News Releases
ONCOLYTICS BIOTECH INC. ANNOUNCES THIRD QUARTER RESULTS

CALGARY, AB, --- November 7, 2001 - Oncolytics Biotech Inc. ("Oncolytics") (TSE:ONC, NASDAQ:ONCY) today announced its financial results for the quarter ended September 30, 2001. 

Highlights of the third quarter 2001 include:

· Advanced our discussion with Health Canada about the Company’s Investigational New Drug submission for a Phase II clinical trial of REOLYSIN ® for the treatment of prostate cancer. 
· Successfully demonstrated, in animal models, further systemic and co-therapy administration of REOLYSIN® for the treatment of a broad range of cancers

“Oncolytics’ bid to develop the reovirus as a potential therapeutic for most forms of cancer was advanced last quarter by approval from Health Canada to proceed with a broadened protocol for our prostate cancer trial,” said Dr. Brad Thompson President and Chief Executive Officer. “Our top priorities for 2001, are to complete our Phase I trial and to continue our aggressive approach to clinical development by initiating multiple Phase II human clinical trials.” 

Subsequent to the end of the quarter, the Company received approval to initiate a clinical study to evaluate the efficacy of REOLYSIN® for the treatment of T2 prostate cancer.

Financial Highlights 

For the three months ended September 30, 2001, Oncolytics reported a net loss of $2.4 million or $0.13 per share compared to a loss of $1.6 million or $0.09 per share for the same three month period in 2000.

For the nine months ended September 30, 2001, the Company’s net loss was $4.8 million or $0.27 per share compared to a total loss of $3.1 million or $0.19 per share for the nine months ended September 30, 2000. As its products are still under development, the Company reported no revenue for either the three or nine month periods, other than revenue derived from interest earned on its cash and investment balances - $546,529 for the first nine months of 2001 and $645,265 for the first nine months of 2000. 

Research and development expenses totalled $2.0 million for the three months ended September 30, 2001, and $3.6 million for the nine months ended September 30, 2001, as compared to $1.5 million for the three months ended September 30, 2000 and $3.1 million for the nine months ended September 30, 2000. The expenses in the third quarter of both 2001 and 2000, include $1.0 million for a milestone payment to the founding shareholders under the Purchase and Assumption Agreements. The remaining quarterly increase in 2001 over 2000 is primarily attributable to costs associated with the Phase I clinical trial, increased product manufacturing and toxicology studies.

Operating expenses increased to $472,809 for the three months ended September 30, 2001 and to, $1.5 million for the nine months ended September 30, 2001, as compared to $268,570 for the three months ended September 30, 2000, and $585,709 for the nine months ended September 30, 2000. The increase was associated with increased support of the research and development efforts, and the costs of expanding the Corporation’s market exposure for the nine - month period in 2001.

Amortization for the nine months ended September 30, 2001 increased to $342,531 as compared to $102,469 for the same period in 2000. The increase was primarily due to the commencement of amortization of patent costs from the date of patent issuance in accordance with the Company’s policy.

As at September 30, 2001, the Company's cash balance was $15,858,360 and working capital was $13,874,635 as compared to cash balance of $17,619,110 and working capital of $17,191,277 as at December 31, 2000. 

Oncolytics is a Calgary-based biotechnology company focused on the development of the reovirus, REOLYSIN®, as a potential cancer therapeutic. Oncolytics’ researchers have demonstrated that reovirus was able to kill cancer cells selectively and in vitro, and successfully demonstrated that the virus could kill human cancer cells derived from breast, prostate, pancreatic and brain tumors. Oncolytics initiated its Phase I clinical trial on REOLYSIN® in June, 2000 and in October, 2001 received approval from Health Canada to initiate a clinical study of REOLYSIN® for the treatment of prostate cancer. In November 2000, the Company entered into a worldwide licensing agreement with Pfizer Inc. for the development and marketing of the reovirus for animal health applications. 

To find out more about Oncolytics Biotech Inc. (TSE: ONC), (NASDAQ: ONCY), visit the Company’s website atwww.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 ability to broaden its investor base in the United States, the potential of REOLYSIN® as a cancer therapeutic, and the belief that Ras pathway has broad potential in the treatment of many cancers, 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.