DBV Technologies S.A. (DBVT) Q4 2020 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the DBV Technologies Full Year 2020 Financial Results and Business Update Conference Call. [Operator Instructions] Please advise this call is being recorded at the company's request. At this time, I'd like to turn the call over to Anne Pollak, Head of Investor Relations. Anne, please proceed.

Thank you, operator. This afternoon, DBV Technologies issued a press release that outlines our financial results for the full year ending December 31, 2020. This 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 development plans, our anticipated future interactions with regulatory agencies and our financial forecasts. 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 today's call are Daniel Tassé, Chief Executive Officer of DBV; Sébastien Robitaille, Chief Financial Officer; Pascal Wotling, Chief Technical Operations Officer; and Pharis Mohideen, Chief Medical Officer. We had originally scheduled this call for last Thursday and then decided to shift it to today. I would like to provide some context on the date change. This is our first financial reporting period for DBV as a U.S. domestic filer. We will now file our financial results in U.S. dollars according to both U.S. GAAP and IFRS, and in both English and French. As you can imagine, it is an enormous amount of work coordinated among internal and external teams in both the U.S. and France. We decided to take one additional week to confirm all requirements were met. It is now my pleasure to hand the call over to Daniel. Daniel? Daniel Tassé: Anne, thank you, and thank you all for joining us this evening. So in 2021 at DBV, our highest priority is advancing Viaskin Peanut in both United States and in the European Union. We are committed to its potential approval as a treatment for children ages 4 to 11 who suffer from peanut allergy, and we are making important progress on both fronts. First, let me provide you an update on the European Union side. In the fourth quarter of last year, the European Medicines Agency, or EMA, validated our marketing authorization application for Viaskin Peanut, and began the review process. We recently received the Day 120 questions from the EMA review team. The list of questions is consistent with what we were expecting to receive at this stage of the review cycle, and are aligned to our prefiling conversations with the EMA. Of note, we did not receive any questions about the impact of adhesion on efficacy or a request for patch modification. Now turning to the U.S. side. Since receiving a complete response letter from the Food and Drug Administration, from the FDA, in August, we have made significant progress on modifying our patch. As a reminder, the CRL outlined the agency's concerns regarding the impact of patch adhesion as it relates to efficacy and indicated the need for patch modifications. The FDA agreed that the modified patch would not be a new product entity if we met their data requirement. Our manufacturing process was engineered with the long-term potential of the whole Viaskin technology platform in mind, so it has the flexibility to produce multiple types of patches. I will turn the call over to Pascal Wotling, our Chief Technical Operations Officer, who is leading the patch manufacturing engineering; and to Pharis Mohideen, our Chief Medical Officer, who is leading, obviously, clinical development regulatory, to provide you more information on the patch modification process. And now we are planning to evaluate 1 or 2 modified patches in children ages 4 to 11 who suffer from peanut allergy. Pascal, let's start with you.

Thank you, Daniel, and good evening to everyone on the call. As Daniel mentioned, we have been working on modifying the patch for the past few months. We decided that we would not alter the patch perfusion chamber, which is comprised of the inner diameter of the adhesive foam ring, the 50-microgram dose of peanut protein and the backing of the foam ring onto which peanut protein is applied. We set that parameter to keep the critical drug delivery mechanism of the patch unchanged. Then we identified cell feature of the patch that we could potentially alter to improve adhesion. For example, we could: a, increase the surface area or shape of adhesive dressing that covers the perfusion chamber; or b, modify the application system, for example, the paper applicator and the filter; or c, alter the patch application protocol, for example, pressing down on the adhesive dressing for a few seconds. Going through this process of changing one or more variables associated with the patch, we created many modified patch prototypes that we put through several rounds of development testing to select the ones with increased adhesion. To that end, we first conducted several new in vitro tests to simulate the child's movements and scratching behaviors. Second, we conducted also in vivo studies in adults to evaluate the impact of these potential changes and - to the application protocol. Over the several rounds of development testing, we subsequently narrowed the field of modified patches to 5. These 5 selected modified patches have advanced to our trial in healthy volunteers with a goal to identifying 1 or 2 to eventually advance into clinical testing in children ages 4 to 11 with peanut allergy. Once these 1 or 2 modified patches are selected, my team expects to focus on producing the clinical batches, and preparing our CMC processes with our external partners for potential commercial scale if the patch is approved. I will now turn the call over to Pharis to discuss the clinical development program for the modified patches. Thank you.

Thanks, Pascal, and good evening, everyone. We expect to conduct 3 clinical trials to evaluate the modified Viaskin Peanut patches. The first trial is the one Pascal just mentioned. We call this one CHAMP, which stands for comparison of adhesion among modified patches, so C-H-A-M-P. I'm pleased to say that this study is already underway. CHAMP is a trial in healthy adult volunteers that will assess the adhesion of 5 modified patches versus the current patch. The volunteers wear the patches for 24 hours, and the adhesion of each patch is assessed at multiple time points throughout the day. The trial protocol includes real-world conditions. So the volunteers will wear the patch when showering or bathing and during exercise periods. We believe the data will help us select the 1 or 2 modified patches that perform the best, which we will then use in the clinical trials in the target treatment population. We expect all participants to have completed the CHAMP trial by the end of March. We are also planning 2 other trials. As a reminder, in January, we announced that the FDA provided clear guidance on the recommended next steps we should take to advance Viaskin Peanut in the U.S. The agency recommended that we conduct 2 trials in children ages 4 to 11 with peanut allergy. One trial is an allergen uptake trial to compare the current patch to a modified patch. The intent here is to demonstrate that the occlusion chamber performs similarly in both patches. We've conducted a somewhat similar trial in the past in healthy adults where we assessed how much protein is released from the patch over the course of 24 hours. So we have experience in conducting a trial of this nature. We're calling this new trial EQUAL, which stands for equivalents in uptake of allergen. We expect the data from this trial will support that a modified patch should not be treated as a new product and that we should be able to use data from our existing peanut development program. The other trial in the intended patient population is expected to be a 6-month safety and adhesion study. We're calling this 1 STAMP, which stands for safety, tolerability and adhesion of modified patches. We have previously assessed adhesion in our pivotal Phase III study, so we also have experience assessing this parameter. And of course, we have collected safety data in all of our clinical trials, and that's just standard practice. Neither STAMP nor EQUAL will require a double-blind, placebo-controlled food challenge at entry or exit, and this should help to facilitate recruitment. As I stressed on our last call, we will continue to work closely with the agency to align on the protocols and the statistical analysis plans for these trials as our next step. Once we have that alignment, we will provide an update with more details around the trials, including time lines. Now, I'd like to turn the call over to our Chief Financial Officer, Sébastien Robitaille, to review our financial results. Sébastien Robitaille: Thank you, Pharis, and good evening to everyone on the call. Earlier today, we issued a press release with our 2020 financial results. As a reminder, as of January 1, DBV became a U.S. domestic filer under applicable SEC laws, so you will notice that our financial results and the corresponding financial statements are reported in U.S. dollars and according to both U.S. GAAP and IFRS as adopted by the EU. We have previously qualified as a foreign private issuer and reported in euros according to IFRS only. Our cash and cash equivalents as of December 31, 2020, were USD 196 million, which we continue to believe will support our operations until the second half of 2022. For a full summary of our financial results for full year 2020, please see the press release issued earlier today. And now, I will turn the call back to Daniel for some closing remarks. Thanks. Daniel Tassé: Thanks, Sébastien. So in summary, we are making good progress in advancing Viaskin Peanut towards potential approval in both the U.S. and the EU. That is our top priority for 2021, and everybody here at DBV is highly committed to the potential of bringing Viaskin Peanut, if approved, to children ages 4 to 11 and the peanut - who suffer peanut allergy, their parents and loved ones and the allergists who treat them. With that, I would like to open the call for questions, operator.

[Operator Instructions] And our first question comes from Alex Cogut from Kempen.

Great to see that you're making progress on the patches for the FDA. I was just wondering in relation to your European application, how would the European filing be affected if you have an updated patch going through the FDA process later on? And as the second question, also on the European path. Since your review is progressing nicely, what is your latest thinking on commercialization in Europe of the patch? Daniel Tassé: Okay. I'll have Pharis give you a sense of how we deal with having 2 different patches. We see it as being a nonissue, clearly. And then after that, I will provide you some color on how it is on the commercialization. So, Pharis?

Yes. No. I think, Alex, part of what you may be asking is perhaps the difference between the European review process and the FDA. And they are 2 separate regulatory entities, as you know. So although we are providing a modified product in the U.S., we're obviously moving forward with the current product in Europe. And we don't see that as any problem from a regulatory standpoint to have one product in one region and a modified product in the second region. Does that answer your question, Alex?

Yes. I guess if you are collecting additional safety data, wouldn't that something that the European regulator would see?

They could potentially see it, Alex. But our dossier has been submitted, and they have validated the dossier, and they're completing their review process as scheduled. So I don't think that factors into the European dossier review at this stage. Daniel Tassé: I would also add, Alex, if I may, that with the current patch from the European regulators, safety has not come up as being a particular concern. So a different profile in the U.S. is an independent regulatory question. But if the EU has questions for us, we'll be happy to share data with them, obviously. Maybe another question before I move to commercialization is we're very confident in our ability to manufacture 2 patches that are somewhat different for 2 geographies to be able to do that at scale with great efficiency. And with well-managed cost of goods is not a concern of ours, again, because our manufacturing equipment has built-in flexibility for - at any time to have more than one patch on the market anyway. It's across more than one indication. So the complexity in manufacturing is not a major issue at all. When it comes to commercialization, we could commercialize it ourselves. We could essentially find a partner to commercialize it in Europe. We are in a position to pursue both. We are comfortable with both. The right kind of partnership to bring scale and expertise quickly is something that's obviously desirable. On the one hand, it's a product we know very well ourselves. So we remain very open-minded and somewhat agnostic to the best way to satisfy patients and maximize value for our shareholders. Does that answer your question?

Yes, that's very clear. And congrats on the progress.

[Operator Instructions] The next question comes from Graig Suvannavejh from Goldman Sachs.

Congrats also on the forward progress on both U.S. and European processes. Daniel, can you give a sense of how those discussions and interactions with the FDA are going? I mean, clearly, the 2 CRLs maybe put a little bit of a risk on some level between maybe you and the agency or maybe not. But now that you're where you are, is there any update that you can provide on how you think the nature of the interactions are going clearly moving forward with trials? But I just wanted to see if you were able to offer any kind of perspective there. And then maybe if I could ask maybe 2 more questions. Just one with respect to the 3 different trials you have ongoing, how do you intend on communicating the outcome of those trials? Is it something that you would update us in periodic quarterly updates? Or is there a plan to put out stand-alone press releases? Just wondering how you're going to do that. And then maybe third, and maybe I'll jump back in the queue, is any insight on what's happening with the competitor product now that it's been kind of absorbed into Nestlé? We don't really have any good visibility on what's happening with that product, so anything your competitive intelligence is telling you on what's happening there. Daniel Tassé: Okay. Thanks, Graig, for those questions. Thanks for joining us tonight. Let me give you a bit of an answer on the tone with the FDA, but then turn over to Pharis, obviously, with him and his team are managing that, and then I'll come back to planned communication on trials and on Aimmune's products now owned by Nestlé's success in the marketplace. Well, look, last year was a frustrating year, I think, for many companies dealing with the FDA because of the pandemic, rightfully so, consumed a lot of management attention with the agency. And - but that being said, we see the tone of the CRL, what has been their response to our plan to generate data on the modified patch as to secure approval eventually as being very constructive. We're finding the tone with the agency to be one that is collegial. We believe that modifying the patch is something that's a matter to the agency. And in doing so, we have obviously a very rich exchange with them. And the agency wants us to review our protocols, which we want to do anyway, so that by the time we go and execute on those trials, we'll work on something that's very much aligned to what the agency wants. So I'll invite Pharis to make a few more comments on this before I come back to communication on the trials. Pharis, anything more you want to provide us color on the dynamic with the agency?

Yes. Thanks, Daniel. I think, Graig, the tone of the communication, we were very pleased with the tone and, as we've said at the previous call, the clarity provided by the agency. We feel that they had provided a very clear regulatory path, as we have described with the 2 studies. So that, for us, was very important, obviously. And then as Daniel said, the next steps will be to align with them on the protocols and the details around the protocols. And as those become clear, we'll obviously communicate that in the appropriate time as we receive that feedback. Does that help a bit?

It does. Thank you. Daniel Tassé: And on communication around the trials, Graig, our next major communication will be once we have the agency sign off on the protocols, and thus, now we're ready to go, we'll know when the study will start, when we expect the studies to complete, and obviously, what that would mean roughly for refiling. I think that's a planning horizon would be important for us to share with investors, with prescribing physicians, with patient advocates. There are people who want to know where we are. So we certainly plan on having a helpful communication to the whole world, including investors, once those agreements with the agency have been secured. As far as the results of those trials, we have not made a decision yet, but I think we're going to operate the same way we've operated in the past, is transparency serves everybody here. Patients, doctors want to know. As you know, our data last year that we used to discuss with the agency in exchange with them to answer the question on adhesion, we chose to have published in peer-reviewed publications in 2 of them because we believe that clinical science, regulatory decision-making and patients' interests are best served by transparency. So I suspect that we want to publish that data. That decision is not made yet, but it would be very much aligned to what's been historically our philosophy here. So - and then when it comes to Palforzia's success in the marketplace, we have no visibility to it. Obviously, it's not that big a product in the scale of Nestlé's business. They're not reporting on it. What we're picking up from the marketplace is, obviously, I like to think is not a complete set of information here. And I wouldn't want to provide any color that is not fully informed. What we are hearing though is that the pandemic is certainly driving home how the 2 product profiles are, Viaskin Peanut and protocolized OIT, are fundamentally different products. And the demand being put on patients, caregivers and medical practices to dispense OIT are obviously clearly problematic in a pandemic environment. And we believe that is reinforcing the distinct and we think preferential product profile we have for most patients out there.

And the next question comes from Jon Wolleben from JMP Securities.

Congrats on the progress. Just a few for me. When you mentioned that you're looking to identify 1 or 2 of the best-performing patches, I'm wondering, is there anything besides adhesion you're looking for? And are you looking - if it is, in fact, adhesion, is it the 2 best adhesive patches? Or are you looking for kind of opposing metrics on some scale there? And then previously, you said FDA would like to see a consistent uptake between the modified patch and the initial one. Is there any boundaries on what considered consistent uptake? Or is it just up to you to determine and present the data that comes out? Daniel Tassé: Yes. Again, I'll have Pharis add some color here. The consistent uptake, we believe, will not be problematic. We read it as good or better because no better protein delivery obviously can only impact efficacy in a positive way here. But given the fact that we're not changing the inner chamber and the adhesive property of the foam ring, we don't expect that the protein transfer would be affected in any way. But we're looking for equivalents or slightly better, conceptually, what the agencies expecting us to do. When it comes to adhesion, no, we're looking for better adhesion. The FDA, as you sort of mentioned it, is not concerned about the safety of the product. They do think adhesion will lead to better efficacy, so we're solving for adhesion here. Obviously, we'll be attentive to the other properties. But the - our effort is focused on finding a patch that adheres as well in real-life conditions. Anything you want to add to that, Pharis? Or maybe Pascal?

I think that's it.

[Operator Instructions] And we currently have no questions in the queue. I'll turn the call back over for final remarks. Daniel Tassé: If there are no more questions, I just want to, again, thank you all for your time today. As I said, as we have agreement closure with the agency on the protocol, we would be happy to communicate all of that to investors. In the interim, as you know, we're always available for any complement of information that may come to mind between now and then. Yes. Thank you all for your time this evening, and wish you a nice evening.

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