DBV Technologies S.A. — FY2018 Form 20-F
Reporting period: Fiscal year ended December 31, 2018. The filing is an annual report, not a standalone Q4 report. Financial statements are audited and prepared under IFRS in euros. DBV is a clinical-stage biopharmaceutical company developing epicutaneous immunotherapy products using its Viaskin platform; it had no product sales.
Financial results and liquidity
| Metric | 2018 | 2017 |
|---|---|---|
| Revenue from sales | €0 | €0 |
| Other operating income | €14.5 million | €11.9 million |
| Research and development expense | €107.2 million | €105.2 million |
| Sales and marketing expense | €32.2 million | €15.8 million |
| General and administrative expense | €41.4 million | €35.8 million |
| Operating loss | €166.2 million | €145.0 million |
| Net loss | €166.1 million | €147.7 million |
| Basic and diluted loss per share | €5.74 | €5.97 |
| Cash used in operating activities | €136.6 million | €114.3 million |
| Cash and cash equivalents, year-end | €122.8 million | €137.9 million |
Other operating income primarily comprised the French research tax credit (€11.0 million), collaboration-related income and subsidies; it is not product revenue. The filing reports no meaningful operating margin for a company with no product sales and substantial development spending.
- Total assets were €171.7 million, shareholders’ equity €121.3 million and total liabilities €50.5 million at year-end 2018. Current assets were €145.5 million versus current liabilities of €43.5 million.
- Financial debt was €2.5 million, primarily conditional public advances; DBV reported no bank loans. It also disclosed €30.3 million of operating lease obligations.
- Investing cash outflow was €8.6 million and financing cash inflow €130.7 million, principally reflecting the March 2018 share offering. The offering raised gross proceeds of approximately €140.8 million; the cash flow statement reports €133.1 million of net capital increases.
- The company had 30,157,777 ordinary shares outstanding at December 31, 2018.
Material changes versus 2017
- Net loss increased by €18.4 million, while operating loss increased by €21.2 million. Other operating income rose 22.1% to €14.5 million.
- Research and development expense increased 1.8%; DBV said spending reflected continued clinical development and manufacturing scale-up.
- Sales and marketing expense more than doubled, up 103.3%, as DBV expanded U.S. commercial preparation and staffing. General and administrative expense rose 15.5%.
- Operating cash use increased €22.3 million. Year-end cash fell €15.1 million despite the March equity offering.
- The 2018 financing materially increased share capital and contributed to dilution; shares outstanding rose from 24,990,822 at year-end 2017 to 30,157,777 at year-end 2018.
Outlook, risks and unusual items
- Going concern and funding: Management said cash was not expected to support the operating plan for the next 12 months and anticipated a cash shortfall in Q4 2019. The auditor’s report included an explanatory paragraph describing substantial doubt about DBV’s ability to continue as a going concern. Management planned to seek additional financing, likely equity and/or debt; success was not assured. Financial statements were prepared on a going-concern basis without adjustments for the uncertainty.
- Viaskin Peanut: DBV voluntarily withdrew its U.S. BLA in December 2018 after FDA discussions identified additional manufacturing-procedure and quality-control data needs. In February 2019, it expected to resubmit in Q3 2019 and targeted a potential North American launch in 2020, subject to approval. The PEPITES trial showed a statistically significant response-rate difference, but its 95% confidence interval lower bound did not meet the prespecified 15% threshold in the statistical analysis plan. FDA approval and timing remained uncertain.
- Pipeline: The Phase III EPITOPE toddler peanut-allergy trial advanced to Part B after the safety board identified no safety concern in Part A. Viaskin Milk’s Phase II MILES study identified the 300 μg dose as having the greatest observed clinical activity in children; further study design remained to be determined. Other programs were earlier-stage.
- Other risks: DBV had no approved products or product revenue; development, regulatory, manufacturing, supply, reimbursement and competitive risks are substantial. The company relied on third parties for active ingredients and manufacturing, including a single API supplier, and expected continued operating losses and financing needs.
- Legal and accounting: A securities class action filed in January 2019 alleges violations relating to statements during February–December 2018; DBV said it considered the claims without merit and intended to defend itself. The auditor gave an unqualified opinion on the financial statements and internal controls; management also reported effective controls. IFRS 16 adoption was expected to increase reported financial liabilities by an estimated €25–30 million.
Most important facts for investors to verify
- Whether DBV completed the planned Q3 2019 BLA resubmission, addressed FDA manufacturing and quality-control requirements, and received FDA acceptance or approval.
- Updated cash runway, quarterly cash burn, financing completed or available, and any resulting dilution or debt obligations.
- Full audited statements and notes for the reported cash-flow, financing, conditional-advance debt and lease commitments; the filing includes differing accumulated-deficit/reserve descriptions in separate sections.
- Subsequent clinical and regulatory results for Viaskin Peanut and Viaskin Milk, including the significance of the PEPITES endpoint shortfall and safety findings.
- Developments in the securities class action, manufacturing arrangements, and the timing and accounting impact of IFRS 16 adoption.