Edgar Filing: ONCOLYTICS BIOTECH INC

Form 6-K

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 August 1, 2003

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 -

TABLE OF CONTENTS


Signatures
Press Release

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 August 1, 2003	By:	/s/ Douglas A. Ball Douglas A. Ball Chief Financial Officer

210, 1167 Kensington Crescent NW
Calgary, Alberta
Canada T2N 1X7

FOR IMMEDIATE RELEASE

Oncolytics Biotech Announces 2003 Second Quarter Results

CALGARY, Alberta, August 1, 2003 — Oncolytics Biotech Inc. (TSX: ONC, NASDAQ: ONCY) (“Oncolytics”) today announced its financial results for the three and six-month periods ending June 30, 2003.

Second Quarter Highlights

	•		Increased working capital by $8.7 million through the completion of a private placement, the sale of a non-core asset and exercise of warrants.
	•		Added 7th U.S. patent, covering co-administration of the virus with immune suppressing agents such as cyclosporine, and use of the virus in combination with conventional therapeutic agents and treatments such as surgery, chemotherapy and radiation therapy.
	•		Added 8th U.S. patent, covering use of combinations of reovirus strains for the treatment of Ras-mediated tumours.
	•		Received approval from Health Canada for amendments to the Phase I/II recurrent malignant glioblastoma clinical trial, allowing the trial to resume enrolling patients.

“In the second quarter, the Company strengthened its working cash position, as well as adding two U.S. patents that we consider important,” said Dr. Brad Thompson, President and CEO of Oncolytics. “We believe that the Company is now well positioned to continue its development of REOLYSIN®.”

FINANCIAL REVIEW

CAPITAL EXPENDITURES
The Company continues to expand and protect its intellectual property. Oncolytics has received three U.S. patents during the first half of 2003. In the second quarter of 2003 the Company received its seventh and eighth U.S. patents covering the use of combinations of reovirus strains for the treatment of Ras-mediated tumours and co-administration of reovirus with immune suppressing agents such as Cyclosporin. Total patent costs incurred in 2003 were $595,147 compared to $346,186 in 2002.

INVESTMENTS
Transition Therapeutics Inc. (“TTH”)
In the second quarter of 2003, the Company took advantage of an opportunity to monetize its investment in TTH. On June 6, 2003, Oncolytics sold all of its 6.89 million common shares in TTH for net cash proceeds of $2.55 million. The sale of TTH has provided the Company with additional operating capital that will allow Oncolytics to continue its development of REOLYSIN®. As a result of the sale, an accounting loss of $2.2 million was recorded ($0.10 per share).

FINANCING ACTIVITIES
On June 19, 2003 the Company closed a private placement raising net proceeds of $5.8 million. The Company issued 2,120,000 units for $3.00 per unit. Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase an additional common share for $4.00 per share until December 19, 2004.

RESULTS OF OPERATIONS (For the three month period ended June 30, 2003)
Research and Development Expenses (“R&D”)
During the second quarter of 2003, the Company incurred R&D expenses of $848,721 compared to $753,200 in the second quarter of 2002. The increase in R&D expenses relates to costs associated with the production of REOLYSIN® as the Company continues activities in support of its commercial manufacturing process and prepares for a systemic clinical trial. As a result, the Company continues to incur costs associated with the production, quality and stability testing of REOLYSIN®. The Company also continues to study the toxicology of REOLYSIN® as it prepares to expand its clinical trial program. Pre-clinical toxicology studies were performed focusing on the systemic delivery of REOLYSIN® in the second quarter of 2003. Finally, the Company continues to advance its malignant glioma Phase I/II trial. On May 6, 2003 the malignant glioma trial was given approval to re-commence from Health Canada after protocol amendments were submitted following a planned interim safety assessment of the study in December of 2002.

Operating Expenses
During the second quarter of 2003, the Company incurred operating expenses of $826,894 compared to $601,495 in the second quarter of 2002. Operating expenses for the second quarter of 2003 increased due to additions to Oncolytics’ staff, increased professional fees and filing costs associated with public company filing requirements, an increase in liability insurance premiums and non-cash compensation associated with stock based compensation paid to third parties.

Loss on Sale of Investment in TTH
As a result of the sale of the Company’s ownership in TTH a loss of $2,156,685 was recorded. The loss represents the difference of the cash proceeds received on the sale of its TTH shares and the cost value ascribed to the investment when it was acquired through a share exchange in 2002.

About Oncolytics Biotech Inc.

Oncolytics is a Calgary-based biotechnology company focused on the development of REOLYSIN®, its proprietary formulation of the human reovirus, as a potential cancer therapeutic. Oncolytics’ researchers have demonstrated that the reovirus is able to selectively kill human cancer cells in vitro that are derived from many types of cancer, including breast, prostate, pancreatic and brain tumours, and have also demonstrated successful cancer treatment results in a number of animal models. Phase I clinical trial results have indicated that REOLYSIN® was well tolerated and that the reovirus demonstrated activity in tumours injected with REOLYSIN®.

This news release contains forward looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements, including the Company’s belief as to the value of the additional patents; the Company’s expectations related to the applications of the patented technology, the ability of the technology to strengthen the core technology and the design, timing and success of planned clinical trial programs and other statements related to anticipated developments in the Company’s business and technologies, all of which involve known and unknown risks and uncertainties that could cause the Company’s actual results to differ materially from those in the forward looking statements. Such risks and uncertainties include, among others, the efficacy of REOLYSIN® as a cancer treatment, the success and timely completion of clinical studies and trials, uncertainties related to the research and development of pharmaceuticals, uncertainties related to the regulatory process and general changes to the economic environment. Investors should consult the Company’s quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward looking statements. Investors are cautioned against placing undue reliance on forward looking statements. The Company does not undertake to update these forward looking statements.

FOR FURTHER INFORMATION PLEASE CONTACT:


*For Canada:* Oncolytics Biotech Inc. Doug Ball, CA 210, 1167 Kensington Cr NW Calgary, Alberta T2N 1X7 Tel: 403.670.7377 Fax: 403.283.0858 info@oncolyticsbiotech.com		*For Canada:* The Equicom Group Inc. Joanna Longo 20 Toronto Street Toronto, Ontario M5C 2B8 Tel: 416.815.0700 ext. 233 Fax: 416.815.0080 jlongo@equicomgroup.com		*For United States:* The Investor Relations Group Gino De Jesus or Dian Griesel, Ph.D. 11 Stone Street, 3rd Floor New York, NY 10004 Tel: 212.825.3210 Fax: 212.825.3229 theproteam@aol.com

ONCOLYTICS BIOTECH INC.
BALANCE SHEETS


		Unaudited			Audited
		June 30, 2003			December 31, 2002
		$			$

ASSETS
Current assets:
	Cash		13,486,096			8,319,244
	Accounts receivable		58,844			48,536
	Prepaid expenses		150,413			77,158

			13,695,353			8,444,938
Capital assets			4,822,106			4,516,813
Investments			297,123			5,006,503

			18,814,582			17,968,254

LIABILITIES
Accounts payable and accrued liabilities			662,005			1,260,239

Alberta Heritage Foundation Loan			150,000			150,000

Shareholders’ equity:
	Share capital		36,707,418			30,305,858
	Contributed surplus		2,815,324			2,702,718
	Deficit		(21,520,165	)		(16,450,561	)

			18,002,577			16,558,015

			18,814,582			17,968,254

Statements of Loss and Deficit
For the periods ended June 30, 2003
Unaudited


													Cumulative
		6 months ended June 30					3 months ended June 30						from
		2003		2002				2003		2002			inception on
		$		$				$		$			April 2, 1998

Revenue
Rights revenue			—		—				—		—			310,000
Interest income			84,526		111,617				41,356		54,437			1,857,204

			84,526		111,617				41,356		54,437			2,167,204

Expenses
	Research and development		1,328,356		1,574,718				848,721		753,200			14,905,237
	Operating		1,348,919		1,140,973				826,894		601,495			6,155,992
	Amortization		318,940		272,640				163,716		141,027			1,565,506

			2,996,215		2,988,331				1,839,331		1,495,722			22,626,735

Loss before the following:			2,911,689		2,876,714				1,797,975		1,441,285			20,459,531
	Loss on sale of investment in Transition Therapeutics Inc.		2,156,685		—				2,156,685		—			2,156,685

Loss before income taxes			5,068,374		2,876,714				3,954,660		1,441,285			22,616,216
	Capital tax		1,230		6,514				630		6,218			18,949
	Future income tax recovery		—		(323,809	)			—		(161,904	)		(1,115,000	)

Net loss for the period			5,069,604		2,559,419				3,955,290		1,285,599			21,520,165
Deficit, beginning of the period			16,450,561		10,359,075				17,564,875		11,632,895			—

Deficit, end of the period			21,520,165		12,918,494				21,520,165		12,918,494			21,520,165

Loss from operations per share			0.13		0.15				0.08		0.07

Loss on sale of Transition Therapeutics Inc. per share			0.10		—				0.10		—

Basic and diluted loss per common share			0.23		0.13				0.18		0.07

Weighted average number of shares			22,396,218		19,360,577				2,569,011		19,527,902

Statements of Cash Flows
For the periods ended June 30, 2003
Unaudited


															Cumulative
		6 months ended June 30						3 months ended June 30							from
		2003			2002				2003			2002			inception on
		$			$				$			$			April 2, 1998

OPERATING ACTIVITIES
Net Loss for the period			(5,069,604	)		(2,559,419	)			(3,955,290	)		(1,285,599	)		(21,520,165	)
Deduct non-cash items Loss on sale of investment			2,156,685			—				2,156,685			—			2,156,685
	Amortization		318,940			272,640				163,716			141,028			1,565,506
	Future income tax recovery		—			(323,809	)			—			(161,904	)		(1,115,000	)
	Non-cash compensation		112,606			—				112,135			—			145,324
	Net change in non-cash working capital		(669,452	)		(1,748,470	)			(412,316	)		(407,077	)		395,918

			(3,150,825	)		(4,359,058	)			(1,935,070	)		(1,713,552	)		(18,371,732	)

INVESTING ACTIVITIES
Intellectual property expenditures			(595,147	)		(346,186	)			(135,487	)		(197,056	)		(2,214,104	)
Equipment and other			(41,431	)		(176,912	)			(40,809	)		(18,587	)		(501,674	)
Proceeds from sale of Transition Therapeutics Inc.			2,552,695			—				2,552,695			—			2,552,695
Investment in Transition Therapeutics Inc.			—			—				—			—			(20,352	)
Investment in BCY Lifesciences Inc.			—			(125,000	)			—			(125,000	)		(127,123	)

			1,916,117			(648,098	)			2,376,399			(340,643	)		(310,558	)

FINANCING ACTIVITIES
Alberta Heritage Loan			—			—				—			—			150,000
Proceeds from exercise of warrants and options			339,975			—				339,975			—			3,100,078
Proceeds from private placement			6,061,585			—				5,817,414			—			12,735,105
Proceeds from public offering			—			—				—			—			16,183,203

			6,401,560			—				6,157,389			—			32,168,386

Increase (decrease) in cash during period			5,166,852			(5,007,156	)			6,598,718			(2,054,195	)		13,486,096
Cash, beginning of the period			8,319,244			14,970,756				6,887,378			12,017,795			—

Cash, end of the period			13,486,096			9,963,600				13,486,096			9,963,600			13,486,096

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