SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November, 2006
Commission File Number 000-31062
Oncolytics Biotech Inc.
(Translation of registrant’s name into
English)
Suite 210, 1167 Kensington Crescent NW
Calgary, Alberta, Canada T2N 1X7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
| Form 20-F o | Form 40-F þ |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
| Yes o | No þ |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Oncolytics
Biotech Inc. (Registrant) |
||||
| Date: November 3, 2006 | By: | /s/ Doug Ball
Doug Ball Chief Financial Officer |
||
|
210, 1167 Kensington Cr. N.W. Calgary, Alberta Canada T2N 1X7 |
Third
Quarter Report
September 30, 2006
September 30, 2006
Oncolytics Biotech Inc.
TSX: ONC
NASDAQ: ONCY
TSX: ONC
NASDAQ: ONCY
Third Quarter Report
For the quarter ended September 30, 2006
Letter to Shareholders
In the third quarter of 2006, Oncolytics achieved a number of important clinical milestones
including obtaining regulatory approval of a U.K. Phase II combination
REOLYSIN®/radiation clinical trial, commencing patient enrolment in two clinical trials
in the U.S. and the U.K. and completing patient enrolment in its U.S. systemic administration
trial.
In July, Oncolytics started patient enrolment in its Phase Ib U.K. clinical trial investigating
REOLYSIN® in combination with radiation therapy as a treatment for patients with
advanced cancers. The Phase Ib trial is treating patients with a range of two to six intratumoural
doses of REOLYSIN® at 1x1010 TCID50 with a constant radiation dose
of 36 Gy in 12 fractions. The trial follows the successful completion of the Company’s Phase Ia
combination clinical trial. Three of the five patients reported on in the Phase Ia trial’s interim
analysis experienced partial tumour responses.
Based on the Phase Ia results, Oncolytics submitted an application to the U.K. Medicines and
Healthcare products Regulatory Agency (MHRA) to conduct a Phase II REOLYSIN®/radiation
clinical trial using the maximum dose delivered in the Phase Ia trial. The Phase II trial was
approved in July 2006.
Also in July, Oncolytics announced that it had commenced patient enrolment in its U.S. Phase I/II
recurrent malignant gliomas trial at the University of Alabama at Birmingham. In this trial, a
single dose of REOLYSIN® is delivered into the tumour over a three-day period through an
infusion pump. The primary objective of the study is to determine the maximum tolerated dose, dose
limiting toxicity and safety profile of REOLYSIN®. Secondary objectives include the
evaluation of viral replication, immune response to the virus and any evidence of anti-tumour
activity.
Enrolment was completed in August in the Company’s Phase I U.S. clinical trial investigating the
systemic delivery of REOLYSIN® for patients with advanced cancers. A total of 18
patients were treated in the trial at escalating dosages up to 3x1010 TCID50. A maximum
dose was not reached and the treatment appears to have been well tolerated by the patients.
In September, Dr. Alan Melcher presented a poster at the 1st Joint Meeting of European National
Societies of Immunology entitled “Reovirus Activates Dendritic Cells (DC) and Promotes Innate
Anti-Tumour Immunity.” The researchers concluded that the reovirus may support early innate
anti-tumour immunity as well as inducing direct tumour cell death.
Oncolytics has made significant progress in its clinical program for REOLYSIN® in the
past quarter. The Company is preparing to initiate its comprehensive Phase II clinical program for
REOLYSIN® as a monotherapy and in combination with radiation and chemotherapeutics both
in the U.K. and the U.S. The initiation of this program is a key element in determining which
cancer indications REOLYSIN® will be specifically targeting in future clinical studies.
Thank you for your ongoing enthusiasm and support for Oncolytics.
Brad Thompson, PhD
President and CEO
November 2, 2006
President and CEO
November 2, 2006
November 2, 2006
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis should be read in conjunction with the unaudited financial
statements of Oncolytics Biotech Inc. as at and for the three and nine months ended September 30,
2006 and 2005, and should also be read in conjunction with the audited financial statements and
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
contained in our annual report for the year ended December 31, 2005. The financial statements have
been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”).
FORWARD-LOOKING STATEMENTS
The following discussion contains forward-looking statements, within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, including our
belief as to the potential of REOLYSIN® as a cancer therapeutic and our expectations as
to the success of our research and development and manufacturing programs in 2006 and beyond,
future financial position, business strategy and plans for future operations, and statements that
are not historical facts, involve known and unknown risks and uncertainties, which could cause our
actual results to differ materially from those in the forward-looking statements. Such risks and
uncertainties include, among others, the need for and 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, our ability to successfully
commercialize REOLYSIN®, uncertainties related to the research, development and
manufacturing of pharmaceuticals, uncertainties related to competition, changes in technology, the
regulatory process and general changes to the economic environment. Investors should consult our
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. Forward-looking
statements are based on assumptions, projections, estimates and expectations of management at the
time such forward looking statements are made, and such assumptions, projections, estimates and/or
expectations could change or prove to be incorrect or inaccurate. Investors are cautioned against
placing undue reliance on forward-looking statements. We do not undertake to update these
forward-looking statements.
OVERVIEW
Oncolytics Biotech Inc. is a Development Stage Company
Since our inception in April of 1998, Oncolytics Biotech Inc. has been a development stage company
and we have focused our research and development efforts on the development of
REOLYSIN®, our potential cancer therapeutic. We have not been profitable since our
inception and expect to continue to incur substantial losses as we continue research and
development efforts. We do not expect to generate significant revenues until, if and when, our
cancer product becomes commercially viable.
General Risk Factors
Prospects for biotechnology companies in the research and development stage should generally be
regarded as speculative. It is not possible to predict, based upon studies in animals, or early
studies in humans, whether a new therapeutic will ultimately prove to be safe and effective in
humans, or whether necessary and sufficient data can be developed through the clinical trial
process to support a successful product application and approval.
If a product is approved for sale, product manufacturing at a commercial scale and significant
sales to end users at a commercially reasonable price may not be successful. There can be no
assurance that we will generate adequate funds to continue development, or will ever achieve
significant revenues or profitable
operations. Many factors (e.g. competition, patent protection, appropriate regulatory approvals)
can influence the revenue and product profitability potential.
In developing a pharmaceutical product, we rely upon our employees, contractors, consultants and
collaborators and other third party relationships, including our ability to obtain appropriate
product liability insurance. There can be no assurance that these reliances and relationships will
continue as required.
In addition to developmental and operational considerations, market prices for securities of
biotechnology companies generally are volatile, and may or may not move in a manner consistent with
the progress being made by Oncolytics.
REOLYSIN® Development Update for the Third Quarter of 2006
We continue to develop our lead product REOLYSIN® as a possible cancer therapy.
Our goal each year is to advance REOLYSIN® through the various steps and stages of
development required for potential pharmaceutical products. In order to achieve this goal, we
actively manage the development of our clinical trial program, our pre-clinical and collaborative
programs, our manufacturing process and REOLYSIN® supply, and our intellectual property.
Clinical Trial Program
During the third quarter of 2006, the following clinical trial activity occurred:
U.K. Phase II Combination REOLYSIN®/Radiation Clinical Trial
During the third quarter of 2006, we received a letter of approval from the U.K. Medicines and
Healthcare products Regulatory Agency for our Clinical Trial Application to begin a Phase II
clinical trial to evaluate the anti-tumour effects of intratumoural administration of
REOLYSIN® in combination with low-dose radiation in patients with advanced cancers.
Since receiving this letter of approval, we have been working with our investigators and the
clinical trial sites to initiate patient enrollment which is expected to occur in the fourth
quarter of 2006.
The trial is to be an open-label, single-arm, multi-centre Phase II study of REOLYSIN®
delivered via intratumoural injection to patients during treatment with low-dose radiotherapy. Up
to 40 evaluable patients, including approximately 20 patients with head and neck and esophageal
cancers, and approximately 20 patients with other advanced cancers, will be treated with two
intratumoural doses of REOLYSIN® at 1x1010 TCID50 with a constant
localized radiation dose of 20 Gy in five consecutive daily fractions. Eligible patients include
those who have been diagnosed with advanced or metastatic cancers including head, neck and
esophageal tumours that are refractory (have not responded) to standard therapy or for which no
curative standard therapy exists.
The primary objective of the trial is to assess the anti-tumour activity of the combination of
REOLYSIN® and low dose radiotherapy in treated and untreated lesions. Secondary
objectives include the evaluation of viral replication, immune response to the virus and to
determine the safety and tolerability of intratumoural administration of REOLYSIN® in
patients with advanced cancers who are receiving radiation treatment.
U.K. Phase Ia/Ib Combination REOLYSIN®/Radiation Clinical Trial
During the third quarter of 2006, we commenced patient enrolment in our Phase Ib U.K. clinical
trial investigating REOLYSIN® in combination with radiation therapy as a treatment for
patients with advanced cancers. The Phase Ib trial will treat patients with a range of two to six
intratumoural doses of REOLYSIN® at 1x1010 TCID50 with a constant
radiation dose of 36 Gy in 12 fractions.
The primary objective of our Phase Ib trial is to determine the maximum tolerated dose, dose
limiting toxicity, and safety profile of REOLYSIN® when administered intratumourally to
patients receiving radiation treatment. A secondary objective is to examine any evidence of
anti-tumour activity. Eligible
patients include those who have been diagnosed with advanced or metastatic solid tumours that are
refractory (have not responded) to standard therapy or for which no curative standard therapy
exists. An additional group of patients is planned to be treated at the maximum dose regimen
reached in the Ib trial.
Patient enrolment in our Ia combination REOLYSIN®/radiation trial was completed in June
2006. The Phase Ia trial tested two intratumoural treatments of REOLYSIN® at dosages of
1x108, 1x109, or 1x1010 TCID50 with a constant
localized radiation dose of 20 Gy given in five fractions. A maximum tolerated dose was not reached
and the combination treatment appears to have been well tolerated by the patients.
Interim results of the Ia trial were presented at the American Association for Cancer Research
Annual Meeting in Washington, D.C. in April 2006. Preliminary analysis has demonstrated evidence of
both local and systemic response.
U.S. Phase I Systemic Administration Clinical Trial
During the third quarter of 2006, we completed patient enrolment in our Phase I U.S. clinical trial
investigating the systemic delivery of REOLYSIN® to treat patients with advanced
cancers. A total of 18 patients were treated in the Phase I trial with REOLYSIN® at
escalating dosages of 1x108, 3x108, 1x109, 3x109,
1x1010 or 3x1010 TCID50. A maximum tolerated dose was not reached
and the treatment appears to have been well tolerated by the patients.
The clinical trial is an open-label, dose-escalation Phase I study in which a single dose of
REOLYSIN® is administered intravenously to patients diagnosed with selected advanced or
metastatic solid tumours that are refractory (have not responded) to standard therapy or for which
no curative standard therapy exists. The primary objective of the study is to determine the maximum
tolerated dose, dose limiting toxicity and safety profile of REOLYSIN®. Secondary
objectives include the evaluation of viral replication, immune response to the virus and any
evidence of anti-tumour activity.
U.S. Phase I/II Recurrent Malignant Glioma Clinical Trial
During the third quarter of 2006, we began patient enrolment in our clinical trial to investigate
the use of REOLYSIN® for patients with recurrent malignant gliomas. This clinical trial
is an open-label dose escalation Phase I/II trial in which a single dose of REOLYSIN® is
administered by infusion to patients with recurrent malignant gliomas that are refractory to
standard therapy. The administration involves the stereotactically-guided placement of a needle
into the tumour, through which REOLYSIN® will be administered or infused into the tumour
mass and surrounding tissue using a pump.
The primary objective of the study is to determine the maximum tolerated dose, dose limiting
toxicity and safety profile of REOLYSIN®. Secondary objectives include the evaluation of
viral replication, immune response to the virus and any evidence of anti-tumour activity.
Other Clinical Trial Activity
During the third quarter, we continued to develop our Phase II clinical trial program which
included the assessment of different cancer indications and potential drug combinations, the
interviewing and selection of investigators and clinical trial sites, and the contracting of
Contract Research Organizations.
Manufacturing and Process Development
In the first part of 2006, we completed the production runs that were ongoing at the end of 2005,
providing us with sufficient product to complete our U.K. Phase II combination
REOLYSIN®/radiation clinical trial and our existing Phase I clinical trials. At the
same time, our process development activity helped improve virus yields from our manufacturing
process. We completed the transfer of these improvements to our cGMP manufacturer at the beginning
of the third quarter of 2006 and began production runs under this improved process. These
production runs are expected to provide sufficient REOLYSIN® to expand our Phase II
clinical trial program. Our process development activity has now shifted focus to the examination
of the potential scale up of our manufacturing process.
Pre-Clinical Trial and Collaborative Program
We perform pre-clinical studies and engage in collaborations to help support our clinical trial
programs and expand our intellectual property base. We continue with studies examining the
interaction between the immune system and the reovirus, the use of the reovirus as a co-therapy
with chemotherapeutics and radiation, the use of new RAS active viruses as potential therapeutics,
and to consider other uses for the reovirus as a therapeutic.
Financial Impact
We estimated at the end of the second quarter of 2006 that our monthly cash usage for the year
would average approximately $1,250,000. Our cash usage for the nine months ending September 30,
2006 was $8,456,752 from operating activities and $581,661 for the purchases of intellectual
property and property and equipment. Our net loss for the nine month period ending September 30,
2006 was $9,407,419. We expect that our monthly cash usage will continue to increase through the
fourth quarter of 2006 as we complete our ongoing production runs, continue to enroll patients in
our ongoing clinical trials, and expand our clinical trial and collaborative programs. We now
believe our average monthly cash usage will be less than $1,200,000 for 2006.
Cash Resources
We exited the second quarter of 2006 with cash resources totaling $31,495,254 (see “Liquidity and
Capital Resources”).
Expected REOLYSIN® Development for the Remainder of 2006
For the remainder of 2006, we expect to continue to enroll patients in our existing clinical
trials. We also expect to conclude enrollment in the expanded maximum delivered dose cohort in our
U.K. Phase I systemic administration clinical trial. Also, along with our existing REOLYSIN®
/radiation Phase II clinical trial, we plan to move into REOLYSIN®/chemotherapy
co-therapy Phase II clinical trials and REOLYSIN® monotherapy Phase II clinical trials.
The REOLYSIN®/chemotherapy clinical trial program will consist of small dose escalation
Phase I studies to assess the safety of each co-therapy drug combination followed by Phase II
clinical trials.
Recent 2006 Progress
On September 9, 2006 a poster, prepared by one of our collaborators, entitled “Reovirus
Activates Dendritic Cells and Promotes Innate Anti-Tumour Immunity” was presented at the 1st Joint
Meeting of European National Societies of Immunology. The poster highlighted the researchers’ use
of isolated human cells to examine whether the use of the reovirus as a direct tumour killing agent
might also activate the innate immune system to play a role in the killing of tumour cells. The
innate immune system is the broad, short-term and non-specific first-line immune response to an
infection. The research showed that the reovirus can infect and activate immature human dendritic
cells. The reovirus-activated dendritic cells triggered anti-tumour cytotoxicity when co-cultured
with two other types of immune cells, natural killer cells and autologous T-cells. The researchers
concluded that the reovirus may support early innate anti-tumour immunity as well as inducing
direct tumour cell death.
THIRD QUARTER RESULTS OF OPERATIONS
(for the three months ended September 30, 2006 and 2005)
Net loss for the three month period ending September 30, 2006 was $3,425,169 compared to $3,509,503
for the three month period ending September 30, 2005.
Research and Development Expenses (“R&D”)
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Manufacturing and related process development expenses |
1,259,716 | 1,767,524 | ||||||
Clinical trial expenses |
688,435 | 372,825 | ||||||
Pre-clinical trial and research collaboration expenses |
301,165 | 64,611 | ||||||
Other R&D expenses |
456,430 | 613,103 | ||||||
Research and development expenses |
2,705,746 | 2,818,063 | ||||||
For the third quarter of 2006, R&D decreased to $2,705,746 compared to $2,818,063 for the
third quarter of 2005. The decrease in R&D was due to the following:
Manufacturing & Related Process Development (“M&P”)
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Product manufacturing expenses |
896,776 | 1,655,390 | ||||||
Technology transfer expenses |
184,761 | ¾ | ||||||
Process development expenses |
178,179 | 112,134 | ||||||
Manufacturing and related process development expenses |
1,259,716 | 1,767,524 | ||||||
Our M&P expenses for the third quarter of 2006 decreased to $1,259,716 compared to $1,767,524 for
the third quarter of 2005. In the third quarter of 2006, we completed the technology transfer that
commenced in the second quarter of 2006. Our process development studies, that had been ongoing
since 2005, resulted in improvements in virus yields. Once this technology transfer was completed
we began production runs that will be used to supply our expanding Phase II and Phase I/II clinical
trials. During the third quarter of 2005, we were in the midst of a multiple run supply contract,
producing REOLYSIN® for our Phase I trials and did not incur technology transfer related
costs.
In the third quarter of 2006, we incurred process development activity primarily associated with
scale up compared to virus yield studies in the third quarter of 2005.
Clinical Trial Program
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Direct clinical trial expenses |
639,719 | 371,768 | ||||||
Other clinical trial expenses |
48,716 | 1,057 | ||||||
Clinical trial expenses |
688,435 | 372,825 | ||||||
During the third quarter of 2006, our direct clinical trial expenses increased to $639,719 compared
to $371,768 for the third quarter of 2005. In the third quarter of 2006, we incurred direct
clinical trial expenses in four clinical trials that were actively enrolling patients along with
clinical site start up costs associated with our Phase II combination
REOLYSIN®/radiation clinical trial in the U.K. In the third quarter of 2005, we
incurred direct clinical trial expenses in only three clinical trials along with clinical site
start up costs in the U.S.
Pre-Clinical Trial Expenses and Research Collaborations
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Research collaboration expenses |
252,460 | 64,611 | ||||||
Pre-clinical trial expenses |
48,705 | — | ||||||
Pre-clinical trial expenses and research collaborations |
301,165 | 64,611 | ||||||
During the third quarter of 2006, our research collaboration expenses were $252,460 compared to
$64,611 in the third quarter of 2005. Our research collaboration activity continues to focus on
the interaction of the immune system and the reovirus, the use of the reovirus as a co-therapy with
chemotherapeutics and radiation, the use of new RAS active viruses as potential therapeutics, and
to consider other uses of the reovirus as a therapeutic.
Other Research and Development Expenses
| 2006 | 2005 | |||||||
| $ | $ | |||||||
R&D consulting fees |
70,323 | 384,725 | ||||||
R&D salaries and benefits |
299,224 | 187,035 | ||||||
Other R&D expenses |
86,883 | 41,343 | ||||||
Other research and development expenses |
456,430 | 613,103 | ||||||
During the third quarter of 2006, our R&D consulting fees decreased to $70,323 compared to $384,725
in 2005. In the third quarter of 2005 we incurred consulting costs associated with the recruitment
of our Chief Medical Officer, the activities of our scientific advisory board and consulting
activity in support of our clinical trial activities. In the third quarter of 2006, we only
incurred consulting fees associated with our clinical trial activity.
Our R&D salaries and benefits costs were $299,224 in the third quarter of 2006 compared to $187,035
in the third quarter of 2005. The increase is a result of increases in compensation and staff
levels along with the hiring of our Chief Medical Officer in the third quarter of 2005.
Operating Expenses
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Public company related expenses |
507,828 | 390,473 | ||||||
Office expenses |
258,790 | 195,127 | ||||||
Operating expenses |
766,618 | 585,600 | ||||||
During the third quarter of 2006, our public company related expenses increased to $507,828
compared to $390,473 for the third quarter of 2005. During this period we engaged additional
investor relations services compared to the third quarter of 2005. Our office expenses in the
third quarter of 2006 increased to $258,790 compared to $195,127 in the third quarter of 2005. Our
office expenses have increased due to increased compensation levels and a general increase in
office costs.
Stock Based Compensation
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Stock based compensation |
34,671 | 4,173 | ||||||
Stock based compensation for the third quarter of 2006 increased to $34,671 compared to $4,173 for
the third quarter of 2005. In the third quarters of 2006 and 2005, we incurred stock based
compensation associated with the vesting of previously granted options.
YEAR TO DATE RESULTS OF OPERATIONS
(for the nine months ended September 30, 2006 and 2005)
Net loss for the nine month period ending September 30, 2006 was $9,407,419 compared to $8,841,272
for the nine month period ending September 30, 2005.
Research and Development Expenses (“R&D”)
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Manufacturing and related process development expenses |
2,751,207 | 3,584,430 | ||||||
Clinical trial expenses |
1,920,467 | 1,154,677 | ||||||
Pre-clinical trial and research collaboration expenses |
691,553 | 524,472 | ||||||
Other R&D expenses |
1,219,460 | 1,235,455 | ||||||
Research and development expenses |
6,582,687 | 6,499,034 | ||||||
For the nine month period ending September 30, 2006, R&D increased to $6,582,687 compared to
$6,499,034 for 2005. The increase in R&D was due to the following:
Manufacturing & Related Process Development (“M&P”)
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Product manufacturing expenses |
1,664,308 | 3,406,588 | ||||||
Technology transfer expenses |
457,975 | ¾ | ||||||
Process development expenses |
628,924 | 177,842 | ||||||
Manufacturing and related process development expenses |
2,751,207 | 3,584,430 | ||||||
Our M&P expenses for the nine month period ending September 30, 2006 decreased to $2,751,207
compared to $3,584,430 in 2005. In the first part of 2006, we completed the production runs that
were ongoing at the end of 2005, providing us with sufficient product to complete our U.K. Phase II
combination REOLYSIN®/radiation clinical trial and our existing Phase I clinical trials.
At the same time, our process development activity helped improve virus yields from our
manufacturing process. We completed the transfer of the improvements in our process to our cGMP
manufacturer at the beginning of the third quarter of 2006 and began campaigning production runs in
order to provide us with sufficient REOLYSIN® to expand our Phase II clinical trial
program. Our process development activity has now shifted focus to the examination of the
potential scale up of our manufacturing process.
In 2005, we were focused on the production of REOLYSIN® to supply the clinical trials
enrolling at that time and to provide a supply for the two U.S. monotherapy and the U.K.
combination trials approved in the first half of 2005. Our process development activity commenced
work on improving production yields in the third quarter of 2005.
We continue to believe that our manufacturing and related process development expenses for 2006
will be in line with 2005.
Clinical Trial Program
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Direct clinical trial expenses |
1,783,138 | 1,067,927 | ||||||
Other clinical trial expenses |
137,329 | 86,750 | ||||||
Clinical trial expenses |
1,920,467 | 1,154,677 | ||||||
During the nine month period ending September 30, 2006, our direct clinical trial expenses
increased to $1,783,138 compared to $1,067,927 for the nine month period ending September 30, 2005.
During this period of 2006, we incurred direct patient costs in our four ongoing clinical trials
along with clinical site start up costs associated with our U.K. phase II combination
REOLYSIN®/radiation trial and our U.S. recurrent malignant glioma trial. In 2005, we
were incurring direct patient costs associated with three enrolling clinical trial studies along
with clinical site start up costs associated with our U.K. Phase Ia combination
REOLYSIN®/radiation therapy and our U.S. systemic and glioma clinical trials.
We expect our clinical trial expenses will continue to increase for the remainder of 2006 compared
to 2005. The increase in these expenses is expected to arise from enrollment in our existing
clinical trial program and expansion into Phase II clinical trials.
Pre-Clinical Trial Expenses and Research Collaborations
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Research collaboration expenses |
634,199 | 427,719 | ||||||
Pre-clinical trial expenses |
57,354 | 96,753 | ||||||
Pre-clinical trial expenses and research collaborations |
691,553 | 524,472 | ||||||
During the nine month period ending September 30, 2006, our research collaboration expenses were
$634,199 compared to $427,719 for the nine month period ending September 30, 2005. Our research
collaboration activity continues to focus on the interaction of the immune system and the reovirus,
the use of the reovirus as a co-therapy with chemotherapeutics and radiation, the use of new RAS
active viruses as potential therapeutics, and to consider other uses of the reovirus as a
therapeutic.
During the nine month period ending September 30, 2006, our pre-clinical trial expenses were
$57,354 compared to $96,753 for the nine month period ending September 30, 2005. The frequency of
our pre-clinical trial expenses change from period to period as we move through our development
program. As well, we may increase our pre-clinical activity depending on the results of our
research collaborations.
For the remainder of 2006, we now expect that pre-clinical trial expenses and research
collaborations will increase compared to 2005. We expect to continue expanding our collaborations
in order to provide support for our expanding clinical trial program and identify new areas for
investigation. Also, in our efforts to enter into additional combination therapy clinical trials
we may be required to perform additional pre-clinical trial studies.
Other Research and Development Expenses
| 2006 | 2005 | |||||||
| $ | $ | |||||||
R&D consulting fees |
134,650 | 550,594 | ||||||
R&D salaries and benefits |
907,115 | 562,373 | ||||||
Quebec scientific research and experimental development refund |
(52,344 | ) | — | |||||
Other R&D expenses |
230,039 | 122,488 | ||||||
Other research and development expenses |
1,219,460 | 1,235,455 | ||||||
During the nine month period ending September 30, 2006, our R&D consulting fees decreased to
$134,650 compared to $550,594 in 2005. In this period of 2005, we incurred consulting costs
associated with the recruiting of our Chief Medical Officer and our two U.S. clinical trial
applications. In 2006 we have not incurred this type of consulting service.
Our R&D salaries and benefits costs were $907,115 for the nine month period ending September 30,
2006 compared to $562,373 for the nine month period ending September 30, 2005. The increase is a
result of increases in salary levels along with the hiring of our Chief Medical Officer in the
third quarter of 2005.
We expect that our Other Research and Development Expenses for the remainder of 2006 will remain
consistent with 2005. We expect that salaries and benefits will increase as 2006 should include a
complete year of salary and benefit costs for our Chief Medical Officer. This increase should be
offset by a decline in our R&D consulting fees as we do not expect to require the same level of
consulting services in 2006 as we incurred in 2005. However, we may choose to engage additional
consultants to assist us in the development of protocols and regulatory filings for our additional
combination therapy and Phase II clinical trial studies, possibly causing our R&D consulting
expenses to increase.
Operating Expenses
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Public company related expenses |
2,007,464 | 1,484,605 | ||||||
Office expenses |
782,183 | 626,822 | ||||||
Operating expenses |
2,789,647 | 2,111,427 | ||||||
During the nine month period ending September 30, 2006, our public company related expenses
increased to $2,007,464 compared to $1,484,605 for the nine month period ending September 30, 2005.
The increase in public company related expenses was a result of incurring financial advisory
services, executive search consulting fees associated with the appointment of two new directors and
an increase in our investor relations activity in 2006 compared to 2005.
During the nine month period ending September 30, 2006, our office expenses increased to $782,183
compared to $626,822 for the nine month period ending September 30, 2005. Our office expenses have
increased due to increased compensation levels and a general increase in office costs.
Stock Based Compensation
| 2006 | 2005 | |||||||
| $ | $ | |||||||
Stock based compensation |
293,880 | 25,952 | ||||||
Stock based compensation for the nine month period ending September 30, 2006 increased to $293,880
compared to $25,952 for the nine month period ending September 30, 2005. During this period in
2006, we incurred stock based compensation associated with the issue and immediate vesting of stock
options to our two newly appointed directors and the vesting of previously granted options.
Commitments
As at September 30, 2006, we are committed to payments totaling $1,624,000 during the remainder of
2006 for activities related to clinical trial activity and collaborations. All of these committed
payments are considered to be part of our normal course of business.
SUMMARY OF QUARTERLY RESULTS
The following unaudited quarterly information is presented in thousands of dollars except for
per share amounts:
| 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||
| Sept. | June | March | Dec. | Sept. | June | March | Dec. | |||||||||||||||||||||||||
Revenue(1) |
320 | 335 | 292 | 160 | 211 | 168 | 245 | 205 | ||||||||||||||||||||||||
Net loss(4) |
3,425 | 2,988 | 2,995 | 3,941 | 3,510 | 2,955 | 2,377 | 3,992 | ||||||||||||||||||||||||
Basic and diluted loss per common
share(4) |
$ | 0.09 | $ | 0.08 | $ | 0.08 | $ | 0.12 | $ | 0.11 | $ | 0.09 | $ | 0.07 | $ | 0.14 | ||||||||||||||||
Total assets(2), (5) |
37,980 | 40,828 | 43,660 | 46,294 | 34,538 | 38,081 | 40,519 | 39,489 | ||||||||||||||||||||||||
Total cash(3), (5) |
31,495 | 34,501 | 37,687 | 40,406 | 28,206 | 31,975 | 34,713 | 33,919 | ||||||||||||||||||||||||
Total long-term debt(6) |
150 | 150 | 150 | 150 | 150 | 150 | 150 | 150 | ||||||||||||||||||||||||
Cash dividends
declared(7) |
Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | ||||||||||||||||||||||||
| (1) | Revenue is comprised of interest income and income from short term investments. | |
| (2) | Subsequent to the acquisition of Oncolytics Biotech Inc. by SYNSORB in April 1999, we applied push down accounting. See note 2 to the audited financial statements for 2005. | |
| (3) | Included in total cash are cash and cash equivalents plus short-term investments. | |
| (4) | Included in net loss and loss per common share between September 2006 and Sept 2004 are quarterly stock based compensation expenses of $34,671, $222,376, $36,833, $38,152, $4,173, $8,404, $13,375, and $1,870,596, respectively. | |
| (5) | We issued 150,000 common shares in 2006 for cash proceeds of $127,500 (2005 – 4,321,252 common shares for cash proceeds of $18,789,596; 2004 – 4,685,775 common shares for $23,495,961). | |
| (6) | The long-term debt recorded represents repayable loans from the Alberta Heritage Foundation. | |
| (7) | We have not declared or paid any dividends since incorporation. |
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
As at September 30, 2006, we had cash and cash equivalents (including short-term investments) and
working capital positions of $31,495,254 and $30,400,183, respectively compared to $40,406,167 and
$39,301,444, respectively for December 31, 2005. The decrease in 2006 reflects cash usage from
operating activities and purchases of intellectual property of $8,456,752 and $552,319,
respectively with cash inflows from financing activities of $127,500.
We desire to maintain adequate cash and short-term investment reserves to support our planned
activities which include our clinical trial program, product manufacturing, collaborations,
administrative costs, and our intellectual property expansion and protection. For the remainder of
2006, we expect our monthly cash usage to continue to increase as we manufacture
REOLYSIN®, enroll patients in our ongoing clinical trials, and expand our clinical trial
and collaborative programs. We expect that our average monthly cash usage for 2006 will be less
than $1,200,000 per month and we believe our existing capital resources are adequate to fund our
current plans for research and development activities well into 2008. Factors that will affect our
anticipated average monthly burn rate include, but are not limited to, the number of manufacturing
runs and activities required to supply our clinical trial program and the cost of each run, the
number of clinical trials ultimately approved, the timing of patient enrollment in the approved
clinical
trials, the actual costs incurred to support each clinical trial, the number of treatments each
patient will receive, the timing of the U.S. National Cancer Institute’s R&D activity, and the
level of pre-clinical activity undertaken.
In the event that we choose to seek additional capital, we will look to fund additional capital
requirements primarily through the issue of additional equity. We recognize the challenges and
uncertainty inherent in the capital markets and the potential difficulties we might face in raising
additional capital. Market prices and market demand for securities in biotechnology companies are
volatile and there are no assurances that we will have the ability to raise funds when required.
Capital Expenditures
We spent $187,283 on intellectual property in the third quarter of 2006 compared to $242,223 in the
third quarter of 2005. The change in intellectual property expenditures reflects the timing of
filing costs associated with our expanded patent base. As well, we have benefited from a stronger
Canadian dollar as our patent costs are typically incurred in U.S. currency. As at the end of the
third quarter of 2006, we had been issued 17 U.S., five Canadian and three European patents.
Investing Activities
Under our Investment Policy, we are permitted to invest in short-term instruments with a rating no
less than R-1 (DBRS) with terms less than two years. We have $27,538,168 invested under this
policy and we are currently earning interest at an effective rate of 3.89% (2005 – 2.86%).
OTHER MD&A REQUIREMENTS
We have 36,386,748 common shares outstanding at November 2, 2006. If all of our warrants
(2,672,000) and options (3,584,550) were exercised we would have 42,643,298 common shares
outstanding.
Additional information relating to Oncolytics Biotech Inc. is available on SEDAR at www.sedar.com.
Financial Statements
Oncolytics Biotech Inc.
September 30, 2006
Oncolytics Biotech Inc.
BALANCE SHEETS
(unaudited)
(unaudited)
As at,
| September 30, | December 31, | |||||||
| 2006 | 2005 | |||||||
| $ | $ | |||||||
ASSETS |
||||||||
Current |
||||||||
Cash and cash equivalents |
3,957,086 | 3,511,357 | ||||||
Short-term investments |
27,538,168 | 36,894,810 | ||||||
Accounts receivable |
37,640 | 47,390 | ||||||
Prepaid expenses |
1,231,697 | 540,368 | ||||||
| 32,764,591 | 40,993,925 | |||||||
Property and equipment |
152,358 | 189,863 | ||||||
Intellectual property |
5,063,265 | 5,110,538 | ||||||
| 37,980,214 | 46,294,326 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current |
||||||||
Accounts payable and accrued liabilities |
2,364,408 | 1,692,481 | ||||||
Alberta Heritage Foundation loan |
150,000 | 150,000 | ||||||
Shareholders’ equity |
||||||||
Share capital [note 2] |
||||||||
Authorized: unlimited number of common shares |
||||||||
Issued: 36,386,748 (December 31, 2005 – 36,236,748) |
84,681,904 | 84,341,212 | ||||||
Warrants [note 2] |
4,216,740 | 4,429,932 | ||||||
Contributed surplus [note 3] |
6,707,123 | 6,413,243 | ||||||
Deficit |
(60,139,961 | ) | (50,732,542 | ) | ||||
| 35,465,806 | 44,451,845 | |||||||
| 37,980,214 | 46,294,326 | |||||||
See accompanying notes
Oncolytics Biotech Inc.
STATEMENTS OF LOSS AND DEFICIT
(unaudited)
(unaudited)
| Cumulative | ||||||||||||||||||||
| Nine Month | Nine Month | Three Month | Three Month | from inception | ||||||||||||||||
| Period | Period | Period | Period | on April 2, | ||||||||||||||||
| Ending | Ending | Ending | Ending | 1998 to | ||||||||||||||||
| September | September | September | September | September 30, | ||||||||||||||||
| 30, 2006 | 30, 2005 | 30, 2006 | 30, 2005 | 2006 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
Revenue |
||||||||||||||||||||
Rights revenue |
¾ | ¾ | ¾ | ¾ | 310,000 | |||||||||||||||
Interest income |
947,364 | 623,615 | 320,454 | 210,978 | 4,516,560 | |||||||||||||||
| 947,364 | 623,615 | 320,454 | 210,978 | 4,826,560 | ||||||||||||||||
Expenses |
||||||||||||||||||||
Research and development |
6,582,687 | 6,499,034 | 2,705,746 | 2,818,063 | 39,418,192 | |||||||||||||||
Operating |
2,789,647 | 2,111,427 | 766,618 | 585,600 | 15,880,338 | |||||||||||||||
Stock based compensation [note 3] |
293,880 | 25,952 | 34,671 | 4,173 | 4,055,979 | |||||||||||||||
Foreign exchange loss/(gain) |
(2,703 | ) | 198,481 | 5,129 | 97,997 | 610,875 | ||||||||||||||
Amortization – intellectual property |
647,893 | 580,949 | 220,774 | 199,131 | 3,810,684 | |||||||||||||||
Amortization – property and equipment |
43,379 | 51,334 | 12,685 | 17,042 | 398,425 | |||||||||||||||
| 10,354,783 | 9,467,177 | 3,745,623 | 3,722,006 | 64,174,493 | ||||||||||||||||
Loss before the following: |
9,407,419 | 8,843,562 | 3,425,169 | 3,511,028 | 59,347,933 | |||||||||||||||
Gain on sale of BCY LifeSciences Inc. |
¾ | (765 | ) | ¾ | ¾ | (299,403 | ) | |||||||||||||
Loss on sale of Transition Therapeutics Inc. |
¾ | ¾ | ¾ | ¾ | 2,156,685 | |||||||||||||||
Loss before taxes |
9,407,419 | 8,842,797 | 3,425,169 | 3,511,028 | 61,205,215 | |||||||||||||||
Capital tax |
¾ | (1,525 | ) | ¾ | (1,525 | ) | 49,746 | |||||||||||||
Future income tax recovery |
¾ | ¾ | ¾ | ¾ | (1,115,000 | ) | ||||||||||||||
Net loss for the period |
9,407,419 | 8,841,272 | 3,425,169 | 3,509,503 | 60,139,961 | |||||||||||||||
Deficit, beginning of period |
50,732,542 | 37,950,711 | 56,714,792 | 43,282,480 | ¾ | |||||||||||||||
Deficit, end of period |
60,139,961 | 46,791,983 | 60,139,961 | 46,791,983 | 60,139,961 | |||||||||||||||
Basic and diluted loss per share |
0.26 | 0.27 | 0.09 | 0.11 | ||||||||||||||||
Weighted average number of shares |
36,317,687 | 32,702,843 | 36,368,270 | 32,983,922 | ||||||||||||||||
See accompanying notes
Oncolytics Biotech Inc.
STATEMENTS OF CASH FLOWS
(unaudited)
(unaudited)
| Three | Three | Cumulative | ||||||||||||||||||
| Nine Month | Nine Month | Month | Month | from inception | ||||||||||||||||
| Period | Period | Period | Period | on April 2, | ||||||||||||||||
| Ending | Ending | Ending | Ending | 1998 to | ||||||||||||||||
| September | September | September | September | September 30, | ||||||||||||||||
| 30, 2006 | 30, 2005 | 30, 2006 | 30, 2005 | 2006 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
OPERATING ACTIVITIES |
||||||||||||||||||||
Net loss for the period |
(9,407,419 | ) | (8,841,272 | ) | (3,425,169 | ) | (3,509,503 | ) | (60,139,961 | ) | ||||||||||
Deduct non-cash items |
||||||||||||||||||||
Amortization – intellectual property |
647,893 | 580,949 | 220,774 | 199,131 | 3,810,684 | |||||||||||||||
Amortization – property and equipment |
43,379 | 51,334 | 12,685 | 17,042 | 398,425 | |||||||||||||||
Stock based compensation |
293,880 | 25,952 | 34,671 | 4,173 | 4,055,979 | |||||||||||||||
Other non-cash items [note 4] |
¾ | 73,790 | ¾ | 35,905 | 1,383,537 | |||||||||||||||
Net changes in non-cash working capital [note 4] |
(34,485 | ) | (188,531 | ) | 261,875 | (297,460 | ) | 1,058,514 | ||||||||||||
| (8,456,752 | ) | (8,297,778 | ) | (2,895,164 | ) | (3,550,712 | ) | (49,432,822 | ) | |||||||||||
INVESTING ACTIVITIES |
||||||||||||||||||||
Intellectual property |
(552,319 | ) | (706,982 | ) | (187,283 | ) | (242,223 | ) | (5,208,989 | ) | ||||||||||
Property and equipment |
(29,342 | ) | (31,134 | ) | (8,294 | ) | (15,914 | ) | (616,853 | ) | ||||||||||
Purchase of short-term investments |
(801,358 | ) | (5,470,458 | ) | (261,480 | ) | (136,620 | ) | (47,885,398 | ) | ||||||||||
Redemption of short-term investments |
10,158,000 | 2,747,396 | ¾ | ¾ | 19,928,746 | |||||||||||||||
Investment in BCY LifeSciences Inc. |
¾ | 7,965 | ¾ | ¾ | 464,602 | |||||||||||||||
Investment in Transition Therapeutics Inc. |
¾ | ¾ | ¾ | ¾ | 2,532,343 | |||||||||||||||
| 8,774,981 | (3,453,213 | ) | (457,057 | ) | (394,757 | ) | (30,785,549 | ) | ||||||||||||
FINANCING ACTIVITIES |
||||||||||||||||||||
Alberta Heritage Foundation loan |
¾ | ¾ | ¾ | ¾ | 150,000 | |||||||||||||||
Proceeds from exercise of warrants
and stock options |
127,500 | 3,384,787 | 85,000 | 76,500 | 15,094,568 | |||||||||||||||
Proceeds from private placements |
¾ | ¾ | ¾ | ¾ | 38,137,385 | |||||||||||||||
Proceeds from public offerings |
¾ | ¾ | ¾ | ¾ | 30,793,504 | |||||||||||||||
| 127,500 | 3,384,787 | 85,000 | 76,500 | 84,175,457 | ||||||||||||||||
Increase (decrease) in cash and cash
equivalents during the period |
445,729 | (8,366,204 | ) | (3,267,221 | ) | (3,868,969 | ) | 3,957,086 | ||||||||||||
Cash and cash equivalents, beginning of the
period |
3,511,357 | 12,408,516 | 7,224,307 | 7,911,281 | ¾ | |||||||||||||||
Cash and cash equivalents, end of the period |
3,957,086 | 4,042,312 | 3,957,086 | 4,042,312 | 3,957,086 | |||||||||||||||
See accompanying notes
Oncolytics Biotech Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2006 (unaudited)
1. ACCOUNTING POLICIES
These unaudited interim financial statements do not include all of the disclosures included in
the Company’s annual financial statements. Accordingly, these unaudited interim financial
statements should be read in conjunction with the Company’s most recent annual financial
statements. The information as at and for the year ended December 31, 2005 has been derived from
the Company’s audited financial statements.
The accounting policies used in the preparation of these unaudited interim financial statements
conform with those used in the Company’s most recent annual financial statements.
2. SHARE CAPITAL
Authorized:
Unlimited number of common shares
| Issued: | Shares | Warrants | ||||||||||||||
| Amount | Amount | |||||||||||||||
| Number | $ | Number | $ | |||||||||||||
Balance, December 31, 2004 |
31,915,496 | 66,643,325 | 2,855,340 | 3,347,630 | ||||||||||||
Issued for cash pursuant to December 29, 2005
private placement |
3,200,000 | 14,176,000 | 1,920,000 | 2,908,800 | ||||||||||||
Exercise of warrants |
771,252 | 3,417,271 | (771,252 | ) | (329,984 | ) | ||||||||||
Expired warrants |
— | 1,496,514 | (1,219,288 | ) | (1,496,514 | ) | ||||||||||
Exercise of options |
350,000 | 297,500 | — | — | ||||||||||||
Share issue costs |
— | (1,689,398 | ) | — | — | |||||||||||
Balance, December 31, 2005 |
36,236,748 | 84,341,212 | 2,784,800 | 4,429,932 | ||||||||||||
Exercise of options |
150,000 | 127,500 | — | — | ||||||||||||
Expired warrants |
— | 213,192 | (112,800 | ) | (213,192 | ) | ||||||||||
Balance, September 30, 2006 |
36,386,748 | 84,681,904 | 2,672,000 | 4,216,740 | ||||||||||||
Oncolytics Biotech Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2006 (unaudited)
The following table summarizes the Company’s outstanding warrants as at September 30, 2006:
| Weighted | ||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||
| Outstanding, | Granted | Exercised | Expired | Remaining | ||||||||||||||||||||
| Exercise | Beginning of | During the | During the | During the | Outstanding, | Contractual | ||||||||||||||||||
| Price | the Period | Period | Period | Period | End of Period | Life (years) | ||||||||||||||||||
$5.65 |
320,000 | — | — | — | 320,000 | 2.25 | ||||||||||||||||||
$6.15 |
1,600,000 | — | — | — | 1,600,000 | 2.25 | ||||||||||||||||||
$7.06 |
112,800 | — | — | (112,800 | ) | — | — | |||||||||||||||||
$8.00 |
752,000 | — | — | — | 752,000 | 1.15 | ||||||||||||||||||
| 2,784,800 | — | — | (112,800 | ) | 2,672,000 | 1.94 | ||||||||||||||||||
3. STOCK BASED COMPENSATION
Stock Option Plan
The Company has issued stock options to acquire common stock through its stock option plan of
which the following are outstanding at September 30:
| 2006 | 2005 | |||||||||||||||
| Weighted | Weighted | |||||||||||||||
| Average | Average | |||||||||||||||
| Stock | Share Price | Share Price | ||||||||||||||
| Options | $ | Stock Options | $ | |||||||||||||
Outstanding at beginning of period |
3,634,550 | 4.66 | 3,805,550 | 4.39 | ||||||||||||
Granted during period |
100,000 | 3.85 | 200,000 | 3.18 | ||||||||||||
Cancelled during period |
¾ | ¾ | (21,000 | ) | 4.95 | |||||||||||
Exercised during period |
(150,000 | ) | 0.85 | (350,000 | ) | 0.85 | ||||||||||
Outstanding at end of period |
3,584,550 | 4.79 | 3,634,550 | 4.48 | ||||||||||||
Options exercisable at end of period |
3,352,050 | 4.91 | 3,387,050 | 4.77 | ||||||||||||
Oncolytics Biotech Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2006 (unaudited)
The following table summarizes information about the stock options outstanding and exercisable at
September 30, 2006:
| Weighted | Weighted | Weighted | ||||||||||||||||||
| Average | Average | Average | ||||||||||||||||||
| Range of | Remaining | Exercise | Exercise | |||||||||||||||||
| Exercise | Number | Contractual | Price | Number | Price | |||||||||||||||
| Prices | Outstanding | Life (years) | $ | Exercisable | $ | |||||||||||||||
$ 0.75 – $ 1.00 |
482,550 | 3.1 | 0.85 | 482,550 | 0.85 | |||||||||||||||
$ 1.65 – $ 2.37 |
281,000 | 6.2 | 1.85 | 261,000 | 1.85 | |||||||||||||||
$ 2.70 – $ 3.50 |
728,750 | 7.3 | 3.13 | 528,750 | 3.11 | |||||||||||||||
$ 4.00 – $ 5.00 |
1,240,750 | 8.0 | 4.86 | 1,228,250 | 4.86 | |||||||||||||||
$ 6.77 – $ 9.76 |
708,500 | 5.4 | 8.66 | 708,500 | 8.66 | |||||||||||||||
$12.15 – $13.50 |
143,000 | 4.1 | 12.63 | 143,000 | 12.63 | |||||||||||||||
| 3,584,550 | 6.4 | 4.79 | 3,352,050 | 4.91 | ||||||||||||||||
The outstanding options vest annually or after the completion of certain milestones. The
Company has reserved 3,662,461 common shares for issuance relating to outstanding stock options.
As the Company is following the fair value based method of accounting for stock options, the
Company recorded compensation expense of $34,671 and $293,880 for the three and nine month periods
ending September 30, 2006, respectively (September 30, 2005 $4,173 and $25,952, respectively) with
respect to the granting of options in the period and vesting of options issued in prior periods
with an offsetting credit to contributed surplus.
The estimated fair value of stock options issued during the nine month period ending September 30,
2006 was determined using the Black-Scholes model using the following weighted average assumptions
and fair value of options:
| 2006 | 2005 | |||||||
Risk-free interest rate |
4.24 | % | 3.27 | % | ||||
Expected hold period to exercise |
3.5 years | 3.5 years | ||||||
Volatility in the price of the Company’s shares |
64 | % | 64 | % | ||||
Dividend yield |
Zero | Zero | ||||||
Weighted average fair value of options |
$ | 1.86 | $ | 1.51 | ||||
Oncolytics Biotech Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2006 (unaudited)
4. ADDITIONAL CASH FLOW DISCLOSURE
Net Change In Non-Cash Working Capital
For the periods ending:
| Cumulative | ||||||||||||||||||||
| Nine | Nine | Three | Three | from | ||||||||||||||||
| Month | Month | Month | Month | inception | ||||||||||||||||
| Period | Period | Period | Period | on April 2, | ||||||||||||||||
| Ending | Ending | Ending | Ending | 1998 to | ||||||||||||||||
| September | September | September | September | September | ||||||||||||||||
| 30, 2006 | 30, 2005 | 30, 2006 | 30, 2005 | 30, 2006 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
Change in: |
||||||||||||||||||||
Accounts receivable |
9,750 | (683 | ) | 16,507 | 19,481 | (37,640 | ) | |||||||||||||
Prepaid expenses |
(691,329 | ) | (702,806 | ) | (233,919 | ) | (197,897 | ) | (1,231,697 | ) | ||||||||||
Accounts payable and accrued liabilities |
671,927 | 480,322 | 457,687 | (113,734 | ) | 2,364,408 | ||||||||||||||
Change in non-cash working capital |
(9,652 | ) | (223,167 | ) | 240,275 | (292,150 | ) | 1,095,071 | ||||||||||||
Net change associated with investing
activities |
(24,833 | ) | 34,636 | 21,600 | (5,310 | ) | (36,557 | ) | ||||||||||||
Net change associated with operating
activities |
(34,485 | ) | (188,531 | ) | 261,875 | (297,460 | ) | 1,058,514 | ||||||||||||
Other Non-Cash Items
| Cumulative | ||||||||||||||||||||
| Three | Three | from | ||||||||||||||||||
| Nine Month | Nine Month | Month | Month | inception on | ||||||||||||||||
| Period | Period | Period | Period | April 2, | ||||||||||||||||
| Ending | Ending | Ending | Ending | 1998 to | ||||||||||||||||
| September | September | September | September | September | ||||||||||||||||
| 30, 2006 | 30, 2005 | 30, 2006 | 30, 2005 | 30, 2006 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
Foreign exchange loss |
— | 74,555 | — | 35,905 | 425,186 | |||||||||||||||
Donation of medical equipment |
— | — | — | — | 66,069 | |||||||||||||||
Loss on sale of Transition
Therapeutics Inc. |
— | — | — | — | 2,156,685 | |||||||||||||||
Gain on sale of BCY LifeSciences Inc. |
— | (765 | ) | — | — | (299,403 | ) | |||||||||||||
Cancellation of contingent payment
obligation settled in common shares |
— | — | — | — | 150,000 | |||||||||||||||
Future income tax recovery |
— | — | — | — | (1,115,000 | ) | ||||||||||||||
| — | 73,790 | — | 35,905 | 1,383,537 | ||||||||||||||||
5. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the current period’s
presentation.
Shareholder Information
For public company filings please go to www.sedar.com or contact us at:
Oncolytics Biotech Inc.
Suite 210, 1167 Kensington Crescent NW
tel: 403.670.7377 fax: 403.283.0858
Calgary, Alberta, Canada T2N 1X7
www.oncolyticsbiotech.com
Suite 210, 1167 Kensington Crescent NW
tel: 403.670.7377 fax: 403.283.0858
Calgary, Alberta, Canada T2N 1X7
www.oncolyticsbiotech.com
Officers
Brad Thompson, PhD
Chairman, President and CEO
Doug Ball, CA
Chief Financial Officer
Matt Coffey, PhD
Chief Scientific Officer
Karl Mettinger, MD, PhD
Chief Medical Officer
George Gill, MD
Senior Vice President, Clinical and Regulatory Affairs
Chairman, President and CEO
Doug Ball, CA
Chief Financial Officer
Matt Coffey, PhD
Chief Scientific Officer
Karl Mettinger, MD, PhD
Chief Medical Officer
George Gill, MD
Senior Vice President, Clinical and Regulatory Affairs
Directors
Brad Thompson, PhD
Chairman, President and CEO, Oncolytics Biotech Inc.
Doug Ball, CA
CFO, Oncolytics Biotech Inc.
Ger van Amersfoort
Biotech Consultant
William. A. Cochrane, OC, MD
Biotech Consultant
Jim Dinning
Chairman, Western Financial Group
Ed Levy, PhD
Adjunct Professor, University of British Columbia
J. Mark Lievonen, CA
President, Sanofi Pasteur Limited
Bob Schultz, FCA
Chairman, Rockwater Capital Corporation
Fred Stewart, QC
President, Fred Stewart and Associates Inc.
Chairman, President and CEO, Oncolytics Biotech Inc.
Doug Ball, CA
CFO, Oncolytics Biotech Inc.
Ger van Amersfoort
Biotech Consultant
William. A. Cochrane, OC, MD
Biotech Consultant
Jim Dinning
Chairman, Western Financial Group
Ed Levy, PhD
Adjunct Professor, University of British Columbia
J. Mark Lievonen, CA
President, Sanofi Pasteur Limited
Bob Schultz, FCA
Chairman, Rockwater Capital Corporation
Fred Stewart, QC
President, Fred Stewart and Associates Inc.
Oncolytics Biotech Inc.
Suite 210, 1167 Kensington Crescent NW, Calgary, AB T2N 1X7
Phone: (403) 670.7377 Fax: (403) 283.0858
www.oncolyticsbiotech.com
FOR FURTHER INFORMATION PLEASE CONTACT:
For Canada:
|
For Canada: | For United States: | ||
Oncolytics Biotech Inc.
|
The Equicom Group | The Investor Relations Group | ||
Cathy Ward
|
Nick Hurst | Damian McIntosh | ||
210, 1167 Kensington Cr NW
|
20 Toronto Street | 11 Stone St, 3rd Floor | ||
Calgary, Alberta T2N 1X7
|
Toronto, Ontario M5C 2B8 | New York, NY 10004 | ||
Tel: 403.670.7377
|
Tel: 403.538.4845 | Tel: 212.825.3210 | ||
Fax: 403.283.0858
|
Fax: 416.815.0080 | Fax: 212.825.3229 | ||
cathy.ward@oncolytics.ca
|
nhurst@equicomgroup.com | dmcintosh@investorrelationsgroup.com |
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