This morning, BELLUS announced it had entered into an agreement to acquire all of the remaining BLU-5937 and related P2X3 antagonists intellectual property assets from adMare BioInnovations' NEOMED Institute.Mackie Research analyst Andr\u00e9 Uddin reviewed the state of affairs for drug developer Bellus Health (Bellus Health Stock Quote, Chart, News TSX:BLU) in an update to clients on Tuesday, where the analyst stuck with his \u201cHold\u201d rating and $3.90 target price. Laval, Quebec\u2019s Bellus Health is a clinical-stage drug developer focused on chronic cough candidate BLU-5937, which is targeting a multi-billion dollar market opportunity. The company released in June negative top-line results from its Phase 2 clinical study which showed that BLU-5937 missed the primary endpoint of awake cough frequency, testing at four doses, with BLU-5937 not achieving statistical significance of reduction in placebo-adjusted cough frequency at any tested dose. At the same time, Bellus conducted a subgroup analysis which indicated that BLU-5937\u2019s efficacy was positively associated with patients\u2019 baseline cough frequency. Subjects with more than 20 coughs per hour at baseline had significant placebo-adjusted reductions across the four doses \u2013 -20 per cent, -18 per cent, -19 per cent and -27 per cent, respectively, while subjects with more than 32 coughs per hour at baseline had more significant reductions \u2013 -28 per cent, -28 per cent, -30 per cent and -32 per cent, respectively. Then, Bellus on Tuesday announced the design of a Phase 2b trial for BLU-5937 in refractory chronic cough (RCC), a planned four-week trial with 240 patients with cough frequency of more than 25 coughs per hour. \u201cBuilding on the results from our RELIEF trial where there was a significant and clinically meaningful improvement observed in patients with baseline cough frequencies \u226520 coughs per hour when treated with BLU-5937, we believe our plan to recruit patients with baseline cough frequencies >25 coughs per hour for the SOOTHE trial provides the best strategy for success in this patient population,\u201d said Cathy Bonuccelli, Chief Medical Officer at Bellus, in a press release. \u201cAdditional exploratory arms of patients with baseline cough frequencies <25 coughs per hour will allow us to collect additional data to better inform the design of our Phase 3 program.\u201d The company has said it will meet with the US FDA over the fourth quarter to finalize the trial design, with the first patient expected to be dosed in the same quarter and interim results anticipated in mid-2021 and top line results in the second half of 2021. \u201cFollowing the mixed RELIEF Phase 2 results, we have revised our licensing assumptions for BLU-5937,\u201d wrote Uddin. \u201cWe are currently assuming Bellus would out-license BLU-5937 in 2022 for US$75M ($100 million) upfront and US$336 million ($450 million) in milestones, as well as a royalty rate of 20 per cent. In June 2016, Merck acquired Afferent for US$1.25 billion (US$500 million upfront plus US$750 million in milestones) to obtain gefapixant (MK-7264, formerly known as AF-219). Investors should note that our financial assumptions are conservative compared to the terms in Merck\u2019s acquisition of Afferent.\u201d (All figures in Canadian dollars except where noted otherwise.) At press time, Uddin\u2019s $3.90 target represented a projected return of 20 per cent.