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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  DBV Technologies    DBV   FR0010417345

DBV TECHNOLOGIES

(DBV)
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DBV Technologies : Annual and transition report of foreign private issuers

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03/20/2020 | 04:42pm EDT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

  • REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

  • ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

  • TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

OR

  • SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission File Number 001-36697

DBV TECHNOLOGIES S.A.

(Exact name of registrant as specified in its charter and translation of registrant's name into English)

France

(Jurisdiction of incorporation or organization)

177-181 avenue Pierre Brossolette

92120 Montrouge France

(Address of principal executive offices)

Mr. Daniel Tassé

Chief Executive Officer and Director

DBV Technologies S.A.

177-181 avenue Pierre Brossolette

92120 Montrouge France

Tel: +33 1 55 42 78 78 Fax: +33 1 43 26 10 83

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbol

Name of each exchange on which registered

American Depositary Shares, each representing

DBVT

The Nasdaq Stock Market LLC

one-half of one ordinary share, nominal value

€0.10 per share

Ordinary shares, nominal value €0.10 per

*

The Nasdaq Stock Market LLC*

share*

*  Not for trading, but only in connection with the registration of the American Depositary Shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

Ordinary shares, nominal value €0.10 per share: 47,028,510 as of December 31, 2019

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

  • The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

International Financial Reporting Standards as issued

Other

by the International Accounting Standards Board

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

TABLE OF CONTENTS

PAGE

INTRODUCTION

1

PART I

4

Item 1.

Identity of Directors, Senior Management and Advisers

4

Item 2.

Offer Statistics and Expected Timetable

4

Item 3.

Key Information

4

A. Selected Financial Data

4

B. Capitalization and Indebtedness

5

C. Reasons for the Offer and Use of Proceeds

5

D. Risk Factors

5

Item 4.

Information on the Company

46

A. History and Development of the Company

46

B. Business Overview

46

C. Organizational Structure

89

D. Property, Plants and Equipment

89

Item 4A.

Unresolved Staff Comments

90

Item 5.

Operating and Financial Review and Prospects

90

A. Operating Results

97

B. Liquidity and Capital Resources

102

C. Research and Development, Patents and Licenses

107

D. Trend Information

107

E. Off-Balance Sheet Arrangements

107

F. Tabular Disclosure of Contractual Obligations

107

G. Safe Harbor

108

Item 6.

Directors, Senior Management and Employees

108

A. Directors and Senior Management

108

B. Compensation

111

C. Board Practices

128

D. Employees

134

E. Share Ownership

134

Item 7.

Major Shareholders and Related Party Transactions

134

A. Major Shareholders

134

B. Related Party Transactions

136

C. Interests of Experts and Counsel

141

Item 8.

Financial Information

141

A. Consolidated Statements and Other Financial Information

141

B. Significant Changes

142

Item 9.

The Offer and Listing

142

A. Offer and Listing Details

142

B. Plan of Distribution

142

C. Markets

142

D. Selling Shareholders

142

E. Dilution

142

F. Expenses of the Issue

142

Item 10.

Additional Information

142

A. Share Capital

142

B. Memorandum and Articles of Association

142

C. Material Contracts

143

D. Exchange Controls

144

E. Taxation

144

F. Dividends and Paying Agents

151

G. Statement by Experts

151

H. Documents on Display

151

I. Subsidiary Information

151

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

151

Item 12.

Description of Securities Other than Equity Securities

152

A. Debt Securities

152

B. Warrants and Rights

152

C. Other Securities

153

D. American Depositary Shares

153

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

155

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

155

Item 15.

Controls and Procedures

155

Item 16A.

Audit Committee Financial Expert

156

Item 16B.

Code of Ethics

156

Item 16C.

Principal Accountant Fees and Services

156

Item 16D.

Exemptions from the Listing Standards for Audit Committees

157

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

157

Item 16F.

Change in Registrant's Certifying Accountant

157

Item 16G.

Corporate Governance

157

Item 16H.

Mine Safety Disclosure

157

PART III

Item 17.

Financial Statements

158

Item 18.

Financial Statements

158

Item 19.

Exhibits

158

INTRODUCTION

Unless otherwise indicated, "DBV," "the company," "our company," "we," "us" and "our" refer to DBV Technologies S.A. and its consolidated subsidiary.

We own various trademark registrations and applications, and unregistered trademarks and servicemarks, including, "ViaskinTM," "EPITTM," "DBV Technologies®", "AbyldisTM" and our corporate logo. All other trademarks or trade names referred to in this Annual Report on Form 20-F are the property of their respective owners. Trade names, trademarks and service marks of other companies appearing in this Annual Report on Form 20-F are the property of their respective holders. Solely for convenience, the trademarks and trade names in this Annual Report on Form 20-F may be referred to without the ® and symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies' trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Our audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our consolidated financial statements are presented in euros. All references in this Annual Report on Form 20-F to "$," "US$," "U.S.$" "U.S. dollars," "dollars" and "USD" mean U.S. dollars, and all references to "€" and "euros" mean euros, unless otherwise noted. Throughout this Annual Report on Form 20-F, references to ADSs mean ADSs or ordinary shares represented by ADSs, as the case may be.

1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's beliefs and assumptions and on information currently available to our management. All statements other than present and historical facts and conditions contained in this Annual Report on Form 20-F, including statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements. When used in this Annual Report on Form 20-F, the words "anticipate," "believe," "can," "could," "estimate," "expect," "intend," "is designed to," "may," "might," "plan," "potential," "predict," "objective," "should," or the negative of these and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

  • our expectations regarding the timing or likelihood of regulatory filings and approvals, including with respect to our submission and the ongoing review of a Biologics License Application for ViaskinTM Peanut by the U.S. Food and Drug Administration;
  • the sufficiency of existing capital resources and our ability to continue as a going concern;
  • our ability to manufacture clinical and commercial supplies of our product candidates and comply with regulatory requirements related to the manufacturing of our product candidates;
  • our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize ViaskinTM Peanut and/or our other product candidates, if approved;
  • the commercialization of our product candidates, if approved;
  • our expectations regarding the potential market size and the size of the patient populations for ViaskinTM Peanut and/or our other product candidates, if approved, and our ability to serve such markets;
  • the pricing and reimbursement of our product candidates, if approved;
  • the rate and degree of market acceptance of ViaskinTM Peanut and/or our other product candidates, if approved, by physicians, patients, third-party payors and others in the medical community;
  • the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs;
  • our ability to advance product candidates into, and successfully complete, clinical trials;
  • the implementation of our business model, strategic plans for our business, product candidates and technology;
  • the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;
  • estimates of our expenses, future revenues, capital requirements and our needs for additional financing;
  • the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements;
  • our ability to maintain and establish collaborations or obtain additional grant funding;
  • our financial performance;
  • developments relating to our competitors and our industry, including competing therapies; and
  • other risks and uncertainties, including those listed in the section of this Annual Report on Form 20-F titled "Item 3.D-Risk Factors."

2

You should refer to the section of this Annual Report on Form 20-F titled "Item 3.D-Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report on Form 20-F will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this Annual Report on Form 20-F and the documents that we reference in this Annual Report on Form 20-F and have filed as exhibits to this Annual Report on Form 20-F completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This Annual Report on Form 20-F contains market data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified any third- party information. While we believe the market position, market opportunity and market size information included in this Annual Report on Form 20-F is generally reliable, such information is inherently imprecise.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Annual Report on Form 20-F, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

3

PART I

Item 1. Identity of Directors, Senior Management and Advisers.

Not applicable.

Item 2. Offer Statistics and Expected Timetable.

Not applicable.

Item 3. Key Information.

A. Selected Financial Data

Our consolidated audited financial statements have been prepared in accordance with IFRS, as issued by the IASB. We derived the selected statements of consolidated income data for the years ended December 31, 2017, 2018 and 2019 and selected statements of consolidated financial position data as of December 31, 2017, 2018 and 2019 from our consolidated audited financial statements included elsewhere in this Annual Report on Form 20-F. The selected consolidated statement of income data for the years ended December 31, 2015 and 2016 and the selected consolidated financial position data as of December 31, 2015 and 2016 have been derived from our audited consolidated financial statements and notes thereto which are not included in this Annual Report on Form 20-F. This data should be read together with, and is qualified in its entirety by reference to, "Item 5. Operating and Financial Review and Prospects" as well as our financial statements and notes thereto appearing elsewhere in this Annual Report on Form 20-F. Our historical results are not necessarily indicative of the results to be expected in the future.

Statement of Income (Loss) Data (in thousands, except share and per share data):

Year Ended December 31,

2015

2016

2017

2018

2019

Euro

Euro

Euro

Euro

Euro

US$(1)

Operating income

6,166

9,084

11,909

14,537

13,139

$

14,751

Operating expenses:

Cost of goods sold

(128)

-

-

-

-

-

Research and development

(34,234)

(78,828)

(105,232)

(107,171)

(101,497)

(113,950)

Sales and marketing

(491)

(11,282)

(15,824)

(32,169)

(18,941)

(21,265)

General and administrative

(16,859)

(35,005)

(35,837)

(41,399)

(44,401)

(49,849)

Total expenses

(51,712)

(125,115)

(156,892)

(180,739)

(164,839)

(185,065)

Operating (loss)

(45,546)

(116,031)

(144,983)

(166,202)

(151,700)

(170,314)

Financial profit (loss)

871

1,500

(2,709)

141

(1,341)

(1,506)

Income tax

-

-

(1)

(15)

(545)

(612)

Net (loss)

(44,674)

(114,531)

(147,693)

(166,076)

(153,587)

$

(172,432)

Earnings (loss) per share(2)

Basic

(2.08)

(4.68)

(5.97)

(5.74)

(4.15)

$

(4.66)

Diluted

(2.08)

(4.68)

(5.97)

(5.74)

(4.15)

$

(4.66)

Number of shares used for computing

Basic

21,522,342

24,454,850

24,757,176

28,924,976

37,007,247

37,007,247

Diluted

21,522,342

24,454,850

24,757,176

28,924,976

37,007,247

37,007,247

  1. Translated solely for convenience into dollars at the noon buying rate of the Federal Reserve Bank of New York of €1.00 = $1.1227 at December 31, 2019.
  2. See Note 23 to our financial statements for further details on the calculation of basic and diluted loss per ordinary share.

4

Statement of Financial Position Data (in thousands, except share and per share data):

As of December 31,

2015

2016

2017

2018

2019

Euros

Euros

Euros

Euros

Euros

US$(1)

Cash and cash equivalents

323,381

256,473

137,880

122,770

172,027

193,134

Total assets

343,280

287,500

177,807

171,749

241,476

271,105

Total shareholders' equity

322,076

242,849

129,923

121,286

171,563

192,613

Total non-current liabilities

5,183

15,649

11,954

6,919

21,845

24,526

Total current liabilities

16,021

29,002

35,930

43,543

48,068

53,966

Total liabilities

21,204

44,651

47,884

50,463

69,913

78,491

Total liabilities and shareholders' equity

343,280

287,500

177,807

171,749

241,476

271,105

  1. Translated solely for convenience into dollars at the noon buying rate of the Federal Reserve Bank of New York of €1.00 = $1.1227 at December 31, 2019.
  1. Capitalization and Indebtedness Not applicable.
  2. Reasons for the Offer and Use of Proceeds Not applicable.
  3. Risk Factors

Our business faces significant risks. You should carefully consider all of the information set forth in this Annual Report and in our other filings with the United States Securities and Exchange Commission, or the SEC, including the following risk factors which we face and which are faced by our industry. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. This report also contains forward- looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks described below and elsewhere in this Annual Report and our other SEC filings. See "Special Note Regarding Forward-Looking Statements" above.

Risks Related to Our Financial Condition and Capital Requirements

We Have Incurred Significant Losses Since Our Inception And Anticipate That We Will Continue To Incur Significant Losses For The Foreseeable Future.

We are a clinical-stage biopharmaceutical company, and we have not yet generated significant income from operating activities. We have incurred net losses in each year since our inception in 2002, including net losses of €147.7 million, €166.1 million and €153.6 million for the years ended December 31, 2017, 2018 and 2019, respectively. As of December, 31, 2019, we had an accumulated deficit and reserves of €405 million.

We have devoted most of our financial resources to research and development, including our clinical and pre-clinical development activities. To date, we have financed our operations primarily through the sale of equity securities, obtaining public assistance in support of innovation, such as conditional advances from OSEO Innovation, or OSEO, reimbursements of research tax credit claims and strategic collaborations. The amount of our future net losses will depend, in part, on the pace and amount of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations, or additional grants or tax credits. To date, we have not generated any product revenue and we continue to prepare for the potential launch of ViaskinTM Peanut in North America, which we expect in the second half of 2020, if approved. Even if we obtain regulatory approval to market ViaskinTM Peanut or any other product candidate, our future revenues will depend upon the size of any markets in which our product candidates have received approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for any approved products in those markets.

Our near-term prospects, including our ability to finance our company and generate revenue, will depend heavily on the successful development, regulatory approval and commercialization of ViaskinTM Peanut. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

  • seek regulatory and marketing approvals and pursue commercial activities for ViaskinTM Peanut, for which our Biologics License Application, or BLA, submission is currently under review by the U.S. Food and Drug Administration, or FDA;

5

  • seek regulatory and marketing approvals for our other product candidates that successfully complete clinical trials;
  • continue to establish a sales, marketing and distribution infrastructure to commercialize ViaskinTM Peanut, if approved, and any other products for which we may obtain marketing approval, especially in North America;
  • further develop the manufacturing process for our product candidates;
  • change or add additional manufacturers or suppliers;
  • continue our research, pre-clinical and clinical development of our product candidates;
  • expand the scope of our current clinical trials for our product candidates;
  • initiate and conduct any post-approval clinical trials, if required by the FDA, for our approved products, if any;
  • initiate additional pre-clinical, clinical or other studies for our product candidates;
  • seek to identify and validate additional product candidates;
  • acquire or in-license other product candidates and technologies;
  • make milestone or other payments under any in-license agreements;
  • maintain, protect and expand our intellectual property portfolio;
  • attract and retain new and existing skilled personnel;
  • add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts, as well as a company listed on both the U.S. and French stock markets; and
  • experience any delays or encounter issues with any of the above.

The net losses we incur may fluctuate significantly from year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. In any particular period or periods, our operating results could be below the expectations of securities analysts or investors, which could cause the price of our ADSs or ordinary shares to decline.

We Will Require Additional Funding, Which May Not Be Available On Acceptable Terms, Or At All. Failure To Obtain This Necessary Capital When Needed May Force Us To Delay, Limit Or Terminate Our Product Development Efforts Or Other Operations.

We are currently advancing our product candidates through pre-clinical and clinical development. Developing product candidates is expensive, lengthy and risky, and we expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we seek regulatory approval for ViaskinTM Peanut and advance ViaskinTM Milk through clinical development. Furthermore, if we obtain marketing approval for ViaskinTM Peanut or any other product candidate that we may develop, we expect our commercialization expenses related to product sales, marketing, distribution and manufacturing to increase significantly as we further develop the appropriate infrastructure to commercialize. In addition, our expenses could increase beyond expectations if the FDA requires us to perform nonclinical studies, clinical trials or post-approval clinical trials for our approved products, if any, in addition to those that we currently anticipate.

As of December 31, 2019, our cash and cash equivalents were €172.0 million. We have primarily funded our operations through equity financings, and by obtaining public assistance in support of innovation and reimbursements of research tax

6

credits. To date, we have not generated any product revenue and we continue to prepare for the potential launch of our ViaskinTM Peanut product candidate in North America in the second half of 2020, if approved. In October 2019, we announced the FDA's acceptance for review of our Biologics License Application for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of the BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review, and to our knowledge, the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date.

We expect operating losses to continue for the foreseeable future. Based on our current operations, plans and assumptions, current cash-on-hand and cash equivalents, including the €136.4 million net proceeds from our offering in the first quarter of 2020, after deducting commissions and estimated offering expenses, are projected to be sufficient to fund our operating plan into the first quarter of 2021.

We expect that we will need to raise additional capital in the future as we commercialize ViaskinTM Peanut, if approved, and continue to discover and develop other product candidates using our ViaskinTM Platform. We may seek to finance our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. However, no assurance can be given at this time as to whether we will be able to achieve these financing objectives.

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

Additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our ADSs or ordinary shares to decline. The sale of additional equity or convertible securities would dilute all of our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidate or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

If we are unable to obtain sufficient funding on a timely basis, we may be required to scale back our operating plan, significantly curtail, delay or discontinue one or more of our research or development programs or the launch and commercialization of ViaskinTM Peanut in North America, if approved, or the commercialization of any other product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

We Are Limited In Our Ability To Raise Additional Share Capital, Which May Make It Difficult For Us To Raise Capital To Fund Our Operations.

Under French law, our share capital may be increased only with shareholders' approval at an extraordinary general shareholders' meeting following the recommendation of our board of directors. The shareholders may delegate to our board of directors either the authority (délégation de compétence) or the power (délégation de pouvoir) to carry out any increase in share capital. As discussed further under "Item 10. B-Memorandum and Articles of Association," our board of directors may be precluded from issuing additional ordinary shares without first obtaining shareholders' approval.

In addition, the French Commercial Code imposes certain limitations on our ability to price any offering of our share capital without preferential subscription right (sans droit préférentiel de souscription), which limitation may prevent us from successfully completing any such offering. Specifically, under the French Commercial Code, unless the offering is less than 10% of issued share capital, securities cannot be sold in an offering at a price that is more than a 5% discount to the volume weighted average trading price on Euronext Paris over the last three trading days preceding the commencement of the marketing of the transaction. In addition, the combined shareholders' meeting dated May 24, 2019 granted authority to our board of directors to increase our share capital up to 30% of issued share capital, if the investors in such offering fit within a category of persons meeting certain characteristics. In this case securities cannot be sold in such an offering at a price that is more than a 15% discount to (i) the average trading price on Euronext Paris over five consecutive trading days chosen among the last thirty trading sessions preceding the commencement of the marketing of the transaction or (ii) the weighted average trading price the day preceding the commencement of the marketing of the transaction.

7

We Are Obligated To Develop And Maintain A System Of Effective Internal Controls Over Financial Reporting. These Internal Controls May Be Determined To Be Not Effective, Which May Adversely Affect Investor Confidence In Our Company And, As A Result, The Value Of Our Ordinary Shares And ADSs.

We have been and are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective and would be required to disclose any material weaknesses identified in Management's Report on Internal Control over Financial Reporting. While we have established certain procedures and control over our financial reporting processes, we cannot assure you that these efforts will prevent restatements of our financial statements in the future.

Our independent registered public accounting firm is also required, pursuant to Section 404 of the Sarbanes-Oxley Act, to report on the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. For future reporting periods, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. We may not be able to remediate any future material weaknesses, or to complete our evaluation, testing and any required remediation in a timely fashion.

If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion that our internal controls over financial reporting are effective, investors could lose confidence in the accuracy and completeness of our financial reports, which could cause the price of our ordinary shares and ADSs to decline, and we could be subject to sanctions or investigations by regulatory authorities, including the SEC and Nasdaq. Failure to remediate any material weakness in our internal control over financial reporting, or to maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

If We Do Not Obtain The Capital Necessary To Fund Our Operations, We Will Be Unable To Successfully Commercialize, Develop Or Pursue Regulatory Approval For Our Biopharmaceutical Products.

The development of biopharmaceutical products is capital-intensive. We anticipate that we may require additional financing to continue to fund our operations. Our future capital requirements will depend on, and could increase significantly as a result of, many factors including:

  • the FDA's approval of our BLA for ViaskinTM Peanut;
  • the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval, especially in North America;
  • the costs of securing manufacturing arrangements for commercial production;
  • revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
  • the scope, progress in, results and the costs of, our pre-clinical studies and clinical trials and other research and development programs, particularly as we seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials;
  • the scope, prioritization and number of our research and development programs;
  • the costs, timing and outcome of regulatory review of our product candidates;
  • the achievement of milestones or occurrence of other developments that trigger payments under our existing collaboration agreements, and any additional collaboration agreements we may enter into;

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  • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under our existing collaboration agreements and future collaboration agreements, if any; and
  • the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual property rights.

Until we can generate significant continuing revenues, we expect to satisfy our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. Uncertainty and dislocations in the financial markets have generally made equity and debt financing more difficult to obtain, and may have a material adverse effect on our ability to meet our future fundraising needs. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or our commercialization efforts. Additional funding, if obtained, may significantly dilute existing shareholders if that financing is obtained through issuing equity or instruments convertible into equity. We could also be required to seek funds through collaborations or licensing arrangements with third parties, and we could be required to do so at an earlier stage than otherwise would be desirable. In connection with any such collaborations or licensing arrangements, we may be required to relinquish valuable rights to our intellectual property, future revenue streams, research programs or product candidates, grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

Our Product Development Programs For Candidates May Require Substantial Financial Resources And May Ultimately Be Unsuccessful.

In addition to the development of our lead product candidates, we have completed and commenced a number of proof-of-concept trials in the field of inflammatory and autoimmune diseases. In November 2015, Dr. Jonathan Spergel from the Children's Hospital of Philadelphia, or CHOP, initiated the Study of ViaskinTM Milk in MILk-InducedEosinophilic Esophagitis, or SMILEE, a Phase IIa clinical trial assessing the safety and efficacy of ViaskinTM Milk for the treatment of milk-induced eosinophilic esophagitis, with findings presented in December 2018 and February 2019. We also investigated the use of ViaskinTM rPT for the reactivation of immunity against Bordetella pertussis (whooping cough) in healthy adults. Following the announcement of additional Phase I clinical trial results in September 2018, we evaluated further development pathways, including the optimization of ViaskinTM rPT. Our current early-stage development programs also include potential treatments for Crohn's disease and respiratory syncytial virus. These development programs are still in the pre-clinical or proof-of-concept phase and may not result in product candidates we can advance to the clinical development phase. None of our other potential product candidates have commenced clinical trials, and there are a number of U.S. Food and Drug Administration, or FDA, and European Medicines Agency, or EMA, regulatory requirements that we must satisfy before we can commence these clinical trials, if at all. Satisfaction of these requirements will entail substantial time, effort and financial resources. We may never satisfy these requirements. Any time, effort and financial resources we expend on our other early-stage development programs may adversely affect our ability to continue development and commercialization of product candidates based on our ViaskinTM technology platform, and we may never commence clinical trials of such development programs despite expending significant resources in pursuit of their development. Even if we do commence clinical trials of our other potential product candidates, such product candidates may never be approved by the FDA or the EMA.

The Requirements Of Being A U.S. Public Company May Strain Our Resources, Divert Management's Attention And Affect Our Ability To Attract And Retain Executive Management And Qualified Board Members.

As a U.S. public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not previously incur. We are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Nasdaq listing requirements and other applicable securities rules and regulations. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly if we no longer qualify as a foreign private issuer. The Exchange Act requires that, as a public company, we file annual, semi-annual and current reports with respect to our business, financial condition and result of operations. However, as a foreign private issuer, we are not required to file quarterly reports with respect to our business, financial condition and results of operations. We currently make annual and semi-annual filings with respect to our listing on Euronext Paris. Unless otherwise required by the Exchange Act or the listing rules of the Nasdaq Global Select Market, we do not expect to file quarterly financial reports, but have and expect to continue to file financial reports on an annual and semi-annual basis. As a result of being a U.S. public company, management's attention may be diverted from other business concerns, which could adversely affect our business and results of operations.

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The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. We have limited experience complying with Section 404, and such compliance may require that we incur substantial accounting expenses and expend significant management efforts. Our independent registered public accounting firm is also required, pursuant to Section 404 of the Sarbanes-Oxley Act, to report on the effectiveness of our internal control over financial reporting.

Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, or if our independent registered public accounting firm is unable to express an opinion that our internal controls over financial reporting are effective, the market price of our ordinary shares and ADSs could decline if investors and others lose confidence in the reliability of our financial statements, we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities and our business could be harmed.

As a U.S. public company that is subject to these rules and regulations, we may find it is more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in filings required of a U.S. public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and results of operations.

Further, being a U.S. public company and a French public company has an impact on disclosure of information and compliance with two sets of applicable rules. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Risks Related to Product Development, Regulatory Approval and Commercialization

We Depend Almost Entirely On The Successful Development Of Our Novel ViaskinTM Technology. We Cannot Be Certain That We Will Be Able To Obtain Regulatory Approval For, Or Successfully Commercialize, ViaskinTM Products.

We currently have no drug or biological product approved for sale and may never be able to develop a marketable drug or biological product. While our Biologics License Application, or a BLA, for ViaskinTM Peanut is presently under review by FDA, we cannot assure you that ViaskinTM Peanut will successfully complete the FDA regulatory approval process and be commercialized. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of the BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review, and to our knowledge, the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date. It is also possible that the FDA may require that we complete additional clinical trials of ViaskinTM Peanut. We may also receive approval in a limited patient population or we may experience delays in receiving such regulatory approval. Even if we successfully commercialize ViaskinTM Peanut, we may not be successful in developing and commercializing our other product candidates, and our commercial opportunities may be limited.

Our other lead ViaskinTM technology-based product candidate, ViaskinTM Milk, is currently in clinical development. Our business depends almost entirely on the successful clinical development, regulatory approval and commercialization of ViaskinTM Peanut and ViaskinTM Milk. ViaskinTM Milk will require substantial additional clinical development, testing, and regulatory approval before we are permitted to commence its commercialization. Our other product candidates, such as ViaskinTM Egg or ViaskinTM rPT, are still in pre-clinical or early proof-of-concept phase development. The clinical trials of our product candidates are, and the manufacturing and marketing of our product candidates will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend to test and, if approved, market any product candidate. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through preclinical testing and clinical trials that, among other things, the product candidate is safe and effective for use in each target indication. This process can take many years and may include post-marketing requirements and surveillance, including the completion of pediatric studies to satisfy both U.S. and EMA requirements, which will require the expenditure of substantial resources. Of the large number of drugs in development in the

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United States, only a small percentage successfully completes the FDA regulatory approval process and is commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development and clinical programs, we cannot assure you that ViaskinTM Milk or any other of our product candidates will be successfully developed or commercialized.

We are not permitted to market ViaskinTM Peanut or ViaskinTM Milk in the United States until we receive approval of a BLA from the FDA, or in any other countries until we receive the requisite approval from such countries. Obtaining approval of a BLA, or requisite approval in other countries, is a complex, lengthy, expensive and uncertain process, and the FDA may delay, limit or deny approval of ViaskinTM Peanut, for which our BLA submission is currently under review by the FDA, and ViaskinTM Milk for many reasons, including, among others:

  • we may not be able to demonstrate that ViaskinTM Peanut or ViaskinTM Milk is safe and effective in treating food allergies, to the satisfaction of the FDA;
  • the results of our clinical trials or the clinical trials conducted by third party academic institutions and included in our application package may not meet the level of statistical or clinical significance required by the FDA for marketing approval;
  • the FDA may disagree with the number, design, size, conduct or implementation of our clinical trials;
  • the FDA may require that we conduct additional clinical trials;
  • the FDA may not approve the formulation, labeling or specifications of either ViaskinTM Peanut or ViaskinTM Milk;
  • the clinical research organizations, or CROs, that we retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials;
  • the FDA may find the data from pre-clinical studies and clinical trials from either ViaskinTM Peanut or ViaskinTM Milk insufficient to demonstrate that the clinical or other benefits of either product candidate outweighs its respective safety risks;
  • the FDA may disagree with our analysis or interpretation of data from our pre-clinical studies and clinical trials;
  • the FDA may not accept data generated at our clinical trial sites;
  • the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;
  • the FDA may require development of a Risk Evaluation and Mitigation Strategy, or REMS, as a condition of approval or post- approval;
  • the FDA may restrict the use of our products to a narrow population;
  • the FDA or the applicable foreign regulatory agency may not approve the manufacturing processes or facilities of our own or of third-party manufacturers with which we contract, or may issue inspectional findings that require significant expense and time to address; or
  • the FDA may change its approval policies or adopt new regulations. Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory approval for and successfully market any of our product candidates based on our ViaskinTM technology platform. Moreover, because our business is almost entirely dependent upon ViaskinTM technology, any such setback in our pursuit of regulatory approval would have a material adverse effect on our business and prospects.

In October 2017, we announced topline results from PEPITES, in which we observed a statistically significant response with a favorable tolerability profile. However, the primary endpoint, which evaluates the 95% confidence interval, or CI, in the difference in response rates between the active and placebo arms, did not reach the 15% lower bound of the CI that was

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proposed in the trial's Statistical Analysis Plan submitted to the FDA. As such, our BLA and any submission we make to the other regulatory agencies for approval based on the PEPITES trial may be subject to such regulatory body's interpretation of the CI interval.

In October 2018, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In December 2018, we voluntarily withdrew our BLA for ViaskinTM Peanut following correspondence with the FDA regarding additional data needs on manufacturing procedures and quality controls. In August 2019, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In October 2019, we announced the FDA's acceptance for review of our BLA for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020. In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss our BLA for ViaskinTM Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date. Additionally, the timing of any action by the FDA and possible regulatory paths forward cannot be guaranteed, in that, for example, the FDA may miss its own required deadlines (including the target action date assigned under the Prescription Drug User-Fee Act). We cannot assure you that the BLA will be approved or that we will not be required to conduct additional clinical trials of ViaskinTM Peanut.

Our Product Candidates Have Undergone And/Or Will Be Required To Undergo Clinical Trials That Are Time-Consuming And Expensive, The Outcomes Of Which Are Unpredictable, And For Which There Is A High Risk Of Failure. If Clinical Trials Of Our Product Candidates Fail To Satisfactorily Demonstrate Safety And Efficacy To The FDA And Other Regulators, We, Or Our Collaborators, May Incur Additional Costs Or Experience Delays In Completing, Or Ultimately Be Unable To Complete, The Development And Commercialization Of These Product Candidates.

Pre-clinical testing and clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. It may take several years to complete the pre-clinical testing and clinical development necessary to commercialize a drug or biologic, and delays or failure can occur at any stage. Interim results of clinical trials do not necessarily predict final results, and success in pre-clinical testing and early clinical trials does not ensure that later clinical trials will be successful. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials even after promising results in earlier trials, and we cannot be certain that we will not face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. An unfavorable outcome in one or more trials would be a major setback for our product candidates and for us. Due to our limited financial resources, an unfavorable outcome in one or more trials may require us to delay, reduce the scope of, or eliminate one or more product development programs, which could have a material adverse effect on our business and financial condition and on the value of our ADSs and ordinary shares.

In connection with clinical testing and trials, we face a number of risks, including:

  • a product candidate is ineffective, inferior to existing approved medicines, unacceptably toxic, or has unacceptable side effects;
  • patients may die or suffer other adverse effects for reasons that may or may not be related to the product candidate being tested, especially during the double-blind,placebo-controlled food challenges;
  • extension studies on long-term tolerance could invalidate the use of our product, showing ViaskinTM does not generate a sustained protective effect;
  • the results may not confirm the positive results of earlier testing or trials; and
  • the results may not meet the level of statistical significance required by the FDA or other regulatory agencies to establish the safety and efficacy of our product candidates.

The results of pre-clinical studies do not necessarily predict clinical success, and larger and later-stage clinical trials may not produce the same results as earlier-stage clinical trials. The prior clinical trials of our product candidates based on our ViaskinTM technology platform showed favorable safety and efficacy data; however, we may have different enrollment criteria in our future clinical trials. As a result, we may not observe a similarly favorable safety and efficacy profile as our prior clinical trials. In addition, we cannot assure you that in the course of potential widespread use in future, some

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drawbacks would not appear in maintaining production quality, protein stability or allergenic strength. Frequently, product candidates developed by pharmaceutical, biopharmaceutical and biotechnology companies have shown promising results in early pre-clinical studies or clinical trials, but have subsequently suffered significant setbacks or failed in later clinical trials. In addition, clinical trials of potential products often reveal that it is not possible or practical to continue development efforts for these product candidates.

If we do not successfully complete pre-clinical and clinical development, we will be unable to market and sell our product candidates and generate revenues. Even if we do successfully complete clinical trials, those results are not necessarily predictive of results of additional trials that may be needed before a BLA may be submitted to the FDA. Although there are a large number of drugs and biologics in development in the United States and other countries, only a small percentage result in the submission of an NDA or a BLA to the FDA, even fewer are approved for commercialization, and only a small number achieve widespread physician and consumer acceptance following regulatory approval. If our clinical trials are substantially delayed or fail to prove the safety and effectiveness of our product candidates in development, we may not receive regulatory approval of any of these product candidates and our business and financial condition will be materially harmed.

In Our Clinical Trials, We Utilize An Oral Food Challenge Procedure Intentionally Designed To Trigger An Allergic Reaction, Which Could Be Severe Or Life-Threatening.

In accordance with our food allergy clinical trial protocols, we utilize a double-blind,placebo-controlled food challenge procedure. This consists of giving the offending food protein to patients in order to assess the sensitivity of their food allergy, and thus the safety and efficacy of our product candidates versus placebo. The food challenge protocol is meant to induce objective symptoms of an allergic reaction. These oral food challenge procedures can potentially trigger anaphylaxis or potentially life-threatening systemic allergic reactions. Even though these procedures are well- controlled, standardized and performed in highly specialized centers with intensive care units, there are inherent risks in conducting a trial of this nature. An uncontrolled allergic reaction could potentially lead to serious or even fatal reactions. Any such serious clinical event could potentially adversely affect our clinical development timelines, including a complete clinical hold on our food allergy clinical trials. We may also become liable to patients who participate in our clinical trials and experience any such serious or fatal reactions. Any of the foregoing could have a material adverse effect on our business, prospects, stock price or financial condition.

Delays, Suspensions And Terminations In Our Clinical Trials Could Result In Increased Costs To Us And Delay Or Prevent Our Ability To Generate Revenues.

Human clinical trials are very expensive, time-consuming, and difficult to design, implement and complete. The completion of trials for ViaskinTM Peanut, ViaskinTM Milk or our other product candidates may be delayed for a variety of reasons, including delays in:

  • demonstrating sufficient safety and efficacy to obtain regulatory approval to commence a clinical trial;
  • reaching agreement on acceptable terms with prospective CROs, and clinical trial sites;
  • validating test methods to support quality testing of the drug substance and drug product;
  • obtaining sufficient quantities of the drug substance or other materials necessary to conduct clinical trials;
  • manufacturing sufficient quantities of a product candidate;
  • obtaining permission to proceed from the FDA under an investigational new drug, or IND, application;
  • obtaining institutional review board, or IRB, or independent ethics committee approval to conduct a clinical trial at a prospective clinical trial site;
  • determining dosing and clinical design and making related adjustments; and
  • patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical trial sites, the availability of effective treatments for the relevant disease and the eligibility criteria for the clinical trial.

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The commencement and completion of clinical trials for our product candidates may be delayed, suspended or terminated due to a number of factors, including:

  • lack of effectiveness of product candidates during clinical trials;
  • adverse events, safety issues or side effects relating to the product candidates or their formulation;
  • serious adverse events relating to the double-blind,placebo-controlled food challenge procedure when testing patients for the sensitivity of their allergies;
  • inability to raise additional capital in sufficient amounts to continue clinical trials or development programs, which are very expensive;
  • the need to sequence clinical trials as opposed to conducting them concomitantly in order to conserve resources;
  • our inability to enter into collaborations relating to the development and commercialization of our product candidates;
  • failure by us or our collaborators to conduct clinical trials in accordance with regulatory requirements;
  • our inability or the inability of our collaborators to manufacture or obtain from third parties materials sufficient for use in pre-clinical studies and clinical trials;
  • governmental or regulatory delays and changes in regulatory requirements, policy and guidelines, including mandated changes in the scope or design of clinical trials or requests for supplemental information with respect to clinical trial results;
  • failure of our collaborators to advance our product candidates through clinical development;
  • delays in patient enrollment, variability in the number and types of patients available for clinical trials, and lower-than anticipated retention rates for patients in clinical trials;
  • difficulty in patient monitoring and data collection due to failure of patients to maintain contact after treatment;
  • a regional disturbance where we or our collaborative partners are enrolling patients in our clinical trials, such as a pandemic, terrorist activities or war, or a natural disaster; and
  • varying interpretations of our data, and regulatory commitments and requirements by the FDA and similar foreign regulatory agencies.

Many of these factors may also ultimately lead to denial of our BLAs for our product candidates. If we experience delay, suspensions or terminations in a clinical trial, the commercial prospects for the related product candidate will be harmed, and our ability to generate product revenues will be delayed or such revenues could be reduced or fail to materialize.

In addition, we may encounter delays or product candidate rejections based on new governmental regulations, future legislative or administrative actions, or changes in FDA or other similar foreign regulatory agency policy or interpretation during the period of product development. If we obtain required regulatory approvals, such approvals may later be withdrawn. Delays or failures in obtaining regulatory approvals may result in:

  • varying interpretations of data and commitments by the FDA and similar foreign regulatory agencies; and
  • diminishment of any competitive advantages that such product candidates may have or attain.

Furthermore, if we fail to comply with applicable FDA and other regulatory requirements at any stage during this regulatory process, we may encounter or be subject to:

  • diminishment of any competitive advantages that such product candidates may have or attain; 14
  • delays or termination in clinical trials or commercialization;
  • refusal by the FDA or similar foreign regulatory agencies to review pending applications or supplements to approved applications;
  • product recalls or seizures;
  • suspension of manufacturing;
  • withdrawals of previously approved marketing applications; and
  • fines, civil penalties, and criminal prosecutions.

If Our Product Candidates Are Not Approved By The FDA, We Will Be Unable To Commercialize Them In The United States.

The FDA must approve any new drug or biologic before it can be commercialized, marketed, promoted or sold in the United States. We must provide the FDA with data from pre-clinical studies and clinical trials that demonstrate that, among other things, our product candidates are safe and effective for a defined indication before they can be approved for commercial distribution. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. We must provide data to ensure the identity, strength, quality and purity of the drug substance and drug product. Also, we must assure the FDA that the characteristics and performance of the clinical batches will be replicated consistently in the commercial batches. We will not obtain approval for a product candidate unless and until the FDA approves a BLA, if at all. In October 2018, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In December 2018, we voluntarily withdrew our BLA for ViaskinTM Peanut following correspondence with the FDA regarding additional data needs on manufacturing procedures and quality controls. In August 2019, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In October 2019, we announced the FDA's acceptance for review of our BLA for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020. In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss our BLA for ViaskinTM Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date. Additionally, the timing of any action by the FDA and possible regulatory paths forward cannot be guaranteed, in that, for example, the FDA may miss its own required deadlines (including the target action date assigned under the Prescription Drug User-Fee Act). We cannot assure you that the BLA will be approved or that we will not be required to conduct additional clinical trials of ViaskinTM Peanut.

The processes by which regulatory approvals are obtained from the FDA to market and sell a new or repositioned product are complex, require a number of years and involve the expenditure of substantial resources. We cannot assure you that any of our product candidates will receive FDA approval in the future, and the time for receipt of any such approval is currently incapable of estimation.

A Fast Track Designation By The FDA May Not Actually Lead To A Faster Development Or Regulatory Review Or Approval Process, And It Does Not Increase The Likelihood That Our Product Candidates Will Receive Marketing Approval.

We have obtained fast track designation from the FDA for the development of ViaskinTM Peanut and ViaskinTM Milk in pediatric populations, and we may pursue that designation for other product candidates as well. If a product is intended for the treatment of a serious or life-threatening condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for this condition, the sponsor may apply for FDA fast track designation. The FDA has broad discretion whether or not to grant this designation, and even if we believe our product candidates are eligible for this designation, we cannot be sure that the FDA would decide to grant it. Even if we do have fast track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. A fast track designation affords the possibility of rolling review, enabling the FDA to review portions of our marketing application before submission of a complete application, and priority review if supported by clinical data at the time of our BLA submission. The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program.

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The Approval Process Outside The United States Varies Among Countries And May Limit Our Ability To Develop, Manufacture And Sell Our Products Internationally. Failure To Obtain Marketing Approval In International Jurisdictions Would Prevent Our Product Candidates From Being Marketed Abroad.

In order to market and sell our product candidates in the European Union and many other jurisdictions, we, and our collaborators, must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and may involve additional testing. While we have submitted a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age, we have not sought regulatory approval to market ViaskinTM Peanut in countries other than the United States, including in Europe.

We may, in the future, conduct clinical trials for, and seek regulatory approval to market, our product candidates in countries other than the United States. Depending on the results of clinical trials and the process for obtaining regulatory approvals in other countries, we may decide to first seek regulatory approvals of a product candidate in countries other than the United States, or we may simultaneously seek regulatory approvals in the United States and other countries. If we or our collaborators seek marketing approvals for a product candidate outside the United States, we will be subject to the regulatory requirements of health authorities in each country in which we seek approvals. With respect to marketing authorizations in Europe, we will be required to submit a European Marketing Authorization Application, or MAA, to the EMA which conducts a validation and scientific approval process in evaluating a product for safety and efficacy. The approval procedure varies among regions and countries and may involve additional testing, and the time required to obtain approvals may differ from that required to obtain FDA approval.

Pursuing regulatory approvals from health authorities in countries outside the United States is likely to subject us to all of the risks associated with pursuing FDA approval described above. In addition, marketing approval by the FDA does not ensure approval by the health authorities of any other country, and approval by foreign health authorities does not ensure marketing approval by the FDA.

Even If We, Or Our Collaborators, Obtain Marketing Approvals For Our Product Candidates, The Terms Of Approvals And Ongoing Regulation Of Our Products May Limit How We Or They Market Our Products, Which Could Materially Impair Our Ability To Generate Revenue.

Even if we receive regulatory approval for ViaskinTM Peanut or any of our other product candidates, this approval may carry conditions that limit the market for the product or put the product at a competitive disadvantage relative to alternative therapies. For instance, a regulatory approval may limit the indicated uses for which we can market a product or the patient population that may utilize the product, or may be required to carry a warning in its labeling and on its packaging. Products with boxed warnings are subject to more restrictive advertising regulations than products without such warnings. These restrictions could make it more difficult to market any product candidate effectively. Accordingly, assuming we, or our collaborators, receive marketing approval for ViaskinTM Peanut or any of our other product candidates, we and our collaborators will continue to expend time, money and effort in all areas of regulatory compliance.

Any Of Our Product Candidates For Which We, Or Our Collaborators, Obtain Marketing Approval In The Future Could Be Subject To Post- Marketing Restrictions Or Withdrawal From The Market And We, And Our Collaborators, May Be Subject To Substantial Penalties If We, Or They, Fail To Comply With Regulatory Requirements Or If We, Or They, Experience Unanticipated Problems With Our Products Following Approval.

Any of our product candidates for which we, or our collaborators, obtain marketing approval in the future, as well as the manufacturing processes, post- marketing requirements and commitments, labeling, advertising and promotional activities for such products, among other things, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post- marketing information and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents and requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted, the approval will be subject to limitations on the indicated uses for which the product may be marketed or may be subject to other conditions of approval, including the FDA requirement to implement a REMS to ensure that the benefits of a drug or biological product outweigh its risks.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product, such as long term observational studies on natural exposure. The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed and distributed only for the approved indications and in accordance with the

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provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers' communications regarding off-label use and if we, or our collaborators, market any of our product candidates for which we, or they, receive marketing approval for treatment other than their approved indications, we, or they, may be subject to warnings or enforcement action for off-label marketing. Violation of the Federal Food, Drug, and Cosmetic Act, or FDCA, and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

If We Do Not Achieve Our Projected Development And Commercialization Goals In The Timeframes We Announce And Expect, The Commercialization Of Our Product Candidates May Be Delayed, And Our Business Will Be Harmed.

We sometimes estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives for planning purposes. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings, or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval, or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:

  • our available capital resources or capital constraints we experience;
  • our receipt of approvals, if any, by the FDA and other regulatory agencies and the timing thereof;
  • the rate of progress, costs and results of our clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators, and our ability to identify and enroll patients who meet clinical trial eligibility criteria;
  • other actions, decisions or rules issued by regulators;
  • our ability to access sufficient, reliable and affordable supplies of compounds used in the manufacture of our product candidates;
  • the efforts of our collaborators with respect to the commercialization of our products; and
  • the securing of, costs related to, and timing issues associated with, product manufacturing as well as sales and marketing activities.

If we fail to achieve announced milestones in the timeframes we expect, the commercialization of our product candidates may be delayed, our business and results of operations may be harmed, the trading price of the ADSs or ordinary shares may decline.

Access To Raw Materials And Products Necessary For The Conduct Of Clinical Trials, For Commercialization, If Approved, And Manufacturing Of Our Product Candidates And Product, If Any, Is Not Guaranteed.

We are dependent on third parties for the supply of various materials, chemical or biological products that are necessary to produce patches for our clinical trials or diagnosis patches, and will be necessary to produce patches for our commercial supply, if ViaskinTM Peanut is approved. The supply of these materials could be reduced or interrupted at any time. In such case, we may not be able to find other suppliers of acceptable materials in appropriate quantities at an acceptable cost. If key suppliers or manufacturers are lost or the supply of materials is diminished or discontinued, we may not be able to continue to develop, manufacture and market our product candidates or products, if any, in a timely and competitive manner. In addition, these materials are subject to stringent manufacturing processes and rigorous testing. Delays in the completion and validation of facilities and manufacturing processes of these materials could adversely affect our ability to complete trials and commercialize our products, if any, in a cost- effective and timely manner. To prevent such situations, we intend to diversify our supply sources by identifying at a minimum a second source of supply for critical raw materials and materials, such as natural protein and polymer film with a titanium coating. If we encounter difficulties in the supply of these materials, chemicals or biological products, if we were not able to maintain our supply agreements or establish new agreements to develop and manufacture our products in the future, our business, prospects, financial condition, results and development could be significantly affected.

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Relying On Third-Party Manufacturers May Result In Delays In Our Clinical Development Or Commercialization Efforts.

Developing and commercializing new medicines entails significant risks and expenses. Our clinical trials may be delayed if third-party manufacturers are unable to assure a sufficient quantity of the drug product to meet our study needs. Currently, we have only one manufacturer, Sanofi S.A., or Sanofi, of the active pharmaceutical ingredients, or API, used in our ViaskinTM product candidates, including ViaskinTM Peanut, such as peanut protein extract and unmodified allergen milk extract. In February 2020, Sanofi announced that it plans to create a new company dedicated to the production and marketing to third parties of API, which will consolidate Sanofi's API commercial and development activities currently conducted in six of its European API production sites. While those API sites do not include the site in which the API used in our ViaskinTM product candidates is produced, there can be no assurances that this transition will not adversely impact our supply of API from Sanofi. If Sanofi does not continue to manufacture the API as required by us in a timely manner, we may not be able to find a substitute manufacturer on a timely basis and our commercialization efforts and clinic trials may be delayed. Further, we are aware that Sanofi has entered into a clinical collaboration with Regeneron and Aimmune Therapeutics, to evaluate treatment with Palforzia in combination with Dupilumab in peanut allergic patients, and commenced a Phase II clinical trial in October 2018 under this collaboration. This potential competitive dynamic may make Sanofi less inclined to continue or renew their manufacturing arrangement with us on commercially reasonable terms or at all and, notwithstanding contractual protections, Sanofi may be able to utilize knowledge gained through their relationship with us in furtherance of their development of competitive therapies.

We also expect to rely on Sanofi or other third-party manufacturers for the manufacturing of commercial supply of ViaskinTM Peanut, if approved, and any other product for which we obtain regulatory approval. Sanofi may not be able to effectively scale its manufacturing capacity of our API to meet our commercialization needs and we may be unable to establish any agreements with other third-party manufacturers or to do so on acceptable terms. Even if Sanofi is able to meet our commercialization needs or if we are able to establish agreements with other third-party manufacturers, reliance on third- party manufacturers entails additional risks, including:

  • reliance on the third party for regulatory compliance and quality assurance;
  • the possible breach of the manufacturing agreement by the third party;
  • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
  • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.

Once regulatory approval is obtained, a marketed product and its manufacturer are subject to continual review. The discovery of previously unknown problems with a product or manufacturer may result in restrictions on the product, manufacturer or manufacturing facility, including withdrawal of the product from the market. Any manufacturers with which we contract are required to operate in accordance with FDA-mandated current good manufacturing practices, or cGMPs. A failure of any of our contract manufacturers to establish and follow cGMPs and to document their adherence to such practices may lead to significant delays in the launch of products based on our product candidates into the market. Moreover, the constituent parts of a combination product retain their regulatory status (as a biologic or device, for example) and, as such, we or our contract manufacturers may be subject to additional requirements in the Quality System Regulation, or QSR, applicable to medical devices, such as design controls, purchasing controls, and corrective and preventive action. Failure by third-party manufacturers to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, revocation or suspension of marketing approval for any products granted pre-market approvals, seizures or recalls of products, operating restrictions, and criminal prosecutions.

Our current and anticipated future dependence upon others for the manufacture of our product candidates or products, if approved, may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

Our ViaskinTM Product Candidates May Not Be Able To Be Manufactured Profitably On A Large Enough Scale To Support Commercialization.

To date, our ViaskinTM product candidates have only been manufactured at a scale which is adequate to supply our research activities and clinical trials. There can be no assurance that the procedures currently used to manufacture our product

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candidates will work at a scale which is adequate for commercial needs and we may encounter difficulties in the production of ViaskinTM patches due to our or our partners' manufacturing capabilities. For example, in large-scale use, there is a possibility that our electrospray manufacturing tool, ES GEN4.0, may have issues related to maintenance of production quality, protein stability, and allergenicity. Additionally, during production, the containment of the electrospray function and the use of the allergen in liquid form keep the environment from being contaminated by the allergens. However, if there is a malfunction in the handling or storage phases or during the production phases, allergens could be released into the atmosphere and sensitize anyone present in the environment. We have not built commercial-scale manufacturing facilities, and we have limited manufacturing experience with ViaskinTM patches.

Additionally, while the production process was developed in strict compliance with current regulations, due to the originality of the product, we cannot predict if European or U.S. regulatory authorities will make new regulations applicable to our production process, or if we will have any future disagreements with such regulatory authorities regarding our interpretation of the regulatory requirements.

We rely on a single supplier to produce, or contract for the production of, active ingredients for our clinical trials and for our commercial supplies of any future approved products. Even if we were to obtain access to quantities of active ingredients sufficient to allow us otherwise to expand our ViaskinTM manufacturing capabilities, we may not be able to produce sufficient quantities of the product at an acceptable cost, or at all. In the event our ViaskinTM product candidates cannot be manufactured in sufficient quantities for commercialization, our future prospects could be significantly impacted and our financial prospects would be materially harmed.

We Or The Third Parties Upon Whom We Depend May Be Adversely Affected By Earthquakes, Other Natural Disasters or Outbreaks of Contagious Diseases And Our Business Continuity And Disaster Recovery Plans May Not Adequately Protect Us From A Serious Disaster.

Earthquakes, other natural disasters or an outbreak of a contagious disease, such as the novel strain of coronavirus, or COVID-19, that recently originated in China, could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.

The COVID-19 Coronavirus Could Adversely Impact Our Business, Including Our Clinical Trials.

In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States and several European countries, including countries in which we have planned or ongoing clinical trials. If COVID-19 continues to spread in the United States and Europe, we may experience disruptions that could severely impact our business, including a delay in the timing of any action by the FDA, such as a delay of their review of our BLA submission for Viaskin Peanut. For example, in March 2020, the FDA announced that it will be postponing its inspections outside of the United States through April 2020, due to the COVID-19 outbreak, which may impact the FDA's product application reviews. We may also experience disruptions that could impact our clinical trials, including:

  • delays or difficulties in enrolling patients in our clinical trials;
  • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
  • diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
  • interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others; and
  • limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people.

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For our clinical trials that are being conducted at sites outside the United States, particularly in countries which are experiencing heightened impact from COVID-19, in addition to the risks listed above, we may also experience the following adverse impacts:

  • delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
  • interruption in global shipping that may affect the transport of clinical trial materials, such as API for our product candidates used in our clinical trials;
  • changes in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
  • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and
  • refusal of the FDA to accept data from clinical trials in these affected geographies.

If the COVID-19 outbreak continues to spread, we may need to limit operations or implement limitations, including work from home policies. There is a risk that other countries or regions may be less effective at containing COVID-19, or it may be more difficult to contain if the outbreak reaches a larger population or broader geography, in which case the risks described herein could be elevated significantly.

The global outbreak of COVID-19 continues to rapidly evolve. For example, on March 11, 2020, President Trump announced the 30-day suspension of all travel by foreign nationals from Europe to the United States, effective March 13, 2020. On March 13, 2020, President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, and subsequently, many U.S. cities closed their schools and public gathering places for more than 500 people. In France, on March 12, 2020, the government announced the closure of all schools, a band on gatherings of more than 100 people and the closure of all non-essential businesses until further notice. On March 16, 2020, President Macron announced that the French population would be confined for a minimum of 15 days. The extent to which the COVID-19 coronavirus may impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in Europe, the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in Europe, the United States and other countries to contain and treat the disease.

We Rely, And Will Rely In The Future, On Third Parties To Conduct Our Clinical Trials And Perform Data Collection And Analysis, Which May Result In Costs And Delays That Prevent Us From Successfully Commercializing Product Candidates.

We rely, and will rely in the future, on medical institutions, clinical investigators, CROs, contract laboratories and collaborators to perform data collection and analysis and others to carry out our clinical trials. Our development activities or clinical trials conducted in reliance on third parties may be delayed, suspended, or terminated if:

  • the third parties do not successfully carry out their contractual duties or fail to meet regulatory obligations or expected deadlines;
  • we replace a third party; or
  • the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to clinical protocols, regulatory requirements, or for other reasons.

Third party performance failures may increase our development costs, delay our ability to obtain regulatory approval, and delay or prevent the commercialization of our product candidates. While we believe that there are numerous alternative sources to provide these services, in the event that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional costs.

Even If Collaborators With Which We Contract In The Future Successfully Complete Clinical Trials Of Our Product Candidates, Those Candidates May Not Be Commercialized Successfully For Other Reasons.

Even if we contract with collaborators that successfully complete clinical trials for one or more of our product candidates, those candidates may not be commercialized for other reasons, including:

  • failing to receive regulatory approval to market them as drugs; 20
  • being subject to proprietary rights held by others;
  • failing to obtain approval from regulatory authorities on the manufacturing of our products;
  • being difficult or expensive to manufacture on a commercial scale;
  • having adverse side effects that make their use less desirable;
  • failing to compete effectively with products or treatments commercialized by competitors; or
  • failing to show long-term risk/benefit ratio of our products.

We Currently Have A Limited Marketing And Sales Force. If We Are Unable To Establish Effective Sales Or Marketing Capabilities Or Enter Into Agreements With Third Parties To Sell Or Market Our Product Candidates, We May Not Be Able To Effectively Sell Or Market Our Product Candidates, If Approved, Or Generate Product Revenues.

We currently have a limited sales and marketing infrastructure. To achieve commercial success for any approved product candidate for which we retain sales and marketing responsibilities, we must build our sales, marketing, managerial, and other non-technical capabilities or make arrangements with third parties to perform these services. For example, we are planning to hire sales representatives for the marketing of ViaskinTM Peanut in the United States, if approved. There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our product candidates on our own include:

  • our inability to recruit, hire, retain and incentivize adequate numbers of effective sales and marketing personnel;
  • the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future products;
  • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
  • unforeseen costs and expenses associated with establishing an independent sales and marketing organization.

If we enter into arrangements with third parties to perform sales, marketing and distribution services, as we are currently exploring for the marketing of ViaskinTM Peanut in the United States, if approved, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market and sell any product candidates that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market ViaskinTM Peanut or any of our other product candidates or may be unable to do so when needed or on terms that are favorable to us. We likely will have more limited control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our product candidates effectively, or they may fail to comply with promotional requirements for prescription products that could render our products misbranded in violation of FDA regulations and thus potentially subject to enforcement. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing ViaskinTM Peanut or any of our other product candidates that receive marketing approval or any such commercialization may experience delays or limitations. If we are not successful in commercializing ViaskinTM Peanut or any of our other product candidates, either on our own or through collaborations with one or more third parties, our business, results of operations, financial condition and prospects will be materially adversely affected.

Our Product Candidates Are Regulated As Biological Products, Or Biologics, Which May Subject Them To Competition Sooner Than Anticipated.

The Biologics Price Competition and Innovation Act, or BPCIA, established an abbreviated licensure pathway for biological

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products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product. "Biosimilarity" means that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and there are no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency of the product. To meet the higher standard of "interchangeability," an applicant must provide sufficient information to show biosimilarity and demonstrate that the biological product can be expected to produce the same clinical result as the reference product in any given patient and, if the biological product is administrated more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between the use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch.

Under the BPCIA, an application for a biosimilar or interchangeable product cannot be approved by the FDA until 12 years after the reference product was first licensed, and the FDA will not even accept an application for review until four years after the date of first licensure. The law is evolving, complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty and could have a material adverse effect on the future commercial prospects for our biological products.

We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, potentially creating the opportunity for biosimilar or interchangeable competition sooner than anticipated. Moreover, the process by which an interchangeable product, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products (i.e., drugs) is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing and subject to interpretation.

Even If Any Of Our Product Candidates Are Commercialized, They May Not Be Accepted By Physicians, Patients, Or The Medical Community In General. Even If We, Or Our Collaborators, Are Able To Commercialize Our Product Candidates, The Products May Become Subject To Market Conditions That Could Harm Our Business.

Even if the medical community accepts a product as safe and efficacious for its indicated use, physicians may choose to restrict the use of the product if we or any collaborator is unable to demonstrate that, based on experience, clinical data, side-effect profiles and other factors, our product is preferable to any existing drugs or treatments. We cannot predict the degree of market acceptance of any product candidate that receives marketing approval, which will depend on a number of factors, including, but not limited to:

  • the demonstration of the clinical efficacy and safety of the product;
  • the approved labeling for the product and any required warnings;
  • the advantages and disadvantages of the product compared to alternative treatments;
  • our and any collaborator's ability to educate the medical community about the safety and effectiveness of the product;
  • the coverage and reimbursement policies of government and commercial third-party payors pertaining to the product;
  • the market price of our product relative to competing treatments; and
  • our ability to effectively implement a scientific publication strategy.

We Face Substantial Competition From Companies With Considerably More Resources And Experience Than We Have, Which May Result In Others Discovering, Developing, Receiving Approval For, Or Commercializing Products Before Or More Successfully Than Us.

The biopharmaceuticals industry is highly competitive. Numerous biopharmaceutical laboratories, biotechnology companies, institutions, universities and other research entities are actively involved in the discovery, research, development and marketing of therapeutic responses to treat allergies, making it a highly competitive field. We have competitors in a number of jurisdictions, many of which have substantially greater name recognition, commercial infrastructures and financial, technical and personnel resources than we have. Although we believe we are currently in a unique position with respect to the

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testing and treatment of food allergies in young children, established competitors may invest heavily to quickly discover and develop novel compounds that could make the ViaskinTM patch products obsolete or uneconomical. Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, convenience, tolerability and safety to be commercially successful. Other competitive factors, including generic competition, could force us to lower prices or could result in reduced sales. In addition, new products developed by others could emerge as competitors to ViaskinTM patch products. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will suffer.

In the case of food allergies, we are aware of several academic studies that are currently being conducted in major centers and hospitals worldwide. These studies are evaluating sublingual, subcutaneous, intranasal or other forms of desensitization or products using synthetic allergens, denatured allergens or combinations of medicines or methods, or medicines using traditional methods such as Chinese herbs. We are not aware of any pharmaceutical development in conjunction with these academic efforts at this time.

We expect studies combining other methods of immunotherapy, such as oral immunotherapy, or OIT, with anti-IgE treatments will be conducted. These types of co-administrations may significantly improve the safety of specific immunotherapies administered orally or subcutaneously, and may become significant competitors with our products.

To our knowledge, other pharmaceutical and biotechnology companies are also seeking to develop or have received marketing approval for food allergy treatments. For example, Aimmune Therapeutics, Inc., or Aimmune, received FDA approval of its OIT product candidate, Palforzia, in peanut allergic patients in January 2020. To our knowledge, Palforzia uses a formulation of peanut flour for oral administration intended for oral desensitization to peanut. We are also aware of other companies developing OIT product candidates, as well as other companies that are working on recombinant peanut proteins capable of initiating an attenuated immune response of using subcutaneous administration. Aimmune also announced a clinical collaboration with Regeneron Pharmaceuticals, Inc. and Sanofi to study Palforzia treatment with dupilumab in peanut allergic patients, and commenced a Phase II clinical trial in October 2018 under this collaboration. Regeneron and Sanofi are currently recruiting patients in a Phase II study of dupilumab as a monotherapy in the treatment of peanut allergic patients. In August 2018, Genentech, Inc. and Novartis Pharmaceuticals Corporation announced that the FDA granted breakthrough designation for Xolair (omalizumab) for the prevention of severe allergic reactions following accidental exposure to one Xolair or more foods in people with allergies. In July 2019, NIAID (National Institute of Allergy and Infectious Diseases) started a Phase III clinical trial studying omalizumab as monotherapy and as adjunct therapy to multi-allergen OIT in multiple food allergies.

Government Restrictions On Pricing And Reimbursement, As Well As Other Healthcare Payor Cost-Containment Initiatives, May Negatively Impact Our Ability To Generate Revenues If We Obtain Regulatory Approval To Market A Product.

The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare costs to contain or reduce costs of healthcare may adversely affect one or more of the following:

  • our ability or our collaborators' ability to set a price we believe is fair for our products, if approved;
  • our ability or our collaborators' ability to obtain and maintain market acceptance by the medical community and patients;
  • our ability to generate revenues and achieve profitability; and
  • the availability of capital.

Sales of our products, when and if approved for marketing, will depend, in part, on the extent to which our products will be covered by third-party payors, such as federal, state, and foreign government health care programs, commercial insurance and managed healthcare organizations. There may be significant delays in obtaining coverage and reimbursement for newly approved products, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Third-party payors are increasingly reducing reimbursements for medical products, drugs and services. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic

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products. Adoption of price controls and cost containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Limited third-party reimbursement for our product candidates or a decision by a third-party payor not to cover our product candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition.

Various provisions of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, or ACA, were designed to impact the provision of, or payment for, health care in the United States, including expanded Medicaid eligibility, subsidized insurance premiums, provided incentives for businesses to provide health care benefits, prohibited denials of coverage due to pre-existing conditions, established health insurance exchanges, and provided additional support for medical research. With regard to biopharmaceutical products, among other things, the ACA expanded and increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under the Medicare prescription drug benefit. However, there remain judicial and Congressional challenges, as well as efforts by the Trump Administration to repeal or replace certain aspects of the ACA. For example, since January 2017, President Trump signed two Executive Orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA. Additionally, on December 22, 2017, President Trump signed into law The Tax Cuts and Jobs Act of 2017, or Tax Act, which includes a provision repealing the individual mandate to maintain health insurance coverage under the ACA effective January 1, 2019. In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated "Cadillac" tax on high-costemployer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. In December 2018, the Centers for Medicare & Medicaid Services, or CMS, published a new final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. It is unclear how this decision, future decisions, subsequent appeals, if any, and other efforts will impact the ACA. We continue to evaluate how the ACA and recent efforts to limit the implementation of the ACA will impact our business.

Following ACA, both the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, or the ATRA, include, among other things, mandatory reductions in Medicare payments to certain providers. Additionally, in the United States, there have been several recent Congressional inquiries and federal and state legislative activity designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration's budget proposal for fiscal year 2020 contains further drug price control measures that could be enacted during the budget process or in other future legislation. The Trump administration released a "Blueprint", or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. The United States Department of Health and Human Services has solicited feedback on some of these measures and has implemented others under its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020. This final rule codified CMS's policy change that was effective January 1, 2019. While some measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Additional legislative proposals to reform healthcare and government insurance programs, along with the trend toward managed healthcare in the United States, could influence the purchase of medicines and reduce demand and prices for our products, if approved. This could harm our or our collaborators' ability to market any products and generate revenues. Cost containment measures that healthcare payors and providers are instituting and the effect of further healthcare reform could significantly reduce potential revenues from the sale of any of our product candidates approved in the future, and could cause an increase in our compliance, manufacturing, or other operating expenses.

In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. In addition, in certain foreign markets, the pricing of prescription drugs is subject to government control and reimbursement may in some

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cases be unavailable. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, biopharmaceutical products launched in the European Union do not follow price structures of the United States and generally tend to have significantly lower prices.

We believe that pricing pressures at the federal and state levels in the United States, as well as internationally, will continue and may increase, which may make it difficult for us to sell our potential products that may be approved in the future at a price acceptable to us or any of our future collaborators.

Guidelines And Recommendations Published By Various Organizations May Impact The Use Or Reimbursement Of ViaskinTM Peanut, If Approved.

Government agencies promulgate regulations and guidelines that may be directly applicable to us and any approved products. However, professional societies, practice management groups, insurance carriers, physicians groups, private health and science foundations and organizations involved in various diseases also publish guidelines and recommendations to healthcare providers, administrators and payers, as well as patient communities.

Recommendations by government agencies or other groups and organizations may relate to such matters as usage, dosage, route of administration and use of related therapies, and a growing number of organizations are providing assessments of the value and pricing of pharmaceutical products. These assessments may come from private organizations, such as the Institute for Clinical and Economic Review, or ICER, which publish their findings and offer recommendations relating to the products' reimbursement by government and private payers. In July 2019, ICER published its final report assessing the comparative clinical effectiveness and value of treatments for peanut allergy, including ViaskinTM Peanut and a competitor product candidate. The results of the ICER report or any similar recommendations or guidelines may affect our reputation, and any recommendations or guidelines that result in decreased use or reimbursement of ViaskinTM Peanut, if approved, could have a material adverse effect on our results of operations and financial condition. In addition, the occurrence of any of the foregoing, or the perception by the investment community or shareholders that such recommendations or guidelines will result in decreased use or reimbursement of ViaskinTM Peanut, if approved, could adversely affect the market price of our securities.

Our Product Candidates May Cause Undesirable Side Effects That Could Delay Or Prevent Their Regulatory Approval, Limit The Commercial Profile Of An Approved Label, Or Result In Significant Negative Consequences Following Marketing Approval, If Any.

Our product candidates are being developed to address the needs of severely allergic patients, for some of whom coming into contact with even minute amounts of an allergen can have a profound and life-threatening adverse reaction. Accordingly, safety is of paramount importance in developing these product candidates. To date, more than ten clinical trials of ViaskinTM Peanut and ViaskinTM Milk product candidates have been conducted both outside and inside of the United States in over 1,000 human patients to evaluate the safety and efficacy of these product candidates for the treatment of peanut allergies and milk allergies, respectively. Adverse events observed in these clinical trials have primarily involved general disorders such skin and subcutaneous tissue, immune system and administration site conditions, such as erythema, pruritus, edema and urticaria. However, in clinical trials to date, one case of mild to moderate anaphylaxis has been reported, and it is possible that anaphylaxis or other systemic reactions may occur in the future. It is worth noting that, as a desensitization patch bringing the allergen into contact with the skin, reactions, which are a source of itching and discomfort for the patient, are common. This reaction is typically temporary in duration and fades after a few weeks of use. In addition, during daily administration of the patches during treatments, depending on the severity of the allergies and patient response to treatment, precautionary measures are necessary when handling the patches after use due to risk of contamination.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay, halt or terminate clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. Further, if our ViaskinTM patch product candidates receive marketing approval and we or others identify undesirable side effects caused by the products (or any other similar products) after the approval, a number of potentially significant negative consequences could result, including:

  • regulatory authorities may withdraw or limit their approval of the products; 25
  • regulatory authorities may require the addition of labeling statements, such as a "boxed" warning or a contraindication;
  • we may be required to change the way the products are distributed or administered, conduct additional clinical trials or change the labeling of the products;
  • we may decide to remove the products from the marketplace;
  • we could be sued and held liable for injury caused to individuals exposed to or taking our products; and
  • our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected products and could substantially increase the costs of commercializing our products and significantly impact our ability to successfully commercialize our products and generate revenues.

Our Future Growth Depends, In Part, On Our Ability To Penetrate Foreign Markets, Where We Would Be Subject To Additional Regulatory Burdens And Other Risks And Uncertainties.

Our future profitability will depend, in part, on our ability to commercialize product candidates based on our ViaskinTM technology platform in markets within and without the United States and Europe. If we commercialize product candidates based on our ViaskinTM technology platform in foreign markets, we would be subject to additional risks and uncertainties, including:

  • the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements;
  • different medical practices and customs in foreign countries affecting acceptance in the marketplace;
  • import or export licensing requirements;
  • longer accounts receivable collection times;
  • longer lead times for shipping;
  • language barriers for technical training;
  • reduced protection of intellectual property rights in some foreign countries, and related prevalence of generic alternatives to therapeutics;
  • foreign currency exchange rate fluctuations;
  • patients' ability to obtain reimbursement for ViaskinTM patch products in foreign markets; and
  • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.

Foreign sales of ViaskinTM patch products could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.

We Are Subject To Healthcare Laws And Regulations, Which Could Expose Us To Criminal Sanctions, Civil Penalties, Integrity Obligations, Exclusion from Government Healthcare Programs, Individual Imprisonment, Contractual Damages, Reputational Harm And Diminished Profits And Future Earnings, Among Other Consequences.

Healthcare providers, physicians and others will play a primary role in the recommendation and prescription of ViaskinTM patch products, if approved. Our arrangements with such persons and third-party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute ViaskinTM patch products, if we obtain marketing

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approval. Restrictions under applicable federal, state and foreign healthcare laws and regulations include but are not limited to the following:

  • The federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for or the purchase, lease, order or recommendation of any item, good, facility or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. The intent standard under the federal Anti-Kickback Statute was amended by the ACA to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
  • The federal civil and criminal false claims laws, including the civil False Claims Act, impose criminal and civil penalties, including those from civil whistleblower or qui tam actions, and civil monetary penalties laws, which prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government.
  • The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created federal criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or knowingly and willingly falsifying, concealing or covering up a material fact or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.
  • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which impose certain requirements on covered entities and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information.
  • The federal transparency requirements under the Physician Payments Sunshine Act, enacted as part of the ACA, that require applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program, with specific exceptions, to track and annually report to CMS payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in the applicable manufacturer, and disclosure of such information will be made by CMS on a publicly available website.
  • Analogous state, local or foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and local marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal requirements, state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, state and local laws that require licensure or registration of pharmaceutical sales representatives; state laws that require disclosure of information related to drug pricing; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect as HIPAA.

Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our current and/or future business activities could be subject to challenge under one or more of these laws. If our operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity

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obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of operations, any of which could substantially disrupt our operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs.

Changes In Regulatory Requirements, FDA Guidance Or Guidance From Certain European Regulatory Authorities Or Unanticipated Events During Our Clinical Trials Of ViaskinTM Patch Products May Occur, Which May Result In Changes To Clinical Trial Protocols Or Additional Clinical Trial Requirements, Which Could Result In Increased Costs To Us And Could Delay Our Development Timeline.

Changes in regulatory requirements, FDA guidance or guidance from certain European regulatory authorities or unanticipated events during our clinical trials may force us to amend clinical trial protocols or the FDA or certain European regulatory authorities may impose additional clinical trial requirements. Discussions with regulatory authorities have caused us to adjust certain trial protocols. Amendments to our clinical trial protocols would require resubmission to the FDA and IRBs for review and approval, which may adversely impact the cost, timing or successful completion of a clinical trial. If we experience delays completing, or if we terminate, any of our clinical trials, or if we are required to conduct additional clinical trials, the commercial prospects for the ViaskinTM patch product candidates, or any other product candidates, may be harmed and our ability to generate product revenue will be delayed.

The FDA And Other Regulatory Agencies Actively Enforce The Laws And Regulations Prohibiting The Promotion Of Off-label Uses. If We Are Found To Have Improperly Promoted Off-label Uses, We May Become Subject To Significant Liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as ViaskinTM patch products, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product's approved labeling. If we receive marketing approval for ViaskinTM patch products as a treatment for a particular allergy, physicians, in their professional medical judgment, may nevertheless prescribe ViaskinTM patch products to their patients in a manner that is inconsistent with the approved label. Additionally, it is permissible to share in certain circumstances truthful and nonmisleading information that is consistent with, but not contained in, the product's approved labeling. If we are found to have promoted such off-label uses, we may become subject to significant liability under the FDCA and other statutory authorities, such as laws prohibiting false claims for reimbursement. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the marketing of ViaskinTM patch products, if approved, by restricting off-label promotion, we could become subject to significant liability, which would materially adversely affect our business and financial condition.

We May Not Obtain Biopharmaceutical Company Status And Therefore Have To Rely On Contract Manufacturers Indefinitely.

The French Drug and Health Products Safety Agency, or ANSM, has granted us the status of pharmaceutical establishment (établissement pharmaceutique), or PCS, solely for the purpose of conducting quality control activities and batch release at our Bagneux facility. There are two types of PCS: (1) "exploitant" status (statut d'établissement pharmaceutique exploitant), which permits medicines to be marketed directly in France by the company after demonstrating control of certain key functions such as pharmacovigilance, medical information and advertising, management of quality complaints and batch recall; and (2) manufacturer status, which permits the manufacturing and quality control of medicines after demonstrating adequate manufacturing and quality control premises that exhibit a quality assurance system that meets cGMP. Obtaining a pharmaceutical establishment license from the ANSM, either as an "exploitant" or as a manufacturer, requires the submission of a request file specific to each of the two qualifications with the ANSM. The ANSM grants PCS to a company upon evaluation and determination that such company's premises has adequate personnel, procedure and organization. Accordingly, we cannot manufacture or directly market in France the product candidates that we are developing.

We intend to seek an extension of our PCS manufacturer status to all manufacturing operations in order to have the ability to manufacture our product candidates. We also intend to seek "exploitant" status in order to market our products directly in France.

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Failure to extend or obtain PCS status, as applicable, would force us to revise our strategy. First, failure to extend our manufacturer status to all manufacturing operations will force us to entrust the manufacturing and control of the therapeutic products to one or more specialized contract manufacturing organizations, or CMOs, as is the case with the current production of our clinical lots. Second, if "exploitant" status is not obtained, we will be unable to conduct a direct commercial approach to the French market and will therefore have to enter into marketing license agreements with other biopharmaceutical companies. Failure to extend or obtain either of the two types of PCS status, as applicable, would affect the production and marketing of our product candidates, once approved, and could be detrimental to our business, earnings, financial conditions and growth prospects.

Our Product Development Programs For Candidates Other Than ViaskinTM Patch Products May Require Substantial Financial Resources And May Ultimately Be Unsuccessful.

The success of our business depends primarily upon our ability to identify, develop and commercialize products to treat common food allergies. In addition to the commercialization of ViaskinTM Peanut, if approved, and the clinical development of ViaskinTM Milk, we may pursue development of our other development programs, including ViaskinTM Egg and ViaskinTM rPT. None of our other potential product candidates has commenced any clinical trials, and there are a number of FDA requirements that we must satisfy before we can commence clinical trials. Satisfaction of these requirements will entail substantial time, effort and financial resources. We may never satisfy these requirements. Any time, effort and financial resources we expend on our other development programs may adversely affect our ability to continue the commercialization of ViaskinTM Peanut, if approved, and the clinical development and commercialization of ViaskinTM Milk and we may never commence clinical trials of such development programs despite expending significant resources in pursuit of their development. If we do commence clinical trials of our other potential product candidates, such product candidates may never be approved by the FDA. If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially cause us to cease operations.

If We Do Not Secure Collaborations With Strategic Partners To Test, Commercialize And Manufacture Certain Product Candidates Outside Of Food Allergies, We May Not Be Able To Successfully Develop Products And Generate Meaningful Revenues.

A key aspect of our current strategy is to selectively enter into collaborations with third parties to conduct clinical testing, as well as to commercialize and manufacture product candidates outside of food allergies. Our ability to generate revenues from these arrangements will depend on our collaborators' abilities to successfully perform the functions assigned to them in these arrangements. We currently have multiple collaboration agreements in effect, including collaborations for the development of applications in the field of respiratory allergies or autoimmune disease, as well as other therapeutic domains, such as vaccines. Collaboration agreements, such as our exclusive global collaboration with Nestlé Health Science, typically call for milestone payments that depend on successful demonstration of efficacy and safety, obtaining regulatory approvals and clinical trial results. Collaboration revenues are not guaranteed, even when efficacy and safety are demonstrated. The current economic environment may result in potential collaborators electing to reduce their external spending, which may prevent us from developing our product candidates.

Even if we succeed in securing collaborators, the collaborators may fail to develop or effectively commercialize products using our product candidates. Collaborations involving our product candidates pose a number of risks, including the following:

  • collaborators may not have sufficient resources or decide not to devote the necessary resources due to internal constraints such as budget limitations, lack of human resources, or a change in strategic focus;
  • collaborators may believe our intellectual property is not valid, is not infringed by potential competitors or is unenforceable or the product candidate infringes on the intellectual property rights of others;
  • collaborators may dispute their responsibility to conduct development and commercialization activities pursuant to the applicable collaboration, including the payment of related costs or the division of any revenues;
  • collaborators may decide to pursue a competitive product developed outside of the collaboration arrangement;
  • collaborators may not be able to obtain, or believe they cannot obtain, the necessary regulatory approvals; or

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  • collaborators may delay the development or commercialization of our product candidates in favor of developing or commercializing another party's product candidate.

Thus, collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.

Collaboration agreements are generally terminable without cause on short notice. Once a collaboration agreement is signed, it may not lead to commercialization of a product candidate. We also face competition in seeking out collaborators. If we are unable to secure new collaborations that achieve the collaborator's objectives and meet our expectations, we may be unable to advance our product candidates and may not generate meaningful revenues.

Intellectual Property Risks Related to Our Business

Our Ability To Compete May Decline If We Do Not Adequately Protect Our Proprietary Rights.

Our commercial success depends on obtaining and maintaining proprietary rights to our product candidates for the treatment of common food allergies, as well as successfully defending these rights against third-party challenges. We will only be able to protect our product candidates, and their uses from unauthorized use by third parties to the extent that valid and enforceable patents, or effectively protected trade secrets, cover them. Our ability to obtain patent protection for our product candidates is uncertain due to a number of factors, including:

  • we may not have been the first to make the inventions covered by pending patent applications or issued patents;
  • we may not have been the first to file patent applications for our product candidates or the compositions we developed or for their uses;
  • others may independently develop identical, similar or alternative products or compositions and uses thereof;
  • our disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability;
  • any or all of our pending patent applications may not result in issued patents;
  • we may not seek or obtain patent protection in countries that may eventually provide us a significant business opportunity;
  • any patents issued to us may not provide a basis for commercially viable products, may not provide any competitive advantages, or may be successfully challenged by third parties;
  • our compositions and methods may not be patentable;
  • others may design around our patent claims to produce competitive products which fall outside of the scope of our patents; or
  • others may identify prior art or other bases which could invalidate our patents.

Even if we have or obtain patents covering our product candidates or compositions, we may still be barred from making, using and selling our product candidates or technologies because of the patent rights of others. Others may have filed, and in the future may file, patent applications covering compositions or products that are similar or identical to ours. There are many issued U.S. and foreign patents relating to chemical compounds and therapeutic products, and some of these relate to compounds we intend to commercialize. Numerous U.S. and foreign issued patents and pending patent applications owned by others exist in the allergy treatment field in which we are developing products. These could materially affect our ability to develop our product candidates or sell our products if approved. Because patent applications can take many years to issue, there may be currently pending applications unknown to us that may later result in issued patents that our product candidates or compositions may infringe. These patent applications may have priority over patent applications filed by us.

Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents and/or applications due in several stages over the lifetime of patents and/or applications, as well as the cost associated with complying with numerous

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procedural provisions during the patent application process. We may or may not choose to pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forgo patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer.

Legal actions to enforce our patent rights can be expensive and may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful and could also result in the invalidation of our patents or a finding that they are unenforceable. We may or may not choose to pursue litigation or other actions against those that have infringed on our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.

Biopharmaceutical Patents And Patent Applications Involve Highly Complex Legal And Factual Questions, Which, If Determined Adversely To Us, Could Negatively Impact Our Patent Position.

The patent positions of biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions. The interpretation and breadth of claims allowed in some patents covering biopharmaceutical compositions may be uncertain and difficult to determine, and are often affected materially by the facts and circumstances that pertain to the patented compositions and the related patent claims. The standards of the United States Patent and Trademark Office, or USPTO, are sometimes uncertain and could change in the future. Consequently, the issuance and scope of patents cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated or circumvented. U.S. patents and patent applications may also be subject to interference proceedings, and U.S. patents may be subject to reexamination proceedings, post-grant review and/or inter partes review in the USPTO. Foreign patents may be subject also to opposition or comparable proceedings in the corresponding foreign patent office, which could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, reexamination, post-grant review, inter partes review and opposition proceedings may be costly. Accordingly, rights under any issued patents may not provide us with sufficient protection against competitive products or processes.

In addition, changes in or different interpretations of patent laws in the United States and foreign countries may permit others to use our discoveries or to develop and commercialize our technology and products without providing any compensation to us, or may limit the number of patents or claims we can obtain. The laws of some countries do not protect intellectual property rights to the same extent as U.S. laws and those countries may lack adequate rules and procedures for defending our intellectual property rights.

If we fail to obtain and maintain patent protection and trade secret protection of our product candidates, we could lose our competitive advantage and competition we face would increase, reducing any potential revenues and adversely affecting our ability to attain or maintain profitability.

Developments In Patent Law Could Have A Negative Impact On Our Business.

From time to time, the United States Supreme Court, or the Supreme Court, other federal courts, the United States Congress, the USPTO or similar foreign authorities may change the standards of patentability and any such changes could have a negative impact on our business.

In addition, the Leahy-Smith America Invents Act, or the America Invents Act, which was signed into law in 2011, includes a number of significant changes to U.S. patent law. These changes include a transition from a "first-to-invent" system to a "first-to-file" system, changes to the way issued patents are challenged, and changes to the way patent applications are disputed during the examination process. These changes may favor larger and more established companies that have greater resources to devote to patent application filing and prosecution. The USPTO has developed new and untested regulations and procedures to govern the full implementation of the America Invents Act, and many of the substantive changes to patent law associated with the America Invents Act, and, in particular, the first-to-file provisions, became effective on March 16, 2013. Substantive changes to patent law associated with the America Invents Act may affect our ability to obtain patents, and if obtained, to enforce or defend them. Accordingly, it is not clear what, if any, impact the America Invents Act will have on the cost of prosecuting our patent applications, our ability to obtain patents based on our discoveries and our ability to enforce or defend any patents that may issue from our patent applications, all of which could have a material adverse effect on our business.

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If We Are Unable To Protect The Confidentiality Of Our Trade Secrets, Our Business And Competitive Position Would Be Harmed.

In addition to patent protection, because we operate in the highly technical field of development of therapies, we rely in part on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We expect to enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party's relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. Trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.

We Will Not Seek To Protect Our Intellectual Property Rights In All Jurisdictions Throughout The World And We May Not Be Able To Adequately Enforce Our Intellectual Property Rights Even In The Jurisdictions Where We Seek Protection.

Filing, prosecuting and defending patents on our product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States, assuming that rights are obtained in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. The statutory deadlines for pursuing patent protection in individual foreign jurisdictions are based on the priority dates of each of our patent applications.

Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biopharmaceuticals or biotechnologies. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time- consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not

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prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Third Parties May Assert Ownership Or Commercial Rights To Inventions We Develop.

Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have written agreements with collaborators that provide for the ownership of intellectual property arising from our collaborations. These agreements provide that we must negotiate certain commercial rights with collaborators with respect to joint inventions or inventions made by our collaborators that arise from the results of the collaboration. In some instances, there may not be adequate written provisions to address clearly the resolution of intellectual property rights that may arise from a collaboration. If we cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third-party collaborator's materials where required, or if disputes otherwise arise with respect to the intellectual property developed with the use of a collaborator's samples, we may be limited in our ability to capitalize on the market potential of these inventions. In addition, we may face claims by third parties that our agreements with employees, contractors, or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business.

Third Parties May Assert That Our Employees Or Consultants Have Wrongfully Used Or Disclosed Confidential Information Or Misappropriated Trade Secrets.

We employ individuals who were previously employed at universities or other biopharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

A Dispute Concerning The Infringement Or Misappropriation Of Our Proprietary Rights Or The Proprietary Rights Of Others Could Be Time Consuming And Costly, And An Unfavorable Outcome Could Harm Our Business.

There is significant litigation in the biopharmaceutical industry regarding patent and other intellectual property rights. While we are not currently subject to any pending intellectual property litigation, and are not aware of any such threatened litigation, we may be exposed to future litigation by third parties based on claims that our product candidates, technologies or activities infringe the intellectual property rights of others. If our development activities are found to infringe any such patents, we may have to pay significant damages or seek licenses to such patents. A patentee could prevent us from using the patented drugs or compositions. We may need to resort to litigation to enforce a patent issued to us, to protect our trade secrets, or to determine the scope and validity of third-party proprietary rights. From time to time, we may hire scientific personnel or consultants formerly employed by other companies involved in one or more areas similar to the activities conducted by us. Either we or these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of prior affiliations.

If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources, regardless of whether we win or lose. We may not be able to afford the costs of litigation. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have a material adverse impact on our cash position and the price of the ADSs. Any legal action against us or our collaborators could lead to:

  • payment of damages, potentially treble damages, if we are found to have willfully infringed a party's patent rights;
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  • injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, and sell products; or
  • us or our collaborators having to enter into license arrangements that may not be available on commercially acceptable terms, if at all, all of which could have a material adverse impact on our cash position and business and financial condition. As a result, we could be prevented from commercializing current or future product candidates.

We May Infringe The Intellectual Property Rights Of Others, Which May Prevent Or Delay Our Product Development Efforts And Stop Us From Commercializing Or Increase The Costs Of Commercializing Our Product Candidates, If Approved.

Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties. We cannot assure you that our business, products and methods do not or will not infringe the patents or other intellectual property rights of third parties.

The biopharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may allege that our product candidates or the use of our technologies infringes patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization. Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. Any claim relating to intellectual property infringement that is successfully asserted against us may require us to pay substantial damages, including treble damages and attorney's fees if we are found to be willfully infringing another party's patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license. In addition, if any such claim were successfully asserted against us and we could not obtain such a license, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing ViaskinTM patch products.

Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court, or redesign our products. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or claims could force us to do one or more of the following:

  • cease developing, selling or otherwise commercializing our product candidates;
  • pay substantial damages for past use of the asserted intellectual property;
  • obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and
  • in the case of trademark claims, redesign, or rename, ViaskinTM or other trademarks we may own, to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming.

Any of these risks coming to fruition could have a material adverse effect on our business, results of operations, financial condition and prospects.

Issued Patents Covering Our Product Candidates Could Be Found Invalid Or Unenforceable If Challenged In Court.

If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering our product candidate, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review and equivalent proceedings in

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foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection would have a material adverse impact on our business.

Risks Related to Our Organization, Structure and Operation

We Will Need To Develop And Expand Our Company And Potentially Implement Sales, Marketing And Distribution Capabilities, And As A Result, We May Encounter Difficulties In Managing This Development And Expansion, Which Could Disrupt Our Operations.

As of December 31, 2019, we had 311 full-time employees. To manage our anticipated development and expansion, including the commercialization of ViaskinTM Peanut, if approved, and any of our other product candidates in North America, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these development activities. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects, such as the development of our product candidates. If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates, if approved, and compete effectively will depend, in part, on our ability to effectively manage the future development and expansion of our company.

We Depend On Key Personnel And Attracting Qualified Management Personnel And Our Business Could Be Harmed If We Lose Key Personnel And Cannot Attract New Personnel.

Our success depends to a significant degree upon the technical and management skills of our officers and key personnel. The loss of the services of any of these individuals would likely have an adverse effect on us. Our success also will depend upon our ability to attract and retain additional qualified management. Recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing personnel will also be critical to our success. The loss of the services of our key executives could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key personnel may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, obtain marketing approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We compete for such personnel against numerous companies, including larger, more established companies with significantly greater financial resources than we possess. There can be no assurance that we will be successful in attracting or retaining such personnel and the failure to do so could have a material adverse effect on our business, financial condition, and results of operations.

Our Employees May Engage In Misconduct Or Other Improper Activities, Including Violating Applicable Regulatory Standards And Requirements Or Engaging In Insider Trading, Which Could Significantly Harm Our Business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to: comply with the regulations of the FDA and applicable non-U.S. regulators, provide accurate information to the FDA and applicable non-U.S. regulators, comply with fraud and abuse and other healthcare laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our

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reputation. We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Product Liability And Other Lawsuits Could Divert Our Resources, Result In Substantial Liabilities And Reduce The Commercial Potential Of Our Product Candidates.

The risk that we may be sued on product liability claims is inherent in the development and commercialization of biopharmaceutical products. Side effects of, or manufacturing defects in, products that we develop could result in the deterioration of a patient's condition, injury or even death. For example, product liability claims may be brought by patients participating in our clinical trials as a result of unexpected side effects from our product candidates. Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits increases. Criminal or civil proceedings might be filed against us by patients, the regulatory authorities, biopharmaceutical companies and any other third party using or marketing our products. These actions could include claims resulting from acts by our partners, licensees and subcontractors, over which we have little or no control. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of the affected products.

We May Incur Significant Costs From Class Action Litigation.

The market price for our ordinary shares or ADSs may fluctuate for many reasons, including as a result of public announcements regarding the progress of our development and commercialization efforts or the development and commercialization efforts of our collaborators and/or competitors, the addition or departure of our key personnel, variations in our operating results and changes in market valuations of pharmaceutical and biotechnology companies. When the market price of a security has been volatile as the market price for our ordinary shares and ADSs has been, holders of that security have occasionally brought securities class action litigation against the company that issued the security.

For example, in December 2018, we announced that we voluntarily withdrew our BLA for ViaskinTM Peanut following correspondence with the FDA regarding additional data needs on manufacturing procedures and quality controls, and our ADS price declined significantly as a result. Following this announcement, on January 15, 2019, Travis Ito-Stone individually and on behalf of all others similarly situated, filed a class action complaint for violation of federal securities laws against us, our former Chief Executive Officer, our current Chief Executive Officer, our former Deputy Chief Executive Officer and our former Chief Business Officer in the United States District Court for the District of New Jersey. Subsequently, Ruth Pruitt and Asdrubal Delgado were appointed as lead plaintiffs and an amended complaint was filed on January 24, 2020. The complaint seeks to recover damages caused by defendants' alleged violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. We believe that the allegations contained in the complaint are without merit and intend to defend the case vigorously. See the section of this Annual Report titled "Legal Proceedings" for additional information on this matter.

Whether or not the plaintiff's claims are successful, this type of litigation is often expensive and diverts management's attention and resources, which could adversely affect the operation of our business. If we are ultimately required to pay significant defense costs, damages or settlement amounts, such payments could adversely affect our operations.

We may be the target of similar litigation in the future. Any future litigation could result in substantial costs and divert our management's attention and resources, which could cause serious harm to our business, operating results and financial condition. We maintain liability insurance; however, if any costs or expenses associated with this or any other litigation exceed our insurance coverage, we may be forced to bear some or all of these costs and expenses directly, which could be substantial.

We May Be Subject To Legal Or Administrative Proceedings And Litigation Other Than Product Liability Lawsuits Which May Be Costly To Defend And Could Materially Harm Our Business, Financial Condition And Operations.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of product candidates we develop. We currently carry product liability insurance coverage for our clinical trials with a €15.0 million annual aggregate coverage limit. Although we

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maintain such insurance, our insurance coverage may be insufficient to reimburse us for any expenses or losses we may suffer. In addition, in the future, we may not be able to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product or other legal or administrative liability claims by us or our partners, licensees or subcontractors, which could prevent or inhibit the commercial production and sale of any of our product candidates that receive regulatory approval, which could adversely affect our business. Product liability claims could also harm our reputation, which may adversely affect our collaborators' ability to commercialize our products successfully.

Our Failure To Maintain Certain Tax Benefits Applicable To French Technology Companies May Adversely Affect Our Results Of Operations.

As a French technology company, we have benefited from certain tax advantages, including, for example, the French research tax credit (crédit d'impôt recherche), or CIR. The CIR is a French tax credit aimed at stimulating research and development. The CIR can be offset against French corporate income tax due and the portion in excess (if any) may be refunded at the end of a three fiscal-year period. The CIR is calculated based on our claimed amount of eligible research and development expenditures in France and represented €9.3 million, €10.8 million and €9.8 million, as of December 31, 2017, 2018 and 2019, respectively. The French tax authority with the assistance of the Research and Technology Ministry may audit each research and development program in respect of which a CIR benefit has been claimed and assess whether such program qualifies in its view for the CIR benefit. The French tax authorities may challenge our eligibility to, or our calculation of certain tax reductions and/or deductions in respect of our research and development activities and, should the French tax authorities be successful, we may be liable to additional corporate income tax, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows. Furthermore, if the French Parliament decides to eliminate, or reduce the scope or the rate of, the CIR benefit, either of which it could decide to do at any time, our results of operations could be adversely affected.

We May Be Forced To Repay Conditional Advances Prematurely If We Fail To Comply With Our Contractual Obligations Under The Applicable Innovation Grant Agreements.

Since inception through December 31, 2019, we have received multiple conditional advances totaling €6.2 million for innovation granted by OSEO, the French Agency for Innovation and part of the Banque Publique d'Investissement. If we fail to comply with our contractual obligations under the applicable innovation grant agreements, including if we lose our exclusive right to commercially develop our product candidates, we could be forced to repay the sums advanced ahead of schedule. Such premature repayment could adversely affect our ability to finance our research and development projects. In addition, we cannot ensure that we will then have the additional financial means needed, the time or the ability to replace these financial resources with others.

We May Be Exposed To Significant Foreign Exchange Risk. Exchange Rate Fluctuations May Adversely Affect The Foreign Currency Value Of Our ADSs.

We incur portions of our expenses, and may in the future derive revenues, in currencies other than the euro, in particular, the U.S. dollar. As a result, we are exposed to foreign currency exchange risk as our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. We currently do not engage in hedging transactions to protect against uncertainty in future exchange rates between particular foreign currencies and the euro. Therefore, for example, an increase in the value of the euro against the U.S. dollar could be expected to have a negative impact on our revenue and earnings growth as U.S. dollar revenue and earnings, if any, would be translated into euros at a reduced value. We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows. The ADSs are quoted in U.S. dollars on the Nasdaq Global Select Market and our ordinary shares are trading in euros on Euronext Paris. Our financial statements are prepared in euros. Fluctuations in the exchange rate between euros and the U.S. dollar will affect, among other matters, the U.S. dollar value and the euro value of our ordinary shares and ADSs.

We May Use Hazardous Chemicals And Biological Materials In Our Business. Any Claims Relating To Improper Handling, Storage Or Disposal Of These Materials Could Be Time Consuming And Costly.

Our research and development processes may involve the controlled use of hazardous materials, including chemicals and biological materials. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. For example, in production, the confinement of the electrospray function and the use of the allergen in liquid form make it possible to prevent the allergens from contaminating the environment. However, we cannot assure you that in case of malfunction during the handling, storage or production process, allergen would not be released into the atmosphere

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and sensitize the persons present in the environment. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed any insurance coverage and our total assets. Federal, state, local or foreign laws and regulations govern the use, manufacture, storage, handling and disposal of these hazardous materials and specified waste products, as well as the discharge of pollutants into the environment and human health and safety matters. Compliance with environmental laws and regulations may be expensive and may impair our research and development efforts. If we fail to comply with these requirements, we could incur substantial costs, including civil or criminal fines and penalties, clean-up costs or capital expenditures for control equipment or operational changes necessary to achieve and maintain compliance. In addition, we cannot predict the impact on our business of new or amended environmental laws or regulations or any changes in the way existing and future laws and regulations are interpreted and enforced.

Our Internal Computer Systems, Or Those Of Our Third-party Contractors Or Consultants, May Fail Or Suffer Security Breaches, Which Could Result In A Material Disruption Of Our Product Development Programs.

Despite the implementation of security measures, our internal computer systems and those of our third-party contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we do not believe that we have experienced any such system failure, accident or security breach to date, including cybersecurity incidents, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs. For example, the loss of clinical trial data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach, including cybersecurity incidents, results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed. As these threats continue to evolve, particularly around cybersecurity, we may be required to expend significant resources to enhance our control environment, processes, practices and other protective measures. Despite these efforts, such events could materially adversely affect our business, financial condition or results of operations.

We May Acquire Businesses Or Products, Or Form Strategic Alliances, In The Future, And We May Not Realize The Benefits Of Such Acquisitions.

At this stage, our strategy does not involve plans to acquire companies or technologies facilitating or enabling us to access to new medicines, new research projects or new geographical areas, or enabling us to express synergies with our existing operations. However, if such acquisitions were to become necessary in future, we may not be able to identify appropriate targets or make acquisitions under satisfactory conditions, in particular, satisfactory price conditions. In addition, we may unable to obtain the financing for these acquisitions under favorable conditions, and could be led to finance these acquisitions using cash that could be allocated to other purposes in the context of existing operations. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction, which could have a material adverse effect on our business, financial conditions, earnings and prospects.

European Data Collection Is Governed By Restrictive Regulations Governing The Use, Processing, And Cross-Border Transfer Of Personal Information.

The collection and use of personal health data in the European Union is governed by the provisions of the General Data Protection Regulation ((EU) 2016/679), or GDPR. This legislation imposes requirements relating to having legal bases for processing personal information relating to identifiable individuals and transferring such information outside the European Economic Area including to the United States, providing details to those individuals regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information, responding to individuals' requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments and record-keeping. The GDPR imposes additional responsibilities and liabilities in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. Failure to comply with the requirements of the GDPR and related national data protection laws of the member states of the European Union may result in substantial fines, other administrative penalties and civil claims being brought against us, which could have a material adverse effect on our business, results of operations and financial condition.

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We Are Subject To U.S. And Certain Foreign Export And Import Controls, Sanctions, Embargoes, Anti-Corruption Laws, And Anti-Money Laundering Laws And Regulations. Compliance With These Legal Standards Could Impair Our Ability To Compete In Domestic And International Markets. We Can Face Criminal Liability And Other Serious Consequences For Violations, Which Can Harm Our Business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department's Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties to sell our products sell our products outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors, and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

Risks Related to Ownership of Our Ordinary Shares and ADSs

The Market Price For The ADSs May Be Volatile Or May Decline Regardless Of Our Operating Performance.

The trading price of our ADSs and ordinary shares has fluctuated, and is likely to continue to fluctuate, substantially. The trading price of our securities depends on a number of factors, including those described in this "Risk Factors" section, many of which are beyond our control and may not be related to our operating performance.

Our ADSs were sold in our initial public offering on Nasdaq in October 2014 at a price of $21.64 per share, and the price per ADS has ranged from as low as $5.77 and as high as $11.23 during 2019. During this same period, our ordinary share prices have ranged from as low as €9.80 to as high as €22.32. The market price of our securities may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

  • actual or anticipated fluctuations in our financial condition and operating results;
  • actual or anticipated changes in our growth rate relative to our competitors;
  • competition from existing products or new products that may emerge;
  • regulatory actions with respect to our products or our competitors' products, including the potential approval by the FDA of our BLA for ViaskinTM Peanut;
  • announcements by us, our partners or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations, or capital commitments;
  • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;
  • issuance of new or updated research or reports by securities analysts;
  • fluctuations in the valuation of companies perceived by investors to be comparable to us;
  • price and volume fluctuations attributable to inconsistent trading volume levels of the ADSs and/or ordinary shares;

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  • additions or departures of key management or scientific personnel;
  • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;
  • changes in the structure of healthcare payment systems;
  • changes to coverage policies or reimbursement levels by commercial third-party payors and government payors and any announcements relating to coverage policies or reimbursement levels;
  • announcement or expectation of additional debt or equity financing efforts;
  • sales of our ordinary shares or ADSs by us, our insiders or our other shareholders; and
  • general economic and market conditions.

These and other market and industry factors may cause the market price and demand for our securities to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their ADSs or ordinary shares and may otherwise negatively affect the liquidity of our ADSs and ordinary shares. In addition, the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Share Ownership Is Concentrated In The Hands Of Our Principal Shareholders And Management, Who Will Continue To Be Able To Exercise A Direct Or Indirect Controlling Influence On Us.

As of December 31, 2019, our executive officers, directors, current 5% or greater shareholders and affiliated entities, including entities affiliated with Caisse de Dépots et Consignations, entities affiliated with Baker Bros. Advisors LP, entities affiliated with Perceptive Advisors LLC, entities affiliated with Boxer Capital, LLC and entities affiliated with Deerfield Mgmt. L.P. together beneficially own approximately 51.3% of our ordinary shares. As a result, these shareholders, acting together, will have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other shareholders may view as beneficial.

If Securities Or Industry Analysts Do Not Publish Research Or Publish Inaccurate Or Unfavorable Research About Our Business, The Price Of The ADSs And Trading Volume Could Decline.

The trading market for our ADSs and ordinary shares depends in part on the research and reports that securities or industry analysts publish about us or our business. If no or few securities or industry analysts cover our company, the trading price for our ADSs and ordinary shares would be negatively impacted. If one or more of the analysts who covers us downgrades our ADSs or ordinary shares or publishes incorrect or unfavorable research about our business, the price of our ADSs and ordinary shares would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, or downgrades our ADSs or ordinary shares, demand for the our ADSs and ordinary shares could decrease, which could cause the price of our ADSs or ordinary shares or trading volume to decline.

We Do Not Currently Intend To Pay Dividends On Our Securities And, Consequently, Your Ability To Achieve A Return On Your Investment, If Any, Will Depend On Appreciation In The Price Of The ADSs. In Addition, French Law May Limit The Amount Of Dividends We Are Able To Distribute.

We have never declared or paid any cash dividends on our ordinary shares and do not currently intend to do so for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likely to receive any dividends on your ADSs for the foreseeable future and the success of an investment in ADSs will depend upon any future appreciation in its value. Consequently, investors may need to sell all or part of their holdings of ADSs after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that the ADSs will appreciate in value or even maintain the price at which our shareholders have purchased the ADSs. Investors seeking cash dividends should not purchase the ADSs.

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Further, under French law, the determination of whether we have been sufficiently profitable to pay dividends is made on the basis of our annual financial statements. Please see the section of this Annual Report on Form 20-F titled "Item 10.B-Memorandum and Articles of Association" for further details on the limitations on our ability to declare and pay dividends. Therefore, we may be more restricted in our ability to declare dividends than companies not based in France.

In addition, exchange rate fluctuations may affect the amount of euros that we are able to distribute, and the amount in U.S. dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in euros, if any. These factors could harm the value of the ADSs, and, in turn, the U.S. dollar proceeds that holders receive from the sale of the ADSs.

Future Sales Of Ordinary Shares Or ADSs By Existing Shareholders Could Depress The Market Price Of The ADSs.

As of December 31, 2019, 47,028,510 ordinary shares were issued and outstanding. Sales of a substantial number of shares of our ordinary shares or ADSs in the public market, or the perception that these sales might occur, could depress the market price of our securities and could impair our ability to raise capital through the sale of additional equity securities. A substantial number of our shares are now generally freely tradable, subject, in the case of sales by our affiliates, to the volume limitations and other provisions of Rule 144 under the Securities Act. If holders of these shares sell, or indicate an intent to sell, substantial amounts of our securities in the public market, the trading price of our securities could decline significantly.

In addition, we have filed a registration statement with the SEC to register the ordinary shares that may be issued under our equity incentive plans. The ordinary shares subject to outstanding options under our equity incentive plans, ordinary shares reserved for future issuance under our equity incentive plans and ordinary shares subject to outstanding warrants will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. Sales of a large number of the shares issued under these plans in the public market could have an adverse effect on the market price of our securities.

The Dual Listing Of Our Ordinary Shares And Our ADSs May Adversely Affect The Liquidity And Value Of The ADSs.

Our ADSs are traded on the Nasdaq Global Select Market, and our ordinary shares are listed on Euronext Paris. The dual listing of our ordinary shares and our ADSs may dilute the liquidity of these securities in one or both markets and may adversely affect the maintenance of an active trading market for our ADSs in the United States. The price of our ADSs could also be adversely affected by trading in our ordinary shares on Euronext Paris, and vice versa. In addition, currency fluctuations as between the euro and U.S. dollar may have an adverse impact on the value of our ADSs.

Our By-Laws And French Corporate Law Contain Provisions That May Delay Or Discourage A Takeover Attempt.

Provisions contained in our by-laws and the corporate laws of France, the country in which we are incorporated, could make it more difficult for a third- party to acquire us, even if doing so might be beneficial to our shareholders. In addition, provisions of our by-laws impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions. These provisions include the following:

  • under French law, a non-French resident as well as any French entity controlled by non-French residents may have to file a declaration for statistical purposes with the Banque de France, within 20 working days following the date of certain direct foreign investments in us, including any purchase of our ADSs. In particular, such filings are required in connection with investments exceeding €15,000,000 that lead to the acquisition of at least 10% of our share capital or voting rights or cross such 10% threshold;
  • under French law, certain investments in a French company relating to certain strategic industries by individuals or entities not residents in a Member State of the EU are subject to prior authorization of the Ministry of Economy;
  • the owner of 90% of the share capital and voting rights of a public company listed on a regulated market in a Member State of the European Union or in a state party to the EEA Agreement, including from the main French Stock Exchange, has the right to force out minority shareholders following a tender offer made to all shareholders;
  • a merger (i.e., in a French law context, a share for share exchange following which our company would be dissolved into the acquiring entity and our shareholders would become shareholders of the acquiring entity) of our company into a company incorporated in the European Union would require the approval of our board of directors as well as a two-thirds majority of the votes held by the shareholders present, represented by proxy or voting by mail at the relevant meeting;

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  • under French law, a cash merger is treated as a share purchase and would require the consent of each participating shareholder;
  • our shareholders have granted and may grant in the future our board of directors broad authorizations to increase our share capital or to issue additional ordinary shares or other securities (for example, warrants) to our shareholders, the public or qualified investors, including as a possible defense following the launching of a tender offer for our shares;
  • our shareholders have preferential subscription rights on a pro rata basis on the issuance by us of any additional securities for cash or a set-off of cash debts, which rights may only be waived by the extraordinary general meeting (by a two-thirds majority vote) of our shareholders or on an individual basis by each shareholder;
  • our board of directors has the right to appoint directors to fill a vacancy created by the resignation or death of a director, subject to the approval by the shareholders of such appointment at the next shareholders' meeting, which prevents shareholders from having the sole right to fill vacancies on our board of directors;
  • our board of directors can only be convened by our chairman or our managing director, if any, or, when no board meeting has been held for more than two consecutive months, by directors representing at least one-third of the total number of directors;
  • our board of directors meetings can only be regularly held if at least half of the directors attend either physically or by way of videoconference or teleconference enabling the directors' identification and ensuring their effective participation in the board's decisions; however, this mode of participation (by way of videoconference or teleconference) does not apply to the adoption of decisions taken for the closing of the accounts for the fiscal year, including the consolidated financial statements;
  • our shares are nominative or bearer, if the legislation so permits, according to the shareholder's choice. Shares issued are registered in individual accounts opened by us or any authorized intermediary, in the name of each shareholder and kept according to the terms and conditions laid down by the legal and regulatory provisions;
  • approval of at least a majority of the votes held by shareholders present, represented by a proxy, or voting by mail at the relevant ordinary shareholders' general meeting is required to remove directors with or without cause;
  • advance notice is required for nominations to the board of directors or for proposing matters to be acted upon at a shareholders' meeting, except that a vote to remove and replace a director can be proposed at any shareholders' meeting without notice;
  • our by-laws can be changed in accordance with applicable laws;
  • the crossing of certain thresholds has to be disclosed and can impose certain obligations; see the section of this Annual Report on Form 20-F titled "Item 10.B-Memorandum and Articles of Association";
  • transfers of shares shall comply with applicable insider trading rules and regulations and in particular with the Market Abuse Directive and Regulation dated April 16, 2014; and
  • pursuant to French law, the sections of the by-laws relating to the number of directors and election and removal of a director from office may only be modified by a resolution adopted by at least a two thirds majority vote of our shareholders present, represented by a proxy or voting by mail at the meeting.

You May Not Be Able To Exercise Your Right To Vote The Ordinary Shares Underlying Your ADSs.

Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a statement as to the manner in which instructions may be given by the holders.

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You may instruct the depositary of your ADSs to vote the ordinary shares underlying your ADSs. If the depositary timely receives voting instructions from you, it will endeavor to vote the securities (in person or by proxy) represented by the ADSs in accordance with such voting instructions. If the depositary receives voting instructions which fail to specify the manner in which the depositary is to vote the deposited securities, you will be deemed to have instructed the depositary to vote in favor of all resolutions endorsed by our board of directors. Otherwise, you will not be able to exercise your right to vote, unless you withdraw the ordinary shares underlying the ADSs you hold. However, you may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for your instructions, the depositary, upon timely notice from us, will notify you of the upcoming vote and arrange to deliver our voting materials to you. We cannot guarantee you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your ordinary shares or to withdraw your ordinary shares so that you can vote them yourself. If the depositary does not receive timely voting instructions from you, it may give a proxy to a person designated by us to vote the ordinary shares underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote, and there may be nothing you can do if the ordinary shares underlying your ADSs are not voted as you requested.

Your Right As A Holder Of ADSs To Participate In Any Future Preferential Subscription Rights Or To Elect To Receive Dividends In Shares May Be Limited, Which May Cause Dilution To Your Holdings.

According to French law, if we issue additional securities for cash, current shareholders will have preferential subscription rights for these securities on a pro rata basis, transferable during a period starting two days prior to the opening of the subscription period or, if that day is not a trading day, the preceding trading day; and ending two days prior to the closing of the subscription period or, of that day is not a trading day, the preceding trading day, unless they waive those rights at an extraordinary meeting of our shareholders (by a two-thirds majority vote) or individually by each shareholder. However, the ADS holders in the United States will not be entitled to exercise or sell such rights unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement provides that the depositary will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case you will receive no value for these rights.

You May Be Subject To Limitations On The Transfer Of Your ADSs And The Withdrawal Of The Underlying Ordinary Shares.

Your ADSs, which may be evidenced by ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to your right to cancel your ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders' meeting or we are paying a dividend on our ordinary shares. In addition, you may not be able to cancel your ADSs and withdraw the underlying ordinary shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.

As A Foreign Private Issuer, We Are Exempt From A Number Of Rules Under The U.S. Securities Laws And Are Permitted To File Less Information With The SEC Than A U.S. Company. This May Limit The Information Available To Holders Of Our ADSs.

We are a "foreign private issuer," as defined in the SEC's rules and regulations and, consequently, we are not subject to all of

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the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently make annual and semi-annual filings with respect to our listing on Euronext Paris and we have and expect to continue to file financial reports on an annual and semi-annual basis, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers and are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Accordingly, there will be less publicly available information concerning our company than there would be if we were a U.S. domestic issuer.

As A Foreign Private Issuer, We Are Permitted To Adopt Certain Home Country Practices In Relation To Corporate Governance Matters That Differ Significantly From Nasdaq Corporate Governance Listing Standards. These Practices May Afford Less Protection To Shareholders Than They Would Enjoy If We Complied Fully With Corporate Governance Listing Standards.

As a foreign private issuer listed on the Nasdaq Global Select Market, we are subject to corporate governance listing standards. However, rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in France, which is our home country, may differ significantly from corporate governance listing standards. For example, neither the corporate laws of France nor our by-laws require a majority of our directors to be independent and we could include non-independent directors as members of our compensation committee, and our independent directors do not necessarily hold regularly scheduled meetings at which only independent directors are present. Currently, we intend to follow home country practices to the maximum extent possible. Therefore, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers.

We May Lose Our Foreign Private Issuer Status In The Future, Which Could Result In Significant Additional Cost And Expense.

While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer's most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2020, which would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2021. We could lose our foreign private issuer status in the future if we to fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. In order to maintain our current status as a foreign private issuer, either (a) a majority of our ordinary shares or ADSs must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and

  1. our business must not be administered principally inside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. As of December 31, 2019, approximately 62% of our outstanding ordinary shares were held by U.S. residents.

The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we currently incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP, rather than IFRS, and in U.S. dollars rather than euros, and to modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion of our financial statements to U.S. GAAP will involve significant time and cost. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the solicitation of proxies.

U.S. Investors May Have Difficulty Enforcing Civil Liabilities Against Our Company And Directors And Senior Management And The Experts Named In This Annual Report.

Certain members of our board of directors and senior management, and those of our subsidiary, are non-residents of the

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United States, and all or a substantial portion of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides. In particular, there is some doubt as to whether French courts would recognize and enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in France. An award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the claimant for loss or damage suffered but is intended to punish the defendant. The enforceability of any judgment in France will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The United States and France do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters.

The Rights Of Shareholders In Companies Subject To French Corporate Law Differ In Material Respects From The Rights Of Shareholders Of Corporations Incorporated In The United States.

We are a French company with limited liability. Our corporate affairs are governed by our by-laws and by the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our board of directors are in many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our company, our shareholders, employees and other stakeholders, rather than solely our shareholders and/or creditors. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder. See the sections of this Annual Report on Form 20-F titled "Item 10. B-Memorandum and Articles of Association" and "Item 16.G-Corporate Governance."

U.S. Holders Of ADSs May Suffer Adverse Tax Consequences If We Are Characterized As A Passive Foreign Investment Company.

Under the U.S. Internal Revenue Code of 1986, as amended, or Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which, after the application of certain "look-through" rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of "passive income," or (ii) 50% or more of the average quarterly value of our assets, including cash, consists of assets that produce, or are held for the production of, "passive income." Passive income generally includes interest, dividends, rents, certain non-active royalties and capital gains. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which we expect may vary substantially over time. Based on the composition of our gross income and gross assets for our 2019 taxable year, the latter determined by reference to the value of the ADSs and shares, we believe that we were not likely a PFIC for the taxable year ending December 31, 2019, and we do not expect to be classified as a PFIC for the taxable year ending December 31, 2020. However, there can be no assurance that we have not been or will not be a PFIC for the current taxable year or any future taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder (as defined below) holds ADSs, a U.S. Holder may be subject to adverse tax consequences if a mark-to-market election or a qualified electing fund, or QEF, election has not been made with respect to its ADSs. A U.S. Holder may incur significant additional U.S. federal income taxes on income resulting from certain distributions on, or any gain from the disposition of, such ADSs, as such income generally would be allocated over the U.S. Holder's holding period for its ADSs. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC would be subject to tax as ordinary income earned in the current year, and all other amounts would be subject to tax at the highest rates of U.S. federal income taxation in effect for such years, with an interest charge then imposed on the resulting taxes in respect of such income. Furthermore, if we are a PFIC for any taxable year during which the U.S. Holder holds ADSs, dividends paid by us would not be eligible for preferential individual rates of U.S. federal income tax. In addition, U.S. Holders that own an interest in a PFIC are required to comply with certain reporting requirements.

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A U.S. Holder may in certain circumstances mitigate the adverse tax consequences of the PFIC rules by filing an election to treat the PFIC as a QEF, or, if shares of the PFIC are "marketable stock" for purposes of the PFIC rules, by making a mark-to-market election with respect to the shares of the PFIC. See "Certain Material U.S. Federal Income Tax Considerations."

Item 4. Information on the Company.

  1. History and Development of The Company

Our legal and commercial name is DBV Technologies S.A. We were incorporated as a société par actions simplifiée (S.A.S.) under the laws of the French Republic on March 29, 2002 for a period of 99 years and subsequently converted on March 13, 2003 into a société anonyme. We are registered at the Nanterre Commerce and Companies Register under the number 441 772 522. Our principal executive offices are located at 177-181 avenue Pierre Brossolette, 92120 Montrouge, France, and our telephone number is +33 1 55 42 78 78. Our agent for service of process in the United States is Cogency Global Inc. We also maintain a website at www.dbv-technologies.com. The reference to our website is an inactive textual reference only and the information contained in, or that can be accessed through, our website is not a part of this Annual Report on Form 20-F.

Our actual capital expenditures for the years ended December 31, 2017, 2018 and 2019 amounted to €7.8 million, €8.6 million and €5.1 million, respectively. These capital expenditures primarily consisted of the acquisition of laboratory equipment and industrial tools, the refurbishment of our research and development laboratories, our relocation of our headquarters to Montrouge as well as cash contributions to our liquidity contract. We expect our capital expenditures to increase in absolute terms in the near term as we seek regulatory approval for the commercialization of ViaskinTM Peanut, continue to advance our research and development programs and grow our operations. For the near future, our investments will mainly remain in France where our research and development facilities are currently located.

  1. Business Overview

We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called ViaskinTM Our therapeutic approach is based on epicutaneous immunotherapy, or EPITTM, our proprietary method of delivering biologically active compounds to the immune system through intact skin using ViaskinTM. We have generated significant data demonstrating that ViaskinTM's mechanism of action is novel and differentiated as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, which capture the antigen and migrate to the lymph node in order to activate the immune system without allowing passage of the antigen into the bloodstream, minimizing systemic exposure in the body. We are advancing this unique technology to address areas of unmet medical need, including in patients suffering from food allergies, for whom safety is paramount as the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such as anaphylactic shock.

Our proprietary platform is based on our epicutaneous ViaskinTM patch. We have designed and developed this technology internally, for which we have scalable manufacturing capabilities. ViaskinTM is an electrostatic patch, which may offer a convenient, self-administered,non-invasive immunotherapy to patients. Once applied on intact skin, ViaskinTM forms a condensation chamber, which hydrates the skin and solubilizes the antigen allowing it to penetrate the epidermis, where it is captured by Langerhans cells. Based on numerous scientific publications and our own research, we believe this unique mechanism of action has a favorable safety profile and that it generates a strong immune response that results in allergen desensitization. Our epicutaneous immunotherapy method allows us to develop product candidates addressing food allergies, as well as other unmet medical needs.

According to an expert panel convened by the American Academy of Allergy Asthma and Immunology, or the AAAAI, epidemiological studies suggest that over half of Americans are sensitive to at least one allergen. Allergy is considered a "disease of the developed world" as its increasing incidence is proportional to higher living standards. Based on a paper published by the AAAAI, approximately 3% to 5% of Americans suffer from food allergies, with a number of recent studies suggesting that nearly 6 million or approximately 8% of children have some type of food allergy. Food allergies in particular can lead to extremely dangerous reactions while significantly impairing daily quality of life. According to a paper published in the Immunology and Allergy Clinics of North America, food, mainly peanut, allergies, are responsible for 150 to 200 deaths and about 200,000 emergency room visits every year in the United States. These patients often also experience skin discomfort, asthma symptoms, impaired lung function and gastrointestinal complications, such as sustained bloating, nausea, vomiting and diarrhea. Food allergies can be particularly difficult for young children to manage, and due to their life-threatening nature, severe food allergies can often lead to psychological traumas and social anxiety. In some cases, these allergies can also cause chronic diseases such as failure to thrive in children and an allergic inflammatory condition of the esophagus called eosinophilic esophagitis, or EoE.

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We are committed to finding safe, effective and patient-friendly therapies for food-allergic patients. Compared to other allergy treatment approaches, we believe the safety profile of our EPITTM method carried-out via the ViaskinTM patch may be able to offer significant therapeutic, tolerability and ease-of-use advantages to these patients. EPITTM can be utilized as an allergy-specific immunotherapy commonly referred to as desensitization. Desensitization consists of repeated administration of small quantities of allergen to decrease allergen reactivity in patients. Currently studied desensitization methods include subcutaneous, sublingual and oral immunotherapy, which often require frequent or prolonged administration in specialized centers. In academic settings some successful cases exist, but large-scale pharmaceutical development in this field has been limited due to both the safety concerns and the commercial viability of these desensitization approaches for the treatment of food allergies. These methods may also be poorly designed for pediatric patients due to their safety profile or the inconvenient method of administration. Most importantly, some of these approaches are also known for triggering severe adverse events related to treatment, including severe anaphylaxis, risking the patient's life during administration. Further, some of these methods have been also associated with an increased risk of adverse long- term treatment effects, such as EoE. As a self-administered treatment with a good safety profile, we believe ViaskinTM has positioned us as the company with one of the most advanced clinical programs in food allergies to date.

The following table summarizes our most advanced product candidates:

  • US FDA Breakthrough Therapy and Fast Track designation in children
    ** US FDA Fast Track designation in pediatric patients two and older

We are focused on becoming the leader in discovering, developing and commercializing food allergies products. Our pipeline development strategy is based on leveraging ViaskinTM's scientific profile while taking into consideration a combination of target market characteristics, which include allergen prevalence, persistence and severity. We select our target product candidates with the aim to address allergies that have high unmet medical needs.

Our lead product candidate, ViaskinTM Peanut, has completed a global Phase III program for the treatment of peanut allergic patients four to 11 years of age. ViaskinTM Peanut has obtained fast track designation and breakthrough therapy designation in children from the U.S. Food and Drug Administration, or FDA, which are regulatory designations intended to expedite or facilitate the process of reviewing new drugs and biological products that are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. The European Medicines Agency's, or EMA, Pediatric Committee has also adopted a positive opinion with respect to our Pediatric Investigation Plan, or PIP, for ViaskinTM Peanut, which is a prerequisite for the filing of marketing authorization for any new medicinal product in Europe.

In September 2014, we announced topline results for our ViaskinTM Peanut's Efficacy and Safety, or VIPES, Phase IIb clinical trial of ViaskinTM Peanut for the treatment of peanut allergic patients, which was followed by a full study report presented at the 2015 AAAAI Annual Meeting in Houston, Texas. In October 2016, we announced topline results from the two-yearOLFUS-VIPES study evaluating the long-term efficacy and safety profile of ViaskinTM Peanut for the treatment of peanut allergic children. OLFUS-VIPES, or OLFUS, is an open-label,follow-up study to VIPES. Following results from our Phase IIb program, we launched a Phase III program designed to assess the efficacy and safety of ViaskinTM Peanut in children. As part of our Phase III program development, we initiated the Peanut EPITTM Efficacy and Safety Study, or

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PEPITES, a pivotal Phase III trial, in December 2015. PEPITES was designed to evaluate the safety and efficacy of ViaskinTM Peanut 250 µg in 356 peanut allergic patients four to 11 years of age. In August 2016, we launched the REAL Life Use and Safety of EPITTM (REALISE) study, which was designed to evaluate the use and safety of ViaskinTM Peanut 250 µg in routine clinical practice in 393 peanut allergic patients four to 11 years of age.

In October 2017, we announced topline results from PEPITES, in which we observed a statistically significant response with a favorable tolerability profile, with 35.3% of patients responding to ViaskinTM Peanut 250 µg after 12 months of treatment as compared to 13.6% of patients in the placebo arm (difference in response rates = 21.7%; p=0.00001; 95% CI = 12.4% - 29.8%). However, the primary endpoint, which evaluates the 95% confidence interval, or CI, in the difference in response rates between the active and placebo arms, did not reach the 15% lower bound of the CI that was proposed in the trial's Statistical Analysis Plan submitted to the FDA.

In November 2017, we announced topline safety results from REALISE and that the trial met its primary objective. In the trial, we observed that ViaskinTM Peanut was well-tolerated with no new or unexpected adverse events. A favorable safety and tolerability profile was observed, which was comparable with outcomes from previous studies of ViaskinTM Peanut 250 µg.

The results from PEPITES and REALISE formed the basis for our regulatory submission in the United States, for the use of ViaskinTM Peanut in peanut allergic patients four to 11 years of age.

In February 2018, we announced that the FDA agreed that the available efficacy and safety data for ViaskinTM Peanut supports the submission of a Biologics License Application, or a BLA, for the treatment of peanut allergy in children four to 11 years of age. The FDA provided written responses to the clinical pre-BLA meeting package we submitted. These responses reflect agreement on the content of the clinical module of the BLA for ViaskinTM Peanut; however, FDA agreement on the content of the BLA clinical module does not assure that the BLA will be approved and that we will not be required to conduct additional clinical trials of ViaskinTM Peanut.

In October 2018, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In December 2018, we voluntarily withdrew our BLA for ViaskinTM Peanut following correspondence with the FDA regarding additional data needs on manufacturing procedures and quality controls.

In August 2019, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age.

In October 2019, we announced the FDA's acceptance for review of our BLA for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020.

In January 2020, we announced positive topline results of the three-year,open-label extension of our Phase III PEPITES trial, or PEOPLE trial, evaluating the long-term efficacy and safety of investigational ViaskinTM Peanut in peanut-allergic children ages four to 11 years. The results demonstrated long-term clinical benefit as shown by an increase in eliciting dose, or ED, which may decrease the chance of reacting to an accidental peanut exposure. After three years, we observed that 75.9% (107/141) of patients had increased their ED from baseline, and 51.8% (73/141) of patients reached an ED of at least 1,000 mg peanut protein by year three. The safety profile of ViaskinTM Peanut was consistent with that observed in the clinical program to date in over 1,000 patients. During the PEOPLE trial, the most common adverse events were mild to moderate skin reactions localized to the administration site, and there was no epinephrine use deemed related to treatment. No treatment related serious adverse events were reported. One patient experienced one case of mild anaphylaxis that was determined by the investigator to be possibly related to treatment and resolved without treatment. Treatment compliance remained high throughout the study at a mean of 98% over three years of treatment. Low discontinuations due to adverse events were observed.

We intend to use the results from PEPITES, REALISE, PEOPLE to form the basis for our planned regulatory submissions in Europe and other countries for the use of ViaskinTM Peanut in peanut allergic patients four to 11 years of age.

In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss the BLA for ViaskinTM Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA for ViaskinTM Peanut, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date.

We are also developing ViaskinTM Peanut for the treatment of peanut allergy in toddlers one to three years of age. In August 2017, we initiated the EPITTM in Toddlers with Peanut Allergy, or EPITOPE, a Phase III clinical trial assessing the safety and

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efficacy of ViaskinTM Peanut for the treatment of peanut allergic patients one to three years of age. In September 2018, we announced that the independent data and safety monitoring board, or DSMB, completed its planned safety review of Part A of the EPITOPE trial. The DSMB did not identify any safety concerns for patients enrolled in Part A of the trial and recommended that the trial continue as planned with the 250 µg dose selected for investigation in Part B. We expect to announce the results from Part A of the EPITOPE trial in the first half of 2020. Following a positive DSMB meeting, we initiated Part B of the EPITOPE trial in October 2018, which will study patients for 12 months. We expect to enroll approximately 350 toddlers in the United States, Europe, Australia and Canada, and expect to announce an update on our timing for completion of enrollment in the first half of 2020.

Our second product candidate, ViaskinTM Milk, is in development for the treatment of cow's milk protein allergy, or CMPA, in children two to 17 years of age, and received fast track designation from the FDA in September 2016. In November 2014, we initiated a multi-center,double-blind, placebo- controlled, randomized Phase I/II dose-finding trial to study the safety and efficacy of ViaskinTM Milk in 198 patients with Immunoglobulin E, or IgE, mediated CMPA, which we refer to as the Milk Efficacy and Safety, or MILES, trial. The MILES (Milk Efficacy and Safety) study was designed to determine a safe and effective dose in two age groups: children ages two to 11 and adolescents ages 12 to 17. In June 2015, we announced completion of Part A of the MILES study, or Phase I, for which the DSMB recommended to continue the study as planned and did not raise any safety concerns, and we launched Part B, or Phase II, in October 2015.

In February 2018, we announced topline results from Part B of the MILES study. Following analyses of the data, the 300 µg dose of ViaskinTM Milk was identified as the dose with the greatest observed clinical activity for children (intent-to-treat, or ITT, p=0.042). We believe these results support further advancement of the ViaskinTM Milk program, and we intend to discuss findings with regulatory authorities to determine the design of future studies.

In February 2015, we announced the development of our third product candidate, ViaskinTM Egg, for the treatment of patients suffering from hen's egg allergy. Preclinical development for ViaskinTM Egg commenced in the first half of 2015.

In addition to our development programs in food allergies, we are exploring the use of our ViaskinTM technology for the treatment of inflammatory and autoimmune diseases with high unmet medical need. Human proof-of-concept trials have been conducted with ViaskinTM in EoE and as a booster vaccination against Bordetella pertussis (whooping cough) in healthy adults. Our other earlier stage research programs include vaccination for respiratory syncytial virus, as well as potential treatments for Crohn's disease, celiac disease and type I diabetes.

In an effort to continue diversifying our product candidate pipeline, we are also exploring the use of our technology platform in the development of diagnostic tools for food allergies. In May 2016, we announced our entry into an exclusive global collaboration with Nestlé Health Science to develop MAG1C, a ready-to-use and standardized atopy patch test tool for the diagnosis of CMPA in infants and toddlers. Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a pivotal Phase III clinical program, and if the appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally. We are eligible to receive up to €100.0 million in potential development, clinical, regulatory and commercial milestones, inclusive of a non-refundable upfront payment of €10.0 million that we received in July 2016.

We intend to commercialize our food allergy product candidates, if approved, in North America. In June 2016, we signed a lease for a commercial facility in Summit, New Jersey, which is intended to support the launch and commercialization of ViaskinTM Peanut in North America, if the appropriate regulatory approvals are received.

In other geographies, including certain European countries, and indications outside of food allergies, we may explore selective collaborations with parties who have relevant clinical and commercial expertise in order to maximize shareholder value.

Our Strategy

Our goal is to become the leading global biopharmaceutical company focused on discovering, developing, manufacturing and commercializing treatments for severe allergies. Key elements of our strategy are:

  • Rapidly Seek Marketing Approval for ViaskinTM Peanut-Our Phase III development program for ViaskinTM Peanut in peanut allergic children ages four to 11 has been completed. In December 2015, we initiated PEPITES, a pivotal efficacy and safety Phase III trial in peanut allergic children four to 11 years of

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age. In November 2016, we initiated REALISE, a Phase III safety trial in peanut allergic children four to 11 years of age. We reported results from the PEPITES and REALISE trials in October and November 2017, respectively. We are also exploring additional marketing indications for ViaskinTM Peanut in other patient populations as part of our clinical development strategy, and have an ongoing Phase III trial in toddlers one to three years of age, called EPITOPE. In order to potentially expedite development of ViaskinTM Peanut, we have pursued and obtained both fast track and breakthrough therapy designations from the FDA for ViaskinTM Peanut. Our BLA for ViaskinTM Peanut for the treatment of peanut allergic children four to 11 years of age was accepted for review by FDA in October 2019, and we expect to bring ViaskinTM Peanut to patients in the second half of 2020, if approved.

  • Advance the Development of Our ViaskinTM Technology Platform into Other Areas of Unmet Medical Need in Food Allergies-Following the potential approval and commercialization of ViaskinTM Peanut in the United States, we intend to comprehensively evaluate the product candidates in our pipeline, including ViaskinTM Milk and ViaskinTM Egg. We reported results from the MILES Phase II trial in ViaskinTM Milk in February 2018. We obtained fast track designation from the FDA for ViaskinTM Milk in September 2016 for the treatment of CMPA in children two to 17 years of age. Preclinical development for ViaskinTM Egg began in the first half of 2015.
  • Become a Fully Integrated Biopharmaceutical Company Focused on the Commercialization of our ViaskinTM Food Allergies Product Candidates in the United States and Other Major Markets-We are utilizing our team's unique expertise and knowledge in food allergies to rapidly advance clinical development and approval of our product candidates in the United States and other major markets. In anticipation of commercial launches, we continue to enhance our manufacturing and commercial production capabilities. Given the limited number and targeted nature of the prescribers in our target markets, we currently intend to launch and commercialize our food allergies product candidates with our own specialty sales force.
  • Maximize the Value of our Innovative ViaskinTM Technology Platform by Building a Broad Immunotherapy Product Pipeline-We are leveraging our expertise in skin immunology science and believe that our ViaskinTM technology platform has the potential to support significant product opportunities beyond treatments for food allergies. To support our pipeline innovation strategy, we have completed a number of proof-of-concept trials in the field of inflammatory and autoimmune diseases, including an investigator- sponsored study at the Children's Hospital of Philadelphia, or CHOP, in EoE, an inflammatory disease of the esophagus, with findings presented in December 2018 and February 2019. In collaboration with the Geneva University Hospitals, or HUG, and BioNet-Asia Co. Ltd., or BioNet, we conducted a Phase I trial of ViaskinTM rPT for booster vaccination against pertussis, our first human proof-of-concept trial in the field of boosting vaccination. Initial data was announced in March 2017, with additional data presented in September 2018. We have also advanced a number of pre-clinical indications, which could enable us to broaden our product pipeline, including the development of applications in Crohn's disease as well as other early stage research opportunities and collaborations. We expect to selectively collaborate with leading pharmaceutical and biotechnology companies that have deep clinical expertise or extensive commercial infrastructure in other therapeutic areas of interest to us, in order to accelerate product candidate development and maximize shareholder value.

Our Industry

Allergies are a Growing Global Health Problem

Allergy is considered a "disease of the developed world" as its increasing incidence is proportional to higher living standards. Epidemiological studies suggest that over half of Americans are sensitive to at least one allergen. Environmental and lifestyle changes, urbanization, pollution, dietary changes, development of sanitation standards and decrease in chronic bacterial infections all seem to be factors promoting the rapid increase in prevalence of allergies throughout the developed world.

Background on Allergic Reaction

An allergic reaction is the body's inappropriate immune response to a foreign substance, or an allergen. While, for most people, exposure to an allergen is relatively harmless, for others, exposure to an allergen can provoke an allergic reaction of varying severity. An allergic reaction typically progresses in two stages.

In the first stage, the allergic immune response begins with allergen sensitization. The first time an allergen penetrates the body via the skin or the mucosa, for example, the eyes, respiratory or digestive tracts, the immune system identifies the foreign element as dangerous and begins to produce specific antibodies against it. Antibodies are substances produced by the

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immune system that recognize and destroy certain foreign elements to which the body is exposed. The immune system produces different types of antibodies targeted to specific allergens. For allergic people, this phenomenon is known as sensitization. In the second stage of an allergic reaction, upon re-exposure to the allergen, the now sensitized immune system is ready to react. The antibody seeks to eliminate the allergen by triggering a collection of defense responses causing an allergic reaction. In various types of allergies, including food allergies, the antibody IgE plays an essential role in the development of the allergic disease. IgE is known for binding to allergens and triggering the release of cellular substances that can cause inflammation, thus triggering a cascade of allergic reactions. Allergic reactions range in severity and include hives, itching, swelling, shortness of breath, vomiting, and cardiac arrhythmia. Reactions vary in duration, and allergy patients experience these symptoms frequently unless treated properly. The most severe allergic reaction is anaphylaxis, which if not treated quickly by epinephrine injection, may progress to anaphylactic shock causing a rapid drop in blood pressure, loss of consciousness and possibly death within a few minutes.

Current Challenges in the Treatment and Management of Allergy Patients

Symptomatic Allergy Treatments and their Limitations

Aimmune Therapeutics, Inc., or Aimmune, received FDA approval of its OIT product candidate, Palforzia, in peanut allergic patients in January 2020. Palforzia is the only FDA-approved product for peanut-allergic patients. For other food allergies, there are no symptomatic or disease-modifying allergy treatments. By contrast, in the case of respiratory allergies, symptomatic allergy treatments, such as antihistamines, bronchodilators and corticosteroids, are among the most widely used treatments in the world. Non-sedating antihistamines such as histamine H1 inhibitors are the mainstay treatment for respiratory allergies. Allegra and Zyrtec are two leading antihistamines treatments. Another method of symptomatic treatment consists of blocking production of IgE, the allergy antibody.

However, all these treatments treat the symptoms of allergies, and are not intended to treat the underlying causes of the allergic reaction itself. As a result, when the treatment course is finished, the patient is once again susceptible to the original allergen and typically will suffer a similar allergic reaction if re-exposed to the original allergen.

Emergency Treatments and Their Limitations

Allergies can lead to severe reactions that require the use of treatments that have been designated to treat allergic symptoms during emergency situations, such as severe anaphylactic reactions. Epinephrine, also known as adrenaline, is the most widely used treatment for anaphylactic reactions, and it is usually administered by injection. The most commonly used type of epinephrine injections are Epipen Auto-Injectors, or Epipens, which are indicated for the emergency treatment of severe allergic reactions including sudden anaphylactic shock or for patients with a history of anaphylactic reactions to known triggers. Patients at risk of anaphylaxis are instructed by their physicians on how to recognize the symptoms of anaphylaxis and on when to use the Epipens. Epinephrine injections help relieve the symptoms of anaphylaxis, but they do not treat or help address the underlying causes of the allergic disease.

Desensitization Allergy Treatments and their Limitations

Another therapeutic approach for the treatment of allergies is through a type of immunotherapy called desensitization therapy. Desensitization therapy consists of repeated administration of increasing quantities of allergen to decrease reactivity in allergic patients. It is currently recognized by the World Health Organization, or WHO, as the preferred therapeutic treatment for allergies. Desensitization therapy is widely used in respiratory allergies and allergies to insect bites. This treatment is traditionally performed by subcutaneous injections of increasing doses of the allergen at regular intervals in the hospital and under the supervision of a physician. Less invasive methods of administration, including oral drops and sublingual, or under the tongue, tablets, have also been developed to permit a simplified treatment that can be administered at home. For example, to our knowledge, Palforzia uses a formulation of peanut flour for oral administration intended for oral desensitization to peanut. For patients allergic to dust mites or pollen, desensitization by injection is the standard method of therapy. However, subcutaneous methods of desensitization have been shown to cause significant side effects.

Additionally, with current desensitization techniques, the achieved immunity may be short-lived; many patients are not able to tolerate the allergen permanently. A therapeutic approach that promotes tolerization to the allergen would be of particular clinical and societal benefit.

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Food and Pediatric Allergies are a High Unmet Clinical Need

According to a paper published by the AAAAI, approximately 3% to 5% of Americans suffer from food allergies, with a number of recent studies suggesting that nearly six million or approximately 8% of children have some type of food allergy. Food allergies, in particular, can lead to extremely dangerous reactions and often lead to anaphylactic shock. According to a paper published in the Immunology and Allergy Clinics of North America, food, mainly peanut allergies, are responsible for 150 to 200 deaths every year in the United States. The U.S. Centers for Disease Control and Prevention reported that food allergies result in more than 300,000 ambulatory-care visits per year among children under the age of 18. Every three minutes a food allergy reaction sends someone to the emergency department, which is about 200,000 emergency department visits per year, and every six minutes the reaction is one of anaphylaxis. A recent U.S. study indicates an increase of 350% in the number of hospitalizations of children below age 18 for diagnosis of a food allergy for the period from 2004 to 2006 as compared to the period from 1998 to 2000. According to a paper published in the Immunology and Allergy Clinics of North America, the majority of fatal anaphylactic reactions in patients are caused by peanut allergy.

While anaphylactic shock is the most severe allergic reaction to food, patients also suffer from a poor quality of life. Symptoms tend to disappear within hours of exposure but, in some cases, can continue to affect patients for several days. Reactions can include, but are not limited to, skin discomfort, hay fever-like symptoms, impaired lung function and gastrointestinal complications, such as sustained bloating, nausea, vomiting and diarrhea. In some cases, food allergies can lead to chronic diseases such as failure to thrive in children and EoE.

Recent studies suggest that patients with food allergies are especially at risk for experiencing significant disruption to their daily life. Food allergies are not only a physical disability; they are often associated with psychological traumas, including fear of eating, antisocial behavior and anxiety. In the case of pediatric patients, food allergies also have a significant impact on their caretakers. A recent study suggests that the quality of life in children with peanut allergy is more impaired than in children with insulin-dependent diabetes mellitus.

There Are Limited Treatment Options Suitable for Food Allergies

Aimmune received FDA approval of its OIT product candidate, Palforzia, in peanut allergic patients in January 2020. Palforzia is the only FDA-approved product for peanut-allergic patients. For other food allergies, there are no symptomatic or disease-modifying allergy treatments. Strict avoidance of food allergens and early recognition and management of allergic reactions to food are important and the most common measures to prevent serious health consequences. However, strict avoidance of food allergen is very difficult to achieve, especially for children. Some foods can contain hidden traces of allergens, labeling is often deceptive and contamination of allergen-free foods occurs regularly. For example, according to a paper published in the Journal of Allergy and Clinical Immunology, or JACI, it is estimated that accidental exposure to peanuts in peanut allergic patients occurs once every three to five years and the annual incidence of accidental ingestion is between 15% and 40%.

Treating Allergies Early in Life Can Modify the Disease

Recent scientific studies suggest that treating allergies early in life could prevent disease progression or the development of polyallergies. A study of children desensitized to pollen and monitored for five years demonstrated that treating pollen allergy reduced the development of asthma. This early intervention, when the immune system is not mature, is referred to as the "window of opportunity." Thus, research suggests that addressing allergies during this time in life is likely of critical clinical importance.

However, current techniques are poorly adapted to treating young allergy patients:

  • Injections are not well-tolerated and must be performed under strict medical supervision; and
  • Sublingual methods, developed to encourage home administration, are generally not suitable for young children who are unable to keep the product in contact with the oral mucosa long enough for its use to be effective (a minimum of two minutes before being swallowed). In addition, sublingual administration in children is sometimes poorly tolerated. In the case of tablets, the risk of aspiration also exists. Due to these safety concerns, existing techniques are limited to children who are at least six years old. Given these limitations, it has been difficult to commercialize large-scale desensitization efforts for young children, even if medical research suggests that early allergy treatment during the "window of opportunity" is the best prophylactic and therapeutic management of the disease.

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In December 2016, the National Institute of Allergy and Infectious Diseases, or NIAID, a division of the National Institutes of Health, released updated clinical guidelines to aid health care providers in early introduction of peanut-containing foods to infants with the goal of possibly preventing the development of peanut allergy in patients at high-risk of developing peanut allergy. The new Addendum Guidelines for the Prevention of Peanut Allergy supplement the "Guidelines for the Diagnosis and Management of Food Allergy in the United States," which were previously introduced by NIAID in December 2010. Development of the Addendum Guidelines was prompted by emerging data suggesting that peanut allergy may be prevented by early introduction of peanut-containing foods. However, the latest findings are part of a complicated and evolving global allergy landscape, and early introduction of peanut-containing foods is an effort to prevent, rather than treat, peanut allergy. The Addendum Guidelines categorize children by risk of developing a peanut allergy. The Addendum Guidelines recommend that high-risk infants that have already been diagnosed with severe eczema, egg allergy or both should have peanut-containing foods introduced into the diet as early as four to six months of age to reduce the risk of developing peanut allergy. Further, the Addendum Guidelines suggest that infants with mild to moderate eczema may have peanut-containing foods introduced into their diets around six months of age to reduce the risk of developing peanut allergy, and low-risk infants without eczema or any food allergy may introduce peanut-containing foods freely into their diets. The Addendum Guidelines recommend that high-risk infants have an evaluation by an allergy specialist, and that patients diagnosed with a peanut allergy should not be introduced to peanut-containing foods due to the risk of anaphylactic reactions and death. It is uncertain what effect the Addendum Guidelines will have on the development of peanut allergy in children or if it will decrease the prevalence of peanut allergy in the United States.

There is Urgent Need for Safe, Effective and Convenient Treatments for Food Allergic Patients

For all these reasons, food allergic patients, especially young children, their caregivers and their clinicians have long sought a safe, effective and convenient treatment. It is well understood that desensitization would be a desirable therapeutic approach as long as the procedure limits serious side effects, is convenient to administer and is effective. In particular, a therapeutic approach that promotes a long-term therapeutic effect would be most desirable. While Aimmune received FDA approval of its OIT product candidate, Palforzia, in peanut allergic patients in January 2020, we believe there remains an unmet need for many peanut-allergic patients. For example, in a third-party study of 200 peanut-allergic children, children expressed a preference for a patch treatment option over an oral treatment option, mainly due to perceived difficulty of therapy administration and fear of ingesting peanuts. Our clinical trials of ViaskinTM Peanut did not require restrictions to daily activities or require peanut ingestion. Additionally, we believe the clinical benefit, high compliance and low discontinuation rates observed in our clinical program to date are important attributes of investigational ViaskinTM Peanut. ViaskinTM Peanut is administered as a single, daily 250 µg patch applied to the back of peanut-allergic children, which will offer constant dosing, if approved.

Our Solution: Epicutaneous Immunotherapy (EPITTM) Using Our ViaskinTM Technology Platform

Over the last decade, we have developed an innovative immunotherapy technology platform, with the potential for sustained therapeutic effect, by delivering biologically active compounds, including antigens, via intact skin. This technology platform, which we call ViaskinTM, is based on an electrostatic patch, which administers the antigen directly on the skin. Once administered, the antigen is concentrated in the superficial layers of the skin, where it activates the immune system by specifically targeting the Langerhans cells, without passage of the antigen into the bloodstream. We refer to this novel approach to immunotherapy as epicutaneous immunotherapy, or EPITTM. Based on our trials and research, we believe that EPITTM has the potential to provide all of the intended benefits of a disease-modifying treatment in allergy, while avoiding severe or life-threatening allergic reactions.

ViaskinTM-The First Epicutaneous Immunotherapy Product Candidate

Three important characteristics of our ViaskinTM technology platform contribute to its potential safety and efficacy:

  • The ViaskinTM patch contains the antigen in dry form, which allows it to retain its chemical properties optimally.
  • The ViaskinTM patch creates a condensation chamber with the skin. This increases the hydration of the skin and solubilizes the antigen, which allows it to penetrate the upper layers of the epidermis. Here, the antigen is close to tolerogenic, antigen-presenting cells in the body called the Langerhans cells.

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  • The ViaskinTM patch delivers the antigen directly to the Langerhans cells, but not into the bloodstream, thereby aiming to avoid systemic allergic reactions. This mechanism of action leads to the potential safety of ViaskinTM, which has been observed in multiple clinical trials in over 1,000 patients.

Below is a diagram reflecting the primary components of the ViaskinTM patch:

The key elements of the ViaskinTM patch mechanism of action are the following:

Containing a dry layer of allergen in its center, the patch is positioned on intact skin, without prior preparation.

The condensation chamber formed between the skin and the center of the patch creates hyperhydration of the skin and an accumulation of water.

The accumulation of water solubilizes the allergen. Due to this condensation chamber, the epidermis becomes more permeable allowing passage of the allergen into the epidermis.

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Once in the epidermis, the allergen is captured by a population of highly specialized cells: Langerhans cells. These cells can take the protein at the surface of the skin, process it and present its epitopes to the lymphocytes in the lymph nodes.

ViaskinTM-Targeting the Unique Immunological Properties of the Skin

ViaskinTM's effect on the immune system has been the subject of numerous scientific analyses and publications, which have been featured in major medical journals and allergology conferences. These epigenetic and mechanistic studies have helped us characterize the ViaskinTM's novel mechanism of action.

Our mechanism of action is unique and differentiated as it targets specific epidermal dendritic cells, called Langerhans cells, which capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream. After the antigen has been presented to the T cells in the lymph node, it activates the Tregs, the main factor in the down-regulation of Th2 response with little influence in Th1 expression, thus rebalancing the immune response.

Th2 cells are thought to play a role in allergic responses because allergies are known to be Th2 dominant conditions. An elevated Th2 response is ultimately responsible for the production of IgE, which can cause inflammation and trigger allergic reactions. Conversely, a normal, or non-allergic, immune response to an allergen is usually characterized by a well-balanced Th1/Th2 response.

We believe that EPITTM can rebalance the immune reaction by decreasing, or down-regulating, the Th2 response to allergens, keeping Th1 and Th2 balanced and thus promoting long-term tolerance toward future allergen exposure. The first documentation of this mechanistic feature of our ViaskinTM patch in humans was presented at the 2016 AAAAI Annual Meeting in Los Angeles, California.

ViaskinTM-Compelling Clinical Benefits

We believe that our innovative approach to EPITTM has the potential to offer compelling clinical benefits to patients suffering from severe allergies:

  • Our Epicutaneous Approach Targeting Langerhans Cells has the Potential to Induce an Immune Reaction with a Highly Tolerogenic Profile: By delivering the allergen directly to the lymph node through the Langerhans cells, EPITTM activates specific Tregs that can down-regulate the Th2-oriented reaction to the allergen. The absence of passage of allergens into the bloodstream explains the potential safety while the activity in the lymph node explains the potential efficacy of EPITTM.
  • Our ViaskinTM Patch Enables Continuous Antigen Exposure which has the Potential to Promote Sustained Tolerization: The ViaskinTM patch contains allergen protein in its original antigenic state, which allows the skin to be continuously exposed to the allergen over time. We believe this promotes a long-term, sustained therapeutic effect.
  • The Safety Profile and Ease of Use of ViaskinTM May Allow the Treatment of Allergies Very Early in Life: Because of its ease-of-use and observed safety profile, we believe our ViaskinTM technology will allow for the treatment of all patients suffering from severe allergies, including young children, limiting the risk of treatment-related anaphylaxis. As a result, we believe our approach will permit early treatment of allergies in children during the "window of opportunity" which could prevent disease progression in these patients or the development of polyallergies.

We believe ViaskinTM's ability to induce epicutaneous immunological responses can also potentially be applied to other therapeutic areas, such as vaccination and treatment of inflammatory and autoimmune diseases.

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Our Product Candidates

Our lead product candidate, ViaskinTM Peanut, is being developed for the treatment of peanut allergy in children, adolescents and adults. We completed a Phase III development program for ViaskinTM Peanut 250 µg in peanut allergic children four to 11 years of age. In December 2015, we initiated PEPITES, a randomized, placebo-controlled pivotal Phase III trial investigating the safety and efficacy of ViaskinTM Peanut 250 µg in 356 patients after 12 months of treatment. In November 2016, we initiated REALISE, a Phase III trial designed to generate safety data after six months of blinded treatment, as well as to evaluate the use of ViaskinTM Peanut 250 µg in routine clinical practice. Patients in PEPITES were eligible to enroll in PEOPLE (Open-Label Follow-UpStudy of the PEPITES Study to Evaluate the Long-termEfficacy and Safety of ViaskinTM Peanut), a long-term,open-label extension trial of ViaskinTM Peanut 250 µg. In the PEOPLE trial, patients who were randomized and received active treatment during PEPITES will receive ViaskinTM Peanut 250 µg for two additional years, while patients who received placebo during PEPITES will be treated with ViaskinTM Peanut 250 µg for three years. We announced the topline results from PEPITES and REALISE in October and November 2017, respectively. We announced topline results from the three-year,open-label extension trial, PEOPLE, in January 2020.

The results from PEPITES and REALISE formed the basis for our regulatory submission in the United States, the use of ViaskinTM Peanut in peanut allergic patients four to 11 years of age. In February 2018, we announced that the FDA agreed that the available efficacy and safety data for ViaskinTM Peanut supports the submission of a BLA for the treatment of peanut allergy in children four to 11 years of age.

In October 2018, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In December 2018, we voluntarily withdrew our BLA for ViaskinTM Peanut following correspondence with the FDA regarding additional data needs on manufacturing procedures and quality controls. In August 2019, we announced the submission of a BLA to the FDA for ViaskinTM Peanut for the treatment of peanut allergy in children four to 11 years of age. In October 2019, we announced the FDA's acceptance for review of our BLA for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020. In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss our BLA for ViaskinTM Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date.

We are also developing ViaskinTM Peanut for the treatment of peanut allergy in toddlers one to three years of age. In August 2017, we initiated the EPITTM in Toddlers with Peanut Allergy, or EPITOPE, a Phase III clinical trial assessing the safety and efficacy of ViaskinTM Peanut for the treatment of peanut allergic patients one to three years of age. In September 2018, we announced that the independent DSMB completed its planned safety review of Part A of the EPITOPE trial. The DSMB did not identify any safety concerns for patients enrolled in Part A of the trial and recommended that the trial continue as planned with the 250 µg dose selected for investigation in Part B. We expect to announce the topline results from Part A of the EPITOPE trial in the first half of 2020. In October 2018, we announced the initiation of Part B of EPITOPE. We expect to enroll approximately 350 toddlers for Part B in the United States, Europe, Australia and Canada, and expect to announce an update on our timing for completion of enrollment in the first half of 2020. Patients in the EPITOPE trial were eligible to enroll in EPOPEX (EPITOPE OPen-Label EXtension Study to Evaluate the Long- Term Clinical Benefit and Safety of ViaskinTM Peanut in Peanut-AllergicChildren), a long-term,open-label extension trial of ViaskinTM Peanut 250 µg in toddlers. In the EPOPEX trial, patients who were randomized and received active treatment during EPITOPE will receive ViaskinTM Peanut 250 µg for two additional years, while patients who received placebo during EPITOPE will be treated with ViaskinTM Peanut 250 µg for three years.

Our second product candidate, ViaskinTM Milk, is being developed for children and adolescents for the treatment of IgE mediated CMPA. Proof-of-concept data from a pilot clinical trial of ViaskinTM Milk was published in JACI in 2010. In November 2014, we initiated our 198-subject,multi-center,double-blind,placebo-controlled, randomized Phase I/II dose-finding MILES clinical trial evaluating the safety and efficacy of ViaskinTM Milk in children two to 11 years of age and adolescents 12 to 17 years of age with IgE mediated CMPA. Completion of Part A (Phase I) occurred in June 2015. In February 2018, we reported results from this dose-finding trial. Following analyses of the data, the 300 µg dose was identified as the dose with the greatest observed clinical activity for children (ITT, p=0.042). We believe these results support further advancement of the ViaskinTM Milk program, and we intend to discuss findings with regulatory authorities to determine the design of future studies.

We are also developing a third product candidate, ViaskinTM Egg, for the treatment of hen's egg allergy. In the first half of 2015, we began pre-clinical work for this product candidate with the goal of initiating a clinical program if these studies are successful.

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To support our pipeline innovation strategy, we have commenced a number of proof-of-concept trials in the field of inflammatory and autoimmune diseases. In November 2015, Dr. Jonathan Spergel from CHOP initiated an investigator-sponsoredmulti-center,double-blind,placebo-controlled, randomized trial to assess the safety and efficacy of ViaskinTM Milk in pediatric patient populations with milk-induced EoE. CHOP presented and published finding from this 20-patient trial in December 2018, February 2019 and February 2020. A reduction in eosinophil counts was observed in this initial data set, showing a possible connection between the skin and the gastrointestinal tract. We also initiated our first human proof-of-concept trial in the field of boosting vaccination in September 2016 in collaboration with HUG and BioNet. We, in collaboration with HUG and BioNet, designed a Phase I trial to study the ability of ViaskinTM rPT in the reactivation of immunity against Bordetella pertussis in 60 healthy adults. The primary endpoint of the study was the incidence of treatment-emergent adverse events, or TEAEs, related to the application of ViaskinTM rPT and the secondary objectives assessed humoral responses compared to placebo In November 2016, we announced the completion of dosing in the first cohort and the DSMB recommendation that the study continue with dosing in the second patient cohort. We announced the results of this trial in March 2017. In September 2018, we presented data from two additional cohorts, showing that following skin preparation with an epidermal laser, anti-PT booster responses elicited by ViaskinTM-PT were comparable to those elicited by BoostrixTM dTpa, an injectable approved booster vaccine.

We are also exploring the use of the ViaskinTM technology platform in the development of diagnostic tools for food allergies. In May 2016, we announced our entry into an exclusive global collaboration with Nestlé Health Science to develop MAG1C, a ready-to-use and standardized atopy patch test for the diagnosis of CMPA in infants and toddlers. Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a pivotal Phase III clinical program, and if the appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally.

ViaskinTM Peanut

Background

Peanut allergy is one of the most common food allergies, and can cause severe, potentially fatal, allergic reactions, including anaphylaxis. Strict avoidance of peanut is necessary as even trace amounts of peanut can cause severe allergic reactions. According to recent studies, food allergies, mainly to peanut, are responsible for 150 to 200 deaths every year in the United States and about 200,000 emergency room visits. While anaphylactic shock is the most severe allergic reaction to peanuts, many patients also suffer from a poor quality of life. Peanut allergies have lifelong effects and are often associated with psychological traumas, including fear of eating, antisocial behavior and anxiety.

Allergy to peanuts appears to be on the rise and its prevalence has increased in the past 10 years. According to an article published in JACI, a recent survey in the United States indicated that approximately 1% of the U.S. population, or more than three million people, are allergic to peanuts and/or nuts. Two recent studies conducted in the United States and the United Kingdom show that peanut allergy has doubled in five years in children below age five. A study funded by Food Allergy Research and Education, Inc., or FARE, indicates that the number of children in the United States with peanut allergy more than tripled between 1997 and 2008. Although some patients outgrow their peanut allergies, research indicates that only about 20% of individuals with peanut allergy outgrow it during a lifetime.

Phase III Clinical Program Ages Four to 11 - PEPITES and REALISE

PEPITES (Peanut EPITTM Efficacy and Safety Study)

In December 2015, we initiated a pivotal Phase III trial designed to evaluate the safety and efficacy of ViaskinTM Peanut 250 µg in children four to 11 years of age suffering from peanut allergy. PEPITES was a global, randomized 2:1, double-blind,placebo-controlled Phase III trial, in which pediatric peanut allergic patients were treated with ViaskinTM Peanut 250 µg or placebo for 12 months. During the trial, patients' sensitivity to peanut protein was assessed using a double-blind,placebo-controlled food challenge, or DBPCFC, at baseline. The DBPCFC was halted once the subject exhibited an objective symptom, as described on a pre-specified scale, thus establishing a subject's peanut reactivity level, which is labeled as the patient's eliciting dose, or ED. As in VIPES, patients received a daily application of ViaskinTM Peanut or placebo over a 12-month treatment period. Each patch was to be applied for 24 hours on the patient's back.

PEPITES randomized 356 peanut allergic patients in 31 centers across North America, including Canada and the United States, Europe and Australia. The patient population included a high percentage of subjects who exhibited additional allergic conditions. We established baseline peanut tolerance levels by measuring the peanut eliciting dose at which patients began to exhibit allergy symptoms, thus establishing the reactive baseline dose. The median baseline reactive dose in PEPITES was 100 mg.

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Both the FDA and the EMA agreed to a combined primary endpoint based on a responder analysis after 12 months of treatment. For patients with a baseline peanut protein ED equal to or less than 10 mg, a responder was defined as a patient with a peanut protein ED equal to or greater than 300 mg of peanut protein after 12 months of treatment. For patients with a baseline ED greater than 10 mg, a responder was defined as a patient with a peanut protein eliciting dose equal to or greater than 1,000 mg of peanut protein after 12 months of treatment. Secondary endpoints included the change from baseline of mean and median cumulative reactive dose of peanut protein, or CRD, which is used to establish the total quantity of peanut protein consumed during the DBPCFC. Serological markers were also measured at baseline, three, six and 12 months in order to characterize the immunological changes observed in patients.

Results of PEPITES Trial

In October 2017, we announced topline results from PEPITES, in which we observed a statistically significant response with a favorable tolerability profile, with 35.3% of patients responding to ViaskinTM Peanut 250 µg after 12 months of treatment as compared to 13.6% of patients in the placebo arm (difference in response rates = 21.7%; p=0.00001; 95% CI = 12.4% - 29.8%). However, the primary endpoint, which evaluates the 95% CI in the difference in response rates between the active and placebo arms, did not reach the 15% lower bound of the CI that was proposed in the study's Statistical Analysis Plan submitted to the FDA. We presented these topline results at the 2018 AAAAI/WAO Joint Congress in Orlando, Florida in March 2018. Detailed results were published in The Journal of the American Medical Association in February 2019.

With respect to CRD, a key secondary endpoint which measures threshold reactivity during the DBPCFC, we observed that at month 12, patients treated with ViaskinTM Peanut 250 µg and placebo reached a mean CRD of 906 mg (median 444 mg) and 361 mg (median 144 mg) of peanut protein, respectively. Mean CRD at baseline was 211.7 mg (median 144 mg) in the ViaskinTM Peanut arm and 212.5 mg (median 144 mg) in the placebo arm. An increase in the CRD was observed between ViaskinTM Peanut and placebo (nominal p-value < 0.001).

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Exploratory analyses showed that changes in peanut-specific biomarkers, including immunoglobulin E (IgE) and immunoglobulin G4 (IgG4), support the immunomodulatory effect with ViaskinTM Peanut [Figure 1]. The median observed increase from baseline in peanut-specific IgE was greater in the ViaskinTM Peanut group vs placebo group, respectively, at month 3 (70.1 kilounits of antibody per liter (kUA/L) vs 9.8 kUA/L) and month 6 (27.4 kUA/L vs 1.32 kUA/L). However, at month 12, peanut-specific IgE were observed to return to near baseline in both groups (1.1 kUA/L vs -1.1 kUA/L). Median peanut-specific IgG4 were observed to increase over time in the ViaskinTM Peanut group (change from baseline at month 3: 0.81 mg/L; month

  1. 1.79 mg/L; month 12: 3.27 mg/L), while levels remained unchanged from baseline in the placebo group. The change from baseline in peanut-specific IgG4 was greater at all time points with ViaskinTM Peanut vs placebo, and the groups were observed to be highly distinguished by this marker, given a flat trend in the placebo arm.

Figure 1: PEPITES Immunological Responses

In a post-hoc analysis, the majority of patients on ViaskinTM Peanut exhibited an increased ED compared to the placebo group (62.6% in active vs. 28% in placebo) at 12 months. An additional post-hoc analysis showed that 53.1% of patients treated with ViaskinTM Peanut increased their baseline ED from 100 mg or less to 300 mg or more, compared to 19% in the placebo group. Based on quantitative risk modeling from Baumert et al, this improvement in ED is predicted to reduce the risk of an allergic reaction due to accidental exposure by over 95%.

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A favorable safety and tolerability profile was observed with ViaskinTM Peanut. Treatment adherence was high (98.5%), and similar discontinuation rates between treatment groups were reported, with 89.9% of patients completing the trial. There was a low discontinuation rate due to treatment- emergent adverse events (TEAEs) (1.7%), and the overall rate of TEAEs, regardless of relatedness to the treatment, was comparable between treatment and placebo groups, at 95.4% and 89.0%, respectively. The most commonly reported TEAEs were mild to moderate application-site reactions that decreased after month 1 in both frequency and severity. There were no treatment-related gastrointestinal adverse events or cases of eosinophilic esophagitis in this trial.

There were no cases of severe anaphylaxis in the trial. Serious adverse events (SAEs) were balanced between the ViaskinTM Peanut and placebo group, at 4.2% vs. 5.1%, respectively. Four SAEs reported in three ViaskinTM Peanut patients (1.3%) were determined by the investigator as possibly or probably related to treatment. A low rate of treatment-related epinephrine use was reported (2.9% treatment group vs. 0.8% placebo group). Ten cases in eight ViaskinTM Peanut patients (3.4%) of possibly or probably treatment-related anaphylaxis occurred, and all were classified as mild or moderate without evidence of cardiovascular, neurologic, or respiratory compromise. Six of these ten cases were treated with epinephrine, and five of the eight patients continued on ViaskinTM Peanut in the trial.

Following the completion of PEPITES, all patients were eligible to enroll in PEOPLE (Open-Label Follow-UpStudy of the PEPITES Study to Evaluate the Long-termEfficacy and Safety of ViaskinTM Peanut), a long-term,open-label extension trial of ViaskinTM Peanut 250 µg in children. In the PEOPLE trial, patients who were randomized and received active treatment during PEPITES will receive ViaskinTM Peanut 250 µg for two additional years, while patients who previously received placebo during PEPITES will be treated with ViaskinTM Peanut 250 µg for three years. In August 2017, we announced the completion of enrollment of the PEOPLE trial, with 298 (92%) patients who completed PEPITES enrolling in this follow-up trial.

PEOPLE (PEPITES OPen Label Extension Study)

In January 2020, we announced positive topline results of the three-year,open-label extension of our Phase III PEPITES trial, or PEOPLE trial, evaluating the long-term efficacy and safety of investigational ViaskinTM Peanut in peanut-allergic children ages four to 11 years. The results demonstrated long-term clinical benefit as shown by an increase in eliciting dose, or ED, which may decrease the chance of reacting to an accidental peanut exposure.

The PEOPLE trial is an ongoing open-label extension study evaluating the long-term safety, tolerability and efficacy of ViaskinTM Peanut 250 µg in patients who have completed the Phase III PEPITES trial. Of the 213 patients who were randomized in the active treatment arm of PEPITES and completed the 12-month trial, 198 patients opted to enter the PEOPLE study (safety population). Of these patients, 148 were considered completers after 36 months and 141 patients completed all treatment according to the study protocol without major deviations. Efficacy data were analyzed from these 141 patients (per-protocol).

Topline results from PEOPLE support the long-term tolerability and clinical benefit of ViaskinTM Peanut, demonstrating desensitization over 36 months of treatment, with 75.9% (107/141) of patients increasing their ED from baseline. After 36

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months, 51.8% (73/141) of patients reached an ED of at least 1,000 mg peanut protein, an increase relative to Month 12, 40.4% (57/141). In addition, 13.5% (19/141) of patients completed the food challenge without meeting stopping criteria at 36 months (cumulative dose of 5,444 mg). At Month 36, the mean cumulative reactive dose (CRD) was 1,768.8 mg (median 944 mg) compared to 223.8 mg (median 144 mg) at baseline

The safety profile of ViaskinTM Peanut was consistent with that observed in the clinical program to date in over 1,000 patients. During the PEOPLE trial, the most common adverse events were mild to moderate skin reactions localized to the administration site, and there was no epinephrine use deemed related to treatment. No treatment related serious adverse events were reported. One patient experienced one case of mild anaphylaxis that was determined by the investigator to be possibly related to treatment and resolved without treatment. Treatment compliance remained high throughout the trial at a mean of 98% over three years of treatment. Low discontinuations due to adverse events were observed, with two children discontinuing the trial due to treatment-related TEAEs during PEOPLE.

Exploratory analyses suggest ViaskinTM Peanut may offer sustained effect even after a period without treatment. All participants who reached an ED t 1,000 mg at Month 36 were eligible to continue the trial for two additional months without treatment while maintaining a peanut-free diet. A further double-blindplacebo-controlled food challenge to determine ED was administered at the end of this period (Month 38). The analysis showed that 77.8% (14/18) of the children who completed the oral food challenge at Month 38 maintained desensitization with an ED t 1,000 mg.

REALISE (REAL Life Use and Safety of EPITTM)

In November 2016, we initiated a Phase III trial in peanut allergic children four to 11 years of age designed to assess the use and safety of ViaskinTM Peanut 250 µg in routine clinical practice. REALISE is a multicenter, randomized 3:1, double-blind,placebo-controlled Phase III trial, in which pediatric peanut allergic patients were treated with ViaskinTM Peanut 250 µg or placebo for six months. Treatment course with ViaskinTM Peanut consists of a daily application of the patch on the backs of the patients.

No DBPCFCs were required for entry or during the trial. Patients in the study were selected based on a well-documented medical history of IgE-mediated reactions to peanut, including children with a history of severe anaphylaxis. The primary endpoint of the study is safety as measured by adverse events, treatment-emergent adverse events and serious adverse events after six months of blinded treatment. Secondary endpoints include evolution of peanut-specific serological markers over time, including IgE, immunoglobulin G and skin prick test wheal. Exploratory criteria will also include scores from patients' Food Allergy Quality of Life Questionnaire, or FAQLQ, and the Food Allergy Independent Measure, FAIM.

In March 2017, we announced the completion of enrollment in REALISE, which randomized 393 patients in 32 centers across North America.

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After the initial blinded six-month period, 97.5% of patients in both the placebo and active arms opted into an open-label portion of the study, which will continue monitoring patients for a total of 36 months of active treatment.

Results of REALISE Trial

Results from this trial were comparable with outcomes from previous studies of ViaskinTM Peanut 250 µg. The most commonly reported adverse events were local application site reactions, which were mostly mild and moderate in nature. No imbalance in SAEs was observed in the trial, with three cases in three patients in the active arm (1.0%) and two cases in two patients in the placebo arm (2.0%). One case in one patient in the active arm was qualified by the investigator as moderate anaphylaxis probably related to treatment. The patient responded to standard outpatient therapy. In the six-month blinded period, the discontinuation rate was 2.5%, with a 1.0% dropout related to adverse events. The mean patient compliance was above 95%.

Phase III Clinical Trial Ages One to Three-EPITOPE

EPITOPE (EPITTM in Toddlers with Peanut Allergy)

In August 2017, we initiated EPITOPE, a two-part, pivotal, double-blind,placebo-controlled Phase III trial designed to evaluate the safety and efficacy of ViaskinTM Peanut in children one to three years of age suffering from peanut allergy. Part A of the trial assessed the safety of two doses of ViaskinTM Peanut, 100 µg and 250 µg, in 51 patients for three months. Based on the results from Part A, we are studying the maximum-tolerated dose in Part B, which is expected to enroll approximately 350 additional patients to evaluate the safety and efficacy of the identified dose versus placebo for 12 months.

The primary efficacy endpoint of the trial is based on a responder analysis after 12 months of treatment of ViaskinTM Peanut. For patients with a baseline peanut protein ED equal to or less than 10 mg, a responder is defined as a patient with a peanut protein ED equal to or greater than 300 mg of peanut protein after 12 months of treatment. For patients with a baseline ED greater than 10 mg, a responder is defined as a patient with a peanut protein eliciting dose equal to or greater than 1,000 mg of peanut protein after 12 months of treatment. The primary analysis evaluating the difference between ViaskinTM Peanut 250 µg and placebo is defined by reaching a lower bound of the two-sided 95% confidence interval (CI) of t15%.

In September 2018, we announced that the independent DSMB completed its planned safety review of Part A of EPITOPE and did not identify any safety concerns for patients enrolled in Part A of the trial, recommending that the trial continue as planned with the 250 µg dose selected for investigation in Part B. We expect to announce the results from Part A of the EPITOPE trial in the first half of 2020. In October 2018, we announced the initiation of Part B of EPITOPE. We expect to enroll approximately 350 toddlers in the United States, Europe, Australia and Canada, and expect to announce an update on our timing for completion of enrollment in the first half of 2020.

Patients in EPITOPE were eligible to enroll in EPOPEX (EPITOPE Open-Label Extension Study to Evaluate the Long-Term Clinical Benefit and Safety of ViaskinTM Peanut in Peanut-Allergic Children), a long-term, open-labelextension trial of ViaskinTM Peanut 250 µg in toddlers. In the EPOPEX trial, patients who were randomized and received active treatment during EPITOPE will receive ViaskinTM Peanut 250 µg for two additional years, while patients who received placebo during EPITOPE will be treated with ViaskinTM Peanut 250 µg for three years.

Phase IIb Clinical Trials-VIPES and OLFUS-VIPES

VIPES (ViaskinTM Peanut's Efficacy and Safety)

In August 2012, we initiated VIPES, a double-blind,placebo-controlled,multi-center Phase IIb clinical trial of ViaskinTM Peanut in 221 peanut allergic patients with a well-documented medical history of systemic reactions after ingestion of peanut. Patients completed their last food challenge visits after twelve months of treatment.

The VIPES trial was a multi-center clinical trial conducted at 22 sites in North America and Europe. In the trial, 221 peanut allergic patients were randomized into four treatment arms to evaluate three doses of ViaskinTM Peanut, specifically 50 µg, 100 µg and 250 µg peanut protein, compared to placebo. The trial was prospectively organized across the three dose levels with two patient strata, composed of three different patient age groups: children (113 patients, ages six to 11) for the first stratum and adolescents (73 patients, ages 12 to 17) plus adults (35 patients, ages 18 to 55) for the other stratum. Each patient underwent two DBPCFCs: one at initial screening and one at 12 months after initiation of treatment. The challenge was halted once the subject exhibited an objective symptom, thus establishing a subject's ED. Patients in VIPES received a daily application of the ViaskinTM Peanut patch over a 12-month treatment period. Each patch was applied for 24 hours, either on the upper arm for adults (ages 18 to 55) and adolescents (ages 12 to 17) or on the back of children (ages six to 11).

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Baseline peanut tolerance levels were established by measuring the peanut eliciting dose at which patients began to exhibit allergy symptoms, thus establishing the reactive baseline dose. The median baseline reactive dose in VIPES was 30 mg for children and 100 mg for adolescents and adults. The distribution of patients' baseline reactive dose is summarized in the graph below.

The primary efficacy endpoint in the trial was the percentage of treatment responders for each active treatment compared to placebo. Trial responders were defined as patients who, after 12 months of treatment with ViaskinTM Peanut and using a DBPCFC, started to react at a dose of peanut protein equal to or greater than 1,000 mg, or at least a 10-fold increase in the eliciting dose of peanut protein compared to baseline. As a secondary efficacy endpoint, CRD was also used to establish the total quantity of peanut protein triggered patient reactions at month 12 versus placebo. Serological markers were also measured as additional secondary endpoints at baseline, three, six and 12 months in order to characterize the immunological changes observed in patients.

The principal coordinating investigator for VIPES in North America is Dr. Hugh Sampson, M.D., Chief of the Division of Allergy & Immunology in the Department of Pediatrics, Director of the Jaffe Food Allergy Institute, and Dean of Translational Biomedical Science at The Mount Sinai Medical Center in New York, United States. Dr. Sampson joined us in June 2015 and was appointed as our Chief Scientific Officer in November 2015.

The principal coordinating investigator for VIPES in Europe is Christophe Dupont, M.D., Ph.D., Head of the Pediatric-Gastroenterology Ambulatory Department at the Necker Hospital, or AP-HP. Dr. Dupont has been a member of the European Society for Pediatric Gastroenterology, Hepatology and Nutrition and of the Committee of Nutrition of the French Pediatric Society.

Results of VIPES Trial

In September 2014, we announced topline results for the VIPES trial, which was followed by a full study presentation at the 2015 AAAAI Annual Meeting in Houston, Texas, during an oral presentation by Dr. Sampson titled, "Epicutaneous Immunotherapy (EPITTM) is effective and safe to treat Peanut Allergy: a multi-national,double-blindplacebo-controlled randomized, phase IIb trial." We discussed additional post-hoc analyses during a company event webcasted following the 2015 AAAAI meeting.

The primary efficacy endpoint was met with ViaskinTM 250 µg, with 50.0% responders vs 25.0% with placebo, p=0.01 [Figure 2]. Moreover, children in the ViaskinTM 250 µg arm (six-11 years) exhibited 53.6% responders vs 19.4% for placebo, p=0.008 [Figure 3]. In children, the mean CRD showed a ViaskinTM Peanut dose-dependent response, with a change from baseline of +61 mg, +471 mg, +570 mg and +1121 mg for the placebo, 50 µg, 100 µg, and 250 µg arms, respectively [Figure 4]. Children's immunological responses were observed to be robust. In the ViaskinTM 250 µg arm, peanut- specific IgE exhibited a median increase t50 kUA/L at 3 months and decreased back to baseline at 12 months; median peanut-specific IgG4 at 12 months increased in a dose-dependent fashion: 1.3, 5.5-, 7.2- and 19.1-fold for each dose arm, respectively [Figure 5].

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We are conducting additional analyses on the adolescents and adults age stratum. Due to a high placebo response rate, we believe these results need to be investigated further before determining our ViaskinTM Peanut development path in these patient populations [Figure 6]. We intend to refine our development strategy for both peanut allergic adolescents and adults in the next 12 months.

Patient compliance with daily ViaskinTM Peanut application was above 97%. The safety profile was confirmed across all active arms with no serious treatment-related adverse events reported or use of epinephrine related to treatment. Three separate Data Safety Monitoring Board, or DSMB, meetings concluded that VIPES did not have any safety concerns. In the trial, there were 20 SAEs, but none related to study drug. Of the 20 Serious Adverse Events, or SAEs, in VIPES, 14 were anaphylaxes during the DBPCFC, three were moderate anaphylaxes after accidental consumption of peanut containing foods outside of clinical trial site, one was a reaction to fish consumption, one respiratory distress case and one psychiatric case. The trial drop-out rate was 6.3%, or 14 patients, which was below the 15% rate initially anticipated. Two of the 14 drop-outs were related to the study drug due to dermatitis, one was due to uncontrolled asthma not related to treatment and the remaining 11 patients were drop-outs due to non-compliance, lost to follow-up or consent withdrawals. Furthermore, local cutaneous reactions, mostly mild and moderate, were observed in the majority of the active groups.

The following figures summarize these results.

Figure 2: Summary of VIPES Responders

Figure 3: Summary of VIPES Responders: Children

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Figure 4: Summary of CRD Changes from Baseline in Children

Figure 5: Summary of Immunological Responses in Children

Figure 6: Summary of VIPES Responders: Adolescents and Adults

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OLFUS-VIPES(Open-LabelFollow-UpStudy)

In September 2013, we initiated an open-labelfollow-up Phase IIb clinical trial called OLFUS-VIPES to assess the long-term efficacy and safety of ViaskinTM Peanut in patients with peanut allergy. OLFUS-VIPES is an extension trial for patients who completed the VIPES double-blind, placebo- controlled clinical trial, during which all patients were under active treatment with ViaskinTM Peanut 250 µg. OLFUS-VIPES includes 171 patients at 21 sites in North America and Europe, representing 83% of the patients who completed 12 months of therapy in the VIPES trial. The objective of this trial was to assess the efficacy and safety of ViaskinTM Peanut after up to 36 months of epicutaneous immunotherapy in peanut allergic patients, as well as sustained unresponsiveness of patients to peanut protein after cessation of treatment.

Results of OLFUS-VIPES Trial

In October 2016, we announced topline results for OLFUS-VIPES, which evaluated the long-term efficacy and safety of ViaskinTM Peanut for the treatment of peanut allergic children. The response rate in children (ages six to 11 at entry in VIPES) treated with the 250 µg dose for 36 months was observed to be long-lasting. In this dose cohort, 83% of children were observed to continue responding to treatment during the second year of OLFUS, up from 80% at month 12 of OLFUS and 57% at the OLFUS baseline. The average CRD for this treatment group progressed to 2,454 mg (1,440 mg median) of peanut protein at the completion of OLFUS, from 1,884 mg (1,440 mg median) at month 12 of OLFUS, from 1,068 mg (444 mg median) at the OLFUS baseline, and 84 mg (44 mg median) at baseline during VIPES entry [Figure 7]. Serological markers for this treatment group showed the strengthening of the immunological changes initially observed in VIPES. After 36 months, a median 36.5% decrease from the VIPES baseline value in peanut-specific IgE was observed, while the high median levels IgG4 were maintained at a 473% increase from the VIPES baseline [Figure 8]. Detailed study results were presented at the 2017 AAAAI meeting in Atlanta, Georgia by Dr. Wayne Shreffler during an oral presentation titled, "Efficacy and Safety of Long-Term Epicutaneous Immunotherapy (EPITTM) Treatment of Peanut Allergy with ViaskinTM Peanut: Results of the Two-Year Extension of the VIPES Phase IIb Clinical Trial."

No drug-related epinephrine use or SAEs due to ViaskinTM Peanut were reported. The study's median compliance rate, which was maintained at 95.5%, was also consistent with previously reported results from VIPES and prior observations in OLFUS. Most adverse events were related to application site and were mild to moderate, with decreasing severity and frequency over time.

After 24 additional months of treatment with ViaskinTM Peanut, no additional significant clinical response was observed relative to the OLFUS baseline in the adolescents and adults' treatment group. Response rates consistent with the results observed in VIPES were shown in treatment-naïve adolescents and adults who received 24 months of therapy during OLFUS.

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The following figures summarize these results.

Figure 7: Summary of Responders in OLFUS-VIPES - Children Treated for

36 Months with ViaskinTM 250 µg

Figure 8: OLFUS-VIPES Serological Evolution in Children Treated for 36 Months with ViaskinTM 250 µg

Phase Ib Clinical Trial

In July 2010, we initiated our first clinical trial of ViaskinTM Peanut in the United States, which was a Phase Ib trial to evaluate the safety and tolerability of repeated epicutaneous administration of ViaskinTM Peanut in patients allergic to peanuts. Results from this trial were published in February 2016 in JACI. In the trial, which was conducted at five leading

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centers in the United States, 100 patients (initially adults, followed by adolescents and then children) allergic to peanuts, including 70 with a non-severe allergy and 30 with a severe allergy, were randomized and treated for two weeks with 20 µg to 500 µg of ViaskinTM Peanut or with placebo. Patients with a history of severe anaphylactic reactions could be enrolled only after assessment of the safety of ViaskinTM Peanut in patients with historical non-severe anaphylaxis. The primary endpoint of this clinical trial was safety, with the primary safety parameters of adverse events, physical examinations, vital signs, lab values, allergic reactions, any skin reactions, local or distant, echo-cardiogram, and Peak Expiratory Flow and spirometry (FEV1). Secondary endpoints included the proportion of patients that experience systemic reactions such as urticaria, asthma and acute dyspnea, change in blood pressure, and digestive symptoms such as vomiting and diarrhea associated with ViaskinTM Peanut treatment versus placebo, the proportion of patients requiring treatment for systemic reactions related to ViaskinTM Peanut treatment or placebo, and overall adherence to the clinical trial treatment.

In the overall population, the dose of 500 µg of ViaskinTM Peanut in adults and adolescents, and the dose of 250 µg of ViaskinTM Peanut in children, were each shown to be well-tolerated maximum doses regardless of the administration plan. Importantly, an excellent treatment compliance rate greater than 96% was observed and the intermediate results suggested satisfactory usage safety of ViaskinTM Peanut in patients allergic to peanuts. The interim report was communicated to the FDA on December 15, 2011, and we released the complete results of this clinical trial at the EAACI Congress in June 2012.

Academic Trials

The lack of cure and approved treatment options for food allergies has encouraged researchers and physicians to conduct several observational and mechanistic studies to further their understanding of these diseases. In the United States, for example, the NIAID of the United States National Institutes of Health has substantially increased its support for food allergy research since 2003, including the establishment of CoFAR in 2005.

As such, we have been approached by certain academic and research institutions interested in exploring ViaskinTM and EPITTM's mechanism of action and their impact on patients. In particular, both the AP-HP in France and CoFAR in the United States have initiated clinical trials to assess ViaskinTM Peanut's efficacy: ARACHILD and CoFAR6, respectively. While not a sponsor of these trials, we have and will provide the doses of ViaskinTM Peanut needed to complete both of these trials.

CoFAR6 (Consortium for Food Allergy Research 6)

In October 2013, CoFAR launched a multi-center, randomized, double-blind,placebo-controlled trial to evaluate ViaskinTM Peanut in children and adults allergic to peanuts. This trial is sponsored and funded by the NIAID and coordinated by Stacie M. Jones, MD, Professor of Pediatrics, University of Arkansas for Medical Sciences, Arkansas Children's Hospital, Little Rock, Arkansas. The trial is being conducted in five hospitals in the United States and includes 75 patients; 54 children four to 11 years of age and 21 adolescents and adults 12 to 25 years of age. In CoFAR6, patients were randomized 1:1:1 to two doses of ViaskinTM Peanut (100 µg and 250 µg) or placebo. The primary outcome measure was the percent of patients desensitized to peanut protein during the peanut protein oral food challenge, or OFC, at week 52. Responders were characterized as patients who successfully passed a 5044 mg OFC or who successfully consumed a dose ten times greater as compared to baseline.

The 52-week CoFAR6 results were highlighted during two oral presentations at the 2016 AAAAI Annual Meeting in Los Angeles, California. Findings from this study were consistent with clinical data trends previously observed in VIPES. In the CoFAR6 trial, ViaskinTM Peanut was observed to have a favorable safety and tolerability profile across treatment groups, with no SAEs or epinephrine use related to treatment observed. Treatment adherence was high (97.1%), dropouts were low (8%), and no withdrawals occurred in the 250 µg treatment group. Cohorts treated with both ViaskinTM Peanut 100 µg (P=0.005), and ViaskinTM Peanut 250 µg (P=0.003) met the primary efficacy endpoint in all populations. The treatment response was enhanced in children four to 11 years of age, and also, with ViaskinTM Peanut 250 µg compared to ViaskinTM Peanut 100 µg. Based on additional analysis presented separately by us, we observed a greater response in children treated with the 250 µg dose (P=0.001). The CoFAR6 results were published in JACI in October 2016.

CoFAR6 also explored mechanistic features of ViaskinTM Peanut. Dr. Cecilia Berin, Associate Professor Pediatrics, Mount Sinai Hospital in New York, New York presented early findings from CoFAR6 at the 2016 AAAAI meeting, which supported ViaskinTM Peanut's mechanistic features that have been observed at the preclinical level. ViaskinTM Peanut at the 250 µg dose showed a trend of decreased Th2 cell frequency without any increased trends in the Th1 response. In animal models, we have observed that ViaskinTM's unique mechanism of action could rebalance the immune reaction by down-regulating the Th2 response to allergens while keeping Th1 responses balanced.

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ARACHILD

The ARACHILD trial is a pilot trial conducted in France by the AP-HP. It is a DBPCFC trial to investigate the efficacy and safety of ViaskinTM Peanut in peanut allergic patients recruited from six centers. In the trial, 54 patients (35 children (age five to 11) and 19 adolescents (age 12 to 18)), were randomized into two treatment arms to evaluate a single dose of ViaskinTM Peanut, specifically 100 µg of peanut protein, compared to placebo. Patients in the placebo arm were crossed over at six months to ViaskinTM Peanut without unblinding the trial. Each patient underwent DBPCFCs at months six, 12 and 18 after initiation of treatment. After the initial double-blindsix-month treatment period, all patients went through an open-label period of 30 months. The primary endpoint of the trial was the proportion of patients who achieved at least a 10-fold increase in initial reactive dose or CRD greater than 1,000 mg of peanut protein (about four peanuts). The secondary endpoints included significant immunological changes.

In June 2013, AP-HP reported the results from the initial six-monthdouble-blindplacebo-controlled phase of the trial and for the first 12 months of the open-labelfollow-up phase. In the active group (28 patients), six-, 12- and 18-month data showed 7.4%, 20% and 40% of patients, respectively, consuming at least 10 times more peanut protein than tolerated at the beginning of the trial (versus 7.7% in the placebo arm before the crossover to ViaskinTM Peanut at month six, then 13% and 19% respectively after the crossover). Net trends of a specific sub-analysis of 19 adolescents (age 12 to

  1. showed that despite a positive serological response of IgE, no adolescents qualified as responders at six, 12 and 18 months. In an analysis of 35 children (age five to 11), we observed not only a positive serological response of IgE, but also that an immunological response is characteristic of an acquisition of tolerance leading to a continuous and progressive number of responders. For the children subgroup, six-, 12- and 18- month data showed 12.5%, 33.3% and 66.7% of patients, respectively, consuming at least 10 times more peanut protein than at the beginning of the trial (versus 10.5% in the placebo arm before the crossover to ViaskinTM Peanut at month six, then 16.7% and 23.5%, respectively, after the crossover). ViaskinTM Peanut also showed significant immunological changes (secondary efficacy endpoints) in the overall population, with clear-cut results in children. In treated children, peanut-specific IgE were increased by more than two-fold at 6-month, before decreasing and approaching toward initial levels at 18-month, while peanut-specific IgG4 (immunoglobulin G4) increased by more than eight-fold over 18-month of treatment.

Additional analyses of these data also suggest a linear relationship between body surface and response rate as well as onset of response. This analysis supports the belief that the 100 µg dose in ViaskinTM Peanut used in ARACHILD was potentially too low to generate a significant clinical outcome in patients with a higher body surface. In addition, these data also suggest that levels of the antibody IGg4 are potentially a good predictor of future patient response.

Pre-Clinical Studies

Prior to commencing our clinical trials of ViaskinTM Peanut, we completed a series of customary proof-of-concept and IND-enablingpre-clinical studies. These included in vitro pharmacokinetic/absorption studies, in vivo pharmacology studies in a mouse model of peanut allergy, and toxicology studies, as well as ISO 10993-compliant biocompatibility studies for the device component.

Following the potential approval and commercialization of ViaskinTM Peanut in the United States, we intend to comprehensively evaluate the product candidates in our pipeline, including ViaskinTM Milk and ViaskinTM Egg. However, we expect to continue to prioritize the advancement and commercialization of ViaskinTM Peanut, if approved.

ViaskinTM Milk

Background

Cow's Milk Protein Allergy (CMPA) is frequently the first allergy that appears during early childhood. CMPA is often missed in the primary care setting and can be a significant cause of infant distress when left undiagnosed. Symptoms can include gastrointestinal problems such as vomiting and diarrhea, skin rash, angioedema or rapid swelling of the skin, and anaphylaxis. The only option available for CMPA management is the avoidance of cow's milk, which can lead to issues of dietary imbalance, failure to thrive and poor quality of life.

In addition, cow's milk allergy is believed to be involved in many cases of EoE in children and it is estimated that EoE impacts one in every 2,000 children. EoE is a recently recognized allergic inflammatory disease, characterized by swelling of the esophagus. Typical symptoms include vomiting, abdominal pain, regurgitation, dysphagia and, in young children and infants, feeding difficulties and failure to thrive. Because the diverse and non-specific symptoms, EoE can be diagnosed only

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by esophageal biopsy. In addition to presenting symptoms, acute and chronic complications that may arise if EoE remains untreated include food impaction, esophageal stricture, narrow-caliber esophagus and esophageal perforation. EoE is considered to be a chronic condition with no currently approved treatments.

CMPA is the most common food allergy in infants and young children, affecting 2% to 3% of the general population. In approximately 80% of CMPA cases, the allergy to cow's milk disappears after age 16. However, according to an expert panel convened by the AAAAI, approximately 35% of children with severe CMPA subsequently develop other food allergies or allergic respiratory diseases, such as asthma.

MILES (MILk Efficacy and Safety)

Our product candidate for the treatment of CMPA, ViaskinTM Milk, received fast track designation from the FDA in September 2016. In November 2014, we initiated our MILES trial, a multi-center,double-blind,placebo-controlled, randomized Phase I/II trial to was designed to determine a safe and effective dose in two age groups: children ages two to 11 and adolescents ages 12 to 17, and study the safety and efficacy of ViaskinTM Milk in patients suffering from IgE mediated CMPA. This trial was conducted in select United States and Canadian clinical centers. In the study, 198 patients (18 patients in Part A and 180 patients in Part B) were randomized for treatment at 17 sites.

In November 2016, we announced the completion of enrollment for Part B of the MILES study, or Phase II. Part B was designed to evaluate the safety and efficacy of three doses of ViaskinTM Milk (150 µg, 300 µg, 500 µg) compared to placebo for 12 months. The primary efficacy endpoint was the percentage of patients who are treatment responders after 12 months, defined as patients who meet at least one of the following criteria: (1) a 10-fold or greater increase in CRD of cow's milk proteins at month 12 of the food challenge as compared to baseline value in addition to reaching tolerance to at least 144 mg of cow's milk protein (approximately 4.5 mL of milk) or (2) a CRD of cow's milk proteins greater than or equal to 1,444 mg (approximately 45 mL of milk) at month 12 of the food challenge. Secondary efficacy endpoints included, among others, the percentage of patients who are treatment responders at month 24, the mean and median CRD of cow's milk proteins at months 12 and 24 as well as the change in CRD from baseline.

Results of MILES

In June 2015, we announced results for Part A of MILES, which is equivalent to Phase I, which evaluated the safety of repeated daily applications of three escalating dose-levels of ViaskinTM Milk (150 µg, 300 µg and 500 µg cow's milk protein) versus placebo during three weeks in 18 patients. The DSMB for the study recommended that the study continue and expressed no safety concerns after evaluating the Part A safety data of patients treated with the three doses of ViaskinTM Milk.

In February 2018, we announced preliminary results from Part B, or Phase II, of a Phase I/II study evaluating the efficacy and safety of three dose regimens of ViaskinTM Milk (150 µg, 300 µg, 500 µg) in 198 patients for the treatment of IgE-mediated cow's milk protein allergy, or CMPA. This was followed by a full study presentation at the 2018 EAACI Annual Meeting in Munich, Germany, during an oral presentation by Dr. Bob Wood titled, "A Double-Blind,Placebo-Controlled Phase I/II Dose-Finding Study of ViaskinTM Milk in Children and Adolescents for the Treatment of IgE-Mediated Cow's Milk Protein Allergy (CMPA): Results From MILES." Following analyses of the data, the 300 µg dose was identified as the dose with the greatest observed clinical activity for children (ITT, p=0.042). We believe these preliminary results support further advancement of the ViaskinTM Milk program, and intend to discuss findings with regulatory authorities to determine the design of future studies.

The overall patient population treated according to the protocol (per-protocol analysis population) was also scientifically relevant for this dose-finding study, and the response rate that we observed with the 300 µg dose was significantly greater than placebo (p=0.027), which was consistent with ITT statistical trends. Analysis of the data showed a statistically significant response in the 300 µg arm in the two to 11 age group (ITT, p=0.042), which was identified as the prioritized population for future studies. A significant increase in CRD versus baseline as measured by changes in the month 12

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DBPCFC was observed in children treated with the 300 µg dose as compared to placebo (ITT, p=0.045). The response rate and CRD for the ITT population is summarized in the table below:

Summary of Response Rate and Cumulative Reactive Dose (CRD), ITT

ViaskinTM

ViaskinTM

ViaskinTM

Milk

Milk

Milk

Placebo

150 µg

300 µg

500 µg

Overall

n=53

n=49

n=49

n=47

Responder Rate

30.2%

36.7%

49.0%

36.2%

Mean Change in CRD

555.5

745.1

1,201.0*

723.0

Children

n=40

n=38

n=38

n=36

Responder Rate

32.5%

34.2%

57.9%**

38.9%

Mean Change in CRD

565.6

624.6

1,322.4*

839.8

Adolescents

n=13

n=11

n=11

n=11

Responder Rate

23.1%

45.5%

18.2%

27.3%

Mean Change in CRD

525.4

1,150.3

715.6

364.0

* Geometric Mean P-values for CRD, Overall: 0.008, Children: 0.045, **p=0.042

ViaskinTM Milk was reported to be well-tolerated across all doses with no treatment-related SAEs. The most commonly reported adverse events were mild and moderate application site reactions. Overall, the discontinuation rate was 4.5%, with a 1.5% dropout rate due to adverse events. Treatment adherence, as measured by mean patient compliance, was over 95% in all study groups.

Overall, 98.9% of patients completing month 12 of MILES opted to enroll in the open-label portion of the study.

Pilot Clinical Trial

Dr. Christophe Dupont and the AP-HP conducted a double-blind,placebo-controlled pilot clinical trial of EPITTM in 2005 in children (age three months to 15 years) with high levels of specific IgE related to cow's milk protein who were unable to consume more than 10 mL of cow's milk. A publication discussing this trial's results was published in JACI in 2010. In the trial, at the end of a three-month treatment, the mean cumulative tolerated dose increment was 12-fold in the active group versus 8% in the placebo group.

At the start of the clinical trial, out of the 19 patients included, some patients could not tolerate the equivalent of one drop of milk without having severe reactions. However, after three or six months of treatment, almost half of the ViaskinTM Milk treatment group was able to ingest milk in large quantities. In contrast, no patients treated during the first three months with a placebo (patch without active substance) showed meaningful improvement. These same non-responder patients were then treated with ViaskinTM Milk and after three or six months of treatment, 80% of them experienced an improvement in their tolerance of milk. There were no serious or unexpected adverse events in the trial nor premature withdrawal from the clinical trial. Although larger studies are needed to confirm the statistical efficacy, we believe the results of the pilot clinical trial provide proof-of-concept for specific immunotherapy via the epicutaneous route for this indication.

Pre-Clinical Studies

Prior to commencing our clinical trial of ViaskinTM Milk, we completed a series of customary proof-of-concept and IND-enablingpre-clinical studies. These included in vitro pharmacology studies in a murine model of allergies, general safety studies in a milk-sensitized animal model, genetic and other toxicology studies with the milk protein extract, and local tolerance studies, as well as biocompatibility studies of the device component.

ViaskinTM Egg

Background

Hen's egg allergy is one of the most common food allergies in children. A 2011 study conducted in Australia estimated that up to 8.9% of infants react to raw egg. Several global studies suggest that egg allergy affects 1.5% to 3% of young children globally. However, most children seem to outgrow egg allergy before adolescence. A recent publication estimated that approximately 50% of children with egg allergy will become tolerant by six years of age, although resolution was highly correlated to lower egg-specific IgE levels and the absence of systemic reactions beyond topical sensitivity.

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Egg-allergic reactions are mostly cutaneous in nature, including skin rashes and hives, and typically occur within 30 minutes of egg contact or ingestion. Gastrointestinal problems, such as vomiting, and respiratory complications, such as nasal congestion, are also common, but anaphylaxis is not often reported. Food allergy experts believe that about one-third of eczema patients react to food triggers, which can sometimes cause the eczema to worsen. The most common food allergen associated with eczema is egg.

Development Program for ViaskinTM Egg

We are developing ViaskinTM Egg as a treatment that we believe can reduce the clinical manifestations of hen's egg allergy. Studies also suggest that the treatment of egg allergy in young children may have a significant impact on preventing the occurrence and development of eczema.

We began pre-clinical work for this product candidate in the first half of 2015.

Other Potential ViaskinTM Technology Applications

We believe that our broadly applicable technology platform, know-how and deep understanding of EPITTM positions us well to develop product candidates in areas of unmet medical need in immunotherapy. We currently expect to selectively conduct product development programs outside of our core expertise in food allergies, and will often seek to collaborate with companies or agencies that are experts in a particular field of interest. To date, we have signed several collaboration agreements to broaden the number of indications we are pursuing with our ViaskinTM technology platform, while also developing other potential product candidates independently. We do not expect to provide regular updates unless and until we elect to move forward with any of these product candidates in a meaningful way:

  • We are exploring the use of our technology platform in the development of diagnostic tools for food allergies. In May 2016, we announced our entry into an exclusive collaboration with Nestlé Health Science to develop MAG1C, a ready-to-use and standardized atopy patch test for the diagnosis of non-IgE mediated CMPA in infants and toddlers. Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a pivotal Phase III clinical program, and if the appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally. We are eligible to receive up to €100.0 million in potential development, clinical, regulatory and commercial milestones, inclusive of an upfront payment of €10.0 million.
  • With CHOP, we explored the use of our technology platform in EoE. The SMILEE (Study of Efficacy and Safety of the ViaskinTM Milk in Milk-Induced Eosinophilic Esophagitis) trial which studied ViaskinTM Milk in the treatment of milk-induced EoE in children ages four to 17. The trial was conducted by Dr. Jonathan Spergel at CHOP pursuant to an investigator-sponsored IND application that was accepted by the FDA in July 2015. Although we provided assistance in the form of funding and trial supplies, this trial is being conducted by CHOP and supervised by Dr. Spergel. Dr. Spergel presented and published the results of this trial in December 2018, February 2019 and February 2020.
  • With HUG and BioNet, we are developing ViaskinTM rPT, BioNet's genetically-detoxified recombinant pertussis toxin administered by our ViaskinTM patches as a booster vaccine against pertussis. In September 2016, we initiated a proof-of-concept Phase I dose- escalation, randomized, double-blind,placebo-controlled safety and immunogenicity study of ViaskinTM rPT in 60 young healthy adults 18 to 40 years of age who have been vaccinated during childhood against pertussis. The primary endpoint of the trial was the incidence of treatment-emergent adverse events related to the application of ViaskinTM rPT, and the secondary objectives assessed humoral responses compared to placebo. In March 2017, we announced results from the trial assessing ViaskinTM rPT's ability to boost immunity against pertussis by epicutaneously administering two doses of BioNet's recombinant pertussis toxin. After further analysis of the data, limitations in study design and protocol were observed. In September 2018, we presented data from two additional cohorts at the 5th European Congress of Immunology in Amsterdam, Netherlands, which demonstrated that, following skin preparation with an epidermal laser, anti-PT booster responses elicited by ViaskinTM-PT were comparable to those elicited by BoostrixTM dTpa, an injectable approved booster vaccine.

In addition, we are continuing to explore other cellular mechanisms modulated by EPITTM, such as biomarkers, in collaboration with Mount Sinai Hospital in the United States and Commissariat à l'Énergie Atomique et aux Énergies

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Alternatives, or CEA, in France. We believe that with improved knowledge about the evolution of immunological biomarkers and epigenetic modulation, we may be able to determine the level of patient response earlier during treatment, ensure follow-up and measure tolerance maintained once treatment is completed. At the 2016 EAACI meeting in Vienna, Austria, we presented initial findings from some of these collaborations, which suggest that proprietary biomarker modeling may be used to help monitor patient responses to ViaskinTM Peanut. Additional research is being performed to further strengthen the results of these early findings.

Manufacturing and Supply

Our Proprietary ViaskinTM Technology

We have engineered a proprietary manufacturing technology for ViaskinTM patch, which is designed to comply with the most stringent pharmaceutical production standards, including those promulgated by the FDA, in order to enable ViaskinTM to deliver proteins via intact skin. This novel pharmaceutical process, which was fully developed by us, uses an electrospray to spray homogeneous, thin, dry protein layers onto the ViaskinTM patch.

This process sprays a liquid solution of electrically charged proteins onto the patch's backing, which is then turned into a dry solid charged particle, which remains stuck onto the patch's backing. It deposits very small and precise quantities of the active substance, devoid of adjuvants. The patch can then be stored at room temperature. We believe this patented technology is highly scalable and complies with cGMP requirements.

The principles of the ViaskinTM electrospray technology are the following:

  • Constant liquid flows from a capillary and is subjected to a high voltage electric field.
  • With our electrospray machine, we can transform these electrically charged liquid droplets into dry solid charged particles, and then drive them along the electric field lines onto the patch's backing.
  • When the electric field lines are directed toward the grounded ViaskinTM patch, they force the dry particles to go directly to and only onto the patch.

With ViaskinTM manufacturing technology, we believe we can achieve:

  • a homogeneous layer of protein on the ViaskinTM patch;
  • a specific mass of active substance per ViaskinTM patch;
  • an adjustable active substance dosage and size for clinical trials;
  • instant drying of the active substance;
  • a high solubility of the active substance; and
  • the possibility of spraying on the ViaskinTM patch both biological and chemical substances.

ViaskinTM is a Highly Scalable Manufacturing Technology

We currently rely on a contract manufacturer, Sanofi, to manufacture the active pharmaceutical ingredients used in our ViaskinTM product candidates, such as peanut protein extract. Our manufacturing machine then uses an electrospray technology to deposit the active pharmaceutical ingredient onto the ViaskinTM patch.

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ES GEN3.1 (2009)

10 or 18 nozzles

Used for Phase I and Phase II trials

ES GEN3.2 (2014)

54 nozzles

Used for Phase III trials

Improved electrospray process, forerunner of ES GEN4.0

ES GEN4.0 (2017)

288 nozzles

To be used for commercial products

Scaled up to produce more patches annually

We believe our proprietary ViaskinTM manufacturing technology creates high barriers to entry to our line of business, particularly in the engineering and manufacturing of our ViaskinTM product candidates. We design, develop and build our manufacturing tools, and contract third-party manufacturers to operate it. We have entered into an agreement with a contract manufacturer, FAREVA, to manufacture clinical and commercial batches of ViaskinTM Peanut patches.

Intellectual Property

Our patent portfolio includes pending patent applications and issued patents in the United States and in foreign countries. To date, all patents directed at the ViaskinTM electrostatic patch, as well as food allergen desensitization methods, have been issued in the major markets, including in particular the United States, Europe, Canada and Australia. These patents and applications generally fall into four broad categories:

  • patents and patent applications we co-own with AP-HP and the Université de Paris-Descartes relating to the ViaskinTM electrostatic patch and its use, half of which may expire as early as 2022;
  • patents and patent applications which we own relating to our electrospray method of manufacturing the ViaskinTM electrostatic patch, which may expire as early as 2029;
  • patents and patent applications we co-own with AP-HP and the Université de Paris-Descartes relating to the treatment of peanut allergies using our ViaskinTM patch technology, which may expire as early as 2028; and
  • a variety of other patent applications that we own or co-own relating, for example, to prophylactic uses of the ViaskinTM patch technology and to treatment of other indications using the ViaskinTM patch technology.

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The term of a U.S. patent may be eligible for patent term extension under the Hatch-Waxman Act to account for at least some of the time the drug or device is under development and regulatory review. With regard to a drug or device for which FDA approval is the first permitted marketing of the active ingredient, the Hatch-Waxman Act allows for extension of the term of one U.S. patent. The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent or 14 years from the date of the FDA approval of the drug or device. Some foreign jurisdictions have analogous patent term extension provisions that allow for extension of the term of a patent that covers a device approved by the applicable foreign regulatory agency. In the future, if and when our ViaskinTM electrostatic patch receives FDA approval, we expect to apply for a patent term extension on the patent that we believe will provide the best exclusivity position if extended. We also has extensive know-how and trade secrets covering part of the ViaskinTM patch manufacturing method using electrospray technology

Co-Ownership Agreement

AP-HP and Université de Paris-Descartes

In December 2008, we entered into an assignment, development and co-ownership agreement with AP-HP and Université Paris-Descartes, or UPD, by which we agreed to terms of co-ownership with AP-HP and UPD of certain U.S. and foreign patents and patent applications, referred to herein as the shared patents. We, and any licensees or sublicensees that we designate, have the exclusive right to commercial uses of the shared patents. AP-HP and UPD agreed to use the shared patents only for internal research purposes and not to license the shared patents to any third party. Upon commercialization of any product covered by the shared patents, which we expect would include our ViaskinTM product candidates, we will be obligated to pay AP-HP and UPD a percentage of net sales as a royalty. This royalty is in the low single digits and varies depending on the particular patent used in the product. Additionally, if we license any of the shared patents to a third party and a licensee commercializes products covered by such shared patents, we will be obligated to pay AP-HP and UPD a percentage in the low single digits of the money that we receive from our licensee.

If we do not sell any of our product candidates covered by the shared patents within 30 months from the date we first market such product candidates, AP-HP may, upon six months' notice and subject to certain exceptions, convert our exclusive right to the commercial use of the shared patents to a non-exclusive right.

Any party may terminate the license in the event of another party's substantial breach which remains uncured after six months of receiving written notice of such breach. The agreement will also terminate in the event we cease operations or are subject to a dissolution or bankruptcy proceedings.

Absent early termination, the agreement will automatically terminate upon the expiration of the last shared patent. In the event the agreement is terminated, we would no longer have the exclusive right to commercial use of the shared patents, though we would retain our shared ownership rights. In addition, our ownership stake in certain jointly made improvements covered by the shared patents would survive termination of the agreement. The longest lived patent rights licensed to us under the agreement are currently expected to expire in 2029.

Competition

The biotechnology and pharmaceutical industries are highly competitive and subject to significant and rapid technological change as researchers learn more about diseases and develop new technologies and treatments. Significant competitive factors in our industry include product efficacy and safety: quality and breadth of an organization's technology; skill of an organization's employees and its ability to recruit and retain key employees; timing and scope of regulatory approvals; government reimbursement rates for, and the average selling price of, products; the availability of raw materials and qualified manufacturing capacity; manufacturing costs; intellectual property and patent rights and their protection; and sales and marketing capabilities.

We cannot assure you that any of our products that we successfully develop will be clinically superior or scientifically preferable to products developed or introduced by our competitors.

Our competitors may also succeed in obtaining FDA or other regulatory approvals for their product candidates more rapidly than we are able to do, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights. Market acceptance of our product candidates will depend on a number of factors, including: (1) potential advantages over existing or alternative therapies or tests; (2) the actual or perceived safety of similar classes of products; (3) the effectiveness of sales, marketing, and distribution capabilities; and (4) the scope of any approval provided by the FDA or foreign regulatory authorities.

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Although we believe our product candidates possess attractive attributes, we cannot assure you that our product candidates will achieve regulatory or market acceptance, or that we will be able to compete effectively in the biopharmaceutical drug markets. If our product candidates fail to gain regulatory approvals and acceptance in their intended markets, we may not generate meaningful revenues or achieve profitability.

There are numerous competitors on the market for the therapeutic treatment of allergies. Numerous structures, pharmaceutical laboratories, biotechnology companies, institutions, universities and other research entities are actively involved in the discovery, research, development and marketing of therapeutic responses to treat allergies. Many of our competitors have greater resources and experience in terms of clinical development, management, manufacturing, marketing and research than us.

In the case of food allergies, we are aware of several academic studies that are currently being conducted in major centers and hospitals worldwide. These studies are evaluating sublingual, subcutaneous, intranasal or other forms of desensitization or products using synthetic allergens, denatured allergens or combinations of medicines or methods, or medicines using traditional methods such as Chinese herbs. We are not aware of any pharmaceutical development in conjunction with these academic efforts at this time.

We expect studies combining other methods of immunotherapy, such as OIT, with anti-IgE treatments will be conducted. These types of co-administrations may significantly improve the safety of specific immunotherapies administered orally or subcutaneously, and may become significant competitors with our products.

To our knowledge, other pharmaceutical and biotechnology companies are also seeking to develop food allergy treatments, although many are in the discovery or preclinical stages. For example, Aimmune Therapeutics, Inc., or Aimmune received FDA approval of its OIT product candidate, Palforzia, in peanut allergic patients in January 2020. To our knowledge, the company uses a formulation of peanut flour for oral administration intended for oral desensitization to peanut. We are also aware of other companies developing OIT product candidates, as well as other companies that are working on recombinant peanut proteins capable of initiating an attenuated immune response of using subcutaneous administration. In February 2020, Aimmune announced the licensing of exclusive worldwide rights to Xencor's XmAb®7195 to be developed in combination with Palforzia. Aimmune also announced a clinical collaboration with Regeneron Pharmaceuticals, Inc. and Sanofi to study Palforzia treatment with dupilumab in peanut allergic patients, and commenced a Phase II clinical trial in October 2018 under this collaboration. Regeneron and Sanofi are currently recruiting patients in a Phase II study of dupilumab as a monotherapy in the treatment of peanut allergic patients. In August 2018, Genentech, Inc. and Novartis Pharmaceuticals Corporation announced that the FDA granted breakthrough designation for Xolair (omalizumab) for the prevention of severe allergic reactions following accidental exposure to one or more foods in people with allergies. In July 2019, NIAID (National Institute of Allergy and Infectious Diseases) started a Phase III clinical trial studying omalizumab as monotherapy and as adjunct therapy to multi-allergen OIT in multiple food allergies.

Government Regulation

Government authorities in the United States at the federal, state and local level and in other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, or biologics, such as our product candidates. Generally, before a new drug or biologic can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review and approved by the regulatory authority.

U.S. Biological Product Development

In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, or PHSA, and their implementing regulations. Biologics are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA's refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled

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or warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

Our product candidates must be approved by the FDA through the Biologics License Application, or BLA, process before they may be legally marketed in the United States. The process required by the FDA before a biologic may be marketed in the United States generally involves the following:

  • completion of extensive nonclinical, sometimes referred to as pre-clinical laboratory tests, pre-clinical animal studies and formulation studies in accordance with applicable regulations, including the FDA's Good Laboratory Practice, or GLP, regulations;
  • submission to the FDA of an IND, which must become effective before human clinical trials may begin;
  • performance of adequate and well-controlled human clinical trials in accordance with applicable IND and other clinical trial-related regulations, sometimes referred to as good clinical practices, or GCPs, to establish the safety and efficacy of the proposed product candidate for its proposed indication;
  • submission to the FDA of a BLA;
  • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the product is produced to assess compliance with the FDA's current good manufacturing practice, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the product's identity, strength, quality, purity and potency;
  • potential FDA audit of the pre-clinical and/or clinical trial sites that generated the data in support of the BLA; and
  • FDA review and approval of the BLA prior to any commercial marketing or sale of the product in the United States.

The data required to support a BLA is generated in two distinct development stages: pre-clinical and clinical. The pre-clinical development stage generally involves laboratory evaluations of drug chemistry, formulation and stability, as well as studies to evaluate toxicity in animals, which support subsequent clinical testing. The conduct of the pre-clinical studies must comply with federal regulations, including GLPs. The sponsor must submit the results of the pre-clinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for human trials. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the IND on clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a product candidate at any time before or during clinical trials due to safety concerns or non-compliance. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that could cause the trial to be suspended or terminated.

The clinical stage of development involves the administration of the product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor's control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Further, each clinical trial must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

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There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries. Sponsors of certain clinical trials of FDA-regulated products, including biologics, are required to register and disclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials after completion.

Clinical trials are generally conducted in three sequential phases that may overlap, known as Phase I, Phase II and Phase III clinical trials. Phase I clinical trials generally involve a small number of healthy volunteers who are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the product candidate and, if possible, to gain early evidence on effectiveness. Phase II clinical trials typically involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, as well as identification of possible adverse effects and safety risks and preliminary evaluation of efficacy. Phase III clinical trials generally involve large numbers of patients at multiple sites, in multiple countries (from several hundred to several thousand subjects) and are designed to provide the data necessary to demonstrate the efficacy of the product for its intended use, its safety in use, and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product approval. Phase III clinical trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing. Generally, two adequate and well- controlled Phase III clinical trials are required by the FDA for approval of a BLA.

Post-approval trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, FDA may condition approval of a BLA on the sponsor's agreement to conduct additional clinical trials to further assess the biologic's safety and effectiveness after BLA approval.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse, findings from other studies suggesting a significant risk to humans exposed to the drug, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important rate increase of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase I, Phase II and Phase III clinical trials may not be completed successfully within any specified period, if at all. The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB's requirements or if the drug has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated intervals based on access to certain data from the trial. We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

BLA and FDA Review Process

Following trial completion, trial data is analyzed to assess safety and efficacy. The results of pre-clinical studies and clinical trials are then submitted to the FDA as part of a BLA, along with proposed labeling for the product and information about the manufacturing process and facilities that will be used to ensure product quality, results of analytical testing conducted on the chemistry of the product candidate, and other relevant information. The BLA is a request for approval to market the biologic for one or more specified indications and must contain proof of safety, purity, potency and efficacy, which is demonstrated by extensive pre-clinical and clinical testing. The application includes both negative or ambiguous results of pre-clinical and clinical trials and positive findings. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA. FDA approval of a BLA must be obtained before a biologic may be marketed in the United States.

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Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee, which is adjusted on an annual basis. PDUFA also imposes an annual program fee for approved drugs. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Once a BLA has been accepted for filing, which occurs, if at all, sixty days after the BLA's submission, the FDA's goal is to review BLAs within ten months of the filing date for standard review or six months of the filing date for priority review, if the application is for a product intended for a serious or life-threatening condition and the product, if approved, would provide a significant improvement in safety or effectiveness. The review process is often significantly extended by FDA requests for additional information or clarification. If not accepted for filing, the sponsor must resubmit the BLA and begin the FDA's review process again, including the initial sixty day review to determine if the application is sufficiently complete to permit substantive review.

After the BLA submission is accepted for filing, the FDA reviews the BLA to determine, among other things, whether the proposed product candidate is safe and effective for its intended use, and whether the product candidate is being manufactured in accordance with cGMP to assure and preserve the product candidate's identity, strength, quality, purity and potency. The FDA may refer applications for novel drug product candidates or drug product candidates which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. The FDA will likely re-analyze the clinical trial data, which could result in extensive discussions between the FDA and us during the review process. The review and evaluation of a BLA by the FDA is extensive and time consuming and may take longer than originally planned to complete, and we may not receive a timely approval, if at all.

Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. In addition, before approving a BLA, the FDA may also audit data from clinical trials to ensure compliance with GCP requirements. After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form. A Complete Response Letter usually describes all of the specific deficiencies in the BLA identified by the FDA. The Complete Response Letter may require additional clinical data and/or an additional pivotal Phase III clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, pre-clinical studies or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information is submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data.

There is no assurance that the FDA will ultimately approve a product for marketing in the United States and we may encounter significant difficulties or costs during the review process. If a product receives marketing approval, the approval may be significantly limited to specific populations, severities of allergies, and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may condition the approval of the BLA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products. For example, the FDA may require Phase IV testing which involves clinical trials designed to further assess the product's safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. The FDA may also place other conditions on approvals including the requirement for a Risk Evaluation and Mitigation Strategy, or REMS, to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS. The FDA will not approve the BLA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing.

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Review and Approval of Combination Products in the United States

Certain products may be comprised of components that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA. These products are known as combination products. Specifically, under regulations issued by the FDA, a combination product may be:

  • a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity;
  • two or more separate products packaged together in a single package or as a unit and comprised of drug and device products;
  • a drug, device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, device or biological where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or
  • any investigational drug, device, or biological packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect. Our ViaskinTM product candidates are combination products comprising a device for delivery of a biologic. Under the FDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. That determination is based on the "primary mode of action" of the combination product, which means the mode of action expected to make the greatest contribution to the overall intended therapeutic effects. Thus, if the primary mode of action of a device-biologic combination product is attributable to the biologic product, that is, if it acts by means of a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, or analogous product, the FDA center responsible for premarket review of the biologic product would have primary jurisdiction for the combination product.

Expedited Development and Review Programs

The FDA has a fast track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria. Specifically, new drugs and biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and nonclinical or clinical data demonstrate the potential to address an unmet medical need. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a fast track product concurrently with the submission of an IND or at any time before a pre-NDA meeting, and the FDA must determine if the product qualifies for fast track designation within 60 days of receipt of the sponsor's request. Unique to a fast track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review, or review within a six-month timeframe from the date a complete BLA is accepted for filing, if it treats a serious condition and has the potential to provide a significant improvement in safety or effectiveness. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug or biological product designated for priority review in an effort to facilitate the review.

Additionally, a product may be eligible for accelerated approval. Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well- controlled post-marketing clinical trials. If the FDA concludes that a drug shown to be effective

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can be safely used only if distribution or use is restricted, it will require such post-marketing restrictions as it deems necessary to assure safe use of the drug, such as:

  • distribution restricted to certain facilities or physicians with special training or experience; or
  • distribution conditioned on the performance of specified medical procedures.

The limitations imposed would be commensurate with the specific safety concerns presented by the product. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast track designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.

Breakthrough Designation

The Food and Drug Administration Safety and Innovation Act, or FDASIA, amended the FDCA to require the FDA to expedite the development and review of a breakthrough therapy. A product can be designated as a breakthrough therapy if it is intended to treat a serious or life-threatening condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. A sponsor may request that a product candidate be designated as a breakthrough therapy concurrently with the submission of an IND or any time before an end-of-Phase-II meeting, and the FDA must determine if the product candidate qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor's request. If so designated, the FDA shall act to expedite the development and review of the product's marketing application, including by meeting with the sponsor throughout the product's development, providing timely advice to the sponsor to ensure that the development program to gather pre-clinical and clinical data is as efficient as practicable, involving senior managers and experienced review staff in a cross-disciplinary review, assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable.

Pediatric Trials

Under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and efficacy of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. FDASIA requires that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan, or PSP, within sixty days of an end-of-Phase II meeting or as may be agreed between the sponsor and FDA. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers.

Post-Marketing Requirements

Following approval of a new product, a manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product's approved labeling, also known as off-label use, limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although physicians may prescribe legally available drugs and biologics for off-label uses, manufacturers may not market or promote such off-label uses. Modifications or enhancements to the product or its labeling or changes of the site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S.

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Prescription Drug Marketing Act, or the PDMA, a part of the FDCA.

In the United States, once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMP. Moreover, the constituent parts of a combination product retain their regulatory status, for example, as a biologic or device, and as such, we may be subject to additional requirements in the Quality System Regulation, or QSR, applicable to medical devices, such as design controls, purchasing controls, and corrective and preventive action. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities. BLA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including, among other things, recall or withdrawal of the product from the market.

The FDA also may require post-approval testing, sometimes referred to as Phase IV testing, REMS and post-marketing surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product's approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA's policies may change, which could delay or prevent regulatory approval of our products under development.

Other Regulatory Matters

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, CMS, other divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments. In the United States, sales, marketing and scientific/educational programs, among other activities, must also comply with state and federal fraud and abuse laws, data privacy and security laws, transparency laws, and pricing and reimbursement requirements in connection with governmental payor programs, among others. The handling of any controlled substances must comply with the U.S. Controlled Substances Act and Controlled Substances Import and Export Act. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

The failure to comply with regulatory requirements subjects firms to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative penalties, damages, fines, disgorgement, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of product approvals, the exclusion from participation in federal and state healthcare programs or refusal to allow a firm to enter into supply contracts, including government contracts, integrity obligations and individual imprisonment. In addition, even if a firm complies with FDA and other requirements, new information regarding the safety or efficacy of a product could lead the FDA to modify or withdraw product approval. Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.

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Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example:

  1. changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our products; or
  1. additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.

U.S. Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of the FDA approval of our product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product's approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. PTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we may apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

An abbreviated approval pathway for biological products shown to be similar to, or interchangeable with, an FDA-licensed reference biological product was created by the Biologics Price Competition and Innovation Act of 2009, or BPCIA. Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or trials. Interchangeability requires that a biological product be biosimilar to the reference product and the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times, the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product. A reference biological product is granted twelve years of exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure. "First licensure" typically means the initial date the particular product at issue was licensed in the United States. This does not include a supplement for the biological product or a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or other related entity) for a change that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength, unless that change is a modification to the structure of the biological product and such modification changes its safety, purity, or potency. Whether a subsequent application, if approved, warrants exclusivity as the "first licensure" of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued "Written Request" for such a trial.

European Union Drug Development

In the European Union, our future product candidates may also be subject to extensive regulatory requirements. As in the United States, medicinal products can only be marketed if a marketing authorization from the competent regulatory agencies has been obtained.

Similar to the United States, the various phases of pre-clinical and clinical research in the European Union are subject to significant regulatory controls. Although the EU Clinical Trials Directive 2001/20/EC has sought to harmonize the European Union clinical trials regulatory framework, setting out common rules for the control and authorization of clinical trials in the European Union, the European Union Member States have transposed and applied the provisions of the Directive differently.

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This has led to significant variations in the Member State regimes. To improve the current system, a new Regulation No. 536/2014 on clinical trials on medicinal product candidates for human use, which repealed Directive 2001/20/EC, was adopted on April 16, 2014 and published in the European Official Journal on May 27, 2014. The new Regulation aims at harmonizing and streamlining the clinical trials authorization process, simplifying adverse event reporting procedures, improving the supervision of clinical trials, and increasing their transparency. The new Regulation entered into force on June 16, 2014 but will not be applied before 2020 (its enactment will occur six months after the publication of a notice delivered by the European Commission on the European Union clinical trial portal and database, expected for 2019 according to the European Commission's website). Until then the Clinical Trials Directive 2001/20/EC will still apply. In addition, the transitory provisions of the new Regulation offer the sponsors the possibility to choose between the requirements of the Directive and the Regulation for one year from the entry into application of the Regulation.

Under the current regime, before a clinical trial can be initiated it must be approved in each of the European Union countries where the trial is to be conducted by two distinct bodies: the National Competent Authority, or NCA, and one or more Ethics Committees, or ECs. Under the current regime all suspected unexpected serious adverse reactions, or SUSARs, to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred.

European Union Drug Review and Approval

In the European Economic Area, or EEA (which is comprised of the 28 Member States of the European Union plus Norway, Iceland and Liechtenstein), medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA (though there are other cases of regulatory authorizations derogating from the MA system which are exceptional and which do not currently concern the Company). There are three types of marketing authorizations:

The Centralized Procedure: an MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products containing a new active substance indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA on the date on which Regulation No. 726/2004 enters into force or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the European Union.

The Mutual Recognition Procedure is mandatory when a product has already been authorized for marketing in a Member State of the EEA, known as the reference Member State (RMS). This National MA needs to be recognized by the other Member States through the Mutual Recognition Procedure.

The Decentralized Procedure: when the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. Under the Decentralized Procedure an identical dossier is submitted to the competent authorities of each of the Member States in which the MA is sought, one of which is selected by the applicant as the Reference Member State, or RMS. The competent authority of the RMS prepares a draft assessment report, a draft summary of the product characteristics, or SPC, and a draft of the labeling and package leaflet, which are sent to the other Member States (referred to as the Concerned Member States, or CMSs) for their approval. If the CMSs raise no objections, based on a potential serious risk to public health, to the assessment, SPC, labeling, or packaging proposed by the RMS, the product is subsequently granted a national MA in all the Member States (i.e. in the RMS and the CMSs).

For the registration of a medicinal product in only one Member State of the European Union, the applicant must use the national procedure. National marketing authorizations are issued by the competent authorities of the EEA Member States (e.g. for France the Agence nationale de sécurité du médicament et des produits de santé (ANSM)) and only cover their respective territories. They are available for products that are not covered by the compulsory scope of Community procedures.

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

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Other Regulatory Matters

French Regulatory Framework

In the European Union pending the entry into force of Regulation No. 536/2014, the regulation governing clinical trials is currently based on European Directive No. 2001/20/EC of April 4, 2001 relative to the implementation of good clinical practices in the conduct of clinical trials on medicinal products for human use. Each country of the European Union had to transpose this Directive into national law by eventually adapting it to its own regulatory framework.

In France, for example, Directive No. 2001/20/EC has been transposed by Act No. 2004-806 of August 9, 2004 relative to the public health policy and Decree No. 2006-477, April 26, 2006, modifying the title of the Code of Public Health dedicated to biomedical research. This regulation replaces the notification procedure arising from the Huriet-Sérusclat Act of December 20, 1988. The Act of August 9, 2004 was notably amended by the Act of March 5, 2012 and by the ordinance of June 16, 2016, which mostly aims at (i) adapting the provisions relating to clinical research to the new European Regulation No. 536/2014, (ii) a better response coordination among Ethical Research Committees in charge of reviewing research agreements and

  1. harmonizing data protection provisions with the latest legislative developments (Jardé Act). The Jardé Act was inapplicable for a long time, and applicable since November 18, 2016, date of its enforcement decree.

Article L. 1121-4 of the Public Health Code, as amended by the Ordinance of June 16, 2016, establishes a system of prior authorization issued by the ANSM and/or of a favorable opinion of a competent Ethical Research Committee, depending on the type of clinical trial. Since the entry into force of the Jardé Act, the competent Ethical Research Committee is selected randomly by drawing lots (article L.1123-6 of the Public Health Code as amended by law No. 2018-892 of October 17, 2018). On the basis of Article L. 1123-7 of the same code, the Ethical Research Committee shall deliver its opinion on the research's conditions of validity, particularly with respect to participant protection, their information and how they collect informed consent, as well as the project's general relevance, the satisfactory nature of the assessment of benefits and risks and the adequacy between the objectives pursued and the means implemented. The ANSM, after submission of the complete file containing not only information on the clinical protocol, but also specific product data and its quality control, as well as results of pre-clinical studies may inform the sponsor that it objects to the implementation of the research. The sponsor can then modify the contents of his research project and submit this amended or supplemented request to the ANSM. If the sponsor does not alter the content of its request, the request is considered rejected.

Under the terms of the Decree of April 26, 2006, the time limit for the examination of a request for authorization cannot exceed 60 days from the receipt of the complete file (R.1123-32 of the Public Health Code). Finally, under Article L. 1123-11, in the event of risk to public health or if the ANSM considers that the conditions in which the research is implemented no longer correspond to the conditions indicated in the request for authorization or does not comply with the provisions of the Public Health Code, it may at any time request changes to procedures for the realization of research, and suspend or ban this research. As of October 15, 2018, the ANSM has implemented a fast-track system for the authorization of clinical trials ("Fast Track"), which will reduce the time required to process applications for authorization of clinical trials for medicines (for sponsors who meet the eligibility criteria) and for innovative therapy medicines (ITMs) as of February 18, 2019. Fast Track 1, "Access to Innovation", provides for a maximum review time of 40 days for trials of new medicines and 110 days for ITMs. Fast Track 2, "Development Support", provides for a maximum review time of 25 days for trials of new medicines and 60 days for ITMs.

The decision of November 24, 2006 sets the rules for Good Clinical Practice for biomedical research on medicines for human use provided for in Article L. 1121-3 of the Public Health Code. The purpose of Good Clinical Practice, or GCP, is to ensure both the reliability of data arising from clinical trials and the protection of persons participating in these clinical trials. GCPs shall apply to all clinical trials, including pharmacokinetics, bioavailability and bioequivalence studies in healthy volunteers and Phase II to IV clinical trials.

Personal data collected during clinical trials must be reported to the French data protection authority, and kept in the record of processing activities held by the data processor pursuant to the Regulation 2016/679 of April 27, 2016, French Act No. 78-17 of January 6, 1978, concerning computing, files and freedoms. However, for certain types of research, the formalism is lightened if the data processing is carried out in compliance with one of the reference methodologies (RM) in force. In particular, the data controller who wishes to implement one or more processing operations in compliance with one of these reference methodologies must send the CNIL a declaration attesting to this compliance for each reference methodology applicable to its projects. On the other hand, if the study does not fall within the scope of these reference methodologies, the sponsor is obliged to submit a research authorization request to the CNIL. According to the aforementioned regulations, patients have, among others, a right to their data and a right of rectification of such data, as the case may be.

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French Pharmaceutical Company Status

To date, we have been granted by the ANSM the status of pharmaceutical establishment ("établissement pharmaceutique") solely for the purpose of conducting quality control activities on the Bagneux site, and therefore, cannot either manufacture the product candidates we develop or directly consider their marketing. Obtaining the pharmaceutical establishment license, either as distributor "exploitant" or as manufacturer, requires the submission of a request electronic file via the dedicated platform (mandatory since January 1, 2020) specific to each of the two qualifications with the ANSM, which only grants it after review of this file and evaluation, usually after verification that the company has adequate premises, the necessary personnel and an adapted structure with satisfactory procedures for carrying out the proposed pharmaceutical activities.

In order to simplify the procedures for authorizing pharmaceutical companies manufacturing new and/or innovative medicines to operate in France, the ANSM has introduced a new procedure to reduce the time required to process an application from 90 to 60 days.

We currently entrust CMOs with the manufacturing of clinical batches and intend to continue relying on CMOs for the production of the first commercial batches. We may consider internalizing production once our first product candidate is approved by the regulatory authorities.

Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we or our collaborators obtain regulatory approval. Sales of our products will depend, in part, on the extent to which our products, once approved, will be covered and reimbursed by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly reducing reimbursements for medical products and services. The process for determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for setting the price of a drug product or for establishing the reimbursement rate that a payor will pay for the drug product once coverage is approved. Third-party payors may limit coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the FDA approved drugs for a particular indication.

In order to secure coverage and reimbursement for any product candidate that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product candidate, in addition to the costs required to obtain FDA or other comparable regulatory approvals. Whether or not we conduct such studies, our product candidates may not be considered medically necessary or cost-effective. A third-party payor's decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor's determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Third party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development.

The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our product candidate or a decision by a third-party payor to not cover our product candidate could reduce physician usage of the product candidate and have a material adverse effect on our sales, results of operations and financial condition.

For example, the ACA, enacted in March 2010, has significantly impacted the health care industry. The ACA was expansive health reform legislation designed to expand coverage for the uninsured while at the same time containing overall healthcare costs enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms, and other changes. With regard to biopharmaceutical products, among other things, the ACA expanded and increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under the Medicare Part D program. However, there remain judicial and Congressional challenges, as well as efforts by the Trump Administration to repeal or replace certain aspects of the ACA.

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For example, since January 2017, President Trump signed two Executive Orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA. Additionally, on December 22, 2017, President Trump signed into law The Tax Cuts and Jobs Act of 2017, or Tax Act, which included a provision repealing the individual mandate to maintain health insurance coverage under the ACA effective January 1, 2019. In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated "Cadillac" tax on high-costemployer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. In December 2018, the Centers for Medicare & Medicaid Services, or CMS, published a new final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. It is unclear how this decision, future decisions, subsequent appeals, if any, and other efforts will impact the ACA. We continue to evaluate how the ACA and recent efforts to limit the implementation of the ACA will impact our business.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 among other things, created measures for spending reductions by Congress. The Joint Select Committee on Deficit Reduction was tasked with recommending to Congress proposals in spending reductions. Because they did not achieve a targeted deficit reduction of at least $1.2 trillion for fiscal years 2012 through 2021, it triggered the legislation's automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will stay in effect through 2029 unless additional Congressional action is taken. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which among other things, also reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. We expect that additional federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, and in turn could significantly reduce the projected value of certain development projects and reduce our profitability.

Additionally, in the United States, there have been several recent Congressional inquiries and federal and state legislative activity designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration's budget proposal for fiscal year 2020 contains further drug price control measures that could be enacted during the budget process or in other future legislation. The Trump administration released a "Blueprint", or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. The United States Department of Health and Human Services has solicited feedback on some of these measures and has implemented others under its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020. This final rule codified CMS's policy change that was effective January 1, 2019. While some measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Additional legislative proposals to reform healthcare and government insurance programs, along with the trend toward managed healthcare in the United States, could influence the purchase of medicines and reduce demand and prices for our products, if approved. This could harm our or our collaborators' ability to market any products and generate revenues. Cost containment measures that healthcare payors and providers are instituting and the effect of further healthcare reform could significantly reduce potential revenues from the sale of any of our product candidates approved in the future, and could cause an increase in our compliance, manufacturing, or other operating expenses.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

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In France, for example, effective access to the market can be achieved either at a free price, decided by the pharmaceutical company, or with a system of cover/reimbursement with a price regulated by the authorities. In this case, the future products must be included, for coverage by hospitals, on the list of proprietary medicinal products approved for use by local authorities and various public services (known as the "Liste Collectivités") (Article L. 5123-2 of the Public Health Code) or included on the list of proprietary medicinal products reimbursable to insured persons (known as the "Liste Sécurité Sociale") for reimbursement by the Social Security system (Article L. 162-17 of the Social Security Code)..

Indeed, in France, the manufacturer's price excluding tax of medicines reimbursable to insured persons (registered on the Social Security List) is the subject of a multi-year agreement negotiated between each pharmaceutical company and the Economic Committee for Health Products (CEPS) (failing this, by unilateral decision of the CEPS). A framework agreement has been concluded between LEEM (the trade union representing the pharmaceutical industries) and CEPS. The last framework agreement was signed on December 31, 2015 and will remain in force until July 31, 2020. In addition, the transfer prices of medicines on the Sus List and the Retrocession List are also set by agreement between the operating laboratory and the CEPS.

There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, products launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.

Other Healthcare Laws and Compliance Requirements

Our business operations in the United States and our arrangements with clinical investigators, healthcare providers, consultants, third-party payors and patients may expose us to broadly applicable federal, state, and foreign fraud and abuse and other healthcare laws. These laws may impact, among other things, our research, proposed sales, marketing and education programs of our product candidates that obtain marketing approval. The healthcare laws and regulations that may affect our ability to operate include, among others:

  • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order, or recommendation of, an item, good, facility or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. The intent standard under the federal Anti-Kickback Statute was amended by the ACA to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti- Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;
  • federal civil and criminal false claims laws, including the federal civil False Claims Act, which impose penalties and provide for civil whistleblower or qui tam actions, and civil monetary penalty laws, which prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government, including for example, providing inaccurate billing or coding information to customers or promoting a product off-label;
  • HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, knowingly and willfully falsifying, concealing or covering up a material fact or making false statements relating to healthcare matters, knowingly and willfully embezzling or stealing from a healthcare benefit program, or willfully obstructing a criminal investigation of a healthcare offense. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

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  • the federal Physician Payments Sunshine Act, enacted as part of the ACA, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program, with specific exceptions, to track and annually report to CMS payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in applicable manufacturers and group purchasing organizations;
  • HIPAA, as amended by the HITECH Act, and its implementing regulations, which imposes certain requirements on covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information; and
  • state, local and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state and local marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal requirements; state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state and local laws that require licensure or registration by pharmaceutical sales representatives; state laws that require disclosure of information related to drug pricing; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect as HIPAA, thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant administrative, civil, and/or criminal penalties, damages, fines, disgorgement, individual imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity obligations, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. If the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to significant administrative, civil, and/or criminal sanctions, including individual imprisonment and exclusion from government funded healthcare programs.

Within the European Union, there are also national anti-corruption procedures and specific rules on ethics.

C. Organizational Structure

The following diagram illustrates our corporate structure:

D. Property, Plants and Equipment.

Our corporate headquarters are located in Montrouge, France. Our principal offices occupy a 4,470 square meter facility consisting of office and laboratory space, pursuant to a lease agreement dated March 3, 2015, which expires on March 8, 2024. We entered into an additional lease for offices in Montrouge, France in July 2018. This facility consists of 1,808 square meters of office space, pursuant to a lease agreement dated July 1, 2018, which expires on June 30, 2027.

We also have two facilities in Bagneux, France. These facilities consist of 2,237 square meters of office and laboratory space and are used primarily by our industrial and production teams. One of the facilities is our pharmaceutical manufacturing

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establishment, which is focused on the quality control of our manufactured therapeutic patches. In April 2018, we entered into an addendum to our lease for an additional 500 square meters of office space in building B of Green Square, Bagneux, France. These facilities are leased under one agreement, which expires on May 31, 2020.

We also have an office in North America to support our U.S. subsidiary as well as future commercialization needs. We lease 3,780 square feet of office space in Tower 49, New York, New York. This lease is for a period of 65 months and expires on February 25, 2023.

In September 2016, we entered into a lease for a commercial facility of 8,919 square feet in Summit, New Jersey, which is intended to support the launch and commercialization of ViaskinTM Peanut in North America, if the appropriate regulatory approvals are received. In July 2018, we entered into a lease for an additional 12,629 square feet in the same building and made both leases co-terminus on July 10, 2028. This lease includes extension options of two five-year periods.

Item 4. A. Unresolved Staff Comments.

Not applicable.

Item 5. Operating and Financial Review and Prospects.

Overview

We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called ViaskinTM. Our therapeutic approach is based on epicutaneous immunotherapy, or EPITTM, our proprietary method of delivering biologically active compounds to the immune system through intact skin using ViaskinTM. We have generated significant data demonstrating that ViaskinTM's mechanism of action is novel and differentiated, as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream, minimizing systemic exposure in the body. We are advancing this unique technology to treat patients, including infants and children, suffering from food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such an anaphylactic shock.

We initially financed our operations through several private equity investments totaling €38.7 million. In 2012, we completed a €40.6 million initial public offering of our ordinary shares on Euronext Paris. In 2013, we completed a €29.9 million private investment in public equity, or PIPE, of which we received net proceeds of €15.1 million and our selling shareholders received net proceeds of €14.8 million. In 2014, we completed a €104.5 million global underwritten public offering of both ADSs on the Nasdaq Global Select Market, or Nasdaq, and ordinary shares on Euronext Paris, issuing an aggregate of 3,074,686 ordinary shares, from which we received net proceeds of €93.7 million. In July 2015, we completed a €255.3 million underwritten public offering of 4,140,000 ordinary shares in the form of 8,280,000 ADSs, from which we received net proceeds of €237.3 million. In connection with our 2015 public offering, our share capital increased by €414 thousand with a corresponding increase of €236.9 million in our share premium. In March 2018, we completed an underwritten global offering of an aggregate of 4,056,914 ordinary shares in (i) a public offering of 1,600,817 ordinary shares in the form of 3,201,634 ADSs in the United States, Canada and certain other countries outside Europe and (ii) a concurrent private placement of 2,456,097 ordinary shares in Europe (including France), from which we received gross proceeds of €140.8 million. In connection with our 2018 public offering, our share capital increased by €0.4 million with a corresponding increase of €140.4 million in our share premium, gross. In April 2019, we completed an underwritten global offering of an aggregate of 6,000,000 ordinary shares in (i) a public offering of 2,447,500 ordinary shares in the form of 4,895,000 ADSs in the United States, Canada and certain other countries outside Europe and (ii) a private placement of 3,552,500 ordinary shares in Europe (including France), from which we received gross proceeds of €72.1 million. In connection with our April 2019 public offering, our share capital increased by €0.6 million with a corresponding increase of €71.5 million in our share premium, gross. In October 2019, we completed an underwritten global offering of an aggregate of 9,484,066 ordinary shares in (i) a public offering of 7,914,622 ordinary shares in the form of 15,829,244 ADSs in the United States, Canada and certain other countries outside Europe and (ii) a private placement of 1,569,444 ordinary shares in Europe (including France), from which we received gross proceeds of €130.7 million. In connection with our October 2019 public offering, our share capital increased by €1.1 million with a corresponding increase of €129.6 million in our share premium, gross. In February 2020, we completed an underwritten global offering of an aggregate of 7,500,000 ordinary shares in (i) a public offering of 4,535,581 ordinary shares in the form of 9,071,162 ADSs in the United States, Canada and certain other countries outside Europe and (ii) an offering exclusively addressed to qualified investors in Europe (including France) of 2,964,419 ordinary shares, from which we received gross proceeds of approximately €139.8 million. On March 2, 2020, we announced that the underwriters

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partially exercised their option to purchase 338,687 additional ordinary shares in the form of 677,374 ADSs. Consequently, following partial exercise of the option, the total number of ordinary shares sold in the global offering in the first quarter of 2020 was 7,838,687 ordinary shares, including 4,874,268 ordinary shares in the form of 9,748,536 ADSs, bringing the total gross proceeds from the global offering to approximately $160.7 million (approximately €146.1 million). In connection with our public offering in the first quarter of 2020, our share capital increased by €0.8 million with a corresponding increase of €145.3 million in our share premium, gross.

We have incurred net losses in each year since our inception. Substantially all of our net losses resulted from costs incurred in connection with our development programs and from general and administrative expenses associated with our operations.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially in connection with our ongoing activities, as we:

  • seek regulatory and marketing approvals and pursue commercial activities for ViaskinTM Peanut, for which our Biologics License Application, or BLA, submission is currently under review by the U.S. Food and Drug Administration, or FDA;
  • seek regulatory and marketing approvals for our other product candidates that successfully complete clinical trials;
  • continue to establish a sales, marketing and distribution infrastructure to commercialize ViaskinTM Peanut, if approved, and any other products for which we may obtain marketing approval, especially in North America;
  • further develop the manufacturing process for our product candidates;
  • change or add additional manufacturers or suppliers;
  • continue our research, pre-clinical and clinical development of our product candidates;
  • expand the scope of our current clinical trials for our product candidates;
  • initiate and conduct any post-approval clinical trials, if required by the FDA, for our approved products, if any;
  • initiate additional pre-clinical, clinical or other studies for our product candidates;
  • seek to identify and validate additional product candidates;
  • acquire or in-license other product candidates and technologies;
  • make milestone or other payments under any in-license agreements;
  • maintain, protect and expand our intellectual property portfolio;
  • attract and retain new and existing skilled personnel;
  • add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts, as well as a company listed on both the U.S. and French stock markets; and
  • experience any delays or encounter issues with any of the above.

To date, we have not generated any product revenue and we continue to prepare for the potential launch of our ViaskinTM Peanut product candidate in North America, which we expect in the second half of 2020, if approved. In October 2019, we announced the FDA's acceptance for review of our Biologics License Application for ViaskinTM Peanut, with a target action date, provided by the FDA, of August 5, 2020. In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss our BLA for ViaskinTM Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date.

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We expect operating losses to continue for the foreseeable future. Based on our current operations, plans and assumptions, current cash-on-hand and cash equivalents, including the €136.4 million net proceeds from our offering in the first quarter of 2020, after deducting commissions and estimated offering expenses, are projected to be sufficient to fund our operating plan into the first quarter of 2021. We expect that we will need to raise additional capital in the future as we commercialize ViaskinTM Peanut, if approved, and continue to discover and develop other product candidates using our ViaskinTM TM Platform. We may seek to finance our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. However, no assurance can be given at this time as to whether we will be able to achieve these financing objectives.

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

Our financial statements have been prepared on a going concern basis assuming that we will be successful in our financing objectives. As such, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or classification of liabilities that might be necessary should we not be able to continue as a going concern.

Our financial statements for 2017, 2018 and 2019 have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

Financial Operations Overview

Operating Income

Our operating income consists of other income as we generated no revenue in 2017, 2018 or 2019.

Other Income

Government Assistance

Due to the innovative nature of our product candidate development programs, we have benefited from a number of sources of assistance from the central French government or local public authorities, intended to finance our research and development efforts or the recruitment of specific personnel. These funds are recognized as other income in our statement of income (loss) for the fiscal year that recorded the financed expenses or expenditures.

Research Tax Credits

The research tax credit (crédit d'impôt recherche), or CIR, is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies demonstrating that they have expenditures that meet the required criteria, including research expenditures located in France or, since January 1, 2005, within the European Community or in another state that is a party to the Agreement on the European Economic Area that has concluded a tax treaty with France that contains an administrative assistance clause, receive a tax credit which can be used against the payment of the corporate tax due on the fiscal year in which the expenditures were made and during the next three fiscal years, or, as applicable, can be reimbursed for the excess portion. The expenditures taken into account for the calculation of the CIR only involve research expenses.

The main characteristics of the CIR are the following:

  • the CIR results in a cash inflow to us from the tax authorities, i.e., it is used to offset the payment of corporate tax or is paid directly to us for the portion that remains unused;
  • a company's corporate income tax liability does not limit the amount of the CIR - a company that does not pay any corporate income tax can request direct cash payment of the research tax credit; and
  • the CIR is not included in the determination of the corporate income tax.

As a result, we have concluded that the CIR meets the definition of a government grant as defined in IAS 20 "Accounting for Government Grants and Disclosure of Government Assistance" and that the classification as other income within operating income in our statement of income (loss) is appropriate.

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We received the reimbursement of the CIR for the 2018 fiscal year in 2019.

Beginning in the fiscal year ending December 31, 2019, we will no longer benefit from the immediate reimbursement of the Research Tax Credit due to the loss of our Small and Medium-sized Enterprises, or SMEs, status under EU law. The Research Tax Credit will now be refunded three years after the tax declaration in cases in which we cannot offset it against corporate income tax due. We will request the reimbursement of the 2019 fiscal year CIR in 2023 if not offset against the corporate income tax before that time.

Collaboration agreement with Nestlé Health Science

In May 2016, we announced our entry into an exclusive global collaboration with Nestlé Health Science for the development and, if approved, commercialization of MAG1C, an innovative, ready-to-use and standardized atopy patch test for the diagnosis of CMPA in infants and toddlers.

Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a Phase II clinical trial and a pivotal Phase III clinical program, and if the appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally, while prioritizing certain agreed-upon countries. We are eligible to receive up to €100.0 million in potential development, clinical, regulatory and commercial milestones, including an upfront payment of €10.0 million. As of December 31, 2019, we had recorded deferred revenue of €3.3 million related to our collaboration with Nestlé Health Science, which will be deferred and recognized ratably over the service obligation period. We expect the service obligation period to be completed in 2024.

Operating Expenses

Since inception, our operating expenses have consisted primarily of research and development activities, general and administration costs and sales and marketing costs.

Research and Development

We engage in substantial research and development efforts to develop innovative pharmaceutical product candidates. Research and development expense consists primarily of:

  • cost of third-party contractors such as contract research organizations, or CROs, that conduct our non-clinical studies and clinical trials;
  • personnel costs, including salaries, related benefits and share-based compensation, for our employees engaged in scientific research and development functions;
  • purchases, real-estate leasing costs, as well as conferences and travel costs; and
  • depreciation, amortization and provisions.

Our research and development expenses in the periods presented mainly relate to the following activities:

  • ViaskinTM Peanut for the treatment of peanut allergy in children, adolescents and adults. In the fourth quarter of 2017, we completed a Phase III global program designed to assess the efficacy and safety of ViaskinTM Peanut in children four to 11 years of age including the Peanut EPITTM Efficacy and Safety Study, or PEPITES, in 356 peanut allergic patients four to 11 years of age, as well as the REAL Life Use and Safety of EPITTM, or the REALISE study, which was designed to assess the use and safety of ViaskinTM Peanut 250 µg in routine clinical practice in 393 peanut allergic patients four to 11 years of age. The PEOPLE trial, the open-label extension trial of PEPITES, completed enrollment in August 2017. We completed the ViaskinTM Peanut's Efficacy and Safety, or VIPES, study, a Phase IIb clinical trial of ViaskinTM Peanut, in the third quarter of 2014, which was followed by OLFUS-VIPES, an open-label extension trial of VIPES. The topline results from the two-yearOLFUS-VIPES were announced in October 2016. In August 2017, we initiated the EPITTM in Toddlers with Peanut Allergy, or EPITOPE, a Phase III clinical trial assessing the safety and efficacy of ViaskinTM Peanut for the treatment of peanut allergic patients one to three years of age. In September 2018, we announced that the

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independent data and safety monitoring board, or DSMB, completed its planned safety review of Part A of the EPITOPE trial of ViaskinTM Peanut in peanut allergic toddlers ages one to three. The DSMB did not identify any safety concerns for patients enrolled in Part A of the trial and recommended that the trial continue as planned with the 250 µg dose selected for investigation in Part B. We expect to announce the results from Part A of the EPITOPE trial in the first half of 2020. In October 2018, following a positive DSMB meeting, we announced the initiation of Part B of the EPITOPE trial, which will evaluate peanut allergic patients for 12 months. We expect to enroll approximately 350 toddlers for Part B in the United States, Europe, Australia and Canada, and expect to announce an update on our timing for completion of enrollment in the first half of 2020.

  • ViaskinTM Milk for the treatment of Immunoglobulin E, or IgE, mediated CMPA in children. The Milk Efficacy and Safety, or MILES, study, a Phase I/II study designed to determine a safe and effective dose in two age groups: children ages 2 to 11 and adolescents ages 12 to 17 with IgE-mediated cow's milk protein allergy, or CMPA completed enrollment in November 2016. Topline results were reported in February 2018. An open-label extension trial is ongoing for up to four years.
  • Scaling of the ViaskinTM technology. Our efforts to increase our production capacity to support the commercialization of ViaskinTM Peanut, if approved, are currently ongoing.
  • Select proof-of-concept clinical trials and preclinical studies using the ViaskinTM platform in the field of inflammatory and autoimmune diseases are currently underway. Of note, the Study of efficacy and safety of the ViaskinTM MILk in Milk-InducedEosinophilic Esophagitis, or EoE, in Children, or SMILEE, is an investigator-initiated Phase II trial investigating the use of ViaskinTM Milk for treatment of EoE in 20 patients four to 17 years of age. SMILEE was conducted at the Children's Hospital of Philadelphia. A Phase I study of ViaskinTM rPT in the reactivation of immunity against Bordetella pertussis in 60 healthy adults was conducted in collaboration with the Geneva University Hospitals (HUG) and BioNet-Asia Co. Ltd.

Our direct research and development expenses consist principally of external costs, such as startup fees paid to investigators, consultants, central laboratories, and CROs in connection with our clinical trials, and costs related to acquiring and manufacturing clinical study materials. We do not allocate personnel-related costs, costs associated with our general platform improvements, depreciation or other indirect costs to specific programs, as they are deployed across multiple projects under development and, as such, are separately classified as personnel and other expenses.

Research and development activities are central to our business. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase in the foreseeable future as we initiate clinical trials for certain product candidates and pursue later stages of clinical development of our product candidates.

In the year ended December 31, 2019, we spent €101.5 million in research and development expenses to advance the development of our product candidates. The following table provides a breakdown of our direct research and development expenses for our two lead development programs, as well as expenses not allocated to the programs and share-based compensation expenses included in research and development expenses, for the years ended December 31, 2017, 2018 and 2019, respectively:

Year Ended December 31,

2017

2018

2019

(thousands of Euros)

Research and development expenses related to ViaskinTM Peanut(1)

43,585

59,162

65,409

As a percentage of research and development expenses, excluding

share-based compensation expense

49%

62%

69%

Research and development expenses related to ViaskinTM Milk(1)

8,348

8,425

7,221

As a percentage of research and development expenses excluding

share-based compensation expense

9%

9%

8%

Other research and development expenses(1)

36,937

27,265

22,126

Total research and development expenses, excluding share-based

compensation expense

88,870

94,852

94,756

Share-based compensation expenses included in research and

development expenses

16,362

12,319

6,741

Total research and development expenses

105,232

107,171

101,497

(1) Excludes employee share-based compensation expense.

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We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if, when, or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

  • the FDA's approval of our BLA for ViaskinTM Peanut;
  • the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval, especially in North America;
  • the costs of securing manufacturing arrangements for commercial production;
  • revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
  • the scope, progress in, results and the costs of, our pre-clinical studies and clinical trials and other research and development programs, particularly as we seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials;
  • the scope, prioritization and number of our research and development programs;
  • the costs, timing and outcome of regulatory review of our product candidates;
  • the achievement of milestones or occurrence of other developments that trigger payments under our existing collaboration agreements, and any additional collaboration agreements we may enter into;
  • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under our existing collaboration agreements and future collaboration agreements, if any; and
  • the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual property rights.

A change in the outcome of any of these variables with respect to the development and commercialization of ViaskinTM Peanut, if approved, or any other product candidate that we are developing could mean a significant change in the costs and timing associated with the development and commercialization of ViaskinTM Peanut, if approved, or such other product candidate. For example, if the FDA or other regulatory authority were to require us to conduct pre-clinical and clinical trials beyond those which we currently anticipate will be required for the completion of clinical development, if we experience significant delays in enrollment in any clinical trials or if the FDA or other regulatory authority were to require us to conduct post-approval clinical trials, we could be required to spend significant additional financial resources and time on the completion of the clinical development and potential launch of commercialization.

General and Administrative

General and administrative expense consists primarily of personnel costs and share-based compensation for finance, legal, IT and administrative employees. General and administrative expense also consists of costs related to obtaining a directors and officers liability insurance policy and fees for professional services, mainly related to audit, tax and legal services, real-estate leasing costs, insurance costs, consulting costs, investor relations costs and corporate communication and travel costs.

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential launch and commercialization of ViaskinTM Peanut in North America. We also anticipate continued increased expenses associated with being a public company in the United States.

Sales and Marketing

Sales and marketing expense consists primarily of personnel costs, consultant fees and share-based compensation for sales and marketing employees, as well as fees related to pre-commercialization activities for ViaskinTM Peanut in North America, other consulting fees and travel costs. We anticipate that our sales and marketing expenses will increase in the future as we prepare for the potential launch and commercialization of ViaskinTM Peanut in North America, if approved.

Finance Income (Expense)

Our cash and cash equivalents have been deposited primarily in savings and deposit accounts with original maturities of five years or less, allowing the funds to be freely withdrawn at any time without significant penalty. Savings and deposit accounts generate a limited amount of interest income, with very low counterparty risks. We expect to continue this investment strategy.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with IFRS. Some of the accounting methods and policies used in preparing our financial statements under IFRS are based on complex and subjective assessments by our management or on estimates based on past experience and assumptions deemed realistic and reasonable based on the facts and circumstances concerned. The actual value of our assets, liabilities and shareholders' equity and of our earnings could differ from the value derived from these estimates if conditions changed and these changes had an impact on the assumptions adopted. We believe that the most significant management judgments and assumptions in the preparation of our financial statements are described below. See Note 3 to our financial statements for a description of our other significant accounting policies.

Revenue Recognition

Regarding the first application of IFRS 15 on January 1, 2018, an analysis has been completed on performance conditions, revenue recognition method for milestones payment and on the sale price allocation for the collaboration contract signed with Nestlé in 2016. It has been determined that the license and developments to be made by us are a unique performance obligation.

As a result, we have concluded that under IFRS 15, revenue related to the contract will be recognized progressively, up to the costs incurred by us at the end of 2019. No margin is recognized at this stage of the development. Deferred revenue is recognized and reversed over the period in which there is a contractual obligation.

As a result, the application of IFRS 15 had no impact on the financial statements as at December 31, 2019, and retrospectively as at December 31, 2018.

Share-Based Compensation

We have various share-based compensation plans for employees and non-employees. We account for share-based compensation in accordance with the authoritative guidance on share-based compensation. Under the fair value recognition provisions of this guidance, share-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award.

Determining the fair value of share-based awards at the grant date requires judgment. We use the Black-Scholesoption-pricing model to determine the fair value of share options. The determination of the grant date fair value of options using an option-pricing model is affected by assumptions regarding a number of complex and subjective variables. These variables include the expected term of the options, our share price volatility, risk-free interest rates, and expected dividends, which are estimated as follows:

Fair Value of Our Ordinary Shares. We established a policy of using the closing sales price per ordinary share as quoted on Euronext Paris on the date prior to the date of grant for purposes of determining the fair value of ordinary shares with a floor value of the average of the closing sales price per ordinary share for the 20 trading days preceding the grant.

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Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding. As we do not have sufficient historical experience for determining the expected term of the share option awards granted, we have based our expected term on the simplified method, which represents the average period from vesting to the expiration of the award.

Expected Volatility. We are using our volatility on Euronext Paris observed on historical dataset from our stock quote.

Risk-FreeInterest Rate. The risk-free interest rate is based on the yields of French government bonds with maturities similar to the expected term of the options for each option group.

Dividend Yield. We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes model changes significantly, share-based compensation for future awards may differ materially compared with the awards granted previously.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods presented:

December 31,

2017

2018

2019

Volatility

42%

47%

71,2%

Risk free interest rate

-0.23%-0.61%

0.14%-0.37%

-0.41%-0.18%

Expected life (in years)

5.5-7.0

5.5-7.0

5.5-7.0

Dividend yield

-

-

-

For 2017, 2018 and 2019, we recorded employee share-based compensation expense of €30.8 million, €26.0 million and €14.9 million, respectively.

A. Operating Results

Comparisons for the Years Ended December 31, 2017 and 2018

Operating Income

We generated operating income of €14.5 million in 2018 compared to €11.9 million in 2017, an increase of 22.1%. This income was mainly generated by our CIR and by revenue recognized under our collaboration agreement with Nestlé Health Science, and more marginally, by subsidies received for research projects conducted by us.

Year Ended December 31,

2017

2018

(Amounts in thousands of

Euros)

Sales

-

-

Other income

11,909

14,537

Research tax credit

9,330

11,034

Subsidies

271

152

Other operating income

2,308

3,351

Total income

11,909

14,537

For the year ended December 31, 2018, we recorded other income related to CIR of €11.0 million. In 2017, we recorded other income related to CIR of €9.3 million, which we requested for reimbursement in 2018. In 2018, we received the reimbursement of €9.5 million (including a €0.3 million adjustment) for the 2017 CIR under the community small and medium business scheme.

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The increase of €1.7 million, or 18.3%, in the CIR recorded in 2018 from the CIR recorded in 2017 reflects the acceleration of our various development programs in 2018, mainly due to simultaneously conducting clinical trials for both ViaskinTM Peanut and ViaskinTM Milk.

In 2018, we recognized revenue of €3.0 million under our collaboration with Nestlé Health Science.

Research and Development Expenditures

From 2017 to 2018, the total amount spent by us for research and development activities increased by €2 million to €107.2 million, or an increase of 1.8%.

Our research and development expenses consisted primarily of external costs, such as startup fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials, and costs related to acquiring and manufacturing clinical study materials.

Year Ended December

31,

2017

2018

(thousands of Euros)

Personnel expenses

37,112

37,912

Sub-contracting, collaborations and consultants

54,397

52,927

Small equipments and other supplies

4,110

4,771

Rental

2,018

2,703

Conferences and travel expenses

2,807

2,591

Depreciation and amortization

2,424

2,492

Others

2,364

3,776

Total research and development expenses

105,232

107,171

The increased research and development expenses in 2018, compared to 2017, resulted from costs associated with the PEPITES and REALISE Phase III trials of ViaskinTM Peanut, the EPITOPE Phase III trial of ViaskinTM Peanut, the MILES Phase I/II trial of ViaskinTM Milk, as well as a substantial increase in research and development personnel expenses in order to support our increasing number of active development programs.

In particular, we have incurred:

  • An increase of 2.2% in total payroll associated with research and development, resulting from an increase in average research and development staff from 176 employees at the end of December 2017 to 191 employees at the end of December 2018 and a decrease in share-based compensation expense. Excluding share-based expenses, the increase of research and development personnel expenses would be 23.3%.
  • A decrease of 2.7% in sub-contracting, collaborations and consultant costs, primarily attributable to expenses related to the completion of the manufacturing of industrial machines and clinical trials we conducted in 2018, including PEPITES, MILES and
    SMILEE.
  • An increase of 19% of other research and development costs, mainly from depreciation related to the commissioning of our industrial machines (ES GEN 4.0).

General and Administrative Expenses

General and administrative expenses were €41.4 million in 2018, compared to €35.8 million in 2017, or an increase of 15.5%.

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Our general and administrative expenses are as follows:

Year Ended

December 31,

2017

2018

(thousands of Euros)

Personnel expenses

19,742

19,101

Fees

10,347

12,718

Insurance policies

1,367

1,930

Corporate communication and travel expenses

1,599

1,576

Rental

584

911

Depreciation and amortization

422

1,720

Others

1,776

3,442

Total general and administrative expenses

35,837

41,399

The increase of €5.6 million in general and administrative expenses was primarily due to:

  • an increase of 22.9% in fees primarily associated with advisor and consultant fees incurred in 2018 to support the implementation of our new information system, as well as an increase in legal and corporate communications fees; and
  • an increase in expenses related to our corporate communications and investor relations efforts.

Those increases were partially offset by:

  • a decrease of 3.2% in total general and administrative payroll resulting from the decrease in share-based compensation expense which was partially offset by the increase of employee from 44 in 2017 to 54 in 2018. Excluding the share-based expense, the increase of general and administrative employee-related expenses was 29.5%.

Sales and Marketing Expenses

During the period presented, our sales and marketing expenses increased up to €32.2 million in 2018, compared to €15.8 million in 2017, or an increase of 103.3%. Sales and marketing expenses primarily include payroll for the U.S. employees, as well as fees related to pre-commercialization activities for ViaskinTM Peanut in North America.

Year Ended

December 31,

2017

2018

(thousands of Euros)

Personnel expenses

6,976

12,553

Fees

2,480

5,148

Marketing, tradeshows and travel expenses

5,984

14,021

Others

384

446

Total sales and marketing expenses

15,824

32,169

Our direct sales and marketing expenses consist principally of personnel expenses and market research consultant fees.

The increase of 80.0% in total payroll associated with sales and marketing results primarily from both an increase in headcount and the recruitment of key executives during the second half of 2018, including the recruitment of our new Chief Commercial Officer in July 2018. Excluding share-based expenses, the increase in our sales and marketing employee-related expenses was 79.8%. Our full-time employees dedicated to sales and marketing increased from 11 employees at the end of 2017 to 23 employees at the end of 2018.

The overall increase in sales and marketing expenses also resulted from an increase in marketing costs of €8.0 million and an increase of €2.7 million for professional fees. The increase in expenses are due in part to the expenses and infrastructure linked with the preparation of the launch, if approved, of ViaskinTM Peanut in North America.

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Financial (Loss) Profit

Our net financial result is profit of €0.1 million in 2018 compared to a loss of €2.7 million in 2017. This item includes capital gains on the disposals of investment securities, foreign exchange gains and expenses related to the discounting of the OSEO and BPI advances.

The change in the financial result is mainly due to the recognition in 2017 of an unrealized exchange loss of €2.4 million on intra-group loans denominated in U.S. dollars against an unrealized exchange loss of €0.3 million in 2018.

Comparisons for the Years Ended December 31, 2018 and 2019

Operating Income

We generated operating income of €13.1 million in 2019 compared to €14.5 million in 2018, a decrease of 9.7%. This income was mainly generated by our CIR and by revenue recognized under our collaboration agreement with Nestlé Health Science, and more marginally in 2018, by subsidies received for research projects conducted by us.

Year Ended December 31,

2018

2019

(Amounts in thousands of

Euros)

Sales

-

-

Other income

14,537

13,139

Research tax credit

11,034

9,770

Subsidies

152

-

Other operating income

3,351

3,369

Total income

14,537

13,139

For the year ended December 31, 2019, we recorded other income related to CIR of €9.8 million. In 2018, we recorded other income related to CIR of €11.0 million, for which we received reimbursement in 2019.

The decrease of €1.3 million, or 11.5%, in the CIR recorded in 2019 from the CIR recorded in 2018 reflects the finalization of our various development programs in 2018, mainly due to simultaneously finalizing clinical trials for ViaskinTM Peanut, including the PEPITES and PEOPLE Phase III trials.

Beginning in the fiscal year ending December 31, 2019, we will no longer benefit from the immediate reimbursement of the Research Tax Credit due to the loss of our SMEs status under EU law. The Research Tax Credit will now be refunded three years after the tax declaration in the event we cannot offset it against corporate income tax due. We will request the reimbursement of the 2019 fiscal year CIR in 2023 if we are not able to offset it against corporate income tax before such time.

In 2019, we recognized revenue of €3.3 million under our collaboration with Nestlé Health Science.

Research and Development Expenditures

From 2019 to 2018, the total amount spent by us for research and development activities decreased by €5.7 million to €101.5 million, or a decrease of 5.3%.

Our research and development expenses consisted primarily of external costs, such as startup fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials, and costs related to acquiring and manufacturing clinical study materials.

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Year Ended December 31,

2018

2019

(thousands of Euros)

Personnel expenses

37,912

41,565

Sub-contracting, collaborations and consultants

52,927

47,750

Small equipments and other supplies

4,771

2,814

Rental

2,703

1,170

Conferences and travel expenses

2,591

1,676

Depreciation and amortization

2,492

4,853

Others

3,776

1,669

Total research and development expenses

107,171

101,497

The decrease in research and development expenses in 2019, compared to 2018, resulted primarily from the completion of the PEPITES Phase III trial of ViaskinTM Peanut. In 2019, ongoing costs regarding the PEOPLE, REALISE, EPITOPE and EPOPEX Phase III trials of ViaskinTM Peanut and the MILES Phase I/II trial of ViaskinTM Milk, as well as a substantial increase in research and development personnel expenses in order to support our active development programs.

In particular, we have incurred:

  • Personnel expenses related to research and development, which increased by 9.6% compared to the same period in 2018. This increase is due to an increase in average research and development staff (from 191 employees at the end of December 2018 to 215 employees at the end of December 2019) and an increase in severance costs due to organizational changes. This increase was partially offset by a decrease in share-based compensation expense. Excluding share-based compensation expense, the payroll dedicated to research and development increased by 36.1%.
  • A decrease of 9.8% in sub-contracting, collaborations and consultant costs, primarily attributable to expenses related to the completion of the manufacturing of industrial machines and clinical trials we concluded in prior year, including PEPITES.
  • An increase of 94.8% in depreciation and amortization and a decrease of 56.7% in rental expenses, primarily attributable to the application of IFRS 16 standard starting January 1, 2019.

General and Administrative Expenses

General and administrative expenses were €44.4 million in 2019, compared to €41.4 million in 2018, or an increase of 7.3%.

Our general and administrative expenses are as follows:

Year Ended

December 31,

2018

2019

(thousands of Euros)

Personnel expenses

19,101

25,751

Fees

12,718

10,883

Rental

911

43

Insurance policies

1,930

2,720

Corporate communication and travel expenses

1,576

972

Depreciation and amortization

1,720

516

Others

3,442

3,515

Total general and administrative expenses

41,399

44,401

The overall increase was primarily due to the 34.8% increase in personnel expenses, due to the increase in the average staff (54 employees as of December 31, 2018 compared to 69 employees as of December 31, 2019), severance costs associated with our reorganization and the implementation of retention measures for our key personnel and consulting fees. These increases were partly offset by a decrease in share-based compensation expense. Excluding share-based compensation expense, the payroll dedicated to general and administrative expense increased by 68.9%.

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The decrease in rental expenses was exclusively linked to the first application of IFRS 16 standard in 2019.

The decrease in fees was related to budget discipline exercised by us as we refocused on preparing for the submission of a BLA for ViaskinTM Peanut to the U.S. FDA.

Sales and Marketing Expenses

During the period presented, our sales and marketing expenses decreased to €18.9 million in 2019, compared to €32.2 million in 2018, or a decrease of 41.3%. Sales and marketing expenses primarily included payroll for the U.S. employees, as well as fees related to pre-commercialization activities for ViaskinTM Peanut in North America.

Year Ended

December 31,

2018

2019

(thousands of Euros)

Personnel expenses

12,553

12,504

Fees

5,148

4,194

Marketing, tradeshows and travel expenses

14,021

1,340

Depreciation and amortization

44

736

Others

402

168

Total sales and marketing expenses

32,169

18,941

Personnel expenses related to sales and marketing decreased by 0.4% compared to the same period in 2018, resulting from a decrease in share-based compensation expense. This decrease was partially offset by an increase in payroll due to an increase in average staff (from 23 employees at the end of December 2018 to 35 employees at the end of December 2019) and by an increase in severance costs due to organizational changes. Excluding share- based compensation expense and employer contribution to free shares, the payroll dedicated to sales and marketing increased by 63.0%.

The increase in depreciation and amortization was mainly due to the recognition of an amortization expenses as part of the implementation of IFRS 16.

The decrease in fees, marketing, tradeshows and travel expenses was related to budget discipline exercised by us as we refocused on preparing for the submission of a BLA for ViaskinTM Peanut to the FDA.

Financial (Loss) Profit

Our financial (loss) was €(1.3) million as of December 31, 2019, compared to a profit of €0.1 million in the same period in 2018. This item includes the financial revenues on our financial assets, foreign exchange losses and financial expenses on lease obligations related to the implementation of IFRS 16 as of January 1, 2019.

  1. Liquidity and Capital Resources

We have financed our operations since our inception through several private placements of equity securities totaling €38.7 million, a €40.6 million initial public offering of our ordinary shares on Euronext Paris in 2012, a €29.9 million PIPE in 2013, of which we received net proceeds of

€15.1 million and our shareholders received net proceeds of €14.8 million, and a €104.5 million global offering of both ADSs on Nasdaq and ordinary shares on Euronext Paris, of which we received net proceeds of €93.7 million. In July 2015, we completed a €255.3 million underwritten public offering of 4,140,000 ordinary shares in the form of 8,280,000 ADSs from which we received net proceeds of €237.3 million. In connection with our 2015 public offering, our share capital increased by €414 thousand with a corresponding increase of €236.9 million in our share premium. In March 2018, we completed an underwritten global offering of an aggregate of 4,056,914 ordinary shares in (i) a public offering of 1,600,817 ordinary shares in the form of 3,201,634 ADSs in the United States, Canada and certain other countries outside Europe and (ii) a concurrent private placement of 2,456,097 ordinary shares in Europe (including France), from which we received gross proceeds of €140.8 million. In connection with our 2018 public offering, our share capital increased by €0.4 million with a corresponding increase of €140.4 million in our share premium, gross. In April 2019, we completed an underwritten global offering of an aggregate of 6,000,000 ordinary shares in (i) a public offering of 2,447,500 ordinary shares in the form of 4,895,000 ADSs in the United States, Canada and certain other countries outside Europe and

102

  1. a private placement of 3,552,500 ordinary shares in Europe (including France), from which we received gross proceeds of €72.1 million. In connection with our April 2019 public offering, our share capital increased by €0.6 million with a corresponding increase of €71.5 million in our share premium, gross. In October 2019, we completed an underwritten global offering of an aggregate of 9,484,066 ordinary shares in (i) a public offering of 7,914,622 ordinary shares in the form of 15,829,244 ADSs in the United States, Canada and certain other countries outside Europe and (ii) a private placement of 1,569,444 ordinary shares in Europe (including France), from which we received gross proceeds of €130.7 million. In connection with our October 2019 public offering, our share capital increased by €1.1 million with a corresponding increase of €129.6 million in our share premium, gross. In February 2020, we completed an underwritten global offering of an aggregate of 7,500,000 ordinary shares in (i) a public offering of 4,535,581 ordinary shares in the form of 9,071,162 ADSs in the United States, Canada and certain other countries outside Europe and (ii) an offering exclusively addressed to qualified investors in Europe (including France) of 2,964,419 ordinary shares, from which we received gross proceeds of approximately €139.8 million. On March 2, 2020, we announced that the underwriters partially exercised their option to purchase 338,687 additional ordinary shares in the form of 677,374 ADSs. Consequently, following partial exercise of the option, the total number of ordinary shares sold in the global offering in the first quarter of 2020 was 7,838,687 ordinary shares, including 4,874,268 ordinary shares in the form of 9,748,536 ADSs, bringing the total gross proceeds from the global offering to approximately $160.7 million (approximately €146.1 million). In connection with our public offering in the first quarter of 2020, our share capital increased by €0.8 million with a corresponding increase of €145.3 million in our share premium, gross.

The table below summarizes our sources and uses of cash for the years ended December 31, 2017, 2018 and 2019.

Year Ended December 31,

2017

2018

2019

(thousands of Euros)

Net cash flow used in operating activities

(114,314)

(136,621)

(128,519)

Net cash flow used in investing activities

(7,834)

(8,641)

(5,058)

Net cash flow provided by financing activities

286

130,676

182,791

Net increase (decrease) in cash and cash equivalents

(121,863)

(14,586)

49,214

Cash Used in Operating Activities

Our net cash flows used in operating activities were €128.5 million, €136.6 million and €114.3 million in 2019, 2018 and 2017, respectively.

During 2019, our net cash flows used in operating activities decreased due to a revised allocation of resources as we were preparing the ViaskinTM Peanut BLA submission to the FDA.

During 2018, our net cash flows used in operating activities increased due to the expenses to support the launch and commercialization of ViaskinTM Peanut in North America.

During 2017, our net cash flows used in operating activities increased due to our advances in our research and development programs.

Cash Used in Investing Activities

Our net cash flows used in investing activities were €5.1 million, €8.6 million and €7.8 million in 2019, 2018 and 2017, respectively.

During 2019, our net cash flows used in investing activities decreased due to a €3.5 million pledge of securities in 2018.

During 2018, our net cash flows used in investing activities increased due to a €3.5 million pledge of securities which was partially offset by the decrease of investment in industrial machines due to the finalization of our main industrial machines' setup in 2018.

During 2017, our net cash flows used in investing activities were primarily related to the purchase of materials for the engineering and manufacturing of our industrial machines, including the development of a commercial-scale version of our electrospray manufacturing tool, ES GEN4.0, to support the development of our product candidates.

103

Cash Provided by Financing Activities

Our net cash flows resulting from financing activities increased to €182.8 million in 2019 from €130.7 million in 2018 and from €0.2 million in 2017, mainly as a result of our underwritten global offerings in 2019.

Consistent with customary practice in the French securities market, we entered into a liquidity agreement (contrat de liquidité) with Natixis on April 13, 2012. The liquidity agreement complies with applicable laws and regulations in France. The liquidity agreement authorizes Natixis to carry out market purchases and sales of our shares on Euronext Paris. As of December 31, 2019, we have contributed an aggregate of €0.2 million to the liquidity account. The amount is classified in other non-current financial assets in our statement of financial position. At December 31, 2019, 9,000 shares and €1.1 million were in the liquidity account. The liquidity agreement has a term of one year and will renew automatically unless otherwise terminated by either party.

Cash and Funding Sources

During 2018 and 2019, we obtained new financing on the public markets by issuance of securities.

Equity

Bank

Other

capital

Loans

debt

Total

(thousands of Euros)

2017

-

-

-

-

2018

140,815.5

-

-

140,815.5

2019

202,805.7

-

-

202,805.7

Total

343,621.2

-

-

343,621.2

We have incurred net losses each year since our inception. Substantially all of our net losses resulted from costs incurred in connection with our development programs and from general and administrative expenses associated with our operations.

We have not incurred any bank debt. Other debt is comprised of conditional advances which are detailed as follows.

We benefited from multiple conditional advances from OSEO, which advances do not accrue interest and are repayable at 100% in the event of technical and/or commercial success of our product, as determined solely and subjectively by OSEO, a non-refundable subsidy from OSEO, a conditional advance from COFACE and an interest-free loan by Bpifrance.

As of December 31, 2019, we had one advance contract with OSEO Innovation and one grant from BpiFrance Financement remaining.

  • The 3rd OSEO advance: In 2011, we obtained a conditional advance by OSEO for a total amount of €640,000 to finance the development of our programs to treat CMPA. This amount has been fully received, with a first payment of €256,000 in December 2011, a second payment of €256,000 in June 2013 and remaining €128,000 balance paid in January 2014. If the program is deemed to be technically or commercially successful, as determined by OSEO in its sole and subjective discretion it will be repaid in 16 quarterly installments defined as follows: four payments of €64,000 starting on September 30, 2014, then 12 payments of €32,000 starting on September 30, 2015, until June 30, 2018. If this project is deemed to be a technical failure, we will still be obligated to repay OSEO the amount of €256,000. The agreement with OSEO terminated on June 30, 2018.
  • The 4th OSEO advance: In 2013, we obtained a conditional advance by OSEO for a total amount of €3.2 million in the context of a research and clinical development collaborative project in the field of house dust mites allergies in young children. We refer to this development program as the ImmunaVia project. €903,500 was received in April 2013, €864,989 was received in January 2015. The €918,000 we expected in October 2015 and €481,162 we expected in April 2018 will not be founded. In addition, we received from OSEO a total of €1,919,056 in the form of a non-refundable subsidy. Following the defection of a sponsor, the Immunavia project was interrupted in September 2017. We are required to reimburse the remaining amounts of conditional advances. This reimbursement has been rescheduled in 13 monthly repayments, commencing on May 31, 2018, through May 31, 2019.
    • The Bpifrance interest-free loan: In 2014, we obtained an interest-free loan from Bpifrance Financement in the amount of €3.0 million to support the pharmaceutical development of ViaskinTM Milk. This assistance was received in a single disbursement in November 2014. The planned repayment is scheduled in 20 quarterly repayments of €150,000 each, commencing on June 30, 2017.

104

The activity for the conditional advances recorded during 2017, 2018 and 2019 is summarized in the table below:

3rd

4th

OSEO

OSEO

BPI

contract

contract

advance

Total

Balance sheet debt as at 12/31/2016

192

1,684

2,751

4,628

Receipts

-

-

-

-

Repayments

(128)

-

(450)

(578)

Other transactions

1

16

84

101

Balance sheet debt as at 12/31/2017

64

1,700

2,386

4,150

Receipts

-

-

-

-

Repayments

(64)

(1,136)

(600)

(1,800)

Other transactions

-

60

69

129

Balance sheet debt as at 12/31/2018

-

624

1,854

2,479

Receipts

-

-

-

-

Repayments

-

(624)

(600)

(1,224)

Other transactions

-

-

44

44

Balance sheet debt as at 12/31/2019

-

-

1,298

1,298

  1. The changes in "other transactions" are comprised of the effect of discounting conditional advances. 105

Operating Capital Requirements

As of December 31, 2019, we had €172.0 million in cash and cash equivalents compared to €122.8 million of cash and cash equivalents as of December 31, 2018. We have incurred operating losses and negative cash flows from operations since inception. Net cash used in operating activities was €(128.5) million for the year ended December 31, 2019 and €(136.6) million for the year ended December 31, 2018. For the year ended December 31, 2019, we had a net loss of €153.6 million. As of December 31, 2019, we had an accumulated deficit and reserves of €405.0 million.

We have primarily funded these losses through equity financings, and, to a lesser extent, by obtaining public assistance in support of innovation and reimbursements of research tax credits. To date, we have not generated any product revenue, and we continue to prepare for the potential launch of our Viaskin Peanut product candidate in North America in the second half of 2020, if approved. In October 2019, we announced the FDA's acceptance for review of our Biologics License Application for Viaskin Peanut, with a target action date, provided by the FDA, of August 5, 2020. In February 2020, we announced that the FDA had announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss our BLA for Viaskin Peanut. On March 16, 2020, we announced that the FDA has informed us that during its ongoing review of our BLA, it has identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA will no longer take place as previously scheduled on May 15, 2020. We are in communication with the FDA regarding the potential submission, as part of the ongoing BLA review, of additional information on patch-site adhesion from our clinical program as well as on our long-term efficacy results from the three-yearopen-label extension trial, PEOPLE. At this time, we have received no additional information regarding the timeline of the BLA review and believe the target action date of August 5, 2020 remains unchanged. However, the submission of additional information to the FDA may constitute a major amendment to the BLA and could extend the target action date.

We expect operating losses to continue for the foreseeable future. Based on our current operations, plans and assumptions, current cash-on-hand and cash equivalents, including the €136.4 million net proceeds from our offering in the first quarter of 2020, after deducting commissions and estimated offering expenses, are projected to be sufficient to fund our operating plan into the first quarter of 2021.

We expect that we will need to raise additional capital in the future as we commercialize ViaskinTM Peanut, if approved, and continue to discover and develop other product candidates using our ViaskinTM Platform. We may seek to finance our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. However, no assurance can be given at this time as to whether we will be able to achieve these financing objectives.

Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to the progress of our development efforts, the status of and results from pre-clinical studies and any ongoing clinical trials or clinical trials we may commence in the future, as well as any collaborations that we may enter into with third parties for our product candidates and any unforeseen cash needs.

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

For more information as to the risks associated with our future funding needs, see the section titled "Item 3.D-Risk Factors."

Capital Expenditures

As all the clinical research and development expenditures are posted to the accounts as expenses until marketing authorizations are obtained, the principal investments made over 2017, 2018 and 2019 have been related primarily to the acquisition of laboratory equipment and, secondarily, to the acquisition of computer and office equipment.

Year Ended December 31,

2017

2018

2019

(thousands of Euros)

Intangible assets

(299)

(41)

(27)

Property, plant, and equipment

(7,246)

(4,710)

(4,973)

Non-current financial assets

(289)

(3,890)

(58)

Total

(7,834)

(8,641)

(5,058)

In 2017, the increase resulted primarily from the purchase of tools and equipment for the design, development and manufacturing of industrial machines.

106

In 2018, the increase resulted primarily from the purchase of tools and equipment for the design, development and manufacturing of industrial machines. Those investments significantly decreased in 2018 due to the finalization of our main industrial machines' setup. Investments also increased in 2018 due to a €3.5 million pledge of securities, which was disclosed as non-current financial assets.

In 2019, the increase resulted primarily from the purchase of tools and equipment for the design, development and manufacturing of industrial machines.

C. Research and Development

For a discussion of our research and development activities, see "Item 4.B-Business Overview" and "Item 5.A-Operating Results."

D. Trend Information

For a discussion of trends, see "Item 4.B-Business Overview," "Item 5.A-Operating Results" and "Item 5.B-Liquidity and Capital Resources."

  1. Off-BalanceSheet Arrangements

During the periods presented, we did not and do not currently have any off-balance sheet arrangements as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.

  1. Tabular Disclosure of Contractual Obligations

The following table discloses aggregate information about material contractual obligations and periods in which payments were due as of December 31, 2019. Future events could cause actual payments to differ from these estimates.

Less than

More than 5

One year

1 to 3 years

3 to 5 years

years

Total

(Amounts in thousands of Euros)

Conditional advances

577

721

-

-

1,298

Capital (finance) lease obligations

-

-

-

-

-

Operating lease obligations - IFRS 16 Lease debt

3,281

7,036

6,246

6,296

22,860

Purchase obligations - Obligations Under the Terms of CRO Agreements

19,221

10,130

-

-

29,350

Total

23,079

17,887

6,246

6,296

53,509

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including interest on long-term debt, fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty.

Our corporate headquarters are located in Montrouge, France. Our principal offices occupy a 4,770 square meter facility consisting of office and laboratory space, pursuant to a lease agreement dated March 3, 2015, which expires on March 8, 2024. We also have two facilities in Bagneux, France. These facilities consist of 2,237 square meters of office and laboratory space and are used primarily by our industrial and production teams. In April 2018, we entered into an addendum to our lease for an additional 500 square meters of office space in building B of Green Square, Bagneux, France. These facilities are leased under one agreement, which expires on May 31, 2020. We entered into an additional lease for offices in Montrouge, France in June 2018. This facility consists of 1,808 square meters of office space, pursuant to a lease agreement dated July 1, 2018, which expires on June 30, 2027. We also have an office in North America to support our U.S. subsidiary as well as future commercialization needs. We lease 3,780 square feet of office space in Tower 49, New York, New York. This lease is for a period of 65 months and expires on February 25, 2023.

107

In September 2016, we entered into a lease for a commercial facility of 8,919 square feet in Summit, New Jersey, which is intended to support the launch and commercialization of ViaskinTM Peanut in North America, if the appropriate regulatory approvals are received. In July 2018, we entered into a lease for an additional 12,629 square feet in the same building and made both leases co-terminus on July 10, 2028. This lease includes extension options of two five-year periods.

In connection with the launch of our clinical trials for ViaskinTM Peanut and ViaskinTM Milk, we signed agreements with several contract research organizations. Expenses associated with the ongoing trials amounted globally to €116.2 million. As of December 31, 2019, the amount we are still obligated to pay in connection with these contracts through 2023 is €29.4 million.

  1. Safe Harbor

This Annual Report on Form 20-F contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See "Special Note Regarding Forward-Looking Statements."

Item 6. Directors, Senior Management and Employees.

A. Directors and Senior Management.

The following table sets forth information regarding our executive officers and directors, including their ages, as of March 20, 2020. Unless otherwise stated, the address for our executive officers and directors is 177-181 avenue Pierre Brossolette, 92120 Montrouge, France.

Name

Age

Position(s)

Executive Officers:

Daniel Tassé

60

Chief Executive Officer and Director

Ramzi Benamar

47

Chief Financial Officer

Marie-Catherine Théréné

52

Deputy Chief Executive Officer and Responsible Pharmacist

Caroline Daniere

46

Chief Human Resources Officer

Dr. Pharis Mohideen

55

Chief Medical Officer

Sébastien Robitaille

50

Chief of Staff

Dr. Hugh Sampson

71

Chief Scientific Officer

Adam Slatter

52

Chief Quality Officer

Kevin Trapp

53

Chief Commercial Officer

Non-Employee Directors:

Michel de Rosen(3)

69

Non-Executive Chairman of the Board of Directors

Dr. Torbjörn Bjerke(2)(3)

56

Director

Maïlys Ferrère(2)(3)

56

Director

Claire Giraut(1)

62

Director

Michael J. Goller(2)(3)

44

Director

Viviane Monges(1)

56

Director

Julie O'Neill

53

Director

Daniel Soland(1)(2)

60

Director

  1. Member of the audit committee.
  2. Member of the compensation committee.
  3. Member of the nominating committee.

Executive Officers:

Daniel Tassé has served as Chief Executive Officer since November 2018 and as a member of our board of directors since March 2019. From March 2016 to November 2018, Mr. Tassé served as the Chairman and Chief Executive Officer of Alcresta Therapeutics, Inc., a pediatric-focused rare disease biotechnology company. From January 2008 to April 2015, Mr. Tassé served as the Chairman and Chief Executive Officer of Ikaria, Inc., which develops drugs and devices for critically ill patients. In April 2015, Ikaria was acquired by Mallinckrodt Pharmaceuticals. Mr. Tassé holds a B.Sc. in Biochemistry from Université de Montréal. The board of directors believes that Mr. Tassé's leadership and extensive experience in the pharmaceutical industry will allow him to drive us to the success of our objectives.

108

Ramzi Benamar has served as our Chief Financial Officer since January 2020, and is responsible for leading our financial strategy and overseeing our finance team. He has been a member of the Executive Committee since January 2020. From January 2017 to January 2020, Mr. Benamar served as the Vice President and Head of Financial Planning and Analysis at Spark Therapeutics, Inc., which was acquired by Roche Holdings AG in December 2019. From 2004 to December2016, Mr. Benamar held various finance and operations positions of increasing responsibilities at Shire Plc, Johnson & Johnson, Purdue and Merck and Co. Mr. Benamar earned both his M.B.A and B.B.A from Temple University, and his Master of Healthcare and Pharmaceutical Business Administration from University of the Sciences in Philadelphia.

Marie-CatherineThéréné has served as our Deputy Chief Executive officer and Responsible Pharmacist (Qualified Person) since January 2020. She has also served as our VP Quality System, Compliance & Audit since October 2019. Ms. Théréné joined us with previous experience as a responsible pharmacist in several companies. She previously worked at Fresenius Medical Care France from January 2018 to October 2019, where her last position was that of Responsible Pharmacist, Managing Director, Quality, Pharmaceutical and Regulatory Affairs Director. From January 2011 to January 2018, she served as European Coordinator for INO therapy, with responsibility for quality assurance, and from February 2014 to January 2018, she served as Deputy responsible pharmacist at Linde France SA. Ms. Théréné earned her Ph.D. in Pharmacy from University of AIX-MARSEILLE II.

Caroline Daniere has served as our Chief Human Resources Officer since September 2019 and is responsible for defining strategies to build culture and drive success through recruitment, retention and alignment across multiple geographies. Ms. Daniere is a member of our Executive Committee. Prior to joining us, from July 2017 to July 2019, Ms. Daniere served as Head of International Mobility & Global Rewards for Sanofi Group and from August 2014 to July 2017, served as head of Compensation & benefit Asia & JPAC for Sanofi Group. Ms. Daniere received her master's degree in finance and economics from INSEEC Masters of Science & MBA Programs, as well receiving her Global Remuneration Professional certification (GFP) from World al Work.

Dr. Pharis Mohideen has served as our Chief Medical Officer since July 2019, and is responsible for continuing development efforts of our pipeline and bringing potentially innovative new treatments to patients, if approved. Dr. Mohideen is a member of our Executive Committee. Prior to joining us, from October 2014 to July 2019, Dr. Mohideen served as Chief Medical Officer for Millendo Therapeutics, Inc. From June 2012 to October 2014, he served as Vice President of Clinical Development at Shionogi Inc. Dr. Mohideen received his M.D., M.S. in human physiology and B.A. in biology from the University of Hawaii, as well as his M.S. in clinical investigation from Vanderbilt University.

Sebastien Robitaille has served as our Chief of Staff since July 2019, responsible for leading the our evolution from a development-stage biotechnology company to a potential commercial organization. He is a member of our Executive Committee. From December 2017 to December 2019, he served as our Deputy Chief Financial Officer and oversaw the Finance and Information Systems operations. Mr. Robitaille joined us in September 2015 as Senior Vice President, Group Controller & Information Systems. Prior to joining us, Mr. Robitaille worked at Ipsen for 15 years, where he held various roles of increasing responsibility and participated in Ipsen's initial public offering. Mr. Robitaille holds a Bachelor's Degree in Business Administration-Finance from Paris School of Business.

Dr. Hugh A. Sampson has served as our Chief Scientific Officer since November 2015 and is a member of our Scientific Advisory Board. Dr. Sampson also served as our interim Chief Medical Officer between January 2019 and July 2019. Dr. Sampson has been a member of our Executive Committee since January 2017. Dr. Sampson has served as the Kurt Hirschhorn Professor of Pediatrics at the Icahn School of Medicine at Mount Sinai since August 1997 and Director Emeritus of the Jaffe Food Allergy Institute since June 2017. Dr. Sampson served as a Director of the Jaffe Food Allergy Institute from August 1997 to June 2017. He continues to direct his NIH-funded translational research activities and to see patients in clinical practice. In his role as Chief Scientific Officer, Dr. Sampson leads our research team, pursuing potential new applications of ViaskinTM for the treatment of food allergies, while also supporting our clinical development teams. Dr. Sampson is past chair of the Section on Allergy & Immunology of the American Academy of Pediatrics and the past-president of the American Academy of Allergy, Asthma and Immunology. He received his M.D. from the State University of New York at Buffalo School of Medicine and his allergy/immunology fellowship at Duke University.

Adam Slatter has served as our Chief Quality Officer since March 2019 and is responsible for leading global Quality Assurance and Quality Control (QAQC). Mr. Slatter is a member of our Executive Committee. Prior to joining us, from March 2018 to March 2019, Mr. Slatter served as Global Head of Quality Services for Philip Morris International. From September 2016 to February 2018, Mr. Slatter worked as an independent consultant with Galenisys Pharmaceutical Consultants and from August 2013 until July 2016, Mr. Slatter was employed as Head of Global Quality for Pierre Fabre. Mr. Slatter received his B.Sc. in Botany/Plant Biology from University of Durham and is a Fellow of the Royal Society of Biology.

109

Kevin Trapp has served as our Chief Commercial Officer since August 2018. He is a member of the Executive Committee. As our Chief Commercial Officer, he is responsible for all of our commercial operations globally. Prior to joining us, from February 2017 to July 2018, Mr. Trapp served as an advisor to us. From 2014 to June 2016, he served as Senior Vice President, Portfolio & Access Strategy at Bristol-Myers Squibb Company. Mr. Trapp earned a bachelor's degree from the University of Connecticut School of Business and completed the General Management Program from CEDEP at INSEAD, Fontainebleau, France.

Non-Employee Directors:

Michel de Rosen has served as a member of our board of directors since May 2018 and as Non-Executive Chairman of our board of directors since March 2019. Mr. Rosen also serves on the board of directors of Faurecia and Pharnext. Mr. de Rosen served as Chairman and Chief Executive Officer of Eutelsat from 2009 until his retirement in November 2017, Chairman and Chief Executive Officer of ViroPharma from 2000 to 2008, and Chairman and Chief Executive Officer of Rhone-Poulenc Santé from 1993 to 1999. He has also held numerous positions at the French Ministries of Finance, Defense, Industry and Telecommunication. Mr. Rosen holds an M.B.A. from HEC and an M.B.A. from Ecole Nationale d'Administration. The board of directors believes that Mr. de Rosen's extensive business experience in the biopharmaceutical industry and over 15 years' experience in the United States will be instrumental to the success of our objectives.

Dr. Torbjörn Bjerke has served as a member of our board of directors since 2006. Dr. Bjerke has served as the portfolio manager of Arctic Aurora LifeScience since January 2016 and as a director of TXP Pharma GmbH since 2014 and SynAct Pharma since April 2016. He previously served as the Chief Executive Officer of Karolinska Development AB from 2011 to 2014. Prior to then, Dr. Bjerke was the President and Chief Executive Officer of Orexo AB, a position he held from 2007 until January 2011, President and Chief Executive Officer of Biolipox AB and Director of Pharmacology at AstraZeneca. Dr. Bjerke holds a Ph.D. in Medicine from Aarhus Universitet. The board of directors believes that Dr. Bjerke's experience in the pharmaceutical industry, particularly his extensive experience in allergy treatment field, and his years of business and leadership experience allow him to make valuable contributions to the board of directors.

Maïlys Ferrère has served as a member of our board of directors since June 2016 and previously served as a non-voting observer of our board of directors since our initial public offering on Euronext Paris in March 2012. Ms. Ferrère has served as a Director, Head of the Large Venture Investment Activity at Bpifrance, France's public investment bank, since October 2013 and is affiliated with one of our significant shareholders. She graduated from Institut d'Etudes Politiques Paris, and began her career with the General Inspectorate of Société Générale before working for multiple French banks in the equity capital markets origination department. The board of directors believes that Ms. Ferrère's experience in the banking industry and her knowledge of capital markets allow her to make valuable contributions to the board of directors.

Claire Giraut has served as a member of our board of directors since June 2016. From 2013 until her retirement in February 2018, Ms. Giraut served as the Executive Vice President, Chief Financial Officer of bioMérieux, a global leader in in vitro diagnostics. She previously served as Chief Financial Officer of Ipsen from 2003 to 2011 and as Chief Financial Officer of Europcar, after holding various finance leadership positions in other worldwide organizations. Since 2010, she has also served as a director of Julius Baer Group Ltd. and Bank Julius Baer & Co. Ltd., a Swiss private banking group. Ms. Giraut holds a master's degree from the Institut National Agronomique (AgroParisTech) in Paris. The board of directors believes that Ms. Giraut's experience in the life sciences industry and her knowledge of financial matters allow her to make valuable contributions to the board of directors.

Michael J. Goller has served as a member of our board of directors since October 2015. Mr. Goller serves as a Partner of Baker Brothers Investments, a fund management company focused on long-term investments in life-sciences companies. Prior to joining Baker Brothers in 2005, Mr. Goller was an associate of JPMorgan Partners, LLC where he focused on venture investments in the life sciences sector from 1999 to 2003. Mr. Goller began his career as an investment banker with Merrill Lynch and Co. from 1997 to 1999. Mr. Goller holds a B.S. in Molecular and Cell Biology from The Pennsylvania State University, and a Masters in both Biotechnology and Business Administration from the University of Pennsylvania. The board of directors believes that Mr. Goller's experience in the life sciences industry and his knowledge of corporate development matters allow him to make valuable contributions to the board of directors.

Viviane Monges has served as a member of our board of directors since May 2019. Ms. Monges also serves on the board of directors of Novo Holdings, Chimique Belge (UCB), Idorsia Pharmaceuticals and Voluntis. Ms. Monges has served as a strategic advisor to NeoMedLight since January 2014.

Ms. Monges served as Vice President of Finance & Control - Nestlé

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Business Excellence at Nestlé S.A. from February 2015 to May 2017, Group Chief Financial Officer at Nestlé Skin Health from October 2010 to February 2015 and Global Chief Financial Officer - OTC Division at Novartis from June 2008 to September 2010. Ms. Monges received an M.B.A. from ESCP Business School. The board of directors believes that Ms. Monges' extensive business experience in the biopharmaceutical industry allows her to make valuable contributions to the board of directors.

Julie O'Neill has served as a member of our board of directors since June 2017. From January 2015 to September 2018, Ms. O'Neill was served as the Executive Vice President, Global Operations for Alexion Pharmaceuticals Inc. From 2014 to 2015, Ms. O'Neill was Senior Vice President of Global Manufacturing Operations and General Manager of Alexion Pharma International Trading. Prior to joining Alexion, Ms. O'Neill served in various leadership positions at Gilead Sciences from 1997 to 2014 including Vice President of Operations and General Manager of Ireland from 2011 to 2014. Prior to Gilead Sciences, Ms. O'Neill held leadership positions at Burnil Pharmacies and Helsinn Birex Pharmaceuticals. She is the Chairperson for the National Standards Authority of Ireland and is a member of the Boards of the National Institute for Bioprocessing Research & Training and the American Chamber of Commerce, Ireland. From January 2019 to October 2019, Ms. O'Neill was engaged by us to serve as a consultant to support CMC activities, including our BLA resubmission for ViaskinTM Peanut. Ms. O'Neill received a Bachelor of Science in Pharmacy from University of Dublin, Trinity College and a Masters of Business Administration from University College Dublin (Smurfit School of Business). The board of directors believes that Ms. O'Neill's experience in the life sciences industry and her knowledge of corporate development matters allow her to make valuable contributions to the board of directors.

Daniel Soland has served as a member of our board of directors since March 2015. Mr. Soland most recently served as Senior Vice President and Chief Operating Officer of Viropharma from March 2008 to December 2014, and currently serves on the board of directors of Acadia Pharmaceuticals Inc. and Kalvista Pharmaceuticals, Inc. In addition to his role at Viropharma, where he helped build the organizational and commercial infrastructure that resulted in an 11-fold increase in Viropharma's share price during his tenure, Mr. Soland previously served as President of Chiron Vaccines, and helped engineer a turnaround that contributed to Chiron's acquisition by Novartis. Prior to then, he served as President and Chief Executive Officer of Epigenesis Pharmaceuticals. At GlaxoSmithKline Biologicals, Mr. Soland served as Vice President and Director, Worldwide Marketing Operations. Earlier in his career, Mr. Soland held positions of increasing responsibility in sales and product management at Pasteur-Merieux's Connaught Laboratories. He holds a B.S. in Pharmacy from the University of Iowa. The board of directors believes that Mr. Soland's extensive executive and management experience in the pharmaceutical industry worldwide, notably at various senior commercial operations positions, allow him to make valuable contributions to the board of directors.

Family Relationships

There are no family relationships among any of our executive officers or directors.

  1. Compensation.

The aggregate compensation recorded and benefits in kind granted by us to our current executive officers and directors, including share-based compensation, for the year ended December 31, 2019, was €16 million. For the year ended December 31, 2019, the aggregate compensation includes severance pay for Executive Committee members in connection with our organizational changes. For the year ended December 31, 2019, €0.1 million of the amounts set aside or accrued to provide pension, retirement or similar benefits to our employees was attributable to our executive officers.

Director Compensation

On March 24, 2015, upon recommendation of our compensation committee, our board of directors set attendance fees for our non-employee directors at a fixed annual retainer of €30,000 per year, regardless of whether or not the director is independent. The members of our audit committee and compensation committee, regardless of whether or not the director is independent, are each entitled to an additional retainer of €5,000 per year. This amount will be increased to €10,000 per year for the chairman of said committees.

On December 9, 2016, upon recommendation of our compensation committee, our board of directors approved an amendment to our non-executive director compensation policy to set attendance fees for our non-employee directors at a fixed annual retainer of €70,000 per year, regardless of whether or not the director is independent. Under the proposed revised policy, the chairman of the audit committee will be entitled to an additional retainer of €20,000 per year, the chairman of the compensation committee will be entitled to an additional retainer of €10,000 per year, and the other members of our audit committee and compensation committee, regardless of whether or not the director is independent, will each be entitled to an additional retainer of €5,000 per year.

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On June 15, 2017, our shareholders at our ordinary shareholders' general meeting set the total annual attendance fees to be distributed among non-employee directors at €600,000, which is then distributed according to the amended non-executive director compensation policy. Shareholder authorization for total attendance fees is automatically renewed each year, unless otherwise decided by our shareholders at an ordinary shareholders' general meeting.

On November 16, 2018, we announced the appointment of Daniel Tassé as our Chief Executive Officer and the retirement of Pierre-Henri Benhamou as our Chief Executive Officer.

On November 28, 2018, upon recommendation of our compensation committee, our board of directors decided to allocate to Dr. Benhamou a fixed annual compensation of €150,000 for his functions of Chairman of the Board of Directors.

On December 12, 2018, upon recommendation of our compensation committee, our board of directors approved an amendment to our non-executive director compensation policy to set attendance fees for the members of our nominating and governance committee at a fixed annual retainer of €10,000 per year to the chairman of the nominating committee and €5,000 per year to the other members, regardless of whether or not the director is independent.

On March 5, 2018, we announced the appointment of Daniel Tassé as Board member in replacement of Dr. Pierre-Henri Benhamou. We also announced the appointment of Michel de Rosen as our Non-executive Chairman and the resignation of Pierre-Henri Benhamou as our Non-executive Chairman.

The following table sets forth information regarding the compensation earned by our non-employee directors for 2019. Mr. Tassé, our Chief Executive Officer, is a director but does not receive any additional compensation for his services as a director

Fees

Name

Earned

Warrants

Total

(thousands

of Euros)

Michel de Rosen

141.9

(1)

- (4)

141.9

Pierre-Henri Benhamou(2)

26.2

- (4)

26.2

Torbjörn Bjerke

87

- (4)

87

Maïlys Ferrère

-

- (4)

-

Claire Giraut

90

- (4)

90

Michael J. Goller

85

- (4)

85

Viviane Monges(3)

45.4

- (4)

45.4

Julie O'Neil

630

(5)

- (4)

630

Daniel Soland

80

- (4)

80

  1. Includes a lump sum of €125,000 for Mr. de Rosen's role as chairman of our board of directors.
  2. Mr. Benhamou resigned from his position as our chairman and as a member of our board of directors in March 2019.
  3. Ms. Monges was appointed to the board of directors on May 24, 2019.
  4. This column reflects the full grant date fair value for warrants granted during 2019 as measured pursuant to IFRS 2-Share-Based Payment as share-based compensation in our financial statements. Unlike the calculations contained in our financial statements, this calculation does not give effect to any estimate of forfeitures related to service-based vesting, but assumes that the director will perform the requisite service for the award to vest in full. The assumptions we used in valuing options are described in Note 18 to our financial statements included in this Annual Report on Form 20-F.
  5. Includes a lump sum of €560,000 for a consulting services.

CEO and Former Deputy CEOs Compensation

The following table sets forth information regarding compensation earned by Mr. Daniel Tassé, our Chief Executive Officer and director, and Messrs. Schilansky and Martin, our former Deputy Chief Executive Officers, during the year ended December 31, 2019.

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Non-Equity

Equity

Incentive Plan

Special

Name and

Salary

Bonus

Awards

Compensation

Compensation

Total

Principal Position

Daniel Tassé

Chief Executive Officer and Director(1)

536,487

694,321

1,512,149

-

29,313

2,772,270

David Schilansky

Former Deputy Chief Executive Officer (2)

252,526

-

-

-

-

252,526

Laurent Martin

Former Deputy Chief Executive (3)

189,788

-

-

-

-

189,788

  1. Mr. Tassé was appointed as a member of our board of directors in March 2019.
  2. Mr. Schilansky resigned as our Deputy Chief Executive Officer in August 2019.
  3. Mr. Martin resigned as our Deputy Chief Executive Officer in January 2020.

Executive Compensation Arrangements

For a discussion of our employment arrangements with our executive officers, see "Item 7.B-Related Party Transactions-Arrangements with Our Directors and Executive Officers." Except the arrangements described in "Item 7.B-Related Party Transactions-Arrangements with Our Directors and Executive Officers," there are no arrangements or understanding between us and any of our other executive officers providing for benefits upon termination of their employment, other than as required by applicable law.

Limitations on Liability and Indemnification Matters

Under French law, provisions of by-laws that limit the liability of directors are prohibited. However, French law allows sociétés anonymes to contract for and maintain liability insurance against civil liabilities incurred by any of their directors and officers involved in a third-party action, provided that they acted in good faith and within their capacities as directors or officers of the company. Criminal liability cannot be indemnified under French law, whether directly by the company or through liability insurance.

We maintain liability insurance for our directors and officers, including insurance against liability under the Securities Act and we intend to enter into agreements with our directors and executive officers to provide contractual indemnification. With certain exceptions and subject to limitations on indemnification under French law, these agreements will provide for indemnification for damages and expenses including, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding arising out of his or her actions in that capacity. We believe that this insurance and these agreements are necessary to attract qualified directors and executive officers.

These agreements may discourage shareholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and executive officers, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder's investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these insurance agreements.

Certain of our non-employee directors may, through their relationships with their employers or partnerships, be insured against certain liabilities in their capacity as members of our board of directors.

Equity Incentives

We believe that our ability to grant incentive awards is a valuable and necessary compensation tool that allows us to attract and retain the best available personnel for positions of substantial responsibility, provides additional incentives to employees and promotes the success of our business. Due to French corporate law and tax considerations, historically, we have granted several different equity incentive instruments to our directors, executive officers, employees and other service providers. These are:

  • employee warrants (otherwise known as bons de souscription de parts de créateurs d'entreprise, or BSPCE), granted to our officers and employees;

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  • non-employeewarrants (otherwise known as bons de souscription d'actions, or BSA), historically typically granted only to non-employee directors, members of our Scientific Advisory Board and other service providers not eligible for either employee warrants or employee share options;
  • employee share options (otherwise known as options de souscription d'actions, or OSA), granted to our officers and employees; and
  • free shares (otherwise known as actions gratuites).

Our board of directors' authority to grant these equity incentive instruments and the aggregate amount authorized to be granted must be approved by a two-thirds majority of the votes held by our shareholders present, represented or voting by authorized means at the relevant extraordinary shareholders' meeting. Once approved by our shareholders, our board of directors can continue to grant such awards for 18 months for employee warrants and non-employee warrants authorized by the shareholders and 38 months for employee share options and free shares authorized by the shareholders.

We are no longer eligible to issue employee warrants since completion of our initial public offering on Euronext Paris in 2012.

In general, employee warrants, employee share options and non-employee warrants no longer continue to vest following termination of the employment, office or service of the holder and all vested shares must be exercised within post-termination exercise periods set forth in the grant documents. In the event of certain changes in our share capital structure, such as a consolidation or share split or dividend, French law and applicable grant documentation provides for appropriate adjustments of the numbers of shares issuable and/or the exercise price of the outstanding warrants or share options.

As of December 31, 2019, employee warrants, non-employee warrants, employee share options and free share were allowing for the purchase of an aggregate of 3,976,271 ordinary shares at a weighted average exercise price of €30.64 per share (not including the 641,728 ordinary shares issuable upon the vesting of outstanding free shares that may be issued for free with no exercise price being paid).

Employee Warrants (BSPCE)

Employee warrants were granted only to our employees who are French tax residents as they carry favorable tax and social security treatment for French tax residents. Employee warrants may also be granted to our chairman and general manager and to our deputy general managers. Similar to options, they entitle a holder to exercise the warrant for the underlying vested shares at an exercise price per share determined by our board of directors and at least equal to the fair market value of an ordinary share on the date of grant. Employee warrants may only be issued by growth companies meeting certain criteria, which we will not meet following the completion of the offering. There is no legal limitation to the size of the employee warrant (BSPCE) pool under French law.

We have issued three types of employee warrants as follows

Plan title

BSPCE 4

BSPCE X

BSPCE 2010

Meeting date

1/21/2009

1/21/2009

12/16/2010

Date of allocation by the Board of Directors

1/21/2009

1/21/2009

6/24/2011

11/22/2011

Total number of BSPCE authorized

5,358

10,858

59,405

59,405

Total number of BSPCEs granted

5,358

2,296

24,000

10,039

including those granted to Daniel Tassé

-

-

-

-

Start date for the exercise of the BSPCEs

1/21/2009

1/21/2010

12/23/2011

11/22/2012

BSPCE expiry date

1/21/2019

1/21/2019

6/24/2021

11/22/2021

BSPCE exercise price(1)

4.33

4.67

5.13

5.13

Number of shares subscribed as of December 31, 2019(1)

80,370

34,440

252,510

150,585

Total number of BCPCEs canceled or obsolete as of

December 31, 2019

-

-

-

-

Total number of BCPCEs outstanding as of December 31,

2019

-

-

7,166

-

Total number of shares available for subscription as of

December 31, 2019(1)

-

-

107,490

-

  1. The number of shares reflects an adjusted exercise parity of the division by 15 of the nominal value of the shares decided by the general meeting of shareholders held on December 9, 2011, namely that each BPSCE is now entitled to a subscription right to 15 new shares instead of 1 new share. For the same reason, the exercise price of each BPSCE plan has been adjusted accordingly and equals 1/15 of the price initially determined by the general meeting of shareholders having authorized each of the plans.

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All BPSCE 4, BPSCE X and BSPCE 2010 granted on June 2011 and BSPCE 2010 granted on November 2011 are exercisable.

Administration. Pursuant to delegations granted by our shareholders, our board of directors determined the recipients, dates of grant and exercise price of employee warrants, the number of employee warrants to be granted and the terms and conditions of the employee warrants, including the period of their exercisability and their vesting schedule. The board of directors has the authority to extend the post-termination exercise period of employee warrants after the termination of the employment agreement.

Employee warrants are not transferable and may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by laws of descent or distribution and may be exercised, during the lifetime of the beneficiary, only by the beneficiary.

Non-Employee Warrants (BSA)

Historically, non-employee warrants were typically granted by our board of directors to non-employee directors, members of our Scientific Advisory Board and other service providers not eligible for either employee warrants or employee share options. In addition to any exercise price payable by a holder upon the exercise of any non-employee warrant, non-employee warrants need to be subscribed for a price which is determined by the board on the date of grant. There is no legal limitation to the size of the non-employee warrant pool.

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We have issued several types of non-employee warrants (BSAs) as of December 31, 2019, the terms of which are set forth in the chart below:

BSA

Plan title

BSA 2010

BSA 2012

BSA 2013

2014

Meeting date

12/16/2010

12/9/2011

6/4/2013

6/3/2014

Date of grant by the Board

of Directors

1/28/2011

6/24/2011

11/22/2011

1/17/2012

9/25/2012

7/25/2013

6/3/2014

Total number of BSAs

authorized

59,405

59,405

59,405

59,405

300,000

100,000(2)

307,468

Total number of BSAs

granted

10,039

8,000

1,338

89,835(3)

30,000

73,000

10,000

Including those granted to

Daniel Tassé

-

-

-

-

-

-

-

Torbjørn Bjerke

-

-

-

-

2,500

2,500

2,500

Start date for the exercise of

the BSAs

12/23/2011

12/23/2011

11/22/2012

1/17/2016

9/25/2013

7/25/2013

6/3/2014

BSA expiry date

1/28/2021

6/24/2021

11/22/2021

1/17/2022

9/25/2022

7/25/2023

6/3/2024

BSA exercise price

5.13

5.13

5.13

5.13

8.59

8.10

€ 18.79

Number of shares

subscribed as of

December 31, 2019(1)

37,650(1)

112,500(1)

20,070(1)

89,835

25,000

66,000

10,000

Total number of BSAs

canceled or obsolete as of

December 31, 2019

7,529

-

-

-

-

-

-

Total number of BSAs

remaining as of

December 31, 2019

-

500

-

-

5,000

7,000

-

Total number of shares

available for subscription

as of December 31,

2019(1)

-

7,500

-

-

5,000

7,000

-

  1. The number of shares reflects an adjusted exercise parity of the division by 15 of the nominal value of shares. Namely, each BSA is now entitled to a subscription right to 15 new shares instead of 1 new share. For the same reason, the exercise price of each BSA plan has been adjusted accordingly and equals 1/15 of the price initially determined.
  2. The overall nominal amount of the shares to which the warrants issued are likely to give entitlement may not exceed €100,000.
  3. The number of BSAs reflects an adjusted exercise parity of the division by 15 of the nominal value of shares.

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BSA X

Plan Title

BSA 2015

2015

BSA 2016

BSA 2017

General Meeting Date

06/03/14

06/23/15

06/23/15

06/21/16

06/21/16

06/15/17

Date of the Grant by the Board of Directors

03/24/15

11/19/15

12/15/15

06/21/16

12/09/16

06/15/17

Total Numbers of BSA's granted

10,000

22,500

90,000(1)

20,000

59,000(2)

9,000

including those granted to:

Torbjørn Bjerke

-

7,500

-

-

7,000

-

Daniel Soland

10,000

7,500

-

-

7,000

-

Michael Goller

-

-

7,500

-

7,000

-

Claire Giraut

-

-

-

10,000

-

-

Julie O'Neill

-

-

-

-

-

9,000

Start date of the exercise of the BSAs

03/24/15

11/19/15

12/15/15

06/21/16

12/09/16

06/15/17

BSA expiry date

03/24/25

11/19/25

12/15/25

06/21/26

12/09/26

06/15/27

BSA exercise price

€ 43.00

€ 66.06

€ 64.14

€ 52.97

€ 69.75

€ 59.05

Numbers of shares subscribed as of December 31, 2019

-

-

-

-

-

-

Total number of BSAs cancelled or obsolete as of

December 31, 2019

-

7,500

16,500(1)

-

24,992

-

Total number of BSAs remaining as of December 31, 2019

10,000

15,000

73,500

20,000

34,008

9,000

Total number of shares available for subscription as of

December 31, 2019

10,000

15,000

73,500

20,000

34,008

9,000

  1. The final subscription date for the BSAs issued in December 2015 was February 15, 2016; none of these BSAs were subscribed as of December 31, 2015. At February 15, 2016, 73,500 BSAs were subscribed and 16,500 BSAs were cancelled.
  2. The final subscription date for the BSAs issued in December 2016 was February 9, 2017; none of these BSAs were subscribed as of December 31, 2016. At February 9, 2017, 34,008 BSAs were subscribed.

All BSA, BSA X and BSA 2010 are currently exercisable. All BSA 2012, 2013, 2014 2015 and BSA X 2015 are exercisable subject to continuous membership of our Board or Scientific Advisory Board (as the case may be) and subject to applicable insiders' rules.

Administration. Pursuant to delegations granted by our shareholders, our board of directors determined the recipients, dates of grant and exercise price of non-employee warrants, the number of non-employee warrants to be granted and the terms and conditions of the non-employee warrants, including the period of their exercisability and their vesting schedule. The board of directors has the authority to extend the post-termination exercise period of non-employee warrants after the end of the term of office.

Non-employee warrants may be transferred to any person and may be exercised by their holder at any time subject to vesting.

Share Options (OSA)

We have granted share options to our employees and our officers pursuant to our 2013 Share Option Plan, or 2013 Plan, our 2014 Share Option Plan, or 2014 Plan, our 2015 Share Option Plan, or 2015 Plan, our 2016 Share Option Plan, or 2016 Plan, our 2017 Share Option Plan, or 2017 Plan, our 2018 Share Option Plan, or 2018 Plan, and our 2019 Share Option Plan, or 2019 Plan. Our current plan, the 2019 Plan, was adopted by our board of directors on May 24, 2019.

Share options may be granted to any individual employed by us or by any affiliated company under the terms and conditions of an employment contract. Employee share options may also be granted to our chairman and general manager and to our deputy general managers and are subject to the fulfillment of certain performance conditions.

The maximum number of our ordinary shares that may be issued pursuant to share options granted under the 2013 Plan, 2015 Plan, 2016 Plan, 2017 Plan, 2018 Plan and 2019 Plan are 203,000, 120,000, 214,345, 522,825, 760,775 and 1,181,100 respectively. In addition, under French law, the maximum number of shares issuable upon exercise of outstanding employee share options may not exceed one-third of the outstanding share capital on a non-diluted basis as at the date of grant.

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Plan title

SO 2013

SO 2014

SO 2015

Meeting date

12/09/2011

06/03/2014

06/03/2014

06/03/2014

06/03/2014

Date of allocation by the board of directors

09/30/2015

12/15/2015

9/18/2013

06/03/2014

6/23/2015

11/19/2015

01/04/2016

Total number of options granted

518,000

75,000

120,000

195,000

75,000

Including those granted to Daniel Tassé

-

-

-

-

-

David Schilansky

(3)

-

-

-

-

Laurent Martin

(4)

-

-

-

-

Start date for the exercise of options(1)

9/19/2017

06/04/2016

6/24/2016(2)

11/19/2016(2)

01/04/2017(2)

Options expiry date

9/18/2023

06/03/2024

6/24/2026

11/19/2025

01/04/2026

Options exercise price

7.57

19.01

48.90

66.06

65.68

Number of shares subscribed as of December 31,

2019

268,000

35,000

-

-

-

Total number of options canceled or obsolete as

of December 31, 2019

47,000

40,000

-

195,000

-

Total number of options remaining as of

December 31, 2019

203,000

-

120,000

-

75,000

Total number of shares available for subscription

as of December 31, 2019

203,000

-

120,000

-

75,000

  1. By way of exception, in the event of a change in control (as defined in Article L.233-3 of the French Commercial Code) all of the options could be exercised in advance.
  2. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 25% of the SO as of 26 months after the grant date; (iii) up to an additional 25% of the SO as of 36 months after the grant date; and (iv) up to an additional 25% of the SO as of 48 months after the grant date.
  3. Mr. Schilansky was appointed to serve as our Executive Vice President by our board of directors on December 16, 2014 as of January 8, 2015. Only the plans granted since his appointment are mentioned in this section. Mr. Schilansky resigned as our Deputy Chief Executive Officer in September 2019.
  4. Mr. Martin was appointed to serve as our Executive Vice President and Responsible Pharmacist (Qualified Person) by our board of directors on March 14, 2017. Only the plans granted since his appointment are mentioned in this section.

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Plan Title

SO 2016

Meeting date

03/06/14

03/06/14

03/06/14

03/06/14

03/06/14

03/06/14

03/06/14

03/06/14

03/06/14

Date of allocation by the

board of directors

04/06/16

04/06/16

06/21/16

06/21/16

06/21/16

06/21/16

06/21/16

12/09/16

12/15/16

04/21/16

05/02/16

08/01/16

09/15/16

10/17/16

11/15/16

Total number of options

granted

33,000

22,000

110,000

10,000

9,300

16,500

8,300

74,960

1,100

Including those granted to:

Daniel Tassé

-

-

-

-

-

-

-

-

-

David Schilansky

-

-

-

-

-

-

-

-

-

Start date for the exercise of

options

04/21/17(1)

05/02/17(1)

06/21/17(2)

08/01/17(2)

09/15/17(2)

10/17/17(2)

11/15/17(2)

12/09/17

12/15/17

Options expiry date

04/21/26

05/02/26

06/21/26

08/01/26

09/15/26

10/17/26

11/15/26

12/09/26

12/15/26

Options exercise price

€ 62.82

€ 59.04

€ 53.96

€ 62.24

€ 62.80

€ 64.39

€ 68.33

€ 69.75 €

69.35

Number of shares subscribed

as of December 31, 2019

-

-

1,200

-

-

-

-

-

-

Total number of options

canceled or obsolete as of

December 31, 2019

11,000

22,000

71,300

-

-

7,200

-

32,015

-

Total number of options

remaining as of

December 31, 2019

22,000

-

37,500

10,000

9,300

9,300

8,300

42,945

1,100

Total number of shares

available for subscription

as of December 31, 2019

22,000

-

37,500

10,000

9,300

9,300

8,300

42,945

1,100

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 25% of the SO as of 26 months after the grant date; (iii) up to an additional 25% of the SO as of 36 months after the grant date; and (iv) up to an additional 25% of the SO as of 48 months after the grant date.
  2. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.

119

Plan Title

SO 2017

Meeting

date

06/03/2014

06/03/2014

06/03/2014

06/03/2014

06/15/2017

06/15/2017

06/15/2017

06/15/2017

06/15/2017

Date of

allocation by

the board of

directors

01/16/2017

03/15/2017

04/18/2017

06/15/2017

06/15/2017

07/17/2017

09/15/2017

12/05/2017

12/15/2017

Total number of

options

granted

19,100

7,200

16,500

126,000

111,600

30,900

52,600

625,200

8,300

Including those

granted to:

Daniel Tassé

-

-

-

-

-

-

-

-

-

David

Schilansky

-

-

-

-

-

-

-

-

-

Laurent Martin

-

-

-

-

-

-

-

-

-

Start date for

the exercise

of options

01/16/2018(1)

03/15/2018(1)

04/18/2018(1)

06/15/2018(1)

06/15/2018(1)

07/17/2018(1)

09/15/2018(1)

12/05/2018((1)

12/15/2018((1)

Options expiry

date

01/16/2027

03/15/2027

04/18/2027

06/15/2027

06/15/2027

07/17/2027

09/15/2027

12/05/2027

12/15/2027

Options

exercise price €

66.11

66.25 €

60.77 €

59.05 €

60.54 €

71.61 €

74.22 €

39.00

38.18

Number of

shares

subscribed as

of

December 31,

2019

-

-

-

-

-

-

-

-

-

Total number of

options

canceled or

obsolete as of

December 31,

2019

19,100

7,200

9,300

65,000

55,000

23,700

7,200

289,175

-

Total number of

options

remaining as

of

December 31,

2019

-

-

7,200

61,000

56,600

7,200

45,400

336,025

8,300

Total number of

shares

available for

subscription

as of

December 31,

2019

-

-

7,200

61,000

56,600

7,200

45,400

336,025

8,300

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.

120

Plan Title

SO 2018

SO 2018

Meeting date

06/15/2017

06/15/2017

06/15/2017

06/15/2017

06/22/2018

06/22/2018

06/22/2018

06/22/2018

06/22/2018

Date of

allocation by

the board of

directors

01/15/2018

04/16/2018

05/15/2018

06/15/2018

06/22/2018

07/16/2018

08/15/2018

09/6/2018

09/15/2018

Total number of

options

granted

15,500

16,500

16,500

23,600

50.000

28,800

33,500

65,000

80,900

Including those

granted to::

-

Daniel Tassé

-

-

-

-

-

-

-

-

-

David

Schilansky

-

-

-

-

-

-

-

-

-

Laurent Martin

-

-

-

-

-

-

-

-

-

Start date for

the exercise

of options

01/15/2019(1)

04/16/2019(1)

05/15/2019(1)

15/06/2019(1)

06/22/2019(1)(2)

07/16/2019(1)(2)

08/15/2019(1)(2)

09/06/2019(1)(2)

09/15/2019(1)(2)

Options expiry

date

01/15/2028

04/16/2028

05/15/2028

06/15/2028

06/22/2028

07/16/2028

08/15/2028

09/6/2028

09/15/2028

Options

exercise price €

43.60

38.64 €

40.84 €

38.92

37.22

33.81

32.90

36.96

40.94

96

Number of

shares

subscribed as

of

December 31,

2019

-

-

-

-

-

-

-

-

-

Total number of

options

canceled or

obsolete as of

December 31,

2019

7,200

-

-

-

-

-

7,200

-

36,425

Total number of

options

remaining as

of

December 31,

2019

8,300

16,500

16,500

23,600

50,000

28,800

26,300

65,000

44,475

Total number of

shares

available for

subscription

as of

December 31,

2019

8,300

16,500

16,500

23,600

50,000

28,800

26,300

65,000

44,475

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.
  2. The exercise of these options will be subject to the fulfillment of a presence condition and the following performance condition: authorization to market ViaskinTM Peanut by the FDA.

121

Plan Title

SO 2018

Meeting date

06/22/2018

06/22/2018

06/22/2018

06/22/2018

06/22/2018

Date of allocation by the board of

directors

10/15/2018

11/15//2018

11/29/2018

12/12/2018

12/15/2018

Total number of options granted

76,700

26,000

350,000

34,000

7,200

Including those granted to::

Daniel Tassé

-

-

350,000

-

-

David Schilansky

-

-

-

-

-

Laurent Martin

-

-

-

-

-

Start date for the exercise of

options

10/15/2019(1)(2)

11/15/2019(1)(2)

11/29/2019(1)(2)

12/12/2019(2)(3)

12/15/2019(2)(3)

Options expiry date

10/15/2028

11/15/2028

11/29/2028

12/12/2028

12/15/2028

Options exercise price

37.28

32.57

30.02

27.96

26.76

Number of shares subscribed as

of December 31, 2019

-

-

-

-

-

Total number of options canceled

or obsolete as of December 31,

2019

5,400

7,200

-

-

-

Total number of options

remaining as of December 31,

2019

71,300

18,800

350,000

34,000

7,200

Total number of shares available

for subscription as of

December 31, 2019

71,300

18,800

350,000

34,000

7,200

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.
  2. The exercise of these options will be subject to the fulfillment of a presence condition and the following performance condition: authorization to market ViaskinTM Peanut by the FDA.

122

Plan Title

Plan Title

SO 2018

SO 2019

Meeting date

06/22/2018

06/22/2018

06/22/2018

05/24/2019

05/24/2019

Date of allocation by the board of

directors

01/15/2019

03/20//2019

05/15/2019

05/24/2019

06/17/2019

Total number of options granted

9,500

547,100

7,200

150,000

7,200

Including those granted to::

Daniel Tassé

-

-

-

150,000

-

David Schilansky

-

-

-

-

-

Laurent Martin

-

-

-

-

-

Start date for the exercise of

options

01/15/2020(1)(2)

03/20//2020(1)(2)

05/15/2020(1)(2)

05/24/2020(2)(3)

06/17/2020(2)(3)

Options expiry date

01/15/2029

03/20//2029

05/15/2029

05/24/2029

06/17/2029

Options exercise price

15.61

14.58

16.82

16.99

16.38

Number of shares subscribed as

of December 31, 2019

-

-

-

-

-

Total number of options canceled

or obsolete as of December 31,

2019

7,200

52,300

-

-

-

Total number of options

remaining as of December 31,

2019

2,300

494,800

7,200

150,000

7,200

Total number of shares available

for subscription as of

December 31, 2019

2,300

494,800

7,200

150,000

7,200

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.
  2. The exercise of these options will be subject to the fulfillment of a presence condition and the following performance condition: authorization to market ViaskinTM Peanut by the FDA.

123

Plan Title

Plan Title

SO 2018

SO 2019

Meeting date

05/24/2019

05/24/2019

05/24/2019

05/24/2019

05/24/2019

Date of allocation by the board of

directors

07/01/2019

07/22//2019

09/16/2019

10/16/2019

12/16/2019

Total number of options granted

403,400

75,000

34,000

3,500

53,100

Including those granted to::

Daniel Tassé

-

-

-

-

-

David Schilansky

-

-

-

-

-

Laurent Martin

-

-

-

-

-

Start date for the exercise of

options

07/01/2020(1)(2)

07/22//2020(1)(2)

09/16/2020(1)(2)

10/16/2020(2)(3)

12/16/2020(2)(3)

Options expiry date

07/01/2029

07/22//2029

09/16/2029

10/16/2029

12/16/2029

Options exercise price

15.43

17.90

18.00

15.30

15.80

Number of shares subscribed as

of December 31, 2019

-

-

-

-

-

Total number of options canceled

or obsolete as of December 31,

2019

49,400

-

-

-

-

Total number of options

remaining as of December 31,

2019

354,000

75,000

34,000

3,500

53,100

Total number of shares available

for subscription as of

December 31, 2019

354,000

75,000

34,000

3,500

53,100

  1. The SOs may be exercised by the beneficiary on the basis of the following vesting schedule: (i) up to 25% of the SO as of one year after the grant date; (ii) up to an additional 12.5% of the SO as of 18 months after the grant date; (iii) up to an additional 12.5% of the SO as of 26 months after the grant date; (iv) up to an additional 12.5% of the SO as of 30 months after the grant date; (v) up to an additional 12.5% of the SO as of 36 months after the grant date; (vi) up to an additional 12.5% of the SO as of 42 months after the grant date; and (vii) up to an additional 12.5% of the SO as of 48 months after the grant date.
  2. The exercise of these options will be subject to the fulfillment of a presence condition and the following performance condition: authorization to market ViaskinTM Peanut by the FDA.

Administration. Our board of directors has the authority to administer the 2013 Plan, 2014 Plan, 2015 Plan, 2016 Plan, 2017 Plan, 2018 Plan and 2019 Plan, or collectively, the Plans. Subject to the terms of each of the Plans, our board of directors determines recipients, dates of grant, exercise price of share options, the number of share options to be granted and the terms and conditions of the share options, including the period of their exercisability and their vesting schedule.

The board of directors has the authority to modify awards outstanding under the Plans subject to the consent of the optionee if such modification is detrimental to him/her, including in particular the authority to extend the post-termination exercise period after the termination of the employment.

124

The term of each share option is ten years from the date of grant or, in the case of death or disability of the optionee during such ten-year period, six months from the death or disability of the optionee in accordance with French law. In the event of the death of an optionee during the term of the options, unless otherwise resolved by the board of directors, the vested options may be exercised at any time within six months following the date of death, by the optionee's estate or by a person who acquired the right to exercise the option by bequest or inheritance.

Share options are not transferable and may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by laws of descent or distribution and may be exercised, during the lifetime of the optionee, only by the optionee.

Amendment and Termination. Our board of directors has the authority to amend, alter, suspend, or terminate the Plans, provided that such action does not impair the rights of any optionee without such optionee's consent. We shall obtain shareholder approval of any amendment to the extent necessary and desirable to comply with applicable laws.

Free Shares

Under our 2012, 2013, 2014, 2015, 2017, 2018 and two 2019 Free Share Plans, we have granted free shares to our employees and officers. We have eight current free share plans, including a 2015 Free Share Plan, which was adopted by our board of directors on September 30, 2015, a 2015 Free Share Plan, which was adopted by our board of directors on December 15, 2015, a 2016 Free Share Plan, which was adopted by our board of directors on April 6, 2016, a 2016 Free Share Plan, which was adopted by our board of directors on October 27, 2016, a 2017 Free Share Plan, which was adopted by our board of directors on March 14, 2017, a 2017 Free Share Plan, which was adopted by our board of directors on April 20, 2017, a 2018 Free Share Plan, which was adopted by our board of directors on June 22, 2018, a 2019 Free Share Plan, which was adopted by our board of directors on May 24, 2019, and a second 2019 Free Share Plan, which was adopted by our board of directors on December 11, 2019.

Free shares may be granted to any individual employed by us or by any affiliated company under the terms and conditions of an employment contract. Free shares may also be granted to our Chairman, our general manager and to our deputy general managers. However, no free share may be granted to a beneficiary holding more than 10% of our share capital or to a beneficiary who would hold more than 10% of our share capital as a result of such grant.

Share Reserve. The maximum number of our ordinary shares that may be issued, in aggregate, under the 2017, 2018 and 2019 Free Share Plans is 641,728. In addition, under French law, the number of free shares may not exceed 10% of the outstanding share capital on a non-diluted basis as at the date of grant.

The details of the grants under the 2017, 2018 and 2019 Free Share Plans as of December 31, 2019 are as follows:

INFORMATION

REGARDING

FREE SHARES

Plan Title

AGA 2017

General

meeting date

09/21/15

09/21/15

Date of grant by the board of directors

03/14/2017

04/20/2017

Total number of free shares granted

22,500

24,000

Including those granted to::

•   Monsieur Daniel Tassé

-

-

•   Monsieur David Schilansky

-

-

•   Monsieur Laurent Martin(2)

-

-

Date of definitive acquisition of free shares (subject to the conditions of

acquisition) (1)

03/14/19(1)

04/20/19(1)

End date of retention period

(3)

(3)

Number of shares acquired definitively as of December 31, 2019

6,000

12,000

Cumulative number of free shares canceled or lapsed as of December 31, 2019

10,500

4,000

Shares acquired free of charge remaining as of December 31, 2019 (in

acquisition period)

6,000

8,000

  1. The acquisition of free shares is conditional for every employee, to the achievement of the two performance criteria below:
    • half of the shares allocated will not vest until the later of the following two dates: (i) the end of the two-year vesting period which runs from the date of the grant and (ii) BLA file accepted for review by the FDA for ViaskinTM Peanut.

125