DBV Technologies S.A. quarterly report, Q1 FY2022

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DBV Technologies S.A. — Q1 2022 Form 10-Q

Reporting period: Three months ended March 31, 2022. Amounts below are in U.S. dollars; financial statement amounts are generally in millions unless stated otherwise. DBV is a clinical-stage biopharmaceutical company developing Viaskin epicutaneous immunotherapy and had no product sales.

Financial performance and position

  • Operating income: $2.5 million, down 13% from $2.9 million in Q1 2021. This was not product revenue; it primarily comprised research tax credits and income recognized under the Nestlé Health Science collaboration.
  • Operating expenses: $19.3 million, down 41% from $32.6 million. Research and development expense fell 45% to $12.2 million; general and administrative expense fell 32% to $6.6 million; sales and marketing expense fell 36% to $0.5 million.
  • Losses: Operating loss was $16.8 million versus $29.6 million; net loss was $16.7 million versus $29.4 million. Basic and diluted loss per share was $0.30 versus $0.54.
  • Cash flow: Operating cash use was $1.5 million versus $36.2 million in Q1 2021. The 2022 figure benefited from a $20.9 million research tax credit reimbursement and changes in operating assets and liabilities. Investing activities provided $0.01 million; financing activities used $0.1 million. Cash declined by $3.2 million, including a $1.6 million adverse currency effect.
  • Liquidity: Cash and cash equivalents were $74.1 million at March 31, 2022, compared with $77.3 million at year-end 2021. Total assets were $117.6 million and shareholders’ equity was $82.1 million.
  • Debt and commitments: The company reported no bank debt. Short-term financial debt was $0.3 million, and operating lease liabilities totaled approximately $4.3 million. Contractual cash requirements totaled $37.7 million, including $33.1 million under CRO agreements.
  • Margins: Conventional sales margins are not meaningful because the company had no product sales and remains development-stage.

Changes versus the prior comparable period

  • Net loss narrowed by approximately 43%, mainly alongside lower operating expenses. R&D reductions reflected completion of major work on REALISE and EPITOPE during 2021, cost controls, and a smaller workforce.
  • Average employee count declined to 88 from 121. Personnel expenses were $5.9 million versus $9.0 million.
  • Operating cash use fell substantially, but the Q1 2022 comparison was affected by the research tax credit reimbursement and working-capital movements; the cash-flow improvement should not be read as a like-for-like reduction in underlying cash burn.
  • Other current assets fell to $16.3 million from $37.1 million, principally reflecting receipt of $20.9 million in 2019 and 2020 research tax credits.

Outlook, risks and unusual items

  • Runway and financing: Management expected the $74.1 million cash balance to fund operations into Q1 2023, but stated that available cash was not projected to support the operating plan for at least the next 12 months. The filing identifies substantial doubt about the company’s ability to continue as a going concern. DBV intends to seek additional financing; availability and terms are uncertain. Failure to obtain funding could require reduced or delayed development or financing arrangements that surrender product rights.
  • Viaskin Peanut, United States: After the FDA’s 2020 Complete Response Letter and subsequent feedback, DBV chose a new pivotal Phase 3 study of a modified patch for children ages 4–11 rather than the FDA’s proposed stepwise sequence of studies. The FDA indicated the strategy was agreeable; the protocol was submitted in April 2022, with a Type C meeting expected in Q2 2022. The regulatory outcome and timing remain uncertain.
  • European Union and younger children: DBV withdrew its Viaskin Peanut marketing application after an EMA major objection concerning the evidence from a single pivotal study; it intends to resubmit when data from a second pivotal study are available. Top-line results from Part B of the EPITOPE study in children ages 1–3 were expected by the end of Q2 2022.
  • Unusual items: Q1 included a $20.9 million research tax credit receipt. The company also terminated its Summit, New Jersey office lease; the filing describes a $1.2 million income related to the termination and a $1.5 million one-time fee. A new New Jersey office lease commenced April 1, 2022.
  • Other risks: COVID-19-related disruption to clinical enrollment and operations, dependence on additional capital, clinical and regulatory execution, and a securities class action are noted. The company said it believed the class-action allegations were without merit and did not expect a material adverse financial effect. It reported no material changes to the risk factors in its 2021 Form 10-K.

Key facts for investors to verify

  1. Whether DBV obtained financing after the filing and whether its cash runway or going-concern assessment changed.
  2. FDA feedback and timing for the modified Viaskin Peanut Phase 3 protocol, study initiation, enrollment and results.
  3. EPITOPE Part B results and the evidence and timing needed for a potential EU resubmission.
  4. Underlying cash burn excluding tax-credit reimbursements and working-capital effects, alongside CRO commitments and other cash requirements.
  5. Any developments in the securities class action and the financial or operational impact of the office lease changes.