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

Hello, everyone. I'm Joe Schwartz at SVB Leerink. It's my pleasure to welcome Daniel Tassé, Chief Executive Officer at DBV Technologies for an update with us today. Welcome, Daniel. Thanks for joining us.

Well, thanks for having me, and good morning to you Joe, and to everyone on the web joining us today.

Great. So maybe you can start us off with a quick update and remind us of the recent progress you've been making advancing Viaskin Peanut to market and review for us your goals through the coming year and the catalyst that investors can look forward to.

Yes, very much so. Viaskin Peanut is in front of regulators in Europe and in the U.S. at this point in time. In the U.S. we received guidance from the FDA through exchange on the back of the CRL we recieved last year. So we have a clear pathway to refile the product, and I'll be able to be providing you an update on that. And we also are in the process of having our file reviewed by the EMA. And we expect or hope to have the closing of that dossier towards again of this year or early in 2022. So those are the catalysts for us.

Yes. Great. And perhaps you can reprise for us the feedback that you got from the FDA, including the CRL and lay out for us the issues that they want to see addressed? Yes. The issues that were addressed -- that were put forward by the FDA was that they had expressed that they had concerns, I use their language, at the intersection of patch adhesion and patch effectiveness. So what the agency has asked us to do is to modify the patch as to improve the adhesion profile as well as do the human factor study that would be the result of modifying the patch as well as some CMC questions that were asked. That was the content of our CRL. But the bulk of the work is the modification of the patch, which we can do to address their concerns around adhesion. And I guess, On that -- on the patch design, it sounds like you have some thoughts on some designs that will address these concerns? Can you address that?

Yes, we do. Yes. To -- so as you know, Joe, our patch is made of essentially 2 components. There's the inner chamber that is made of a foam ring that creates the space for the protein to be solubilize and absorb into the patch -- into the patient's skin and then an outer ring that is an overlay meant to provide more adhesion to the patch. So we've thought about the inner ring, the condensation chamber as being the engine of our patch essentially and the rest is suspension that is meant to make sure that engine is well protected. The -- our intention was to not modify the condensation chamber. So not to change essentially what allows the antigen to be delivered to the patient but simply modify instead the overlay and in doing so, providing more adhesion, but also by not changing the condensation chamber, we're not changing the protein delivery function. And the agency agreed with us that if we don't change the condensation chamber, we don't change the mode of action of our patch, there's no need for us to redo the efficacy data. We could use bridging data through a protein transfer study. So that was the good news is that the agency was -- there was a lot of good news in that communication, but the agency did not see the modified Viaskin Peanut that would provide better adhesion as being a new entity and allowed us essentially do a bridging study using protein delivery mechanism to bridge efficacy. And then our expectation we'd do a safety study to demonstrate the more ease of the patch still has a very acceptable safety profile. Of note, there were no safety observations in the CRL. Does that answer your question or not?

Yes, yes, that's very helpful. So what's the timeline for presenting the modified patch design to the FDA and the protocol for tests? Are those 2 separate events? Has any of that occurred yet? Or can you give us some insight there?

Yes. The -- we've already modified -- maybe to start that, we've already modified -- manufactured 12 modified patches. We've found 12 ways to optimize adhesion of our patch without changing the condensation chamber. As you know, Joe, the manufacturing process of Viaskin Peanut, the whole chain, was meant to also accommodate eventually other products, milk, egg, tree nuts and all of that. So there's already some given flexibility in our manufacturing process, making our ability to modify the patch should be something that was not overly difficult. We did not have to reengineer our whole manufacturing process. With that as a background, we've manufactured over 12 modified patches, selected 5 of them using mechanical testing and robots essentially. And now we will be taking these 5 patches into a healthy human study sometime later on in Q1 to identify the 1 or 2 that performed best. So once we've identified the 1 or 2, we refer to them as MVPs, Modified Viaskin Peanut versus CVP, if I start making reference to MVP and CVP, you know what I'm talking about. And then we will bring 1 or 2 of these modified patches into those 2 clinical studies. The study that is meant to be for protein transport, we refer to that study as EQUAL. So equivalent in uptake of allergens. So that's the bridging protein transport as to link back to the efficacy demonstrated in our pivotal trial. The tolerance trial will be known as STAMP, safety tolerance and adhesion of the modified patch, cute name STAMP, Those 2 protocols for STAMP and for EQUAL will be sent to the agency. We're aiming to do that sometime in early Q2 as to get their feedback and the complete sign-off on everything, analytical method to statistical test. Given the fact that until the agency gets back to us, and I don't control how quick that will be, we're in no position right now to make a commitment to timelines. But once we have had agreement with the agency, our plan is to come back to investors as well as to patient advocacy groups and to KOLs and provide that clarity of what is it we expect to refile the product? Is that helpful? Yes.

Very helpful. So are STAMP and EQUAL in addition to a human factor study? Or is that kind of...

No, they're -- another important question, they're in addition to the human factor study. Because the human factor study is to define the regs. It's necessary for any product of any complexity when it comes to use and application of the product, nondrug device combinations, obviously, from that category here. So that's a standard piece of work that needs to be done. The moment you modify a device, you need to redo human factor study. And the ability here, as you know, is to make sure that the instructions we give patients, or caretaker of patients in our case, are clear. And the way they go about opening the pouch and applying the patch and taking off the lining is done in a way that ensures the best outcome. Those are relatively straightforward studies, and that will be done after we've done EQUAL and STAMP, and we'll have decided which is the best of the MVPs.

Okay. Right. That makes sense. So...

And they take only a day or 2 to make them by the way, human factor studies are not very complex. The rate limiting ones will be, obviously, a STAMP and EQUAL.

Right. But those also sound relatively short-term studies, right? Any idea how long they'll take?

Yes. EQUAL is relatively short term because it would be a study done probably over a day. And we've done a similar study that we've referred to as SOLAR. It was part of our BLA. We've published that data where the patch is applied -- a number of patches applied on the patient and removed at 4, 8, 12, 16 hours and you assess the protein that's on the skin, the protein that's on the patch and do the mathematic, essentially, of epicutaneous delivery. So that's relatively simple study. I shouldn't say simple, short study. There's no need for a food challenge. It also makes a patient recruitment, as you know, to be much easier. And it's the same thing for STAMP. Now the agency is asking us for a 6-month safety assessment. We think that's quite reasonable. So that will be a longer study. But again, there's no need for a food challenge, making the ability to enroll patients and to power up to whatever are the right statistics to be relatively straightforward.

0 Right. So you're planning on taking -- is it just 1 whatever design you determine is ideal based on the shape of -- and size and other perhaps minor structural changes with foam or whatever? One of whatever you deem to be the right candidate into STAMP and EQUAL. Is that right?

Yes, we may take 1. We may take 2. We haven't decided that yet. It probably will not be more than 2 because it just complicates the study significantly. Whether we take 1 or take 2 with these 2 studies is something we're still discussing.

Okay. Very helpful. And then it sounded like in addition to those 2 human factor, there's some additional CMC work required to satisfy the FDA. Do you have a sense of what that entails?

Yes, we very much do. I would call it a pretty standard CMC question. Our product, as you know, is of some complexity being a drug device combination. The drug is a biological on top of it. So -- but the CMC questions have been -- we've been working on that in parallel here. That's progressed quite nicely. So we don't believe that the CMC questions will be on the critical path.

Okay. Great. And how does the situation in Europe differ from all that you've been doing with the FDA or for the FDA?

At the European agency, we filed in the fall of 2020. We filed 6 or 7 weeks after we received the CRL from the FDA. So the agency very much knows what the FDA's position is on adhesion. They have not expressed the same position. They seem to be comfortable because they've accepted the file for review on the back of what happened with the FDA. And they never have been expressed in our exchange with them that adhesion was a specific question on their part. And so the dossier has been sent in, and we're in the process right now of prosecuting the equity of the day 120, 180, 210 questions to come and clock stoppage along the way. So we're in a position right now, we're going to have a different patch in Europe. If approved, we'll have the, what we call, CVP, the Current Viaskin Peanut in Europe and a modified patch in the U.S. But that per se is not a complication for us again because our manufacturing processes are relatively adaptable. You run 3 or 6 or 9 lots of 1 product. You need to clean up the machine anyways and then recalibrate everything for the other. So it should not impact our ability to manufacture that.

Okay. That makes sense. So it seems like -- correct me if I'm wrong, but it seems like you know what to look for in EQUAL. Are there established bounds of bioequivalence that you'll be referencing, do you think that -- which will determine whether the FDA is satisfied with that study? What do you think you need to show in EQUAL? And then a similar question for STAMP. Do you have a sense of what the critical thresholds are for whatever metrics the FDA wants to see there?

Yes. We do for both. The exchange with the agency, the clarity that was provided in their response to the CRL, so their written response, the dialogue we've had with the agency also in the run-up to that and since then, so there is great clarity on the principles that they want us to target. And now, the protocols, the details matter a lot. The SAP matters a lot. That's why we want to make sure that the FDA reviews and blesses our protocols before we go forward here. But yet, the means by which we will show the equivalence here is relatively straightforward because, again, we're not changing the condensation chamber. So the ability for us to put the right analytical and statistical method around that are not of particularly great complexity. It's a study of some technical complexity. We're trying to measure micrograms of peanut protein in 3 different places. The patch, the skin, if not, it's assumed to be in the skin. So the protocol is of some complexity technically, but I have no great complexity when it comes to the regulatory pathway. When it comes to STAMP, the adhesion, the agency has put forward in response what we've suggested what would be criteria of desired adhesion. We agree with them. But again, we want to make sure that the statistics are robust and to finalize that also before we communicate to the world what is the protocol for STAMP.

Great. Super helpful. Thanks. So I guess, probably the last question around this line of questioning is what are the financial implications of all of these studies in the grand scheme of your existing resource that you have.

Well, we've announced that we have cash into the second half of 2022, and we did that in the fall of last year on the back of the reorganization we've announced in June of last year, which allowed us to refocus the company on what's really core here and also getting rid of a number of costs and infrastructure that we've had historically that were not necessary. As we mapped out our cash trajectory, we did anticipate that there would be a need to remedy the CRL. We anticipated what the cost would be. So that's baked into our cash guidance, the remediation of the CRL and the cost of staffing of people.

Okay.

So cash into second half 2022. Being a biotech company, obviously, you're always looking for opportunities to finance the company along the way. But we're in a good position right now, where we can certainly engage with the FDA and get to the right solution without any artificial pressure coming from our ability to run the business.

Right. Good. So -- and you implemented a global restructuring plan. Can you give us an update on what update on still more steps there?

It's essentially all complete. It will be all completed as in the last employees leaving at the end of the first quarter. As you can imagine, if I can step back. A biotech company, the functions we should have internally are the people who have insights into the molecule or the biology or the statistics or the marketing and everything else should be outsourced, which was not the model that DBV had chosen historically. That was the senior previous management. So that's what we want to fix here too, outsource what should be done by third parties because they bring scale and expertise. And to keep internally what is really unique to our technology and to our indication to our patients. So we've done that. There was obviously a lot of methods to be transferred and a lot of testing to be moved on to third parties. So -- but that's pretty much all done now. It was significant resizing the company. About 70% of our employees actually have departed on the back of this. We moved from just about 300 employees to about 90. But it is the right 90 people to have going forward. And in doing so, we did not have to sacrifice our ongoing investment into preclinical studies and building up a pipeline behind Viaskin Peanut that did not have to be sacrificed as we made those difficult choices.

Okay. So all those people contributed a lot in terms of market preparation and the like. Can you remind us of what has your go-to-market strategy been? And at what point do you seek to press play on that effort?

It should be clear -- to be clear, many of the key people and the marketing function have stayed with us as part of the insight that we wish to keep. And our go-to-market strategy in the U.S. was always to do it ourselves. The beauty of the U.S. market, as you and I have discussed in the past is there's about 4,500 physicians, allergists who practice food allergy and see between 70% and 80% of children in this country suffering from food allergies. So our ability to deploy despite being a relatively small company that does not have a commercial infrastructure, to be able to deploy a good solid sales force and all of the functions that support a sales effort with a relatively targeted audience is relatively straightforward. I'll draw a contrast to Europe, for example, where the prescribers in some markets are well identified, in other markets, it's a bit more diffuse. It's a subspecialty shared across more physician groups. There a partnership might make better sense here, although we're willing to go it alone if need be, but a partnership might make better sense given the fact that the market constructs in Germany, France, Spain, Italy and England are quite a bit different.

Yes. That's very interesting. It seems the opposite of so many other markets, which tend to be concentrated in a few key centers in many of these countries in Europe.

It's an attractive market in the U.S., just because there's 850,000 children between the age of 4 and 11, which is our indication, that suffer from peanut allergies. And the bulk of them are treated by 4,500 physicians. So you have a sort of funneling effect of a very, very large market in a relatively reasonable infrastructure of treating physicians, which makes the attractiveness of go-it-alone for companies such as ourselves in the U.S. to be something that's quite striking.

Yes. I get it. So what is the status of being able to address younger patients?

Yes. Our study in 1 to 3 year olds, that we call EPITOPE is ongoing. It's progressing well. We expect to have the results early in 2022. The -- through the CRL the agency did not ask us to stop the study in 1 to 3 year olds, so that continues with the current patch. And obviously, it becomes an important addition to our indications once we have it. As we know, it is pretty common for children with peanut allergy -- actually all food allergies to be typically diagnosed between the ages of 1 and 4, 1 and 5. So to add the 1- to 3-year old population to our indication is not only, per se, an important market segment when it comes to epidemiology. It's also an important 1 because it's a draft in the age of diagnosis, and where the ability to offer an alternative to parents would be very welcome.

Right. Let me just pause quickly and remind folks that there's a Q&A dashboard, if anyone wants me to ask a question on their behalf or you can just shoot me an e-mail at [email protected], and I'll do it that way. But continuing with our conversation, Daniel. How do you -- how is the competitive landscape been evolving? We have 1 product approved, just 1 in the United States. I know your target product profile is quite different. Maybe for -- first, I'll just ask you, how has the competitive landscape been evolving with that 1 product? What does that leave for you to address, do you think and as you look at the development pipeline?

Yes. The -- look, children suffering from peanut allergies and again, most food allergies have no alternatives at this point in time, except oral immunotherapy, which needs to be done the right way. We welcome the fact that there's already 1 approved product. We want a second one, ours to be approved, obviously, so that parents have alternatives. And as you've mentioned, Joe, the 2 products have very different profiles, which should be -- is a very good thing. There are really distinct alternatives available for parents who have a child who suffers from food allergy. And given the demands that are quite different between 1 product and the other when it comes to the ability to ensure compliance and the right outcome, again, to have 2 different profiles is a good thing. For all of those reasons, we've always seen that our competitors product being approved before ours or after ours did not make a very big difference because again, the prior profiles are quite distinct. And to -- in our market research, parents and families tend to go and gravitate to one or gravitate to the other, naturally in large part of a function of busyness, choices made by the family and their ability also to be compliant to therapy here. I don't know how well our competitor product is doing. Unfortunately, or fortunately for them, the company was purchased, as you know, by Nestle, making the ability to get a new report on the uptake of the product to be something that I don't have. So I can't comment well -- how well product is being received. We are getting a lot of comments though from patients, patient advocates and opinion leaders that the pandemic has only driven home that it's important to have alternatives here because our product could be prescribed through a Zoom call with a physician, except for the food challenge, which is not always necessary anyways. And -- reinforcing again the fact that having something that is relatively benign, innocuous and easy to use without needing to monitor the patient for 2 or 3 hours a day would be a welcome change.

Right. Yes, that makes sense. So on the regimen itself. Obviously, it depends on what the FDA -- how they label the indication and stipulate how it should be used. But what would you -- how would you -- would you estimate or project that the regimen resembles. Does it resemble like a fairly short course until a patient is desensitized? Is it for life, is it somewhere in between. I mean you have data that from Phase II goes several years. Do you think that will be referenced? Or do you think it will be strictly according to the primary endpoint? At 1 year in the Phase III? How do you think that will translate to the actual usage in the real world?

It's an important question. We believe that our product, certainly in the U.S., would be approved on 1 year of data because our 3-year data has not been submitted. It's a big difference with the European dossier where 3-year data was not only submitted but was expected by the European regulators. So in substance the difference here is not trivial. But to focus on the U.S. first, We wouldn't be the first product to be approved that is meant for long-term use, but you only have 1 year of data at approval or 3 years. What experts are telling us is the analog they believe is the most relevant is experience that's been seen with insect venom, where usually 4 or 5 years of immunotherapy is usually sufficient to get a fundamental change in the patient's ability to tolerate the allergen and then no need for chronic use. There are reasons to believe from our 3-year data, not only because the efficacy keeps on improving. But as you've seen, Joe, in the sustainable responsiveness of patients who volunteer to go off therapy for 60 days, and then come back and take a food challenge again, 80% of patients. We're seeing them in our Phase II extension. We've seen the same response in Phase III extension. It's a small sample, a small sample, but 80% of patients tolerated, the dosing dose was the same after 2 months of not being on therapy. I'm not suggesting here that we have sufficient data to say 3 years of treatment is sufficient. It is not. But it certainly suggests that there is a fundamental change in the children's biology and ability to deal with the allergen that need to be explored further. We certainly have a lot of work ongoing to provide a more fulsome answer to physicians by the time we get to 3, 4, 5 years. But I think the general expectation of experts is 4, 5 years of treatment with then after that, either a maintenance dose or you move on to a peanut a day or something, again, that hasn't been elaborated yet. But there's a lot of interrogation going on. That answer will certainly be provided way before we get to the fourth of fifth year anniversary of the launch of our product. That makes sense?

Yes. Absolutely. Yes. So I guess the one thing I haven't asked about probably that's important on the commercial side is reimbursement. So what kind of work has the company been doing with payers and give a sense how much of your work has been done on that front?

A lot of work has been done. We've been in ongoing dialogue with payers as we were getting ready for launch last year. That dialogue continues. That team is still in place at DBV. The -- here, a competitor has announced a price, it becomes relevant, obviously, given the fact that it creates a reference point. We were sure not uncomfortable with the price that they've announced, given the fact that on top of it, our product is much less taxing to the health care system, the number of physician visits is much less. So we've explored pricing, and we believe that the pricings we are -- pricing we are looking at is very much acceptable to payers and would really capture what is the true value of our product.

Great. And my last question for you, Daniel, is the reporting status for the company as -- in a year to change it. So what will that entail? And how will that actually change things from the investor point of view?

With the fact that much of the management team, most of our investors serves -- more and more of the option of the company are now managed out of the U.S. We're really a company that is nicely balanced between France and the U.S. We lost our foreign private issuer sort of exceptional status. So now we need to report on a quarterly basis, which we're fine with doing. We also then have to -- we have to live with GAAP in the U.S. and IFRS in Europe. That's okay. But it was possible to choose only 1 currency. So we've chosen the U.S. dollar. So you'll see DBV now reporting like most companies you track, Joe, with quarterly reporting in U.S. dollars.

Okay. Well, great. Thank you so much for the update, Daniel. It's a pleasure and keep up the good work.

Thanks so much, you're very kind. And have a great day, everyone. Bye-bye.

Thanks, everyone.