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BELLUS Health Reports Results for Third Quarter of Fiscal 2008 and on EMEA Update
Date:11/10/2008

LAVAL, QC, Nov. 10 /PRNewswire-FirstCall/ - BELLUS Health Inc. (NASDAQ: BLUS; TSX: BLU) reports results for the third quarter ended September 30, 2008. For the three-month period ended September 30, 2008, the net loss amounted to $11,095,000 ($0.22 per share), compared to $13,889,000 ($0.29 per share) for the corresponding period the previous year. For the nine-month period ended September 30, 2008, the net loss amounted to $36,703,000 ($0.74 per share), compared to $65,389,000 ($1.54 per share) for the same period last year.

The net loss for the current third quarter included net sales of $153,000 which represents one month of sales of VIVIMIND(TM), the Company's first natural health brand launched in Canada and on the Internet on September 2, 2008. The net loss for the nine-month period ended September 30, 2007, included a non-cash accretion expense under Canadian GAAP of $10,430,000 relating to the $40 million 5% senior subordinated convertible notes issued in May 2007.

Research and development expenses, before research tax credits and grants, amounted to $5,208,000 for the current quarter ($21,111,000 for the nine-month period), compared to $11,964,000 for the same period the previous year ($43,533,000 for the nine-month period). The decrease in the current periods compared to the same periods the previous year is mainly attributable to a reduction in expenses incurred in relation to the development of tramiprosate (ALZHEMED(TM); homotaurine) for the treatment of Alzheimer's disease, following the Company's decision in November 2007 to terminate the tramiprosate (ALZHEMED(TM)) pharmaceutical drug development program.

As at September 30, 2008, the Company had available cash, cash equivalents and marketable securities of $20,595,000, compared to $58,672,000 at December 31, 2007. The decrease is primarily due to funds used in operating activities.

Eprodisate (KIACTA(TM)) for the treatment of Amyloid A (AA) amyloidosis

With respect to eprodisate (KIACTA(TM)), the Company submitted a proposed protocol for the second Phase III clinical trial for consideration by the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMEA). EMEA has agreed with the study design including the new primary endpoint focusing on renal events and excluding death. In addition both the FDA and the EMEA have recognized that this second clinical trial will be confirmatory; hence a p-value of less than 0.05, rather than the p-value of less than 0.01 for the previous Phase II/III trial, should be sufficient to gain approval of eprodisate (KIACTA(TM)) for the treatment of AA Amyloidosis,. A follow-up meeting with the FDA to finalize the study details should take place in the very near future.

Consolidated Financial Results Highlights

BELLUS Health Inc., formerly known as Neurochem Inc., (BELLUS Health or the Company) is a global health company focused on the development and commercialization of products to provide innovative health solutions to address critical unmet needs.

The shareholders of Neurochem Inc. approved the change of its name to "BELLUS Health Inc." at the annual and special shareholders' meeting on April 15, 2008. The new stock ticker symbols of the Company are BLUS (NASDAQ) and BLU (TSX).

The Management's Discussion and Analysis (MD&A) provides a review of the Company's operations, performance and financial position for the three- and nine-month periods ended September 30, 2008, compared with the three- and nine-month periods ended September 30, 2007. It should be read in conjunction with the Company's unaudited consolidated financial statements for the periods ended September 30, 2008, as well as the Company's audited consolidated financial statements for the year ended December 31, 2007, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). For discussion regarding related-party transactions, contractual obligations, disclosure controls and procedures, internal control over financial reporting, critical accounting policies and estimates, recent accounting pronouncements, and risks and uncertainties, refer to the Annual Report and the Annual Information Form for the year ended December 31, 2007, as well as registration statements and other public filings, which are available on SEDAR at http://www.sedar.com or on EDGAR at http://www.sec.gov. This document contains forward-looking statements, which are qualified by reference to, and should be read together with the "Forward-Looking Statements" cautionary notice which can be found at the end of this MD&A. All currency figures reported in this document, including comparative figures, are reported in US dollars, unless otherwise specified. This MD&A was prepared by Management with information available as at November 10, 2008.

Results of operations

For the three-month period ended September 30, 2008, the net loss amounted to $11,095,000 ($0.22 per share), compared to $13,889,000 ($0.29 per share) for the corresponding period the previous year. For the nine-month period ended September 30, 2008, the net loss amounted to $36,703,000 ($0.74 per share), compared to $65,389,000 ($1.54 per share) for the same period last year. The net loss for nine-month period ended September 30, 2007, included a non-cash accretion expense under Canadian GAAP of $10,430,000 relating to the $40 million 5% senior subordinated convertible notes issued in May 2007.

Net sales amounted to $153,000 for the current quarter and nine-month period and represent the initial sales of VIVIMIND(TM), the Company's first natural health brand launched in Canada and on the Internet on September 2, 2008. VIVIMIND(TM), to protect memory function, is based on the naturally occurring ingredient, homotaurine, found in certain seaweed. Targeted at healthy baby boomers, this patented natural health brand is expected to address a largely underserved self-care market by providing a scientific, evidence-based health solution. VIVIMIND(TM) is the direct result of over 15 years of significant scientific research, including clinical testing in over 2,000 individuals. Post-hoc analysis of the North American Phase III clinical trial of homotaurine (VIVIMIND(TM)) involving 1,052 Alzheimer's disease (AD) patients showed a positive impact on cognitive function and anatomically it helped to reduce the volume loss of an important area of the brain responsible for memory. VIVIMIND(TM) is commercialized by OVOS Natural Health Inc., a wholly owned subsidiary of BELLUS Health. The Company's strategy includes revenue generation in the short-to-medium-term through the sale of natural health products and in the medium-to-long-term through development of a pipeline of pharmaceutical products.

Revenue from collaboration agreement amounted to nil for the current quarter ($205,000 for the nine-month period), compared to $228,000 for the same period the previous year ($913,000 for the nine-month period). This revenue was earned under the agreement with Centocor, Inc. (Centocor) in respect of eprodisate (KIACTA(TM)), an oral investigational product candidate for the treatment of Amyloid A (AA) amyloidosis. During the first quarter of 2008, the Company announced its decision to continue the drug development program for eprodisate (KIACTA(TM)) and that it will initiate a second Phase III clinical trial for eprodisate (KIACTA(TM)) in close cooperation with the US Food and Drug Administration (FDA) and the European Medicines Agency (EMEA). The Company expects to file the Investigational New Drug application (IND) in the fourth quarter of 2008, with approximately 190 patients to be followed for a period of 24 months. As part of the decision, the Company withdrew its marketing applications for eprodisate (KIACTA(TM)) in the US, the European Union and Switzerland. On April 15, 2008, the Company announced that it had regained full ownership rights and control of eprodisate (KIACTA(TM)) from Centocor. During the second quarter of 2008, the refundable portion ($6,000,000) of the upfront payment received from Centocor in 2005 was refunded to Centocor.

Reimbursable costs revenue amounted to nil for the current quarter ($69,000 for the nine-month period), compared to $73,000 for the same period the previous year ($332,000 for the nine-month period), and, which for the current nine-month period and the comparative periods the previous year, consisted of costs reimbursable by Centocor in respect of eprodisate (KIACTA(TM))-related activities. As the Company regained full ownership of this program from Centocor, these costs are no longer reimbursable by Centocor.

Research and development expenses, before research tax credits and grants, amounted to $5,208,000 for the current quarter ($21,111,000 for the nine-month period), compared to $11,964,000 for the same period the previous year ($43,533,000 for the nine-month period). The decrease in the current periods compared to the same periods the previous year is mainly attributable to a reduction in expenses incurred in relation to the development of tramiprosate (ALZHEMED(TM); homotaurine) for the treatment of AD, following the Company's decision in November 2007 to terminate the tramiprosate (ALZHEMED(TM)) pharmaceutical drug development program.

The Company is also developing NC-503 (eprodisate) for the treatment of Type II diabetes and certain other features of metabolic syndrome. A Phase II clinical trial in diabetic patients was initiated in Canada and patient recruitment and randomization commenced during the second quarter of 2008. The study is a randomized 26-week, double-blind, placebo-controlled study. Interim results are anticipated in early 2009. Results from a validated rat model of diabetes and metabolic syndrome have demonstrated that NC-503 decreases glycemic levels in obese diabetic Zucker rats, when compared to the control group, while preserving 40% more pancreatic islet cells (insulin secreting cells) as compared to the control group, and showed some protective effect on renal function.

Research tax credits and grants amounted to $264,000 for the current quarter ($1,128,000 for the nine-month period), compared to $434,000 for the corresponding period the previous year ($1,434,000 for the nine-month period). Research tax credits represent refundable tax credits earned under the Quebec Scientific Research and Experimental Development Program for expenditures incurred in Quebec. The decrease is mainly attributable to lower research and development expenses incurred in Quebec during the current periods which are eligible for refundable tax credits.

General and administrative expenses totaled $2,987,000 for the current quarter ($8,513,000 for the nine-month period), compared to $2,559,000 for the same quarter the previous year ($9,184,000 for the nine-month period). The increase in the quarter is mainly due to expenses incurred in relation to the Company's natural health product activities.

Selling and marketing expenses amounted to $1,424,000 for the current quarter ($3,459,000 for the nine-month period) and represent expenses incurred in relation to the commercialization of the Company's natural health brand, VIVIMIND(TM), which was launched during the current quarter.

Reimbursable costs amounted to nil for the current quarter ($69,000 for the nine-month period), compared to $73,000 for the same period the previous year ($332,000 for the nine-month period), and, which for the current nine-month period and the comparative periods the previous year, consisted of costs incurred on behalf of Centocor in respect of eprodisate (KIACTA(TM))-related activities and reimbursable by Centocor. As the Company regained full ownership of this program from Centocor, these costs are no longer reimbursable by Centocor.

Stock-based compensation amounted to $439,000 for the current quarter ($2,298,000 for the nine-month period), compared to $998,000 for the corresponding quarter the previous year ($2,854,000 for the nine-month period). This expense relates to stock options and stock-based incentives, whereby compensation cost in relation to stock options is measured at fair value at the date of grant and is expensed over the award's vesting period. The decrease is mainly due to cancellation of stock options as well as adjustments in relation to forfeitures of stock options during the current quarter.

Interest income amounted to $145,000 for the current quarter ($856,000 for the nine-month period), compared to $1,021,000 for the same quarter the previous year ($2,585,000 for the nine-month period). The decrease is mainly attributable to lower average cash balances and lower interest rates during the current periods, compared to the same periods in the previous year.

Accretion expense amounted to $1,243,000 for the current quarter ($3,675,000 for the nine-month period), compared to $1,452,000 for the same quarter the previous year ($14,568,000 for the nine-month period). Accretion expense represents the imputed interest under GAAP on the $42,085,000 aggregate principal amount of 6% convertible senior notes issued in November 2006 (2006 Notes), as well as on the $40,000,000 6% senior convertible notes (Senior Notes) and $40,000,000 5% senior subordinated convertible notes (Junior Notes) issued in May 2007. The Company accretes the carrying values of the convertible notes to their face value through a charge to earnings over their expected life of 60 months, 54 months and 1 month, respectively. The decrease in the current nine-month period, compared to the same period the previous year is mainly due to accretion expenses of $10,430,000 recorded during the second quarter of 2007 on the Junior Notes, which were fully converted during that quarter. As of September 30, 2008, $42,085,000 of the 2006 Notes remains outstanding as well as $4,500,000 of the Senior Notes. Refer to the Liquidity and Capital Resources section for more details on the convertible notes.

Change in fair value of embedded derivatives amounted to a gain of $45,000 for the current quarter (gain of $145,000 for the nine-month period) compared to a gain of $972,000 for the same quarter the previous year (loss of $898,000 for the nine-month period) and represents the variation in the fair value of the embedded derivatives, including the embedded derivative related to the $80,000,000 aggregate principal amount of Senior and Junior Notes issued in May 2007.

Write-down of third party Asset-Backed Commercial Paper amounted to nil for the current quarter ($375,000 for the nine-month period) and represents an additional provision recorded on the valuation of asset-backed commercial paper held by the Company. See Liquidity and Capital Resources section for more details.

Foreign exchange loss amounted to $216,000 for the current quarter (gain of $644,000 for the nine-month period), compared to a gain of $565,000 for the same quarter the previous year (gain of $1,184,000 for the nine-month period). Foreign exchange gains or losses arise on the movement in foreign exchange rates in relation to the Company's net monetary assets denominated in currencies other than US dollars, which is its functional and reporting currency, and consists primarily of monetary assets and liabilities denominated in Canadian dollars. Foreign exchange gains for the current nine-month period include $924,000 of gain recognized on the reclassification, during the first quarter of 2008, from deferred revenue (non-monetary liability) to accrued liability (monetary liability) of the refundable amount ($6,000,000) due to Centocor, following the recovery by the Company of ownership rights and control of eprodisate (KIACTA(TM)).

Other income amounted to $276,000 for the current quarter ($810,000 for the nine-month period), compared to $270,000 for the same quarter the previous year ($987,000 for the nine-month period). Other income consists of non-operating revenue, primarily sub-lease revenue.

Liquidity and capital resources

As at September 30, 2008, the Company had available cash, cash equivalents and marketable securities of $20,595,000, compared to $58,672,000 at December 31, 2007. The decrease is primarily due to funds used in operating activities. The Company also has short-term bank indebtedness of $8,466,000, including $5,963,000 incurred in relation to the refund to Centocor. As previously discussed, during the second quarter of 2008, the Company refunded the refundable portion of the upfront payment received from Centocor in 2005. Since this obligation was secured by Asset-Backed Commercial Paper (ABCP), the market for which is currently being restructured as discussed later in this section, the Company entered into a credit facility, with the chartered bank that sold the Company the ABCP, in order to finance the repayment. Bank indebtedness bears interest at the bank's prime rate minus 1%. This bank indebtedness is expected to be refinanced by long term bank facilities upon the successful restructuring of the ABCP discussed below.

On July 17, 2008, the Company acquired 100% of the remainder of the outstanding capital stock that it did not already own of Innodia Inc. (Innodia), a private company engaged in developing compounds for the treatment of diabetes, obesity and related metabolic conditions and diseases. Prior to the acquisition, the Company indirectly held 23% of Innodia's capital stock. The Company acquired all of the business of Innodia including the intellectual property assets related to its diabetes and obesity projects and now holds the exclusive rights to BELLUS Health's diabetes platform and all related compounds. The purchase price, in the amount of $1,278,000, was settled by the issuance from treasury of 1,185,797 common shares. Additional consideration consisting of either treasury shares or, at the option of the Company, cash is conditionally payable on the first anniversary of the closing of the transaction, based upon the determination of the value of certain assets at that time.

On May 2, 2007, the Company issued $80,000,000 aggregate principal amount of convertible notes, consisting of $40,000,000 6% senior convertible notes due in 2027 and $40,000,000 5% senior subordinated convertible notes due in 2012. The 6% senior convertible notes have an initial conversion price equal to the lesser of $12.68 or the 5-day weighted average trading price of the common shares preceding any conversion, subject to adjustments in certain circumstances. The Company will pay interest on the 6% senior convertible notes until maturity on May 2, 2027, subject to earlier repurchase, redemption or conversion. The 5% senior subordinated convertible notes were subject to mandatory conversion into common shares under certain circumstances. In connection with this transaction, the Company issued warrants to purchase an aggregate of 2,250,645 common shares until May 2, 2012, at an initial purchase price of $12.68 per share, subject to adjustments in certain circumstances. During the year ended December 31, 2007, $35,500,000 of the 6% senior convertible notes were converted into 5,619,321 common shares and the totality of the 5% senior subordinated convertible notes were converted into 4,444,449 common shares.

On November 9, 2006, the Company issued $42,085,000 aggregate principal amount of 6% convertible senior notes (the 2006 Notes) due in 2026. The 2006 Notes are convertible into common shares based on an initial conversion rate of 50.7181 shares per $1,000 principal amount of 2006 Notes ($19.72 per share). The 2006 Notes are convertible, at the option of the holder under certain conditions. On October 15, 2009, the conversion rate of the 2006 Notes will be adjusted to an amount equal to a fraction whose numerator is $1,000 and whose denominator is the average of the closing sale prices of the common shares during the 20 trading days immediately preceding, and including, the third business day immediately preceding October 15, 2009. However, no such adjustment will be made if the adjustment will reduce the conversion rate. On and after November 15, 2009, the conversion rate will be readjusted back to the conversion rate that was in effect prior to October 15, 2009. On or after November 15, 2011, the Company may redeem the 2006 Notes, in whole or in part, at a redemption price in cash equal to 100% of the principal amount of the 2006 Notes, plus any accrued and unpaid interest. On November 15, 2011, 2016 and 2021, the holders of the 2006 Notes may require the Company to purchase all or a portion of their 2006 Notes at a purchase price in cash equal to 100% of the principal amount of the 2006 Notes to be purchased, plus any accrued and unpaid interest. The Company, at its discretion, may elect to settle the principal amount owing upon redemption or conversion in cash, shares or a combination thereof. As at September 30, 2008, the totality of the 2006 Notes remained outstanding. The terms of the 2006 Notes require the continued listing of the Company's shares on a recognized American Stock Exchange; failure to meet this requirement may be an event of default which may result in the convertible notes being immediately due and payable. (see subsequent event). For additional information, refer to the Annual report and Annual Information Form for the year ended December 31, 2007, as well as other publicly filed documents.

In August 2006, the Company entered into a securities purchase agreement in respect of an equity line of credit facility (ELOC) with Cityplatz Limited (Cityplatz) that provides the Company up to $60,000,000 of funds in return for the issuance of common shares. The ELOC facility was amended in February 2008 and the term was extended to February 2010. Under the amended ELOC facility, the maximum amount of each drawdown is limited to the lower of $6,000,000 or 12.5% of the volume-weighted price calculation of the common shares at the time of drawdown. The common shares will be issued at a discount of 4.0% to market price if the volume-weighted average price (VWAP) per share is $6 or higher and 7.0% if the VWAP per share is lower than $6 at the time of drawdown. A placement fee equal to 2.4% of gross proceeds will be payable to the placement agent. The ELOC shall terminate if (i) the Company's common shares are de-listed from NASDAQ unless the common shares are listed at such time on another trading market specified in the agreement and such de-listing is in connection with a subsequent listing on another trading market specified in the agreement (see subsequent event), (ii) the Company is subject to a change of control transaction or (iii) the Company suffers a material adverse effect which cannot be cured prior to the next drawdown notice. The Company may terminate the securities purchase agreement (i) if Cityplatz fails to fund a properly notified drawdown within five trading days of the end of the applicable settlement period or (ii) after it has drawn down at least $15,000,000 under the ELOC. As at September 30, 2008, the Company had not drawn any funds under the ELOC. As at September 30, 2008, $3,982,000 of funds were potentially eligible for drawdown.

As at September 30, 2008, the Company held $13,219,000 in principal value of third party ABCP, including $6,606,000 of third party ABCP acquired as part of the Innodia acquisition. These investments were due to mature in August 2007, but, as a result of a disruption in the credit markets, particularly in the ABCP market, they did not settle on maturity and currently remain outstanding. There are currently no market quotations available for these ABCP. On April 25, 2008, the restructuring plan announced by the Pan-Canadian Investors Committee (the Committee) in December 2007 was approved by the ABCP holders and is expected to be completed shortly, resulting in the conversion of the ABCP into longer term financial instruments. As at September 30, 2008, the Company estimated the fair value of these ABCP at approximately $9,716,000, of which $546,000 is presented as part of Restricted Cash, as it is pledged to a bank as collateral for letters of credit issued in connection with lease agreements. In connection with its fair value estimations, the Company recorded a write-down of $1,184,000 for the year ended December 31, 2007, and an additional write-down of $375,000 during the quarter ended March 31, 2008, to recognize impairment losses related to these investments. During the current quarter, no additional write-down was recorded; although there were certain changes in factors and assumptions, the net result did not affect the fair value estimation. The Company estimated the fair value of the ABCP using a probability weighted discounted cash flow approach, based on its best estimates of the period over which the assets are going to generate cash flows ranging from five to 28 years based on the proposed restructuring, the coupon interest rate, the discount rate to apply to the net cash flows anticipated to be received commensurate with the return on comparably rated notes in accordance with the risk factors of the different investments and other qualitative factors. This estimate of the fair value of the ABCP is not supported by observable market prices or rates, therefore is subject to uncertainty, including, but not limited to, the successful implementation of the restructuring plan being considered, the estimated amounts to be recovered, the yield of the substitute financial instruments and the timing of future cash flows. The resolution of these uncertainties could be such that the ultimate fair value of these investments may vary from the Company's current estimate. Changes in the near term could require changes in the recognized amount of these assets.

As at September 30, 2008, the Company's workforce comprised 103 employees compared to 172 employees as at September 30, 2007. During the current period, the Company reduced further its research activities and associated workforce to focus on its key projects.

As at October 31, 2008, the Company had 50,043,892 common shares outstanding, 220,000 common shares issuable to the Chief Executive Officer upon the achievement of specified performance targets, 4,552,856 options granted under the stock option plan, 2,884,471 shares currently issuable under the convertible notes, and 2,250,645 warrants outstanding, for a total of 59,951,864 common shares, on a fully diluted basis.

To date, the Company has financed its operations primarily through public offerings of common shares, private placements, issuance of convertible notes, as well as a sale-leaseback transaction, research tax credits, collaboration and research contracts, interest and other income. The future profitability of the Company is dependent upon such factors as the success of the clinical trials, the approval by regulatory authorities of products developed by the Company, the ability of the Company to successfully market, sell and distribute products, including its natural health products, and the ability of the Company to obtain the necessary financing to complete its projects.

The Company has incurred significant operating losses and negative cash outflows from operations since inception and has an accumulated deficit of $354,957,000. As at September 30, 2008, the Company's committed cash obligations and expected level of expenses for the upcoming twelve months exceed the committed sources of funds and the Company's cash and cash equivalents on hand. The Company received a NASDAQ Staff Deficiency Letter; failure to maintain a listing on a recognized American stock exchange may trigger a default on the convertible notes and the termination of the ELOC. The Company is actively considering various alternatives to secure additional financing. Picchio Pharma and its related parties have expressed their commitment to participate and to purchase at least 30% of the next financing. No definitive agreements with potential investors have been reached yet and there can be no assurance that such agreements will be reached. The ability of the Company to continue as a going concern is dependent upon raising additional financing through borrowings, share issuances, receiving funds through collaborative research contracts or product licensing agreements, and ultimately, from obtaining regulatory approval in various jurisdictions, to market and sell its product candidates and achieving future profitable operations. The outcome of these matters is dependent on a number of items outside of the Company's control. As a result, there is significant uncertainty as to whether the Company will have the ability to continue as a going concern beyond the first quarter of 2009.

The consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue its operations in the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the ordinary course of business. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company not be successful in its effort to obtain additional financing or be able to remain listed on a recognized American exchange, to receive significant funds on signing collaborative research contracts or by outlicensing its products or making significant product sales.

Subsequent event

The Company received a NASDAQ Staff Deficiency Letter dated October 10, 2008, stating that, for 10 consecutive trading days, the market value of the Company's listed securities has been below the minimum $50,000,000 requirement for continued inclusion on The NASDAQ's Global Market. The Company believes that the recent decline in its market value is due to the general pressure on equity markets worldwide. The Company has 30 calendar days, or until November 10, 2008, to regain compliance to which BELLUS Health will strive. If the market value of the Company's common stock is $50,000,000 or more for a minimum of 10 consecutive business days at any time prior to November 10, 2008, NASDAQ may determine that the Company has regained compliance with the applicable listing requirements. If compliance with the Rules cannot be demonstrated by November 10, 2008, NASDAQ will provide written notification that the Company's securities will be delisted, at which time the Company may appeal the determination to a Listing Qualifications Panel, requesting additional time to regain compliance. Pending this appeal, the common stock would continue to trade on NASDAQ. Among the alternatives the Company is considering, is the submission of a transfer application to transfer the Company's listed securities to The NASDAQ Capital Market Tier if it cannot regain compliance with the requirements of NASDAQ's Global Market Tier within the appeals period or any extended time granted by NASDAQ. There can be no assurance that NASDAQ will approve the Company's transfer application. The Company's common stock is also listed on the Toronto Stock Exchange (TSX) and such listing is not affected by the notice received from NASDAQ. The market value of the Company's common stock has not been $50,000,000 or more for a minimum of 10 consecutive business days during the period beginning on October 10 and ending on November 10, 2008. Accordingly, the Company anticipates that it will receive written notification from NASDAQ that its securities will be delisted from its Global Tier Market, and expects to file a notice of appeal in response.

Change in functional and reporting currency

Effective July 1, 2007, the Company adopted the US dollar as its functional and reporting currency, as a significant portion of its revenues, expenses, assets, liabilities and financing are denominated in US dollars. Prior to that date, the Company's operations were measured in Canadian dollars and the consolidated financial statements were expressed in Canadian dollars. The Company followed the recommendations of the Emerging Issues Committee (EIC) of the Canadian Institute of Chartered Accountants (CICA), set out in EIC-130, "Translation method when the reporting currency differs from the measurement currency or there is a change in the reporting currency". In accordance with EIC-130, assets and liabilities as of June 30, 2007 were translated in US dollars using the exchange rate in effect on that date; revenues, expenses and cash flows were translated at the average rate in effect during the six-month period ended June 30, 2007 and equity transactions were translated at historical rates. Any exchange differences resulting from the translation were included in accumulated other comprehensive income presented in shareholders' equity. Financial statements presented after June 30, 2007, are measured and presented in US dollars.

Forward-looking statements

Certain statements included in this Management's Discussion and Analysis may constitute "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995 and Canadian securities legislation and regulations, and are subject to important risks, uncertainties and assumptions. This forward-looking information includes amongst others, information with respect to the Company's objectives and the strategies to achieve these objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking statements generally can be identified by the use of conditional or forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Refer to the Company's filings with the Canadian securities regulatory authorities and the US Securities and Exchange Commission, for a discussion of the various factors that may affect the Company's future results. Such risks include but are not limited to: the impact of general economic conditions, general conditions in the pharmaceutical and/or natural health products industry, changes in the regulatory environment in the jurisdictions in which the BELLUS Health Group does business, stock market volatility, fluctuations in costs, and changes to the competitive environment, that actual results may vary once the final and quality-controlled verification of data and analyses has been completed. The results or events predicted in forward-looking information may differ materially from actual results or events. The Company believes that expectations represented by forward-looking statements are reasonable, yet there can be no assurance that such expectations will prove to be correct. Unless otherwise stated, the forward-looking statements contained in this report are made as of the date of this report, and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable legislation or regulation. The forward-looking statements contained in this report are expressly qualified by this cautionary statement.

BELLUS Health Inc.

Consolidated Financial Information (1)

(in thousands of US dollars, except per share data)

Three-month Nine-month

period ended period ended

September 30 September 30

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Consolidated

Statements

of Operations 2008 2007 2008 2007

-------------------------------------------------------------------------

-------------------------------------------------------------------------

(unaudited) (unaudited) (unaudited) (unaudited)

Revenues:

Gross sales $ 206 $ - $ 206 $ -

Discounts, returns

and cooperative

promotional

incentives (53) - (53) -

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Net sales 153 - 153 -

Collaboration

agreement - 228 205 913

Reimbursable costs - 73 69 332

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153 301 427 1,245

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Expenses:

Research and

development 5,208 11,964 21,111 43,533

Research tax

credits and

grants (264) (434) (1,128) (1,434)

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4,944 11,530 19,983 42,099

General and

administrative 2,987 2,559 8,513 9,184

Marketing and

selling 1,424 - 3,459 -

Reimbursable costs - 73 69 332

Stock-based

compensation 439 998 2,298 2,854

Depreciation,

amortization and

patent cost

write-off 352 380 1,032 1,087

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10,146 15,540 35,354 55,556

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Loss before

undernoted items (9,993) (15,239) (34,927) (54,311)

Interest income 145 1,021 856 2,585

Interest and bank

charges (109) (26) (181) (150)

Accretion expense (1,243) (1,452) (3,675) (14,568)

Change in fair

value of embedded

derivatives 45 972 145 (898)

Write-down of

third party

asset-backed

commercial paper - - (375) -

Foreign exchange

gain (loss) (216) 565 644 1,184

Other income 276 270 810 987

Share of loss in a

company subject

to significant

influence - - - (327)

Non-controlling

interest - - - 109

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Net loss ($11,095) ($13,889) ($36,703) ($65,389)

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Net loss per share:

Basic and diluted ($0.22) ($0.29) ($0.74) ($1.54)

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Weighted average

number of

common shares

outstanding 49,954,777 47,495,376 49,312,636 42,360,279

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At At

September 30 December 31

Consolidated Balance Sheets 2008 2007

-------------------------------------------------------------------------

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(unaudited) (audited)

Cash, cash equivalents and marketable

securities $20,595 $58,672

Other current assets 3,203 3,933

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Total current assets 23,798 62,605

Capital assets and patents 9,743 9,996

Other long-term assets 10,229 5,830

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Total assets $43,770 $78,431

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Current liabilities $18,955 $21,240

Long-term deferred gain and liabilities 53,327 52,602

Non-controlling interest - 680

Shareholders' (deficiency) equity (28,512) 3,909

-------------------------------------------------------------------------

Total liabilities and shareholders'

(deficiency) equity $43,770 $78,431

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(1) Condensed from the Company's unaudited consolidated financial

statements.

About BELLUS Health

BELLUS Health is a global health company focused on the development and commercialization of products to provide innovative health solutions to address critical unmet needs.

To Contact BELLUS Health

For additional information on BELLUS Health and its drug development programs, please call the Canada and United States toll-free number 1-877-680-4500 or visit the Web Site at http://www.bellushealth.com.

Certain statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements. Such statements, based as they are on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond BELLUS Health Inc.'s (formerly known as Neurochem Inc.) control. Such risks include but are not limited to: the impact of general economic conditions, general conditions in the pharmaceutical and/or nutraceutical industry, changes in the regulatory environment in the jurisdictions in which the BELLUS Health Group does business, stock market volatility, fluctuations in costs, and changes to the competitive environment due to consolidation, that actual results may vary once the final and quality-controlled verification of data and analyses has been completed, as well as other risks disclosed in public filings of BELLUS Health Inc. Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. The reader should not place undue reliance, if any, on any forward-looking statements included in this news release. These statements speak only as of the date made and BELLUS Health Inc. is under no obligation and disavows any intention to update or revise such statements as a result of any event, circumstances or otherwise, unless required by applicable legislation or regulation. Please see the Annual Information Form of BELLUS Health Inc. for further risk factors that might affect the BELLUS Health Group and its business.

CONTACT: Lise Hebert, Ph.D., Vice President, Corporate Communications, (450) 680-4572, lhebert@bellushealth.com


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SOURCE BELLUS Health Inc.
Copyright©2008 PR Newswire.
All rights reserved


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