BELLUS Health second quarter revenues increase to $719,000

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BELLUS HEALTH INC.Aug 10 2011

Patient recruitment progressing for KIACTA™ Confirmatory Phase III Clinical Trial

BELLUS Health Inc. (TSX: BLU) ("BELLUS Health" or the "Company") reported today its financial results for the second quarter ended June 30, 2011.

"Over the past several quarters, we have increasingly focused our business model on our most promising products while reducing our burn rate significantly," said Roberto Bellini, President and Chief Executive Officer of BELLUS Health. "We made significant progress on several fronts during the quarter. Patient recruitment for our lead drug candidate KIACTA™ is progressing well and should be completed in mid-2012. We also continued to expand the distribution footprint in overseas markets for VIVIMIND™."

Operating Highlights

During the quarter, BELLUS Health and its strategic partner Celtic Therapeutics ("Celtic") continued recruitment for the global confirmatory phase III clinical trial for KIACTA™. The trial is designed to confirm the safety and efficacy of KIACTA™ in preventing renal function decline in patients diagnosed with AA amyloidosis. It will involve approximately 230 patients enrolled from approximately 72 sites in 30 countries. Patient recruitment is estimated to be completed in mid-2012. The confirmatory phase III clinical trial is the last key step before applications for regulatory approval for KIACTA™ can be filed. It is currently estimated that the trial will be completed in 2014.
As previously announced, the Company recently signed licensing agreements for the marketing and distribution of VIVIMIND™ in Italy, Canada, Egypt, Pakistan, Iran and certain other Gulf States in the Middle East.
The Company is currently seeking a potential partnership to pursue the development process of NRM8499, a prodrug of tramiprosate, for which a phase I clinical trial was completed in January 2011. Results of the trial showed a potential for pursuing NRM8499 for the treatment of Alzheimer's disease and demonstrated that NRM8499 was safe and well tolerated at the intended therapeutic dose.
Since the second quarter of 2010, the Company has been implementing cost-reduction initiatives to reduce its fixed-cost base and extend its financial resources. These included the gradual reduction of the Company's head count by more than 75% as of June 30, 2011; early termination of the lease agreement for the Company's Laval, Quebec premises; and the reorganization of its international structure. According to management's current estimates, the Company's monthly burn rate is expected to decrease to approximately $350,000 in the future.
On April 7, 2011, BELLUS Health issued 34,242,911 common shares from treasury at a price of approximately $0.125 per share to the landlord of its leased premises in Laval, Quebec, A.R.E. Quebec No. 2, Inc. ("A.R.E.") as final payment for the deferred rent of approximately $4.3 million payable to A.R.E. The early termination of the lease is expected to result in annual savings of approximately $4.5 million for the Company, representing a total of approximately $43 million in aggregate savings over the remainder of the original lease term. The Company signed a new one-year lease that began on April 8, 2011 at the same premises, for less space.

Summary of Financial Results

These financial results were prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. Comparative figures for 2010 have been restated to conform to IFRS. Unless otherwise specified, all currency figures reported in this news release are in Canadian dollars.

The Company's full consolidated financial statements and accompanying management's discussion and analysis for the three-month period ended June 30, 2011, will be available shortly on SEDAR at www.sedar.com and on the Company's web site at www.bellushealth.com.

For the three-month period ended June 30, 2011, revenues amounted to $719,000, compared to $536,000 for the corresponding period the previous year. Revenues correspond mainly to the amortized portion of the US$10-million upfront payments received from Celtic pursuant to the asset sale and license agreement entered into with the Company in April of 2010, as well as to revenues earned by the Company under the service agreement entered between the parties at the same moment.
For the three-month period ended June 30, 2011, finance income amounted to $4,310,000, compared to $2,041,000 for the corresponding period in the previous year. The increase in the current period is mainly attributable to a decrease in the fair value of the embedded derivative liability on the conversion option of the Company's 2009 Notes.
Research and development expenses, before research tax credits and grants, amounted to $341,000 for the second quarter of 2011, compared to $2,243,000 for the corresponding quarter of 2010. The decrease is mainly attributable to the termination of the NC-503 (eprodisate) development program in the first half of 2010 as well as the reduction in the Company's workforce.
General and administrative expenses were of $789,000 for the three-month period ended June 30, 2011, compared to $2,815,000 for the same period the previous year. The decrease is mainly due to the Company's cost-reduction initiatives described under the Operating Highlights above.
Net income for the second quarter of 2011 amounted to $2,103,000 ($0.01 per share), compared to a net loss of $3,667,000 ($0.02 per share) for the corresponding quarter in 2010. The increase is mainly attributable to a decrease in the fair value of the embedded derivative liability on the conversion option of the Company's 2009 Notes in the amount of $4,247,000 for the three-month period.
As at June 30, 2011, the Company had available cash and cash equivalents of $5,291,000.