BELLUS Health announces a $17 million strategic partnership and financing with Pharmascience Inc.

-  Reorganization to result in a simplified capital structure -

LAVAL, QC, April 5, 2012 /CNW/ - BELLUS Health Inc. (TSX: BLU) ("BELLUS Health" or the "Company") today announced that it has entered into a strategic partnership and financing with Pharmascience Inc. ("Pharmascience") whereby Pharmascience will pay a total of $17.25 million to BELLUS Health, including $8.15 million in non-dilutive capital and a $9.1 million investment for a 10.4% ownership stake in a new public company ("New BELLUS"). The partnership will be put in place through a plan of arrangement, under which 89.6% of New BELLUS will be owned by securityholders of BELLUS Health.

"This transaction fully funds the Company until the completion of the ongoing phase 3 registration trial of KIACTA™ as a treatment for AA Amyloidosis," said Roberto Bellini, President and CEO of BELLUS Health. "It also introduces a strong, new strategic partner to the Company and results in a cleaner capital structure. This simpler capital structure supports our plan to attract a wider range of investors and increase our trading liquidity  as we near completion of the KIACTA™ phase 3 trial and evaluate opportunities to add to our pipeline."

"As the largest generic pharmaceutical company in Québec, we are actively looking for opportunities to strategically build our exposure to innovative development pipelines," added David Goodman, CEO of Pharmascience. "Under this plan of arrangement, the company that emerges will be a well-funded, late-stage company and we look forward to collaborating with BELLUS on drug development programs of mutual interest."

As part of the arrangement, all outstanding convertible securities of BELLUS Health will be converted to common equity of New BELLUS or amended to rank equally with the common shares of New BELLUS, at the same price as the Pharmascience investment. Common shares of BELLUS Health will be exchanged on a one-for-one basis for common shares of New BELLUS. New BELLUS will carry on its business operations under the name "Bellus Health Inc." and apply to have its common shares listed with the same "BLU" symbol on the Toronto Stock Exchange. The current senior management of BELLUS Health will continue with New BELLUS.

A summary of the reorganization to be completed under a court-supervised arrangement pursuant to the Canada Business Corporations Act is:

  • BELLUS Health will transfer all its assets to a newly-constituted limited partnership (the "LP") to be owned 10.4% by Pharmascience and 89.6% by New BELLUS.
  • The LP will continue BELLUS Health's business operations.
  • BELLUS Health's convertible debt holders will convert the majority of their debt into common shares of the Company at a conversion rate of $0.05, and preferred shareholders will automatically be converted into common shares in accordance with their terms.
  • Holders of convertible notes of BELLUS Health will have the option to either immediately convert their notes at a conversion price of $0.05 or having the terms of their notes amended to rank pari passu with the common shares of New BELLUS and to be convertible into common shares of New BELLUS in 2016 at a fixed conversion price of $0.05.
  • New BELLUS will apply to have its common shares listed on the Toronto Stock Exchange under the symbol BLU.
  • Upon completion of the transaction, Pharmascience will own 100 percent of the common shares of the original BELLUS Health and a (10.4%) interest in the LP, which interest will be exchangeable for 10.4% of the common shares of New BELLUS that are outstanding (after giving effect to the conversion of convertible notes and exchange of shares of BELLUS Health) at the effective time of the arrangement.

Completion of the transaction is subject to receipt of court and regulatory approvals and other third party consents. The arrangement must also be approved by holders of 66⅔% of the common shares and preferred shares of BELLUS Health, and 66⅔% of the convertible notes of BELLUS Health voted at a special meeting and, if applicable, a majority of minority holders in each such class. The special meeting of the Company's security holders that will be held on May 15, 2012, in conjunction with the Company's annual general shareholders' meeting. Additional details regarding the transaction and the votes to be taken at the special meeting will be provided to BELLUS Health security holders in an information circular that will be mailed before the end of April 2012. The information circular will also be available on BELLUS Health's website (www.bellushealth.com) and at www.sedar.com.

Based on a number of factors, including a fairness opinion rendered by the Company's financial advisor for the transaction and the recommendation of an independent committee of BELLUS Health's Board of Directors that was constituted to supervise the Company's negotiation of the transaction, BELLUS Health's Board of Directors unanimously recommends that the Company's security holders approve the transaction.

Pharmascience has concurrently entered into voting and support agreements with security holders holding approximately 35.9% of the Company's common shares, 52.9% of Company's preferred shares and 61% principal amount of the Company's convertible notes, which security holders have agreed to vote in favour of the transaction.

About Pharmascience Inc. (www.pharmascience.com)
Founded in 1983, Pharmascience is a Canadian-owned pharmaceutical company that is based in Montreal and has over 1,300 employees. Pharmascience specializes in the development and marketing of a wide range of innovative and high-quality generic drugs, available by prescription, over the counter and in hospitals. Ranked third among the largest Canadian pharmaceutical companies in terms of prescriptions, Pharmascience sells its products in over 60 countries, with sales in excess of $700 million.

About BELLUS Health (www.bellushealth.com)
BELLUS Health is a development-focused healthcare company concentrating on products that provide innovative health solutions and address critical unmet medical needs. The Company, in collaboration with its partner, Celtic Therapeutics, is currently advancing its novel drug candidate KIACTA™, through phase III trials for treatment of AA Amyloidosis, an orphan indication resulting in renal dysfunction that often rapidly leads to dialysis and eventually death. AA Amyloidosis affects approximately 50,000 individuals in the United States, Europe and Japan.

Forward Looking Statements
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 control. Such risks include but are not limited to: the ability to obtain financing immediately in current markets, 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 Inc. does business, stock market volatility, fluctuations in costs, and changes to the competitive environment due to consolidation, achievement of forecasted burn rate, achievement of forecasted clinical trial milestones, and that actual results may vary once the final and quality-controlled verification of data and analyses has been completed. 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 Company's public fillings including the Annual Information Form of BELLUS Health Inc. for further risk factors that might affect the Company and its business.

For further information:

Jonathan Ross
TMX Equicom
416-815-0700 ext. 248 | jross@equicomgroup.com

Caroline McNicoll
Pharmascience Inc.
514-340-7845 | cmcnicol@pharmascience.com