Mr. Roberto Bellini reports

BELLUS HEALTH REPORTS RESULTS FOR FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010

Bellus Health Inc. is providing its financial results for the fourth quarter and year ended Dec. 31, 2010. All currency figures reported in this news release, including comparative figures, are in Canadian dollars, unless otherwise specified.

"Our new business model has delivered substantial results in 2010," said Roberto Bellini, president and chief executive officer of Bellus Health. "We continued to add value to the products in our pipeline, particularly Kiacta, which has started its confirmatory phase III trial. We have also significantly reduced our burn rate through the implementation of our strategic initiatives to limit our operating costs. We intend to carry on this path in 2011 to continue building value for our shareholders," Mr. Bellini added.

Financial results

For the fourth quarter ended Dec. 31, 2010, the company recorded a net loss of $3,817,000 (two cents per share), compared with $5,662,000 (three cents per share) for the corresponding quarter the previous year. For the year ended Dec. 31, 2010, the net loss amounted to $20,113,000 (10 cents per share), compared with a net loss of $8.79-million (six cents per share) for the same period last year.

The decrease in net loss for the fourth quarter ended Dec. 31, 2010, compared with the corresponding quarter the previous year, is primarily due to revenue recorded in 2010 in relation to the Kiacta asset sale and licence agreement and sale of Ovos Natural Health Inc., as well as a decrease in research and development expenses. The significant variation between the net loss for the years ended Dec. 31, 2010, and 2009 is mainly attributable to items recorded in the second quarter of 2009 in relation to the company's refinancing that took place in April, 2009. During that quarter, the company recorded a gain on extinguishment of debt in the amount of $20.53-million resulting from amendments to the terms of the convertible notes issued in 2006 and 2007, as well as a net credit for vacant space in the amount of $2,277,000 in relation to the vacant portion of the company's premises.

As at Dec. 31, 2010, the company had available cash and cash equivalents of $10,257,000, compared with $14,017,000 at Dec. 31, 2009. The decrease is primarily due to funds used in operating activities, offset by funds received in connection with the Kiacta asset sale and licence agreement.

The company's consolidated financial statements and accompanying management's discussion and analysis for the year ended Dec. 31, 2010, will be available shortly on SEDAR and on the company's website.

Highlights

Update on the company's product candidates

The following is an overview of the progress on the company's product candidates during 2010.

Kiacta (eprodisate) for the treatment of amyloid A (AA) amyloidosis

On Dec. 14, 2010, a global confirmatory phase III clinical study was initiated for Kiacta. The study is designed to confirm the safety and efficacy of Kiacta in preventing renal function decline in patients with AA amyloidosis. The international, randomized, double-blind, placebo-controlled, event-driven study will involve approximately 230 patients diagnosed with AA amyloidosis enrolled from approximately 90 sites in 30 countries worldwide. It is currently estimated that the study will be completed in 2014. A similar study conducted by the company from 2001 to 2004 achieved statistical significance in its primary end point (p equals 0.025) (New England Journal of Medicine, June 7, 2007, 356: 2,349 to 2,360). On April 29, 2010, the company signed an asset sale and licence agreement with Celtic Therapeutics, pursuant to which Celtic Therapeutics acquired and licensed worldwide rights related to the phase III investigational product candidate Kiacta for upfront payments totalling $10-million (U.S.). Celtic Therapeutics will finance 100 per cent of Kiacta's development costs through its confirmatory phase III clinical study and all other requirements for Kiacta's regulatory approval.

NRM8499, a prodrug of tramiprosate for the treatment of Alzheimer's disease

During the first quarter of 2010, the company initiated a phase I clinical study for NRM8499. The randomized, double-blind, placebo-controlled study investigated the safety, tolerability and pharmacokinetic profile of NRM8499 in a group of 67 young and elderly healthy subjects. The phase I clinical study for NRM8499 was completed in the fourth quarter of 2010. On Jan. 31, 2011, Bellus Health announced in Stockwatch the results of the phase I clinical study which indicated that NRM8499 was safe and well tolerated at the intended therapeutic dose. Moreover, the gastrointestinal tolerability and pharmacokinetic profile of tramiprosate, with regard to the interindividual variability in drug systemic exposure, were meaningfully improved with NRM8499 when compared with the administration of an equivalent dose of tramiprosate.

Update on Vivimind and Ovos Natural Health

On Sept. 30, 2010, a natural health product number (NPN) was issued by Health Canada for Vivimind, which grants formal authorization for sale in Canada. During 2010, the company entered into two partnerships in relation to Vivimind.

On Oct. 19, 2010, with the approval of a special committee of the board of directors of the company, Bellus Health signed a licence and supply agreement relating to the distribution of Vivimind in Italy with FB Health LLC. Pursuant to the licence and supply agreement, the company granted FB Health exclusive distribution rights for Vivimind in Italy, for consideration consisting of an upfront payment and of up to three million euros in commercial milestone payments should certain mutually agreed upon sales targets be achieved. The licence and supply agreement also provides for Bellus Health to supply material for the product to FB Health at a preagreed transfer price. FB Health is an Italian nutraceutical company controlled by Dr. Francesco Bellini, chairman of the board of directors of Bellus Health.

On Dec. 31, 2010, the company entered into a share purchase agreement with Advanced Orthomolecular Research Inc. (AOR) with respect to Ovos Natural Health, the company's wholly owned Canadian nutraceutical subsidiary. In addition, the company and AOR entered into an exclusive licence and supply agreement relating to the distribution of Vivimind in Canada. Pursuant to the share purchase agreement, AOR acquired all issued and outstanding shares of Ovos Natural Health for a total consideration of $1-million, consisting of an upfront payment of $350,000 and of a payment of $650,000 contingent upon the successful completion of a pre-established milestone event expected to occur within 18 months of the closing of the transaction. Pursuant to the licence and supply agreement, the company granted AOR exclusive distribution rights for Vivimind in Canada and will be supplying AOR with the material for the product at a preagreed transfer price. The licence and supply agreement also provides for up to $3-million in commercial milestone payments to Bellus Health should certain mutually agreed upon sales targets be achieved.

The company continues to actively pursue arrangements in relation to the distribution of Vivimind in other markets.

Strategic initiatives to reduce burn rate

During 2010 and following the end of the year, the company continued its efforts to reduce its annual expenditures (burn rate). Based on the company's current estimates, the initiatives implemented by the company, as described below, including the impact of the corporate reorganization, are expected to decrease Bellus Health's monthly burn rate to approximately $400,000 by the end of the second quarter of 2011.

On Aug. 9, 2010, the company announced in Stockwatch that it would be focusing on supporting its current and future partnerships and on undertaking less expensive product development programs for NRM8499 to reduce its burn rate and extend its cash resources. The company further announced that as a result of these initiatives, it would gradually reduce its head count by more than two-thirds. It is expected that the company will have approximately 10 employees by the end of the second quarter of 2011.

On Jan. 14, 2011, the company announced in Stockwatch that it exercised its right to terminate the lease of its Laval, Que., premises as of April 7, 2011, as provided in the amended lease agreement dated March 31, 2009, with ARE Quebec No. 2 Inc., the landlord of such premises. The exercise of such termination option will result in annual savings of approximately $4.5-million for the company, representing a total of approximately $43-million in total savings over the remainder of the original lease term. On Jan. 21, 2011, in consideration for the exercise of the termination option, Bellus Health issued 20,656,320 common shares from treasury to ARE at a price of 29 cents per share (rounded to the second decimal point), for a total value of $6-million. Pursuant to the terms of the amended lease agreement, 2009, deferred rent in the amount of $4.2-million (including deferred rent payments for the first quarter of 2011 and all accrued interest thereon) will be payable to ARE on April 7, 2011, in cash or, at the company's option, through an issuance of common shares from treasury.

Corporate reorganization

The company initiated a corporate reorganization process whereby the company will unwind its international structure by closing its subsidiaries in Europe and the United States. The completion of the corporate reorganization, which is expected to occur in the first quarter of 2011, will result in the repatriation of Bellus Health's intellectual property to Canada.

Departure of vice-president, general counsel and corporate secretary

In connection with the gradual reduction of its work force under the initiatives to reduce its burn rate, Bellus Health also announced today that David Skinner, vice-president, general counsel and corporate secretary, will leave the company, effective Feb. 25, 2011.

"Since joining Bellus Health in April, 2003, David Skinner has demonstrated extraordinary rigour and professionalism. His contribution to managing contractual and enterprise risk, financings and strategic partnerships, and negotiating and implementing M&A transactions has been invaluable. We wish to thank David for his dedication and wish him the best success in his future endeavours," said Mr. Bellini.

As part of its mandate as external legal adviser to the company, Davies Ward Phillips & Vineberg LLP will provide the services of one of its partners, Sebastien Roy, as corporate secretary, effective Feb. 25, 2011.

Going concern

As at Dec. 31, 2010, the company's committed sources of funds, and the cash and cash equivalents on hand, is expected, in management's view, to be sufficient to meet its committed cash obligations and expected level of expenditures over the next 12 months. However, in the longer term, the ability of the company to continue as a going concern is dependent upon raising additional financing through borrowings, share issuances, receiving funds through sale of assets, supply agreements or product licensing agreements, and from obtaining regulatory approval in various jurisdictions to market and sell its product candidates and ultimately achieving future profitable operations. The outcome of these matters is dependent on a number of factors outside of the company's control. These factors continue to raise significant doubt about the company's ability to continue as a going concern in the foreseeable future.

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