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, 2020 , included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , filed with theSecurities and Exchange Commission onMarch 17, 2021 , 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. OnJanuary 13, 2021 , the Company received written responses from the FDA to questions provided in the Type A meeting request the Company submitted inOctober 2020 following the CRL. We believe the FDA feedback provides a well-defined regulatory path forward. In exchanges with the FDA, we proposed potential resolutions to two main concerns identified by the FDA in the CRL: the impact of patch adhesion and the need for patch modifications. 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 1/1000 of a 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 modified patches, the FDA has requested an assessment comparing the uptake of allergen (peanut protein) between the patches in peanut allergic children ages 4 to 11 years. The FDA also recommended conducting a 6-month, well-controlled safety and adhesion trial to assess the modified Viaskin Peanut patch in the intended patient population. We intend to submit the protocols for the safety and adhesion study and the allergen uptake study to the FDA for review and comments before initiating the trials. We will address details about a new human factor, or HF, validation study and additional CMC data in subsequent interactions with the FDA During the first quarter of 2021, we received the first set of questions from theEuropean Medicines Agency , or EMA, regarding the Marketing Authorization Application, or MAA, for Viaskin Peanut as a treatment for peanut allergy in children ages 4-11.. The questions were consistent with our expectations and prefiling conversations with the EMA. We did not receive questions about the impact of adhesion on efficacy. TheEMA's Committee for Medicinal Products for Human Use will provide a recommendation to theEuropean Commission , or EC, on whether to grant a marketing authorization when its review of the Viaskin Peanut MAA is complete.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States , orU.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the revenue, costs and expenses recognized during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no new policies or significant changes to our critical accounting policies as disclosed in the critical accounting policies described in the Annual Report. Our significant accounting policies are more fully described in Note 1 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report. 13
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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 March 31, 2021 2020 Operating income$ 2,941 $ 4,720 Operating expenses Research and development expenses (22,164 ) (27,532 ) Sales and marketing expenses (729 ) (7,297 ) General and administrative expenses (9,683 ) (11,113 ) Restructuring expenses - - Total Operating expenses (32,575 ) (45,942 ) Financial income 215 309 Income tax (30 ) - Net loss$ (29,449 ) $ (40,913 )
Basic/diluted Net loss per share attributable to shareholders
Comparison of the three months ended
Operating Income
We generated operating income of
Three Months Ended March 31 % change 2021 2020 2021 vs 2020 Sales - - Other income 2,941 4,720 (37.7 )% Research tax credit 1,807 2,902 (37.7 )% Other operating income 1,133 1,818 (37.6 )% Total operating income 2,941 4,720 (37.7 )% 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, 2021 , 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.
Operating Expense
The following table summarizes our operating expense excluding restructuring
incurred during the three months ended
Three months Ended March 31 % change 2021 2020 2021 vs 2020
Research and development expenses 22,164 27,532 (19.5 )% Sales and marketing expenses 729 7,297 (90.0 )% General and administrative expenses 9,683 11,113 (12.9 )% Total operating expenses 32,575 45,942 (29.1 )% 14
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Operating expenses for the three months endedMarch 31, 2021 were$32.6 million compared to$45.9 million for the three months endedMarch 31, 2020 . The$13.4 million decrease in operating expenses is mainly attributable to a decrease in personnel expenses directly related to the workforce reduction we implemented as part of our 2020 global restructuring plan. Personnel expenses decreased by$9.7 million , or 52%, to$9.0 million during the three months endedMarch 31, 2021 from$18.7 million for the three months endedMarch 31, 2020 . Average headcount decreased 61% between the two periods, from 311 FTEs for the three months endedMarch 31, 2020 to and 121 FTEs for the three months endedMarch 31, 2021 . By function, the personnel expenses, including share-based payment expenses, decreased as follows: Three Months Ended March 31, % change 2021 2020 2021 vs 2020 Research and development expenses 4,718 10,204 (53.8 )% Sales and marketing expenses 518 4,197 (87.7 )% General and administrative expenses 3,766 4,283 (12.1 )% Total personnel expenses 9,002 18,684 (51.8 )% The decrease in other operating expenses was primarily due to the budget discipline measures taken by DBV. In particular, sales and marketing consulting fees dropped by 96.8% or$2.6 million , from$2.7 million for the three months endedMarch 31, 2020 to$0.1 million for the three months endedMarch 31, 2021 and general and administrative fees decreased by 43.5% or$1.7 million , from$4.0 million for the three months endedMarch 31, 2020 to$2.3 million for the three months endedMarch 31, 2021 .
As a result of the ongoing COVID-19 pandemic, we also experienced a decrease in other expenses, in particular tradeshows and travel expenses.
Restructuring
We initiated a global restructuring plan in
We expect full implementation of the restructuring plan to result in a reduction of more than 200 jobs, resulting in a remaining global team of 90 individuals dedicated to the pursuit of innovation and scientific development of novel therapies. As ofMarch 31, 2021 , we had 104 employees. We expect full implementation of the organization-wide costs reduction measures to be completed by the second half of 2021. The restructuring costs, which were$23.6 million as ofDecember 31, 2020 , were mainly comprised of payroll expenses, restructuring-related consulting and legal fees, as well as impairment of facilities and right of use assets following resizing of facilities. During the three months endedMarch 31, 2021 , the restructuring liability evolved as presented below: Restructuring liabilities Restructuring liability -January 1, 2021 9,387 Amounts paid (4,854 ) Other effect including currency translation effect (220 ) Restructuring liability -March 31, 2021 4,313 of which current contingencies 1,511 of which other current liabilities 2,803
They were no restructuring costs for three months ended
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Financial income
Our financial income was
Net loss
Net loss was$29.4 million for the three months endedMarch 31, 2021 , compared to$40.9 million for the three months endedMarch 31, 2020 . Net loss per share (based on the weighted average number of shares outstanding over the period) was$0.54 and$0.79 for three months endedMarch 31, 2021 and 2020, respectively.
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