DBV Technologies S.A. Q3 FY2021 Earnings Call

Welcome to the DBV Technologies conference call webcast. My name is Adrianne, and I'll be your operator for today's call. Please note this conference is being recorded. I'll now turn the call over to Anne Pollak, Head of Investor Relations. Anne, you may begin.

Thank you. This afternoon, DBV Technologies issued a press release that outlines our financial results for the 3 and 9 months ended September 30, 2021, and regulatory updates. This release is available on the Press Release section of the DBV Technologies website. Before we begin, please note that today's call may include a number of forward-looking statements, including but not limited to comments regarding our clinical and regulatory development plans; the timing and results of interactions with regulatory agencies; our forecast of our cash runway, and the ability of any of our product candidates, if approved, to improve the lives of patients with food allergies. These forward-looking statements are based on assumptions that are subject to risks and uncertainties that could cause the company's actual results to differ significantly from those suggested by these statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to the company's filings with the SEC and the French AMF for information concerning risk factors that could cause the company's actual results to differ materially from expectations, including any forward-looking statements made on this call. Except as required by law, the company disclaims any obligation to publicly update or revise any forward-looking statements to account for or reflect events or circumstances that occur after this call. Daniel Tassé, Chief Executive Officer of DBV, is joining me today, and I will now pass the call over to him.

Thank you, Anne, and thank you all for joining the call. Today, in addition to releasing our third quarter financial results, we provided an update on Viaskin Peanut in the European Union and in the United States. Let me focus on the EU first. The review of the MAA, the marketing authorization application, for Viaskin Peanut, is progressing according to established EMA processes and aligned to our ongoing conversations with the EMA. We are currently preparing our response to the Day 180 letter of outstanding issues we received in the summer. We're also evaluating how to best address the agency's remaining objections, including the one major objection that questions the limitation of the data, for example, the clinical relevance and effect size supported by a single pivotal study. Our team anticipates having further exchanges with the EMA, and we estimate the EMA could issue its decision on potential marketing authorization for Viaskin Peanut in the first quarter of 2022. And now turning to the U.S. We recently received feedback from the FDA on the STAMP protocol we submitted in early May. As I'm sure you remember, STAMP is a 6-month safety and adhesion study of modified Viaskin Peanut in children ages 4 to 11 who suffer from peanut allergy, a study the FDA recommended we conduct. In the feedback we recently received, the FDA requested a stepwise approach to the mVP development program. Specifically, the agency would like to review data from a protein uptake release study with a modified Viaskin patch and the current patch prior to providing additional comments on the STAMP protocol. This request is a new development. The FDA did not request a stepwise approach in the guidance they provided in January as part of the written response to our Type A meeting request. In that recent communication providing STAMP feedback, the FDA stated that further guidance is forthcoming on how to best demonstrate the protein uptake comparability of the two patches. We have not yet received this second communication from the agency. As such, we remain steadfast that we will not initiate STAMP until complete feedback is received from the agency and we have full alignment on the STAMP protocol. So what are the next key steps? First, we await the forthcoming FDA feedback. In the meantime, we also explore all avenues for mVP clinical development. We continue to see constructive exchanges with the FDA to align on a clearly defined clinical program and regulatory pathway for Viaskin Peanut. Now let me turn briefly to the third quarter financial results. Net cash used in operating activities between the first 9 months of 2020 and 2021 decreased 32% and reflects our continued implementation of cost containment measures. We ended the quarter with $98.2 million in cash and cash equivalents, which we continue to expect will support our operations into the third quarter of 2022. Our cash runway projections consider two types of expenditure: one, the day-to-day fixed operating costs of the company, salaries, corporate facilities, rent, etc.; and the variable costs associated with our scientific and clinical development such as expenses related to STAMP and EQUAL. Before I open the call to questions, I want to reaffirm DBV's commitment to the food allergy community, including allergists, families, patients, loved ones, and all those who advocate tirelessly on their behalf. Everyone at DBV is motivated each day by patients and providers urgently awaiting a therapeutic advancement in treating peanut allergies and by our unwavering confidence in the potential of Viaskin Peanut. We will continue to explore all viable pathways and maintain open communications with the FDA. With that, I would like to open the call for questions. And to help answer those questions with me besides Anne Pollak, Head of Investor Relations; I have Sébastien Robitaille, our Chief Financial Officer; and Pharis Mohideen, our Chief Medical Officer, all here to join me.

Our first question comes from Samuel Levine.

Thanks for the update today. A few for me. Could you give us an update on the PREQUAL study? And then also, what your current expectations are for EQUAL? I know you thought it would be a quick turnaround. So just wondering if you could remind us of how long you think that could be, number of patients, etc.

Yes. So again, to put all this in perspective, it's important here. As you know, the equivalence in uptake of allergen study, what we call EQUAL, is a touch of technical complexity. So first, we want to optimize the sample methodology. Now how do you collect essentially microgram amounts of peanut protein off of surfaces, both the skin and the patch? And then also how to validate the assays that we're going to use to calculate that actual data. So that's what we call PREQUAL. Now work actually has been completed, and the data is in-house, on its way to being analyzed. Now in parallel, and this is what the FDA is asking us to do here, as part of our ongoing exchanges with the FDA, we proposed to the agency to first compare cVP to mVP in healthy volunteers before a trial in patients. That's the protocol for which we're waiting for feedback now. We don't know, since optimizing methodology was the objective of PREQUAL, randomizing that right now and waiting for feedback from the agency, we don't yet know what is going to be the sample sizes required for EQUAL. Did that answer your question?

Okay, yes. In the initial communication from the FDA, did they have a rationale for why the 6-month duration for STAMP? Or is there, do you think, a possibility for that to be a 3-month or even shorter study given that there are no efficacy requirements and the primary goal here is just to measure adhesion?

Yes. There was no specific detailed rationale around the 6 months. It was of long enough duration to be able to assess the patch, and you need to have the patch on for a reasonable number of months to be able to assess the adhesion properties. As you know, there's an initial few weeks where you get up to speed in terms of the 24 hours per day. And it was a recommendation, so that's part of the negotiation with the agency.

Yes. I would also add, if I may, that the adhesion assessments in our pivotal trial were between month 3 and month 6, and month 3 and month 9. So that's reasonable sort of boundaries for this study. We were comfortable with 6 months.

Got it. And one last for me on Europe before I jump in the queue. Does the EMA have all the longer-term data you've collected? Or is there more that you can send over to give them a more robust data set?

You're welcome. The EMA has the PEOPLE data, which includes the 3-year efficacy in 4 to 11-year-olds; that information is available to them. They also have most, but not all, of the safety data from REALISE, our safety-only trial. We have shared the most current data with them, but there is more to come. Am I correct in that, Pharis?

That's correct.

Our next question comes from Graig Suvannavejh. You're welcome. No, the EMA has the PEOPLE data, which includes the 3-year efficacy results for 4 to 11-year-olds; they do have that data. They also possess most, but not all, of the safety data from REALISE, our safety-only trial. So I think we've provided them with the current data, but there is more to come. Am I correct in that, Pharis? That's correct.

Daniel, I have a couple of questions. First, regarding the EU regulatory review process and the major objection, it seems that there may be concerns about the data from a single pivotal study. Could this indicate an increased risk that DBV might need to conduct another pivotal trial for approval in Europe? I’d like to know how we should view this in light of the major objection from the EMA. Secondly, in terms of the U.S. side, are you anticipating that the guidance you're expecting will align perfectly with the EQUAL study design you’ve outlined? Or are you considering the possibility that a different trial design might be necessary? How should we approach this if it becomes a potential issue before STAMP starts, particularly regarding its impact on the timeline?

It's important. I'll answer your second question first, Graig, if I may, then I'll come back to the EU question. We don't know what to expect from the FDA. We're surprised that they see EQUAL and STAMP as being, in some way, joined conceptually. One study is meant to assess adhesion, that's STAMP. One is meant to assess whether or not protein transfer is comparable between cVP and mVP. That's the one we call EQUAL. How data out of EQUAL becomes critical to inform STAMP, we don't know the answer to that. So obviously, we've been speculating, but that's not helpful. And we don't know what it is. Given the fact that, that feedback is forthcoming, as the FDA stated in the communication to us, we will wait for that feedback and then see what it means. At that point in time, we'll have to decide whether or not what we had in mind for EQUAL is adequate or not. Again, what we have now is, in some ways, healthy. It's frustrating because of the delay, but it's also healthy. We're exchanging with the FDA to make sure that the EQUAL study, for which there is no analog, is conceptualized soundly. And essentially, what we're trying to achieve here is what the agency wants here, which is why we did PREQUAL first, to validate methodology and sampling. Then we want to do an EQUAL-like study in healthy volunteers, again, to further optimize the approach before we do it in kids here. There's an exchange on that. It's the time that's a touch, obviously, disappointing. And the codependency of the two, obviously, is the recent development that was unexpected. So did I answer your EQUAL question adequately before I get to the EMA?

Yes. I have a follow-up question regarding the U.S. side. Do you have an estimated timeline for when you might receive the FDA's guidance on the best way to demonstrate protein uptake? Is it expected by the end of this year, in the first half of next year, or is it uncertain?

Let me share the facts we have. It took 5.5 months for the agency to respond to our STAMP protocol, which was sent in early May, and we received feedback in mid-October or late October. The documents related to the protein uptake protocol were sent to the agency in mid-July, and we expect to receive feedback on that in a reasonable timeframe, with the agency indicating it is forthcoming. Regarding your question about the EU, we are engaged in ongoing discussions with the EMA. We are confident that our product addresses their major objection, and we will present that to them. Whether or not it will convince the EMA is their decision. At this time, we have not considered any supplemental actions to address their objection; that will depend on our next discussions with them, but we remain optimistic that the product can benefit patients. The product is approvable, but the final decision lies with the CHMP.

Great. And if I could just ask one more slightly off-the-cuff question. Any thoughts on changing the company name to DBV Therapeutics?

Excellent suggestion. So what Graig is making reference to here is that on my voicemail, I called the company DBV Therapeutics, and I've never corrected it. I probably should.

And currently, we have no further questions.

If it is all right, give another 30 seconds or a minute, and if not...

And we have Graig back in the queue.

Daniel, I think it's really important for investors to get a better understanding of the Viaskin Peanut story, which has unfolded over several years. It seems we might be experiencing a slight delay with the agency in the U.S. While I appreciate that we may be getting closer to the finish line, a significant question for me and other investors is what potential issues could arise that might disrupt approval timelines. While I don't expect you to speculate on what could come next from the FDA, you've done a commendable job with your team in managing costs and reducing cash burn. Given your current situation, could you remind us how long your current cash runway is projected to last? Additionally, how do you navigate the uncertainty regarding the FDA while ensuring you have enough capital to support the company?

Yes, this is an essential question, and we take our responsibility to manage our shareholders' funds very seriously. We have significantly reduced expenses. As mentioned, we focus on expenses rather than just the baseline rate. We have also allocated funds for EQUAL and STAMP, and while we await FDA feedback, those spending plans have shifted, giving us a bit more flexibility. Currently, we have enough cash to last into the third quarter of next year. We are actively managing our finances to keep everything under control. I hope we can reach a resolution with the agency well before then. Additionally, we recognize that the division responsible for vaccine research and review is quite busy, especially given the demands of COVID. A recent article pointed out that OVRR has a significant amount of work to complete in a short timeframe. While we are understandably eager, and perhaps a little impatient, we acknowledge the agency's current pressures. We believe that ongoing communication with the agency will ultimately benefit both patients and investors, even if it takes longer than we hoped. Importantly, we have been reassured by the FDA that the Viaskin Peanut program is a priority for them, as demonstrated by their prompt engagement with us. Although the process is slower than anticipated, we are remaining very cautious with our expenses to ensure we do not face undue pressure in our discussions with the agency.

And the next question comes from Jon Wolleben.

Just one more for me, Daniel. You mentioned that you have a response to EMA's major objection. I was wondering if you could provide any color on what your answer is to this major objection as it is new news to at least us.

Yes. We do not want to go into detail about the nature of the objection. We feel it would be unproductive in relation to the ongoing EMA discussions. Therefore, I will not comment further on those exchanges, other than to state that it involves the interpretation of clinical data, which is the core of what sponsor regulatory agencies discuss and will be central to our Day 180 response and future interactions with them. We believe we have a satisfactory answer to their objection and a fair interpretation regarding benefits. The EMA will need to make that decision during the process, likely in Q1.

And the next question comes from Alex Cogut.

Daniel, so maybe it was answered before, but I believe you previously mentioned that the EQUAL study could be done fairly quickly in a couple of days. Is that still valid? Or do you see a scenario where the FDA asks something that makes the study much longer to perform?

I don't know the answer to that. To again remind ourselves what EQUAL is, the idea is to show the equivalence in protein delivery between the current patch and the modified patch, a study that can be done over, whether it's days or weeks; this is not a chronic study here. This is essentially the version of what would be PK/PD data if it was possible to measure concentration in the bloodstream, something we can't do with our product, given the mode of action. Again, I don't wish to speculate on what the agency will ask us to do, whether the study is going to be longer or more complex. What I think is important for investors to know, and the reason why we were a bit surprised by that development with the agency is, by asking us to do these things in a stepwise way, what we wish to do is to run EQUAL and all the work leading up to EQUAL in parallel to STAMP, which was important for us, obviously, in getting a resolution here. That's what's changed with the FDA guidance. That needs to be stepwise as opposed to parallel. And until we hear more from the agency on their thoughts on EQUAL, our ability to run these in parallel as opposed to in a stepwise way is something that we don't know. Hopefully, that would help answer your question.

And we have no further questions in the queue.

Adrianne, thank you, everybody calling in, to Pharis and Sébastien, and thanks for joining us today. And as you know, we're always a phone call away if you wish to have a further discussion. I thank you all for attending today.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.