inception on April 2, 1998 to December 31, 2005 2004 2003 2005 $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the year (12,781,831) (12,956,119) (8,544,031) (50,732,542) Deduct non-cash items Amortization - intellectual property 786,459 686,717 594,353 3,162,791 Amortization - capital assets 69,532 65,039 69,171 355,046 Stock based compensation 64,104 2,668,570 996,707 3,762,099 Loss on sale of Transition Therapeutics Inc. - - 2,156,685 2,156,685 Other non-cash items 224,508 379,895 (261,572) (773,148) Net changes in non-cash working capital 584,766 (69,065) (489,051) 1,092,999 ------------------------------------------------------------------------- Cash used in operating activities (11,052,462) (9,224,963) (5,477,738) (40,976,070) ------------------------------------------------------------------------- INVESTING ACTIVITIES Intellectual property (1,033,035) (958,809) (1,045,869) (4,656,670) Capital assets (61,309) (15,230) (50,729) (587,511) Purchase of short-term investments (22,195,253) (6,777,179) (18,111,608) (47,084,040) Redemption of short-term investments 6,656,746 3,114,000 - 9,770,746 Investment in BCY LifeSciences Inc. 7,965 133,609 450,151 464,602 Investment in Transition Therapeutics Inc. - - 2,552,695 2,532,343 ------------------------------------------------------------------------- Cash used in investing activities (16,624,886) (4,503,609) (16,205,360) (39,560,530) ------------------------------------------------------------------------- FINANCING ACTIVITIES Alberta Heritage Foundation loan - - - 150,000 Proceeds from exercise of stock options and warrants 3,384,787 8,121,296 700,882 14,967,068 Proceeds from private placements 15,395,402 6,223,763 9,844,700 38,137,385 Proceeds from public offerings - 9,150,902 5,459,399 30,793,504 ------------------------------------------------------------------------- Cash provided by financing activities 18,780,189 23,495,961 16,004,981 84,047,957 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents during the period (8,897,159) 9,767,389 (5,678,117) 3,511,357 Cash and cash equivalents, beginning of the period 12,408,516 2,641,127 8,319,244 - ------------------------------------------------------------------------- Cash and cash equivalents, end of the period 3,511,357 12,408,516 2,641,127 3,511,357 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash interest received 993,097 459,757 187,843 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash taxes paid (net) - - 1,552 ------------------------------------------------------------------------- -------------------------------------------------------------------------

To view the Notes to the Company's Financial Statements and Management's Discussion and Analysis, please see the Company's 2005 Annual Filings which will be available on www.sedar.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 and Phase I/II human trials using REOLYSIN(R), its proprietary formulation of the human reovirus, alone and in combination with radiation. 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. Forward looking statements, including the Company's belief as to the potential of REOLYSIN(R) as a cancer therapeutic; the Company's expectations as to the success of its research and development programs in 2006 and beyond, the Company's planned expansion, the value of the additional patents and intellectual property; the Company's expectations related to the applications of the patented technology; the ability of the technology to strengthen the core 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(R) as a cancer treatment, the success and timely completion of clinical studies and trials, the Company's ability to successfully commercialize REOLYSIN(R), 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.

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, www.oncolyticsbiotech.com; The Equicom Group,Nick Hurst, 20 Toronto Street Toronto, Ontario, M5C 2B8, Tel: (416)815-0700 ext.226, Fax: (416) 815-0080, nhurst@equicomgroup.com; TheInvestor Relations Group, Damian McIntosh, 11 Stone St, 3rd Floor, NewYork, NY, 10004, Tel: (212) 825-3210, Fax: (212) 825-3229,dmcintosh@investorrelationsgroup.com; RenMark Financial Communications,John Boidman, 2080 Rene Levesque Blvd. W., Montreal, PQ, H3H 1R6, Tel:(514) 939-3989, Fax: (514) 939-3717, jboidman@renmarkfinancial.com