Dr. Matt Coffey reports

ONCOLYTICS BIOTECH(R) INC. ANNOUNCES 2017 YEAR-END RESULTS

Oncolytics Biotech Inc. has released its financial results and operational highlights for the year ended Dec. 31, 2017.

"We view 2017 as a pivotal year for Oncolytics and one that positions us for a productive year ahead," said Dr. Matt Coffey, president and chief executive officer of Oncolytics Biotech. "Our IND 213 study in metastatic breast cancer, or mBC, generated compelling results and marked the first time that an oncolytic virus has demonstrated a statistically significant median overall survival advantage in a randomized clinical study. We received supportive regulatory feedback on our proposed registrational study design for pelareorep in HR-positive, HER2-negative breast cancer, the major genetic subgroup of mBC, from both the United States Food and Drug Administration and the European Medicines Agency. Looking forward, we are excited to initiate a phase 3 mBC registrational study later this year and also expand our development with highly focused phase 2 studies designed to further establish pelareorep as an immunotherapy and deliver near-term clinical data. We plan to initiate three cost-effective, partner-sponsored phase 2 studies. These would include a basket study to generate efficacy data on pelareorep in combination with high-profile checkpoint inhibitors in patients having specific genetic mutations across cancer types, and part two a trial using pelareorep in combination with pembrolizumab (Keytrud) in patients with relapsed metastatic adenocarcinoma of the pancreas. We are also planning to initiate a window of opportunity study using pelareorep and the standard of care in a neoadjuvant setting for treatment naive mBC patients, potentially broadening pelareorep's treatment applicability to include first line treatment."

Selected highlights

Since Jan. 1, 2017, selected highlights announced by the company include:

Clinical updates:

• The company presented findings from IND 213, an open-label, randomized, phase 2 study of intravenously administered pelareorep given in combination with paclitaxel versus paclitaxel alone in patients with advanced or metastatic breast cancer (mBC) at the American Association for Cancer Research meeting in April, 2017. Results showed a statistically significant improvement in median overall survival (OS) from 10.4 months in the control arm to 17.4 months in the test arm.
• The company presented additional clinical data from IND 213 at the European Society for Medical Oncology (ESMO) 2017 Congress that demonstrated a doubling of overall survival benefit for patients with HR double-positive, HER2-negative mBC when treated with pelareorep/paclitaxel combination treatment versus paclitaxel alone.
• The company announced a favourable end-of-phase 2 meeting with the FDA for pelareorep in combination with paclitaxel, for the treatment of hormone receptor positive, HER2-receptor-negative (HR+/HER2-) mBC patients. The agency's guidance proposed a single, 400 patient registration study to support a future biologics licence application submission in the United States -- subsequently, increased to 450 patients to ensure the completion of the study with the planned evaluable population.
• The company received a final advice letter from the EMA suggesting that a single phase 3 study may be acceptable to form the basis of a marketing authorization application (MAA) in Europe.
• The company announced the launch of MUK 11, a phase 1b trial studying pelareorep in combination with Celgene's Imnovid (pomalidomide) and Revlimid (lenalidomide), as a rescue treatment in relapsing myeloma patients. Oncolytics treated the first patient in this trial in September, 2017.
• The company presented the largest-ever safety database for an oncolytic virus at the ESMO 2017 Congress that demonstrated pelareorep is safe and well-tolerated when administered in combination with paclitaxel plus/minus carboplatin.
• The company announced that the FDA granted fast-track designation for pelareorep for the treatment of mBC, based on the data from IND 213. However, the company's request for breakthrough therapy designation (BTD) in mBC was not approved at this time based on certain data requirements. The FDA provided guidance that the company may reapply for BTD once additional supportive information is available.

Corporate updates:

• The company entered into an $86.6-million (U.S.) regional licensing agreement with Adlai Nortye for pelareorep covering China, Hong Kong, Macau, Singapore, South Korea and Taiwan. Under the terms of the agreement, Oncolytics is eligible to receive upfront, licensing fee and milestone payments of $21.2-million (U.S.) to support its phase 3 registration study and is eligible to receive up to an additional $65.4-million (U.S.) upon achievement of clinical, regulatory and commercialization milestones.
• The company received shareholder approval for the consolidation of the company's common shares, which enables Oncolytics to meet requirements for listing on the Nasdaq Capital Market.
• The company closed an underwritten public share offering of 16,445,000 units at a purchase price of 70 cents for gross proceeds of approximately $11.5-million ($10.6-million net).
• The company established a scientific advisory board focused on pelareorep's registration study in mBC.
• The company appointed Oncolytics co-founder and long-serving senior executive Dr. Matt Coffey, PhD, MBA, as president and chief executive officer.
• The company appointed Andrew de Guttadauro as president of its U.S. subsidiary, Oncolytics Biotech (U.S.) Inc., and head of global business development.

Anticipated milestones:

• Initiate a phase 3 registration study of pelareorep in combination with paclitaxel, for the treatment HR+/HER2- mBC patients in third quarter 2018;
• Initiate a phase 2 partner-sponsored window of opportunity study of pelareorep in combination with standard of care therapy in the neoadjuvant setting in mBC in second half 2018;
• Initiate a phase 2 partner-sponsored basket study to generate important biomarker and efficacy data of pelareorep in combination with checkpoint inhibitors in second half 2018;
• Initiate part two of a phase 2 North-West University/Merck-sponsored trial of pelareorep in combination with pembrolizumab (Keytrud) in patients with relapsed metastatic adenocarcinoma of the pancreas;
• Relist on the Nasdaq in second quarter 2018.

                                               
              CONSOLIDATED STATEMENTS OF (LOSS) AND COMPREHENSIVE (LOSS)   

                                                          For the years ending Dec. 31,
                                                     2017           2016           2015
Expenses
Research and development                       $9,392,623     $9,770,007     $8,601,864
Operating                                       6,212,831      5,524,500      5,315,837
(Loss) before the following                   (15,605,454)   (15,294,507)   (13,917,701)
Interest                                          130,101        163,902        197,859
(Loss) before income taxes                    (15,475,353)   (15,130,605)   (13,719,842)
Income tax (expense)                             (141,498)        (9,374)        (3,153)
Net (loss)                                    (15,616,851)   (15,139,979)   (13,722,995)
Other comprehensive (loss)
income items that may be
reclassified to net (loss)
Translation adjustment (loss)                    (180,330)      (206,918)       480,935
Net comprehensive (loss)                      (15,797,181)   (15,346,897)   (13,242,060)
Basic and diluted (loss) per common share           (0.12)         (0.13)         (0.12)

To view the company's fiscal 2017 year-end consolidated financial statements, related notes to the consolidated financial statements, and management's discussion and analysis, please see the company's annual filings, which will be available under the company's profile at SEDAR and on Oncolytics's investor relations website.

About Oncolytics Biotech Inc.

Oncolytics is a biotechnology company developing Reolysin, also known as pelareorep, an intravenously delivered immuno-oncolytic virus. The compound induces selective tumour lysis and promotes an inflamed tumour phenotype -- turning cold tumours hot -- through innate and adaptive immune responses to treat a variety of cancers. Oncolytics's clinical development program emphasizes three pillars: chemotherapy combinations to trigger selective tumour lysis; immuno-therapy combinations to produce adaptive immune responses; and immune modulator (IMiD) combinations to facilitate innate immune responses. Oncolytics is currently planning its first registration study in metastatic breast cancer, as well as studies in combination with checkpoint inhibitors and targeted and IMiD therapies in solid and hematological malignancies.

We seek Safe Harbor.