Oncolytics Commences Ib REOLYSIN® Trial

Oncolytics Biotech Commences Patient Enrolment in Phase Ib UK Clinical Trial Investigating REOLYSIN® in Combination with Radiation Therapy

Monday 10 July 2006

Oncolytics Biotech Inc. (Oncolytics; TSX:ONC, NASDAQ:ONCY) announced today that it has commenced patient enrolment in its Phase Ib UK clinical trial investigating REOLYSIN^® in combination with radiation therapy as a treatment for patients with advanced cancers. The Phase Ib trial will treat patients with a range of two to six intratumoural doses of REOLYSIN^® at 1x10¹⁰ TCID₅₀ with a constant radiation dose of 36 Gy in 12 fractions.

Patient enrolment in the Ia combination REOLYSIN^®/radiation trial was completed in June 2006. The Phase Ia trial tested two intratumoural treatments of REOLYSIN^® at dosages of 1x10⁸, 1x10⁹, or 1x10¹⁰ TCID₅₀ with a constant localized radiation dose of 20 Gy given in five fractions.  A maximum tolerated dose (MTD) was not reached and the combination treatment appears to have been well tolerated by the patients.  Interim results of the Ia trial were presented at the American Association for Cancer Research (AACR) Annual Meeting in Washington, D.C. in April 2006.  Preliminary analysis has demonstrated evidence of both local and systemic response.

The primary objective of the Phase Ib trial is to determine the MTD, dose limiting toxicity (DLT), and safety profile of REOLYSIN^® 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 advanced or metastatic solid tumours that are refractory (have not responded) to standard therapy or for which no curative standard therapy exists.  An additional group of patients is planned to be treated at the maximum dose regimen reached in the Ib trial.

The principal investigators for the trial are Dr. Kevin Harrington of the Targeted Therapy Laboratory, The Institute of Cancer Research, Cancer Research UK Centre for Cell and Molecular Biology and Honorary Consultant in Clinical Oncology at The Royal Marsden NHS Foundation Trust, London, UK, and Dr. Alan Melcher of the Cancer Research UK Clinical Centre at St. James’s University Hospital in Leeds. The trial is enrolling patients at the Royal Marsden and St. James’s Hospitals in the UK.

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For further information please contact:

Cathy Ward

Notes to editors:

• 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 I/II human trials using REOLYSIN^®, its proprietary formulation of the human reovirus, alone and in combination with radiation.  For further information about Oncolytics, please visit www.oncolyticsbiotech.com
• 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 U.K. Phase Ia or Ib combination REOLYSIN^®/radiation clinical trials, 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, the availability of funds and resources to pursue research and development projects, the efficacy of REOLYSIN^® as a cancer treatment, the tolerability of REOLYSIN^® outside a controlled test, 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 and uncertainties related to the regulatory process. 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.