ONCOLYTICS BIOTECH INC

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Note 1: Nature of Operations

Oncolytics Biotech Inc. is a Nevada corporation. The Company was originally incorporated on April 2, 1998, and completed a change in jurisdiction to the State of Nevada on March 31, 2026. This change in jurisdiction had no impact on our operations. Our shares are publicly traded on the Nasdaq Capital Market. Our principal place of business is located at 4350 Executive Drive, Suite 325, San Diego, California, U.S.

Unless otherwise indicated, all references in these financial statements to the terms “we,” “our,” “us,” “the Company,” and “Oncolytics” may refer, as the context requires, to Oncolytics Biotech Inc., or collectively to Oncolytics Biotech Inc. and its subsidiaries.

We are a clinical-stage biopharmaceutical company developing pelareorep, a well-tolerated intravenously delivered immunotherapeutic agent that activates the innate and adaptive immune systems and weakens tumor defense mechanisms. This improves the ability of the immune system to fight cancer, making tumors more susceptible to a broad range of oncology treatments. Our primary focus is to position pelareorep as a platform immunotherapy for the treatment of gastrointestinal (“GI”) tumors and advance our GI program to registration-enabled clinical studies. We are exploring opportunities for registrational programs and investigator-sponsored trials in metastatic pancreatic cancer, second-line or later anal cancer, and metastatic colorectal cancer.

Going Concern

These condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, these condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern. Such adjustments could be material.

We have incurred operating losses since inception and expect to continue to incur losses for the foreseeable future as we advance the development of pelareorep and incur research and development, manufacturing, and general and administrative expenses. We do not expect to generate significant revenues unless and until pelareorep receives regulatory approval and becomes commercially viable.

As of March 31, 2026, we had cash and cash equivalents of $5,493. Based on our current operating plan, we expect that our existing cash resources, even when considered together with capital that may be raised under our equity distribution arrangements, are sufficient to fund near‑term operating milestones but are not sufficient to fund our planned operations for at least twelve months from the date of issuance of our condensed consolidated financial statements included in this quarterly report. These conditions raise substantial doubt about our ability to continue as a going concern.

Our ability to continue as a going concern depends on our ability to obtain additional financing to fund ongoing operations. Management has plans to raise additional capital, including through the use of our at‑the‑market equity sales agreement and potential strategic collaborations or other financing arrangements. However, there can be no assurance that we will be able to obtain additional financing when needed, on acceptable terms, or at all. If we are unable to obtain additional funding as required, we may need to reduce or delay research and development activities, scale back operations, or pursue strategic alternatives.

Liquidity and Capital Resources

To date, we have funded our operations mainly through issuing share capital via public offerings, equity distribution arrangements, and the exercise of warrants. Until such time as we can generate revenue from product licensing or sales, if ever, we expect to finance our operations through public or private equity or debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties. If we are unable to raise capital or enter into such other arrangements as and when needed, we may have to significantly delay, scale back or discontinue our planned expenditures.

Our primary use of cash and cash equivalents is to fund operating expenses, which consist of research and development and general and administrative expenditures. Factors that will affect our future capital requirements include, but are not limited to, expansion of our clinical trial program; the timing of patient enrollment in our clinical trials; the actual costs incurred to support each clinical trial; the number of treatments each patient will receive; the timing of activity with our clinical trial research collaborations; the number, timing and costs of manufacturing runs required to conclude the validation process and supply product to our clinical trial program; the level of collaborative activity undertaken; and the general and administrative services required to support our operations.

Note 2: Basis of Presentation

These condensed consolidated financial statements and notes hereto have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements prepared in accordance with U.S. GAAP that are contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026. These condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of our financial position and results of operations for the interim periods. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year or for any other subsequent interim period. Our condensed consolidated financial statements include our financial statements and the financial statements of our wholly owned subsidiaries, Oncolytics Biotech (Barbados) Inc., Oncolytics Biotech (U.S.) Inc. and Oncolytics Biotech (Canada) Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Judgments and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we evaluate the estimates used, which include but are not limited to revenue recognition, estimation of research and development costs incurred, valuation of stock-based compensation, valuation of warrant derivatives, the discount rate used in estimating the present value of right-of-use assets and lease liabilities, deferred income taxes, determination of the functional currency of each of our legal entities, and forecasting future cash flows in assessing our going concern assumption.

Note 3: Summary of Significant Accounting Policies

The condensed consolidated financial statements have been prepared using accounting policies that are consistent with the policies used in preparing the Company’s audited consolidated financial statements for the year ended December 31, 2025.

Functional and Reporting Currency

Management uses its judgment to determine the functional currency that most accurately represents the economic effects of the underlying transactions, events and conditions and considered various factors including the currency of historical and future expenditures and the currency in which funds from financing activities are generated. A company’s functional currency is only changed when there is a material change in the underlying transactions, events and conditions.

Effective January 1, 2026, the functional currency of Oncolytics Biotech Inc. and its subsidiary, Oncolytics Biotech (Barbados) Inc. was changed to the United States (U.S.) dollar (“USD”) from the Canadian dollar. The change was made to reflect that U.S. dollars has become the currency of the primary economic environment in which the Company operates, accounting for a significant part of the Company’s labor, operations and financing.

The change in functional currency was accounted for prospectively in accordance with ASC 830 – Foreign Currency Matters. Accordingly, translated balances at December 31, 2025 became the new accounting basis at January 1, 2026. Results of operations prior to the change were not restated.

These consolidated financial statements are presented in USD, unless otherwise stated.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and other receivables from the Pancreatic Cancer Action Network (see Note 4) in the event of non-performance by counterparties, but we do not anticipate such non-performance. We maintain our cash and cash equivalents at accredited financial institutions. At times, such balances may exceed federally insured limits. We do not believe we are exposed to any significant credit risk with respect to these balances, as we place our cash and cash equivalents with high‑quality financial institutions and have not experienced any losses on such accounts.

Fair Value Measurement

U.S. GAAP defines fair value, establishes a consistency framework for measuring fair value and specifies disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. Fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. In determining the fair value measurement of our financial instruments, we prioritize the related inputs used in measuring fair value into the following hierarchy:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;

Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

As of March 31, 2026, the carrying amount of our financial instruments, including cash and cash equivalents, other receivables, accounts payable, accrued liabilities, and other liabilities, approximated their fair value due to their short-term maturity.

Stock-Based Compensation

Awards of options that provide for an exercise price that is not denominated in: (a) the currency of a market in which a substantial portion of the Company’s equity securities trades in, (b) the currency in which the employee’s pay is denominated, or (c) the functional currency of the employer’s operations, are required to be classified as liabilities. Following the change in functional currency effective January 1, 2026, certain outstanding stock options with a Canadian dollar exercise price were reclassified from equity-classified to liability-classified options. The reclassification is accounted for as a share option modification in accordance with ASC 718 – Compensation – Stock Compensation (“ASC 718”). Under ASC 718, when an award is reclassified from equity to liability, if at the reclassification date the original vesting conditions are expected to be satisfied, then the minimum amount of compensation cost to be recognized is based on the grant date fair value of the original award. Fair value changes below this minimum amount are recorded in additional paid-in capital. For each reporting period after the modification date, the stock option liability is adjusted so that it equals the portion of the requisite service provided multiplied by the modified award’s fair value at the end of the reporting period. Increases in the fair value of the liability in excess of the minimum grant date compensation cost described above are recognized as stock-based compensation in operating expenses in the condensed consolidated statements of operations and comprehensive loss. For all grants of liability-classified option awards, the compensation cost is remeasured at each reporting period until the settlement date.

Future Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic220-40) Disaggregation of Income Statement Expenses, which requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. In January 2025, the FASB issued ASU No. 2025-01, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220–40): Clarifying the Effective Date. The amendments in ASU 2025-01 clarified that ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the potential impact of the adoption of ASU 2024-03 on our consolidated financial statement disclosures.

Note 4: Balance Sheet Details

Prepaid Expenses

Prepaid expenses consisted of the following:

Accrued Liabilities

Accrued liabilities consisted of the following:

PanCAN Grant Agreement

In 2023, we were selected by the Pancreatic Cancer Action Network (“PanCAN”), a not-for-profit entity, as the recipient of its Therapeutic Accelerator Award to conduct a clinical trial with pelareorep in combination with modified FOLFIRINOX chemotherapy with or without an immune checkpoint inhibitor in pancreatic cancer patients. Under the terms of the award agreement, we are entitled to receive up to $5,000 in funding for eligible research expenses, and we must comply with the conditions set out in the award agreement, including providing periodic performance progress reports.

Funding received for the three months ended March 31, 2026 and 2025 wasnil. During the three months ended March 31, 2026 and 2025, we recognized $390 and $756, respectively, as a reduction of research and development expenses based on eligible costs incurred in accordance with the agreement.

As of March 31, 2026 and December 31, 2025 eligible research and development expenditures incurred exceeded cumulative funding received to date, resulting in other receivables of $917 and $527, respectively.

Note 5: Leases

Our operating lease costs were $73 for each of the three months ended March 31, 2026 and 2025. Our variable lease costs were $16 for each of the three months ended March 31, 2026 and 2025. Variable lease costs consist primarily of a pro rata share of operating costs, insurance costs, utilities and real property taxes.

Future minimum operating lease liabilities as of March 31, 2026 are presented in the following table. Variable lease costs are not included in these payments:

Note 6: Common Shares

Authorized Share Capital

We are authorized to issue 1,000,000,000 shares of common stock, par value of $0.001 per share. Holders of our common stock are entitled toone vote per share at meetings of shareholders, to receive such dividends as declared by our board of directors (“Board”), and to receive our remaining property and assets upon dissolution or wind up. Our common shares are not subject to any future call or assessment and there are no pre-emptive, conversion, sinking fund or redemption rights attached to such shares. Our shareholders have no liability to further capital calls as all shares issued and outstanding are fully paid and non-assessable. No other classes of shares are currently permitted to be issued.

At-the-Market Offering Agreements

On October 17, 2025, we entered into an ATM offering agreement with BTIG, LLC, which allows us to issue common shares, at prevailing market prices, with an aggregate offering value of up to $50,000 through the facilities of the Nasdaq Capital Market. During the three months ended March 31, 2026, we sold 7,446,574 common shares for gross proceeds of $7,861 at an average price of $1.06 per share. We received net proceeds of $7,614 after issuance costs of $247 (including commissions of $236). This ATM agreement was terminated on March 21, 2026. On April 6, 2026, we entered into an Open Market Sale Agreement with Jefferies LLC (see Note 12).

On August 2, 2024, we entered into an ATM offering agreement with Cantor Fitzgerald & Co, which allowed us to issue common shares, at prevailing market prices, with an aggregate offering value of up to $50,000 over a 25-month period through the facilities of the Nasdaq Capital Market. During the three months ended March 31, 2025, we sold 5,302,950 common shares for gross proceeds of $4,327 at an average price of $0.82 per share. We received net proceeds of $4,183 after issuance costs of $144 (including commissions of $130). This ATM agreement was terminated on August 22, 2025.

Consultant Services Shares Issued

During the three months ended March 31, 2026, we issued 650,000 common shares to consultants valued at $539, or a weighted-average price of $0.83 per share, as partial or total consideration for services received. We measured the fair value of these services based on the fair value of our common shares on the date we entered into each underlying consulting services agreement. We recognize stock-based compensation expense for these agreements over the time period we expect to receive services. For the three months ended March 31, 2026, we recognized stock-based compensation expense of $730 related to consultant services. As of March 31, 2026 and December 31, 2025, we recorded $93 and $283 in prepaid expenses related to services not yet performed.

Compensation Warrants

In consideration of the services rendered by the underwriter as part of a public offering in 2023, we issued 536,693 compensation warrants. Each compensation warrant is exercisable intoone common share at an exercise price of $2.25 up to 60 months from the date of issuance. At the issuance date, we used the Black-Scholes Model to estimate the fair value of the services rendered. The resulting fair value was included as part of the public offering transaction costs, and was allocated to share issue costs and operating expenses based on the relative fair values of the common share and warrant of each unit issued. As of March 31, 2026 and March 31, 2025, there were 536,693 compensation warrants outstanding.

Warrants

Following the change in functional currency on January 1, 2026, warrants issued in 2023 pursuant to an underwritten public offering no longer met liability classification and as such were reclassified as equity at that date. The warrants have an exercise price denominated in U.S. dollars and are indexed to our stock because of the change in functional currency.

Each warrant entitles the holder to purchaseone common share at an exercise price of $2.81 up to 60 months from the date of issuance. The expiration of the warrants may be accelerated by us at any time prior to the expiration date if the volume weighted-average price of the issued and outstanding common shares on the Nasdaq Stock Market is greater than $6.50 for any 20 consecutive trading days, at which time we may, within 10 business days, accelerate the expiration date by issuing a press release announcing the reduced warrant term whereupon the warrants will expire on or after the 75 th calendar day after the date of such press release. As of March 31, 2026 and March 31, 2025, there were 7,667,050 warrants outstanding.

Note 7: Stock-Based Compensation

Amended and restated Stock Option and Incentive Share Award Plans

Our amended and restated Stock Option Plan and Share Award Plan (collectively, the “Equity Incentive Plans”) were approved

by our shareholders on May 9, 2023. The Equity Incentive Plans provide for the grant of stock options, restricted share unit awards and performance share unit awards to our employees, consultants and directors. Upon the effective date of the 2026 Plan described below, we ceased granting awards under the Equity Incentive Plans, but any awards granted under the Equity Incentive Plans will remain subject to the terms of the applicable plans.

2026 Incentive Award Plan

The 2026 Incentive Award Plan (the “2026 Plan”) was approved by our shareholders at a Special Meeting of Shareholders held on January 15, 2026 and became effective on March 31, 2026. The 2026 Plan provides for the grant of options, including incentive stock options and nonqualified stock options, restricted stock, dividend equivalents, restricted stock units (“RSUs”), performance shares, other incentive awards, stock appreciation rights and cash awards, to our employees, consultants and directors.

The number of shares reserved for issuance under the 2026 Plan equals the sum of (i)6,500,000 shares; (ii) any shares that remain available under the prior Equity Incentive Plans, as defined below; (iii) any shares that are subject to awards under the prior Equity Incentive Plans which are forfeited or lapse unexercised and which are not issued under the prior Equity Incentive Plans; and (iv) an annual increase on the first day of each calendar year beginning January 1, 2027 and ending on and including January 1, 2036, equal to the lesser of (A)6% of the aggregate number of shares outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the Board or the compensation committee.

As of March 31, 2026, we had 9,986,795 and 12,771,148 common shares reserved for issuance relating to the 2026 Plan and the Equity Incentive Plans, respectively. As of March 31, 2026, there were 9,986,795 common shares available for grant under the 2026 Plan.

Inducement Equity Awards

We have granted inducement equity awards to certain of our key executives. These awards included stock options subject to a service condition, performance-based stock options (collectively, the “Inducement Stock Options”), and performance-based restricted share award units (“Inducement Share Awards”). The grants were made as a material inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4), and therefore did not require shareholder approval.

Stock-Based Compensation Expense

Our stock-based compensation expense was as follows:

Stock Options

Our stock option activity for the three months ended March 31, 2026 was as follows:

Our stock option activity for the three months ended March 31, 2025 was as follows:

Information about our stock options outstanding and exercisable, including both stock options subject to a service condition and stock options subject to a performance condition at March 31, 2026, was as follows:

As of March 31, 2026, unrecognized compensation expense related to unvested stock options was $4,220, including $97 of compensation cost related to unvested stock options with a performance condition. These costs are expected to be recognized over a remaining weighted-average period of 1.6 years.

Stock option grants subject only to a service condition typically vest either immediately or annually over periods ranging fromone tothree years. The performance-based Inducement Stock Options will vest in full upon us generating a minimum of $25,000 in cumulative proceeds from new financing transactions.

We use the Black-Scholes Model to estimate fair value. We use historical data to estimate the expected dividend yield and expected volatility of our stock in determining the fair value of the stock options. The risk-free interest rate is based on the U.S. Treasury rate applicable to the expected life of the award. The expected dividend yield is zero, as we do not expect to pay dividends for the foreseeable future.

The fair value of options granted during the three months ended March 31 was determined using the following weighted average assumptions:

Liability-Classified Stock Options

As discussed in note 3, certain employee stock options previously classified as equity were reclassified as liabilities, effective January 1, 2026.

The fair value of the liability-classified options as of March 31, 2026 and January 1, 2026 was determined using the following weighted-average assumptions:

A summary of the stock option liability for the three months ended March 31, 2026 was as follows:

RSUs

Our RSU activity for the three months ended March 31, 2026 was as follows:

Our RSU activity for the three months ended March 31, 2025 was as follows:

As of March 31, 2026, unrecognized compensation expense related to non-vested RSUs was $128. These costs are expected to be recognized over a remaining weighted-average period of 1.0 year.

Inducement Share Awards

Inducement Share Awards will vest upon our entry into a definitive agreement involving either the acquisition of our company or the exclusive license of pelareorep. During the three months ended March 31, 2026, we granted 300,000 Inducement Share Awards. If the performance condition for these awards is met, our CEO will be entitled to receive a number of common shares equal to 2% of our then-outstanding common shares (2,322,563 at March 31, 2026), and certain key executives will be entitled to receive 800,000 common shares. Accordingly, if the performance conditions had been met on March 31, 2026, a total of 3,122,563 common shares would be issuable pursuant to the Inducement Share Awards. Compensation expense for these awards will be recognized if and when the performance condition becomes probable or is achieved. To date, we have not recorded any compensation expense related to these awards.

Note 8: Net Loss Per Share

The following table shows the calculation of net loss per share:

The amounts in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

Note 9: Contract Liability

We entered into a licensing agreement (the “Licensing Agreement”) with Adlai Nortye Biopharma Co., Ltd. (“Adlai”). Under the terms of the Licensing Agreement, Adlai will have exclusive development and commercialization rights to pelareorep in China, Hong Kong, Macau, Singapore, South Korea, and Taiwan. Pursuant to the Licensing Agreement, we are entitled to receive upfront license fees, development and regulatory milestone payments, royalties, and sales-based milestone payments.

Our contract liability balance at March 31, 2026 and December 31, 2025, which we expect to record in revenue over the next five years, was as follows:

Note 10: Commitments and Contingencies

Indemnification of Officers and Directors

Our corporate bylaws require that, except to the extent expressly prohibited by law, we will indemnify our officers and directors against all costs, charges, and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred in respect of any civil, criminal, or administrative action or proceeding as it relates to their services to us. The bylaws provide no limit to the amount of the indemnification. We have purchased directors’ and officers’ insurance coverage to cover claims made against the directors and officers during the applicable policy periods. The amounts and types of coverage have varied from period to period as dictated by market conditions. We believe that we have adequate insurance coverage, however, there is no guarantee that all indemnification payments will be covered under our existing insurance policies.

There is no pending litigation or proceeding involving any of our officers or directors as to which indemnification is being sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

Commitments

As of March 31, 2026, we are committed to payments of approximately $350 for activities mainly related to our clinical trial and manufacturing programs, which are expected to occur over the nextone year. The ultimate amount and timing of these payments are subject to changes in our research and development plan.

Note 11: Segment Information

We manage our operations as a single reportable and operating segment for the purposes of assessing performance and making operating decisions. Our chief operating decision maker (“CODM”) is made up of our Chief Executive Officer and Chief Financial Officer. The CODM assesses performance and manages and allocates resources on a total company basis. Further, the CODM reviews and utilizes functional expenses at the consolidated level to manage our operations. The measure of segment assets is reported on the consolidated balance sheets as total assets.

The following table provides information about our single segment:

Note 12: Subsequent Events

On April 6, 2026, we entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (the “Agent”), pursuant to which we may offer and sell from time to time through or to the agent, acting as agent or principal, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $75,000.

From April 1, 2026 to May 12, 2026, we sold 2,575,905 common shares pursuant to the Sales Agreement with the Agent, for gross proceeds of $2,363 at an average price of $0.92 per share. We received net proceeds of $2,292 after commissions of $71.