Oncolytics Biotech Inc. Announces Closing of Over-Allotment Option

CALGARY, March 21 /PRNewswire-FirstCall/ – Oncolytics Biotech Inc.
(“Oncolytics” or the “Company”) (TSX:ONC; NASDAQ:ONCY) is pleased to announce
that Canaccord Capital Corporation has fully exercised its over-allotment
option to purchase an additional 600,000 units in connection with the
previously announced public unit offering that closed on February 22, 2007.
Each unit is comprised of one common share and one-half of one common share
purchase warrant, at a price of Cdn. $3 per unit for gross proceeds of Cdn.
$1,800,000. Each whole common share purchase warrant entitles the holder to
acquire one common share of Oncolytics upon payment of Cdn. $3.50 at any time
until 5:00 p.m. (Calgary time) on February 22, 2010. The full exercise of the
over-allotment option increases the gross proceeds of the offering to Cdn.

Oncolytics will use the net proceeds from this offering for its clinical
trial program, manufacturing activities in support of the clinical trial
program and for general corporate purposes.

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.

This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state or province in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state or province. A copy of the final short form prospectus
relating to the units is available at www.sedar.com or may be obtained from
Canaccord Capital Corporation – in Canada, call 416-869-3290 in the U.S. call
1-617-788-1554, or send requests to: Attention: Lee Ward, P.O. Box 516, 161
Bay Street, Suite 3000, Toronto, Ontario M5J 2S1 (fax requests –

This press release contains forward-looking statements, within the meaning
of Section 21E of the United States Securities Exchange Act of 1934, as
amended. Forward-looking statements, including the Company’s expectations
related to the completion of this offering, progress in the clinical trial
program and the Company’s belief as to the potential of REOLYSIN(R) 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 offering on the terms set forth
in its agreements, the Company’s ability to maintain regulatory approval for
the offering, the 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, the Company’s
ability to successfully commercialize REOLYSIN(R), 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, except
as may be required pursuant to applicable securities laws.

SOURCE Oncolytics Biotech Inc.