FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of August 2004

Commission File Number 000-31062

Oncolytics Biotech Inc.

Suite 210, 1167 Kensington Crescent NW
Calgary, Alberta, Canada T2N 1X7
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                     

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):                     

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule12g3-2(b): 82 -                     

Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		210, 1167 Kensington Cr. N.W. Calgary, Alberta Canada T2N 1X7

FOR IMMEDIATE RELEASE

Oncolytics Biotech Inc. Announces 2004 Second Quarter Results

CALGARY, AB, — August 5, 2004 - Oncolytics Biotech Inc. (“Oncolytics”) (TSX:ONC, NASDAQ:ONCY) today announced its financial results for the three and six-month periods ending June 30, 2004.

Second Quarter Highlights:

“The commencement of our first systemic administration trial is a significant milestone for the Company in its development of REOLYSIN® as a potential cancer therapeutic,” said Dr. Brad Thompson, President and CEO of Oncolytics.

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. (“Oncolytics” or the “Company”) as at and for the three and six months ended June 30, 2004 and 2003, 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 Oncolytics’ annual report for the year ended December 31, 2003. 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 the Company’s belief as to the potential of REOLYSIN® as a cancer therapeutic, the Company’s expectation regarding the adequacy of its existing capital resources, and the Company’s expectations as to the success of its research and development programs in 2004 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 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 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 competition, changes in technology, 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. 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. The Company does not undertake to update these forward-looking statements.

OVERVIEW

Oncolytics Biotech Inc. is a Development Stage Company

Since its inception in April of 1998, Oncolytics Biotech Inc. (the “Company”) has been a development stage company and has focused its research and development efforts on the development of REOLYSIN®, its potential cancer therapeutic. The Company has not been profitable since its inception and expects to continue to incur substantial losses from its research and development. The Company does not expect to generate significant revenues until, if and when, its 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 the Company 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 product for approval, the Company will rely upon its employees, contractors, consultants and collaborators and other third party relationships, including the 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 the Company.

Highlights

During the second quarter of 2004, the Company’s net loss was $3,191,888 compared to $3,911,473 for the second quarter of 2003. The decrease in the Company’s net loss is mainly due to the loss on sale of investment in Transition Therapeutics Inc. (“TTH”) of $2,156,685 that occurred in 2003. This decrease was offset by an increase in expenses for the three month period ending June 30, 2004 associated with the Company’s operations. Specifically, manufacturing and related process development expenses increased in the second quarter of 2004 compared to 2003 as the Company has increased its production of

REOLYSIN® in order to supply its clinical trial program. As well, the Company’s systemic (intravenous) delivery clinical trial in the United Kingdom (“U.K.”) commenced patient enrolment in the second quarter of 2004 increasing clinical trial costs in the second quarter of 2004 compared to 2003. Also, the Company’s pre-clinical trial expenses increased in support of future clinical trial applications that include other jurisdictions and methods of application. Finally, the Company recorded a non-cash expense for stock based compensation related to stock options granted in the second quarter of 2004.

The Company’s cash balance continued to improve through the closing of a private placement and the exercise of warrants and options. During the six months ended June 30, 2004, the Company received additional cash proceeds from financing activities of $10,264,784. The Company exited the second quarter of 2004 with cash and short-term investments of $25,522,728 compared to $20,752,735 as at December 31, 2003.

SECOND QUARTER RESULTS OF OPERATIONS
(for the three months ended June 30, 2004 and 2003)

Net loss for the three month period ended June 30, 2004 was $3,191,888 compared to $3,911,473 for 2003. The decrease in the Company’s net loss in the second quarter of 2004 was mainly due to the loss from sale of investment in TTH of $2,156,685 that occurred in 2003 and increases during the second quarter of 2004 in the Company’s operating activities as follows:

Research and Development Expenses (“R&D”)

For the second quarter of 2004, R&D increased to $1,495,934 compared to $848,721 for the second quarter of 2003. The increase in R&D was due to the following:

Manufacturing & Related Process Development

During the second quarter of 2004, the Company continued to focus on the production of REOLYSIN® in order to supply its R&D activity. As well, additional production costs were incurred relating to the technology transfer and set up costs associated with the Company’s second manufacturer.

Clinical Trial Programs

The Company’s clinical trial expenses increased to $167,051 in the second quarter of 2004 compared to $78,145 for the second quarter of 2003. The increase in the second quarter of 2004 relates to the Company commencing patient enrolment in and supporting its systemic (intravenous) delivery clinical trial in the United Kingdom.

Pre-Clinical Trial Expenses

During the second quarter of 2004, the Company incurred pre-clinical trial costs associated with toxicology and equivalency studies being performed in support of future clinical trial applications. These types of studies were limited in the second quarter of 2003.

Operating Expenses

For the second quarter of 2004, the Company’s operating expenses increased to $960,326 compared to $714,759 for the second quarter of 2003. Public company and other operating costs increased in the second quarter of 2004 compared to 2003 reflecting the increased costs associated with the preparation of the Company’s annual filings, annual general meeting and shareholder mail outs plus additional expenses incurred in investor relations and business development.

Stock Based Compensation

During the second quarter of 2004, the Company recorded stock based compensation of $734,670 associated with the granting of stock options to its employees, directors, and certain consultants. Stock based compensation recorded in 2003 related to previously granted options that vested in the second quarter of 2003 and options granted to consultants.

YEAR TO DATE RESULTS OF OPERATIONS
(for the six months ended June 30, 2004 and 2003)

Net loss for the six month period ended June 30, 2004 was $5,868,124 compared to $5,025,787 for 2003. The increase in the Company’s net loss was due to the following:

Research and Development Expenses (“R&D”)

For the six month period ending June 30, 2004, R&D increased to $3,450,331 compared to $1,328,356 for 2003. The increase in R&D was due to the following:

Manufacturing & Related Process Development

In 2004 the Company continued to focus on the production of REOLYSIN® in order to supply its existing and planned R&D activity. As well, the Company took steps to mitigate the risk of economic dependence as a result of having only one supplier of REOLYSIN®. Consequently, almost 75% of the Company’s manufacturing and related process development expenses incurred in 2004 related to the production of REOLYSIN® compared to only 8% in 2003. The Company’s manufacturing expenses in 2004 also include technology transfer and set up costs associated with the addition of a second supplier.

The remaining manufacturing and related process development costs incurred in 2004 and almost all of these costs incurred in 2003 relate to process development. During the first six months of 2003 the Company was completing the development of its manufacturing process and also commenced the development of its viral and cell banks. Consequently, 85% of the Company’s manufacturing and related process development expenses incurred in 2003 related to these activities compared to only 19% in 2004.

For the remainder of 2004, the Company expects that it will continue to produce REOLYSIN® and that a majority of these costs will relate directly to manufacturing. As well, future manufacturing costs may be impacted by the need to supply the clinical trials to be run in accordance with the agreement between the U.S. National Cancer Institute (“NCI”) and the Company.

Clinical Trial Programs

The Company’s clinical trial expenses increased to $292,696 for the six month period ending June 30, 2004 compared to $88,787 in 2003. The increase in clinical trial expenses relates mainly to the costs associated with the Company’s systemic (intravenous) delivery clinical trial in the United Kingdom. The Company also continues to incur expenses related to the Canadian malignant glioma clinical trial.

For the remainder of 2004, the Company expects that clinical trial expenses will continue to be incurred as enrolment continues in the systemic (intravenous) delivery clinical trial. As well, the Company expects that its clinical trial costs may increase as it continues to try and expand its clinical trial program into other jurisdictions.

Pre-Clinical Trial Expenses

The Company’s pre-clinical trial expenses increased to $513,562 for the six month period ending June 30, 2004 compared to $137,966 in 2003. Pre-clinical costs include toxicology studies and are incurred by the Company in support of expanding its clinical trial program into other jurisdictions and other applications.

Operating Expenses

For the six month period ending June 30, 2004, the Company’s operating expenses increased to $1,661,500 compared to $1,236,313 for the six month period ending June 30, 2003. Salary, insurance and other office expenses increased to $723,040 for the six month period ending June 30, 2004 from $505,893 in 2003 due to the increase in staff levels and insurance premiums that commenced in the second quarter of 2003. Public company and other operating costs increased to $938,460 for the six month period

ending June 30, 2004 from $730,420 in the first six months of 2003 reflecting the increased costs associated with the preparation of the Company’s annual filings, annual general meeting and shareholder mail outs plus additional expenses incurred in investor relations and business development.

Sale of Investments

For the six month period ending June 30, 2004 the Company sold 697,945 common shares of BCY for net cash proceeds of $133,609. This resulted in an accounting gain of $47,002. As at June 30, 2004, the Company owned 200,000 common share of BCY with an estimated market value of $20,000. These remaining shares are held in escrow and will be released over the next two years.

For the six month period ending June 30, 2003, the Company sold its investment in TTH for net cash proceeds of $2,552,695 resulting in a recorded loss of $2,156,685.

Commitments

As at June 30, 2004, the Company has committed to payments totaling $766,500 for activities primarily related to product manufacturing and continued toxicology related work. The Company anticipates that these committed payments will occur in 2004. All of these committed payments are considered to be part of the Company’s normal course of business.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As at June 30, 2004, the Company had cash of $25,522,728 (including cash, cash equivalents and short-term investments) and a working capital position of $25,234,266 compared to $20,752,735 and $20,088,868 respectively as at December 31, 2003. During the second quarter of 2004, the Company continued to improve its cash position through a private placement of 1,077,100 units at an average price of $6.25 per unit. Net cash proceeds after issue costs were $6,223,763 and each unit was comprised of 1,077,100 common shares and 538,550 common share purchase warrants. Each whole common share purchase warrant entitles the holder to acquire one common share of the capital of the Company upon payment of $7.75 per share until October 7, 2005. The Company also received cash proceeds from the exercise of warrants from previously closed financings of $3,300,038 and from the exercise of stock options of $740,983. Consequently, for the six month period ending June 30, 2004, the Company has received a net amount of $10,264,784. This increase in the Company’s cash position has been offset by cash outflows from operating activities of $5,194,579 and purchases of intellectual property and other assets of $433,821.

The Company desires to maintain adequate cash and short-term investment reserves to support its planned activities which include its clinical trial program, production manufacturing, and its intellectual property expansion and protection as well as administrative activities. The Company believes that its existing capital resources are adequate to fund its current plans for research and development activities into 2007 without presuming the further exercise of outstanding warrants and options. In the event that the Company chooses to seek additional capital, the Company will look to fund additional capital

requirements through the issue of additional equity as well as potential partnering or licensing opportunities. The Company recognizes the challenges and uncertainty inherent in the capital markets and the potential difficulties it might face in today’s environment. Market prices for securities in biotechnology companies are volatile and the ability to raise funds will be dependent on a number of factors, including the progress of R&D, availability of clinical trial information, and general market conditions.

Capital Expenditures

During the six month period ending June 30, 2004, the Company spent $425,928 on intellectual property compared to $595,147 in 2003. The difference relates to variances in filing fees on existing patent applications.

SUMMARY OF QUARTERLY RESULTS

The following unaudited quarterly information is presented in thousands of dollars except for per share amounts:

OTHER MD&A REQUIREMENTS

The Company has 29,452,618 common shares outstanding at July 31, 2004. If all of the Company’s warrants and options were exercised the Company would have 35,234,077 common shares outstanding.

Oncolytics Biotech Inc.

BALANCE SHEETS

As at,

See accompanying notes

Oncolytics Biotech Inc.

STATEMENTS OF LOSS AND DEFICIT

See accompanying notes

Oncolytics Biotech Inc.

STATEMENTS OF CASH FLOWS

See accompanying notes

Oncolytics Biotech Inc.

NOTES TO FINANCIAL STATEMENTS

June 30, 2004 and 2003 (unaudited)

1. ACCOUNTING POLICIES

These unaudited interim financial statements do not include all of the disclosures included in the Company’s annual financial statements. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company’s most recent annual financial statements. The information for the year ended December 31, 2003 has been derived from the Company’s audited financial statements for the year then ended.

The accounting policies used in the preparation of these unaudited interim financial statements conform with those used in the Company’s most recent annual financial statements.

2. INVESTMENTS

During the six month period ending June 30, 2004, the Company sold 697,945 of its BCY shares for net cash proceeds of $133,609 recording a gain on sale of investment of $47,002. As at June 30, 2004, the Company’s remaining ownership in BCY was 200,000 common shares with a book value of $24,818 and an estimated market value of $20,000 based on the trading price at June 30, 2004.

3. SHARE CAPITAL

Authorized:

Unlimited number of common shares

Oncolytics Biotech Inc.

NOTES TO FINANCIAL STATEMENTS

June 30, 2004 and 2003 (unaudited)

The following table summarizes the Company’s outstanding warrants as at June 30, 2004:

Stock Option Plan

The Company has issued stock options to acquire common stock through its stock option plan of which the following are outstanding at:

Oncolytics Biotech Inc.

NOTES TO FINANCIAL STATEMENTS

June 30, 2004 and 2003 (unaudited)

As the Company is following the fair value based method of accounting for stock option awards, compensation expense related to options granted to employees and consultants was $717,276 and $22,820, respectively for the six month period ending June 30, 2004 (June 30, 2003 – $5,271 and $63,518, respectively) with an offsetting credit to contributed surplus.

4. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period’s presentation.

FOR FURTHER INFORMATION PLEASE CONTACT:

-30-