BELLUS Health and NEOMED

Institute Transaction

Licensing of BLU-5937 for

Chronic Cough

February 28, 2017

r

Investment Thesis

Fast follower with best-in-class potential for large market with high unmet

medical need2

Merck acquired a P2X3 antagonist program in 2016

for US$500M based on positive Phase II data in

chronic cough

Potential multi billion dollar drug class in therapeutic

indication lacking innovation

Orally bioavailable small molecule

Superior potency and P2X3 selectivity

Potential for improved efficacy and safety profile

Clear and efficient development path & value creation

Attractive financial terms

Leverages core competencies: clinical, BD, financing

Experienced, motivated team to drive project to success

Right-sized transaction for BELLUS

BLU-5937: potential to be best-in-class drug

addressing high unmet need

P2X3: validated target in emerging drug class

for chronic cough

Chronic Cough

Cough lasting > 8 weeks, associated

with:

• Pulmonary diseases (asthma, COPD,

lung cancer, IPF)

• Extra-pulmonary disorders (post-nasal

drip, gastro-oesophageal reflux)

• Use of certain drugs (ACE inhibitors)

• No identifiable cause (unexplained

chronic cough)

3

ImplicationsCharacteristics

Time and resource intensive for

healthcare system

• Responsible for 30M physician visits per

year in U.S.

• 38% of pulmonologist outpatient practice

• Unexplained and refractory chronic cough

require time and resource intensive

differential diagnosis

Major Impact on Patients

4

Exhaustion

Sleep deprivation

Retching/vomiting

Incontinence

Headache

Hoarse voice

Chest pain

Rib fracture

Embarrassment of

coughing in public

Interference with

lifestyle, work & leisure

Difficulty speaking

Social exclusion

Distress

Anger

Anxiety

Depression

Psychosocial complications

Social complications

Physical complications

Chronic cough has significant impact on patient quality of life4

Few Treatment Options

5

Gabapentin/PregabalinOpioids

Centrally acting

Some efficacy

demonstrated in small

studies

High incidence of

adverse effects

Very limited efficacySome efficacy but cause

sedation/confusion

Constipation and

nausea

Potential for addiction

OTC Products

No novel approach approved to address chronic cough in 40 years5

Pathophysiology: Hypersensitivity of Cough Reflex

Coughing trigger

(ex. asthma attack)

Cellular damage causes ATP

release in respiratory tract

ATP activates P2X3 receptors

on airway sensory neurons

Airway hyper-excitability

Chronic Cough

Cell injury

Drug targeting P2X3 has strong mechanistic rationale for reducing cough

frequency 6

ATP andCytokines

Primary afferent(A𝛿 or C-fiber)

ATP

ATP

Receptors

P2X3

P2X3-containingPrimary afferent

Problematic taste side effect

likely due to lack of high

selectivity for P2X3

Clinically Validated Molecular Target

Opportunity for highly selective P2X3 antagonist with better

efficacy/safety profile ratio to become class leader7

50 to 75%reduction in cough frequency

50 to 100%of patients experience taste

disturbance

Adbulqawi et al., 2016. P2X3 receptor antagonist (AF-219) in refractory chronic cough: a randomised, double-blind, placebo-controlled phase 2 study. Lancet. Vol 385, No 9974 pp. 1198-1205.

Kitt et al., 2016. A Phase 2 Dose-Escalation Study with AF-219, a P2X3 Antagonist for the Treatment of Chronic Cough. American Thoracic Society 2016 International Conference - San

Francisco.

Weakly selective P2X3 antagonist use in

chronic cough patients results in:

P2X3 Family Involved in Taste Perception

8

Taste stimuli

ATP release from taste

buds

ATP activates P2X3 and

P2X2 receptors on taste

sensory neurons

Taste perception

Drug with high selectivity for P2X3 could limit or eliminate taste alteration

side effect without compromising effect on cough8

Kinnamon et al., 2013. A Taste for ATP: neurotransmission in taste buds. Frontiers in Cellular Neuroscience. Vol 7, Article 264 pp. 1-7.

mouse tongue

Legend

P2X3

P2X2

P2X3 Highly

Selective Antagonist

P2X3 & P2X2

Double knockout

Taste loss

P2X3

Single knockout

P2X2

Single knockout

Mild taste alterationMild taste alteration

Expected mild/no taste alteration

P2X3 Antagonist

Knockout Mice

Drug Approach

P2X3 Mildly

Selective Antagonist

Significant taste alteration

Strong drug candidate profile with potential to be best in P2X3 class

BLU-5937 Profile

9

Kgscale CMC

Broad and comprehensive IP to

2034

HighPotency (low nM) and Selectivity for

P2X3

Orally bioavailable

small molecule

Zerosafety findings of concern to-date

Preclinical Efficacy: Cough Response

*

Treatments (control, BLU-5937) were administered orally (p.o.) two hours prior to tussive agent exposure:

citric acid (0.1 M, aerosol) and histamine (0.6 mM, aerosol); n=6 animals (guinea pig) per group *p<0.05

Oral administration of BLU-5937 dose-dependently reduced the frequency

of cough in a guinea pig model10

0

5

10

15

20

25

30

Control 0.3 mg/kg p.o. 3 mg/kg p.o. 30 mg/kg p.o.

Total coughs (average)

Control BLU-5937

*

Competitive Landscape

11

Preclinical

Early clinical

Late clinical

Registration

TRP modulators

• Novel target, TRPM8,

is in the exploratory

stage with limited

mechanistic

understanding

NK1 antagonists

• Repurposed class initially

developed for depression

• Also target sensory nerve

signaling

• Limited clinical validation in chronic

cough

P2X3 antagonists

• Inhibit respiratory tract

sensory pathway signals

• Most promising and

competitive novel class

of anti-tussive

BLU-5937BELLUS Health

AF-219

Afferent/Merck

Overpitant

NeRRe Therapeutics

Repurposed classSCH 900978

Opko Health

Repurposed class

Ax-8

Alveonix

TRPM8 agonist

Acquired by Merck

in 2016 (US$500M

upfront, US$750M

in milestones)

following positive

Phase II data

10-40% patients with

refractory / unexplained

chronic cough

10% of US adult

population has

chronic cough

Estimated addressable patients in major pharma markets:

6.3M

Large Addressable Market

12

275M U.S. adults

27.5M U.S. chronic cough

patients

2.75M Unexplained/

refractory

patients

Major pharma markets include the U.S., Europe top five countries and Japan

Song et al., 2015. The global epidemiology of chronic cough in adults: a systematic review and meta-analysis. Eur Respir J. Vol 55 pp. 1479-1481Zanasi et al., 2014. Chronic and unexplained cough. (Published online) Vol 4, No 3 pp. 159-164

Key Development Milestones

13

Value creating milestones throughout development path

2017 2018 2019/2020

IND-enabling studiesPhase I: assess dose

and taste effect

Phase II: demonstrate

antitussive effect

Complete IND

preclinical study

package

Assess safety,

tolerability, PK, effect on

taste in healthy subjects

Single ascending dose

and multiple ascending

dose studies

Assess safety, PK and

antitussive effects in patients

suffering from chronic

refractory cough

Dose response study with

crossover design

13

Key Transaction Terms

14

Significant upside potential for BELLUS investors14

Milestone Payments:

None

Revenue Sharing:

Very low double

digit revenue sharing expected

Upfront Fee:

$1.7M cash;

$1.5M equity

Scope:

exclusive worldwide

license for all indications

Royalty Rate:

Low single digit tiered