DBV Technologies S.A 10-Q for FY2021 Q1
DBV Technologies S.A. (DBVT)
About this 10-Q
DBV Technologies S.A filed this 10-Q on May 5, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).
Headline figures
Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.94M
- down 37.7% from $4.72M a year earlier
- Net loss
- $29.45M
- compared with a net loss of $40.91M a year earlier
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2021
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-36697
DBV TECHNOLOGIES S.A.
(Exact name of registrant as specified in its charter)
| France | Not applicable | |
| State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) | |
| 177-181 avenue Pierre Brossolette Montrouge France |
92120 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code +33 1 55 42 78 78
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| American Depositary Shares, each representing one-half of one ordinary share, nominal value €0.10 per share | DBVT | The Nasdaq Stock Market LLC | ||
| Ordinary shares, nominal value €0.10 per share* | n/a | The Nasdaq Stock Market LLC |
| * | Not for trading, but only in connection with the registration of the American Depositary Shares. |
Securities registered pursuant to section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
As of April 30, 2021, the registrant had 54,936,687 ordinary shares, nominal value €0.10 per share, outstanding.
Table of Contents
| Page | ||||||
| Part I |
1 | |||||
| Item 1 |
1 | |||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| Notes to the Condensed Consolidated Financial Statements (Unaudited) |
5 | |||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||||
| Item 3 |
17 | |||||
| Item 4 |
17 | |||||
| Part II |
18 | |||||
| Item 1 |
18 | |||||
| Item 1A |
18 | |||||
| Item 2 |
18 | |||||
| Item 3 |
18 | |||||
| Item 4 |
18 | |||||
| Item 5 |
18 | |||||
| Item 6 |
19 | |||||
Table of Contents
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS.
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or variations of these words or similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Any forward-looking statement involves known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statement. Forward-looking statements include statements, other than statements of historical fact, about, among other things:
| • | statements regarding the impact of the ongoing COVID-19 pandemic and its effects on our operations, research and development and clinical trials and potential disruption in the operations and business of third-party manufacturers, contract research organizations, other service providers and collaborators with whom we conduct business; |
| • | our expectations regarding the timing or likelihood of regulatory filings and approvals, including with respect to our anticipated re-submission of a Biologics License Application for ViaskinTM Peanut to the U.S. Food and Drug Administration; |
| • | the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs; |
| • | the sufficiency of existing capital resources; |
| • | the implementation of our global restructuring plan, our business model and our other strategic plans for our business, product candidates and technology; |
| • | our ability to manufacture clinical and commercial supplies of our product candidates and comply with regulatory requirements related to the manufacturing of our product candidates; |
| • | our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize Viaskin Peanut and/or our other product candidates, if approved; |
| • | the commercialization of our product candidates, if approved; |
| • | our expectations regarding the potential market size and the size of the patient populations for Viaskin Peanut and/or our other product candidates, if approved, and our ability to serve such markets; |
| • | the pricing and reimbursement of our product candidates, if approved; |
| • | the rate and degree of market acceptance of Viaskin Peanut and/or our other product candidates, if approved, by physicians, patients, third-party payors and others in the medical community; |
| • | our ability to advance product candidates into, and successfully complete, clinical trials; |
| • | the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; |
| • | estimates of our expenses, future revenues, capital requirements and our needs for additional financing; |
| • | the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements; |
| • | our ability to maintain and establish collaborations or obtain additional grant funding; |
| • | our financial performance; |
| • | developments relating to our competitors and our industry, including competing therapies; and |
| • | other risks and uncertainties, including those listed under the caption “Risk Factors.” |
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, these statements are based on our estimates or projections of the future that are subject to known and unknown risks and uncertainties and other important factors that may cause our actual results, level of activity, performance, experience or achievements to differ materially from those expressed or implied by any forward-looking statement. These risks, uncertainties and other factors are described in greater detail under the caption “Risk Factors” in Part I. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on March 17, 2021. As a result of the risks and uncertainties, the results or events indicated by the forward-looking statements may not occur. Undue reliance should not be placed on any forward-looking statement.
In addition, any forward-looking statement in this Annual Report represents our views only as of the date of this annual report and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause our views to change. Although we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, except as required by applicable law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
Table of Contents
Part I – Financial Information
DBV Technologies S.A.
Condensed Consolidated Statements of Financial Position (unaudited)
(amounts in thousands, except share and per share data)
| March 31, | December 31, | |||||||||||
| Note | 2021 | 2020 | ||||||||||
| Assets |
||||||||||||
| Current assets : |
||||||||||||
| Cash and cash equivalents |
3 | $ | 152,459 | $ | 196,352 | |||||||
| Trade receivables |
— | 2,230 | ||||||||||
| Other current assets |
7,349 | 8,792 | ||||||||||
|
|
|
|
|
|||||||||
| Total current assets |
159,809 | 207,375 | ||||||||||
| Property, plant, and equipment, net |
21,526 | 24,792 | ||||||||||
| Right-of-use assets related to operating leases |
9,168 | 10,104 | ||||||||||
| Intangible assets |
32 | 41 | ||||||||||
| Other non-current assets |
30,870 | 29,935 | ||||||||||
|
|
|
|
|
|||||||||
| Total non-current assets |
61,596 | 64,871 | ||||||||||
|
|
|
|
|
|||||||||
| Total Assets |
$ | 221,405 | $ | 272,246 | ||||||||
|
|
|
|
|
|||||||||
| Liabilities and shareholders’ equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Trade payables |
4 | $ | 17,176 | $ | 20,338 | |||||||
| Short-term operating leases |
3,314 | 3,708 | ||||||||||
| Short-term financial debt |
701 | 724 | ||||||||||
| Current contingencies |
6 | 4,246 | 5,016 | |||||||||
| Other current liabilities |
4 | 13,394 | 22,926 | |||||||||
|
|
|
|
|
|||||||||
| Total current liabilities |
38,831 | 52,713 | ||||||||||
|
|
|
|
|
|||||||||
| Long-term operating leases |
9,533 | 10,496 | ||||||||||
| Long-term financial debt |
350 | 543 | ||||||||||
| Non-current contingencies |
6 | 2,229 | 2,527 | |||||||||
| Other non-current liabilities |
1,286 | 475 | ||||||||||
|
|
|
|
|
|||||||||
| Total non-current liabilities |
13,398 | 14,042 | ||||||||||
|
|
|
|
|
|||||||||
| Total Liabilities |
$ | 52,229 | $ | 66,754 | ||||||||
|
|
|
|
|
|||||||||
| Shareholders’ equity : |
||||||||||||
| Ordinary shares, €0.10 par value; 54,936,687 and 54,929,187 shares authorized, and issued as at March 31, 2021 and December 31, 2020, respectively, and 4,100,663 and 4,029,763 shares outstanding as at March 31, 2021 and December 31, 2020, respectively |
$ | 6,519 | $ | 6,518 | ||||||||
| Additional paid-in capital |
1,153,516 | 1,152,042 | ||||||||||
| Treasury stock, 60,588 and 112,302 ordinary shares as of March 31, 2021 and December 31, 2020, respectively, at cost |
(681 | ) | (1,169 | ) | ||||||||
| Accumulated deficit |
(987,992 | ) | (958,543 | ) | ||||||||
| Accumulated other comprehensive income |
399 | 484 | ||||||||||
| Accumulated currency translation effect |
(2,586 | ) | 6,158 | |||||||||
|
|
|
|
|
|||||||||
| Total Shareholders’ equity |
$ | 169,176 | $ | 205,491 | ||||||||
|
|
|
|
|
|||||||||
| Total Liabilities and Shareholder’s equity |
$ | 221,405 | $ | 272,246 | ||||||||
|
|
|
|
|
|||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Table of Contents
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(amounts in thousands, except share and per share data)
| Three Months Ended March 31, |
||||||||||
| Note | 2021 | 2020 | ||||||||
| Operating income |
7 | $ | 2,941 | $ | 4,720 | |||||
| Operating expenses |
||||||||||
| Research and development expenses |
(22,164 | ) | (27,532 | ) | ||||||
| Sales and marketing expenses |
(729 | ) | (7,297 | ) | ||||||
| General and administrative expenses |
(9,683 | ) | (11,113 | ) | ||||||
|
|
|
|
|
|||||||
| Total Operating expenses |
(32,575 | ) | (45,942 | ) | ||||||
|
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|
|
|
|||||||
| Loss from operations |
(29,634 | ) | (41,222 | ) | ||||||
|
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|
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|
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| Financial income |
215 | 309 | ||||||||
|
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|
|
|
|||||||
| Loss before taxes |
(29,419 | ) | (40,913 | ) | ||||||
|
|
|
|
|
|||||||
| Income tax |
(30 | ) | — | |||||||
|
|
|
|
|
|||||||
| Net loss |
$ | (29,449 | ) | $ | (40,913 | ) | ||||
|
|
|
|
|
|||||||
| Other comprehensive loss |
||||||||||
| Foreign currency translation differences, net of taxes |
(8,744 | ) | (6,064 | ) | ||||||
| Actuarial (losses) gains on employee benefits, net of taxes |
(85 | ) | 189 | |||||||
|
|
|
|
|
|||||||
| Comprehensive loss |
$ | (38,279 | ) | $ | (46,788 | ) | ||||
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|
|
|
|||||||
| Basic/diluted Net loss per share attributable to shareholders |
11 | $ | (0.54 | ) | $ | (0.79 | ) | |||
| Weighted average shares outstanding used in computing per share amounts: |
54,880,776 | 51,802,524 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Table of Contents
Condensed Consolidated Statements of Cash Flows (unaudited)
(amounts in thousands)
| Three Months Ended March 31, | ||||||||||||
| Notes | 2021 | 2020 | ||||||||||
| Net loss for the period |
$ | (29,449 | ) | $ | (40,913 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||
| Depreciation, amortization and accrued contingencies |
1,483 | 1,548 | ||||||||||
| Retirement pension obligations |
— | 109 | ||||||||||
| Expenses related to share-based payments |
1,433 | 3,073 | ||||||||||
| Other elements |
(456 | ) | 419 | |||||||||
| Changes in operating assets and liabilities: |
||||||||||||
| Decrease (increase) in inventories and work in progress |
— | (2,402 | ) | |||||||||
| Decrease (increase) in trade receivables |
2,101 | — | ||||||||||
| Decrease (increase) in other current assets |
(417 | ) | 122 | |||||||||
| (Decrease) increase in trade payables |
(2,567 | ) | (3,212 | ) | ||||||||
| (Decrease) increase in other current and non-current liabilities |
(7,980 | ) | (8,382 | ) | ||||||||
| Change in operating lease liabilities and right of use assets |
(353 | ) | (45 | ) | ||||||||
| Net cash flow used in operating activities |
(36,204 | ) | (49,683 | ) | ||||||||
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|
|
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| Cash flows used in investing activities: |
||||||||||||
| Acquisitions of property, plant, and equipment, net from proceeds |
(184 | ) | (816 | ) | ||||||||
| Acquisitions of intangible assets |
— | (114 | ) | |||||||||
| Acquisitions of non-current financial assets |
(1 | ) | — | |||||||||
|
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|
|
|
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| Net cash flows used in investing activities |
(185 | ) | (930 | ) | ||||||||
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|
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| Cash flows provided by financing activities: |
||||||||||||
| (Decrease) increase in conditional advances |
(164 | ) | 7 | |||||||||
| Treasury shares |
578 | (412 | ) | |||||||||
| Capital increases, net of transaction costs |
42 | 151,023 | ||||||||||
| Other cash flows related to financing activities |
(17 | ) | (7 | ) | ||||||||
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|
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| Net cash flows provided by financing activities |
440 | 150,611 | ||||||||||
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| Effect of exchange rate changes on cash and cash equivalents |
(7,944 | ) | (5,811 | ) | ||||||||
|
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| Net (decrease) / increase in cash and cash equivalents |
(43,893 | ) | 94,187 | |||||||||
|
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|
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| Net Cash and cash equivalents at the beginning of the period |
196,352 | 193,255 | ||||||||||
|
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|
|
|
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| Net cash and cash equivalents at the end of the period |
3 | $ | 152,459 | $ | 287,442 | |||||||
|
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|
|
|
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)
(amounts in thousands, except share and per share data)
| Ordinary shares | ||||||||||||||||||||||||||||||||
| Number of Shares |
Amount | Additional paid-in capital |
Treasury stock |
Accumulated deficit |
Accumulated other comprehensive income (loss) |
Accumulated currency translation effect |
Total Shareholders’ Equity |
|||||||||||||||||||||||||
| Balance at January 1, 2020 |
47,028,510 | $ | 5,645 | $ | 1,003,595 | $ | (230 | ) | $ | (798,988 | ) | $ | 108 | $ | (16,945 | ) | $ | 193,186 | ||||||||||||||
| Net (loss) |
— | — | — | — | (40,913 | ) | — | — | (40,913 | ) | ||||||||||||||||||||||
| Other comprehensive income (loss) |
— | — | — | — | — | 189 | (6,064 | ) | (5,875 | ) | ||||||||||||||||||||||
| Issuance of ordinary shares |
7,898,677 | 873 | 150,150 | — | — | — | — | 151,023 | ||||||||||||||||||||||||
| Treasury shares |
— | — | — | (832 | ) | — | — | — | (832 | ) | ||||||||||||||||||||||
| Share-based payments |
— | — | 3,073 | — | — | — | 3,073 | |||||||||||||||||||||||||
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| Balance at March 31, 2020 |
54,927,187 | $ | 6,518 | $ | 1,156,818 | $ | (1,062 | ) | $ | (839,901 | ) | $ | 297 | $ | (23,009 | ) | $ | 299,662 | ||||||||||||||
| Ordinary shares | ||||||||||||||||||||||||||||||||
| Number of Shares |
Amount | Additional paid-in capital |
Treasury stock |
Accumulated deficit |
Accumulated other comprehensive gain (loss) |
Accumulated currency translation effect |
Total Shareholders’ Equity |
|||||||||||||||||||||||||
| Balance at January 1, 2021 |
54,929,187 | $ | 6,518 | $ | 1,152,042 | $ | (1,169 | ) | $ | (958,543 | ) | $ | 484 | $ | 6,158 | $ | 205,491 | |||||||||||||||
| Net (loss) |
— | — | — | — | (29,449 | ) | — | — | (29,449 | ) | ||||||||||||||||||||||
| Other comprehensive (loss) |
— | — | — | — | — | (85 | ) | (8,744 | ) | (8,829 | ) | |||||||||||||||||||||
| Issuance of ordinary shares |
7 500 | 1 | 42 | — | — | — | — | 42 | ||||||||||||||||||||||||
| Treasury shares |
— | — | — | 488 | — | — | — | 488 | ||||||||||||||||||||||||
| Share-based payments |
— | — | 1,433 | — | — | — | — | 1,433 | ||||||||||||||||||||||||
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| Balance at March 31, 2021 |
54,936,687 | $ | 6,519 | $ | 1,153,516 | $ | (681 | ) | $ | (987,992 | ) | $ | 399 | $ | (2,586 | ) | $ | 169,176 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
Note 1: The Company
Incorporated in 2002 under the laws of France, DBV Technologies S.A. (“DBV Technologies,” or the “Company”, or the “group”) is a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin™. The Company’s therapeutic approach is based on epicutaneous immunotherapy, or EPIT™, a proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin™.
Basis of Presentation
The condensed consolidated financial statements of the Company and its wholly-owned subsidiaries are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and are presented in U.S. dollars. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.
The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2021 (the “Annual Report”). The condensed consolidated statement of financial position at December 31, 2020 was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The Company’s critical accounting policies are detailed in the Annual Report. The Company’s critical accounting policies have not changed materially since December 31, 2020.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. These interim financial results are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2021, or any other future period.
Use of estimates
The preparation of the Company’s condensed consolidated financial statements requires the use of estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of income and expenses during the period. The Company bases its estimates and assumptions on historical experience and other factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The actual results may differ from these estimates.
On an on-going basis, management evaluates its estimates, primarily those related to: (1) evaluation of costs and measure of progress of the development activities conducted as part of the collaboration agreement with Nestlé Health Science, (2) research tax credits, (3) assumptions used in the valuation of right of use assets - operating lease, (4) impairment of right-of-use assets related to leases and property, plant and equipment, (5) recoverability of the Company’s net deferred tax assets and related valuation allowance, (6) assumptions used in the valuation model to determine the fair value and vesting conditions of share-based compensation plan and, (7) estimate of contingencies.
Going concern
Since its inception, the Company has primarily funded its operations with equity financings, and, to a lesser extent, public assistance aimed at supporting innovation and payments associated with research tax credits (Crédit d’Impôt Recherche). The Company does not generate product revenue and continues to prepare for the potential launch of its first product in the United States and in the European Union, if approved.
Following receipt of a Complete Response Letter (“CRL”) from the U.S. Food and Drug Administration (“FDA”) in connection with its Biologics License Application (“BLA”) for Viaskin™ Peanut, beginning in August 2020, the Company scaled down its other clinical programs and pre-clinical spend to focus on Viaskin™ Peanut. The Company also initiated a global restructuring plan in June 2020 to provide operational latitude to progress the clinical development and regulatory review of Viaskin™ Peanut in the United States and European Union. Based on guidance received from the FDA in January 2021, the Company’s plans to implement such guidance, and expected cost savings from implementation of the global restructuring plan, the Company expects that its current balance of cash and cash equivalents of $152.5 million as of March 31, 2021 will be sufficient to fund its operations for at least the next 12 months.
The Company intends to seek additional capital as it prepares for the launch of Viaskin Peanut, if approved, and continues other research and development efforts. The Company may seek to finance its future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. As a result of disruptions to the global financial markets as a result of the ongoing COVID-19 pandemic, the Company cannot guarantee that it will be able to obtain the necessary financing to meet its needs or to obtain funds at attractive terms and conditions. The ongoing COVID-19 pandemic has already caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to the Company, including reduced ability to raise additional capital when needed or on acceptable terms, if at all.
5
Table of Contents
Accounting Pronouncements adopted in 2021
Effective January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, which is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial position or results of operations.
Accounting Pronouncements issued not yet adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 - Financial Instruments - Credit losses, which replaces the incurred loss impairment methodology for financial instruments in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The FASB has issued ASU 2019-10 which has resulted in the postponement of the effective date of the new guidance for eligible smaller reporting companies to the fiscal year beginning January 1, 2023. The guidance must be adopted using a modified-retrospective approach and a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently evaluating the impact of the guidance on its Consolidated Financial Statements. The Company does not expect this new standard will have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which modifies the goodwill impairment test and requires an entity to write down the carrying value of goodwill for the amount by which the carrying amount of a reporting unit exceeds its fair value. The FASB has issued ASU 2019-10 which has resulted in the postponement of the effective date of the new guidance for eligible smaller reporting companies to the fiscal year beginning January 1, 2023. The Company does not expect this new standard will have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s Consolidated Financial Statements upon adoption.
Note 2: Significant Events and Transactions
Clinical programs
ViaskinTM Peanut for children ages 4-11
In January 2020, the Company announced positive topline results of the three-year, open-label extension of its Phase III PEPITES trial, or PEOPLE trial, evaluating the long-term efficacy and safety of investigational Viaskin Peanut in peanut-allergic children ages 4 to 11 years. The results demonstrated long-term clinical benefit as shown by an increase in eliciting dose (“ED”), which may decrease the chance of reacting to an accidental peanut exposure. After three years, the Company observed that 75.9% (107/141) of patients had increased their ED from baseline, and 51.8% (73/141) of patients reached an ED of at least 1,000 mg peanut protein by year three. The safety profile of Viaskin Peanut was consistent with that observed in the clinical program to date in over 1,000 patients. During the PEOPLE trial, the most common adverse events were mild to moderate skin reactions localized to the administration site, and there was no epinephrine use deemed related to treatment. No treatment related serious adverse events were reported. One patient experienced one case of mild anaphylaxis that was determined by the investigator to be possibly related to treatment and resolved without anti-anaphylactic treatment. Treatment compliance remained high throughout the study at a mean of 98% over three years of treatment. Low discontinuations due to adverse events were observed.
In February 2020, the FDA announced an Allergenic Products Advisory Committee meeting to be held on May 15, 2020 to discuss the Biologics License Application (BLA) for Viaskin Peanut. On March 16, 2020, the Company announced that the FDA had informed us that during its ongoing review of the Company’s BLA for Viaskin Peanut, it had identified questions regarding efficacy, including the impact of patch-site adhesion. Therefore, the Advisory Committee meeting to discuss the BLA originally scheduled on May 15, 2020 was cancelled.
On August 4, 2020, the Company announced that FDA has issued a Complete Response Letter in which the FDA indicated it could not approve the Viaskin Peanut BLA in its current form. The FDA identified concerns regarding the impact of patch-site adhesion on efficacy and indicated the need for patch modifications, and subsequently a new human factor study. The FDA also indicated that supplementary clinical data would need to be generated to support the modified patch. In addition, the FDA requested additional Chemistry, Manufacturing and Controls, or CMC, data. The FDA did not raise any safety concerns related to Viaskin Peanut.
On January 13, 2021, the Company received written responses from the FDA to questions provided in the Type A meeting request the Company submitted in October 2020 following the CRL. The Company believes the FDA feedback provides a well-defined regulatory path forward. In exchanges with the FDA, the Company proposed potential resolutions to two main concerns identified by the FDA in the CRL: the impact of patch adhesion and the need for patch modifications. The FDA agreed with the Company’s position that a modified Viaskin Peanut patch should not be considered as a new product entity provided the occlusion chamber of the current Viaskin Peanut patch and the peanut protein dose of 250 µg (approximately 1/1000 one peanut) remains unchanged and performs in the same way it has performed previously. In order to confirm the consistency of efficacy data between the existing and modified patches, the FDA has
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requested an assessment comparing the uptake of allergen (peanut protein) between the patches in peanut allergic children ages 4 to 11 years. The FDA also recommended conducting a 6-month, well-controlled safety and adhesion trial to assess the modified Viaskin Peanut patch in the intended patient population.
On November 2, 2020, the Company announced that its Marketing Authorization Application, or MAA, for Viaskin Peanut had been validated by the European Medicines Agency, or EMA. The validation of the MAA confirmed that the submission was sufficiently complete to begin the formal review process for Viaskin Peanut to treat peanut allergies in children ages 4 to 11 years. The Company received the first set of questions from the EMA, during the first quarter of 2021, which were consistent with the Company’s expectations and prefiling conversations with the EMA. The Company did not receive questions about the impact of adhesion on efficacy. The EMA’s Committee for Medicinal Products for Human Use will provide a recommendation to the European Commission, or EC, on whether to grant a marketing authorization when its review of the Viaskin Peanut MAA is complete.
Viaskin Peanut for children ages 1-3
On June 26, 2020, the Company announced that in Part A, patients in both treatment arms showed consistent treatment effects after 12 months of therapy, as assessed by a double-blind placebo-controlled food challenge and biomarker results. Part A subjects were not included in Part B and the efficacy analyses from Part A were not statistically powered to demonstrate superiority of either dose versus placebo. These results validate the ongoing investigation of the 250 mg dose in this age group, which is the dose being studied in Part B of the study. Enrollment for Part B of EPITOPE was completed in the first quarter of 2021.
Financing
On February 4, 2020, the Company announced the closing of an underwritten global offering of an aggregate of 7,500,000 ordinary shares in (i) a public offering of 4,535,581 ordinary shares in the form of 9,071,162 American Depositary Shares (“ADSs”) in the United States, Canada and certain countries outside Europe at a public offering price of $10.25 per ADS (on the basis of an exchange rate of $1.0999 = €1.00), and (ii) an offering exclusively addressed to qualified investors in Europe (including France) of 2,964,419 ordinary shares at an offering price of €18.63 per ordinary share (together, the “Global Offering”).
On March 2, 2020, the Company announced that the underwriters partially exercised their option to purchase 338,687 additional ordinary shares in the form of 677,374 ADSs at an offering price of $10.25 per ADS, before deducting commissions and estimated offering expenses (the “Option”). The Option closed on March 4, 2020.
Consequently, following partial exercise of the Option, the total number of ordinary shares sold in the global offering was 7,838,687 ordinary shares, including 4,874,268 ordinary shares in the form of 9,748,536 ADSs, bringing the total gross proceeds from the global offering to $160.7 million and net proceeds of $150.0 million.
Restructuring
The Company initiated a global restructuring plan in June 2020 to provide operational latitude to progress in the clinical development and regulatory review of investigational Viaskin Peanut in the United States and European Union. The Company expects full implementation of the organization-wide costs reduction measures to be completed by the second half of 2021.
The following table summarizes restructuring activities as of March 31, 2021 included in current contingencies and other current liabilities in the statement of financial position:
| Restructuring liabilities |
||||
| Restructuring liability - January 1, 2021 |
9,387 | |||
| Amounts paid |
(4,854 | ) | ||
| Other effect including currency translation effect |
(220 | ) | ||
|
|
|
|||
| Restructuring liability - March 31, 2021 |
4,313 | |||
|
|
|
|||
| of which current contingencies |
1,511 | |||
| of which other current liabilities |
2,803 | |||
COVID-19 Pandemic
On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. This global health crisis led many countries to impose national containment measures and travel bans. In view of this exceptional situation, the Company decided to take all measures
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aimed primarily at guaranteeing the safety of its employees and the continuation of ongoing clinical trials, in compliance with the directives of the authorities in each country. The Company has experienced a decrease in new patients enrolling in the ongoing clinical studies and it has had to adapt the protocols of its clinical trials because patients remain subject to travel restrictions.
The Company has assessed the impact of the uncertainties created by the pandemic. As of March 31, 2021, those uncertainties were taken into account in the assumptions underlying the estimates and judgments used by the Company. The Company continues to update these estimates and assumptions as the situation evolves. The effects of the COVID-19 pandemic are presented in the relevant line items of the condensed consolidated statement of financial position and the condensed consolidated statement of operations according to the function or nature of the income or expense.
Legal Proceedings
A class action complaint was filed on January 15, 2019 in the United States District Court for the District of New Jersey, entitled Travis Ito-Stone v. DBV Technologies, et al., Case No. 2:19-cv-00525. The complaint alleged that the Company and its former Chief Executive Officer, its current Chief Executive Officer, and its former Deputy Chief Executive Officer violated certain federal securities laws, specifically under Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. The plaintiffs seek unspecified damages on behalf of a purported class of purchasers of the Company’s securities between February 14, 2018 and March 16, 2020.
The Company believes that the allegations contained in the amended complaint are without merit and will defend the case vigorously. The Company believes this complaint will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.
Note 3: Cash and Cash Equivalents
The following table presents for each reported period, the breakdown of cash and cash equivalents:
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash |
58,069 | 42,341 | ||||||
| Cash equivalents |
94,390 | 154,011 | ||||||
|
|
|
|
|
|||||
| Total cash and cash equivalents as reported in the statements of financial position |
152,459 | 196,352 | ||||||
|
|
|
|
|
|||||
Cash equivalents are immediately convertible into cash at no or insignificant cost, on demand. They are measured using level 1 fair value measurements.
Note 4: Trade Payables and Other Current Liabilities
4.1 Trade Payables
No discounting was performed on the trade payables to the extent that the amounts did not present payment terms longer than one year at the end of each fiscal period presented.
4.2 Other Current Liabilities
Other current liabilities consisted of the following:
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Employee related liabilities |
9,245 | 16,661 | ||||||
| Deferred income |
3,378 | 4,687 | ||||||
| Tax liabilities |
312 | 580 | ||||||
| Other debts |
460 | 999 | ||||||
|
|
|
|
|
|||||
| Total |
13,394 | 22,926 | ||||||
|
|
|
|
|
|||||
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The other current liabilities include short-term debt to employees including employee termination allowance and benefits as part of the restructuring (refer to Note 2, “Significant Events and Transactions of the Period – Restructuring”), bonus accruals, and social welfare and tax agency obligations.
Deferred income primarily includes deferred income from the collaboration agreement with Nestlé Health Science, which amounted to $3.4 million as of March 31, 2021.
Note 5: Share-Based Payments
The Board of Directors has been authorized by the General Meeting of the Shareholders to grant restricted stock units (“RSU”), stock options plan (“SO”), employee warrants (Bons de Souscription de Parts de Créateur d’Entreprise or “BSPCE”) and (Bons de Souscription d’Actions or “BSA”).
During the three months ended March 31, 2021, the Company granted 75,600 stock options and 24,900 restricted stock.
There have been no changes in the vesting conditions and method of valuation of the SO and RSUs from that disclosed in Note 14 to the consolidated financial statements included in the Annual Report.
| Stock options fair value assumptions during the three months ended March 31, 2021 |
||||
| Weighted average share price at grant date in € |
9.3 | |||
| Weighted average expected volatility |
90.9 | % | ||
| Weighted average risk-free interest rate |
(0.36 | )% | ||
| Weighted average expected term (in years) |
6 | |||
| Dividend yield |
— | |||
| Weighted average fair value of stock-options in € |
6.9 | |||
Change in Number of BSA/BCE/SO/RSU
| Number of outstanding | ||||||||||||||||
| BSA | BCE | SO | RSUs | |||||||||||||
| Balance as of December 31, 2020 |
218,008 | 5,500 | 2,610,510 | 1,118,745 | ||||||||||||
| Granted during the period |
— | — | 75,600 | 24,900 | ||||||||||||
| Forfeited during the period |
— | — | (15,400 | ) | (13,700 | ) | ||||||||||
| Exercised/released during the period |
— | (500 | ) | — | — | |||||||||||
| Expired during the period |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Balance as of March 31, 2021 |
218,008 | 5 000 | 2,670,710 | 1,129,945 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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Reconciliation of the share-based payments expenses with the consolidated statements of operations
| Three Months Ended March 31, |
||||||||||||
| 2021 | 2020 | |||||||||||
| Research and development |
SO | (376 | ) | (876 | ) | |||||||
| RSU | (251 | ) | (392 | ) | ||||||||
| Sales and marketing |
SO | (49 | ) | (598 | ) | |||||||
| RSU | (22 | ) | (2 | ) | ||||||||
| General and administrative |
SO | (644 | ) | (1,071 | ) | |||||||
| RSU | (91 | ) | (133 | ) | ||||||||
|
|
|
|
|
|||||||||
| Total share-based compensation expense |
(1,433 | ) | (3,073 | ) | ||||||||
|
|
|
|
|
|||||||||
Note 6: Contingencies
Current contingencies and non-current contingencies break down as follows:
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Current contingencies |
4,246 | 5,016 | ||||||
| Non-current contingencies |
2,229 | 2,527 | ||||||
|
|
|
|
|
|||||
| Total contingencies |
6,474 | 7,542 | ||||||
|
|
|
|
|
|||||
The table below shows movements in contingencies:
| Pension retirement obligations |
Collaboration agreement - Loss at completion |
Other contingencies | Total | |||||||||||||
| At January 1, 2021 |
937 | 3,956 | 2,649 | 7,542 | ||||||||||||
| Increases in liabilities |
— | — | — | — | ||||||||||||
| Used liabilities |
— | (434 | ) | (515 | ) | (949 | ) | |||||||||
| Reversals of unused liabilities |
— | — | — | — | ||||||||||||
| Net interest related to employee benefits, and unwinding of discount |
— | — | — | — | ||||||||||||
| Actuarial gains and losses on defined-benefit plans |
85 | — | — | 85 | ||||||||||||
| Other effects including currency translation effect |
(44 | ) | (164 | ) | 4 | (204 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| At March 31, 2021 |
978 | 3,358 | 2,139 | 6,474 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Of which current |
— | 2,107 | 2,139 | 4,246 | ||||||||||||
| Of which non-current |
978 | 1,251 | — | 2,229 | ||||||||||||
In 2020 and during the first three months of 2021, the ongoing COVID-19 pandemic impacted the Company’s current clinical trials, including its Phase II clinical trial conducted as part of the development activities pursuant to the collaboration and license agreement with Nestlé Health Science. The Company experienced a decrease in new patients enrolling in this Phase II clinical trial and modified the protocols of the clinical trial. As a result of these delays, the Company expects to incur additional clinical and production costs related to the Phase II clinical trial. Starting the last quarter of the fiscal year 2020, an accrual in the amount of the difference between the Company’s current best estimates of costs yet to be incurred and revenues yet to be recognized for the completion of the Phase II clinical trial has been recorded.
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Other contingencies are primarily composed of the estimated expenses to be incurred as part of the employee-related costs related to restructuring, as well as estimated cost of refurbishing lease premises (Refer to Note 2, “Significant Events and Transactions—Restructuring contingencies).
There have been no significant changes in assumptions for the estimation of the retirement commitments from those disclosed in Note 15 to the consolidated financial statements included in the Annual Report.
Note 7: Operating income
The operating income is broken down in the following manner:
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Research tax credit |
1,807 | 2,902 | ||||||
| Other operating income |
1,133 | 1,818 | ||||||
|
|
|
|
|
|||||
| Total |
2,941 | 4,720 | ||||||
|
|
|
|
|
|||||
As of March 31, 2021, the Company recorded its collaboration contract’s income based on its updated measurement of progress of the Phase II clinical trial conducted as part of the collaboration and license agreement with Nestlé Health Science. The accrual recorded in the amount of the difference between the Company’s current best estimates of costs yet to be incurred and income yet to be recognized for the completion of the Phase II clinical trial has been updated accordingly.
Note 8: Allocation of Personnel Expenses
The Company had an average of 121 employees during the three months ended March 31, 2021, in comparison with an average of 311 employees during the three months ended March 31, 2020.
Allocation of Personnel Expenses by Function:
| Three Months Ended March 31, |
||||||||
| 2021 | 2020 | |||||||
| Research and development expenses |
4,718 | 10,204 | ||||||
| Sales and marketing expenses |
518 | 4,197 | ||||||
| General and administrative expenses |
3,766 | 4,283 | ||||||
|
|
|
|
|
|||||
| Total personnel expenses |
9,002 | 18,684 | ||||||
|
|
|
|
|
|||||
Allocation of Personnel Expenses by Nature:
| Three months Ended March 31, |
||||||||
| 2021 | 2020 | |||||||
| Wages and salaries |
4,454 | 12,872 | ||||||
| Social security contributions |
1,332 | 663 | ||||||
| Expenses for pension commitments |
402 | 915 | ||||||
| Employer contribution to bonus shares |
1,381 | 1,162 | ||||||
| Share-based payments |
1,433 | 3,073 | ||||||
|
|
|
|
|
|||||
| Total personnel expenses |
9,002 | 18,684 | ||||||
|
|
|
|
|
|||||
The decrease in personnel expenses is mainly due to a decreased headcount as well as reductions in accrued bonuses, retention measures and share-based compensation expenses, partly as a result of the 2020 global restructuring plan.
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Note 9: Commitments
There have been no significant changes in other commitments from those disclosed in Note 19 to the consolidated financial statements included in the Annual Report.
Note 10: Relationships with Related Parties
There were no new significant related-party transactions during the period nor any change in the nature of the transactions from those described in Note 20 to the consolidated financial statements included in the Annual Report.
Note 11: Loss Per Share
Basic loss per share is calculated by dividing the net loss attributable to the shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. As the Company was in a loss position for each of the three months ended March 31, 2021 and 2020, the diluted loss per share is equal to basic loss per share because the effects of potentially dilutive shares were anti-dilutive as a result of the Company’s net loss.
The following is a summary of the ordinary share equivalents that were excluded from the calculation of diluted net loss per share for each of the three months ended March 31, 2021 and 2020 indicated in number of potential shares:
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Non-employee warrants |
225,008 | 225,008 | ||||||
| Employee warrants |
75,000 | 82,500 | ||||||
| Stock-options |
2,670,710 | 2 835,635 | ||||||
| Restricted stock units |
1,129,945 | 696,895 | ||||||
Note 12: Events after the Close of the Period
The Company evaluated subsequent events that occurred after March 31, 2021, through the date the condensed consolidated financial statements were issued after their approval by the Board of Directors on April 30, 2021 and determined that there are no significant events that require adjustments or disclosure in such condensed consolidated financial statements.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this Report and with our audited financial statements and related notes thereto for the year ended December 31, 2020, included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 17, 2021, or the Annual Report. This discussion and other parts of this Report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause such differences are discussed in the section of this Report titled “Special Note Regarding Forward-Looking Statements” and under “Item 1A. Risk Factors” in the Annual Report.
Overview
We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. Our therapeutic approach is based on epicutaneous immunotherapy, or EPITTM, our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin. We have generated significant data demonstrating that Viaskin’s mechanism of action is novel and differentiated, as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream, minimizing systemic exposure in the body. We are advancing this unique technology to treat patients, including infants and children, suffering from food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such as anaphylactic shock.
On January 13, 2021, the Company received written responses from the FDA to questions provided in the Type A meeting request the Company submitted in October 2020 following the CRL. We believe the FDA feedback provides a well-defined regulatory path forward. In exchanges with the FDA, we proposed potential resolutions to two main concerns identified by the FDA in the CRL: the impact of patch adhesion and the need for patch modifications. The FDA agreed with our position that a modified Viaskin Peanut patch should not be considered as a new product entity provided the occlusion chamber of the current Viaskin Peanut patch and the peanut protein dose of 250 µg (approximately 1/1000 of a peanut) remains unchanged and performs in the same way it has performed previously. In order to confirm the consistency of efficacy data between the existing and modified patches, the FDA has requested an assessment comparing the uptake of allergen (peanut protein) between the patches in peanut allergic children ages 4 to 11 years. The FDA also recommended conducting a 6-month, well-controlled safety and adhesion trial to assess the modified Viaskin Peanut patch in the intended patient population. We intend to submit the protocols for the safety and adhesion study and the allergen uptake study to the FDA for review and comments before initiating the trials. We will address details about a new human factor, or HF, validation study and additional CMC data in subsequent interactions with the FDA
During the first quarter of 2021, we received the first set of questions from the European Medicines Agency, or EMA, regarding the Marketing Authorization Application, or MAA, for Viaskin Peanut as a treatment for peanut allergy in children ages 4-11.. The questions were consistent with our expectations and prefiling conversations with the EMA. We did not receive questions about the impact of adhesion on efficacy. The EMA’s Committee for Medicinal Products for Human Use will provide a recommendation to the European Commission, or EC, on whether to grant a marketing authorization when its review of the Viaskin Peanut MAA is complete.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the revenue, costs and expenses recognized during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no new policies or significant changes to our critical accounting policies as disclosed in the critical accounting policies described in the Annual Report. Our significant accounting policies are more fully described in Note 1 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report.
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The following table summarizes our results of operations, derived from our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP and presented in thousands of U.S. Dollars for the three months ended March 31, 2021 and 2020:
| Three Months Ended March 31, |
||||||||
| 2021 | 2020 | |||||||
| Operating income |
$ | 2,941 | $ | 4,720 | ||||
| Operating expenses |
||||||||
| Research and development expenses |
(22,164 | ) | (27,532 | ) | ||||
| Sales and marketing expenses |
(729 | ) | (7,297 | ) | ||||
| General and administrative expenses |
(9,683 | ) | (11,113 | ) | ||||
| Restructuring expenses |
— | — | ||||||
|
|
|
|
|
|||||
| Total Operating expenses |
(32,575 | ) | (45,942 | ) | ||||
|
|
|
|
|
|||||
| Financial income |
215 | 309 | ||||||
|
|
|
|
|
|||||
| Income tax |
(30 | ) | — | |||||
|
|
|
|
|
|||||
| Net loss |
$ | (29,449 | ) | $ | (40,913 | ) | ||
|
|
|
|
|
|||||
| Basic/diluted Net loss per share attributable to shareholders |
$ | (0.54 | ) | $ | (0.79 | ) | ||
Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020
Operating Income
We generated operating income of $2.9 million during the three months ended March 31, 2021 compared to $4.7 million during the three months ended March 31, 2020, a decrease of 37.7%. This income was mainly generated from the French research tax credit (crédit d’impôt recherche), or CIR, and by revenue recognized under our collaboration agreement with Nestlé Health Science.
| Three Months Ended March 31 | % change | |||||||||||
| 2021 | 2020 | 2021 vs 2020 | ||||||||||
| Sales |
— | — | ||||||||||
| Other income |
2,941 | 4,720 | (37.7 | )% | ||||||||
| Research tax credit |
1,807 | 2,902 | (37.7 | )% | ||||||||
| Other operating income |
1,133 | 1,818 | (37.6 | )% | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating income |
2,941 | 4,720 | (37.7 | )% | ||||||||
|
|
|
|
|
|
|
|||||||
The decrease in operating income is primarily attributable to the decrease of the CIR, as eligible expenses have declined in correlation with Research and Development costs.
As of March 31, 2021, we recorded our collaboration contract income based on our updated measurement of progress of the Phase II clinical trial conducted as part of the collaboration and license agreement with Nestlé Health Science. The accrual recorded in the amount of the difference between our current best estimates of costs yet to be incurred and income yet to be recognized for the completion of the Phase II clinical has been updated accordingly.
Operating Expense
The following table summarizes our operating expense excluding restructuring incurred during the three months ended March 31, 2021 and 2020:
| Three months Ended March 31 |
% change | |||||||||||
| 2021 | 2020 | 2021 vs 2020 | ||||||||||
| Research and development expenses |
22,164 | 27,532 | (19.5 | )% | ||||||||
| Sales and marketing expenses |
729 | 7,297 | (90.0 | )% | ||||||||
| General and administrative expenses |
9,683 | 11,113 | (12.9 | )% | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
32,575 | 45,942 | (29.1 | )% | ||||||||
|
|
|
|
|
|
|
|||||||
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Operating expenses for the three months ended March 31, 2021 were $32.6 million compared to $45.9 million for the three months ended March 31, 2020. The $13.4 million decrease in operating expenses is mainly attributable to a decrease in personnel expenses directly related to the workforce reduction we implemented as part of our 2020 global restructuring plan. Personnel expenses decreased by $9.7 million, or 52%, to $9.0 million during the three months ended March 31, 2021 from $18.7 million for the three months ended March 31, 2020. Average headcount decreased 61% between the two periods, from 311 FTEs for the three months ended March 31, 2020 to and 121 FTEs for the three months ended March 31, 2021. By function, the personnel expenses, including share-based payment expenses, decreased as follows:
| Three Months Ended March 31, |
% change | |||||||||||
| 2021 | 2020 | 2021 vs 2020 | ||||||||||
| Research and development expenses |
4,718 | 10,204 | (53.8 | )% | ||||||||
| Sales and marketing expenses |
518 | 4,197 | (87.7 | )% | ||||||||
| General and administrative expenses |
3,766 | 4,283 | (12.1 | )% | ||||||||
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| Total personnel expenses |
9,002 | 18,684 | (51.8 | )% | ||||||||
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The decrease in other operating expenses was primarily due to the budget discipline measures taken by DBV. In particular, sales and marketing consulting fees dropped by 96.8% or $2.6 million, from $2.7 million for the three months ended March 31, 2020 to $0.1 million for the three months ended March 31, 2021 and general and administrative fees decreased by 43.5% or $1.7 million, from $4.0 million for the three months ended March 31, 2020 to $2.3 million for the three months ended March 31, 2021.
As a result of the ongoing COVID-19 pandemic, we also experienced a decrease in other expenses, in particular tradeshows and travel expenses.
Restructuring
We initiated a global restructuring plan in June 2020 to provide operational latitude to progress in the clinical development and regulatory review of investigational Viaskin™ Peanut in the United States and European Union.
We expect full implementation of the restructuring plan to result in a reduction of more than 200 jobs, resulting in a remaining global team of 90 individuals dedicated to the pursuit of innovation and scientific development of novel therapies.
As of March 31, 2021, we had 104 employees. We expect full implementation of the organization-wide costs reduction measures to be completed by the second half of 2021.
The restructuring costs, which were $23.6 million as of December 31, 2020, were mainly comprised of payroll expenses, restructuring-related consulting and legal fees, as well as impairment of facilities and right of use assets following resizing of facilities.
During the three months ended March 31, 2021, the restructuring liability evolved as presented below:
| Restructuring liabilities |
||||
| Restructuring liability - January 1, 2021 |
9,387 | |||
| Amounts paid |
(4,854 | ) | ||
| Other effect including currency translation effect |
(220 | ) | ||
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| Restructuring liability - March 31, 2021 |
4,313 | |||
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| of which current contingencies |
1,511 | |||
| of which other current liabilities |
2,803 | |||
They were no restructuring costs for three months ended March 31, 2021 and 2020.
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Financial income
Our financial income was $0.2 million for the three months ended March 31, 2021 and 2020. This item mainly includes foreign exchange income.
Net loss
Net loss was $29.4 million for the three months ended March 31, 2021, compared to $40.9 million for the three months ended March 31, 2020. Net loss per share (based on the weighted average number of shares outstanding over the period) was $0.54 and $0.79 for three months ended March 31, 2021 and 2020, respectively.
Summary Statement of Cash Flows
The table below summarizes our sources and uses of cash for the three months ended March 21, 2021 and 2020.
| Three Months Ended March 31, |
% change | |||||||||||
| (Amounts in thousands of U.S. Dollars) | 2021 | 2020 | 2021 vs 2020 | |||||||||
| Net cash flow used in operating activities |
(36,204 | ) | (49,683 | ) | (27.1 | )% | ||||||
| Net cash flow used in investing activities |
(185 | ) | (930 | ) | (80.1 | )% | ||||||
| Net cash flow provided by financing activities |
440 | 150,611 | (99.7 | )% | ||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(7,944 | ) | (5,811 | ) | (36.7 | )% | ||||||
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| Net (decrease) increase in cash and cash equivalents |
(43,893 | ) | 94,187 | (146.6 | )% | |||||||
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Operating Activities
Our net cash flows used in operating activities were $36.2 million and $49.7 million during the three months ended March 31, 2021 and 2020, respectively. Our net cash flows used in operating activities decreased by $13.5 million, or 27.2%, mainly due to the budget discipline measures we took, in particular the decrease in personnel expenses, which was directly related to the workforce reduction we implemented as part of our global restructuring plan. Cash flows used in operating activities for the three months ended March 31, 2021 included $4.9 million in restructuring amounts paid.
Investing Activities
Our net cash flows used in investing activities were $0.2 million and $0.9 million during the three months ended March 21, 2021 and 2020, respectively. Those investments were mainly for our industrial machinery and equipment, which are commissioned in order to support the commercialization of Viaskin Peanut, if approved.
Financing Activities
Our net cash flows provided by financing activities decreased to $0.4 million during the three months ended March 21, 2021 from $150.6 million during the three months ended March 21, 2020. Financing activities consisted mainly of our underwritten global offering in the first quarter of 2020.
Based on our current assumptions, we expect that our current cash and cash equivalents will support our operations until the second half of 2022
Contractual Obligations and Other Commitments
There have been no material changes in our contractual obligations and commitments from those disclosed in the Annual Report.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements and do not have variable interests in variable interest entities.
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Smaller Reporting Company Status
We are a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended. We may, and intend to, take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as we are a smaller reporting company. We may be a smaller reporting company in any year in which (i) the market value of our voting and non-voting ordinary shares held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) (a) our annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of our voting and non-voting ordinary shares held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Our market risks have not changed materially from those disclosed in Item 7A of the Annual Report.
| Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
Based on their evaluation as of March 31, 2021, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to provide reasonable assurance that (i) the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and
procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error of fraud may occur and not be detected.
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| Item 1. | Legal Proceedings |
See “Note 2: Significant Events and Transactions – Legal Proceedings” in the notes to the condensed consolidated financial statements included elsewhere in this Report.
| Item 1A. | Risk Factors |
There have been no material changes in our risk factors from those disclosed in the Annual Report.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
During the three months ended March 31, 2021, we granted 75,600 stock options and 24,900 restricted stock units to employees in France and in the United States.
During the three months ended March 31, 2021, we issued 7,500 ordinary shares following the exercise of employee warrants by an employee in France, for proceeds of $42,000.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe these transactions were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Regulation S promulgated under Section 5 of the Securities Act, as transactions by an issuer not involving any public offering or as offerings made to non-U.S. resident employees pursuant to an employee benefit plan established and administered in accordance with the law of a country other than the United States (namely, the Republic of France) and in accordance with that country’s practices and documentation. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
Not applicable.
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Exhibit Index
| Exhibit |
Description |
Incorporated by Reference | ||||||||||||||||
| Schedule / Form |
File Number |
Exhibit | File Date |
|||||||||||||||
| 3.1 | By-laws (statuts) of the registrant (English translation) | 10-K | 001-36697 | 3.1 | 3/17/2021 | |||||||||||||
| 31.1 | Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as Amended | |||||||||||||||||
| 31.2 | Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended | |||||||||||||||||
| 32.1* | Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, as amended | |||||||||||||||||
| 101.INS | XBRL Instance Document | |||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |||||||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||
| * | Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. |
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DBV Technologies S.A. | ||||||
| Date: May 5, 2021 | ||||||
| By: | /s/ Daniel Tassé | |||||
| Daniel Tassé | ||||||
| Chief Executive Officer) | ||||||
| (Principal Executive Officer) | ||||||
| Date: May 5, 2021 | By: | /s/ Sébastien Robitaille | ||||
| Sébastien Robitaille | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
Exhibit 31.1
CERTIFICATION
I, Daniel Tassé, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of DBV Technologies S.A.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 5, 2021 | By: | /s/ Daniel Tassé | ||||
| Daniel Tasse | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) | ||||||
Exhibit 31.2
CERTIFICATION
I, Sébastien Robitaille, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of DBV Technologies S.A.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 5, 2021 | By: | /s/ Sébastien Robitaille | ||||
| Sébastien Robitaille | ||||||
| Chief Executive Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Daniel Tassé, Chief Executive Officer of DBV Technologies S.A. (the “Company”), and Sébastien Robitaille, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:
| 1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
| 2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: May 5, 2021
IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 5th day of May, 2021.
| By: | /s/ Daniel Tasse |
By: | /s/ Sébastien Robitaille | |||||
| Daniel Tasse | Sébastien Robitaille | |||||||
| Chief Executive Officer | Chief Financial Officer | |||||||
| (Principal Executive Officer) | (Principal Financial and Accounting Officer) |
This certification accompanies the Quarterly Report, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Quarterly Report), irrespective of any general incorporation language contained in such filing.