Oncolytics Biotech® Announces 2011 Year End Results

Oncolytics Biotech Inc. has announced its financial results and operational highlights for the year ended December 31, 2011.

"In the last year we made substantial progress as we announced positive clinical trial results and started clinical trials in additional cancer indications while maintaining the strength of our balance sheet," said Dr. Brad Thompson, President and CEO of Oncolytics.

Dr. Thompson continued, "Our primary focus in the near term remains completing enrollment in the first stage of our Phase III study in head and neck cancers with the support of an increasing number of enrolling centres in Europe and North America."

Selected Highlights

Since January 1, 2011, the Company has made a number of significant announcements:

Clinical Trial Results
• Presented interim data from a Phase II clinical trial using intravenous administration of REOLYSIN® in combination with gemcitabine (Gemzar®) in patients with advanced pancreatic cancer (REO 017) indicating that the clinical study had successfully reached its primary endpoint, and that the drug combination was active. Eight patients of 13 evaluable patients in the study had stable disease (SD) for 12 weeks or longer, for a clinical benefit rate (complete response (CR) + partial response (PR) + SD) of 62%.

An additional patient had an unconfirmed PR of less than six weeks. Seventeen evaluable patients with pancreatic cancer were expected to be treated in the first stage and if three or more patients received clinical benefit, the study would then proceed to the next stage. This endpoint was met after six evaluable patients were enrolled;
• Presented positive results from a Phase II clinical trial (REO 015) using intravenous administration of REOLYSIN in combination with paclitaxel and carboplatin in patients with advanced head and neck cancers at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics.

Of the 13 patients evaluable for response, four had PRs, for an objective response rate of 31%. Six patients had SD or better for 12 weeks or longer for a disease control rate (SD or better) of 46%. Two of the four patients with PRs and both patients with SD had received prior treatment with taxanes;
• The presentation of interim preliminary results from a Phase II clinical trial using intravenous administration of REOLYSIN in combination with paclitaxel and carboplatin in patients with non-small cell lung cancer (NSCLC) with Kras or EGFR-activated tumours at the International Association for the Study of Lung Cancer World Conference on Lung Cancer.

As of the presentation date, response evaluation in 21 patients showed six PR (28.6%), 13 SD (61.9%) and two progressive disease (PD) (9.5%), translating into a clinical benefit rate (complete response (CR) + PR + SD) of 90.5% and a response rate (CR + PR) of 28.6%;
• Interim data from a U.K. translational clinical trial (REO 013) investigating intravenous administration of REOLYSIN in patients with metastatic colorectal cancer prior to surgical resection of liver metastases. On initial histological analysis of the 10 treated patients, there was evidence of selective delivery of virus to tumour versus normal liver and viral replication in the majority (seven) of patients;

Ongoing Clinical Program
• Entry into an agreement whereby the NCIC Clinical Trials Group (CTG) at Queen's University in Kingston, Ontario, will sponsor and conduct a randomized Phase II study of REOLYSIN in patients with recurrent or metastatic castration resistant prostate cancer enrolling up to 80 patients;
• Agreement with the Cancer Therapy Evaluation Program, Division of Cancer Treatment and Diagnosis, U.S. National Cancer Institute (NCI), which is part of the National Institutes of Health, to sponsor a Phase I study of REOLYSIN alone in patients with relapsed multiple myeloma;
• The opening of enrollment in a U.S. Phase 1 study of REOLYSIN in combination with FOLFIRI (Folinic Acid (leucovorin) + Fluorouracil (5-FU) + Irinotecan) in patients with oxaliplatin refractory/intolerant Kras mutant colorectal cancer (REO 022);
• Start of enrollment in a 2-Arm randomized Phase II study of carboplatin, paclitaxel plus REOLYSIN versus carboplatin and paclitaxel alone in the first line treatment of patients with recurrent or metastatic pancreatic cancer sponsored by the NCI;
• Completion of enrollment in a U.S. Phase II clinical trial using intravenous administration of REOLYSIN in combination with paclitaxel and carboplatin in patients with advanced head and neck cancers (REO 015);

Manufacturing
• SAFC®, a Division of Sigma-Aldrich Corporation, commenced validation activities designed to demonstrate the manufacturing process for the commercial production of REOLYSIN is robust and reproducible;
• A commercial supply agreement with SAFC for the commercial manufacture of REOLYSIN. Under the terms of the agreement, SAFC will perform process validation of the product, will continue to supply clinical requirements and will supply commercial material upon approval of the product;

Preclinical Program
• The posting of a study in the online version of Molecular Therapy, a publication of The American Society of Gene and Cell Therapy, investigating the timing of chemotherapy delivery that optimizes the efficacy of systemic REOLYSIN. The paper, authored by Kottke et al., was entitled "Precise Scheduling of Chemotherapy Primes VEGF-producing Tumors for Successful Systemic Oncolytic Virotherapy."

It describes when best to administer taxanes with reovirus to optimize viral delivery to the tumor mass. The researchers demonstrated that this drug combination yielded superior results to either treatment alone. They were able to reproducibly cure nearly half of the treated animals by employing this optimized schedule of paclitaxel/REOLYSIN;

Financial
• Closed bought deal financing, that had been increased to $18.5 million from $15 million, for gross proceeds of $21.3 million following the full exercise of the over-allotment option by the syndicate of underwriters;
• Pursuant to the acceleration of the expiry date of those warrants issued on November 23, 2009, the Company received proceeds of approximately US$6.8 million resulting from the exercise of 1,943,000 warrants;
• The exercise of 1,322,750 warrants, issued in connection with the financing that closed on November 8, 2010, providing the Company with proceeds of approximately $8.2 million;

Corporate
• The appointment of Gerard Kennealey, MD as Senior Vice President of Clinical Development and Chief Medical Officer (CMO). Dr. Kennealey most recently held the position of Vice President of Scientific Affairs at Cephalon Inc.; and
• The appointment of George M. Gill, MD as Senior Vice President of Regulatory Affairs and Chief Safety Officer. Dr. Gill has been an officer of Oncolytics since 2002.