DBV Technologies S.A. (DBVT) Q3 2022 Earnings Report, Transcript and Summary

Welcome to the DBV Technologies Third quarter 2022 Earnings Conference Call. My name is Daryl, and I'll be your operator for today's call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Anne Pollak. Anne, you may begin.

Thank you. This afternoon, DBV Technologies issued a press release that outlines our financial results for the three months ended September 30, 2022. The press release is available on the Press Release section of the DBV Technologies website. Before we begin, please note that today's call may include a number of forward-looking statements, including, but not limited to comments regarding our clinical and regulatory development plans, the timing and results of interactions with regulatory agencies, our forecast of our cash runway and the ability of our products – of our product candidates, if approved to improve the lives of patients with food allergies. These forward-looking statements are based on assumptions that are subject to risks and uncertainties that could cause the company's actual results to differ significantly from those suggested by these statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to the company's filings with the SEC and the French AMF for information concerning risk factors that could cause the company's actual results to differ materially from expectations, including any forward-looking statements made on this call. Except as required by law, the company disclaims any obligation to publicly update or revise any forward-looking statements to account for or reflect events or circumstances that occur after this call. Joining me on today's call are Daniel Tassé, Chief Executive Officer of DBV; Sébastien Robitaille, Chief Financial Officer; and Pharis Mohideen, Chief Medical Officer. I'll now pass the call over to Daniel. Daniel? Daniel Tassé: Thank you, Anne. Thank you all for joining us on this call today. Let me start with an update on VITESSE, the Phase 3 pivotal trial of Viaskin Peanut with the modified patch in children age 4 to 7 with a confirmed peanut allergy. On September 21, we announced that DBV received a partial clinical hold from the FDA specific to the test. It does not affect any other ongoing studies with Viaskin Peanut. In the partial clinical hold letter, the FDA specified changes to elements of the VITESSE protocol with the intent for the trial to support a future BLA submission. The letter indicates the FDA's careful attention to the VITESSE protocol. We believe it is a constructive letter that reflects and undermines the productive nature of our exchanges with the FDA. We appreciate the FDA sent this letter before any subjects are enrolled in VITESSE. We would much rather address the agency's additional feedback at this stage, especially if any protocol changes the data, the FDA will find more valuable when evaluating a future BLA submission. Furthermore, our recent exchanges with the agency focus on addressing the partial clinical hold letter and have a third in a timely manner. Our top priority is to resolve the VITESSE partial clinical hold and resume initiation of VITESSE. We understand what the FDA is asking and satisfied with the progress we've made in the six weeks since receiving the letter. At the time we received the partial clinical hold letter, we had started submitting the protocol to study sites for subsequent approval by their institutional review boards. When we received the letter, we rescinded any submitted protocols and paused that process. However, we are continuing internal preparations for VITESSE and are conducting certain site assessments and start-up activities to support a prompt study launch once the partial clinical hold is lifted. While as of today, it is premature to assess the impact of the partial clinical hold letter on other previously announced VITESSE milestones, we do know we will not begin screening subjects by year-end. We will communicate additional updates publicly as appropriate, including once the partial clinical hold has been lifted. When that happens, we plan to host a conference call announcing the – conference call following the announcement with the goal of providing clarity on any changes to the VITESSE protocol and timeline. Let me now move on to a brief update of the financial results for the nine months ending on September 30, 2022. As of September 30, 2022, cash and cash equivalents were $212.7 million. Net cash used in operating activities for the nine months was $31.8 million, which is a decrease of 35% from the same period of 2021 and reflects our continued implementation of budget discipline measures. Our cash runway guidance remains unchanged from our previous guidance. We continue to maximize the efficiency of our spend, and remain highly disciplined in our cash management. Now looking ahead to the remainder of 2022, we will continue to keep you updated as appropriate under VITESSE partial clinical hold. We also look forward to attending the upcoming American College of Allergy, Asthma and Immunology Annual Scientific Meeting in Louisville, Kentucky. Historically, as you know, DBV has had a strong presence at the college. We look forward to participating again this year. I want to thank everyone on the phone and webcast for joining us today. I will now ask Pharis and Sébastien to join me for the question-and-answer. So operator, if you could open the line for questions that would be great.

[Operator Instructions] And we do have a question from Jon Wolleben [JMP Securities]. Go ahead Jon.

Thank you and thanks for taking my questions. A few from me. Daniel Tassé: Hi, Joh.

Hi, Daniel. With the clinical hold and the dialogue you're having with the FDA, how are you thinking about the food challenge as a primary endpoint? Do you think you're going to need to change or at least add maybe a co-primary endpoint based on the feedback that FDA has been having on this trial design? Daniel Tassé: No, we don't believe so. I think the primary endpoint will remain clinical response as defined by the food challenge month 12 versus day 0. That is not a topic of discussion within the clinical hold.

And is FDA in the dialogue said certain criteria they want you guys to hit in terms of adhesion or is it they just want it measured? I was hoping you could provide any more color on the adhesion portion of this. Daniel Tassé: That is at the very core of what we're discussing with the agency right now. The adhesion and statistical criteria around adhesion, and the wear time flip of it is the two topics, two of the bigger topics of discussion with the agency.

Okay. And can you give an update on how you're thinking about moving forward with the 1- to 3-year old population after the successful EPITOPE trial? Daniel Tassé: Yes. It remains something we wish to discuss with the agency. The agency knows we wish to discuss it with them. But at this point in time, our efforts are focused on the clinical hold, first and foremost.

And one last for me, if I may. When we take a look at the R&D spend, can you tell us what portion of that was attributed to ramp-up for VITESSE and how we should think about kind of the spend going forward with the clinical hold in place? Daniel Tassé: I'll turn to Sébastien to answer that question. That's a massive detail, I don't have right now. So Sébastien much of our clinical – and you're asking the spend in the first nine months, is that what you're asking about, Jonathan, to be clear, correct?

Yes, it's kind of the proxy we have. Daniel Tassé: Yes. Séb, are you there?

Sébastien, your line is open. Daniel Tassé: While we're looking for Sébastien in ether what I can say is that we are reiterating the cash guidance that we gave with our last quarterly results. So although there's obviously a setback initiation, we're attentive to how we're spending our money. So as I said, you can translate that to – we see no need to revise our guideline at this point in time, our guidance, I should say, our guidance at this point in time.

Thanks for taking my questions. We're looking for the update hopefully soon. Daniel Tassé: Thanks so much, Jonathan, likewise.

And our next question comes from Clément Bassat [Portzamparc]. Go ahead, Clément. Clément Bassat: Good morning. Clément Bassat from Portzamparc. I have one question about your previous press release. Could you please provide more color about the comment of the FDA regarding the method of categorization data? It is about the constitution of the group of children according to the reactive dose or it is linked to the analysis of this data, which is a concern post… Daniel Tassé: It's a good question. I'll let Pharis give you the answer. But the fact is it's a categorizing of adverse events. The buckets they want to use for analysis has nothing to do with the primary endpoint of the assessment of Viaskin. Is that correct, Pharis?

Yes, that's correct. It's basically just counting rows related to what Daniel mentioned. Clément Bassat: Okay. So that is the first point. Daniel Tassé: I'm sorry, Clément, can you repeat that? We've answered your question properly. Clément Bassat: All right. So it is about the constitution of the group of children, the categorization data? Daniel Tassé: Yes, groups of children experiencing specific adverse events, how does it get to be categorized to be specific. Clément Bassat: All right, okay. Okay. All right, thank you very much. Daniel Tassé: Thank you.

Our next question comes from Jacob Mekhael from Kempen. Go ahead, Jacob.

Thanks for taking my question. I'm just curious if you can please elaborate on the progress that has been made so far on the hold issues. And maybe just tell us what issues have been resolved and what issues remain to be resolved? Daniel Tassé: Yes, at this point in time, look, we've had good exchanges with the FDA to progress our understanding and theirs. And at this point in time, we don't wish to provide more details on those interactions, which as I said, they've been productive. Once the hold is lifted, our plan is to be quite wholesome in describing the outcome of the exchanges and obviously, any changes to the protocol, why and the impact on timeline, if any. But until then, anything we say is at best inconclusive, now that we have not finalized yet the list of the clinical hold and could be at worse have been counterproductive to what we believe has been a very productive relationship with the FDA in addressing the clinical hold. I will be okay with that.

Okay. Okay, thanks.

And our next question comes from Matthew Caufield from H.C. Wainwright. Go ahead, Matthew.

Great. Thank you guys for taking our question and [indiscernible] the update. Just one quick clarification and then one follow-up question. So speaking of one of the previous clarifications, the hold itself you're saying is about the adverse events being categorized. There's no relationship whatsoever to the patch, correct? It's all about just the categorization of the adverse events? Daniel Tassé: That was one of the four comments. That comment is by categorization of the adverse events. It's not patch specific. It's specific to the analysis of the study with the patch.

Got it. Daniel Tassé: Is that answers your question?

Yes. That's helpful and then just one kind of last question, if I could. Any thoughts on the quick turnaround of the clinical hold taking place September 21, following the trial initiation that had just taken place the first week of September. Was something missed? Or was there some sort of miscommunication somehow with the agency? Is that sort of uncommon for that to happen so quickly after trial initiation? Just curious on any thoughts there. Daniel Tassé: It's – I'll share with you our thoughts. Yes, we were surprised with the clinical hold. As you know, unless there's a safety issue to patients, usually, the agency would have a discussion with the company. That was not the case here, that's okay. Given they decided to hold, did come at a time before we start enrolling patients, so the ability to modify the protocol if need be is not terribly costly when it comes duly to execute the program here. And we would rather discuss issues that matter to the agency when it comes to giving them the most helpful data in evaluating the product and I'll do the discussion now before we initiate the trial than afterwards as part of the review process here. So although we were surprised and it's not common, the fact is that it's something we think is going to help us enrich the program when it comes to helping the agency assessment.

Very helpful. Thank you for that. Daniel Tassé: Thank you.

And our next question comes from Arsene Guekam [Kepler Cheuvreux].

Hello, gentlemen. Thank you for taking my question, three questions, if I may. Another question on – hello, do you hear me? Daniel Tassé: We can, yes, hello.

Yes. Okay. Okay. Sorry. Okay. Could you give us more color on the meaning of the categorization of adverse event? I'm not sure to well understand what's the meaning of this? And what is the link between this and a higher number of patients needed for your trial? This is the first question. The second one is, when do you think that the FDA will give you a feedback on lifted hold for this clinical trial? And the last one is there any impact on your cash burn of this situation? Thanks a lot. Daniel Tassé: Three good questions. I'll have Pharis answer the first and second one, and I'll take the cash burn one. So any more detail if you wish to share, you can share, Pharis, on the adverse event categorization.

Yes. It's simply how the FDA wanted us to bucket different adverse events that occurred. It's really as simple as that. We're not changing how we collect them or the types of events. It's just they wanted them categorized in one bucket. We thought this should be in a different bucket. And so it was really as simple as that. I don't know if that answers your question sufficiently, but that was it. And there was no link between that and the number of subjects, there are two different issues.

Okay. But if I may, if I understand well, the FDA asked you to increase the number of patients for your Phase 3...

It did, but it's not related to the…

Okay, okay.

It was – this was not to power up to be able to better identify adverse events. As you know, trials are not powered on safety, they're powered on efficacy. And the agency wanted more patients. In this case, actually, it's to enrich the safety database, not to power up the efficacy. But there was no linkage between the wish to have more patients and the buckets categories, though, which adverse events will be clarified – classified.

Yes. Daniel Tassé: Your third question about cash burn and I forgot the second one. With my apologies here, Arsene, but let me answer the third one.

And the feedback from the lift of the hold, when do you think that the FDA will give you the feedback? Daniel Tassé: Well, the regs are pretty clear. The clock is on the sponsor on DBV to respond to the four elements of the clinical hold. Once we've responded to it, what is it we're going to address the FDA's comments, then the agency has 30 days to respond to us, either lift the clinical hold or provide the supplemental comments and then the clock starts all over again. So we – so once we respond to the agency, they have 30 days. We're not committing at this point in time to when we'll respond to the agency, we have announced that. But as I said, the exchanges agency has been productive, and we're satisfied with the progress we've made there. The impact of all that on cash burn, obviously, the delay will bring us to consume more cash to get to the completion of the study. That being said, we had cash, obviously, for more than 30 months, close to three years. That's a long time. We have a good treasury at $213 million. There's some levers we can pull, obviously, to best preserve cash. So at this point in time, despite the fact that it will have an impact, obviously, on our cash burn, it does not change the guidance we've given at the end of Q2.

Okay, thank you. Dan and Pharis, thank you.

And we have no more questions at this time. I'll turn it back to the speakers for final comments. Daniel Tassé: I just want to thank everybody for your availability today and for your questions. And as always, we're always available for follow-up discussions if you wish to do so. Thank you all and wish you a great evening.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.