BELLUS Health Inc. (TSX: BLU) is a clinical-stage bio-pharmaceutical development company, advancing novel therapeutics for conditions with a high unmet medical need.

Key Highlights:

• Bellus’ BLU-5937 failed to meet the primary endpoint of its Phase II clinical study for refractory chronic cough. The Company was formulating BLU-5937 medicine, which was meant to treat for refractory chronic cough, a condition that affects the quality of life of millions of patients globally. Positive trial results would have ensured higher business prospects for the Company.
• A total of 68 patients were enrolled for the trial with a dosage of 25mg, 50mg, 100mg and 200mg. However, there was discontinuation in the trial process, and 52 patients completed the entire procedure, while 13 patients were stopped due to detection of COVID 19 and 3 patients discontinued the trial.
• After the usage, the patients did not notice a complete loss of taste and the candidate was well tolerated, including mild side effects at all doses.
• The trial witness meaningful benefit in patients, who were having cough counts more than the median, while response from the lower cough patients was not encouraging.
• The Company intends to initiate a Phase IIb study in the high cough count patient group in Q4 2020.

BLU-5937 phase 2 trials Strategy (Source: Company Reports)

Stock Recommendation: The stock of BLU plunged ~72.34% on July 6, 2020, as the RELIEF trial failed to meet the primary endpoint of reduction in awake cough frequency. The above action went against the investor’s expectation resulting in a steep fall in the stock price. Amidst the failure of the RELIEF trial, there were few positives such as no patients witnessed any side effects, and the dosages are at tolerating levels, and patients with high cough levels witnessed improvement. The company is yet to report its top-line and has incurred higher research and development expenses over the years. The uncertainty around the timelines of the clinical studies coupled with the unexpected miss in chronic cough and the fact that BLU-5937 is the only potential drug in clinical trials puts Bellus in a tight spot. Considering the aforesaid facts, we prefer to stay away from the stock and recommend a ‘Sell’ rating on the stock at the current market price of CAD 5.19 on July 07, 2020.

BLU Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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