DBV Technologies S.A. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. DBV is a clinical-stage biotechnology company developing Viaskin epicutaneous immunotherapy. The company had no product sales; reported operating income came primarily from French research tax credits and collaboration-related income. Financial amounts below are in U.S. dollars.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Operating income | $2.1m | $1.3m | $6.1m | $2.8m |
| Operating expenses | $20.1m | $25.7m | $64.8m | $87.9m |
| Net loss | $17.3m | $24.0m | $57.0m | $84.1m |
| Basic and diluted loss per share | $0.18 | $0.44 | $0.79 | $1.53 |
| Cash used in operating activities | Not stated for quarter | Not stated for quarter | $31.8m | $89.5m |
- At September 30, cash and cash equivalents were $212.7m, versus $77.3m at December 31, 2021. Total assets were $248.1m and total shareholders’ equity was $212.1m.
- Nine-month financing cash flow was $194.4m, principally reflecting 2022 equity financing. Investing cash flow was a $0.1m outflow. Exchange-rate movements reduced cash by $27.2m during the nine months.
- The company reported no bank debt. Lease liabilities totaled $2.8m; total contingencies were $8.3m, including $7.6m related to the Nestlé collaboration Phase II trial.
- Contracted cash requirements totaled $59.3m: $56.5m under CRO agreements and $2.8m for operating leases, principally due by 2025.
Changes versus the prior comparable period
- Nine-month net loss narrowed by $27.1m and operating expenses fell by $23.2m year over year. R&D expense decreased $12.7m, G&A fell $9.1m, and sales and marketing declined $1.3m.
- Management attributed lower expenses to cost controls, workforce reductions, completion of major work on certain studies, and lower depreciation/amortization and other costs, including comparison with a prior-period charge related to the Nestlé collaboration trial. Q3 R&D external clinical costs nevertheless rose 29%, in part as work began on VITESSE.
- Operating income increased, particularly over the nine-month period, partly because of updated recognition of Nestlé collaboration income; 2021 included negative collaboration revenue associated with enrollment delays. Research tax credit income was lower year over year.
- Cash increased largely through financing, not operating generation. The June PIPE and May ATM issuance were highly dilutive: ordinary shares outstanding rose from 55.1m at year-end 2021 to 94.0m at September 30, 2022, with a further 28.3m pre-funded warrants outstanding.
Outlook, programs, and risks
- Management stated that available cash was expected to fund the operating plan for at least the next 12 months as of the filing date. The company continues to incur losses and negative operating cash flow and may need additional financing; it warned that adverse economic or capital-market conditions could impair access to funding or require spending reductions or partnering.
- The FDA placed the VITESSE Phase 3 study of modified Viaskin Peanut in children ages 4–7 on partial clinical hold in September 2022. The FDA requested protocol changes concerning adhesion analysis, minimum daily wear time, data categorization, and the number of active-treatment participants. Screening and recruitment had not begun. DBV expected further updates after consulting the FDA.
- EPITOPE, the Phase 3 trial in peanut-allergic children ages 1–3, met its primary endpoint, according to results announced in June 2022: 67.0% of treated participants versus 33.5% on placebo met responder criteria after 12 months. DBV said it would further analyze the data and explore regulatory pathways; the filing does not establish an approval or filing timetable.
- DBV had withdrawn its EU marketing application for Viaskin Peanut in ages 4–11 after the EMA raised a major objection concerning the evidence from a single pivotal trial. The company said it intended to resubmit when data from a second pivotal study became available.
- COVID-19-related enrollment and travel disruptions remained a stated uncertainty. The company also identified financing needs, clinical and regulatory execution, manufacturing, and potential share sales/dilution as risks. A securities class action was dismissed with prejudice in July 2022; plaintiffs did not appeal within the stated period, and the company reported the matter resolved with finality.
Most important facts for investors to verify
- FDA correspondence and the timing, revised protocol, and recruitment status of the VITESSE trial.
- EPITOPE full data, regulatory strategy, and any timetable for potential submissions or approval.
- Cash runway assumptions, operating cash burn, and the effect of CRO commitments on future financing needs.
- Potential dilution from the 28.3m pre-funded warrants, equity plans, and registered resale shares.
- Composition and expected settlement of the $8.3m contingency balance and the $56.5m CRO commitments.