OrbiMed leads $35M PIPE financing in BELLUS, becomes largest shareholder

BELLUS Health Inc. (TSX: BLU) has raised $35 million through the issuance of 36,842,105 common shares at a price of $0.95 per share by way of short-form prospectus offering.

OrbiMed Advisors, LLC led the financing and was joined by other investors including New Leaf Venture Partners, First Manhattan Co., Samsara BioCapital, Fonds de solidarité FTQ, AppleTree Partners and Amzak Health.

Orbid, an existing investor, invested $16 million as part of the offering, increasing its stake in BELLUS to 13% of the outstanding common shares. Chau Q. Khuong, Partner at OrbiMed, has joined BELLUS’ board of directors.

Orbid will become the largest shareholder in BELLUS replacing Power Corporation of Canada (TSX: POW), assuming that Power did not participate in the offering.

photo credit: BELLUS

News Release

BELLUS Health Closes $35M Financing to Support Development of its Lead Drug Candidate BLU-5937 for Chronic Cough
Financing led by OrbiMed with Appointment of Mr. Chau Q. Khuong to BELLUS Board of Directors

LAVAL, Quebec, December 18, 2018 – BELLUS Health Inc. (TSX: BLU) (“BELLUS Health” or the “Company”), a clinical-stage biopharmaceutical company, today announced that it has closed an equity offering, issuing a total of 36,842,105 common shares for gross proceeds of $35 million (the “Offering”). The Offering was led by OrbiMed and also included New Leaf Venture Partners, First Manhattan Co., Samsara BioCapital, Fonds de solidarité FTQ, AppleTree Partners and Amzak Health. In connection with the financing, Mr. Chau Q. Khuong, Partner at OrbiMed, has joined the Company’s Board of Directors.

“This financing culminates a transformational year for BELLUS Health during which we also delivered positive Phase 1 data for our lead drug candidate, BLU-5937, for chronic cough,” said Roberto Bellini, President and CEO of BELLUS Health. “We are pleased to have the support and confidence of this high-quality group of healthcare-focused investors. This funding will enable us to advance the clinical development of BLU-5937 as expeditiously as possible. Accordingly, we look forward to initiating our Phase 2 study in chronic cough patients in mid-2019.”

“BELLUS Health has an innovative scientific platform and its potential best-in-class P2X3 antagonist, BLU-5937, holds significant promise for patients afflicted with chronic cough,” said Mr. Khuong, Partner at OrbiMed. “We are excited to work with the Company’s Board of Directors and management team to move BLU-5937 forward in clinical development and to continue driving value for BELLUS Health and its stakeholders.”

Details of the Offering

Bloom Burton Securities Inc. acted as lead agent and book running manager for the Offering on behalf of a syndicate of agents that also included Mackie Research Capital Corporation. Robert W. Baird & Co. Incorporated acted as financial advisor to BELLUS Health in connection with the financing.

Under the Offering, subscribers purchased a total of 36,842,105 common shares at a price of $0.95 per share for aggregate gross proceeds of $35 million. The Offering price of $0.95 per share is an 8% discount to the closing price the day before the announcement of the financing.

In Canada, the common shares purchased pursuant to the Offering were qualified for sale by way of a prospectus supplement dated December 13, 2018 to BELLUS Health’s amended and restated short form base shelf prospectus dated November 30, 2018, which was filed in each of the Canadian provinces. After the completion of the Offering, BELLUS Health has 157,039,686 common shares issued and outstanding.

All currency figures reported in this press release are in Canadian dollars.

Use of Proceeds

Cash, cash equivalents and short-term investments on hand as of November 30, 2018 and pro forma to the Offering total $49.5 million. These funds will be used to finance research and development activities, including but not limited to, BLU-5937’s clinical development, general and administrative expenses, working capital needs and other general corporate purposes.

Insider Participation

Insiders of the Company, Chairman of Board Dr. Francesco Bellini, and Directors Mr. Franklin F. Berger and Dr. Clarissa Desjardins purchased an aggregate of 585,500 common shares under the Offering or 1.6% of the shares issued under the Offering. Being insiders of the Company, subscriptions for common shares by Dr. Bellini, Mr. Berger and Dr. Desjardins are related party transactions within the meaning of applicable Canadian securities laws.

The subscriptions by Dr. Bellini, Mr. Berger and Dr. Desjardins are exempt from the formal valuation and minority approval requirements applicable to related party transactions on the basis that the value of the transactions insofar as they involve related parties is less than 25 percent of the Company’s market capitalization. The Board of Directors of the Company has approved the Offering and Dr. Bellini, Mr. Berger and Dr. Desjardins declared their interest and abstained from voting thereon. A material change report in respect of this related party transaction could not be filed earlier than 21 days prior to the closing of the Offering due to the Offering being launched on December 11, 2018 and the terms of the participation of certain of the non-related parties and the related parties in the Offering confirmed shortly before closing.

Agent Commissions

In connection with the Offering, the agents received a total cash commission of $1,549,970 equal to 4.5% of the gross proceeds raised in connection with the Offering (excluding common shares sold to certain excluded subscribers on a direct, non-brokered basis without any cash fee paid in respect of such shares). In addition, the agents were issued 1,450,264 non-transferable broker warrants, equal to 4.0% of the number of common shares issued under the Offering (excluding any common shares sold to certain excluded subscribers on a direct, non-brokered basis without any broker warrants issued to the agents in respect of such shares). Each broker warrant entitles the agents to buy one common share at a price of $0.95 per share for a period of eighteen (18) months from the closing of the Offering.

U.S. Securities Statement

The securities described herein have not been, and will not be, registered under the U.S. Securities Act, or any state securities laws, and accordingly, may not be offered or sold to, or for the account or benefit of, persons in the United States or to U.S. Persons (as such term is defined in Regulation S under the U.S. Securities Act), except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company’s securities.

About BELLUS Health (www.bellushealth.com)

BELLUS Health is a clinical-stage biopharmaceutical company developing novel therapeutics for conditions with high unmet medical need. Its pipeline of projects includes the Company’s lead drug candidate BLU-5937 for chronic cough and several other partnered clinical-stage drug development programs. BLU-5937, a highly selective P2X3 antagonist, has the potential to be a best-in-class therapeutic for chronic cough patients who do not respond to current therapies.

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. A commercial assessment performed by Torreya Insights on behalf of the Company concluded that, in the United States alone, more than 26 million adults have chronic cough and more than 2.6 million of these patients suffer from refractory chronic cough lasting for more than a year.

François Desjardins
Vice-President, Finance