Oncolytics Biotech Inc. Reports Highlights and Financial Results for 2006



    CALGARY, March 2 /CNW/ - Oncolytics Biotech Inc. (TSX:ONC, NASDAQ:  ONCY)
("Oncolytics" or the "Company") today reported its financial results for the
year ended December 31, 2006.
    "The past year has been an exciting and productive one for Oncolytics,"
said Dr. Brad Thompson, President and CEO of Oncolytics Biotech Inc. "In 2006,
we presented positive clinical results from local and systemic administrations
trials using REOLYSIN(R), commenced our Phase II combination REOLYSIN(R) and
radiation clinical program and received approval to begin our combination
REOLYSIN(R) program with approved chemotherapeutics."

    
    Selected Highlights:

    -   Expanded the clinical program with the approval and commencement of
        enrolment for a Phase II combination REOLYSIN(R)/radiation trial in
        the U.K., approval and commencement of a Phase Ib
        REOLYSIN(R)/radiation trial in the U.K., commencement of a Phase I/II
        recurrent malignant glioma trial in the U.S., and approval for three
        combination REOLYSIN(R) and chemotherapy trials in the U.K.;
    -   Completed enrolment of two Phase I systemic administration trials in
        the U.S. and the U.K;
    -   Presented positive final results of a Canadian Phase I recurrent
        malignant glioma trial and positive interim results of a U.K. Phase I
        systemic administration trial at the American Society of Clinical
        Oncology (ASCO) annual meeting and positive interim results of a
        Phase Ia combination REOLYSIN(R) and radiation clinical trial at the
        American Association for Cancer Research (AACR) annual meeting;
    -   Presented promising preclinical research at the EORTC-NCI-AACR
        Symposium on Molecular Targets and Cancer Therapeutics in the area of
        co-therapy with chemotherapeutic agents and at the AACR Annual
        Meeting on the anti-tumour activity of reovirus in vitro and in vivo
        in childhood sarcoma cell lines;
    -   Presented additional preclinical research on the interaction of
        reovirus and the immune system in 2006 at the British Society of Gene
        Therapy in London, U.K. and the European National Societies of
        Immunology in Paris, France and in early 2007 at the Academic &
        Research Surgery Conference in Cambridge, U.K.;
    -   Strengthened the Board of Directors with the appointments of
        Dr. Ed Levy and Mr. Ger van Amersfoort;
    -   Expanded the Company's intellectual property portfolio with the issue
        of four additional U.S. patents and one more Canadian patent in 2006,
        and an 18th U.S. patent in early 2007;
    -   Announced in January 2007 that Ms. Mary Ann Dillahunty had been
        appointed to the Company's management team as Vice President,
        Intellectual Property; and,
    -   Announced in February 2007 the closing of a public offering that
        provided gross proceeds of $12 million to the Company.



                           Oncolytics Biotech Inc.

                               BALANCE SHEETS
    As at December 31

                                                        2006         2005
                                                          $            $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                         3,491,511    3,511,357
    Short-term investments                           24,122,237   36,894,810
    Accounts receivable                                  84,003       47,390
    Prepaid expenses                                    638,540      540,368
    -------------------------------------------------------------------------
                                                     28,336,291   40,993,925

    Property and equipment                              149,596      189,863

    Intellectual property                             5,079,805    5,110,538
    -------------------------------------------------------------------------

                                                     33,565,692   46,294,326
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities          2,616,421    1,692,481
    -------------------------------------------------------------------------
    Alberta Heritage Foundation loan                    150,000      150,000
    -------------------------------------------------------------------------

    Commitments and contingency

    Shareholders' equity
    Share capital
      Authorized: unlimited
      Issued: 36,520,748 (2005 - 36,236,748)         83,083,271   82,841,871
    Warrants                                          4,216,740    4,429,932
    Contributed surplus                               8,529,326    7,912,584
    Deficit                                         (65,030,066) (50,732,542)
    -------------------------------------------------------------------------

                                                     30,799,271   44,451,845
    -------------------------------------------------------------------------
                                                     33,565,692   46,294,326
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                           Oncolytics Biotech Inc.

                       STATEMENTS OF LOSS AND DEFICIT

    For the periods ended December 31

                                                                  Cumulative
                                                                     from
                                                                   inception
                                                                  on April 2,
                                                                    1998 to
                                                                 December 31,
                              2006         2005         2004         2006
                                $            $            $            $
    -------------------------------------------------------------------------

    Revenue
    Rights revenue                  -            -            -      310,000
    -------------------------------------------------------------------------
                                    -            -            -      310,000
    -------------------------------------------------------------------------

    Expenses
    Research and
     development           10,535,689    9,308,977    7,107,998   43,371,194
    Operating               3,630,144    3,083,372    2,803,669   16,770,581
    Stock based
     compensation             403,550       64,104    2,668,570    4,165,649
    Foreign exchange loss      35,270      253,608      358,068      648,848
    Amortization -
     intellectual property    874,043      786,459      686,717    4,036,834
    Amortization -
     capital assets            52,637       69,532       65,039      407,683
    -------------------------------------------------------------------------
                           15,531,333   13,566,052   13,690,061   69,400,789
    -------------------------------------------------------------------------

                           15,531,333   13,566,052   13,690,061   69,090,789

    Interest income        (1,233,809)    (783,456)    (699,757)  (4,803,005)

    Gain on sale of BCY
     LifeSciences Inc.              -         (765)     (34,185)    (299,403)

    Loss on sale of
     Transition
     Therapeutics Inc.              -            -            -    2,156,685
    -------------------------------------------------------------------------

    Loss before taxes      14,297,524   12,781,831   12,956,119   66,145,066

    Future income tax
     recovery                       -            -            -   (1,115,000)
    -------------------------------------------------------------------------

    Net loss for the year  14,297,524   12,781,831   12,956,119   65,030,066

    Deficit, beginning
     of year               50,732,542   37,950,711   24,994,592            -
    -------------------------------------------------------------------------

    Deficit, end of year   65,030,066   50,732,542   37,950,711   65,030,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     loss per share             (0.39)       (0.39)       (0.45)
    ------------------------------------------------------------
    ------------------------------------------------------------



                           Oncolytics Biotech Inc.

                           STATEMENTS OF CASH FLOWS

    For the periods ended December 31
                                                                  Cumulative
                                                                     from
                                                                   inception
                                                                  on April 2,
                                                                    1998 to
                                                                 December 31,
                              2006         2005         2004         2006
                                $            $            $            $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net loss for the year (14,297,524) (12,781,831) (12,956,119) (65,030,066)
    Deduct non-cash items
      Amortization -
       intellectual
       property               874,043      786,459      686,717    4,036,834
      Amortization -
       capital assets          52,637       69,532       65,039      407,683
      Stock based
       compensation           403,550       64,104    2,668,570    4,165,649
      Other non-cash
       items                        -      224,508      379,895    1,383,537
    Net changes in
     non-cash working
     capital                  811,922      584,766      (69,065)   1,904,921
    -------------------------------------------------------------------------
    Cash used in
     operating activities (12,155,372) (11,052,462)  (9,224,963) (53,131,442)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Intellectual property    (842,610)  (1,033,035)    (958,809)  (5,499,280)
    Capital assets            (35,837)     (61,309)     (15,230)    (623,348)
    Purchase of
     short-term
     investments           (1,035,427) (22,195,253)  (6,777,179) (48,119,467)
    Redemption of
     short-term
     investments           13,808,000    6,656,746    3,114,000   23,578,746
    Investment in BCY
     LifeSciences Inc.              -        7,965      133,609      464,602
    Investment in
     Transition
     Therapeutics Inc.              -            -            -    2,532,343
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities            11,894,126  (16,624,886)  (4,503,609) (27,666,404)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Alberta Heritage
     Foundation loan                -            -            -      150,000
    Proceeds from
     exercise of stock
     options and warrants     241,400    3,384,787    8,121,296   15,208,468
    Proceeds from private
     placements                     -   15,395,402    6,223,763   38,137,385
    Proceeds from public
     offerings                      -            -    9,150,902   30,793,504
    -------------------------------------------------------------------------
    Cash provided by
     financing activities     241,400   18,780,189   23,495,961   84,289,357
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents during
     the period               (19,846)  (8,897,159)   9,767,389    3,491,511

    Cash and cash
     equivalents,
     beginning of the
     period                 3,511,357   12,408,516    2,641,127            -
    -------------------------------------------------------------------------

    Cash and cash
     equivalents, end of
     the period             3,491,511    3,511,357   12,408,516    3,491,511
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash interest
     received                 940,100      993,097      459,757
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    To view the Notes to the Company's Financial Statements and Management's
Discussion and Analysis, please see the Company's 2006 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 II human trials using
REOLYSIN(R), 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.
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 2007 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.

    %SEDAR: 00013081E




For further information:

For further information: 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, 600, 205
5th Ave. SW, Calgary, Alberta, T2P 2V7, Tel: (403) 538-4845, Fax: (403)
266-2453, 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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