DBV Technologies S.A. Q2 FY2023 Earnings Call

Good afternoon, and welcome to the DBV Technologies Second Quarter Financial Results Conference Call. My name is Vaishnavi, and I am the operator for this call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call for your questions. Please be advised that this call is being recorded at the company's request. And now, I’d like to turn it over to Katie Matthews, Head of Investor Relations. Katie, please go ahead.

Thank you. This afternoon, DBV Technologies issued a press release that outlines our financial results for the three and six months ended June 30, 2023. This press release is available in 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 design of our anticipated clinical trials, the timing and results of interactions with regulatory agencies, our forecast of our cash runway, and the ability of any of our product candidates 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. Joining me on the call today are Daniel Tassé, Chief Executive Officer of DBV; Dr. Pharis Mohideen, Chief Medical Officer; and Sébastien Robitaille, Chief Financial Officer. I will now pass the call over to Daniel. Daniel?

Katie, thank you, and thank you all for joining us on this call today. The purpose of this call today is twofold. One, to provide a business update on our two Viaskin Peanut programs, including feedback we received recently from the FDA through a Type C Meeting on our two pending supplemental safety studies, one in toddlers and one in children, and secondly, to review DBV financial highlights for the first half of 2023. Now, let me summarize what I think has been well established regarding our two Viaskin Peanut development programs before turning the call over to Pharis for an update on the recent FDA exchanges and next steps in our clinical and regulatory work. As you know, DBV is advancing in parallel two clinical programs for Viaskin Peanut: Viaskin Peanut in toddlers, ages one to three, and Viaskin Peanut in children, ages four to seven. It's important to recognize that Viaskin Peanut in one to three year olds and Viaskin Peanut in four to seven year olds are separate product candidates with independent clinical and regulatory paths that we believe will ultimately support two distinct BLAs. With that being said, let me pass the call on to Pharis, who will share with you more details. Pharis.

Thanks, Daniel. Let's start on slide number three, with the pathway for toddlers. Just to remind you, the Viaskin Peanut program in toddlers ages one to three uses the original square Viaskin Peanut patch. Efficacy in this age group was fully supported by our Phase 3 study known as EPITOPE, which was completed in June 2022. Recapping those results, Viaskin Peanut demonstrated a statistically significant treatment effect with a p-value of less than 0.001, with 67% of subjects in the Viaskin Peanut arm meeting the treatment responder criteria after 12 months, which is double compared to 33.5% of subjects in the placebo arm. The predefined endpoint was achieved with the lower bound of the 95% confidence interval at 22.4%, which was well above the pre-specified 15% mark. We were, of course, delighted that the results from EPITOPE were published in the New England Journal of Medicine in May. The publication also featured an accompanying editorial entitled 'Good News for Toddlers with Food Allergies.' This past April, we received pre-BLA written responses from the FDA regarding the next steps for the Viaskin Peanut Toddler program. As we have previously announced, the agency confirmed that our Phase 3 EPITOPE study met the pre-specified criteria for success for the primary endpoint and therefore did not request an additional efficacy study. However, the FDA did ask that we conduct a supplemental safety study using the original square Viaskin Peanut patch to support and complement the efficacy and safety results collected from EPITOPE. This study is intended to bring the safety database in this age group to approximately 600 total subjects on active treatment, which is consistent with FDA's position in support of the company's dossier in four to seven year olds, as previously announced in December 2022. Let me add a little more detail around that. The FDA has not raised any specific safety concerns with respect to the Viaskin Peanut development program, which includes toddlers and children. Thus, we are not looking to assess any specific safety signal in particular. The FDA has been consistent in their communications with us, dating back to the original BLA in 2019, in wanting exposure numbers on active treatment to be approximately 600 subjects in total. Let's move now to slide number four and the four to seven-year-old indication in children, which is evaluating Viaskin Peanut using the modified circular patch. Efficacy will be supported by our pivotal Phase 3 study, VITESSE, which was modeled on EPIT, our Phase 3 study in four to eleven-year-olds. We initiated enrollment in VITESSE in March, and we are making good progress. As with toddlers, we also plan to initiate a supplemental safety study in approximately 270 additional peanut allergic children ages four to seven years. When added to the safety data generated by VITESSE, the supplemental safety study in children will bring our safety database to approximately 600 children on active therapy in this age group. Recall that in December of last year, the FDA agreed that the supplemental study in four to seven-year-olds would be six months of treatment duration. Now let's discuss the progress that we have made with our Viaskin Peanut supplemental safety study following receipt of Type C Meeting Written Responses from the FDA. The meeting had two main objectives: one, to discuss key study design elements, and two, to agree that a six-month study would be adequate in toddlers. Let me summarize where we are; both safety studies, toddlers and children, will be six months in duration. They will be double-blind, placebo-controlled studies. No food challenges will be required for participation in either study. As I just mentioned, the four to seven-year-old children safety study will include about 270 subjects. The toddler safety study will include about 400 subjects in total. Both studies will have a 3:1 randomization of active to placebo. Both supplemental safety studies will also generate patch adhesion data in the same manner previously agreed to with the FDA for the VITESSE Phase 3 study. Now that we have received this feedback, we will finalize the protocols and submit them to the FDA for their formal 90-day review. Viaskin Peanut is a novel complex product for which there is no analog, and we believe that taking a best practice approach with the formal FDA review process serves us and the FDA very well. As they said, a picture is worth a thousand words. So, here's a picture of the two patches. Both have the same foam ring and 250 microgram dose of peanut protein. The only difference is the shape and the size of the overlay. The safety studies will be named COMFORT Toddlers in one to three-year-olds and COMFORT Children in four to seven-year-olds. COMFORT stands for Characterization of the Optimal Management of Food Allergy, Relief, and Treatment. At this point, I'll turn the call back over to Daniel to review the financial results.

Thank you, Pharis. Now, let's briefly review financial highlights of the first half of 2023. Moving to slide number eight. Cash and cash equivalents were $174 million as of June 30th compared to a position of $209.2 million as of December 31, which is a net decrease of $35.2 million. $46.4 million of cash were used in operating activities, which in a biotech company was mostly driven by clinical R&D, the initiation of the VITESSE Phase 3 trial being the biggest component here. Cash used for operations in the six months ended on June 30, 2023, increased by $34.7 million compared to the six months ended June 30, 2022. Now in 2022, the company received €24.8 million during the six months ending June 30, 2022, for reimbursement of 2019, 2020, and 2021 French research tax credits. We raised $7.8 million proceeds from the issuance and sale of new ordinary shares in the form of American Depository Shares (ADSs), which took place on June 16, 2023, pursuant to our At-The-Market (ATM) program, which was established in May 2022. In closing, we continue to maximize the efficiency of our spend to make sure we are highly disciplined in our cash management. We have a lot of clinical work to do by next year. We anticipate having about 1,400 subjects enrolled in Viaskin Peanut Phase 3 studies, which is the bulk of our focus in our broadcast sheets. So let me summarize the fact that we've covered quite a bit of information today. So let me recap. Our four to seven-year-old efficacy study, VITESSE, opened with the first subject screened in March of this year, and we are pleased with the ongoing progress of that trial. We are also actively finalizing the two supplemental COMFORT safety study protocols in toddlers and children. We expect to initiate these studies once we have final FDA review of the protocols. In parallel, we are diligently working on appropriate study start-up activities for both supplemental safety studies, with tasks such as site feasibility and selection contracts that can be done very effectively in parallel. We believe that the successful completion of the supplemental COMFORT Toddlers safety study would be an important step towards filing a BLA, seeking marketing approval for this potential novel breakthrough technology for peanut allergic toddlers and their families. I want to thank everyone on the phone and the webcast for joining us today. I'll ask Pharis and our Chief Financial Officer, Sébastien, to join me for a Q&A. Operator, let's open the lines for questions, please.

We will now begin the question-and-answer session. The first question comes from Jon Wolleben with JMP Securities. Please go ahead.

Hi, good afternoon, and thanks for taking the questions.

Hi, Jon. Good to hear from you.

Good talking to you, Daniel. A couple of questions on the update today. Just wondering what other protocol details are you trying to get alignment with the FDA? And when do you think that could happen to start the COMFORT programs?

It's three on one front. I'll let Pharis answer that question since he's doing all the hard work. Pharis?

Yeah. Hi, Jon. How are you doing? So, for protocol details, it's just the usual sort of last bit of details you want to get alignment on, including inclusion and exclusion type things. The main things that we mentioned that we were really happy about were the six-month duration. Remember, we weren't sure if that could have been a 12-month duration, and then the size of the trial. So, hopefully, that answers the first part. When would we get back to the FDA again? We're working to finalize that protocol, as Daniel said, and then we'll submit it back to them. Not sure if that really answers your question, but we are working hard to finalize it and then get it out the door.

Okay. And can you give an update on the VITESSE enrollment? You guys have previously said you expect to screen the last patient in the first half of next year. Just wondering about the early traction you're getting. And then I believe you also previously said you might wait to start the COMFORT Children now until VITESSE is done screening; is that still the expectation for kind of staggering those studies?

Yes. It is. Let me take that one. Yes. VITESSE is enrolling as expected; we are not changing what was the guidance we've given that we would have the last patient in the first half of next year with top-line results in the first half of 2025. That's unchanged. Things are progressing as planned. As you know, safety trials are easier to recruit than efficacy trials in this space, being a six-month trial. Our plan is still to initiate COMFORT in children towards the end of enrollment of the VITESSE trial as to not compete ourselves. They’ll be able to give us also the same sites, which many investigators know and are familiar with the product as well. So that remains very much the plan here. I hope that answers your question.

Yes. And then one last from me, if I may. Given the agreement on the high-level details from the FDA, does this make any changes to your cash runway guidance with regards to COMFORT Toddlers?

An important question; it does not. We expect the study would be six or 12 months in duration, and it turns out to be six, consistent with realized timelines in the safety trial company for eleven-year-olds back in 2019, and the six-month COMFORT children trial. So, that was very much part of our financial projections here. So, we certainly have more in the financial needs initiated, all these trials in parallel and drive them to execution, and the feedback we have from the FDA changes nothing regarding our clinical trial planning.

Great. Thanks again for taking the questions, and congrats.

Yes. Thank you.

Daniel, it looks like there are no more questions. Do you have any closing remarks?

Nothing, but a big thank you to you, Vaishnavi, and to everybody joining the call today. As you know, I am available for follow-up discussions if you wish. So, thank you so much. Have a great day.

The conference has now concluded. Thank you for joining today.