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 April 2008
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 þ | Form 40-F o |
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: April 30, 2008 | By: | /s/ Doug Ball
Doug Ball Chief Financial Officer |
||
First Quarter Report
March 31, 2008
Oncolytics Biotech Inc.
TSX: ONC
NASDAQ: ONCY
TSX: ONC
NASDAQ: ONCY
First
Quarter Report
For the quarter ended March 31, 2008
For the quarter ended March 31, 2008
Letter to Shareholders
The year 2008 is shaping up to be an exciting and rewarding time for Oncolytics as we begin to see early results from our Phase II and combination REOLYSIN® and chemotherapy clinical trials.
The year 2008 is shaping up to be an exciting and rewarding time for Oncolytics as we begin to see early results from our Phase II and combination REOLYSIN® and chemotherapy clinical trials.
Significant Clinical advances
At the end of January, we announced that we had met the initial criteria to proceed to full enrolment in our U.S. Phase II sarcoma trial. According to the trial protocol, we had to demonstrate that at least one patient in the first 38 patients treated experienced a complete or partial response, or stable disease for greater than six months. The third patient treated in the trial was demonstrated to have stable disease by RECIST criteria for more than six months as measured by CT and PET scans. In addition, the PET scan indicated that any residual tumour mass was metabolically inactive. The trial continues to enroll patients at four sites in the U.S.
At the end of January, we announced that we had met the initial criteria to proceed to full enrolment in our U.S. Phase II sarcoma trial. According to the trial protocol, we had to demonstrate that at least one patient in the first 38 patients treated experienced a complete or partial response, or stable disease for greater than six months. The third patient treated in the trial was demonstrated to have stable disease by RECIST criteria for more than six months as measured by CT and PET scans. In addition, the PET scan indicated that any residual tumour mass was metabolically inactive. The trial continues to enroll patients at four sites in the U.S.
Just subsequent to the quarter end, we also announced positive interim results from our U.K.
combination REOLYSIN® and paclitaxel/carboplatin trial, particularly in patients with
head and neck cancer. In the first cohort of patients treated, a patient with head and neck cancer
received 8 cycles of treatment and achieved a clinical complete response. In the second cohort,
two patients with head and neck cancers with widespread disseminated disease achieved significant
partial responses after six cycles of treatment. Two of the three patients, including the patient
with the clinical complete response, had previously received cisplatin/5-FU treatment and all three
had previously received radiotherapy. Considering the prognosis for recurrent patients, we believe
these early results to be very encouraging.
Also in January, we announced that the U.S. National Cancer Institute (NCI) filed a protocol with
the U.S. Food and Drug Administration (FDA) for a Phase I/II clinical trial for patients with
metastatic ovarian, peritoneal or fallopian tube cancers using concurrent systemic and
intraperitoneal administration of REOLYSIN®. The trial, which is being carried out at
the Ohio State University Comprehensive Cancer Center, began recruiting patients in April.
The NCI also began recruiting patients in April for its Phase II clinical trial for patients with
metastatic melanoma using systemic administration of REOLYSIN®. The trial is being
carried out by the Mayo Phase 2 Consortium.
The investigators for our first U.K. Phase I systemic administration trial published the results of
their work characterizing immune system responses to REOLYSIN® in the March 6 issue of
“Gene Therapy.” This important work further defines the relationship between viral therapy and
human immune responses. The results of the research suggest that reovirus may stimulate the immune
system to mount a dynamic immune response to the presence of virus, increasing the potential to
significantly enhance the efficacy of oncolytic virotherapy. With our collaborators, we continue
to investigate the interaction between the immune system and the reovirus both in the lab and the
clinic.
Preclinical Support Expands
Our collaborators continue to report results of preclinical studies that fully support the development of our human clinical program. In the first quarter, two of our collaborators published results of preclinical studies in Clinical Cancer Research. The first paper, published in January, demonstrated that using cyclophosphamide prior to systemic reovirus administration resulted in increased survival with only mild toxicities. The second paper, published in February, demonstrated that combining reovirus and radiotherapy significantly increased cancer cell killing both in vitro and in vivo, particularly in cell lines with moderate susceptibility to reovirus alone.
Our collaborators continue to report results of preclinical studies that fully support the development of our human clinical program. In the first quarter, two of our collaborators published results of preclinical studies in Clinical Cancer Research. The first paper, published in January, demonstrated that using cyclophosphamide prior to systemic reovirus administration resulted in increased survival with only mild toxicities. The second paper, published in February, demonstrated that combining reovirus and radiotherapy significantly increased cancer cell killing both in vitro and in vivo, particularly in cell lines with moderate susceptibility to reovirus alone.
At the American Association for Cancer Research (AACR) meeting in San Diego in April, two of our
collaborators presented the results of research using reovirus as a purging agent during autologous
blood
stem transplants, and also as a treatment in combination with radiation for childhood sarcomas.
This work highlights future potential opportunities for REOLYSIN® as a cancer therapy.
Intellectual Property Continuing to Grow
We continue to add to our intellectual property as we learn more about oncolytic viruses and their ability to treat many types of human cancers. In the quarter, we secured an additional two Canadian patents covering the use of reovirus for cancers that have inactivated or deleted PKR, and the use of other modified oncolytic viruses to purge contaminating cancer cells from stem cell preparations used for transplants. We also secured a U.S. patent that covers the use of adenoviruses modified to selectively replicate in cancer cells that have an activated Ras pathway, a common mutation in cancer cells.
We continue to add to our intellectual property as we learn more about oncolytic viruses and their ability to treat many types of human cancers. In the quarter, we secured an additional two Canadian patents covering the use of reovirus for cancers that have inactivated or deleted PKR, and the use of other modified oncolytic viruses to purge contaminating cancer cells from stem cell preparations used for transplants. We also secured a U.S. patent that covers the use of adenoviruses modified to selectively replicate in cancer cells that have an activated Ras pathway, a common mutation in cancer cells.
Looking Ahead
We are currently enrolling or recruiting patients in a total of nine clinical studies, four exploring the use of REOLYSIN® as a monotherapy, and five exploring the use of REOLYSIN® in combination with a variety of chemotherapies and radiotherapy. In 2008, we expect to report interim or final results on a number of our ongoing clinical trials. We are rapidly moving toward the point where we can expect to make pivotal clinical trial decisions about REOLYSIN®. It is an exciting time for Oncolytics and our shareholders.
We are currently enrolling or recruiting patients in a total of nine clinical studies, four exploring the use of REOLYSIN® as a monotherapy, and five exploring the use of REOLYSIN® in combination with a variety of chemotherapies and radiotherapy. In 2008, we expect to report interim or final results on a number of our ongoing clinical trials. We are rapidly moving toward the point where we can expect to make pivotal clinical trial decisions about REOLYSIN®. It is an exciting time for Oncolytics and our shareholders.
On behalf of the Board of Directors and the staff at Oncolytics, thank you for your continued
support and encouragement.
Brad Thompson, PhD
President and CEO
April 30, 2008
April 30, 2008
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis should be read in conjunction with the unaudited consolidated
financial statements of Oncolytics Biotech Inc. as at and for the three months ended March 31, 2008
and 2007, 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, 2007. 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 2008 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 the 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 First Quarter of 2008
We continue to develop our lead product REOLYSIN® as a potential cancer therapy. Our
goal each year is to advance REOLYSIN® through the various steps and stages of
development required for 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 supply, and our intellectual property.
Clinical Trial Program
During the first quarter of 2008 our clinical trial program expanded to nine clinical trials of
which seven are being conducted by us and two are being sponsored by the U.S. National Cancer
Institute (“NCI”).
Clinical Trials — Actively Enrolling
During the first quarter of 2008, we continued to enroll patients in our Phase II combination
REOLYSIN®/radiation and our three Phase I/II chemotherapeutic co-therapy clinical trials
in the U.K. In the U.S., we continued to enroll patients in our Phase II sarcoma and in our Phase
I/II recurrent malignant glioma clinical trials.
Clinical Trials — Expanded Enrollment
During the first quarter of 2008, we announced that we had met the initial criteria to proceed to
full enrolment in our U.S. Phase II trial to evaluate the intravenous administration of
REOLYSIN® in patients with various sarcomas that have metastasized to the lung.
According to the trial protocol, to proceed to full enrolment of 52 patients, we had to demonstrate
that at least one patient in the first 38 patients treated experienced a complete or partial
response, or stable disease for greater than six months. The third patient treated in the study was
demonstrated to have stable disease by RECIST criteria for more than six months as measured by CT
scan. A PET scan taken at the same time showed that any residual mass was metabolically inert.
This trial is a Phase II, open-label, single agent study whose primary objective is to measure
tumour responses and duration of response, and to describe any evidence of antitumour activity of
intravenous, multiple dose REOLYSIN® in patients with bone and soft tissue sarcomas
metastatic to the lung. REOLYSIN® is delivered intravenously to patients at a dose of
3x1010 TCID50 for five consecutive days. Patients may receive additional
five-day cycles of therapy every four weeks for a maximum of eight cycles. Up to 52 patients will
be enrolled in the study.
Eligible patients must have a bone or soft tissue sarcoma metastatic to the lung deemed by their
physician to be unresponsive to or untreatable by standard therapies. These include patients with
osteosarcoma, Ewing sarcoma family tumours, malignant fibrous histiocytoma, synovial sarcoma,
fibrosarcoma and leiomyosarcoma.
Clinical Trials — Recently Filed Application
In the first quarter of 2008, the NCI filed a protocol with the U.S. Food and Drug Administration
for a Phase I/II clinical trial for patients with metastatic ovarian, peritoneal or fallopian tube
cancers using concurrent systemic and intraperitoneal administration of REOLYSIN®. The
trial, which is being carried out at The Ohio State University Comprehensive Cancer Center, is
expected to enroll up to 70 patients with metastatic ovarian, peritoneal or fallopian tube cancers.
These cancer indications were selected after comprehensive preclinical studies carried out by the
NCI indicated the reovirus can kill ovarian cancer cells.
Pre-Clinical Trial and Collaborative Program
In the first quarter of 2008, we reported that a research group led by Dr. Richard Vile of the Mayo
Clinic College of Medicine in Rochester, Minnesota, published the results of its work testing the
antitumor efficacy and safety of various combinations of reovirus and cyclophosphamide in vivo.
The paper, entitled “Cyclophosphamide Facilitates Antitumor Efficacy against Subcutaneous Tumors
following Intravenous Delivery of Reovirus” appeared online in the January 1, 2008 issue of
Clinical Cancer Research.
The purpose of the research study was to investigate whether it was possible to use
cyclophosphamide, an immune modulator, to enhance the delivery and replication of the reovirus when
delivered intravenously. After testing various doses and dosing regimens of reovirus and
cyclophosphamide in mice, a metronomic dosing regimen was developed that resulted in increased
survival, high levels of reovirus recovered from regressing tumors, levels of neutralizing
antibodies that were protective, and only very mild toxicities. The data support investigation in
human clinical trials of the use of cyclophosphamide prior to systemic reovirus administration to
modulate, but not ablate, the immune system.
We also reported that Dr. Kevin Harrington and his research group at The Institute of Cancer
Research, London, U.K. published the results of their work testing combination treatment schedules
of reovirus and radiation in human and murine tumour cells in vitro and in vivo. The paper,
entitled “Enhanced In vitro and In vivo Cytotoxicity of Combined Reovirus and Radiotherapy”
appeared online in the February 1, 2008 issue of Clinical Cancer Research.
The effect of different schedules of reovirus and radiotherapy on viral replication and
cytotoxicity was tested in vitro and the combination was assessed in three tumour models in vivo.
The results demonstrated that combining reovirus and radiotherapy significantly increased cancer
cell killing both in vitro and in vivo, particularly in cell lines with moderate susceptibility to
reovirus alone.
As well, in the first quarter of 2008, we reported that Dr. Kevin Harrington and his research group
at The Institute of Cancer Research, London, U.K. published the results of their work
characterizing immune system responses to administration of intravenous REOLYSIN® in a
Phase I clinical trial. The paper, entitled “Characterization of the Adaptive and Innate Immune
Response to Intravenous Oncolytic Reovirus (Dearing Type 3) during a Phase I Clinical Trial”
appeared online in the March 6, 2008 issue of Gene Therapy.
The investigators conducted a detailed analysis of the immune effects of intravenous viral therapy
by collecting and analyzing immune response to the presence of the virus. The results suggest that
reovirus may stimulate the immune system to mount a dynamic immune response to the presence of
virus, increasing the potential to significantly enhance the efficacy of oncolytic virotherapy.
About a third of those patients also showed increases in NK (natural killer) cells following
therapy. The data support the development of interventions aimed at blunting the patient’s immune
response, although preclinical data also suggest that maintaining a baseline level is necessary to
restrict systemic spread and toxicity of the virus.
Manufacturing and Process Development
In the first quarter of 2008, after completing the technology transfer of our 40-litre production
process to our manufacturer in the U.S., we commenced production at the 40-litre scale under cGMP
conditions for use in our clinical trials. Our process development activity continued to focus on
scale up from 40-litre to 100-litre production runs.
Intellectual Property
During the first quarter of 2008, one U.S. and two Canadian patents were issued. At the end of the
first quarter of 2008, we had been issued over 170 patents including 26 U.S. and eight Canadian
patents as well as issuances in other jurisdictions. We also have over 180 patent applications
filed in the U.S., Canada and other jurisdictions.
Financial Impact
We estimated at the beginning of 2008 that our average monthly cash usage would be approximately
$1,660,000 for 2008. Our cash usage for the first quarter of 2008 was $2,991,234 from operating
activities and $259,969 for the purchases of intellectual property and capital assets which is
lower than our expected monthly average but is in line with our expectations for 2008. Our net
loss for the first quarter of 2007 was $3,324,241.
Cash Resources
We exited the first quarter of 2008 with cash resources totaling $21,962,626 (see “Liquidity and
Capital Resources”).
Expected REOLYSIN® Development for the Remainder of 2008
We plan to continue to enroll patients in our clinical trials throughout 2008 and still expect to
complete enrollment in our co-therapy trials in the U.K. and our sarcoma study in the U.S. We
believe that the results from these trials will allow us to broaden our Phase II clinical trial
program and choose a pivotal trial path. As well, we believe that the NCI will commence enrollment
in its two sponsored clinical trials.
We expect to produce REOLYSIN® for our clinical trial program throughout 2008. We
believe we will complete our 100-litre scale up studies and will continue our examination of a
lyophilization (freeze drying) process for REOLYSIN®.
We continue to estimate, based on our expected activity for 2008 that our average monthly cash
usage will be $1,660,000 per month (see “Liquidity and Capital Resources”).
Recent 2008 Progress
Clinical Trials — Positive Interim Results
In April, we announced positive interim results and completion of the dose escalation portion of
our U.K. combination REOLYSIN® and carboplatin/paclitaxel trial. Four of the first
eight patients treated in the study to date have a diagnosis of carcinoma of the head and neck. All
three head and neck patients evaluated to date have had excellent clinical and radiological
responses without appreciable toxicity. Preliminary assessment after recruitment of the first two
cohorts has suggested that patients with head and neck carcinomas represent a group of patients for
whom the combination of carboplatin/paclitaxel and REOLYSIN® may prove effective.
In the first cohort, the patient with head and neck cancer received 8 cycles of treatment (the
maximum allowed) and achieved a clinical complete response. In the second cohort, the two patients
with head and
neck cancers with widespread disseminated disease have each received seven cycles of treatment to
date and both have achieved significant partial responses. Two of the three patients, including the
patient with the clinical complete response, had previously received cisplatin/5-FU treatment and
all three had previously received radiotherapy.
This clinical trial has two components. The first is an open-label, dose-escalating, non-randomized
study of REOLYSIN® given intravenously with paclitaxel and carboplatin every three
weeks. Standard dosages of paclitaxel and carboplatin were delivered to patients with escalating
dosages of REOLYSIN® intravenously. The second component of the trial includes the
enrolment of a further 12 patients at the maximum dosage of REOLYSIN® in combination
with a standard dosage of paclitaxel and carboplatin.
Eligible patients include those who have been diagnosed with advanced or metastatic solid tumours
such as head and neck, melanoma, lung and ovarian cancers 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 determine the Maximum Tolerated Dose (MTD), Dose-Limiting Toxicity (DLT), recommended
dose and dosing schedule and safety profile of REOLYSIN® when administered in
combination with paclitaxel and carboplatin. Secondary objectives include the evaluation of immune
response to the drug combination, the body’s response to the drug combination compared to
chemotherapy alone and any evidence of anti-tumour activity.
Collaborations — Results
On April 15, 2008, we announced that a poster presentation by Dr. Anders Kolb of the Nemours Center
for Childhood Cancer Research entitled “Radiation in Combination with Reolysin for Pediatric
Sarcomas” was presented at the American Association for Cancer Research (“AACR”) Annual Meeting.
The poster covers preclinical work using reovirus in combination with radiation in mice implanted
with pediatric rhabdomyosarcoma and Ewing’s sarcoma tumours. The results demonstrated that the
combination of reovirus and radiation significantly enhanced efficacy compared to either treatment
alone in terms of tumour regression and event-free survival.
On April 15, 2008, we announced that an oral presentation by Dr. Chandini Thirukkumaran of the Tom
Baker Cancer Centre, Calgary, entitled “Targeting Multiple Myeloma with Oncolytic Viral Therapy”
was presented at the AACR Annual Meeting. The presentation covered preclinical work using reovirus
as a purging agent during autologous (harvested from the patient themselves) hematopoietic stem
cell transplants for multiple myeloma. The results demonstrated that up to 70% of multiple myeloma
cell lines tested showed reovirus sensitivity and reovirus induced cancer cell death mediated
through apoptosis.
On April 16, 2008, we announced that Prof. Alan Melcher and his research group at St. James’s
University Hospital in Leeds, U.K. published the results of their work in the April 10 online issue
of Gene Therapy. The paper is entitled “Inflammatory Tumour Cell Killing by Oncolytic Reovirus for
the Treatment of Melanoma.” The investigators showed that reovirus effectively kills and
replicates in both human melanoma cell lines and freshly resected tumour. They demonstrated that
reovirus melanoma killing is more potent than, and distinct from, chemotherapy or
radiotherapy-induced cell death. They concluded that reovirus is suitable for clinical testing in
melanoma.
RESULTS OF OPERATIONS
Net loss for the three month period ending March 31, 2008 was $3,324,241 compared to $4,113,231 for
the three month period ending March 31, 2007.
Research and Development Expenses (“R&D”)
| 2008 | 2007 | |||||||
| $ | $ | |||||||
Manufacturing and related process development expenses |
503,094 | 1,838,193 | ||||||
Clinical trial expenses |
1,042,791 | 721,617 | ||||||
Pre-clinical trial expenses and collaborations |
— | 106,281 | ||||||
Other R&D expenses |
579,926 | 552,146 | ||||||
Research and development expenses |
2,125,811 | 3,218,237 | ||||||
For the first quarter of 2008, R&D decreased to $2,125,811 compared to $3,218,237 for the first
quarter of 2007. The decrease in R&D was due to the following:
Manufacturing & Related Process Development (“M&P”)
| 2008 | 2007 | |||||||
| $ | $ | |||||||
Product manufacturing expenses |
467,328 | 1,748,417 | ||||||
Process development expenses |
35,766 | 89,776 | ||||||
Manufacturing and related process development expenses |
503,094 | 1,838,193 | ||||||
Our M&P expenses for the first quarter of 2008 decreased to $503,094 compared to $1,838,193 for the
first quarter of 2007.
In the first quarter of 2008, our production activity decreased compared to the first quarter of
2007. During the first quarter of 2008, we entered into a contract to manufacture
REOLYSIN® at the 40-litre scale. We commenced production under this contract towards
the end of the first quarter of 2008. In the first quarter of 2007, along with a number of
manufacturing runs at the 20-litre scale, we also incurred vial filling activity for the production
runs that were completed at the end of 2006.
Our process development expenses for the first quarter of 2008 were $35,766 compared to $89,776 for
the first quarter of 2007. In the first quarter of 2008, our process development focus continues
to be on the scale up to 100-litre production runs. In the first quarter of 2007, our process
development focus was on our earlier 40-litre scale up studies.
We still expect that our M&P expenses for 2008 will increase compared to 2007. We have initiated
our 40-litre production runs which will continue throughout 2008. As well, we still expect to
finalize our 100-litre scale up studies and continue the examination of a lyophilization process
for REOLYSIN® in 2008. Once our 100-litre process development studies are complete, we
expect to transfer our 100-litre manufacturing process to our cGMP manufacturers.
Clinical Trial Program
| 2008 | 2007 | |||||||
| $ | $ | |||||||
Direct clinical trial expenses |
994,646 | 683,107 | ||||||
Other clinical trial expenses |
48,145 | 38,510 | ||||||
Clinical trial expenses |
1,042,791 | 721,617 | ||||||
During the first quarter of 2008, our direct clinical trial expenses increased to $994,646 compared
to $683,107 for the first quarter of 2007. In the first quarter of 2008, we incurred direct
patient costs in our six enrolling clinical trials compared to only three actively enrolling
clinical trials in the first quarter of 2007.
We still expect our clinical trial expenses to increase in 2008 compared to 2007. The increase in
these expenses is expected to arise from continued enrollment and continued re-treatments in our
existing clinical trials.
Pre-Clinical Trial Expenses and Research Collaborations
| 2008 | 2007 | |||||||
| $ | $ | |||||||
Research collaboration expenses |
— | 106,281 | ||||||
Pre-clinical trial expenses |
— | — | ||||||
Pre-clinical trial expenses and research collaborations |
— | 106,281 | ||||||
During the first quarter of 2008, our research collaboration activity focused on renewing specific
collaborations, but no costs were incurred compared to $106,281 for the first quarter of 2007. Our
research collaboration activity continues to focus on the interaction of the immune system and the
reovirus and the use of the reovirus as a co-therapy with existing chemotherapeutics and radiation.
We still expect that our pre-clinical trial expenses and research collaborations in 2008 will
remain consistent with 2007.
Other Research and Development Expenses
| 2008 | 2007 | |||||||
| $ | $ | |||||||
R&D consulting fees |
27,408 | 91,776 | ||||||
R&D salaries and benefits |
478,118 | 372,389 | ||||||
Other R&D expenses |
74,400 | 87,981 | ||||||
Other research and development expenses |
579,926 | 552,146 | ||||||
During the first quarter of 2008, our R&D consulting fees were $27,408 compared to $91,776 for the
first quarter of 2007. In the first quarter of 2007, we incurred consulting activity associated
with our co-therapy clinical trial applications that was not incurred in the first quarter of 2008.
Our R&D salaries and benefits costs were $478,118 for the first quarter of 2008 compared to
$372,389 for the first quarter of 2007. The increase is a result of increases in salary levels for
2008 compared to 2007.
We still expect that our Other R&D expenses will remain consistent with 2007.
Operating Expenses
| 2008 | 2007 | |||||||
| $ | $ | |||||||
Public company related expenses |
759,970 | 581,876 | ||||||
Office expenses |
324,284 | 324,839 | ||||||
Operating expenses |
1,084,254 | 906,715 | ||||||
During the first quarter of 2008, our public company related expenses were $759,970 compared to
$581,876 for the first quarter of 2007. In the first quarter of 2008, we incurred an increase in
professional fees associated with the expansion of our corporate structure, an increase in our
investor relations activity, and an increase in compensation costs paid to our board of directors
compared to the first quarter of 2007.
During the first quarter of 2008, our office expenses were $324,284 compared to $324,839 for the
first quarter of 2007. Our office expense activity has remained consistent in the first quarter of
2008 compared to the first quarter of 2007.
Commitments
As at March 31, 2008, we are committed to payments totaling $2,497,000 during the remainder of 2008
for activities related to clinical trial activity, manufacturing 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:
| 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||
| March | Dec. | Sept. | June | March | Dec. | Sept. | June | |||||||||||||||||||||||||
Revenue |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Interest income |
180 | 265 | 319 | 359 | 268 | 286 | 320 | 335 | ||||||||||||||||||||||||
Net loss(3) |
3,324 | 4,085 | 3,764 | 3,680 | 4,113 | 4,890 | 3,425 | 2,988 | ||||||||||||||||||||||||
Basic and diluted loss per common
share(3) |
$ | 0.08 | $ | 0.13 | $ | 0.09 | $ | 0.09 | $ | 0.11 | $ | 0.13 | $ | 0.09 | $ | 0.08 | ||||||||||||||||
Total assets(1), (4) |
27,408 | 30,782 | 33,897 | 37,670 | 41,775 | 33,566 | 37,980 | 40,828 | ||||||||||||||||||||||||
Total cash(2), (4) |
21,963 | 25,214 | 28,191 | 31,533 | 35,681 | 27,614 | 31,495 | 34,501 | ||||||||||||||||||||||||
Total long-term debt(5) |
— | — | — | — | — | 150 | 150 | 150 | ||||||||||||||||||||||||
Cash dividends
declared(6) |
Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | ||||||||||||||||||||||||
| (1) | 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 2007. | |
| (2) | Included in total cash are cash and cash equivalents plus short-term investments. | |
| (3) | Included in net loss and loss per common share between March 2008 and April 2006 are quarterly stock based compensation expenses of $19,593, $396,278, $38,909, $82,573, $21,396, $109,670, $34,671, and $222,376, respectively. | |
| (4) | We issued 4,600,000 units for net cash proceeds of $12,063,394 during 2007 with each unit consisting of one common share and one half of one common share purchase warrant. (2006 — 284,000 common shares for cash proceeds of $241,400) | |
| (5) | The long-term debt recorded represents repayable loans from the Alberta Heritage Foundation. On January 1, 2007, in conjunction with the adoption of the CICA Handbook section 3855 “Financial Instruments”, this loan was recorded at fair value (see note 3 of the December 31, 2007 audited financial statements). | |
| (6) | We have not declared or paid any dividends since incorporation. |
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
As at March 31, 2008, we had cash and cash equivalents (including short-term investments) and
working capital positions of $21,962,626 and $19,457,103, respectively compared to $25,213,829 and
$22,732,987, respectively for December 31, 2007. The decrease in the first quarter of 2008
reflects the cash usage from our operating activities and purchase of intellectual property of
$2,991,234 and $257,304, respectively.
We desire to maintain adequate cash and short-term investment reserves to support our planned
activities which include our clinical trial program, product manufacturing, administrative costs,
and our intellectual property expansion and protection. In 2008, we expect to continue to enroll
patients in our various clinical trials and we also expect to continue with our collaborative
studies pursuing support for our clinical trial program. We will therefore need to ensure that we
have enough REOLYSIN® to supply our clinical trial and collaborative programs. We still
expect our average monthly cash usage to be $1,660,000 in 2008 and we believe our existing capital
resources are adequate to fund our current plans for research and development activities well into
2009. Factors that will affect our anticipated monthly burn rate include, but are not limited to,
the number of manufacturing runs 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 NCI’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 $257,304 on intellectual property in the first quarter of 2008 compared to $218,177 in the
first quarter of 2007. The change in intellectual property expenditures reflects the timing of
filing costs associated with our expanded patent base. As well, we have benefited from
fluctuations in the Canadian dollar as our patent costs are typically incurred in U.S. currency.
At the end of the first quarter of 2008, we had been issued over 170 patents including 26 U.S. and
eight Canadian patents as well as issuances in other jurisdictions. We also have over 180 patent
applications filed in the U.S., Canada and other jurisdictions.
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 $14,635,920 invested under this
policy and we are currently earning interest at an effective rate of 2.74% (2007 — 4.08%).
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Capital Disclosures
On January 1, 2008, the Company adopted the new recommendations of the Canadian Institute of
Chartered Accountants (“CICA”) for disclosure of the Company’s objectives, policies and processes
for managing capital (CICA Handbook Section 1535), as discussed further in Note 5 of our interim
consolidated financial statements.
Financial Instruments — Disclosures
On January 1, 2008, the Company adopted the new recommendations of the CICA for disclosures about
financial instruments, including disclosures about fair value and the credit, liquidity and market
risks associated with financial instruments (CICA Handbook Section 3862), as discussed further in
Notes 6 and 7 of our interim consolidated financial statements.
Financial Instruments — Presentation
On January 1, 2008, the Company adopted the new recommendations of the CICA for presentation of
financial instruments (CICA Handbook Section 3863). Adoption of this standard had no impact on the
Company’s financial instrument related presentation disclosures.
OTHER MD&A REQUIREMENTS
We have 41,180,748 common shares outstanding at April 30, 2008. If all of our warrants (4,220,000)
and options (3,870,493) were exercised we would have 49,271,241 common shares outstanding.
Additional
information relating to Oncolytics Biotech Inc. is available on SEDAR
at www.sedar.com.
Controls and Procedures
There were no changes in our internal controls over financial reporting during the quarter ended
March 31, 2008 that materially affected or are reasonably likely to materially affect, internal
controls over financial reporting.
Oncolytics Biotech Inc.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(unaudited)
As at,
| March 31, | December 31, | |||||||
| 2008 | 2007 | |||||||
| $ | $ | |||||||
ASSETS |
||||||||
Current |
||||||||
Cash and cash equivalents |
7,326,706 | 6,715,096 | ||||||
Short-term investments [note 7] |
14,635,920 | 18,498,733 | ||||||
Accounts receivable |
85,099 | 80,085 | ||||||
Prepaid expenses |
161,478 | 260,300 | ||||||
| 22,209,203 | 25,554,214 | |||||||
Property and equipment |
192,582 | 201,103 | ||||||
Intellectual property |
5,006,297 | 5,026,540 | ||||||
| 27,408,082 | 30,781,857 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current |
||||||||
Accounts payable and accrued liabilities |
2,752,100 | 2,821,227 | ||||||
Shareholders’ equity |
||||||||
Share capital |
||||||||
Authorized:
unlimited number of common shares Issued: 41,180,748 (December 31, 2007 — 41,180,748) |
92,759,665 | 92,759,665 | ||||||
Warrants |
5,346,260 | 5,346,260 | ||||||
Contributed surplus [note 3] |
10,396,555 | 10,376,962 | ||||||
Deficit [note 4] |
(83,846,498 | ) | (80,522,257 | ) | ||||
| 24,655,982 | 27,960,630 | |||||||
| 27,408,082 | 30,781,857 | |||||||
See accompanying notes
Oncolytics Biotech Inc.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(unaudited)
(unaudited)
| Three Month | Three Month | Cumulative | ||||||||||
| Period | Period | from inception | ||||||||||
| Ending | Ending | on April 2, | ||||||||||
| March 31, | March 31, | 1998 to March 31, | ||||||||||
| 2008 | 2007 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Revenue |
||||||||||||
Rights revenue |
— | — | 310,000 | |||||||||
Expenses |
||||||||||||
Research and development |
2,125,811 | 3,218,237 | 56,662,093 | |||||||||
Operating |
1,084,254 | 906,715 | 21,842,523 | |||||||||
Stock-based compensation |
19,593 | 21,396 | 4,724,398 | |||||||||
Foreign exchange loss (gain) |
9,262 | (5,233 | ) | 666,972 | ||||||||
Amortization — intellectual property |
254,469 | 230,992 | 5,253,730 | |||||||||
Amortization — property and equipment |
11,186 | 9,856 | 459,583 | |||||||||
| 3,504,575 | 4,381,963 | 89,609,299 | ||||||||||
Loss before the following: |
3,504,575 | 4,381,963 | 89,299,299 | |||||||||
Interest income |
(180,334 | ) | (268,732 | ) | (6,195,083 | ) | ||||||
Gain on sale of BCY LifeSciences Inc. |
— | — | (299,403 | ) | ||||||||
Loss on sale of Transition Therapeutics Inc. |
— | — | 2,156,685 | |||||||||
Loss before taxes |
3,324,241 | 4,113,231 | 84,961,498 | |||||||||
Future income tax recovery |
— | — | (1,115,000 | ) | ||||||||
Net loss and comprehensive loss for the period |
3,324,241 | 4,113,231 | 83,846,498 | |||||||||
Basic and diluted loss per share |
(0.08 | ) | (0.11 | ) | ||||||||
Weighted average number of shares (basic and
diluted) |
41,180,748 | 38,231,859 | ||||||||||
See accompanying notes
Oncolytics Biotech Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(unaudited)
| Three Month | Three Month | Cumulative | ||||||||||
| Period | Period | from inception | ||||||||||
| Ending | Ending | on April 2, | ||||||||||
| March 31, | March 31, | 1998 to March 31, | ||||||||||
| 2008 | 2007 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
OPERATING ACTIVITIES |
||||||||||||
Net loss for the period |
(3,324,241 | ) | (4,113,231 | ) | (83,846,498 | ) | ||||||
Deduct non-cash items
|
||||||||||||
Amortization — intellectual property |
254,469 | 230,992 | 5,253,730 | |||||||||
Amortization — property and equipment |
11,186 | 9,856 | 459,583 | |||||||||
Stock-based compensation |
19,593 | 21,396 | 4,724,398 | |||||||||
Other non-cash items [note 5] |
— | — | 1,383,537 | |||||||||
Net change in non-cash working capital [note 5] |
47,759 | 103,278 | 2,482,980 | |||||||||
Cash used in operating activities |
(2,991,234 | ) | (3,747,709 | ) | (69,542,270 | ) | ||||||
INVESTING ACTIVITIES |
||||||||||||
Intellectual property |
(257,304 | ) | (218,177 | ) | (6,609,082 | ) | ||||||
Property and equipment |
(2,665 | ) | (34,748 | ) | (718,234 | ) | ||||||
Purchase of short-term investments |
(137,187 | ) | (233,770 | ) | (49,206,150 | ) | ||||||
Redemption of short-term investments |
4,000,000 | — | 34,151,746 | |||||||||
Investment in BCY LifeSciences Inc. |
— | — | 464,602 | |||||||||
Investment in Transition Therapeutics Inc. |
— | — | 2,532,343 | |||||||||
Cash provided by (used) in investing activities |
3,602,844 | (486,695 | ) | (19,384,775 | ) | |||||||
FINANCING ACTIVITIES |
||||||||||||
Proceeds from exercise of warrants and stock
options |
— | — | 15,259,468 | |||||||||
Proceeds from private placements |
— | — | 38,137,385 | |||||||||
Proceeds from public offerings |
— | 12,068,172 | 42,856,898 | |||||||||
Cash provided by financing activities |
— | 12,068,172 | 96,253,751 | |||||||||
Net increase in cash and cash equivalents
during the period |
611,610 | 7,833,768 | 7,326,706 | |||||||||
Cash and cash equivalents, beginning of the
period |
6,715,096 | 3,491,511 | — | |||||||||
Cash and cash equivalents, end of the period |
7,326,706 | 11,325,279 | 7,326,706 | |||||||||
See accompanying notes
Oncolytics Biotech Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
1. INCORPORATION AND NATURE OF OPERATIONS
Oncolytics Biotech Inc. (the “Company” or “Oncolytics”) was incorporated on April 2, 1998 under the
Business Corporations Act (Alberta) as 779738 Alberta Ltd. On April 8, 1998, the Company changed
its name to Oncolytics Biotech Inc.
The Company is a development stage biopharmaceutical company that focuses on the discovery and
development of pharmaceutical products for the treatment of cancers that have not been successfully
treated with conventional therapeutics. The product being developed by the Company may represent a
novel treatment for Ras mediated cancers which can be used as an alternative to existing cytotoxic
or cytostatic therapies, as an adjuvant therapy to conventional chemotherapy, radiation therapy, or
surgical resections, or to treat certain cellular proliferative disorders for which no current
therapy exists.
2. ACCOUNTING POLICIES
These unaudited interim consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. The notes presented in these unaudited interim
consolidated financial statements include only significant events and transactions occurring since
the Company’s last fiscal year end and are not fully inclusive of all matters required to be
disclosed in the Company’s annual audited financial statements. Accordingly, these unaudited
interim consolidated financial statements should be read in conjunction with the Company’s most
recent annual audited financial statements. The information as at and for the year ended December 31, 2007 has been derived from the Company’s annual audited financial statements.
The accounting policies used in the preparation of these unaudited interim consolidated financial
statements conform to those used in the Company’s most recent annual financial statements except
for the following:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiary,
Oncolytics Biotech (Barbados) Inc. All intercompany transactions and balances have been
eliminated.
Adoption of New Accounting Policies
Capital Disclosures
On January 1, 2008, the Company adopted the new recommendations of the Canadian Institute of
Chartered Accountants (“CICA”) for disclosure of the Company’s objectives, policies and processes
for managing capital (CICA Handbook Section 1535), as discussed further in Note 6.
Financial Instruments — Disclosures
On January 1, 2008, the Company adopted the new recommendations of the CICA for disclosures about
financial instruments, including disclosures about fair value and the credit, liquidity and market
risks associated with financial instruments (CICA Handbook Section 3862), as discussed further in
Notes 7 and 8.
Oncolytics Biotech Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
Financial Instruments — Presentation
On January 1, 2008, the Company adopted the new recommendations of the CICA for presentation of
financial instruments (CICA Handbook Section 3863). Adoption of this standard had no impact on the
Company’s financial instrument related presentation disclosures.
3. CONTRIBUTED SURPLUS
| Amount | ||||
| $ | ||||
Balance, December 31, 2006 |
8,529,326 | |||
Stock-based compensation |
539,156 | |||
Expired warrants |
1,308,480 | |||
Balance, December 31, 2007 |
10,376,962 | |||
Stock-based compensation |
19,593 | |||
Balance, March 31, 2008 |
10,396,555 | |||
4. DEFICIT
| Amount | ||||
| $ | ||||
Balance, December 31, 2006 |
65,030,066 | |||
Adjustment — Alberta Heritage Foundation loan1 |
(150,000 | ) | ||
Net loss for the year |
15,642,191 | |||
Balance, December 31, 2007 |
80,522,257 | |||
Net loss, March 31, 2008 |
3,324,241 | |||
Balance, March 31, 2008 |
83,846,498 | |||
| 1. | On January 1, 2007, the Company adopted, without restatement, CICA Handbook Section 3855 “Financial Instruments — Recognition and Measurement” and Section 1530 “Other Comprehensive Income”. Pursuant to the transitional provisions of Section 3855, the Company classified its short-term investments as held-to-maturity fixed income securities and recorded its Alberta Heritage Foundation interest free loan at fair value. As a result, there were no adjustments made to short-term investments or other comprehensive income and there was a decrease in the Alberta Heritage Foundation loan of $150,000 with a corresponding decrease of $150,000 in the Company’s deficit. |
Oncolytics Biotech Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
5. ADDITIONAL CASH FLOW DISCLOSURE
Net Change in Non-Cash Working Capital
| Three Month | Three Month | Cumulative | ||||||||||
| Period | Period | from inception | ||||||||||
| Ended | Ended | on April 2, | ||||||||||
| March 31, | March 31, | 1998 to March 31, | ||||||||||
| 2008 | 2007 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Changes in: |
||||||||||||
Accounts receivable |
(5,014 | ) | 33,055 | (85,099 | ) | |||||||
Prepaid expenses |
98,822 | (143,417 | ) | (161,478 | ) | |||||||
Accounts payable and accrued liabilities |
(69,127 | ) | 232,940 | 2,752,100 | ||||||||
Net change in non-cash working capital |
24,681 | 122,578 | 2,505,523 | |||||||||
Portion related to investing activities |
23,078 | (19,300 | ) | (22,543 | ) | |||||||
Net change associated with operating activities |
47,759 | 103,278 | 2,482,980 | |||||||||
Other
Non-Cash Items
| Three Month | Three Month | Cumulative | ||||||||||
| Period | Period | from inception | ||||||||||
| Ended | Ended | on April 2, | ||||||||||
| March 31, | March 31, | 1998 to March 31, | ||||||||||
| 2008 | 2007 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Foreign exchange loss |
— | — | 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. |
— | — | (299,403 | ) | ||||||||
Cancellation of contingent payment
obligation settled in common shares |
— | — | 150,000 | |||||||||
Future income tax recovery |
— | — | (1,115,000 | ) | ||||||||
| — | — | 1,383,537 | ||||||||||
6. CAPITAL DISCLOSURES
The Company’s objective when managing capital is to maintain adequate cash resources to support
planned activities which include the clinical trial program, product manufacturing, administrative
costs and intellectual property expansion and protection. The Company includes shareholders’
equity, cash and short-term investments in the definition of capital. The Company does not have
any debt other than trade accounts payable and has potential contingent obligations relating to the
completion of its research and development of REOLYSIN®.
In managing capital, the Company estimates its future cash requirements by preparing a budget and a
multiyear plan annually for review and approval by the Company’s board of directors (the “Board”).
The budget establishes the approved activities for the upcoming year and estimates the costs
associated with
Oncolytics Biotech Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
these activities. The multiyear plan estimates future activity along with the
potential cash requirements and is based on the Company’s assessment of its current clinical trial
progress along with the expected results from the coming year’s activity. Budget to actual
variances are prepared monthly and reviewed by the Company’s management and are presented quarterly
to the Board.
Historically, funding for the Company’s plan is primarily managed through the issuance of
additional common shares and common share purchase warrants that upon exercise are converted to
common shares. Management regularly monitors the capital markets attempting to balance the timing
of issuing additional equity with the Company’s progress through its clinical trial program,
general market conditions, and the availability of capital. There are no assurances that funds
will be made available to the Company when required.
The Company is not subject to externally imposed capital requirements.
7. SHORT-TERM INVESTMENTS
Short-term investments, consisting of bankers’ acceptances, are liquid investments that are readily
convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
The objectives for holding short-term investments are to invest the Company’s excess cash resources
in investment vehicles that provide a better rate of return compared to the Company’s interest
bearing bank account with limited risk to the principal invested. The Company also intends to
match the maturities of these short-term investments with the cash requirements of the Company’s
activities. The Company does not hold any asset backed commercial paper.
| Effective | ||||||||||||||||||||
| Original | Accrued | Carrying | Fair | Interest | ||||||||||||||||
| Cost | Interest | Value | Value | Rate | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
March 31, 2008 |
||||||||||||||||||||
Short-term investments |
14,576,744 | 59,176 | 14,635,920 | 14,539,205 | 2.74 | % | ||||||||||||||
December 31, 2007 |
||||||||||||||||||||
Short-term investments |
18,230,340 | 268,393 | 18,498,733 | 18,499,173 | 4.26 | % | ||||||||||||||
Fair value is determined by using published market prices provided by the Company’s investment
advisor.
8. FINANCIAL INSTRUMENTS
Financial instruments of the Company consist of cash and cash equivalents, short-term investments,
accounts receivable, and accounts payable. As at March 31, 2008, there are no significant
differences between the carrying values of these amounts and their estimated market values.
Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial
instrument fails to meet its contractual obligations. The Company is exposed to credit risk on its
cash and cash equivalents and short-term investments in the event of non-performance by
counterparties, but does not anticipate such non-performance. The maximum exposure to credit risk
of the Company at the end of the period is the carrying value of its cash and cash equivalents and
short-term investments.
Oncolytics Biotech Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008 (unaudited)
The Company mitigates its exposure to credit risk by maintaining its primary operating and
investment bank accounts with Schedule I banks in Canada. For its foreign domiciled bank accounts,
the Company uses referrals or recommendations from its Canadian banks to open foreign bank accounts
and these accounts are used solely for the purpose of settling accounts payable or payroll.
The Company also mitigates its exposure to credit risk by restricting its portfolio to investment
grade securities with short term maturities and by monitoring the credit risk and credit standing
of counterparties.
Interest rate risk
Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk through its cash and cash equivalents and its portfolio of short-term investments. The Company mitigates this risk through its investment policy that only allows investment of its excess cash resources in investment grade vehicles while matching maturities with the Company’s operational requirements.
Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk through its cash and cash equivalents and its portfolio of short-term investments. The Company mitigates this risk through its investment policy that only allows investment of its excess cash resources in investment grade vehicles while matching maturities with the Company’s operational requirements.
Fluctuations in market rates of interest do not have a significant impact on the Company’s results
of operations due to the short term to maturity of the investments held.
Currency risk
Currency risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to currency risk from the purchase of goods and services primarily in the U.S. and the U.K. The Company mitigates its foreign exchange risk through the purchase of foreign currencies in sufficient amounts to settle its foreign accounts payable.
Currency risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to currency risk from the purchase of goods and services primarily in the U.S. and the U.K. The Company mitigates its foreign exchange risk through the purchase of foreign currencies in sufficient amounts to settle its foreign accounts payable.
Balances in foreign currencies at March 31, 2008 are as follows:
| U.S. dollars | British pounds | |||||||
| $ | £ | |||||||
Cash and cash equivalents |
441,078 | 181,214 | ||||||
Accounts payable |
(440,988 | ) | (35,985 | ) | ||||
| 90 | 145,229 | |||||||
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure as outlined in note 6 to the unaudited financial statements.
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure as outlined in note 6 to the unaudited financial statements.
Accounts payable are all due within the current operating period.
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
Mary Ann Dillahunty, JD, MBA
Vice President, Intellectual Property
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
Mary Ann Dillahunty, JD, MBA
Vice President, Intellectual Property
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
Corporate Director
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
Corporate Director
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
Suite 210,1167 Kensington Crescent NW, Calgary, AB T2N 1X7
Phone: (403) 670.7377 Fax: (403) 283.0858
www.oncolyticsbiotech.com