CALGARY, Oct. 30 /PRNewswire-FirstCall/ – Oncolytics Biotech Inc.
(“Oncolytics”) (TSX:ONC, NASDAQ:ONCY) today announced its financial results
and highlights for the three and nine-month periods ended September 30, 2007.
Third Quarter Highlights - Announced positive interim results from a U.K. Phase Ia/1b combination REOLYSIN(R) and radiation trial for patients with advanced cancers - including partial and remote responses in patients with a variety of advanced cancers; - Commenced patient enrolment in a multi-centre, combination REOLYSIN(R) and docetaxel (Taxotere(R)) systemic administration trial in the U.K.; - In October, received approval from the U.K. regulatory authorities to begin a combination REOLYSIN(R) and cyclophosphamide trial for patients with advanced cancers; - Secured two additional U.S. patents, for a total of more than 150 issued patents worldwide; and, - Presented preclinical work at the National Cancer Research Institute Conference in Birmingham, U.K. demonstrating for the first time how reovirus-infected melanoma cells stimulate dendritic cells to prime the immune system against cancer cells.
“With positive results being reported from our clinical trial program in
the U.K. and the U.S., seven trials actively enrolling, an additional
combination trial approved to begin and an expanding intellectual property
portfolio supporting our technology, Oncolytics is looking forward to making
substantial progress through the balance of 2007 and 2008,” said Dr. Brad
Thompson, President and CEO of Oncolytics.
Oncolytics Biotech Inc. BALANCE SHEETS (unaudited) As at, September 30, December 31, 2007 2006 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 3,326,374 3,491,511 Short-term investments 24,865,090 24,122,237 Accounts receivable 36,637 84,003 Prepaid expenses 413,811 638,540 ------------------------------------------------------------------------- 28,641,912 28,336,291 Property and equipment 169,226 149,596 Intellectual property 5,085,755 5,079,805 ------------------------------------------------------------------------- 33,896,893 33,565,692 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 2,298,064 2,616,421 ------------------------------------------------------------------------- Alberta Heritage Foundation loan - 150,000 ------------------------------------------------------------------------- Shareholders' equity Share capital Authorized: unlimited number of common shares Issued: 41,120,748 (December 31, 2006 - 36,520,748) 92,708,665 83,083,271 Warrants 6,654,740 4,216,740 Contributed surplus 8,672,204 8,529,326 Deficit (76,436,780) (65,030,066) ------------------------------------------------------------------------- 31,598,829 30,799,271 ------------------------------------------------------------------------- 33,896,893 33,565,692 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Oncolytics Biotech Inc. STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (unaudited) Cumulative from Nine Month Nine Month Three Month Three Month inception Period Period Period Period on April 2, Ending Ending Ending Ending 1998 to September September September September September 30, 2007 30, 2006 30, 2007 30, 2006 30, 2007 $ $ $ $ $ ------------------------------------------------------------------------- Revenue Rights revenue - - - - 310,000 ------------------------------------------------------------------------- - - - - 310,000 ------------------------------------------------------------------------- Expenses Research and development 8,815,255 6,582,687 2,890,644 2,705,746 52,036,449 Operating 2,798,630 2,789,647 880,158 766,618 19,569,211 Stock-based compensation 142,878 293,880 38,909 34,671 4,308,527 Foreign exchange loss/(gain) 2,829 (2,703) 18,917 5,129 651,677 Amortization - intellectual property 713,887 647,893 244,299 220,774 4,750,721 Amortization - property and equipment 30,061 43,379 10,197 12,685 437,744 ------------------------------------------------------------------------- 12,503,540 10,354,783 4,083,124 3,745,623 81,754,329 ------------------------------------------------------------------------- Loss before the following: 12,503,540 10,354,783 4,083,124 3,745,623 81,444,329 Interest income (946,826) (947,364) (319,223) (320,454) (5,749,831) Gain on sale of BCY LifeSciences Inc. - - - - (299,403) Loss on sale of Transition Therapeutics Inc. - - - - 2,156,685 ------------------------------------------------------------------------- Loss before taxes 11,556,714 9,407,419 3,763,901 3,425,169 77,551,780 Future income tax recovery - - - - (1,115,000) ------------------------------------------------------------------------- Net loss and comprehensive loss for the period 11,556,714 9,407,419 3,763,901 3,425,169 76,436,780 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share 0.29 0.26 0.09 0.09 ------------------------------------------------------------- ------------------------------------------------------------- Weighted average number of shares (basic and diluted) 40,181,777 36,317,687 41,120,748 36,368,270 ------------------------------------------------------------- ------------------------------------------------------------- Oncolytics Biotech Inc. STATEMENTS OF CASH FLOWS (unaudited) Cumulative from Nine Month Nine Month Three Month Three Month inception Period Period Period Period on April 2, Ending Ending Ending Ending 1998 to September September September September September 30, 2007 30, 2006 30, 2007 30, 2006 30, 2007 $ $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (11,556,714) (9,407,419) (3,763,901) (3,425,169) (76,436,780) Add/(deduct) non-cash items Amortization - intell- ectual property 713,887 647,893 244,299 220,774 4,750,721 Amortization - property and equipment 30,061 43,379 10,197 12,685 437,744 Stock-based compen- sation 142,878 293,880 38,909 34,671 4,308,527 Other non-cash items - - - - 1,383,537 Net changes in non-cash working capital (179,975) (34,485) 239,121 261,875 1,724,946 ------------------------------------------------------------------------- (10,849,863) (8,456,752) (3,231,375) (2,895,164) (63,831,305) ------------------------------------------------------------------------- INVESTING ACTIVITIES Intellectual property (586,124) (552,319) (99,066) (187,283) (6,085,404) Property and equipment (49,691) (29,342) (11,386) (8,294) (673,039) Purchase of short-term investments (742,853) (801,358) (255,688) (261,480) (48,862,320) Redemption of short-term investments - 10,158,000 - - 23,578,746 Investment in BCY LifeSciences Inc. - - - - 464,602 Investment in Transition Therapeutics Inc. - - - - 2,532,343 ------------------------------------------------------------------------- (1,378,668) 8,774,981 (366,140) (457,057) (29,045,072) ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from exercise of warrants and stock options - 127,500 - 85,000 15,208,468 Proceeds from private placements - - - - 38,137,385 Proceeds from public offerings 12,063,394 - - - 42,856,898 ------------------------------------------------------------------------- 12,063,394 127,500 - 85,000 96,202,751 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents during the period (165,137) 445,729 (3,597,515) (3,267,221) 3,326,374 Cash and cash equivalents, beginning of the period 3,491,511 3,511,357 6,923,889 7,224,307 - ------------------------------------------------------------------------- Cash and cash equivalents, end of the period 3,326,374 3,957,086 3,326,374 3,957,086 3,326,374 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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, 2007 and 2006, 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, 2006.
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(R) as a cancer therapeutic and our expectations as to the success of
our research and development and manufacturing programs in 2007 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(R) as a
cancer treatment, the success and timely completion of clinical studies and
trials, our ability to successfully commercialize REOLYSIN(R), 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(R), 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.
See also "RISK FACTORS AFFECTING FUTURE PERFORMANCE" in our 2006 MD&A. REOLYSIN(R) Development Update for the Third Quarter of 2007
We continue to develop our lead product REOLYSIN(R) as a possible cancer
therapy. Our goal each year is to advance REOLYSIN(R) 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(R) supply, and our intellectual property.
Clinical Trial Program
Our clinical trial program includes eight clinical trials of which seven
are being conducted by us and one is being sponsored by the U.S. National
Cancer Institute (“NCI”). In the third quarter of 2007, we announced positive
interim results from our U.K. Phase Ia/Ib combination REOLYSIN(R) and
radiation clinical trial. As well, we commenced patient enrollment in our U.K.
combination REOLYSIN(R)/docetaxel clinical trial, increasing our actively
enrolling clinical trials to seven.
Clinical Trial Results
In the third quarter of 2007, we announced positive interim results from
our U.K. Phase Ia/Ib combination REOLYSIN(R) and radiation clinical trial for
patients with advanced or metastatic cancers. As of September 28, 2007, 22
patients had been treated with 15 having completed the study. Five patients
withdrew from the study, and two patients are still on study.
A total of 11 patients in the Ia portion of the trial have received two
intratumoural treatments of REOLYSIN(R) at dosages of 1×10(8), 1×10(9), or
1×10(10) TCID(50) with a constant localized radiation dose of 20 Gy given in
five fractions. Of these 11 patients, three patients (oesophageal, squamous
skin carcinoma and squamous cell scalp) experienced significant partial
responses.
One month following treatment, the oesophageal patient experienced a 28.5%
reduction in the target tumour, with stable disease noted in four, non-treated
tumours. At two and three months, the target tumour had shrunk 64%, with
stable disease continuing in the four non-treated tumours, including a 15%
volume reduction in non-treated mediastinal disease that was maintained for
more than six months. The squamous skin cancer patient experienced a 50%
reduction in the target tumour, as well as stable disease in two, non-treated
tumours at one, two and three months post treatment. The squamous cell scalp
patient experienced stable disease in the target tumour for two months which
then became a partial response at three months. This patient also experienced
stable disease in one non-treated tumour measured at three months
post-treatment.
Patients in the Ib portion received either two, four or six intratumoural
doses of REOLYSIN(R) at 1×10(10) TCID(50) with a constant localized radiation
dose of 36 Gy given in 12 fractions. Of the six patients who have completed
the study to date, three patients (colorectal, melanoma and lung cancer)
experienced tumour regression in the target tumour, as well as stable disease
in nontreated tumours.
The colorectal patient experienced a partial response with a more than 50%
regression in the target tumour as well as stable disease in four, non-treated
tumours measured at one month following treatment. A melanoma patient
experienced minor regression in the target tumour as well as stable disease in
two, non-treated tumours at one and two months following treatment. A lung
cancer patient experienced minor regression in the target tumour, as well as
stable disease in three, non-treated tumours at two months following
treatment.
The treatment has been well tolerated, with mostly Grade 1 or 2 toxicities
noted including fatigue, lymphopenia, fever, and neutropenia. Grade 3
toxicities including cellulitis, dysphasia and diarrhoea were related to
disease progression and not to the combination treatment. Viral replication
was unaffected by cellular irradiation.
The primary objective of the Phase Ia/Ib trial was to determine the
maximum tolerated dose (“MTD”), dose limiting toxicity (“DLT”), and safety
profile of REOLYSIN(R) 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 late stage advanced or metastatic solid tumours that are refractory
(“have not responded”) to standard therapy or for which no curative standard
therapy exists.
Clinical Trials – Actively Enrolling
At the end of the third quarter of 2007, we were actively enrolling in
seven clinical trials. In the third quarter of 2007, we commenced enrollment
in the following study:
U.K. Combination REOLYSIN(R) Docetaxel Clinical Trial
We commenced patient enrolment in our U.K. clinical trial to evaluate the
anti-tumour effects of systemic administration of REOLYSIN(R) in combination
with docetaxel (Taxotere(R)) in patients with advanced cancers including
bladder, prostate, lung and upper gastro-intestinal. In preclinical studies,
the combination of REOLYSIN(R) and various taxanes including docetaxel has
been shown to be synergistic against a variety of cancer cell lines.
The trial has two components. The first is an open-label, dose-escalating,
non-randomized study of REOLYSIN(R) given intravenously with docetaxel every
three weeks. A standard dosage of docetaxel will be delivered with escalating
dosages of REOLYSIN(R) intravenously. A maximum of three cohorts will be
enrolled in the REOLYSIN(R) dose escalation portion. The second component of
the trial will immediately follow and will include the enrolment of a further
12 patients at the maximum dosage of REOLYSIN(R) in combination with a
standard dosage of docetaxel.
Eligible patients include those who have been diagnosed with advanced or
metastatic solid tumours such as bladder, prostate, lung or upper
gastro-intestinal cancers that are refractory to standard therapy or for which
no curative standard therapy exists. The primary objective of the trial is to
determine the MTD, DLT, recommended dose and dosing schedule and safety
profile of REOLYSIN(R) when administered in combination with docetaxel.
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.
Pre-Clinical Trial and Collaborative Program
In the third quarter of 2007, we announced that a poster presentation
entitled “Reovirus Infection of Human Melanoma Cells Supports Priming of
Anti-Tumour Cytotoxic T Cell Immunity” was presented by Dr. Robin Prestwich of
CR-UK Clinical Centre, Leeds Institute of Molecular Medicine, University of
Leeds, U.K. at the National Cancer Research Institute Cancer Conference in
Birmingham, U.K.
In this study, the investigators infected melanoma cell lines with
reovirus. The reovirus-infected cell lines stimulated the maturation of
dendritic cells, which in turn educated cancer-killing T cells to attack and
kill the melanoma cells.
Manufacturing and Process Development
We continued to have REOLYSIN(R) manufactured in order to supply our
current and future clinical trial program. In the third quarter of 2007, our
manufacturing activity was focused on the completion of the vial filling and
packaging of the production runs that were completed earlier in 2007. Also in
the third quarter of 2007, we continued process development that examined the
scale up of our manufacturing process increasing the batch size from our
present GMP scale of 20-litres to 40-litres and then to 100-litres.
Intellectual Property
In the third quarter of 2007, two U.S. patents were issued. At the end of
the third quarter of 2007, we had been issued over 150 patents including 23
U.S. and six 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 2007 that our monthly cash usage would be
approximately $1,400,000 for 2007. Our cash usage for the nine months ending
September 30, 2007 was $10,849,863 from operating activities and $635,815 for
the purchases of intellectual property and capital assets which is in line
with our estimate. Our net loss for the nine month period ending September 30,
2007 was $11,556,714.
Cash Resources
We exited the third quarter of 2007 with cash resources totaling
$28,191,464 (see “Liquidity and Capital Resources”).
Expected REOLYSIN(R) Development for the Remainder of 2007
We plan to continue to enroll patients in our seven clinical trials and
expect to add an additional clinical co-therapy trial. We believe that the NCI
sponsored melanoma clinical trial will receive approval to commence in 2007.
We believe we will complete enrollment in our U.K. Phase Ia/Ib clinical trial
by the end of 2007 and complete enrollment in our Phase II combination
REOLYSIN(R)/radiation and chemotherapy co-therapy studies in 2008. Also, our
process development activity will focus on scale up studies and the
examination of a lyophilization process for REOLYSIN(R).
Based on our expected activity in 2007, we continue to estimate our
average monthly cash usage to be $1,400,000 per month (see “Liquidity and
Capital Resources”).
Recent 2007 Progress
On October 23, 2007, we announced receipt of a letter of approval to
commence our clinical trial using intravenous administration of REOLYSIN(R) in
combination with cyclophosphamide, a chemotherapeutic agent as well as immune
modulator, in patients with advanced cancers.
The trial is an open-label, dose-escalating, non-randomized trial of
REOLYSIN(R) given intravenously with escalating doses of cyclophosphamide. A
standard dose of REOLYSIN(R) is administered intravenously over five
consecutive days, while an intravenous dose of cyclophosphamide is
administered three days before REOLYSIN(R) treatment and continues through the
course of the treatment cycle. The total number of patients studied will
depend on the number of dose levels tested, but it is anticipated to be
approximately 30 patients.
Eligible patients include those who have been diagnosed with advanced or
metastatic solid tumours including pancreatic, lung and ovarian cancers that
are refractory to standard therapy or for which no curative standard therapy
exists. The primary objectives of the trial include determining the Minimum
Effective Immunomodulatory Dose of cyclophosphamide to obtain successful
immune modulation. Secondary objectives include the safety profile of the
combination and gathering any evidence of anti-tumour activity.
THIRD QUARTER RESULTS OF OPERATIONS
(for the three months ended September 30, 2007 and 2006)
Net loss for the three month period ending September 30, 2007 was
$3,763,901 compared to $3,425,169 for the three month period ending September
30, 2006.
Research and Development Expenses ("R&D") 2007 2006 $ $ ------------------------------------------------------------------------- Manufacturing and related process development expenses 879,937 1,259,716 Clinical trial expenses 1,278,175 688,435 Pre-clinical trial and research collaboration expenses 293,785 301,165 Other R&D expenses 438,747 456,430 ------------------------------------------------------------------------- Research and development expenses 2,890,644 2,705,746 ------------------------------------------------------------------------- -------------------------------------------------------------------------
For the third quarter of 2007, R&D increased to $2,890,644 compared to
$2,705,746 for the third quarter of 2006. The increase in R&D was due to the
following:
Manufacturing & Related Process Development ("M&P") 2007 2006 $ $ ------------------------------------------------------------------------- Product manufacturing expenses 610,842 896,776 Technology transfer expenses - 184,761 Process development expenses 269,095 178,179 ------------------------------------------------------------------------- Manufacturing and related process development expenses 879,937 1,259,716 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the third quarter of 2007, our M&P expenses decreased to $879,937
compared to $1,259,716 for the third quarter of 2006. In the third quarter of
2007, we continued to fill, test, and package the REOLYSIN(R) that was
produced earlier in the year. During the third quarter of 2006, we commenced a
number of cGMP production runs using our improved manufacturing process. The
technology transfer of our improved process was successfully completed at the
beginning of the third quarter of 2006.
Our process development studies in the third quarter of 2007 focused on
increasing the scale of our production runs from batch sizes of 20 litres to
40 and then 100 litres. In the third quarter of 2006, we completed process
development studies that were successful in improving virus yields.
Clinical Trial Program 2007 2006 $ $ ------------------------------------------------------------------------- Direct clinical trial expenses 1,201,557 639,719 Other clinical trial expenses 76,618 48,716 ------------------------------------------------------------------------- Clinical trial expenses 1,278,175 688,435 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the third quarter of 2007, our direct clinical trial expenses
increased to $1,201,557 compared to $639,719 for the third quarter of 2006. In
the third quarter of 2007, we incurred direct clinical trial expenses in our
seven actively enrolling trials compared to only four enrolling trials in the
third quarter of 2006.
Pre-Clinical Trial Expenses and Research Collaborations 2007 2006 $ $ ------------------------------------------------------------------------- Research collaboration expenses 293,785 252,460 Pre-clinical trial expenses - 48,705 ------------------------------------------------------------------------- Pre-clinical trial expenses and research collaborations 293,785 301,165 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the third quarter of 2007, our research collaboration expenses were
$293,785 compared to $252,460 for the third quarter of 2006. 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 existing
chemotherapeutics, and to investigate new uses of the reovirus as a
therapeutic.
Other Research and Development Expenses 2007 2006 $ $ ------------------------------------------------------------------------- R&D consulting fees 38,152 70,323 R&D salaries and benefits 342,155 299,224 Other R&D expenses 58,440 86,883 ------------------------------------------------------------------------- Other research and development expenses 438,747 456,430 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Our R&D salaries and benefits costs were $342,155 in the third quarter of
2007 compared to $299,224 in the third quarter of 2006. The increase is a
result of increases in salary and staff levels along with the addition of our
Vice President of Intellectual Property in 2007.
Operating Expenses 2007 2006 $ $ ------------------------------------------------------------------------- Public company related expenses 635,076 507,828 Office expenses 245,082 258,790 ------------------------------------------------------------------------- Operating expenses 880,158 766,618 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the third quarter of 2007, our public company related expenses were
$635,076 compared to $507,828 for the third quarter of 2006. In the third
quarter of 2007, we increased our professional fees and investor relations
activity in the United States and Europe compared to the third quarter of
2006.
Stock Based Compensation 2007 2006 $ $ ------------------------------------------------------------------------- Stock based compensation 38,909 34,671 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Stock based compensation for the third quarter of 2007 was $38,909
compared to $34,671 for the third quarter of 2006. In the third quarters of
2007 and 2006, 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, 2007 and 2006)
Net loss for the nine month period ending September 30, 2007 was
$11,556,714 compared to $9,407,419 for the nine month period ending September
30, 2006.
Research and Development Expenses ("R&D") 2007 2006 $ $ ------------------------------------------------------------------------- Manufacturing and related process development expenses 3,546,732 2,751,207 Clinical trial expenses 2,983,688 1,920,467 Pre-clinical trial and research collaboration expenses 731,445 691,553 Other R&D expenses 1,553,390 1,219,460 ------------------------------------------------------------------------- Research and development expenses 8,815,255 6,582,687 ------------------------------------------------------------------------- -------------------------------------------------------------------------
For the nine month period ending September 30, 2007, R&D increased to
$8,815,255 compared to $6,582,687 for 2006. The increase in R&D was due to the
following:
Manufacturing & Related Process Development ("M&P") 2007 2006 $ $ ------------------------------------------------------------------------- Product manufacturing expenses 3,134,143 1,664,308 Technology transfer expenses - 457,975 Process development expenses 412,589 628,924 ------------------------------------------------------------------------- Manufacturing and related process development expenses 3,546,732 2,751,207 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Our M&P expenses for the nine month period ending September 30, 2007
increased to $3,546,732 compared to $2,751,207 in 2006. For the nine month
period ending September 30, 2007, our production and vial filling activity
increased compared to 2006. During this period of 2007, we completed
production runs that commenced in 2006 and initiated additional production
runs to manufacture REOLYSIN(R) at the beginning of 2007. Also, as a result of
the increased viral yields from the process development activity in 2006, we
have incurred additional vial filling and packaging costs compared to 2006.
For the nine month period ending September 30, 2006, we completed the
production runs that were ongoing at the end of 2005 for our Phase I trials.
At the same time, our process development activity helped improve the virus
yields from our manufacturing process. These improvements were then
transferred to our cGMP manufacturer with additional production runs initiated
in the third quarter of 2006.
Our process development expenses for the nine month period ending
September 30, 2007 were $412,589 compared to $628,924 for the nine month
period ending September 30, 2006. During this period of 2007, our main process
development focus has been on the scale up of our production process, which
has included scale up studies at 40 and 100 litres. During the nine month
period ending September 30, 2006, our process development activity included
viral yield and scale up studies along with the validation of our fill
process.
We still expect that our overall manufacturing and related process
development expenses for 2007 will be in line with 2006. In the fourth quarter
of 2007, we plan to initiate a 40-litre technology transfer, complete our
100-litre scale up studies and investigate the lyophilization of REOLYSIN(R).
We are also examining ways to reduce our economic dependence resulting from
having only a single cGMP manufacturer. This might include building up a level
of inventory, increasing the scale of each production run, engaging another
cGMP manufacturer or manufacturing REOLYSIN(R) ourselves. Depending on how we
mitigate our risk of economic dependence our expectation of our 2007 M&P
expenses may change.
Clinical Trial Program 2007 2006 $ $ ------------------------------------------------------------------------- Direct clinical trial expenses 2,798,024 1,783,138 Other clinical trial expenses 185,664 137,329 ------------------------------------------------------------------------- Clinical trial expenses 2,983,688 1,920,467 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the nine month period ending September 30, 2007, our direct
clinical trial expenses were $2,798,024 compared to $1,783,138 for the nine
month period ending September 30, 2006. In this period of 2007, we incurred
direct patient costs in our seven ongoing clinical trials. As well, we
incurred clinical site start up costs for our three co-therapy trials in the
U.K. and our Phase II sarcoma clinical trial in the U.S. During the nine month
period ending September 30, 2006, we incurred direct patient costs in four
ongoing clinical trials along with clinical site start up costs associated
with our U.S. recurrent malignant glioma and U.K. Phase Ia combination
REOLYSIN(R)/radiation therapy trials.
We expect our clinical trial expenses will continue to increase for the
remainder of 2007 compared to 2006 as we continue patient enrollment and
expand our clinical trial program to include other trial sites and other
studies.
Pre-Clinical Trial Expenses and Research Collaborations 2007 2006 $ $ ------------------------------------------------------------------------- Research collaboration expenses 694,315 634,199 Pre-clinical trial expenses 37,130 57,354 ------------------------------------------------------------------------- Pre-clinical trial expenses and research collaborations 731,445 691,553 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the nine month period ending September 30, 2007, our research
collaboration expenses were $694,315 compared to $634,199 for the nine month
period ending September 30, 2006. 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 existing chemotherapeutics, the
use of new RAS active viruses as potential therapeutics, and to investigate
new uses of the reovirus as a therapeutic.
For the remainder of 2007, we still expect that pre-clinical trial
expenses and research collaborations will decline compared to 2006. We expect
to continue with our various collaborations in order to provide support for
our expanding clinical trial program. As well, we may expand our collaborative
activities to include other viruses.
Other Research and Development Expenses 2007 2006 $ $ ------------------------------------------------------------------------- R&D consulting fees 180,043 134,650 R&D salaries and benefits 1,109,709 907,115 Quebec scientific research and experimental development refund (15,927) (52,344) Other R&D expenses 279,565 230,039 ------------------------------------------------------------------------- Other research and development expenses 1,553,390 1,219,460 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the nine month period ending September 30, 2007, our R&D consulting
fees were $180,043 compared to $134,650 for the nine month period ending
September 30, 2007. During this period of 2007, we incurred consulting
activity associated with our ongoing clinical trials and assistance with our
clinical trial applications. During this period of 2006, our consulting
activity related to our ongoing clinical trials.
Our R&D salaries and benefits costs were $1,109,709 for the nine month
period ending September 30, 2007 compared to $907,115 for the nine month
period ending September 30, 2006. The increase is a result of increases in
salary and staff levels along with the addition of our Vice President of
Intellectual Property in 2007.
We still expect that our Other Research and Development expenses for the
remainder of 2007 will increase compared to 2006. We expect that salaries and
benefits will increase to reflect increased compensation levels and the salary
and benefit costs for our Vice President of Intellectual Property. Our R&D
consulting fees are expected to remain consistent with 2006. 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 2007 2006 $ $ ------------------------------------------------------------------------- Public company related expenses 1,970,903 2,007,464 Office expenses 827,727 782,183 ------------------------------------------------------------------------- Operating expenses 2,798,630 2,789,647 ------------------------------------------------------------------------- -------------------------------------------------------------------------
During the nine month period ending September 30, 2007, our public company
related expenses were $1,970,903 compared to $2,007,464 for the nine month
period ending September 30, 2006. In this period of 2007, our financial
advisory expenses decreased compared to 2006. This decrease was offset by an
increase in expenses associated with our investor relations activity in the
U.S. and Europe and professional fees during the nine month period ending
September 30, 2007 compared to 2006.
During the nine month period ending September 30, 2007, our office
expenses were $827,727 compared to $782,183 for the nine month period ending
September 30, 2006. Our office expense activity has remained consistent in
2007 to date compared to 2006 with increases mainly due to increased
compensation levels and a general increase in office costs.
Stock Based Compensation 2007 2006 $ $ ------------------------------------------------------------------------- Stock based compensation 142,878 293,880 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Stock based compensation for the nine month period ending September 30,
2007 was $142,878 compared to $293,880 for the nine month period ending
September 30, 2006. During this period of 2007, we incurred stock based
compensation associated with the vesting of options previously granted. 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, 2007, we are committed to payments totaling $1,162,000
for the remainder of 2007 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:
------------------------------------------------------------------------- 2007 2006 2005 ------------------------------------------------------------------------- Sept. June March Dec. Sept. June March Dec. ------------------------------------------------------------------------- Revenue - - - - - - - - ------------------------------------------------------------------------- Interest income 319 359 268 286 320 335 292 160 ------------------------------------------------------------------------- Net loss(3), 3,764 3,680 4,156 4,890 3,425 2,988 2,995 3,941 ------------------------------------------------------------------------- Basic and diluted loss per common share(3) $0.09 $0.09 $0.11 $0.13 $0.09 $0.08 $0.08 $0.12 ------------------------------------------------------------------------- Total assets (1),(4) 33,897 37,670 41,775 33,566 37,980 40,828 43,660 46,294 ------------------------------------------------------------------------- Total cash (2),(4) 28,191 31,533 35,681 27,614 31,495 34,501 37,687 40,406 ------------------------------------------------------------------------- Total long-term debt(5) - - - 150 150 150 150 150 ------------------------------------------------------------------------- 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 2006. (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 September 2007 and October 2005 are quarterly stock based compensation expenses of $38,909, $82,573, $21,396, $109,670, $34,671, $222,376, $36,833, and $38,152, respectively. (4) We issued 4,600,000 common shares for net cash proceeds of $12,063,394 during 2007 (2006 - 284,000 common shares for cash proceeds of $241,400; 2005 - 4,321,252 common shares for cash proceeds of $18,789,596). (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 1 of the September 30, 2007 interim financial statements). (6) We have not declared or paid any dividends since incorporation. LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2007, we had cash and cash equivalents (including
short-term investments) and working capital positions of $28,191,464 and
$26,343,848, respectively compared to $27,613,748 and $25,719,870,
respectively for December 31, 2006. The increase in 2007 reflects the cash
inflow from financing activities of $12,063,394 offset by cash usage from
operating activities and additions to our intellectual property of $10,849,863
and $586,124, 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. For the remainder of 2007, we are expecting to
continue to enroll patients in our existing trials and we also expect to
expand our clinical trial program. As well, we expect to continue with our
collaborative studies pursuing support for our future clinical trial program.
We will therefore need to ensure that we have enough REOLYSIN(R) to supply our
clinical trial and collaborative programs. We continue to expect our cash
usage in 2007 to be $1,400,000 per month 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,
additional activities reducing our economic dependence on a single supplier,
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 $586,124 on intellectual property during the nine month period
ending September 30, 2007 compared to $552,319 during the nine month period
ending September 30, 2006. 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. In the third quarter of 2007, two
U.S. patents were issued bringing our total patents issued to 23 in the U.S.
and six in Canada.
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 $24,865,090 invested under this policy and we are currently
earning interest at an effective rate of 4.23% (2006 – 3.89%).
OTHER MD&A REQUIREMENTS
We have 41,120,748 common shares outstanding at October 29, 2007. If all
of our warrants (4,972,000) and options (3,497,950) were exercised we would
have 49,590,698 common shares outstanding.
Additional information relating to Oncolytics Biotech Inc. is available on
SEDAR at www.sedar.com.
About Oncolytics Biotech Inc.
Oncolytics is a Calgary-based biotechnology company focused on the
development of oncolytic viruses as potential cancer therapeutics. Oncolytics’
clinical program includes a variety of Phase I and Phase II human trials using
REOLYSIN(R), its proprietary formulation of the human reovirus, alone and in
combination with radiation or chemotherapy. For further information about
Oncolytics, please visit www.oncolyticsbiotech.com.
SOURCE Oncolytics Biotech Inc.
Released October 30, 2007