UNDERWRITING AGREEMENT

UNDERWRITING AGREEMENT

Oncolytics Biotech Inc.

210-1167 Kensington Cr. N.W.

Bolder Investment Partners, Ltd. (the Underwriter ) hereby offers to purchase from Oncolytics Biotech Inc. (the Company ) up to 3,000,000 units of the Company (the Units ) at a price of $2.00 per Unit (the Offering Price ) for gross proceeds to the Company of up to $6,000,000. Each Unit shall consist of one common share (a Unit Share ) and one common share purchase warrant (a Unit Warrant ) of the Company. Each Unit Warrant shall be exercisable into one common share of the Company (a Unit Warrant Share ) for a period of 36 months from the Closing Date (as defined in Section 5 below) at an exercise price of $2.40 per share, provided that, if, on any date (the Accelerated Exercise Date ) the 10-day volume-weighted average trading price of the common shares of the Company (the Common Shares ) on the Toronto Stock Exchange exceeds $3.35 per share, then, at the Company s sole discretion and upon the Company sending the holders of the Unit Warrants written notice of such Accelerated Exercise Date and issuing a news release announcing such Accelerated Exercise Date, the Unit Warrants shall only be exercisable for a period of 30 days following the later of the date on which such written notice is sent to holders of Unit Warrants and the date on which such announcement is made by news release.

The number of Units which the Underwriter shall be obligated to purchase and the Company obligated to sell at the Closing Time (as hereinafter defined), subject to the terms and conditions herein, shall be that number of Units (to a maximum of 3,000,000 (exclusive of Units purchasable pursuant to the Over-Allotment Option (as hereinafter defined)) specified in a written notice provided by the Underwriter to the Company prior to 3:00 p.m. (Calgary time) on the Business Day (meaning a day which is not a Saturday, a Sunday or a statutory or civic holiday in the City of Calgary) prior to the Closing Date.

In addition, the Company hereby grants to the Underwriter an over-allotment option (the Over-Allotment Option ), to purchase and offer for sale to the public pursuant to the terms and conditions contained herein up to an aggregate of 450,000 additional Units (the Over-Allotment Units ), which Over-Allotment Option shall be exercisable in whole or in part by the Underwriter at the Offering Price by providing written notice to the Company of the exercise thereof by 3:00 p.m. (Calgary time) on the Business Day prior to the Closing Date

The Units, together with the Over-Allotment Units, are collectively referred to herein as the Offered Units . The Units which the Underwriter is obligated to purchase hereunder as specified in the notice referred to above, together with any Over-Allotment Units, are collectively referred to herein as the Purchased Units . Reference herein to the Unit Shares, the Unit Warrants and the Unit Warrant Shares shall include reference to those Unit Shares, Unit Warrants and Unit Warrant Shares issuable upon exercise of the Over-Allotment Option, assuming exercise thereof, unless the context otherwise requires. The Unit Shares, the Unit Warrants, the Unit Warrant Shares, the Broker Warrants and the Broker

Warrant Shares are collectively referred to herein as the Offered Securities . The offering of the Offered Securities is referred to herein as the Offering .

The Company filed, on June 16, 2008, with the securities regulatory authorities (the Canadian Securities Commissions ) in each of the provinces of British Columbia, Alberta, Manitoba and Ontario (the Qualifying Provinces ) a short form base shelf prospectus (including the documents incorporated by reference therein, in the English Language, the Canadian Shelf Prospectus ) in accordance with the procedures set out in National Instrument 44-102 qualifying the distribution of, inter alia, Common Shares and warrants to purchase Common Shares and was issued, on June 16, 2008, a receipt therefor by the Alberta Securities Commission (the Reviewing

Authority ) and the Ontario Securities Commission. Receipts therefor were deemed to have been issued by the securities regulatory authority in each of the provinces of British Columbia and Manitoba pursuant to Multilateral Instrument 11-102.

The Company filed, on June 6, 2008, with the United States Securities and Exchange Commission (the SEC ), in accordance with the provisions of the United States Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the 1933 Act ), a registration statement (including documents incorporated by reference therein, as it has been amended on June 17, 2008 and may be further amended from time to time, the Shelf Registration Statement ) on Form F-10, which includes a base shelf prospectus in substantially the form as the Canadian Shelf Prospectus,

covering the sale of, inter alia, Common Shares and warrants to purchase Common Shares under the 1933 Act (the U.S. Shelf Prospectus ), along with an appointment for agent for service of process upon the Company on Form F-X in conjunction with the filing of the Registration Statement (the Form F-X ).

The obligation of the Underwriter to purchase any Offered Units shall, in addition to being subject to the other terms and conditions described herein, be conditional on the following steps having been taken within the time frames described below:

For greater certainty, the parties agree that if the Company fails to meet the deadlines specified above for any reason whatsoever, the Underwriter shall be entitled to exercise the termination rights provided for in Section 10 hereof.

The Company shall pay to the Underwriter a fee (the Underwriter s Fee ) at the Closing Time equal to 8% of the aggregate gross proceeds of the Offering in consideration of the services to be rendered by the Underwriter in connection with the Offering. Such services shall include, without limitation: (i) acting as financial advisor to the Company in the preparation of documentation relating to the sale of the Offered Units; (ii) forming and managing banking, selling and other groups for the sale of the Offered Units; (iii) distributing the Offered Units to the public both directly and through other registered dealers and brokers; (iv) assisting the Company in connection with the preparation and finalization of the Canadian Prospectus Supplement; (v) performing administrative work in connection with these matters; and (vi) all

other services arising out of the agreement resulting from the Company s acceptance of this offer. In the event that Canada Revenue Agency determines that GST is exigible on the Underwriter s

Fee, the Company agrees to pay the amount of GST forthwith upon the request of the Underwriter. In addition, the Underwriter shall be issued, at the Closing Time, warrants, in form and substance acceptable to the Underwriter, acting reasonably, entitling the Underwriter to purchase that number of Common Shares equal to 10% of the number of Common Shares purchased on such date by the Underwriter as part of the Purchased Units (the Broker Warrants ). Each Broker Warrant shall be exercisable into one Common Share (a Broker Warrant Share ) for a period of 36 months from the Closing Date at an exercise price of $2.40 per share, provided that, if the expiry date of the Unit Warrants shall have been accelerated as described above upon the occurrence of an Accelerated Exercise Date, then the expiry

date of the Broker Warrants shall likewise be accelerated provided notice thereof shall have been given to the Underwriter at the time notice thereof is given to the holders of the Unit Warrants.

In the event that the Company shall subdivide, consolidate, reclassify or otherwise exchange the Common Shares during the period in which the Over-Allotment Option and/or Unit Warrants and/or Broker Warrants are exercisable, the Company hereby agrees to make appropriate adjustments to the applicable exercise price of the Over-Allotment Option and/or Unit Warrants (pursuant to the terms of the Warrant Indenture (as hereinafter defined)) and/or Broker Warrants, as the case may be, and to the number of Units and/or Unit Warrant Shares and/or Broker Warrant Shares, as the case may be, issuable upon the exercise thereof, as applicable, such that the Underwriter shall be entitled to receive the same number and type of securities that it would have otherwise received had it exercised the Over-Allotment Option and/or Unit Warrants and/or Broker Warrants, as the case may be, prior to such

occurrence. Reasonable notice shall be given to the Underwriter of such adjustment(s). In the event that the Underwriter shall disagree with the foregoing adjustment(s), the Company s auditors, absent manifest error, at the Company s expense, shall determine such adjustment(s) conclusively.

The Company represents and warrants to and agrees with the Underwriter that:

Warrants or the Broker Warrants or instituted proceedings for any such purpose and no proceedings for any such purpose are pending or, to the knowledge of the Company, are contemplated by any of the aforementioned parties, and any request on the part of such parties for additional information from the Company has been complied with.

The representations and warranties contained in paragraphs (d), (e), (f) and (g) above shall not apply to statements or omissions in the Canadian Supplemented Prospectus or the U.S. Supplemented Prospectus, that are made in reliance upon and in conformity with information furnished to the Company by the Underwriter expressly for use in the Canadian Supplemented Prospectus or the U.S. Supplemented Prospectus.

foreign private issuer within the meaning of Rule 3b-4 under the U.S. Securities Exchange Act of 1934, as amended (the 1934 Act ).

Securities Laws, and are independent as required by the 1933 Act and there has never been any reportable event (within the meaning of Canadian Securities Laws) with the present or any former auditor of the Company.

Intellectual Property means, collectively, all intellectual property rights of whatsoever nature, kind or description including:

Patent Rights means all patents and patent applications of the Company and Oncolytics Barbados and all other patents and patent applications issuing therefrom, claiming, relating to or associated with the business of the Company, Oncolytics Barbados or their respective products and all improvements thereto, including, all divisions, continuations, partial continuations, extensions, substitutions, confirmations, registrations, revalidations, additions or reissues of or to any of the patents or patent applications.

investigation of new drugs in humans and animals, including, but not limited to, those promulgated by the FDA, HC or MHRA.

existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

The Company hereby agrees to sell the Purchased Units to the Underwriter, and the Underwriter hereby agrees to purchase the Purchased Units from the Company, all on the terms and conditions described herein.

The Offered Units are to be offered to the public in the Qualifying Provinces only, either directly through the Underwriter or through members of a selling syndicate to be established by the Underwriter. The Underwriter will comply with the Canadian Securities Laws in connection with the offer and sale of the Offered Units.

The closing of the Offering will be completed at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 2nd Street SW, Calgary, Alberta T2P 4K7 on Wednesday, May 13, 2009 or such later date as the parties may mutually agree to in writing, but in any event no later than May 31, 2009 (the Closing Date ), at 6:30 a.m. (Calgary time) (such time on the Closing Date is referred to herein as the Closing Time ).

At the Closing Time, the Company shall deliver to the Underwriter against delivery to the Company by the Underwriter of the gross proceeds of the Offering:

Furthermore, the Company shall, prior to the Closing Time:

The obligations of the Underwriter to purchase and pay for the Offered Units on the Closing Date are, in addition to the conditions described elsewhere in this Agreement, subject to the following further conditions (which are for the Underwriter s benefit and may be waived by the Underwriter in writing):

In further consideration of the agreements of the Underwriter herein contained, the Company covenants with the Underwriter as follows:

of the Offered Units or the trading in the common shares of the Company, or of the institution or, to the knowledge of the Company, threatening of any proceedings for any such purpose.

The Company will use every reasonable commercial effort to prevent the issuance of any stop order, any order preventing or suspending the use of any prospectus or any order ceasing or suspending the distribution of the Offered Units or the trading in the common shares of the Company and, if any such order is issued, to obtain the revocation thereof at the earliest possible time.

of the 1933 Act) or if, in the opinion of the Company, it is necessary to amend the Disclosure Package, Shelf Registration Statement or amend or supplement the Canadian Supplemented Prospectus or the U.S. Supplemented Prospectus to comply with the Canadian Securities Laws, the 1933 Act or the applicable rules and regulations thereunder, forthwith to prepare, file with the SEC or any Canadian Securities Commission and furnish to the Underwriter and to the dealers (whose names and addresses the Underwriter will furnish to the Company) to which Offered Units may have been sold by the Underwriter and to any other dealers upon request, either amendments or supplements to the U.S. Supplemented Prospectus or the Canadian Supplemented Prospectus (in the English language) (to be effected, if necessary, by the filing with the SEC of a post-effective amendment to the Shelf Registration Statement)

so that the statements in the U.S. Supplemented Prospectus or any Canadian Supplemented Prospectus as so amended or supplemented will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the U.S. Supplemented Prospectus or any Canadian Supplemented Prospectus is delivered to a purchaser, not misleading or so that the Disclosure Package, Shelf Registration Statement, the U.S. Supplemented Prospectus or each Canadian Supplemented Prospectus, as amended or supplemented, will comply with applicable law. The expense of complying with this Section 7(f) shall be borne by the Company in respect of any amendment or supplement required during the nine month period after the effectiveness of the Shelf Registration Statement or the date of the Canadian Prospectus Supplement, as the case may be. Concurrently with the delivery of an amendment or supplement to the Canadian

Supplemented Prospectus to the Underwriter, the Company shall deliver to the Underwriter documents similar to those referred to in Section 6(g), in each case in respect of and dated the date of the amendment or supplement to the Canadian Supplemented Prospectus.

The Company agrees to pay or cause to be paid:

The Company covenants and agrees to indemnify the Underwriter, each person, if any, who controls the Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act and its respective directors, officers, employees and agents (individually, an Indemnified Party and collectively, the Indemnified Parties ), against all losses (other than a loss of profits or consequential damages), claims, damages, liabilities, costs or expenses caused or incurred by reason of:

solely to, or provided solely by, the Underwriter, which prevents or restricts the trading in the distribution to the public, as the case may be, of the Offered Units; or

except to the extent such losses, claims, damages, liabilities, costs or expenses arose primarily from the negligence, wilful misconduct or fraudulent misrepresentation of an Indemnified Party.

To the extent that any Indemnified Party is not a party to this Agreement, the Underwriter shall obtain and hold the right and benefit of the above-noted indemnity in trust for and on behalf of such Indemnified Party and the Company hereby consents to the enforcement by such non-signatory of its rights hereunder.

If any matter or thing contemplated by this Section shall be asserted against any Indemnified Party in respect of which indemnification is or might reasonably be considered to be provided, such Indemnified Party will notify the Company as soon as possible of the nature of such claim and the Company shall be entitled (but not required) to assume the defence of any suit brought to enforce such claim; provided, however, that the defence shall be through legal counsel acceptable to such Indemnified Party, acting reasonably, and that no admission of liability or settlement may be made by the Company or such Indemnified Party without the prior written consent of the other, acting reasonably.

In any such claim, such Indemnified Party shall have the right to retain other counsel to act on such Indemnified Party s behalf provided that the fees and disbursements of such other counsel shall be paid by such Indemnified Party, unless: (i) the Company and such Indemnified Party mutually agree to retain other counsel; or (ii) such Indemnified Party reasonably believes that the representation of the Company and such Indemnified Party by the same counsel would be inappropriate due to actual or potential differing interests, in which event such fees and disbursements shall be paid by the Company to the extent that they have been reasonably incurred.

In the event that the indemnity provided for in this Section is declared by a court of competent jurisdiction to be illegal or unenforceable as being contrary to public policy or for any other reason, the Underwriter and the Company shall contribute to the aggregate of all losses, claims, costs, damages, expenses or liabilities (except loss of profits or consequential damages) of the nature provided for above such that the Underwriter shall be responsible for that portion represented by the percentage that the portion of the Underwriter s Fee payable by the Company to the Underwriter bears to the gross proceeds realized from the sale of the Offered Units whether or not the Underwriter has been sued together or separately and the Company shall be responsible for the balance, provided that, in no event, shall the Underwriter be responsible for any amount in excess of the portion of

the Underwriter s Fee actually received by it. In the event that the Company is held to be entitled to contribution from the Underwriter under the provisions of any statute or law, the Company shall be limited to contribution from the Underwriter in an amount not exceeding the lesser of: (a) the portion of the full amount of losses, claims, costs, damages, expenses, liabilities, giving rise to such contribution for which each Underwriter is responsible, as

determined above; and (b) the amount of the Underwriter s Fee actually received by the Underwriter. Notwithstanding the foregoing, a person guilty of fraudulent misrepresentation or negligence or wilful misconduct shall not be entitled to contribution from any other party. Any party entitled to contribution will, promptly after receiving notice of commencement of any claim, action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section, notify such party or parties from whom contribution may be sought. In no case shall such party from whom contribution may be sought be liable under this Agreement unless such notice shall have been provided, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other obligation it may have otherwise

than under this Section. The right to contribution provided in this Section shall be in addition and not in derogation of any other right to contribution which the Underwriter may have by statute or otherwise by law. The failure by any Indemnified Party to give any notice as provided in this Section 8 shall not relieve the Company from any liability hereunder except to the extent the failure to give such notice materially prejudices the Company.

activities of the Underwriter and not of the Company) which, in the reasonable opinion of the Underwriter, operates to prevent or restrict the trading or the distribution of the Offered Units, the Underwriter shall be entitled, at its option, to terminate its obligations under this Agreement by written notice to that effect given to the Company at or prior to the Closing Time.

This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and federal laws of Canada applicable therein. All parties hereby attorn to the exclusive jurisdiction of the courts of the Province of Alberta to settle all disputes which may arise hereunder or in connection herewith.

The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

All notices or other communications by the terms hereof required or permitted to be given by one party to another shall be given in writing by personal delivery or by facsimile, as follows:

if to the Company at:

Oncolytics Biotech Inc.

Suite 210, 1167 Kensington Cr. N.W.

4500 Bankers Hall East 855 2nd Street SW

if to the Underwriter at:

Bolder Investment Partners, Ltd.

305, 407 - 8 Ave. S.W.

Fraser Milner Casgrain LLP

30th Floor, 237 - Fourth Avenue S.W.

and if so given, shall be deemed to have been given and received upon receipt by the addressee or a responsible officer of the addressee if delivered, or upon receipt of a facsimile transmission confirmation during normal business hours, as the case may be. Any party may, at any time, give notice in writing to the others in the manner provided above of any change of address or facsimile number.

Time shall be of the essence in this Agreement.

The representations, warranties and agreements herein contained shall survive the purchase by the Underwriter of the Offered Units and shall continue in full force and effect unaffected by any subsequent disposition of the Offered Units.

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If this Agreement accurately reflects the terms of the transactions which Bolder and the Company are to enter into and if such terms are agreed to by the Company, please communicate your acceptance by executing where indicated below and returning by facsimile or electronic pdf to Bolder one copy and returning to Bolder by courier thereafter five originally executed copies of this Agreement.

BOLDER INVESTMENT PARTNERS, LTD.

The foregoing is accepted and agreed to as of the date first above written.

ONCOLYTICS BIOTECH INC.

Opinion of Bennett Jones LLP

and no further consent, approval or authorization of any regulatory authority or other governmental body in the Qualifying Provinces is required in connection therewith.

Opinion of Dorsey & Whitney LLP

References to the U.S. Supplemented Prospectus and the U.S. Warrant Prospectus in this Schedule shall also include any supplements thereto at the Closing Date.

Opinion of Barbados Counsel