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CALGARY, AB, --- December 29, 2005 - Oncolytics Biotech Inc. (“Oncolytics”) (TSX:ONC, NASDAQ:ONCY) announced today that it has closed its previously announced private placement. Oncolytics issued 3,200,000 common shares and 1,600,000 common share purchase warrants for gross proceeds of $16,480,000. Each whole common share purchase warrant entitles the holder to acquire, on or before December 29, 2008, one common share of Oncolytics upon payment of $6.15 per warrant. All of the securities issued in connection with this private placement are subject to a four-month hold provision.

An agent retained by Oncolytics received a commission of 6.25% of the gross proceeds and was issued 320,000 common share purchase warrants. Each common share purchase warrant entitles the holder to acquire, on or before December 29, 2008, one common share of Oncolytics upon payment of $5.65 per warrant. 

The net proceeds from this financing are expected to be used to support the initiation of the company’s Phase II clinical trial program and for general corporate purposes. The Phase II clinical trial program will potentially include combination chemotherapy/REOLYSIN® trials in colorectal, prostate, pancreatic and non-small cell lung cancer and combination radiation/REOLYSIN® trials in a number of tumour types. The cancer indications chosen take into account the activity of REOLYSIN® observed in completed and ongoing clinical trials, and in in vitro and in vivo experiments by third parties investigating the activity of REOLYSIN® in combination with various chemotherapeutic agents.

After giving effect to this transaction, Oncolytics has 36,236,748 common shares issued and outstanding. 

The securities to be issued by Oncolytics have not and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states. This press release is not an offer of securities in the United States.

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 cancer cells and, in vitro, kill human cancer cells that are derived from many types of cancer including breast, bladder, prostate, pancreatic and brain tumours, and have also demonstrated successful cancer treatment results in a number of animal models. Previous Phase I clinical trial results have indicated that REOLYSIN® was well tolerated and that the reovirus demonstrated activity in tumours injected with REOLYSIN®. 

This press 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 expectations related to the placement of the units, as to progress in the clinical trial program and the Company’s belief as to the potential of REOLYSIN® as a cancer therapeutic, involve known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, ability of the Company to complete the private placement on the terms set forth in its agreements, the use of proceeds, the Company’s ability to obtain regulatory approval for the offering, the 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, the Company’s ability to successfully commercialize REOLYSIN®, 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.