DBV Technologies S.A. (DBV) Earnings Call Transcript & Summary

Hi, Daniel. How are you?

I'm great, Liisa. How are you?

I'm good. So I want to welcome Daniel Tassé, Chief Executive Officer of DBV Technologies. DBV is working in the area of peanut allergy. So a lot of enthusiasm there. Companies had its ups and downs, and I think they're working their way back up right now. So I think we're excited to get into the details. But maybe first, just to set the stage, Daniel, you can tell us a little bit more about DBV.

Yes. DBV is a company that is exploring the fact that the human skin is actually a pretty powerful immune organ, something that is not always well understood, well appreciated. And the idea is to use a technology that is proprietary to us, we refer to as EPIT. The acronym is epicutaneous immunotherapy, to use essentially the exposure to the human body to very, very minute amounts of an allergen as to condition a tolerance to the allergen. And our first product is targeted to peanut allergy, but it's the first on what we call a Viaskin platform, the first of what we expect is going to be a long portfolio of products directed right now to food allergies and in time to other conditions and human disease.

Okay. Great. Just trying to get to the question page here on my other page. But anyway, so tell us a little bit more about Viaskin Peanut and kind of -- maybe you can walk us through kind of what you saw in Phase III and kind of what's happened and where you are today.

Absolutely. So Viaskin Peanut, again, is the code word or the code name for the first product, which is to target -- the indication would be to treat peanut allergies in children between the ages of 4 and 11. That's important, obviously, because not only is the disease typically diagnosed at a young age, but the younger the child, the greater the risk is obviously of accidental peanut exposure as children obviously might not be prudent about reading labels and making sure that they stay safe. Our product would be the third leg of what is a very important sort of triumvirate here. Patients need to remain attentive obviously to peanut in food or in packaged food. There's an expectation that parents will still carry with them an EpiPen. But the idea here is to use a technology such as Viaskin Peanut to provide that level of protection so there is accidental peanut consumption, the consequence of the patient is very little, if anything, at all, allowing to address what is really the other important element of peanut allergy, not just the medical risk per se, but because of that risk, the impact on the quality of life of the child, the family, the loved ones or whole entourage is huge because -- and this is quite clear if you talk to parents of children with food allergies, the avoidance of that risk, they're often defined so many of the family activities. So what we're trying to do is not only to provide protection to the child, but also hopefully reduce the level of anxiety within the family in a way that's quite significant, which impact the quality of life of the whole family.

So you had some Phase III data that looked pretty good and then -- kind of maybe get us up to speed with kind of where you are today in terms of your [indiscernible] about it.

[indiscernible] to cut you, I'm sorry. Yes, we had Phase III data that showed that the product did what we want it to do, which is provide significant protection, the means by which, as you know -- efficacy in food allergy product is done is through a process that is meant to mimic the risk of exposure in real life by having food challenge exposure. So children are exposed placebo 1 day active, the other day or vice versa to semi-algorithmic increases in peanut protein exposure until they express symptoms or those symptoms are -- that dose is a defined eliciting dose and the trick over 12 months is to move their children up lessening those. Any step-up is protective. And the rule of thumb is that 300 to 1,000 milligram of ED at month 12 becomes quite significant in changing the risk profile for the child since, at least in reasonable models, that reduces the risk of accidental exposure by 95% to 99%. With that as a background, we submitted a product to the FDA last summer. It was accepted for review in October. And we unfortunately received the CRL in early August, complete response letter. And the core of the CRL was the fact that the FDA believes that our patch adhesion experience is not fully adequate and is asking us to modify the patch, which we have chosen to do. I can expound on that more if you wish to, Liisa, obviously. But the decision we made is that we could either go back to the agency and essentially we prosecute the case and say, no, the product that you have in front of you is approvable as we believe it is or to make modifications, which are relatively easy to do within our manufacturing processes as to provide a patch that would have a stronger adhesion profile.

We've got a question here in French from someone. So I'm going to educate myself and [Foreign Language] Yes, my French is not very good. [Foreign Language] FDA.

But that's what I was in process of answering. [Foreign Language] French is my mother tongue, as you know, Liisa, both of us being Canadian.

Oh, I studied it for many years but not very successfully as you can see.

Well, I use it every Sunday when I talk to my mom and every day when I do my work at DBV. So where we are with the FDA right now is the agency sent us a CRL. They want us to modify the patch. We chose to modify the patch as I said. So post CRL, the sponsor has 90 days. Asked for a meeting with the agency with a briefing package. The company -- that demand, that has taken place. And we expect to be able to come back to investors sometime in January after having had the exchange with the agency and thus having clarity on what is it the agency wants us to do to provide the evidence profile necessary to support the modified patch. We have a well informed view of what that evidence can be and needs to be. But obviously, until we discuss it with the FDA and have come to an agreement with them, of the evidence basis they want us to generate and support the modified patch, obviously, we'd rather wait for the FDA feedback before sharing that with the market.

When do you think you might have that kind of feedback?

We expect it by the end of January. If you -- we're not a PDUFA product. Up to now, the agency has always been quite true to the PDUFA guidelines when it comes to response. So you take a CRL in early August, 90 days, ask for meeting, the meeting take place in the month or so that follows. And then you've got real confirmation, what was said. In the 30 days that follows that, takes us some time in January, allowing for the fact that our product is at the vaccine division. They are a little bit busy with COVID, as we all know, plus the year-end holidays. So we expect that sometime in January, we should have that formal feedback from the agency that we can then share with investors.

What do you think will be required to kind of get this sort of new patch, though containing really the same product in a way, but just new kind of -- it's almost like the kind of like Band-Aid part of it is different but the substance of it is the same. And so curious like what you think will be required to show -- I don't know if it's called bioequivalence or whatever kind of...

Yes. That's part of the challenge. So we haven't gone to talk to the agency and come to that agreement because we have -- the beauty of having a breakthrough technology is that it's a breakthrough technology. The problem is that there's no analogue to point to inform those discussions here. And maybe I can start with what you were describing, Liisa, maybe for the befit of the people listening here. Our patches, we made of 2 components. There is a foam ring that creates the chamber of condensation that allows the humidity of the skin, can actually solubilize the allergen and providing that measured, essentially epicutaneous penetration by allergen, which stimulates the T cell response and with that, the immune tolerance. We're not changing that. So the size, the thickness, the making, the backing, the API, the way we apply it, none of that, to what we call the motor action part of the patch, will change. And thus, we believe that the efficacy should be unchanged by the modifications we make because we're not touching, if I may use a bit of a oversimplified analogy, we're not touching the engine of the car. We're going to work on the suspension, but we're not touching the motor here. That suspension is a backing that is larger than that foam ring that is meant to provide adhesion to push down that foam ring so it doesn't stick out too much and in doing so, essentially protect the mode of action of the patch. That's the part that we're willing to modify. There's quite a few things we can do from size and shape, to start off with, to provide a different, more adhesive patch where we did not change the mode of action. So with that as the core principle of what we wish to modify, as we go to the agency, we believe that as long as we can show the patch sticks better and has a very comparable AE profile, that should be acceptable to the agency. Again, we have not discussed this with the FDA. I want to be absolutely transparent with the people listening to us here. On one end, the agency could say, "You need to redo your pivotal trial with food challenges 12 months versus placebo." That's what maybe the agency could ask. At the other end, they could be amenable to what we define as being a reasonable pathway. Our position is well informed by many experts we've talked to. Again, Liisa, what I'm sharing with you right now is exactly half the conversations, what DBV believes is right. Until we talk to the FDA, I'd rather not have anybody speculate the outcome of it.

So what you believe is right, just to clarify, is to modify the patch. But do you want to do any like kind of like studies just to show it's kind of like the same or how long it stays on [ 4 ] or anything on -- because you would think that maybe if the patch is sticking a little bit longer, it might change the efficacy. I [indiscernible] to the better and maybe subtly. And maybe also -- I don't know if the AEs profile changes at all. So anyway, just curious on those 2 aspects. And what do you propose? Like some kind of small study to show it's the same or really like, I don't know, just no studies are needed? And what are you thinking?

Well, we don't believe no studies are needed more, but I don't think it would serve -- nevermind what the agency wants. We also have patients and prescribers and parents that have questions. So we need to generate data as to make sure that the profile of the modified patch is absolutely acceptable. So we certainly are not suggesting that no data is required here. You touched on adhesion impacting efficacy. As you know, we've published data. The data that we shared with the agency back in the spring was also published, showing that after 12 hours, the protein payload is off the patch. So you don't need to wear the patch for 24 hours. If you've had it on for 12 hours, the protein is not on the patch anymore. It's just assumed to be probably on or in the patient's skin. And we've triangulated that observation in Phase I trial to what we saw in our Phase III trial. It shows, again, that clinical response is noticeable after 12 hours in patients who are patched for 16 hours or more. Easily meet the primary end point of the study here, which represents about 85% of patients have that adhesion experience. So you're right, if we approve adhesion for the 15% who cannot get to 16 hours, will we improve the efficacy of the product? That's a reasonable argument to be made, and it's very much part of the discussion we want to have with the agency here. Our view, though -- not our view, though, our view, is that the adhesion experience of the 15% of patients who don't achieve the 16 hours can be addressed through labeling as would be any pharmaceutical product, where if the drug is not the right one for the patients and they cannot wear it long enough, I think the label should instruct parents and prescribers, that's the case here. But you are correct. As we improve adhesion, there are reasons to believe we can improve efficacy. But we're not trying to solve for efficacy. We're trying to solve for adhesion.

What kind of a study would be sufficient, like transitioning patients from one to the other, do you think? Or like a month-long study transitioning from one to the other? I'm just trying to understand like what you think makes sense. Do you still have patients that are kind of in [indiscernible] patch?

Yes, we do. I have to be careful as again -- as I share what we think, I don't want to start and having people anticipate what the agency will see. And I want to be very respectful of the fact that until we've talked to the agency, what we have is just our opinion. I don't think it serves the process well. But yes, we can look to other patch products and see what has been historically the evidence profile that was necessary. Again, there's not a lot of guidance here because our product is quite unique. But we can look to generic patches, for example, of existing product. And as a rule, there is no need to redo an efficacy trial to show that patch B is comparable to patch A. And that's a general philosophy that we're going to be bringing to our conversation with the agency here. But again, sorry for the overabundance of caution here, but our product has no analogue. And until we heard back from the agency, what they think, I don't want people to speculate on what's [indiscernible] of it.

It's interesting though that there are some benchmarks to look at so we'll [indiscernible]

Some benchmarks for transdermal patches, no generic to innovate, which is helpful in many ways. And the precedent is you don't have to show -- you have to show that the patch behaves in a reasonable when it comes to adhesion and when it comes to side effect profile, and the need to show efficacy is usually not required. But again, it applies for that specific regulatory picture. Whether it applies to ours or not remains to be seen.

Okay. Interesting. I want to turn to Europe because Europe is a different animal and different regulatory body. How are you approaching the European market? Maybe you can give us an update.

Yes. It's an important opportunity for us because it is, as a regulatory matter, completely independent opportunity from what we have in the U.S. There's a very low codependence between the 2. The reason with that are a few. One is historically, our interactions with the European regulators have been people who are immunologists by training. So there's just an expertise that we've seen in our dialogue with them that has translated to them suggesting that our 3-year data, not just the 1-year controlled trial that is a registration study, which we've called PEPITES, with a 2-year open-label extension to PEPITES, that study is known as the PEOPLE trial, would be important to be part of our dossier given the fact that since we are, over time, inducing tolerance in patients, it's reasonable to assume that the response at 3 years will be better than the clinical response at 1 year. So the fact that the European regulators strongly suggested that we wait to have the 3-year data before filing, which was not the case with the U.S., we believe, shows an understanding of our MOA with that in a [ ring does ] that's important to have. And on top of it, [indiscernible] in Germany, [indiscernible] in Denmark have been reviewing immunology submissions across all therapeutic areas in EMA for over 15 years now. So there's been a richness in the dialogue that makes us look at the opportunity in Europe as being independent one in the U.S. and where we hopefully don't believe that the modified patch will be necessary. We filed also on October 12. The file was accepted for review, which was now 2.5 months after we received the CRL from the agency, 2.5 months that we got the CRL from the FDA. That was obviously part of our briefing package. So we know the EMA is aware of the FDA's position and, at this point in time, have not expressed any concerns about them.

Okay. Great. That was one of the questions, will -- well, actually, they're asking about will the actual patch be accepted, which, of course, you don't know yet. So maybe -- okay, so the application has been accepted. Walk us through kind of like what happens from here. When will you know and -- yes.

Yes. The -- as we all know, the regulatory process in Europe is a 210-day process plus stop clock -- well, clock stoppages. So that's when the sponsor gets questions. The formal questions are asked at 120, 180 and the very end, at day 210. So the time we take to response stops the clock. On average, a EMA application goes in submission to approval in 14 to 18 months. Again, whether or not we fall into that window or not remains to be seen. So that would mean that an approval could come in late 2021 or early 2022, if we manage the questions right away. It also means that the day-120 question will come sometime in Q1. And that becomes the first opportunity we have to see where the EMA is in the essence of the review of our product.

So we don't have a lot of time left, but I just did want to touch upon kind of the commercial -- the commercialization. What's your kind of thinking on what you're going to do? Is this something you'd want to do yourself? And what is the European market like? Because I understand kind of my research, there are specific kind of countries like the U.K. where peanut allergy is kind of a thing and then other places where it's really kind of more under the radar. So...

Sort of a thing, yes. Yes, yes, it's an important question.

So maybe walk us through kind of the market dynamics just briefly because we don't have a lot of time. And then also, what's your basic commercial plan there?

Okay. Our plan -- we're wanting to commercialize it ourselves, but if we could find a partner that would be -- that already got scale and expertise. The epidemiology is comparable in Europe to what we have in the U.S. And in the 3 key markets, Germany, France and the U.K., peanut allergy is a thing, as you say. The health economic arguments will be put forward to GmbH in Germany, NICE in the U.K. We have generated that data. We believe we have a strong dossier that progresses in parallel to extract the price that we think would be not only fair value for taxpayers in Europe, but also a fair value for our shareholders. We believe that, that space very much exists.

Okay. Great. So just what are the catalysts we should be watching for then? I guess update, maybe towards the end of January from FDA, maybe some -- so a lot of regulatory stuff [indiscernible]

Yes. Big Q1 for DBV, big Q1. We'll have more detail of restructuring plan, which stretches out our cash runway to the second half of 2022 as we've announced that. We will hopefully have something post our exchange with the FDA and -- towards the end of the quarter. If things go as planned with the EMA, there'll be nothing to talk about. If the day-120 questions go as expected, then maybe a bit more color will be provided also. So those are the big catalyst event for us in early 2021.

Okay. Good. Well, we're looking forward to keeping track of all those. We have our fingers crossed until the end of January. And Daniel, it was great to catch up with you and when we'll talk soon. Thanks, everyone.

[indiscernible] Welcome to Evercore.

Thanks.

Okay. Bye.