Exhibit 4.5


 


Condensed
Consolidated Interim Financial Statements of


(Unaudited)


 


BELLUS
HEALTH INC.


 


Periods
ended June 30, 2019 and 2018


 




    


     


    

 


Bellus
health INC.


Condensed
Consolidated Interim Financial Statements


(Unaudited)




 


Periods
ended June 30, 2019 and 2018


 


	Condensed Consolidated Interim
    Financial Statements	 
	 	 
	Condensed Consolidated
    Interim Statements of Financial Position	1
	 	 
	Condensed Consolidated
    Interim Statements of Loss and Other Comprehensive Loss	2
	 	 
	Condensed Consolidated
    Interim Statements of Changes in Shareholders’ Equity	3
	 	 
	Condensed Consolidated
    Interim Statements of Cash Flows	4
	 	 
	Notes to Condensed
    Consolidated Interim Financial Statements	5


 




    


     


    

 


bellus
health INC.


Condensed
Consolidated Interim Statements of Financial Position


(Unaudited)




 


June
30, 2019 and December 31, 2018


(in
thousands of Canadian dollars)


 


	 	 	June
    30,	 	 	December
    31,	 
	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 
	Assets	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	Current assets:	 	 	 	 	 	 	 	 
	 	Cash and
    cash equivalents (note 4)	 	$	18,030	 	 	$	14,933	 
	 	Short-term investments
    (note 4)	 	 	24,339	 	 	 	33,973	 
	 	Trade and other receivables	 	 	964	 	 	 	809	 
	 	Prepaid
    expenses	 	 	523	 	 	 	1,149	 
	 	Total
    current assets	 	 	43,856	 	 	 	50,864	 
	 	 	 	 	 	 	 	 	 	 
	Non-current assets:	 	 	 	 	 	 	 	 
	 	Right-of-use asset
    (notes 3 and 5)	 	 	227	 	 	 	—	 
	 	Other assets	 	 	85	 	 	 	77	 
	 	In-process
    research and development asset	 	 	2,359	 	 	 	2,359	 
	 	Total
    non-current assets	 	 	2,671	 	 	 	2,436	 
	Total Assets	 	$	46,527	 	 	$	53,300	 
	 	 	 	 	 	 	 	 	 	 
	Liabilities and Shareholders' Equity	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	Current liabilities:	 	 	 	 	 	 	 	 
	 	Trade and other payables
    (note 6)	 	$	7,046	 	 	$	2,716	 
	 	Lease
    liability (notes 3 and 5)	 	 	128	 	 	 	—	 
	 	Total
    current liabilities	 	 	7,174	 	 	 	2,716	 
	 	 	 	 	 	 	 	 	 	 
	Non-current liabilities:	 	 	 	 	 	 	 	 
	 	Lease
    liability (notes 3 and 5)	 	 	90	 	 	 	—	 
	 	Total
    non-current liabilities	 	 	90	 	 	 	—	 
	Total Liabilities	 	 	7,264	 	 	 	2,716	 
	 	 	 	 	 	 	 	 	 	 
	Shareholders' equity:	 	 	 	 	 	 	 	 
	 	Share capital (note 7 (a))	 	 	503,552	 	 	 	502,706	 
	 	Other equity (notes
    7 (b) (i) and (ii))	 	 	27,627	 	 	 	27,101	 
	 	Deficit	 	 	(491,916	)	 	 	(479,223	)
	Total Shareholders’
    Equity	 	 	39,263	 	 	 	50,584	 
	Commitments
    (note 10)	 	 	 	 	 	 	 	 
	Total Liabilities
    and Shareholders’ Equity	 	$	46,527	 	 	$	53,300	 





 


See
accompanying notes to unaudited condensed consolidated interim financial statements.


 




    1


     


    

 


bellus
health INC.


Condensed
Consolidated Interim Statements of Loss and Other Comprehensive Loss


(Unaudited)




 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data)


 


	 	 	Three-month
    periods ended	 	 	Six-month
    periods ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2019	 	 	2018	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenues	 	$	8	 	 	$	8	 	 	$	17	 	 	$	17	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Research and development	 	 	5,616	 	 	 	997	 	 	 	8,922	 	 	 	2,402	 
	 	Research tax credits	 	 	(133	)	 	 	(116	)	 	 	(210	)	 	 	(276	)
	 	 	 	5,483	 	 	 	881	 	 	 	8,712	 	 	 	2,126	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	General and administrative	 	 	2,367	 	 	 	946	 	 	 	3,770	 	 	 	1,650	 
	 	Total operating expenses	 	 	7,850	 	 	 	1,827	 	 	 	12,482	 	 	 	3,776	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss
    from operating activities	 	 	(7,842	)	 	 	(1,819	)	 	 	(12,465	)	 	 	(3,759	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Finance income	 	 	277	 	 	 	85	 	 	 	574	 	 	 	184	 
	Finance
    costs	 	 	(337	)	 	 	(1	)	 	 	(802	)	 	 	(3	)
	Net
    finance (costs) income (note 8)	 	 	(60	)	 	 	84	 	 	 	(228	)	 	 	181	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Change
    in fair value of contingent consideration receivable	 	 	—	 	 	 	171	 	 	 	—	 	 	 	171	 
	Net
    loss and total comprehensive loss for the period	 	$	(7,902	)	 	$	(1,564	)	 	$	(12,693	)	 	$	(3,407	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss per share (note 9)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic
    and diluted	 	$	(0.05	)	 	$	(0.01	)	 	$	(0.08	)	 	$	(0.03	)






 


See
accompanying notes to unaudited condensed consolidated interim financial statements.


 




    2


     


    

 


bellus
health INC.


Condensed
Consolidated Interim Statements of Changes in Shareholders’ Equity


(Unaudited)




 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars)


 


	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Share	 	 	Other	 	 	 	 	 	 	 
	 	 	capital	 	 	equity	 	 	Deficit	 	 	Total	 
	 	 	(note 7 (a))	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, December 31, 2018	 	$	502,706	 	 	$	27,101	 	 	$	(479,223	)	 	$	50,584	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjustment on initial application of
    IFRS 16 (note 3)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted
    balance as at January 1, 2019	 	 	502,706	 	 	 	27,101	 	 	 	(479,223	)	 	 	50,584	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total comprehensive loss for the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss and comprehensive
    loss	 	 	—	 	 	 	—	 	 	 	(12,693	)	 	 	(12,693	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
    comprehensive loss for the period	 	 	—	 	 	 	—	 	 	 	(12,693	)	 	 	(12,693	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Transactions
    with shareholders, recorded directly in shareholders’ equity:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Issued
    upon stock options exercise (note 7 (b) (i))	 	 	137	 	 	 	(62	)	 	 	—	 	 	 	75	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Issued
    upon broker warrants exercise (note 7 (b) (ii))	 	 	709	 	 	 	(293	)	 	 	—	 	 	 	416	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock-based compensation
    (note 7 (b) (i))	 	 	—	 	 	 	881	 	 	 	—	 	 	 	881	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance,
    June 30, 2019	 	$	503,552	 	 	$	27,627	 	 	$	(491,916	)	 	$	39,263	 






 


 


	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Share	 	 	Other	 	 	 	 	 	 	 
	 	 	capital	 	 	equity	 	 	Deficit	 	 	Total	 
	 	 	 	(note
                                         7 (a))	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, December 31, 2017	 	$	467,253	 	 	$	26,202	 	 	$	(467,167	)	 	$	26,288	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total comprehensive
    loss for the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net
    loss and comprehensive loss	 	 	—	 	 	 	—	 	 	 	(3,407	)	 	 	(3,407	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
    comprehensive loss for the period	 	 	—	 	 	 	—	 	 	 	(3,407	)	 	 	(3,407	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Transactions
    with shareholders, recorded directly in shareholders’ equity:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock-based
    compensation (note 7 (b) (i))	 	 	—	 	 	 	329	 	 	 	—	 	 	 	329	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance,
    June 30, 2018	 	$	467,253	 	 	$	26,531	 	 	$	(470,574	)	 	$	23,210	 



  


See
accompanying notes to unaudited condensed consolidated interim financial statements.


 




    3


     


    

 


bellus
health INC.


Condensed
Consolidated Interim Statements of Cash Flows


(Unaudited)




 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars)


 





	 	 	Six-month
    periods ended	 
	 	 	June
    30,	 
	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 
	Cash flows from operating
    activities:	 	 	 	 	 	 	 	 
	 	Net
    loss for the period	 	$	(12,693	)	 	$	(3,407	)
	 	Adjustments
    for:	 	 	 	 	 	 	 	 
	 	Depreciation
    (note 5)	 	 	72	 	 	 	—	 
	 	Stock-based
    compensation	 	 	881	 	 	 	329	 
	 	Net
    finance costs (income)	 	 	228	 	 	 	(181	)
	 	Change
    in fair value of contingent consideration receivable	 	 	—	 	 	 	(171	)
	 	Other
    items	 	 	17	 	 	 	(2	)
	 	Changes
    in operating assets and liabilities	 	 	 	 	 	 	 	 
	 	Trade
    and other receivables	 	 	(155	)	 	 	189	 
	 	Prepaid
    expenses and other assets	 	 	768	 	 	 	(25	)
	 	Trade
    and other payables	 	 	4,586	 	 	 	(1,121	)
	 	Financial
    liabilities – CVRs	 	 	—	 	 	 	(20	)
	 	 	 	 	(6,296	)	 	 	(4,409	)
	 	 	 	 	 	 	 	 	 	 
	Cash flows from financing
    activities:	 	 	 	 	 	 	 	 
	 	Payment
    of lease liability	 	 	(87	)	 	 	—	 
	 	Issuance
    of common shares through equity offerings, net of share issue costs	 	 	(406	)	 	 	(290	)
	 	Issuance
    of common shares upon stock options exercise	 	 	75	 	 	 	—	 
	 	Issuance
    of common shares upon broker warrants exercise	 	 	416	 	 	 	—	 
	 	Interest
    and bank charges paid	 	 	(5	)	 	 	(3	)
	 	 	 	 	(7	)	 	 	(293	)
	 	 	 	 	 	 	 	 	 	 
	Cash flows from investing
    activities:	 	 	 	 	 	 	 	 
	 	Net
    sales of short-term investments	 	 	9,575	 	 	 	1,204	 
	 	Acquisition
    of in-process research and development asset, net of costs and deferred development support payments	 	 	—	 	 	 	475	 
	 	Proceeds
    from sale of subsidiary	 	 	—	 	 	 	400	 
	 	Interest
    received	 	 	254	 	 	 	65	 
	 	 	 	 	9,829	 	 	 	2,144	 
	Net increase (decrease)
    in cash and cash equivalents	 	 	3,526	 	 	 	(2,558	)
	 	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents,
    beginning of period	 	 	14,933	 	 	 	7,749	 
	 	 	 	 	 	 	 	 	 	 
	Effect of foreign exchange
    on cash and cash equivalents	 	 	(429	)	 	 	16	 
	 	 	 	 	 	 	 	 	 	 
	Cash
    and cash equivalents, end of period	 	$	18,030	 	 	$	5,207	 
	 	 	 	 	 	 	 	 	 
	Supplemental cashflow
    disclosure:	 	 	 	 	 	 	 	 
	 	Non-cash
    transactions:	 	 	 	 	 	 	 	 
	 	Initial
    recognition of right-of-use asset and lease liability (note 3)	 	$	156	 	 	$	—	 
	 	Addition
    to right-of-use asset and lease liability – Lease modification (note 5)	 	 	143	 	 	 	—	 
	 	Share
    issue costs – 2018 equity offering, in Trade and other payables	 	 	67	 	 	 	—	 
	 	Ascribed
    value related to issuance of common shares upon stock options exercise (note 7 (b) (i))	 	 	62	 	 	 	—	 
	 	Ascribed
    value related to issuance of common shares upon broker warrants exercise (note 7 (b) (ii))	 	 	293	 	 	 	—	 








  


See
accompanying notes to unaudited condensed consolidated interim financial statements.


 




    4


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


1.   Reporting
entity:


 


BELLUS
Health Inc. (“BELLUS Health” or the “Company”) is a clinical-stage biopharmaceutical company developing
novel therapeutics for the treatment of chronic cough and other hypersensitization-related disorders. The Company's lead product
candidate, BLU-5937, is being developed for the treatment of chronic cough and chronic pruritus. The Company is domiciled in Canada.
The address of the Company’s registered office is 275 Armand-Frappier Blvd., Laval, Quebec, H7V 4A7.


 


These
condensed consolidated interim financial statements include the accounts of BELLUS Health Inc. and its subsidiaries.


 


The
Company's shares trade on the Toronto Stock Exchange (“TSX”) under the symbol BLU. The annual consolidated financial
statements of the Company as at and for the year ended December 31, 2018 are available at www.bellushealth.com or at www.sedar.com.


 


2.   Basis
of preparation:


 


		(a)	Statement
                                         of compliance:



 


These
condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) and International Accounting Standard (IAS) 34, Interim Financial Reporting. The condensed consolidated
interim financial statements do not include all the information required for full annual consolidated financial statements and
should be read in conjunction with the annual consolidated financial statements as at and for the year ended December 31, 2018.


 


These
condensed consolidated interim financial statements for the three and six-month periods ended June 30, 2019 were approved by the
Board of Directors on August 7, 2019.


 


		(b)	Use
                                         of estimates and judgements:



 


The
preparation of the condensed consolidated interim financial statements in accordance with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. The reported amounts and note disclosures reflect management’s best estimate of the most probable set
of economic conditions and planned course of actions. Actual results may differ from these estimates.


 


In
preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying
the Company’s accounting policies and key sources of estimation uncertainty were the same as those applied to the consolidated
financial statements for the year ended December 31, 2018, except for new significant judgements related to lessee accounting
under IFRS 16, which are described in note 3.


 




    5


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


3.   Significant
accounting policies and basis of measurement:


 


The
accounting policies and basis of measurement applied in these condensed consolidated interim financial statements are the same
as those applied by BELLUS Health in its consolidated financial statements for the year ended December 31, 2018, except as described
below.


 


The
Company has initially adopted IFRS 16, Leases from January 1, 2019.


 


IFRS
16 introduced a single, on-balance sheet accounting model for lessees. As a result, BELLUS Health, as a lessee, has recognized
a right-of-use asset representing its rights to use the underlying asset and a lease liability representing its obligation to
make lease payments in its statement of financial position, in relation to its property lease.


 


The
Company has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application
is recognized in retained earnings as at January 1, 2019. Accordingly, the comparative information presented for 2018 has not
been restated. It is presented under lAS 17, Leases and related interpretations. There was no impact to the deficit at
January 1, 2019 upon the adoption of IFRS 16.


 


The
details of the changes in accounting policies are disclosed below.


 


		(a)	Definition
                                         of a lease:



 


The
Company now assesses whether a contract is or contains a lease based on the new definition of a lease. Under IFRS 16, a contract
is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange
for consideration. On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment
of which transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that
were not identified as leases under lAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16
has been applied only to contracts entered into or changed on or after January 1, 2019.


 


At
inception or on reassessment of a contract that contains a lease component, BELLUS Health allocates the consideration in the contract
to each lease and non-lease component on the basis of their relative stand-alone prices. However, for its lease of property in
which it is a lessee, the Company has elected not to separate non-lease components and will instead account for the lease and
non-lease components as a single lease component.


 




    6


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


3.   Significant
accounting policies and basis of measurement (continued):


 


		(b)	As
                                         a lessee:



 


		(i)	Significant
                                         accounting policies:



 


BELLUS
Health recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements
of the lease liability. The right-of-use asset is depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the asset or the end of the lease term.


 


The
lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing
rate. Generally, the Company uses its incremental borrowing rate as the discount rate.


 


The
lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It
is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate
of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether
a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.


 


		(ii)	Transition:



 


Prior
to January 1, 2019, BELLUS Health classified its property lease as an operating lease under lAS 17.


 


		(c)	Impacts
                                         on consolidated financial statements:



 


		(i)	Impacts
                                         on transition:



 


On
transition to IFRS 16, BELLUS Health recognized a right-of-use asset and a lease liability, recognising the difference in retained
earnings. The impact on transition is summarised below:


 


	 	 	January
    1,	 
	 	 	2019	 
	 	 	 	 
	Right-of-use
    asset	 	$	156	 
	Lease
    liability	 	 	(156	)





 




    7


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


3.   Significant
accounting policies and basis of measurement (continued):


 


		(c)	Impacts
                                         on consolidated financial statements (continued):



 


		(i)	Impacts
                                         on transition (continued):



 


When
measuring the lease liability for the property lease that was classified as an operating lease, the Company discounted the remaining
lease payments using its incremental borrowing rate as at January 1, 2019. The rate applied is 5%.


 


	 	 	January
    1,	 
	 	 	2019	 
	 	 	 	 
	Operating
    lease commitment as at December 31, 2018 as disclosed in the Company’s consolidated financial statements	 	$	164	 
	Discounting
    of lease payments	 	 	(8	)
	Lease
    liability recognized as at January 1, 2019	 	$	156	 





 


		(ii)	Impacts
                                         for the period:



 


Under
IFRS 16, the Company has recognized depreciation and interest expense on its right-of-use asset and lease liability, respectively,
instead of an operating lease expense. During the three and six-month periods ended June 30, 2019, the Company recognized in its
condensed consolidated interim statement of loss and other comprehensive loss $36 and $72 of depreciation expense, respectively
(of which $25 and $50 respectively is presented in Research and development expenses and $11 and $22 respectively is presented
in General and administrative expenses) and $3 and $6 of interest expense respectively, presented in Finance costs, from its property
lease. For the three and six-month periods ended June 30, 2018, the Company recognized $37 and $73 of operating lease expense,
respectively.


 




    8


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


4.   Cash,
cash equivalents and short-term investments:


 


Cash,
cash equivalents and short-term investments consist of cash balances with banks and short-term investments:


 


	 	 	June
    30,	 	 	December
    31,	 
	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 
	Cash
    balances with banks	 	$	6,313	 	 	$	1,464	 
	Short-term
    investments with initial maturities of less than three months (yielding interest at 1.70% to 1.95% as at June 30, 2019) (December
    31, 2018 – 1.70% to 1.95%)	 	 	11,717	 	 	 	13,469	 
	Cash
    and cash equivalents	 	 	18,030	 	 	 	14,933	 
	 	 	 	 	 	 	 	 	 
	Short-term
    investments with initial maturities greater than three months and less than one year (yielding interest at 1.95% to
    3.10% as at June 30, 2019) (December 31, 2018 – 1.90% to 3.10%)	 	 	24,339	 	 	 	33,973	 
	Cash,
    cash equivalents and short-term investments	 	$	42,369	 	 	$	48,906	 









 


5.   Right-of-use
asset and lease liability: 


 


BELLUS
Health Inc. leases office space in Laval, Quebec. An amendment to the Company’s property lease was signed on June 25,
2019, extending the property lease by an additional one-year term beyond the initial expiry on January 30, 2020, to January 30,
2021.


 


Right
of use asset:


 


	 	 	Net
    book	 
	 	 	value	 
	 	 	 	 
	Cost:	 	 	 	 
	Balance as at January 1, 2019	 	$	156	 
	Addition
    to right-of-use asset – Lease modification	 	 	143	 
	Balance
    as at June 30, 2019	 	$	299	 
	 	 	 	 	 
	Accumulated amortization:	 	 	 	 
	Balance as at January 1, 2019	 	$	—	 
	Depreciation
    expense for the period	 	 	(72	)
	Balance
    as at June 30, 2019	 	$	(72	)
	 	 	 	 	 
	Net book value:	 	 	 	 
	Balance as at January 1, 2019	 	$	156	 
	Balance
    as at June 30, 2019	 	$	227	 



 




    9


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


5.    Right-of-use
asset and lease liability (continued): 


 


Lease
liability:


 


	 	 	Carrying	 
	 	 	value	 
	 	 	 	 
	Balance as at January 1, 2019	 	$	156	 
	 	 	 	 	 
	Addition to lease liability – Lease
    modification	 	 	143	 
	 	 	 	 	 
	Interest expense	 	 	6	 
	Lease
    payments	 	 	(87	)
	Balance as at June 30, 2019	 	$	218	 
	Current
    portion of lease liability	 	 	128	 
	Non-current
    portion of lease liability	 	$	90	 



 


The
remaining life of the Company’s property lease as of June 30, 2019 is 1.6 years,


 


Lease
payments were discounted using an incremental borrowing rate of 5%.


 


Minimum
annual payments under the non-cancelable property lease, undiscounted, are as follows:


 


	Years
    ending December 31,	 	 	 
	 	 	 	 
	2019	 	$	64	 
	2020	 	 	156	 
	2021	 	 	13	 
	 	 	$	233	 



 


6.   Trade
and other payables:


 


Trade
and other payables consist of:


 


	 	 	June
    30,	 	 	December
    31,
	 	 	2019	 	 	2018
	 	 	 	 
	Trade
    payables	 	$	405	 	 	$555
	Other accrued liabilities	 	 	4,276	 	 	1,495
	Deferred
    share unit plans (note 7 (b) (iii))	 	 	2,365	 	 	666
	 	 	$	7,046	 	 	$2,716



 




    10


     


    

  


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


7.   Shareholders’
equity:


 


		(a)	Share
                                         capital:



 


Issued
and outstanding common shares are as follows:


 


	 	 	Number	 	 	Dollars	 
	 	 	 	 	 	 	 
	Balance, December 31, 2018	 	 	157,039,686	 	 	$	502,706	 
	Issued upon stock options exercise (note
    7 (b) (i))	 	 	150,000	 	 	 	137	 
	Issued
    upon broker warrants exercise (note 7 (b) (ii))	 	 	1,094,923	 	 	 	709	 
	Balance,
    June 30, 2019	 	 	158,284,609	 	 	$	503,552	 



 


 


		(b)	Share-based
                                         payment arrangements:



 


		(i)	Stock
                                         option plan:



 


Changes
in outstanding stock options issued under the stock option plan for the six-month periods ended June 30, 2019 and 2018 were as
follows:


 


	 	 	 	Number	 	 	Weighted
    
average 
exercise price	 
	 	 	 	 	 	 	 	 
	Balance,
    December 31, 2018	 	 	 	11,593,000	 	 	$	0.44	 
	Granted (1)	 	 	 	3,655,000	 	 	 	1.21	 
	Exercised	 	 	 	(150,000	)	 	 	0.50	 
	Balance,
    June 30, 2019	 	 	 	15,098,000	 	 	$	0.60	 



 


	 	 	 	Number	 	 	Weighted
    
average 
exercise price	 
	 	 	 	 	 	 	 	 
	Balance,
    December 31, 2017	 	 	 	7,293,000	 	 	$	0.44	 
	Granted
    (2)	 	 	 	4,150,000	 	 	 	0.35	 
	Balance,
    June 30, 2018	 	 	 	11,443,000	 	 	$	0.41	 



 


		(1)	3,225,000
                                         stock options were granted to key management personnel and 430,000 were granted to other
                                         employees.



		(2)	3,800,000
                                         stock options were granted to key management personnel and 350,000 were granted to other
                                         employees.



 


    11


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


7.   Shareholders’
equity (continued):


 


		(b)	Share-based
                                         payment arrangements (continued):



 


		(i)	Stock
                                         option plan (continued):



 


The
following table summarizes information about stock options outstanding and exercisable as at June 30, 2019:


 


	 	 	 	Options
    outstanding	 	 	Options
    exercisable	 
	 	 	 	 	 	 	Weighted	 	 	 	 
	 	 	 	 	 	 	average	 	 	 	 
	 	 	 	 	 	 	years to	 	 	 	 
	Exercise price/share	 	 	Number	 	 	expiration	 	 	Number	 
	$0.30	 	 	 	2,630,000	 	 	 	7.8	 	 	 	1,079,000	 
	$0.35	 	 	 	4,150,000	 	 	 	8.6	 	 	 	830,000	 
	$0.42	 	 	 	200,000	 	 	 	8.4	 	 	 	40,000	 
	$0.50	 	 	 	4,150,000	 	 	 	3.2	 	 	 	4,150,000	 
	$0.57	 	 	 	150,000	 	 	 	9.0	 	 	 	—	 
	$1.05	 	 	 	60,000	 	 	 	3.2	 	 	 	60,000	 
	$1.12	 	 	 	103,000	 	 	 	6.7	 	 	 	61,800	 
	$1.21	 	 	 	3,655,000	 	 	 	9.7	 	 	 	—	 
	 	 	 	 	15,098,000	 	 	 	7.2	 	 	 	6,220,800	 



 


Stock-based
compensation


 


For
the three and six-month periods ended June 30, 2019, the Company recorded a stock-based compensation expense related to the
stock option plan (excluding compensation under the DSU plan) in the amount of $537 and $881, respectively, in the condensed consolidated
interim statement of loss and other comprehensive loss; from these amounts, $93 and $153, respectively, is presented in Research
and development expenses and $444 and $728, respectively, is presented in General and administrative expenses ($199 and $329 for
the corresponding periods of the previous year, $29 and $49 respectively presented in Research and development expenses and $170
and $280 respectively presented in General and administrative expenses).


 




    12


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


7.   Shareholders’
equity (continued):


 


		(b)	Share-based
                                         payment arrangements (continued):



 


		(i)	Stock
                                         option plan (continued):



 


Stock-based
compensation (continued)


 


The
fair value of each stock option granted is estimated on the date of grant using the Black-Scholes pricing model. Expected volatility
is estimated by considering historic average share price volatility for a period commensurate with the expected life. The weighted
average assumptions for stock options granted during the six-month periods ended June 30, 2019 and 2018 were as follows:


 


	 	 	2019
    (1)	 	 	2018
    (2)	 
	 	 	 	 	 	 	 
	Weighted
    average fair value of stock options at grant date	 	$	1.04	 	 	$	0.28	 
	Weighted average share price	 	$	1.21	 	 	$	0.35	 
	Weighted average exercise price	 	$	1.21	 	 	$	0.35	 
	Risk-free interest rate	 	 	1.83	%	 	 	2.19	%
	Expected volatility	 	 	100	%	 	 	100	%
	Expected life in years	 	 	7	 	 	 	7	 
	Expected
    dividend yield	 	 	Nil	 	 	 	Nil	 



 


		(1)	All
                                         stock options were granted on February 20, 2019.



		(2)	All
                                         stock options were granted on February 20, 2018.



 


Dividend
yield was excluded from the calculation, since it is the present policy of the Company to retain all earnings to finance operations
and future growth.


 


		(ii)	Broker
                                         warrants:



 


Changes
in outstanding broker warrants for the six-month period ended June 30, 2019 were as follows:


 


	 	 	 	Number	 	 	Dollars	 
	 	 	 	 	 	 	 	 
	Balance, December 31, 2018	 	 	 	2,556,999	 	 	$	683	 
	Exercised	 	 	 	(1,094,923	)	 	 	(293	)
	Expired	 	 	 	(11,812	)	 	 	(3	)
	 	 	 	 	 	 	 	 	 	 
	Balance,
    June 30, 2019	 	 	 	1,450,264	 	 	$	387	 



 


 




    13


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 



7.   Shareholders’
equity (continued):


 


		(b)	Share-based
                                         payment arrangements (continued):



 


		(ii)	Broker
                                         warrants (continued):



 


During
the six-month period ended June 30, 2019, the Company issued a total of 1,094,923 common shares from treasury upon the exercise
of a total of 1,094,923 broker warrants issued in connection with the Company’s equity offering in December 2017. As a result
of their exercise, the aggregate carrying value of the broker warrants of $293, initially allocated to Other equity pending the
issuance of common shares, was reclassified to Share capital. During the six-month period ended June 30, 2019, 11,812 broker warrants
expired, having a carrying value of $3.


 


In
July 2019, the Company issued a total of 832,540 common shares from treasury upon the exercise of a total of 832,540 broker warrants
issued in connection with the Company’s equity offering in December 2018, for total proceeds of $791. These broker warrants
have an aggregate carrying value of $222, initially allocated to Other equity pending the issuance of common shares.


 


		(iii)	Deferred
                                         share unit (“DSU”) plan:



 


Changes
in the number of units outstanding for the six-month periods ended June 30, 2019 and 2018 were as follows:


 


	Number
    of units	 	2019	 	 	2018	 
	Balance, beginning of period	 	 	652,868	 	 	 	217,953	 
	Units
    granted (1)	 	 	191,812	 	 	 	435,108	 
	Balance,
    end of period	 	 	844,680	 	 	 	653,061	 
	Balance
    of DSU liability, in Trade and other payables (2)	 	$	2,365	 	 	$	340	 



 


		(1)	All
                                         DSUs were granted to key management personnel.



		(2)	Balance
                                         of DSU liability as at December 31, 2018 amounted to $666.



 


During
the six-month period ended June 30, 2019, the Company granted 191,812 DSUs having a fair value per unit of $1.42 (435,108 DSUs
having a fair value per unit of $0.55 during the six-month period ended June 30, 2018). The stock-based compensation expense related
to the DSU plan recorded in the condensed consolidated interim statement of loss for the three and six-month periods ended June
30, 2019 amounted to $1,088 and $1,549, respectively; from these amount, $3 and $3, respectively, is presented in Research
and development expenses and $1,085 and $1,546, respectively, is presented in General and administrative expenses ($193 and $259
for the corresponding periods of the previous year, presented in General and administrative expenses).


 






    14


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


8.   Net
finance (costs) income:


 


Finance
income and Finance costs for three-month periods ended June 30, 2019 and 2018 were attributed as follows:


 


	 	 	Three-month
    periods ended	 	 	Six-month
    periods ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2019	 	 	2018	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest income	 	$	277	 	 	$	83	 	 	$	574	 	 	$	170	 
	Foreign
    exchange gain	 	 	—	 	 	 	2	 	 	 	—	 	 	 	14	 
	Finance
    income	 	 	277	 	 	 	85	 	 	 	574	 	 	 	184	 
	Interest expense on lease liability (note
    3)	 	 	(3	)	 	 	—	 	 	 	(6	)	 	 	—	 
	Interest and bank charges	 	 	(2	)	 	 	(1	)	 	 	(5	)	 	 	(3	)
	Foreign
    exchange loss	 	 	(332	)	 	 	—	 	 	 	(791	)	 	 	—	 
	Finance
    costs	 	 	(337	)	 	 	(1	)	 	 	(802	)	 	 	(3	)
	Net
    finance (costs) income	 	$	(60	)	 	$	84	 	 	$	(228	)	 	$	181	 



 


9.   Loss
per share: 


 


	 	 	Three-month
    periods ended	 	 	Six-month
    periods ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2019	 	 	2018	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic
    weighted average number of common shares outstanding	 	 	158,110,962	 	 	 	119,497,581	 	 	 	157,769,328	 	 	 	119,497,581	 
	Basic
    and diluted loss per share	 	$	(0.05	)	 	$	(0.01	)	 	$	(0.08	)	 	$	(0.03	)



 


Excluded
from the calculation of the diluted loss per share for the three and six-month periods ended June 30, 2019 and 2018 is the impact
of all stock options granted under the stock option plan and broker warrants, as they would be anti-dilutive.


 


Stock
options granted under the stock option plan and broker warrants could potentially be dilutive in the future.


 


10.  Commitments:


 


Contracts
in the normal course of business:


 


The
Company enters into contracts in the normal course of business, including for research and development activities, consulting
and other services.


 


As
at June 30, 2019, the Company has commitments for expenditures related to contracts for research and development activities of
approximately $12,156 (approximately $6,785 as at December 31, 2018), of which $9,571 is expected to be paid in 2019, $2,466 in
2020 and $119 in 2021.


 




    15


     


    

 


bellus
health INC.


Notes
to Condensed Consolidated Interim Financial Statements (Continued)


(Unaudited)


 


Periods
ended June 30, 2019 and 2018


(in
thousands of Canadian dollars, except per share data, unless otherwise noted)


 





 



 


11.  Related
party transactions:


 


		(a)	There
                                         is no single ultimate controlling party.



 


		(b)	Dr.
                                         Francesco Bellini, Chairman of the Board of Directors, provides ongoing advisory services
                                         to the Company under the terms of a consulting and services agreement between the Company
                                         and Picchio International, wholly-owned by Dr. Francesco Bellini and his spouse. The
                                         agreement has a one-year term and shall renew for successive one-year terms. The Company
                                         recorded fees and expenses of $95 and $190 respectively for both three and six-month
                                         periods ended June 30, 2019 and 2018.



 


		(c)	Key
                                         management personnel:



 


The
Chief Executive Officer, Vice-Presidents and Directors of BELLUS Health are considered key management personnel of the Company.


 


The
aggregate compensation for the three and six-month periods ended June 30, 2019 and 2018 to key management personnel of the Company
is set out below:


 


	 	 	Three-month
    periods ended	 	 	Six-month
    periods ended	 
	 	 	June 30,	 	 	June 30,	 
	 	 	2019	 	 	2018	 	 	2019	 	 	2018	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Short term benefits	 	$	478	 	 	$	416	 	 	$	961	 	 	$	864	 
	DSU plan expense	 	 	1,088	 	 	 	193	 	 	 	1,549	 	 	 	259	 
	Stock option plan expense	 	 	473	 	 	 	180	 	 	 	776	 	 	 	297	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	$	2,039	 	 	$	789	 	 	$	3,286	 	 	$	1,420	 



 


12. Financial
instruments:


 


Carrying
values and fair values:


 


Fair
value estimates are made as of a specific point in time, using available information about the financial instrument. These estimates
are subjective in nature and may not be determined with precision. A three-tier fair value hierarchy prioritizes the inputs used
in measuring fair value.


 


There
was no financial asset or liability fair valued on a recurring basis as at June 30, 2019 and December 31, 2018.


 


For
its financial assets and liabilities measured at amortized cost as at June 30, 2019, the Company has determined that the
carrying value of its short-term financial assets and liabilities approximates their fair value because of the relatively short
periods to maturity of these instruments.


 




    16