DBV TECHNOLOGIES You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this Report and with our audited financial statements and related notes thereto for the year endedDecember 31, 2021 , included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSecurities and Exchange Commission onMarch 9, 2022 , or the Annual Report. This discussion and other parts of this Report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause such differences are discussed in the section of this Report titled "Special Note Regarding Forward-Looking Statements" and under "Item 1A. Risk Factors" in the Annual Report.
Overview
We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. 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 Viaskin. We have generated significant data demonstrating that Viaskin'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 as anaphylactic shock. We believe Viaskin may offer convenient, self-administered, non-invasive immunotherapy to patients. Following receipt of a CRL from the FDA in connection with our BLA for Viaskin Peanut, beginning inAugust 2020 , we scaled down our other clinical programs and pre-clinical spend to focus on Viaskin Peanut. We also initiated a global restructuring plan inJune 2020 to provide operational latitude to progress the clinical development and regulatory review of Viaskin Peanut in theUnited States andEuropean Union . InJanuary 2021 , we received written responses from the FDA to questions provided in the Type A meeting request we submitted inOctober 2020 following the CRL. The FDA agreed with our position that a modified Viaskin Peanut patch should not be considered as a new product entity provided the occlusion chamber of the current Viaskin Peanut patch and the peanut protein dose of 250 µg (approximately 1/1,000 of one peanut) remains unchanged and performs in the same way it has performed previously. In order to confirm the consistency of efficacy data between the existing and a modified patch, FDA requested an assessment comparing the uptake of allergen (peanut protein) between the patches in peanut allergic children ages 4-11. We named that assessment EQUAL, which stands for Equivalence in Uptake of Allergen. The FDA also recommended conducting a 6-month, well-controlled safety and adhesion trial to assess a modified Viaskin Peanut patch in the intended patient population. We later named this clinical trial STAMP, which stands for Safety, Tolerability, and Adhesion of Modified Patches.
Based on the
1. Identify a modified Viaskin patch (which we call mVP).
2. Generate the
6-month
safety and adhesion clinical data FDA requested via STAMP, which we expected
to be the longest component of the mVP clinical plan. We prioritized the
STAMP protocol submission so we could begin the clinical trial as soon as
possible.
3. Demonstrate the equivalence in allergen uptake between the current and
modified patches in the intended patient population via EQUAL. The complexity
of EQUAL hinged on the lack of established clinical and regulatory criteria
to characterize allergen uptake via an epicutaneous patch. To support those
exchanges, we outlined our proposed approach to demonstrate allergen uptake
equivalence between the two patches, and allotted time to generate
informative data through two additional Phase I clinical trials in healthy
adult volunteers:
a. PREQUAL, a Phase I trial with adult healthy volunteers to optimize the
allergen sample collection methodologies and validate the assays we
intend to use in EQUAL. The data collection phase of the trial is
complete, and the data analysis phase is ongoing.
b. 'EQUAL in adults,' a second Phase I trial with adult healthy
volunteers to compare the allergen uptake of cVP and mVP.
In March 2021 , we commenced CHAMP (Comparison of adHesion Among Modified
Patches), a Phase I trial in healthy adult volunteers to evaluate the adhesion
of five modified Viaskin Peanut patches. We completed CHAMP in the second
quarter of 2021. All modified Viaskin Peanut patches demonstrated better
adhesion performance as compared to the then-current Viaskin Peanut patch, and
based on the results of CHAMP, we then selected two modified patches that
performed best out of the five modified patches studied for further development.
We then selected the circular patch for further development, which is
approximately 50% larger in size relative to the current patch and circular in
shape.
In May 2021 , we submitted our proposed STAMP protocol to the FDA, and on
October 14, 2021 , we received an Advice/Information Request letter from the FDA.
In this letter, the FDA requested a stepwise approach to the modified Viaskin
patch development program and provided partial feedback on the STAMP protocol.
Specifically, the FDA requested that we conduct allergen uptake comparison
trials (i.e., 'EQUAL in Adults,' EQUAL), and submit the allergen uptake
comparison data for FDA review and feedback prior to starting the STAMP study.
The FDA's explanation was that the results from the allergen uptake trials might
affect the design of the STAMP study.
After careful review of the FDA's information requests, in December 2021 , we
decided not to pursue the sequential approach to the development plans for
Viaskin Peanut as requested by the FDA in the October 2021 feedback. We
estimated that the FDA's newly proposed sequential approach would require at
least five rounds of exchanges that necessitate FDA alignment prior to
initiating STAMP, the
6-month
safety and adhesion study. As such, in December 2021 , we announced we plan to
initiate a pivotal Phase 3 placebo-controlled efficacy trial for a modified
Viaskin Peanut patch (mVP) in children in the intended patient population. The
clinical trial will also include updates to the Instructions for Use (IFU). We
consider this approach the most straightforward to potentially demonstrate
effectiveness, safety, and improved in vivo adhesion of the modified Viaskin
Peanut system. The FDA has confirmed ("mVP") change in strategy is agreeable via
oral and written exchanges. The protocol for the new Phase 3 pivotal study of
the modified Viaskin Peanut (mVP) patch was completed at the end of February
2022 and was submitted to the FDA in April 2022 . The Company has been granted a
Type C meeting by the FDA , which is expected to be held in the second quarter
of 2022, to align on the new Phase 3 study protocol.
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Business trends and Results of Operations
The following table summarizes our results of operations, derived from our
condensed consolidated financial statements, which have been prepared in
accordance with
Three months ended
2022 2021
Operating income $ 2,546 $ 2,941
Operating expenses
Research and development expenses (12,223 ) (22,164 )
Sales and marketing expenses (464 ) (729 )
General and administrative expenses (6,630 ) (9,683 )
Total Operating expenses (19,317 ) (32,575 )
Financial income 152 215
Income tax (87 ) (30 )
Net loss $ (16,706 ) $ (29,449 ) Basic/diluted Net loss per share attributable to shareholders
Comparison of the three months ended
Operating Income We generated operating income of$2.5 million during the three months endedMarch 31, 2022 compared to$2.9 million during the three months endedMarch 31, 2021 , a decrease of 13.4%. This income was mainly generated from the French research tax credit ( crédit d'impôt recherche) , or CIR, and by revenue recognized under our collaboration agreement with Nestlé Health Science. Three months Ended March 31 % change 2022 2021 Sales - - Other income 2,546 2,941 (13 %) Research tax credit 1,569 1,807 (13 %) Other operating (loss) income 976 1,133 (14 %) Total operating income 2,546 2,941 (13 %) The decrease in operating income is primarily attributable to the decrease of the CIR, as eligible expenses have declined in correlation with Research and Development costs. As ofMarch 31, 2022 , we recorded our collaboration contract income based on our updated measurement of progress of the Phase II clinical trial conducted as part of the collaboration and license agreement with Nestlé Health Science. The accrual recorded in the amount of the difference between our current best estimates of costs yet to be incurred and income yet to be recognized for the completion of the Phase II clinical has been updated accordingly. 16
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Operating Expense
Research and Development Expenses
The following table summarizes our research and development expenses incurred
during the three months ended
Three months ended March 31, $ change % change
Research and Development expenses 2022 2021
External clinical-related expenses 7,350 12,878 (5,528 ) (43 %) Employee-related costs 2,492 4,091 (1,599 ) (39 %) Share-based payment expenses 583 627 (45 ) (7 %) Depreciation, amortization and other costs 1,799
4,568 (2,769 ) (61 %)
Total Research and Development expenses 12,223
22,164 (9,941 ) (45 %)
Research and development expenses decreased by$9.9 million for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 , primarily due to a decrease of$5.5 million in external clinical-related expenses as main component of the work on clinical studies such as REALISE and EPITOPE has been finalized during the year 2021. We have also continued to practice financial diligence and implemented further cost containment strategies. Employee-related costs, excluding share-based payment expenses, decreased by$1.6 million for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 , due to the workforce reduction following full implementation of the new organization.
The decrease in depreciation, amortization and other costs was primarily due to the reversal of loss at completion recorded on the Phase II clinical trial conducted as part of the Nestlé agreement.
Sales and Marketing expenses
The following table summarizes our sales and marketing expenses incurred during
the three months ended
Three months ended March
31, $ change % change
Sales & Marketing expenses 2022 2021
Employee-related costs 245 518 (273 ) (53 %) External professional services 122 84 38 45 % Share-based payment expenses (5 ) 71 (76 ) (108 %) Depreciation, amortization and other costs 102 56 46 82 % Total Sales & Marketing expenses 464 729 (265 ) (36 %)
Sales and marketing expenses decreased by
Employee-related costs, excluding share-based payments expenses, decreased by$0.3 million for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 due to the workforce reduction following full implementation of the new organization. 17
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General and Administrative expenses
The following table summarizes our general and administrative expenses incurred
during the three months ended
Three months ended March 31, $ change % change
General & Administrative expenses 2022 2021
External professional services 1,108 2,287 (1,179 ) (52 %)
Employee-related costs 1,810 3,031 (1,221 ) (40 %)
Share-based payment expenses 786 735 51 7 %
Depreciation, amortization and
other costs 2,927 3,630 (702 ) (19 %)
Total General & Administrative
expenses 6,630 9,683 (3,052 ) (32 %)
General and administrative expenses decreased by $3.1 million for the three
months ended March 31, 2022 , compared to the three months ended March 31, 2021 ,
primarily due to a decrease in employee-related costs and external professional
services as we continued to practice financial diligence and implemented further
cost containment strategies.
Employee-related costs, excluding share-based payments expenses, decreased by
$1.2 million for the three months ended March 31, 2022 , compared to the three
months ended March 31, 2021 due to the workforce reduction following full
implementation of the new organization.
Financial income
Our financial income was
Net loss
Net loss was$16.7 million for the three months endedMarch 31, 2022 , compared to$29.4 million for the three months endedMarch 31, 2021 . Net loss per share (based on the weighted average number of shares outstanding over the period) was$0.30 and$0.54 for three months endedMarch 31, 2022 and 2021, respectively.
Liquidity and Capital Resources
Financial Condition
OnMarch 31, 2022 , we had$74.1 million in cash and cash equivalents compared to$77.3 million of cash and cash equivalents onDecember 31, 2021 . We have incurred operating losses and negative cash flows from operations since our inception. Net cash used for operating activities was$1.5 and$36.2 million for the three months endedMarch 31, 2022 and 2021, respectively. As ofMarch 31, 2022 , we recorded a net loss of$16.7 million . Based on our current operations, as well as our plans and assumptions as revised pursuant to our change of strategy announced inDecember 2021 , we expect that our balance of cash and cash equivalents of$74.1 million as ofMarch 31, 2022 will be sufficient to fund our operations into the first quarter of 2023. As of the date of the filing, our available cash is not projected to be sufficient to support our operating plan for at least the next 12 months. As such, there is substantial doubt regarding our ability to continue as a going concern. We intend to seek additional capital as we prepare for the launch of Viaskin Peanut, if approved, and continue other research and development efforts. 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. We cannot guarantee that we will be able to obtain the necessary financing to meet our needs or to obtain funds at attractive terms and conditions, including as a result of disruptions to the global financial markets due to the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic has already caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to us, including reduced ability to raise additional capital when needed or on acceptable terms, if at all. If we are not successful in our financing objectives, we could have to scale back our operations, notably by delaying or reducing the scope of our research and development efforts or obtain financing through arrangements with collaborators or others that may require us to relinquish rights to our product candidates that we might otherwise seek to develop or commercialize independently. 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.
Sources and Material Cash Requirements
Based on our current operations, as well as our plans and assumptions as revised pursuant to our change of strategy announced inDecember 2021 , we expect that our balance of cash and cash equivalents of$74.1 million as ofMarch 31, 2022 will be sufficient to fund our operations into the first quarter of 2023. 18 -------------------------------------------------------------------------------- We fund short-term cash requirements primarily from payments associated with research tax credits ( Crédit d'Impôt Recherche ). 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. As of the date of the filing, our available cash is not projected to be sufficient to support our operating plan for at least the next 12 months. As such, there is substantial doubt regarding our ability to continue as a going concern. We intend to seek additional capital as we prepare for the launch of Viaskin Peanut, if approved, and continue other research and development efforts. 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. We cannot guarantee that we will be able to obtain the necessary financing to meet our needs or to obtain funds at attractive terms and conditions, including as a result of disruptions to the global financial markets due to the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic has already caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to us, including reduced ability to raise additional capital when needed or on acceptable terms, if at all. If we are not successful in our financing objectives, we could have to scale back our operations, notably by delaying or reducing the scope of our research and development efforts or obtain financing through arrangements with collaborators or others that may require us to relinquish rights to our product candidates that we might otherwise seek to develop or commercialize independently.
The following table presents our material cash requirements for future periods:
Material Cash Requirements Due by the period Ended
March 31,
2023 2024-2025 2026-2027 Thereafter Total
(Amounts in thousands)
Conditional advances 333 - - - 333
Operating leases 2,034 2,268 - - 4,302
Purchase obligations - Obligations Under the
Terms of CRO Agreements 20,785 8,825 3,457 - 33,067
Total 23,152 11,094 3,457 - 37,703
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.
Future events could cause actual payments to differ from these estimates.
Conditional advances
In 2014,BpiFrance Financement granted an interest-free Innovation loan toDBV Technologies to help financing the pharmaceutical development of Viaskin ™ Milk. This amount was received in a single disbursement onNovember 27, 2014 . In 2020, due to the COVID-19 pandemic,Bpifrance postponed the repayments for a 6-month period. Repayment will end during the third quarter of 2022.
Operating leases
Our corporate headquarters are located in
We also have facilities inNorth America that were initially intended to support ourU.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 onFebruary 25, 2023 . In light of our global restructuring, the current stage of regulatory interactions regarding Viaskin Peanut, and the ongoing COVID-19 pandemic, we entered into a sublease agreement of this office space inJune 2021 . The NYC office represents a$0.3 million cash requirement as ofMarch 31, 2022 until the first quarter of 2023. OnMarch 28, 2022 , the Company entered into a binding office lease agreement inNew Jersey for a lease term of 3 years and 2 months. The lease commencement was based upon delivery of possession of the premises by the Landlord and occurred onApril 1, 2022 . Right of use and related lease debt will be recorded startingApril 1, 2022 .
Purchase obligations - Obligations Under the Terms of CRO Agreements
In connection with the launch of our clinical trials for Viaskin Peanut and Viaskin Milk, we signed agreements with several contract research organizations. Expenses associated with the ongoing trials amounted globally to$105.5 million . As ofMarch 31, 2022 , the amount we are still obligated to pay in connection with these contracts through 2024 is$33.1 million . 19
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Cash flows
The table below summarizes our sources and uses of cash for the three months
ended
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