BELLUS Health Reports Financial and Operating Results for 2016

BELLUS Health (TSX:BLU) a biopharmaceutical company, reported its financial and operating results for the year 2016.
As quoted in the press release:

2016 and early 2017 Highlights

• Announced on February 28, 2017 the acquisition of an exclusive worldwide license to develop and commercialize BLU-5937 (formerly NEO5937), a potent, highly selective, orally bioavailable small molecule antagonist of the P2X3 receptor, a clinically validated target for chronic cough;
• Announced that its partner, Auven Therapeutics, continues to evaluate the conduct of a Phase 2/3 study for KIACTA™ in pulmonary sarcoidosis;
• Received positive regulatory feedback from the FDA regarding the design of a potential Phase 2 study for Shigamab™ in Shiga-toxin-induced hemolytic uremic syndrome (sHUS);
• Provided a progress update on its legacy portfolio of partnered drug candidates, including AMO-01 for the treatment of Fragile X Syndrome and ALZ-801 for the treatment of Alzheimer’s Disease in APOE4 homozygous patients;
• Announced that the KIACTA™ program for AA amyloidosis was terminated by its partner Auven Therapeutics in December 2016;
• Completed simplification of its capital structure by issuing 13.7 million common shares to settle two convertible securities; the only remaining dilutive securities are those related to the Company’s stock option plan; and
• Concluded the year with cash, cash equivalents and short-term investments totaling $6.8 million, which the Company believes is sufficient to finance its operations for more than 12 months.

“As we continue to make progress on our project pipeline, we are excited to focus our drug development efforts on our recently in-licensed chronic cough candidate, BLU-5937,” said Roberto Bellini, President and CEO of BELLUS Health. “In addition to its potential as a superior treatment option for the millions of patients who suffer from chronic cough, BLU-5937 adds a potentially best-in-class drug candidate to our pipeline and a solid base to grow the Company.”
BLU-5937 for chronic cough
On February 28, 2017, BELLUS Health announced that it had obtained from the NEOMED Institute (NEOMED) an exclusive worldwide license to develop and commercialize BLU-5937 (formerly NEO5937), a potent, highly selective, orally bioavailable small molecule antagonist of the P2X3 receptor, a clinically validated target for chronic cough. BLU-5937 is a promising best-in-class drug candidate that has the potential to help millions of chronic cough patients who do not respond to current therapies.
Under the terms of the agreement, BELLUS Health will pay NEOMED an upfront fee of $3.2 million, consisting of $1.7 million in cash and $1.5 million with 5,802,177 BELLUS Health common shares. NEOMED will be entitled to receive a royalty on net sales-based revenues. In lieu of milestone payments, a certain portion of all other revenues received by BELLUS Health from BLU-5937 will be shared with NEOMED according to a pre-established schedule whereby the shared revenue portion decreases as the program progresses in development.
The P2X3 antagonist program was initiated by AstraZeneca scientists in Montreal, and assigned to NEOMED in October 2012. BLU-5937 was selected as a drug candidate to advance towards the clinic based on development efforts and extensive pre-clinical work in chronic cough done at NEOMED.
Chronic cough is a cough that lasts more than eight weeks and is associated with significant adverse social, psychosocial and physical effects on quality of life. It is estimated that, in the United States alone, more than 2.7 million patients suffer from chronic cough that is not controlled by currently available medications.
KIACTA™ for Sarcoidosis
BELLUS Health’s partner, Auven Therapeutics, is currently evaluating whether to further pursue the development of KIACTA™ for the treatment of patients suffering from active pulmonary sarcoidosis. Auven Therapeutics has developed a clinical Phase 2/3 study protocol to evaluate the safety and efficacy of KIACTA™ in pulmonary sarcoidosis, a rare condition that can seriously impair lung function.
BELLUS Health is partnered with global private equity firm Auven Therapeutics for the development of KIACTA™, who acquired the KIACTA™ rights from the Company in 2010.
Shigamab™ for sHUS
In November 2016, BELLUS Health received positive regulatory feedback from the FDA in relation to the clinical Phase 2 study protocol for the assessment of the efficacy and safety of Shigamab™ in the treatment of children suffering from sHUS. BELLUS Health is currently planning the next steps for the initiation of this clinical Phase 2 study and is seeking to secure a strategic partner for the further development of Shigamab™.
Shigamab™ is a monoclonal antibody therapy being developed for the treatment of sHUS, a rare disease which principally affects the kidneys and often leads to patients requiring acute dialysis. In certain cases, sHUS can cause chronic kidney disease and death, primarily in children. Shigamab™ was acquired through the acquisition of Thallion Pharmaceuticals Inc. (Thallion) in 2013.
AMO-01 for Fragile X Syndrome
In 2014, BELLUS Health entered into a development and license agreement with AMO Pharma Limited (AMO Pharma) for the worldwide rights to AMO-01 (formerly TLN-4601) for the treatment of neurologic and psychiatric disorders in return for revenue sharing and royalties on sales.
AMO Pharma is a private company focused on the treatment of central nervous system and neuromuscular diseases. AMO Pharma is expected to initiate a Phase 2 study on patients with Fragile X Syndrome in the first half of 2017.
ALZ-801 for APOE4 Homozygous Alzheimer’s Disease
ALZ-801 for the treatment of Alzheimer’s disease (AD), initially developed by BELLUS Health, was licensed to Alzheon Inc. (Alzheon) in 2013 in return for revenue sharing and royalties on sales.
Alzheon, a private company focused on AD and other neurodegenerative disorders, has completed two Phase 1b clinical studies with ALZ-801 and is currently in preparation for further clinical studies.
KIACTA™ for AA Amyloidosis
On June 20, 2016, the Company announced negative top-line results from the Phase 3 study of KIACTA™ for the treatment of AA amyloidosis and Auven Therapeutics, BELLUS Health’s partner, decided to terminate the KIACTA™ program in December 2016.
Capital structure simplification
During 2016, the Company completed the simplification of its capital structure initiated in 2012 by issuing the following common shares.
On January 1, 2016, BELLUS Health issued 7,286,828 common shares from treasury in settlement of convertible notes previously amended as part of the May 2012 Plan of Arrangement.
On June 2, 2016, BELLUS Health issued 6,350,638 common shares from treasury upon the exercise of Pharmascience Inc. (Pharmascience)’s right to exchange its 10.4% interest (Interest) in BHI Limited Partnership into common shares of the Company (the Exchange Right). Pharmascience first acquired the Interest in connection with the strategic partnership it entered into with BELLUS Health in May 2012.
As at February 28, 2017, the Company had 61,063,824 common shares outstanding and 65,851,824 common shares on a fully diluted basis, including 4,788,000 stock options granted under the stock option plan. Within the next days, the Company will issue 5,802,177 additional common shares in relation to the BLU-5937 license acquisition from NEOMED.
Summary of Financial Results

	Year ended December 31, 2016		Year ended December 31, 2015
	(in thousands of dollars, except per share data)
Revenues	$	1,893	$	4,024
Research and development expenses, net		(1,366)		(1,008)
General and administrative expenses		(2,624)		(3,122)
Net finance (costs) income		(116)		484
Deferred tax expense (recovery)		15		(27)
Net (loss) income for the year		(2,228)		405
Net (loss) income attributable to shareholders		(2,159)		202
Basic and diluted loss per share	$	(0.04)	$	Nil

• Revenues amounted to $1,893,000 for the year ended December 31, 2016, compared to $4,024,000 for the previous year. The decrease is primarily attributable to lower revenues recognized for accounting purposes in relation to the VIVIMIND™ license agreement with FB Health. As at December 31, 2015, as management assessed that uncertainty in relation to the collectability of future receivables decreased, all amounts to be received until 2017 under this agreement relating to licensing fees, sales-based royalty payments and certain costs reimbursement had been recognized as revenues by the Company. The decrease in revenues is also attributable to lower revenues recognized for accounting purposes from the service agreement entered into with Auven Therapeutics for the development of KIACTA™. Following the announcement of the results from the Phase 3 Confirmatory Study of KIACTA™ in June 2016, the Company’s expected support and assistance to Auven Therapeutics after that date was decreased.
• Research and development expenses, net of research tax credits, amounted to $1,366,000 for the year ended December 31, 2016, compared to $1,008,000 for the previous year. The increase is primarily attributable to higher expenses incurred in relation to the development of Shigamab™. In addition, higher research tax credits were recognized in 2015 in relation to the realization of tax credits from prior years that met the criteria for recognition during that year, and the filing in 2015 of additional claims for prior years.
• General and administrative expenses amounted to $2,624,000 for the year ended December 31, 2016, compared to $3,122,000 for the previous year. The decrease is primarily attributable to costs reduction measures implemented by the Company in 2016 after the announcement of the KIACTA^TM Phase 3 results in June 2016, as well as income recorded in 2016 in relation to the Company’s deferred share unit plans due to the decrease in the Company’s stock price during that period.
• Net finance costs amounted to $116,000 for the year ended December 31, 2016, compared to net finance income of $484,000 for the previous year. The increase in net finance costs is primarily attributable to foreign exchange loss that arose from the translation of the Company’s net monetary assets denominated in US dollars, due to the depreciation of the US dollar vs the Canadian dollar during the period, compared to foreign exchange gains recognized in 2015.

As at December 31, 2016, the Company had available cash, cash equivalents and short-term investments totalling $6,834,000, compared to $9,702,000 as at December 31, 2015. The Company believes its cash position should be sufficient to finance its operations for more than 12 months.
The Company’s full audited consolidated financial statements and accompanying management’s discussion and analysis for the year ended December 31, 2016 will be available shortly on SEDAR at www.sedar.com and on the Company’s website at www.bellushealth.com.
About BELLUS Health (www.bellushealth.com)
BELLUS Health is a biopharmaceutical development company advancing novel therapeutics for conditions with high unmet medical need. Its pipeline of projects includes BLU-5937 for chronic cough, KIACTA™ for sarcoidosis and Shigamab™ for sHUS. BELLUS Health also has economic interests in several other partnered drug development projects.

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