Oncolytics Biotech Inc. (ONCY)

[onco_investor]

ONCY 2011 AGM Transcript - May 2011

Thanks to lordlucansalive on Yahoo V2 for doing the transcript


PRESENTATION




Thank you all for coming along today, we greatly appreciate it. We really appreciate your support
and ongoing kind of dialogue that we have with many of you on an ongoing basis. What we’d like
today is to talk about Oncolytics in a somewhat different light than is normally our wont at the
annual meeting and take a more slightly historical approach to try to tie together where we’ve been,
what we’ve achieved and where we are today, with respect to several key important areas of activity
inside the company.

The hope is that this will allow people to gain some perspective on some of the things that we’ve
done, that have led into our current activities, and kind of give you a sense of where the company is
flowing forward from this time today.

[Forward looking statements etc…]





So today I’ll be talking about 5 key areas:

I’ll be talking about our financial position first, talking about two very key areas that often don’t get
talked about, which is our intellectual property portfolio and our manufacturing programme. And
then move in to talking about some work we’re doing pre-clinically and have done pre-clinically and
how that flows into our clinical trial programme and where we’re planning on going from there.

After that I’ll make some minor conclusions and then entertain any questions you may have at that
point.








Biotechnology has come through an interesting (in the ancient curse mode) several years with
respect to financial transactions. And while things have actually improved I think markedly in the last
12-15 months we’re still faced with this situation where it’s a relatively selective financing
environment.




And so part of what Oncolytics I think has done over its history is to do whatever it needs to at the
appropriate time to raise the resources to support our programmes and so today we’ve actually
raised just under $182M but the complexion of that fund raising I think is a little different than what
people would expect.

Just under, or just over, half of that is what I would think of as old-fashioned traditional public
offerings you know, prospectus-driven public offering, and the offerings that people tend to see and
feel and sense.

But on top of all that, is a variety of textures of things. About a quarter of the money has been from
the exercise of options and warrants, attached to financings primarily. Most recently, our now
biggest shareholder exercised warrants that were barely in the money as a token or demonstration
of support for the company financially to allow us to do certain things. And it’s a very important
component, at least for Oncolytics, of the financing tool. As you go down this list you’ll see that
there’s a number of other types of transactions.

When we started the company it was mostly private placements, prior to us going public, and one
small VC round after going public, and then the innovative ones, which, candidly, while the numbers
are small are the ones that you do when things are really tough, that actually really make the
difference.

We owned a stake in Transition Therapeutics which is a Toronto based company here; Dr Tony Cruz
is the very able CEO of that company and our intent at the time was to actually take a long term
stake in that as we go forward looking at new products things were very difficult and we had the
opportunity to sell the shares which then catalysed 3 private placements 2 days after that. So it
wasn’t a huge amount of money at the start but it certainly catalysed a number of things .

We had some shares in another small Canadian company called BCY that we got rid of and most
recently last year at the start of the year when things were relatively dire we purchased a failed
company from Edmonton for the cash in the bank.

The net effect of that of course is to come up with this number, but I think these last financings
while rather small in size came at very critical junctures in the market when there were really no
other alternatives for raising money and helped catalyse the more normal course of funding.

And so I think our message is that Oncolytics does pretty much what it needs to do to raise capital in
the most appropriate way in the market at the time. And I think the fact that we’re here today after
the carnage of last year is a testimony to our ability to do that.





Looking at the intellectual property portfolio, people tend to really underestimate the value and the
requirement for an ongoing IP programme within companies like Oncolytics. At the end of the day,
assuming Reolysin works, we get the product registered, without a robust and multi-layered and
textured intellectual property portfolio, that has an asset value of pretty much zero. So all the work
that we do to get a product approved in the end of the day unless we have this on the front of that
really isn’t worth anything to us.

And so we’ve been in active operation now since the fall of 1999 so arguably 12 years and we’ve
spent an average of $3,000 a day for that 12 year period working on our IP portfolio and it’s our
intention going forward to continue and expand that effort.





I just wanted to show you some of the layering over the years, and this is not an exhaustive list by
any means. We just took some selective highlights and just US only. You can see, and I think this is
more of interest for people later when they can actually pick through this when this talk is posted on
our website.

To actually see that there’s a kind of a sequence of claims that get allowed, a sequence of key areas,
that was methodically sought after in our IP portfolio. And of course the goal is that on the day we
have product approval or that morning if we get approval in the afternoon I expect Mary Ann
[Dillahunty] and Matt [Coffey] to be still filing IP up until the 3 seconds before and that’s absolutely
critical because we want the broadest possible window going forward, with as many layers on that
window going forward, to help fend off the inevitable competition on what we hope is a successful
product.

This is an example, I mean our very first claims were the claims that Dr Matt Coffey and his
colleagues from when they were at the University of Calgary filed the original patents that were
rolled into Oncolytics and so very important claims about treating RAS, it’s the first time you see RAS
in our patent portfolios, RAS-mediated cancers, and things beyond cancers which are cell
proliferative diseases like neurofibromatosis, by administering Reo it’s an incredibly important start.
It’s a ‘treating this disease with this agent’ kind of claim.

And then you broaden that out. Mary Ann’s been directing this portfolio from its very start and has
done I think just an unbelievably super job at managing, which is a very long term and very layered
process.

Then you broaden out the treatment claims. You broaden it out to start looking at combination
therapies, with immunosuppressants, with other agents, with radiation, and it’s just a very





systematic approach to broadening out a patent portfolio. But again with the goal on the day of
product approval of having as broad a window as you can.



And so reassortments, you’re looking at transplantation first of all, then more biochemistry, and you
start getting into the things like purification methods, delivery methods, pharmaceutical
composition.






And finally, which was an interesting one for the stage of development we’re at, last year getting our
first pure composition of matter claims on our clinical isolate, which is a little late in the game to get
that, but thankfully it is because that takes us to 2028 on those claims.



Going forward, and this I think is a key slide. Right now we have over 250 issued patents, and that
number changes daily. Right now 41 are in the US, 11 in our home jurisdiction of Canada and
probably the most important part of this is the ongoing effort we continue to file, continue to
broaden out the IP base. But honestly in the end, this is where the value of this company is. At the
end of the day if this doesn’t have any structure to it then it really wasn’t worth doing. It’s just very
important to note that.






Manufacturing. And of course today we announced a very important step in that which I’ll allude to
at the end, that is also key. More filings at the FDA fail because of manufacturing concerns than they
do clinical trial concerns, clinical data concerns. Manufacturing is an absolutely critical component in
a biologics programme it can’t be overestimated how important focusing on this is.



I just wanted to compare where we started and where we are now. In 2000 when we first started
treating patients this is the process that we used to purify them and the details aren’t really that



important but it’s basically a lab-based process. It was one of these 15 litre flasks which are about
this big around – I can tote a 15 litre flask around – extract with some fairly nasty environmentally
unfriendly products and purify by a lab-based process which is centrifugation and you fill that and
you put it in human beings.

Certainly not a commercial process: it’s not commercial from a cost perspective, it’s not commercial
from a scale perspective, and it’s not commercial from an ‘I doubt the FDA would ever let you go to
product approval’ perspective. So it certainly allowed us to get into the clinic, but it did not allow you
to meet the 3 goals of a cost-effective, bulk manufacturing, approvable process.

Here we are today at 2011 – this is literally 11 years worth of work where we’re spending probably
between $7M and $9M a year, every year, on a very focused, methodical, process development, to
come up with a commercial scalable process. And this is what the process, I won’t go through it but
it’s a very different process, as you can see there’re some very unique steps in that which will roll
back into our IP portfolio that are unique to Reolysin and possibly useful in other areas. It’s really the
result of a great deal of work by a great deal of people and it’s absolutely important.



Now what you see when you look through the history of our process is this scalability issue. If you
take a look at the dosages that we produced at this equivalent to our standard IV dosage, over time
you see there’s the sequence going through different manufacturers, which is also an important
element, and different yields and different scales.

So we started out with a corporation in the States called BioReliance, that gave us clinical product,
got us into the clinic; not a registration process, not economical. Did our first scale-up work at
BioReliance, and then moving over to Cobra in the UK, and you can see the scale – you start getting a
30-fold yield improvement.



Then our first work at Sigma-Aldrich Fine Chemicals, who we’ve signed a commercial manufacturing
agreement with, announced this morning. Originally at the 40litre scale, again a scale improvement,
and then up into the 100litre scale where we are now. In our last runs we’ve certainly got upwards
of 100,000 dosages out of a single 100litre batch, which I can put my arms round – I can’t lift –
because it’s a little heavy.

And certainly what this does is it gives us economies of scale – this process is now economical. It
gives us a scale that’s at the bottom end of commercial. We can actually fix the process which we’ve
done for our Phase 3 study and ensure that the process is what we’re using for our final
confirmation runs and registration runs. And it acts as a huge asset with respect to us either talking
to corporate partners, because it’s very reassuring to them that we’re actually doing our
manufacturing at a quality place like Sigma-Aldrich. Sigma-Aldrich Fine Chemicals produces bulk
pharmaceutical grade material for virtually every big pharma and is highly regarded in our industry,
and it’s very reassuring to have somebody of that stability and stature doing this work for us.

And so that’s where we are today – we go from a lab-based process to a process that today has a
reputable manufacturer signing a commercial agreement to produce this product for us for our final
confirmation work and to start stockpiling product for hopefully eventual sale. Nice to say that,
finally.

So I think it just bears … again it was a 10 or 11 year process, so it has to be paid attention to, and I
have to I guess, must credit our key men and Matt Coffey who led that effort for taking care of that
over the last decade.



Now preclinical research. People often ask the question why we continue to do preclinical research.
And it’s our model in this business to actually do work not in humans first and then if we can do



some translational work in humans so they don’t have clinical endpoints, they’re more technical
endpoints, which I think of as preclinical because they don’t have clinical endpoints.

To validate new targets, to figure out how the product works, whether it works in certain diseases
better than others, and it’s really quite critical - in all the studies we’re doing to actually have this on
the front end to have all justified it and validated it.



This is the first thing I saw when I met colleagues from the University of Calgary – we showed this
slide for the first 3 years we were a company, where we had our friend the mouse with a tumour on
its hind flank and then our friend the mouse after treatment who didn’t have a tumour any more.

And equally this is a very early indication that you might actually have something, but it is an animal
model. Animal models aren’t humans of course, but unless you pass this threshold you really
shouldn’t be trying to move that into humans.





And there’s been a large number of publications. Again, this is a very tiny sample of the publications
that have come from either direct collaborators of ours where we sponsor their research,
collaborators where we just supply product, and from a researcher perspective you can’t imagine
the luxury of being supplied clinical grade material of a product – it’s in human clinical trials to do
animal work with, or even tissue culture work with, it’s really… They’re getting the same end product
to work with that we’re treating human beings with, it’s very important.

So this is just an example. These have all led to clinical studies. These are just samplings in each of
the areas. There are actually more things, I won’t go through them, the second one is one of those
examples where we actually treated humans as the [?] – that’s the NCI study from where they did a
preliminary report last year and they demonstrated that if you give Reolysin intravenously it
replicates in the peritoneal cavity in tumours which was a big step forward.

Lung – we’ve done quite a bit of work in different lung studies. Head and neck of course. That’s
actually a fairly early publication and it was the first time you saw the word ‘squamous’ being used
with respect to Reolysin use.






Sarcomas, [in] which we’ve had an active ongoing programme for many years. It’s had other uses of
course. Colorectal which we’re running an early stage clinical study right now. Gliomas [in] which
we’ve run 2 phase 1 studies, and I’ll talk briefly about them in a minute, talk about where that’s
going.





Pancreatic cancer, in which we’re running two clinical studies, and, as of yesterday, the NCI
committed the funding to do our first haemopoietic study, and that was again based on this
preclinical work that allowed them to justify going in and funding a clinical study.

And we continue to do this – the message for us is that it’s all an ongoing programme – expect to see
more publications; expect to see more basic research funded, supported, cajoled, however we have
to do it, from Oncolytics with Reolysin. I think it’s incredibly, critically important.



Clinical studies. We’ve run a very large number of clinical studies, and sometimes it’s a little difficult
tying together why we did some of those. Rest assured, there were reasons to do all these things
and they do tend to flow.





What I thought today I’d do is actually show the flow of clinical studies that feed into specific later
stage studies or earlier stage studies that we’re doing in specific areas so that people could actually
see the rationale going on behind this and of course … I’ll start out with our Phase 3 study in head
and neck and I’ll start from the bottom.

When we started our clinical programme it was thought that it would be safer to stick the product
directly into tumours rather than giving it intravenously and so our first two studies were, our first
study was an all-comers study in Canada, REO 1. Dr Gordon Morris was the principal investigator
followed up by a translational study in essence, sort of a phaseless study, that was constant dose, it
was really a Phase 2 looking at early stage prostate cancers, where we were treating the prostate,
injecting the virus directly into the prostate gland then excising the prostate gland and looking at it
histopathologically. And that confirmed that the virus didn’t actually kill the surrounding healthy
tissue, which is, sounds mundane, but is hugely important. People at that time were sensitive to the
fact that we were treating very ill people with virus. No matter how safe we thought it. And that
confirmed we weren’t going to get bystander effects.

From there we were allowed to then go into IV studies. We ran REO 4 and REO 5 which were
relatively parallel studies, the UK study being bigger, looking at Reo as an IV product by itself. And
then we ran a Phase 2 study in sarcomas that had metastasized to the lung, with again Reo as a
monotherapy.

That study had 2 purposes. The purpose on this flow was to confirm that Reo could be given to
patients as a monotherapy for very long durations of time. Some of the patients on this study were
treated for 32, 33 months, monthly 5 dosages in a row of Reolysin, so it was a very long exposure
and showed very nice tumour stabilisation, and that’s very, very important for the second part of our
Phase 3 study which I’ll talk about in a second.



We then said OK we’re focusing in, we’ve got the elements. We ran a head and neck study that
morphed out of a Phase 1 into a Phase 2 in the UK, which was on our now standard carbotax
platform. We had to do the Phase 1 part to see the toxicity. That, in parallel with yet unannounced
results from our REO 15 study, which is the Phase 2 head and neck study in the US, which was run
basically to confirm the data we saw in the UK, and that finally led to our Phase 3 study in Reolysin.

So what you have is, we showed we could do it intravenously, we showed it was safe, to live tissue,
we then showed it was safe and appropriate in IV. We then showed that you could treat for very
long durations with the product as a monotherapy. Then did the drug combination, showed it was
active in a Phase 2 environment, and then started this Phase 3 study.

So, the head and neck element of the attention was demonstrated in these Phase 2 studies. The
second was the often not talked about part of this Phase 3 study is that all the patients, after they’ve
finished 8 cycles of carbotax plus Reolysin are then eligible to go on long term maintenance therapy
of Reolysin by itself.

And so basically it’s a separate study within a study if you’d like to think of it that way, but you
needed to know what the effects of long term Reolysin monotherapy use IV was, which is where the
sarcoma study came in. So that’s how that meshes in with that.

And so you have this sequence - you look at the drug therapy in combination with the IV elements in
combination with the safety in combinations and this whole flow led us to our Phase 3 study.

If Reo had only been used in a sequence to get to head and neck this would have been the same
clinical path that we have taken.



And of course just for some historical context, it’s [?] and I don’t think it’s accidental – this is from
our very first clinical study, REO 1, with a head and neck patient treated at the lowest dosage which



was 1x10**8, which is a thousandth of our IV dosage on a daily basis where we have this lovely
superficial head and neck tumour on the back of the patient. This is actually a biopsy so it’s got
nothing to do with the disease that resolved very quickly and so very early on we knew we had some
sort of inclination that there might be something of interest with Reo and this was as a
monotherapy.



And of course, at the end of that it’s our survival curve from our REO 11 Phase 2 study out of the UK.
With this Kaplan-Meier curve we’re comparing ourselves to a similar patient group treated with
cis/docetaxel by Spencenier which was a publication last fall. And so you’re progressing from this,
we thought, superficial tumour, going to looking like we’re giving lifespan benefit to patients.

That’s a nice sequence, that’s where we need to be, honestly.






One of the early things that we found in these head and neck patients was we started to see our first
real indications of metastatic disease responses, and this is actually a very early patient in that study.
We have gross metastatic disease, but this is the liver – this grey zone and all these dark spots are
mets, which unfortunately is most of this person’s liver – and very rapidly you get this nice – post-
cycle 2 is only what, 4 weeks out, you’re getting this lovely response and that’s maintained. And so it
was a very early indication that we were actually getting metastatic disease response, and we saw it
in a number of other cases.





And this is a later patient, again with a large liver lesion. Heavily treated patients, we were getting
these wonderfully long, quite durable metastatic lesion responses.





Just to show that it does work on primaries. This is the case of a patient who wasn’t a surgical
candidate – he had a large primary tumour on his neck – and again a very rapid response, which is
becoming characteristic of when you do get a response with Reolysin, getting these long very, very
aggressive responses.





Now you can view the same kind of flow with all our other studies, and I think it’s important to do
that. Pancreatic cancer – we’re running two studies right now: we’re doing a single arm study in
combination with gemcitabine, and our colleagues at the NCI, our sponsor, are running a
combination study in first line patients with a carboplatin paclitaxel combination. That one is unique
in the fact that they’re not using the standard of care in the first line. So they’re not using Gemzar.
I’d just like to point that out – the control arm here is not … there’s no Gemzar involved, it’s carbotax
alone.

But how did we get there? Same sort of thing. We had – if you were just looking at pancreatic cancer
in isolation, you have the same, much the same sequence but with slightly different purposes. You
went through the same intra-tumoural studies –you had to show that you didn’t have bystander
effects. Well, we did that in those first two studies, primarily the second one. Then you looked at the
IV studies – the same critical path – to go IV you had to show IV monotherapy.

Then you go into the sarcoma study. Again the same sorts of things, where you’re looking at the long
duration monotherapy exposure in a Phase 2.

Then you switch. Then you’re looking at, well, before it was carbotax toxicity, now we did a Gemzar
study. And we did a Gemzar toxicity study in the UK which has higher dosages than we use in North
America – they’re about 25% higher dosages – so it’s a pretty extreme case of Gemzar combination.

And that fed into our single arm Gemzar pancreatic study that’s now ongoing REO 17. The other
study requires the same toxicology data, so basically you’re double-using the same study where you
did a Phase 1 study that’s morphed into a Phase 2 study with carboplatin paclitaxel focusing on head
and neck, but in this case the toxicity data is what allows you to do the randomised study with
carbotax.



So again, if all we were doing was pancreatic cancer, you’d have basically the same flow. Minor
tweakings with it but it’d be pretty much the same clinical flow. So it’s really important I think to
know how that feeds in and gets to those places.



Now, a little specifics why we’re interested in pancreatic cancer. It’s the one cancer where the
primary solid tumour has such a high RAS activation, which is the basis on which Reolysin works.
Over 90% of pancreatic cancers specifically have mutations at KRAS, and there are some smaller
percentages obviously of other activating mutations. And so it’s one of those cases where you don’t
even have to think about pre-screening – if you have pancreatic cancer, it’s likely it’s going to have a
RAS involvement, which means it’s likely Reo should work in it.

The single arm study is in patients who have advanced disease or metastatic disease and who are
treatment-naïve at… It’s sort of a dark joke in pancreatic cancer that there are no second line
patients because they don’t live that long unfortunately, and so most of the studies you see are first
line.

The primary endpoint was to see 3 or more patients with stable disease in the first 17, and we were
extremely pleased to see that we met, actually exceeded, this endpoint in the first 6 patients we
had. 3 stable diseases in 3 patients, and a PR in 1 patient, and that’s pretty remarkable given that we
were expecting to see that with 3 times as many patients. And we’re finishing off that study right
now. So that’s our pancreatic programme.

Laid on top of that is a very exciting programme where we’re looking at a randomised study paid for
and sponsored by the NCI where we’re looking at carbotax vs. carbotax/Reolysin in basically the
same patient population. It says recurrent, but again, as I just said, we don’t get a lot of recurrent
disease in pancreatic cancer. That study is enrolling quite nicely now so we’re anxiously awaiting the




results of that second study. And certainly we can track that first study quite closely given it’s ours
and it’s a single arm study.



Just because they’re so rare, this is the partial response we saw on the Gemzar study, and it also
illustrates how difficult it is to grade pancreatic cancer by response. Honestly I had to have
somebody tell me where the responses are, and so there’s a lymph node response and a pancreatic
head concurrent response, but again, very quick – it was after 1 cycle.




If we go on to our brain candidates, brain cancer - in this case specifically GBM – was actually our
first real targeted indication. And what we were doing initially was to inject the virus directly into the
tumour bed, which is a surgical procedure – you drill a hole with a dermal drill in the head, or if the
patient’s already open – and inject with very fine-tuned injection methodology, virus directly into
the tumour, a bolus, just squirting it in.

That was actually our first study. We, I think naively, thought that that would work quite nicely
because it worked wonderfully in animals. What we didn’t really realise at that time is that delivery
of the virus would become so critical: the virus works quite nicely when it’s near cells that are of the
right nature, but it has to get there, and in this particular study which was our first under REO 3, we
saw indications of activity, which was nice, but didn’t get the best response rates on the planet.

We then said, OK, we have to improve delivery and we went on to our REO 7 study in the United
States. This study had a higher top dose, which is important, but it also used an alternate delivery
method, which I was going to show, but after polling everybody who looked at this talk, 50% of them
said ‘Do not show that picture in public, Brad!’ It’s quite off-putting actually, it’s enough to make me
not want to ever have that surgery.

In this case you’re infusing the product through a number of different ports that have been surgically
implanted in your head. They’re writing up the publication now on this study, but it did improve it,
that’s the conclusion, but not to the point where we thought it would.

So what you’ve got is your sequence – we had to show it was safe in intra-tumoural because… and
then we went directly to intra-tumoural specifically which was REO 3 in Canada said delivery wasn’t
what we thought, so let’s infuse it and see if that improved, and it did, and then say well, gee, and
we knew this fairly early on in this study, that we were seeing this. It’s still not good enough. The
delivery still isn’t adequate to demonstrate it. So then you have to think about doing it in a more
convenient and better way which is probably IV so then you go back and say that you can reuse the
IV data that you generated for other studies, the IV monotherapy studies in the US and the UK and
then you say how do you get the virus across the blood-brain barrier?

Well, guess what? You can actually use some of the things we’ve also used before, like radiation –
actually it’s pretty good at altering the permeability of the blood-brain barrier, so we had our 2
radiation studies in the UK and coincidentally a lot of the chemotherapies that we use do also the
same thing. And so you take a look at again you know our chemotherapy studies.

And so what doing right now is planning at looking at, in a very cost-effective manner, ie somebody
else will be paying for it. Looking at… I don’t know if anybody else has noticed it but we’re getting
pretty good at getting other people to do clinical studies.

Looking at delivering reovirus which looks like it works pretty well in brain cancers and probably
brain mets in an IV fashion, and finding a way to get it across the blood-brain barrier in an effective
manner, which is a very large market. I don’t know if anybody’s noticed but the increase of cause of
death by brain mets in cancer is increasing. It’s not that brain mets are getting more common, it’s
that we’re selecting for brain metastasis because many of the drugs that we use don’t cross the
blood-brain barrier and so we’re treating systemic disease quite nicely and what we’re leaving



behind is brain mets and that’s what kills the patients. We’re enriching our patient population for a
different cause of death.

This is quite exciting, but it’s long term obviously – we’ve been doing this since 2000 and we’re
finding that delivery does count pretty much everywhere that we look. It’s longer term and it kind of
moves along in the background, but I just thought I’d draw attention to it because we don’t talk
about this particular ailment very often.



And this is out of the US study. This will be in the publication and again we have a genuine – and it’s
really hard to see here so I should have circled it – 2 different cuts of the before and after – quite
long duration and partial response in glioblastoma multiforme in a patient treated with
monotherapy Reolysin infused into the head. You can induce partial responses in gbms that are long
duration with reovirus. That’s a pretty important conclusion, and our investigators are all pretty
excited about moving on, about trying to turn this into a real therapy.





Ovarian cancer. Again we can do the same cycle and hopefully me talking about these will shorten
down quite a bit. You run through the same sort of things – you had to show tumour bystander
effects, you had to show you could do it with IV, you had to show you could do long term therapy.
And then you switch over and say specific and that’s where the NCI monotherapy study which they
presented last year at the AACR or ASCO it was earlier in one of the publications. They showed if you
give Reolysin as a monotherapy it gets into the peritoneal cavity and infects and kills ovarian
tumours. That’s a pretty remarkable conclusion.

Then you look at the drug combination and we did a Phase 1 study with not paclitaxel by itself, but
docetaxel and, for those of you who are involved in manufacturing and sale of taxanes, I apologise
for saying they’re pretty much equivalent. You may disagree with me but, they’re taxanes. And so
we’re now doing this randomised Phase 2 study. It was based on all of this, going forward, with the
NCI again paying and sponsoring for a randomised study in paclitaxel vs. paclitaxel-Reolysin in
ovarian cancers. Again based on this sequence of flow.





And finally (I’ve only 2 more of these) you can do the same flow with colorectal cancers. Again the
same starting point – intra-tumoural. 2 intra-tumoural studies, the IV studies as monotherapy, long
duration as monotherapy, and then our translational study which we just announced recently, the
results, they were looking at Reolysin monotherapy to patients who are surgical candidates for new
adjuvant use of Reolysin. The patients got treated with Reolysin as a monotherapy and then they
excised the metastatic lesions in their liver and looked at whether the virus infected and/or killed the
tumour.

And out of the 10 patients they treated, it was like 8 or 9 out of 10 (the final number they’re arguing
about) actually showed evidence of that – either total tumour death or partial tumour death with
lots of virus replication. Pretty remarkable for a monotherapy in a metastatic disease, but what that
does, that leads in to doing the first combination therapy and we had to go back to Phase 1 which
we’re in the middle of right now in combination with the second line standard of care in the States
which is folfuri, which is also used in the first line in Europe quite comfortably.

So again it’s that flow to get you to a major indication, and this, if successful, is one of our candidates
for us to do our own randomised study as a follow-up.






Just to show you one of our earliest patients in the UK IV study, so that would be REO 5, there’s an
antigen that you can follow, CEA, that’s indicative of a couple of cancers, but colorectal cancer,
metastatic colorectal cancers, is one. And the treatment cycles with reo as a monotherapy, you can
track between a 75% and 80% regression or diminution of that antigen, which of course started
coming back because we weren’t treating all the tumour because we weren’t getting all to it. But it
demonstrated early on that Reo again could be used IV to treat colorectal cancer and this is more
directed towards the primary.





Colorectal cancer is very interesting for everybody – it’s one of the major indications. Second line
therapy in the UK or in the US is typically folfuri plus one of the EGFR inhibitors but if they have a
mutation at the KRAS gene itself, which is almost half of them, then the EGFR drugs are thought not
to work, or work poorly, and so that’s our patient population because then they don’t have a
standard of care.

And so that’s what we’re directed or looking primarily at in our US patient population. In the UK if
we ran a study there we can actually move up to first line if we choose because they do not use
Avastin in the UK. And so we’re doing this Phase 1 study looking at Reolysin in combination with
folfuri – it’s 2 different Reo dosages and 2 different folfuri dosages.



And this slide I talked about earlier. The, I guess it’s 9 out of 10: 7 out of the 10 had viral replication
and another 2 had complete tumour necrosis which you would infer was due to something – that
doesn’t happen by itself. And what’s important, if you’re connecting this with our metastatic
thoughts, over half the patients, about 60% of colorectal patients actually metastasize to the liver, so
it’s an interesting conjunction.





If you look at metastatic disease, and I’ll briefly talk about that, because we’ll be hearing more about
that later this year, if you grade our Reo Phase 2 study in the UK just for metastatic disease, so
you’re looking at metastatic disease not in the brain but in the liver, the lymph nodes and the lung,
you get about a 40% response rate, and an 80% stable disease or better rate.

Generally for metastatic disease it’s thought that single digit response rates and stable disease
around 15-20% is far more the norm using conventional therapies. So this is markedly different than
what you would expect to see, and so we’re increasingly focusing on at least measuring this
independently from the overall response rate to see if that matches up going forward and if it does I
think you can expect to see us focus even more of our time and attention on metastatic disease.
Metastatic disease is what kills people primarily in cancer patients – probably 90% of cancer deaths
can be traced to metastatic disease, so this is an important element.





Finally, lung cancer, for which we have 2 studies going on right now. We have a single arm study
looking at squamous cell lung cancers, which wasn’t a market several years ago – they were lumped
in with all non small cell lung cancers until Avastin and Alimta didn’t do so well. And so it fractured
the non small cell lung market into a new category and this is about 30% of all non small cell lung
cancers. We have a single arm study looking at squamous cell in combination with carbotax again
with Reo, and our non small cell lung excluding squamous cell study that we’re prescreening for
EGFR and KRAS and the preliminary data on this will be presented in July in Amsterdam at the Lung
Congress.

These 2 studies use the same drug combination and are both ongoing at this time. Again you can
make the same story for the sequence. Many of these studies get reused over and over again to lead
to different indications. Local tumour therapy, the IV studies, as a monotherapy, long duration
exposure in a Phase 2 environment, toxicology and early efficacy data in squamous cell head and
neck (which as you can imply is related histopathologically – they’re the same disease, just in
different areas). For head and neck, looking at carbotax, and that leads you to pure Phase 2 studies
where you’ve got toxicology, you’ve got indication of activity and in broader cases of activity than
you might expect.






This is from our head and neck study but is lung metastatic lesions, so that the primary regresses
quite nicely and you’re getting all these lovely little metastatic lesions completely responding in the
lung, so from a different study you’re getting indication of lung cancer ‘activity’ even though they’re
metastatic lesions. So quite encouraging early on and that transposes you into lung studies from a
different study, being head and neck.





And then I’ve done the pure head and neck study. This is actually our very first squamous cell patient
which we were all a little surprised to see on Fox News for the first time to find out we had a
response. A little awkward when you’re doing freeze frame on television news segment trying to get
the screen showing a scan so you can see what’s happening with your patient. And while this is nice
we did inform the investigator he really shouldn’t be doing that. His motives were pure, however –
he was just trying to get the word out that this might be interesting to help his enrolment. But again
you’re getting this very bulky disease. This is the tumour here that resolves quite quickly – this is
only again 5 or 6 weeks for the scan and then it’s gone and metastatic lesions as well.

Our initial inclination from the head and neck responses in the lung then transposed into squamous
cell of the lung responses as well.



Always talk about safety. Oncolytics is, I think because it’s a live agent, focused on safety rather
markedly. We’ve treated just over 380 patients of our own now; the NCI has added probably about
60-70 patients – in that range – it keeps going up daily at the moment, so it’s hard to keep track.
Most of these now, about three quarters, have been treated intravenously, the rest, who were the
early patients done intra-tumourally. We still don’t have an MTD, and the [side effects of the] virus
by itself, you know it’s tough to separate them out when you have drug combinations, are pretty
mild generally. The most common side-effects are what we’ve named pre-flu syndrome, which has
actually caught on as a term that people use. It’s basically what you feel like the day before you get
the flu – you get a mild arthralgia, mild fever – a degree or two degrees, grade 1 or grade 2 fatigue,
and the major blood chemistry changes typically are lymphopenia, neutropenia, low grade and they
typically resolve quite quickly.

It’s a pretty standard reovirus monotherapy side-effect profile and if you look at pretty much every
other agent that’s out in the market or in development it’s a far superior safety profile and I think
it’ll be a major asset again going forward. To have gone from intra-tumoural, to our first IV patients




which were treated in the UK in a negative pressure suite with people with space suits on, to
patients being treated in open wards as outpatients being sent home. So they’ll have their colleague
patients sitting there watching them get reovirus then go home in a cab or whatever and come back
the next day and get treated, it’s really… And that’s a result I think of this focus on safety, and
certainly Dr Gill has been involved with this from the very start and I think I would attribute a large
amount of this particular profile focus onto George. Thank you. It’s critical. You have to be obsessed
with this.






With respect to future directions for the company, just very briefly, and this may sound a little
‘motherhoody’ (but that’s because they are) – biotech companies spend money, to be candid, that’s
what we do and at the end of the day when we quit being innovative quit doing product
development, it means we’ve been successful and that point is when you quit spending money but
for now we’re a development stage company and we need to support our operations which means
we have to finance ourselves, so it’s important that we maintain a strong balance sheet.

However we do that, whether independently or through a variety of other means – partnering
programmes, or getting other people to pay for clinical studies, or whatever – to support our
programme. Critical. As I implied at the start of this talk it’s absolutely essential we continue to add
and build upon our IP portfolio – we are not in the ‘wind down’ part, we are in the ‘wind up’ part on
this particular programme.

Manufacturing is the core underpinning of whether in the end we’re going to be successful with our
product filings. Absolutely essential that we continue to finish process validation this year, begin our
conformity runs, and then begin to stockpile product for potential eventual sale. The worst thing I
can imagine is that assuming Reolysin gets approved, on the day of approval Matt walks into my
office and goes ‘Oh we don’t have any product to sell to anybody, so we’re going to have to do a
lottery or some equivalent programme’ and we do not want that to happen, we do not want to be
product restricted on the assumption that we’re actually going to be successful.

We will continue, we continue to do so, to sponsor research which allows us to get into new areas,
as evidenced as recently as yesterday with the multiple myeloma study which would not have been
funded by the NCI unless we did this.

And finally, very specifically, we will focus obsessively on the execution of our head and neck study
this year, our Phase 3 study. That’s the front end of our programme, it’s absolutely critical and right
in behind that to decide on, to begin 2 randomised studies of our own in new indications, in behind
that, with the intention of having those up and running prior to us getting our first data out of our
Phase 3 study. Absolutely essential.





For this conclusion, over the last ten years I think we’ve been relatively successful in a number of
things. We’ve raised the resources to keep Oncolytics focused on its programmes, and I think it’s
critical – obviously we wouldn’t be in business if we couldn’t have done that. And we’ve built an
impressive intellectual property portfolio. We’re at, and really can’t emphasise this [enough], we’re
at the low end of commercial scale manufacturing already in place and we’re not going to have to
play catch-up on this, which is impossible to do, honestly, when you’re in a Phase 3 study.

We continue to support our basic research and there’s literally dozens and dozens of research
publications out there as a basis of that, which serve 2 purposes – one to support new clinical
studies, but also helps recruit and educate the medical community to this interesting new concept.

And finally, we have currently 3 randomised studies. Our Phase 3 and 2 NCI studies and about to
have that balloon to 5, which is… To have 5 randomised studies in 5 different indications at the same
time is I think an impressive achievement from a biotech company.

So that is all I had to say today. Hopefully you found that historical perspective somewhat of interest
and certainly it’s been an interesting 10 years, I have to say, of active operation over 10, 11 solid,
active years. And when I think back to when we started up in the summer of 1999 with Matt and I,
and we went public with Matt and I as being the only 2 employees, which was interesting, to where
we are today, where we’re running, by this summer we’ll have a Phase 3 study running in 11
countries with collaborators around the world and having run literally hundreds and hundreds of
patients is quite a transformation. We’re very excited, we can see the finish line, we can see the end
and I think our job for us now, going forward, is to execute our plan and so that’s what we’re
planning on doing.

So again, thank you for your time and attention, and I’d be happy to entertain any comments or
questions that you may have.


QUESTIONS AND ANSWERS

48:15

Q: Zero long term debt, is that correct?

A: Yes. Our very first heritage grant, which was a couple of hundred thousand dollars has a repayable
feature if we start selling product, so that’s not classified as debt, so that’s it. We try to keep things
simple – we have 1 class of shares, we have common shares, nobody has preferred rights, nobody
has better rights than somebody else, no weird convertible debt or any of those other kinds of
things. We’ve been fortunate.

Now let’s just be honest – if those were the only financing tools available, we’d do it, but we’ve been
fortunate I think not to have to resort to those tools.

49:05

Q: Would you hazard a guess about what the survival curve for the UK Phase 2 head and neck study
would have looked like if you had had a maintenance arm.

A: A guess, and an optimistic guess, and honestly Matt and I joke about this fairly often my belief in
Reolysin isn’t any greater than the day I first saw Matt’s mouse model, which means [incoherent]
but I would expect that that would have shifted the curve over. I mean that study was unfortunate in
that we only planned to treat the patients for 8 cycles, which is about 6.2 months, and there were
two reasons for that.

There were some product limitations, availability, and there was an acknowledgement that these
patients were unlikely to even live that long, much less be responding that long and we needed to
cut off the study, you know, so we could actually say ‘We’re done’.

You might imagine our surprise when most of the patients at 6.2 months were not only alive, but still
responding and had to be told they weren’t getting more Reolysin therapy.

If you translate the sarcoma Phase 2 data to that and say that’s your starting point, our anticipation
is that for the responding patients you’ll probably get some maintenance of response from the
maintenance therapy and that’s why we introduced it in here. So I would expect it would push that
survival curve more off to the right, which is the right direction for a survival curve. But we’ll see.
We’re trying to ensure that study has the best possible survival in the test arm.

50:48

Q: Could you give us some more colour commentary on what the discussion was like with your
warrant holders? Did they call you first and say, you know, we’d like to give you a gift?

A: They weren’t really giving us a gift. For those who don’t know, we did a financing in November for
$4.70 a unit that had a share at that price and a half-warrant exercisable at $6.15. And our now-
largest shareholder was part of that financing.

And I honestly can’t remember if they brought up the subject or I brought up the subject during one
of my regular updates with them about the possibility of exercising those warrants very early. I


mean, I think they exercised them when we were trading at $6.20 or something, so very uncommon
– much before they expired – to give us the wherewithal to do potentially one extra small
randomised study. A hugely supportive move on their behalf I have to say, and for somebody to do
that is I think a real measure of the support of that particular shareholding group.

And so we’re quite pleased with that – it doesn’t happen very often – usually the pattern is that
warrants are 3 hours away from expiring and you’re getting enquiries about ‘Do you have the
warrant certificate?’ ‘Do I have warrants in your company?’ You know, those kind of things. We
laugh – Doug has had those phone calls – literally – sometimes after they expired. ‘Did they expire
yesterday?’

That’s far more the norm, so to have a shareholder put their stake in the sand and give you $8.1M or
$8.2M when they didn’t really have to is really beneficial, and being very helpful.

52:45

Q: Do you mind commenting on analyst coverage please?

A: In Canada we have analyst coverage from most of the analysts who cover biotech, so I won’t go
through the whole list. And in the United States we now have Rodman and Renshaw who’s covered
us for quite some time, and just recently Wedbush initiated coverage on us as well.

Historically we’ve only done 1 financing that had a small US component and so our financings have
been done, with the exclusion of that 1 small component, all in Canada or in Europe and so I think
the analyst coverage is reflective of that financing shareholder base. I expect that to change over
time – there’s more and more interest over on the US side.

Often the majority of our shares on any day trade on the Nasdaq not on Toronto these days and last
year was I think the first year we traded over the year more shares on Nasdaq than we did on
Toronto so we’re starting to see a shift of our shareholder base, at least through trading into US
hands. So expect to see more US coverage is the short answer.

54:00

Q: Why is the multiple myeloma trial Phase 1?

A: It’s a very good question. It’s a dose escalation Phase 1, I think they’re starting at 3x10**9,
1x10**10, and 3x10**10 I think is the sequence. Those patients are a very unique sub-patient
profile. Multiple myeloma, and excuse me for sounding a little professorial here, for those of you
don’t know, is a cancer of antibody-producing white blood cells, B cells, and so the patients tend to
be somewhat immuno-compromised just by the nature of the disease.

The therapies to treat it aggravate that, because they’re killing off your B cell populations so you’re
antibody deficient. They treat it with things like prednisone, which is immuno-suppressive, and
specific agents that knock out those things. So this patient profile – they’re different from what
we’ve treated before. They tend to be immune deficient in a way that you really have to examine
what’s the case there.


The NCI study has 2 components that are important. One is to demonstrate safety, which is always
important, but the second one is to show (on the positive side this is a non-solid tumour so you
would assume you’d have less delivery issues than you would for Reo trying to get through a solid
tumour) evidence of the virus replicating in a human setting, in a clinical setting in tumour cells.

Multiple myeloma certainly and lymphomas in general in animal models have shown to be
reasonably amenable to reovirus treatment, so it’s an area we’d like to have gone and done
ourselves, but limitation of resources and so on…

I have to say, we’re terribly pleased with the attention the NCI is paying to this particular agent. We
have, what, 6 studies now, including 2 randomised studies, and probably more to come, that the NCI
has paid for through CTEP [Cancer Therapy Evaluation Program], the office that manages this.

That’s a very large commitment for a single agent in mid-stage development from their perspective,
so I think it’s a pretty big statement of support. But that’s why we’re doing the Phase 1. They’ll get
through that pretty quickly – there’s not a shortage of patients unfortunately in that particular
group. Then I think the anticipation is that they’ll move, as is their wont, once they’ve assured those
things, to move into drug combinations, which is where we want to be as well.

56:34

Q: Do you have any updates on the enrolment for the Phase 3 trial? I think last year you mentioned
you were going to be providing updates.

A: Which I honestly shouldn’t have. What we’re doing is providing updates, if you want to look at
clinical trials like gov [http://www.cancer.gov/clinicaltrials] on sites that are open. Our job in that
Phase 3 study is to get the number of sites required to get the enrolment done expeditiously up and
running, and that’s what we’re focusing on and reporting. We just don’t think it’s appropriate to be
giving blow-by-blow updates on enrolment.

Enrolment is not linear in clinical studies, you don’t enrol the same number of patients every month,
it tends to be more of an exponential curve, which is very typical, and that’s how this study is
working out. So I think I probably shouldn’t have said that last year, so I’ll withdraw that and admit
that I shouldn’t have said it and focus on the thing which counts, which is us getting into more
countries: we’re approved in 6 countries now, including France last week and that’ll be 11 probably
by the end of the summer. In each country post-approval you start opening up centres, which we’ll
continue to do in Canada and the United States and the UK and other jurisdictions we’re already in.
That’s our task this year. Get that site number up. Get the enrolment on the first stage done and
then move into the second stage of the study.

58:06

Q: Can you give a brief update on the US head and neck trial and where it’s at, and what’s going on
with that?

A: We announced we finished enrolment. Still tracking patients, or patient I guess – this is the last
patient – and once we’re done that we’ll report on it. That’s the nature of our area – until the


patients are done, the patients aren’t done yet. I would expect some time this year we’ll be hearing
about the data on that study.

The key part of that study is to try to confirm what we saw in the UK Phase 2. It’s been a little
overrun by the Phase 3 study, candidly, but it’s still an important study, to have a different
jurisdiction pretty much confirm what we saw over in the UK and that was its purpose.

58:52

Q: A follow-on question. I thought the protocol was a little bit different for those two – one was
taxane naïve and one wasn’t. Is there…?

A: The protocols weren’t specifically that way. Most of the patients in the UK turned out to be
taxane naïve, not all of them, some, as you see in a couple of slides, had seen taxanes a number of
times – it didn’t really seem to change things.

In the States more of the patients have seen taxanes usually, so more of the patients on that study –
we started actively seeking them – have seen taxane prior exposure. Everybody assumes the
response rate will be different because they’ve seen taxanes, or not, and there’s a lot of argument
about it in the area, but none of it based on data. So having a study [in which] at least in some ways
you can compare previous taxane exposure in patients versus non- will be very helpful.

Our Phase 3 study is platinum refractory, taxane naïve patients and we’ve been obsessive about
resisting attempts to expand the enrolment criteria, because it’s our belief that many of the earlier
head and neck studies that have been run have not shown what they might have shown simply
because of the patient profile – they mixed second and sixth line patients; they mixed patients that
are platinum refractory with platinum resistant; and taxane naïve to taxane induced patients and
taxane refractory patients, and and and and and…

You can’t do that. Well you can, and then you don’t get anything. So our obsession, focus, insistence
is that patients have that very tight enrolment profile because we think it gives us our best shot at
demonstrating activity [?] in our Phase 3 study.

60:33

Q: One more question. The randomised pancreatic study. A couple of times you’ve hinted that it’s
different or special in a way to have Gemzar not being used as the standard of care. Can you expand
on that?

A: With apologies to my colleagues who developed Gemzar and Eli Lilly who sells Gemzar, many
people in our field believe that Gemzar was approved for use with pancreatic cancer on a statistical
anomaly not on real signal. It provides a few short weeks of benefit.

Now, if you’re dying of pancreatic cancer, a few short weeks of benefit is the most amazing gift there
is, so I would take Gemzar too, honestly, just to be up-front, but it’s not a huge amount of benefit
whether it’s real or not. And so I think the feeling is that alternatives should be explored that may
not include Gemzar, and that’s the rationale for this particular study.


We were delighted the NCI wanted to do that, but you’ll notice in the background we’re still running
a Gemzar-Reo study, so we’re going down two paths at one time, the assumption being that we’re
hoping we see superior responses in the Gem-Reo study and we’re hoping to see carbotax-Reo beat
carbotax. But there’s some expectation because taxanes seem to have some activity in pancreatic
cancer that… A carbotax arm by itself will probably beat Gemzar by itself, but we’ll see. I think
everybody’s watching that study for that reason.

That study is also interesting because it’s not blinded, it’s randomised but not blinded because all
the patients in the control arm when they progress they then cross over and get carbotax-Reo
instead of just carbotax. We have already had patients in that study do that, which is interesting. You
get first line and this new category called second line, data in drug-failed patients. It’s quite unique.

Those studies are getting more and more common in oncology to derive information earlier than
you might have in a blinded registration study mode. We’re very excited about that and any
information we can glean out of that study, we try to, because we can. It’s very exciting.

63:03

Q: Today’s announcement about Sigma-Aldrich and the manufacturing – does that telegraph that
you’re betting or speculating that the FDA will approve before Europe, or should we make any read
about the probability or the timing of the two venues in terms of registration approval?
A: It has no impact on the bet whatsoever. This Sigma-Aldrich facility, the Sigma-Aldrich capabilities
are equally applicable to a European filing as to our US filing.

SAFC is a very good organisation. It’s invested a lot in a facility that they purchased and retrofitted
primarily for our first tenant use. It was a fairly big commitment on their behalf on an agent that was
fairly early when they did that, and with no other clients to fill it at that point in time – we were it at
that point in time. So I think it’s a pretty big commitment on an experimental agent at that point in
time.

But they certainly have the capability of taking that through into other jurisdictions and Matt’s team
is focusing very strongly on making sure that the validation and conformity runs are pan-
jurisdictional. So if one jurisdiction has a higher standard than another, then you go to that
automatically.

Europe is different from the United States on the things that concern them, and different countries
in Europe are different – it’s not a monolith – you wish it was a monolith but it is not – so there’s
different concerns and you just pay attention to them all. Things like water for injection – if you do it
by distillation in one jurisdiction that’s great and if you do it in Europe (or maybe it’s the other way
round – I always get them mixed up) you have to do it by reverse osmosis. Just two different
techniques to get to the same place so you use WFI that’s made by both and that solves that
problem.

Little tweaks like that you just pay attention to, and SAFC is very good at paying attention to those
since they make product for multi-jurisdictional use for a very large number of companies. They’re a
good firm. I hope that’s a good enough advertisement for SAFC. I would encourage every company in
the world except for our other viral company colleagues to use them for what they’re doing…


65:41

Q: The Amgen purchase of OncoVex. Could you do a little compare and contrasting, I mean the
manufacturing differences, their agent is…?

A: Completely different agent. It’s a genetically engineered herpes virus that’s had the 34.5 site
chopped out of it because all herpes has to have the neurotoxicity region chopped out of it before
you can stick it into human beings, which seems commonsense to us in the field.

So it’s comparing apples and oranges – the only thing in common is it’s a virus but everything is
different about it – it’s a different virus, it’s got a different mode of action, it’s got a completely
different manufacturing process when you get down to the fine detail points.

Amgen is very good at manufacturing – I know Amgen quite well and if there are any manufacturing
issues I would expect they’ll fix them. I don’t know if there are or there aren’t but certainly if
anyone’s going to take care of it, Amgen will.

We were all very pleased to see that development and while Reo works quite differently than their
product and has different target indications and, and, and… it is a virus used to treat cancers and it
provided for, I think, a, validation is the wrong word, but a relative validation of the area. That big
pharma, because Amgen isn’t a biotech company any more, was willing to commit those kind of
resources to a colleague company was quite helpful I have to say for us all in the area.

67:20

Q: Does the mechanism that their virus uses to avoid being shuttled out of the cell – is it a totally
different mechanism of action, or…?

A: Literally every virus is different. Its recognition by the immune system is different, the means by
which it’s cleared by the body, immune or not, is different.

I mean, Reo’s early clearance has got nothing to do with the immune system – it’s basically just
mechanical filtration and is mostly the lung and the liver. If I gave it to you it would be gone in half
an hour – that’s not your immune system, I’m sorry, it’s different.

And then again Reo, in normal healthy cells there’s a specific double stranded RNA defence
mechanism that’s also not immune, so the immune system’s just part of the equation. But herpes is
very different than Reo in its presentation to the immune system, how it’s cleared, what it binds to
to get into the cell, where it replicates in the cell, everything is unique. I think you have to think of all
viruses that way – adenovirus is different, herpes is different from pox; vaccinia is different from Reo
in all those elements.

We all get together every couple of years in the virus area, have a conference and it’s very inhouse
and it’s not usually competitive because everybody knows everybody is quite different from each
other and we share a lot of things which help each other out, which is going to end some day, but
right now it’s quite collegial. It is different.

68:49


Q: One of the things that’s so stunning to those of us who are watching what you’re doing is how
broadly applicable Reo seems to be, and so… Is it just coincidental that the upfront payment was real
close to the market cap of Oncolytics? With a success payment that would double that?

A: What I find interesting, because obviously I didn’t invent this – Matt and his colleagues did – the
very first time I sat down and listened to Matt present Reo to me, what struck me was the potential
breadth of activity and that really was exceptional.

Looking at normal solid tumours, two thirds-ish have RAS activation or RAS pathway involvement.
Some outliers like panc which is over 90%, metastatic disease arguably 90% or greater, has a RAS
pathway activation, so coming in you have the scientific basis for say ‘Whoo – this should work on
pretty much everything’, and then you start digging into where it works, how it works and all those
other issues, and we’ve found out that delivery into tumours is a critical issue, just as an example.

And of course we found out in humans. Animal models are really poor substitutes for human data.
Animal models are very much more like metastatic disease in that the tumours aren’t very well
differentiated. The piece of tissue you implant in an animal, it’s not the same as a native tumour. So
we found out in humans that we had permeability/delivery issues. That sort of detail and nuance.

Very important nuance, but that was what struck me at the start – it was broadly active and if we
just learned how to use it right we should make it broadly active in people. I still believe that. I think
we’re starting to see that. We’re starting to see this pattern of 40%-ish response rates and 75%-80%
stable disease or better in patients that typically have single digit response rates, all over the place.
That’s a pretty big change.

So I think that’s what really struck me, what caught my attention, and the fact that the science has
remained consistent over all these years and has been broadened and has been tested and has come
up with the same conclusions, I think is quite remarkable and is a testament to the very high quality
early research that was done before I got involved.

71:26

Q: The NCI is not monolithic – they’re obviously seeing some of the same things that you’re seeing
and buying into it, literally. Is there some sub-group within the NCI that has really got the story?

A: I think you’ll always see a pattern with the NCI. They did all the co-therapy work to start so Matt
and I were both expecting to see the first studies being co-therapy studies. You might imagine we
were a little surprised to see a monotherapy melanoma study, a monotherapy ovarian study, a
monotherapy multiple myeloma study etc, and their point to us was that they’d like to see proof,
evidence not of clinical responses necessarily but proof that the virus can actually replicate and be
demonstrated to get tumours of different types as a monotherapy.

Once they’d established that, and that’s the pattern they did with the ovarian thing, then they move
on to drug combinations and start looking for efficacy in the traditional sense. They did that with the
ovarian, they’ll be announcing the same thing with the melanoma I would expect some time this
year, they’re looking for the same thing in their multiple myeloma studies – that’s just their pattern.
They don’t break from their pattern, they’re the NCI, they do what they do and so we follow along.


I think the level of support we’ve got from the NCI is evidence of their interest because it all comes
out of the same office, and this is in a budget-constrained environment because they’re getting cut
back rather markedly in the States right now. They’re valued collaborators of ours and we’ve learned
a lot from them and they’ve learned a lot from us. It’s a good relationship.

[Closing remarks]