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DBV Technologies S.A. misses on earnings expectations. Reported EPS is $-0.37026 EPS, expectations were $-0.26.

Operator: Welcome to the DBV Second Quarter Financial Results and Business Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Katie Matthews, Investor Relations. Please go ahead.

Katie Matthews: Thank you. This afternoon, DBV Technologies issued a press release that outlines our financial results for the three and six months ended June 30, 2024. This press release is available in the Press Releases section of the DBV Technologies website. Before we begin, please note that today’s call may include a number of forward-looking statements including, but not limited to comments regarding our clinical and regulatory development plans, the design of our anticipated clinical trials, the timing and results of interactions with regulatory agencies, our forecast of our cash runway and the ability of any of our product candidates, 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 the call today are Dr. Daniel Tassé, Chief Executive Officer of DBV; Dr. Pharis Mohideen, DBV’s Chief Medical Officer; and Virginie Boucinha, our Chief Financial Officer.

I will now pass the call over to Daniel. Daniel?

Daniel Tassé: Thank you Katie, and thank you everyone for joining our call this evening to review DBV’s second quarter and first half 2024 financial results. For those of you who may be less familiar with our business, DBV is developing Viaskin, an investigational proprietary technology platform with broad potential applications in immunotherapy, including food allergy. Viaskin is based on epicutaneous immunotherapy, we refer to it as EPIT, and it is our method of delivering biologically active compounds to the immune system through intact skin to progressively induce immune tolerance. Our most advanced candidate is Viaskin Peanut, which we are developing for peanut allergic children, ages one through seven, where there exists a significant unmet medical need in the U.S. and around the world, and critically, is an age group where the immune system is particularly malleable.

It is also where there is the most risk to these children from accidental exposure to peanut. Moreover, 75% to 80% of children with a peanut allergy will not outgrow their peanut allergy over their lifetime. And today we are pleased to provide updates on our two Viaskin Peanut development program – programs sorry, one in children aged four to seven years of age using the modified larger circular patch, and one in toddlers age one to three using the original square patch. As you know, we plan on filing two separate biological license applications or BLAs, one for each age group. There are three key highlights we wish to share with you today. Beginning with the program in children four to seven years old, let’s remember that we are running the VITESSE Phase 3 pivotal trial of the modified Viaskin Peanut patch in that population.

Results from this trial, together with the COMFORT Children supplemental safety study, will form the basis of a BLA for this age group. Since the middle of last year, we have seen very good momentum enrolling the VITESSE trial patients and we are unchanged in our expectation that the final subject will be screened by the end of the third quarter of this year. Turning to our other program in toddlers one to three years of age, let’s recall that we announced successful results from the Phase 3 efficacy study, or pivotal study known as EPITOPE, which clearly met its primary endpoint and was published in the New England Journal of Medicine last year. Also recall that the FDA requested that we conduct a supplemental safety study, which we’d call COMFORT, COMFORT Toddlers, to increase the number of subjects on treatment in the one- to three-year-old safety database in support of that BLA.

We submitted the COMFORT Toddlers protocol to the FDA in November of last year, and the agency responded in March. Since then, we have been engaged in ongoing dialogue with the FDA regarding the COMFORT Toddlers supplemental safety study, and the dialogue has mainly focused on patch wear time experience, including how prescribers would advise parents and caregivers to manage day-to-day variability in patch wear time. I will let Pharis, our Chief Medical Officer, get into the details in a bit more of a moment here, but let me state, firstly, that we recognize the importance of that question, and we believe the right answer to that question resides in the result of our existing trial, EPITOPE. And in an effort to seek alignment with FDA, we have recently submitted to the agency a draft labeling proposal, with comprehensive supportive data and analyses that were informed by the EPITOPE pivotal data, focused on the user experience during the first 90 days of treatment, so the first three months of treatment, to address agency’s queries about patch wear time.

The agency asked us for more details and analysis about that proposal, which we provided to FDA on June 28th. And while we are awaiting a response from FDA on this labeling proposal, we continue to advance study preparation activities to be able to initiate the study once we have protocol alignment. Finally, the third update is the result of continued cost-saving measures. Through that, we have extended our cash runway into Q1 of 2025, and I will let Virginie, our CFO, give more details on that shortly. At this point, I would like to turn the call over to our Chief Medical Officer, Dr. Pharis Mohideen, for a more detailed update on our clinical programs. Pharis?

Pharis Mohideen: Thank you, Daniel. First, let’s start with the tests. If you recall, this is a 600-patient study in 4 to 7 year olds with peanut allergy using the modified Viaskin Peanut patch. We have 86 sites across the U.S., Canada, Europe, UK, and Australia. The study is assessing the efficacy and safety of Viaskin Peanut over the course of 12 months of treatment. I’m really pleased with the progress that we have made. The test has been a company-wide priority, and it’s taken a coordinated effort within DBV to get to this point. For example, our medical affairs team is small in numbers, but they are incredibly diligent and never fail to engage our multiple stakeholders at medical conferences. And of course, our investigators and their staff did a fantastic job.

And we really appreciate the support that we have received from the patient advocacy groups and the academic societies. I must also thank our study participants, the parents, caregivers and subjects for their tremendous contributions. As we said in the press release, we anticipate to close recruitment by the end of the third quarter of this year. We estimate that top line results would follow approximately 12 months after the last patient is screened. We will certainly provide more detailed updates along the way. Let’s move now to the status of the COMFORT Toddlers supplemental safety study protocol. The FDA asked us to do a supplemental safety study in the one to three-year old patient population to add to the EPITOPE safety database in this age group.

Following a Type C protocol meeting, we submitted the Toddlers safety protocol to the FDA in November of 2023. The agency responded with comments in March of this year. Since then, DBV and FDA have been engaged in ongoing dialogue. These exchanges largely focused on patch wear time experience, including how prescribers would advise parents and caregivers to manage day-to-day variability in patch wear time. On June 28, DBV submitted a proposed draft labeling approach with comprehensive supportive data and analyses intended to address the agency’s concerns related to patch wear time experience. We are now waiting for the FDA’s feedback on this labeling proposal. Let me explain the labeling proposal that we submitted to the FDA. The agency’s questions we believe are best answered with the data from our pivotal trial EPITOPE.

We are still in discussion with the agency and awaiting feedback, but I can give you an overview of the concept. Based on our analysis of the EPITOPE data, we have identified two groups within the Viaskin Peanut treatment arm. We call the two groups the label in and label out subjects. The baseline immunological characteristics of the label in and label out subjects such as peanut-specific IgE, Skin Prick Test and eliciting dose are similar. So there is clearly a difference in the sensitivity to the locally applied peanut allergen that drive differences in patch wear time experience. This is what we refer to as differences in immune physiology in the press release. Within the first 90 days on treatment, it is possible to identify and separate subjects into those that are very likely to have a robust efficacy response relative to those who are less likely to have a robust efficacy response.

All of this can be done with just the patch wear time experience during the first 90 days on treatment. Subjects that are very likely to have a robust efficacy response are called label in. The proposed prescribing information, the label would recommend that these subjects continue Viaskin Peanut treatment. Alternatively, subjects that are less likely to have a robust efficacy response are called label out and the proposed prescribing information would recommend a shared decision making process between the healthcare provider and the parent or caregiver to determine if treatment should be discontinued. In other words, for subjects identified as label out, the proposed label indicates that clinical efficacy is less likely and discontinuation of treatment should be discussed.

If Viaskin Peanut is approved, we believe this labeling proposal would give prescribers a pragmatic, data driven way to discuss and provide guidance on patch wear time experience to parents and caregivers. At this point, I’d like to invite Virginie to cover financial highlights.

Virginie Boucinha: Thank you very much, Pharis. So we’ll now briefly review financial highlights for the first semester of 2024. And there are two highlights I would like to elaborate on, our cash run rate and our P&L, in particular operating expenses. So number one, we close H1 with €66.2 million of cash on hand and our cash runway now takes us into first quarter of 2025, which is an extension from prior communication where our cash runway was sufficient to fund operations until 2024 year-end. This extension is due to cost saving measures we have implemented and that we will continue to drive. There’s another point I would like to highlight as we consider cash consumption in H1 of 2024. In the first semester, cash used in operations totaled $70 million, largely for ongoing clinical trials and for CMC and regulatory activities.

It is important to note that H1 cash consumption includes $24 million of non-recurring costs such as comfort study, startup costs, move projects, supply chain activities. I will now elaborate briefly on our financials in terms of P&L. Our operating income amounts to $2.6 million for the semester and it is now exclusively composed of the research tax credit, the CIF French scheme following the termination of the collaboration agreement with Nestle Health Sciences. Operating expenses total $65 million that’s plus 28% on last year, but it is driven by what really matters. That’s Viaskin Peanut clinical and CMC activities, and again a third of it are non-recurring expenses. So for the semester we book a net loss of $60.5 million. So I’d like to reiterate that we continue to maximize the efficiency of our spend and remain highly disciplined in our cash management.

That concludes the financial overview, and I’ll turn the call back to Daniel for closing remarks. Danielle?

Daniel Tassé: Merci, Virginie. Before bringing the call for your questions, I would like to take a moment to recap. Our anticipated milestones the remainder of 2024, which is a critical year for DBV. So first, by the end of the third quarter, reiterating that we anticipate completing enrollment in our ongoing VITESSE Phase 3 efficacy trial in children age four to seven years of age, and obviously that’s something that we will communicate once that’s done. Secondly, we believe that DBV’s proposed labeling approach is a pragmatic solution backed with robust analyses and data from EPITOPE. Importantly, and I wish to add that on April 29, the Office of Vaccine Research and Review, which is known as OVRR, which is the regulatory division within FDA that has responsibility for Viaskin Peanut, stated that non-COVID related backlogs, the products such as ours were behind them now, and that the agency would have more bandwidth for interaction with sponsors.

And we are seeing that firsthand in our interactions with the agency in the last few months for both CMC questions as well as clinical related questions. And it’s obviously we’re encouraged by that. And later this year, we anticipate having the year three results from our ongoing open-label extension EPITOPE, our successful Phase 3 trial in toddlers. Recall that we had saw further statistical, further and significant improvements across all efficacy parameters in desensitization year two. We look forward to sharing with you later this year, the year three results, as well as the publication of the year two results of the open label extension in a medical journal. With that, I want to thank everyone on the phone and webcast for joining us today.

I will now ask Pharis and Virginie to join me for the Q&A.

Operator: At this time, we will conduct the question-and-answer session. [Operator Instructions] And our first question will come from Jon Wolleben with Citizens JMP.

Jon Wolleben: Hey, good afternoon. Thanks for the update and taking the questions. Maybe just one quick clarification on the label-in, label-out, and then I have some follow-ups on that. When you say patch wear time experience, do you mean how long the kids are wearing the patch or the experience they have while wearing the patch or an interplay between those two concepts?

Daniel Tassé: Yes, important question Jonathan, thanks for asking. No it’s the former. It’s the fact that some kids wear the patch easily 24 hours a day. Other kids it varies more from one day to the other. So that patch wear time experience measured in hours of wear varies in some patients, and that’s the data that is rich to identify patients will be best responders in a nutshell. Pharis, is that a good way to put it?

Pharis Mohideen: Yes, that’s a good way, Daniel. The other way I like to think about it, Jonathan, is it’s kind of like a holistic experience, right? So not just is the patch there or not like an adhesion type of assessment, but it’s the day-to-day variability in the wear time. It’s the individual sensitivity, tolerability, itching, what kind of experience did they have? Was it difficult to wear it all day long or was it easy? There may be some lifestyle components in that that’s a little harder to tease out, but it’s not just one element. And as Daniel said, you can look at average daily wear time, but that doesn’t always tell you the story in terms of day-to-day variability. So I like to think of it as more of a holistic experience with the product. Does that help to kind of fill in some of the gaps there?

Jon Wolleben: Yes. Well, does that make it harder to quantify them, though, than a simple number of hours worn?

Pharis Mohideen: No, not necessarily. We have – we just – it’s kind of the opposite. We have a lot of data, and we can look at a lot of different parameters. And with all of that data, you can get a pretty good sense of the type of experience the patient’s having. Obviously, we can’t talk to the patients, right. But there’s so much data that we collect in our trials, that you can get a pretty good characteristic of these patients, and there’s really quite a clear differentiation between those who are labeled and labeled out based on this whole accumulated data set that we have on them.

Jon Wolleben: Got it. Okay. And then you guys said there’s an association between a robust clinical efficacy response. I’m wondering if you could put some parameters around what you define as a robust response, and then what percentage of the EPITOPE patients were label and label out based on this criteria?

Virginie Boucinha: Does you want to take it or want me to take it.

Daniel Tassé: Yes. I can, no, I can take it. Yes. So, at this point, because we’re still in dialogue with the FDA, we are. It’s probably not the best idea to throw out specific numbers and details, but we know this data set really, really well, and those numbers are robust in terms of what you’ve seen in the past from the EPITOPE results. And it is a pretty good separation between the two in terms of the size of those who are labeled in versus labeled out. I know that’s kind of vague, but at this point, until we have final agreement with the FDA and have wrestled this down, it’s probably nothing the right time to discuss it. But obviously, as we move forward, we’ll present all of this in a public fashion.

Jon Wolleben: Fair enough.

Daniel Tassé: There’s a reference point, I would add here, Jonathan, if I may. We have 67% overall response rate, so, obviously, the label lens would have a better response rate than that. By definition, it’s a traditional enrichment strategy here, so. But the quantification will come down to the agreement we come to with the agency. If we can come to that agreement, the details will be shared at that point in time.

Jon Wolleben: Got it. And one last one for me. Update on COMFORT Children, you guys don’t have any expectations for feedback timing there it doesn’t seem. Wondering, do you think that any progress with COMFORT Toddlers would help with COMFORT Children, or are there different issues and feedback from FDA there.

Daniel Tassé: Yes, I’ll take that one, Ferris. The two were intertwined. The ability to get to the right protocol design for COMFORT Toddlers was an element, obviously of COMFORT Children. So we wanted to solve for toddlers first, children will come next year as the next step in our discussions with the agency. But job one is to get to agreement in one year to three year olds.

Jon Wolleben: Got it. Okay. Thanks again for taking the questions.

Daniel Tassé: Please. Thank you.

Operator: [Operator Instructions] And it appears there are no further questions. Mr. Tassé, I’ll turn the conference back to you.

Daniel Tassé: I’m sure I’m not on mute, I’m not. Well, that concludes our call for this afternoon. Again, thank you. We are pleased with our progress the first half of the year. We look forward to achievement of the additional value creating milestones that I described this year and next. As always, we will keep you posted on our progress and I wish you all a very good evening.

Operator: This concludes today’s conference call. Thank you for attending.