DBV Technologies S.A. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 9, 2022. This is an annual report, not a standalone fourth-quarter report. Amounts below are in U.S. dollars unless noted.
Business context
DBV is a clinical-stage biopharmaceutical company with no approved products or product sales. Its business centers on Viaskin, a patch-based epicutaneous immunotherapy platform. Viaskin Peanut is its lead candidate; the company is also developing Viaskin Milk and a diagnostic patch with Nestlé Health Science.
Financial performance and liquidity
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Product sales | None | None |
| Operating income (primarily research tax credits and collaboration-related income) | $5.7 million | $11.3 million |
| Operating expenses | $104.3 million | $170.1 million |
| Net loss | $97.8 million | $159.6 million |
| Basic and diluted loss per share | $1.78 | $2.95 |
| Net cash used in operating activities | $108.2 million | $165.6 million |
| Cash and cash equivalents | $77.3 million | $196.4 million |
| Total assets | $146.7 million | $272.2 million |
| Total liabilities | $47.4 million | $66.8 million |
Revenue and conventional profit margins are not meaningful measures for this pre-commercial company. Operating income fell 49%, while operating expenses fell 39%; lower spending principally reflected cost reductions and restructuring. Research and development expense was $70.3 million, down 31%. Cash declined by $119.1 million during 2021, including $10.7 million of adverse foreign-exchange effects.
DBV reported no bank debt. Financial debt consisted of a $0.5 million conditional advance, classified as current. Operating lease liabilities were $10.2 million. Current assets were $114.4 million and current liabilities $31.4 million, including a $28.1 million research tax credit receivable. Management expects cash to fund operations into the first quarter of 2023, but states that available cash is not expected to support the operating plan for at least 12 months from the filing date; the auditor identified substantial doubt about the company’s ability to continue as a going concern.
Material changes and business developments
- In December 2021, DBV changed its FDA development strategy for Viaskin Peanut. Rather than the previously planned sequence of patch uptake and safety/adhesion studies, it plans a new pivotal, placebo-controlled Phase III efficacy trial of a modified patch in children ages 4–11. The FDA indicated the revised strategy was agreeable; the protocol was completed in February 2022 but was still being prepared for submission following further FDA alignment.
- The FDA’s August 2020 Complete Response Letter cited concerns about patch adhesion and its impact on efficacy, requested patch modifications and supplementary clinical data, and sought additional manufacturing information. The FDA did not identify safety concerns in the application.
- DBV withdrew its EU marketing application in December 2021 after the EMA raised a major objection concerning the evidence base, including reliance on a single pivotal trial. The company intends to resubmit when data from a second pivotal trial are available.
- The completed PEPITES trial showed a 35.3% responder rate with Viaskin Peanut versus 13.6% with placebo, but its primary endpoint did not meet the prespecified confidence-interval threshold. PEOPLE extension results showed longer-term increases in peanut tolerance among treated participants.
- Enrollment in the toddler EPITOPE Phase III trial was complete; top-line results were expected in mid-2022. COVID-19-related enrollment delays affected the MAG1C Phase II trial under the Nestlé collaboration.
- The global restructuring, initiated in 2020, was completed in the second half of 2021. It reduced headcount by more than 200 positions; the company reported a global team of about 90 people. Restructuring costs were a $0.9 million reversal in 2021, compared with $23.6 million of expense in 2020.
Outlook, risks and unusual items
Management expects continued losses and higher spending as it pursues the modified-patch trial, regulatory work, manufacturing development and potential commercialization. It plans to seek additional capital through equity or debt, collaborations, licensing or other financing; there is no assurance funding will be available on acceptable terms. The 2021 operating plan’s stated cash runway into Q1 2023 is not a financing commitment and does not remove the going-concern uncertainty.
Key risks include clinical or regulatory failure or delay, the need for additional trials, inability to raise capital, reliance on third-party suppliers and clinical organizations, manufacturing scale-up, competition, and COVID-19-related disruption. The company also faces a securities class action: a third amended complaint was filed in September 2021, and DBV moved to dismiss it in December; the outcome and potential liability are uncertain. The audited financial statements received an unqualified opinion, with going concern highlighted as a critical audit matter. Management reported effective disclosure controls and internal control over financial reporting at year-end.
Most important facts for investors to verify
- Cash runway assumptions, forecast spending and the timing, amount and terms of any required financing.
- FDA protocol submission and review, trial start and design, and whether the modified patch demonstrates efficacy, safety and improved adhesion.
- Timing and results of EPITOPE, and the evidentiary requirements and timing for a renewed EU application.
- Collection and timing of the $28.1 million research tax credit receivable, and the assumptions underlying Nestlé collaboration income and related accruals.
- Progress of the securities litigation and any material changes to the company’s stated going-concern assessment.