DBV Technologies S.A. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read this discussion and analysis of our financial condition and consolidated results of operations together with the consolidated financial statements, related notes and other financial information included in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including statements of our plans, objectives, expectations and intentions, contain forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Please also see the section titled “Forward-Looking Statements.” Overview We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. Our therapeutic approach is based on epicutaneous immunotherapy, or EPITTM, our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin. We have generated significant data demonstrating that Viaskin’s mechanism of action is novel and differentiated, as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream, minimizing systemic exposure in the body. We are advancing this unique technology to treat patients, including infants and children, suffering from food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such as anaphylactic shock. Following receipt of a CRL from the FDA in connection with our BLA for Viaskin Peanut, beginning in August 2020, we scaled down our other clinical programs and pre-clinical spend to focus on Viaskin Peanut. We also initiated a global restructuring plan in June 2020 to provide operational latitude to progress the clinical development and regulatory review of Viaskin Peanut in the United States and European Union. In January 2021, we received written responses from the FDA to questions provided in the Type A meeting request we submitted in October 2020 following the CRL. In order to respond to the FDA’s requests and recommendations, we defined parallel workstreams primarily in order to generate the 6-month safety and adhesion clinical data to assess a modified Viaskin Peanut patch and demonstrate the equivalence in allergen uptake between the current and modified patches in the intended patient population. Following the submission of the adhesion study’s protocol to the FDA, we received an Advice/Information Request letter from the FDA in October 2021, requesting a stepwise approach to the modified Viaskin patch development program and provided partial feedback on this protocol. In December 2021, we decided not to pursue the sequential approach to the development plans for Viaskin Peanut as requested by the FDA in the October 2021 feedback and announced our plan to initiate a pivotal Phase 3 clinical study for a modified Viaskin Peanut patch (mVP) in children in the intended patient population. We consider this approach as the most straightforward approach to demonstrate effectiveness, safety, and improved 84 Table of Contents in vivo adhesion of the modified Viaskin Peanut system. After the FDA confirmed our change in strategy is agreeable, the protocol for the new Phase 3 pivotal study of the modified Viaskin Peanut (“mVP”) patch was completed at the end of February 2022 and has been prepared for FDA submission. We are currently engaged in discussions with FDA in preparation for protocol submission and review. We expect to complete protocol submission following further alignment with FDA. Financial Overview Since our inception, we have primarily funded our operations with equity financings, and, to a lesser extent, public assistance aimed at supporting innovation and payments associated with research tax credits (Crédit d’Impôt Recherche). We do not generate product revenue and continue to prepare for the potential launch of our first product in the United States and in the European Union, if approved. Based on our current operations, as well as our plans and assumptions as revised pursuant to our change of strategy announced in December 2021, we expect that our balance of cash and cash equivalents of $77.3 million as of December 31, 2021 will be sufficient to fund our operations into the first quarter of 2023. As of the date of the filing, our available cash is not projected to be sufficient to support our operating plan for at least the next 12 months. As such, there is substantial doubt regarding our ability to continue as a going concern. We intend to seek additional capital as we prepare for the launch of Viaskin Peanut, if approved, and continue other research and development efforts. We may seek to finance our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. We cannot guarantee that we will be able to obtain the necessary financing to meet our needs or to obtain funds at attractive terms and conditions, including as a result of disruptions to the global financial markets due to the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic has already caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to us, including reduced ability to raise additional capital when needed or on acceptable terms, if at all. If we are not successful in our financing objectives, we could have to scale back our operations, notably by delaying or reducing the scope of our research and development efforts or obtain financing through arrangements with collaborators or others that may require us to relinquish rights to our product candidates that we might otherwise seek to develop or commercialize independently. We anticipate that our expenses will increase substantially in connection with our ongoing activities, as we: • continue our research, pre-clinical and clinical development of our product candidates, including expanding the scope of our trials for Viaskin Peanut; • seek regulatory and marketing approvals and pursue commercial activities for Viaskin Peanut, especially in North America and in the European Union; • seek regulatory and marketing approvals for our other product candidates that successfully complete clinical trials; • continue to establish a sales, marketing and distribution infrastructure to commercialize Viaskin Peanut, if approved, and any other products for which we may obtain marketing approval, especially in North America and in the European Union; • further develop the manufacturing process for our product candidates; • change or add additional manufacturers or suppliers; • initiate and conduct any post-approval clinical trials, if required by the FDA or by the EMA, for our approved products, if any; 85 Table of Contents • initiate additional pre-clinical, clinical or other studies for our product candidates; • seek to identify and validate additional product candidates; • acquire or in-license other product candidates and technologies; • make milestone or meet other payments deadlines under any in-license agreements; • maintain, protect and expand our intellectual property portfolio; • attract and retain new and existing skilled personnel; • add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts, as well as a company listed on both the U.S. and French stock markets; • handle impacts of the ongoing COVID-19 pandemic; and • experience any delays or encounter issues with any of the above. Our financial statements have been prepared on a going concern basis assuming that we will be successful in our financing objectives. As such, no adjustments have been made to the financial statements relating to the recoverability and classification of the asset carrying amounts or classification of liabilities that might be necessary should we not be able to continue as a going concern. Impact of COVID-19 on our Business The COVID-19 pandemic continues to adversely affect global economies, financial markets and the overall environment in which we do business. Our ability to conduct clinical trials has been and may continue to be affected by the COVID-19 pandemic. As the full impact of the COVID-19 pandemic on our business continues to develop, we are closely monitoring the global situation. We are unable to predict the full impact that COVID-19 will have on our operations, liquidity and financial results, and, depending on the magnitude and duration of the COVID-19 pandemic, such impact may be material. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends. For further discussion of the business risks associated with COVID-19, see Item 1A, Risk Factors, within this Form 10-K report. Business Trends We engage in substantial research and development efforts to develop innovative pharmaceutical product candidates. Research and development expense consists primarily of: • cost of third-party contractors such as contract research organizations, or CROs, that conduct our non-clinical studies and clinical trials; • personnel costs, including salaries, related benefits and share-based compensation, for our employees engaged in scientific research and development functions; • purchases, real-estate leasing costs, as well as conferences and travel costs; and • depreciation, amortization and provisions. Our direct research and development expenses consist principally of external costs, such as startup fees paid to investigators, consultants, central laboratories, and CROs in connection with our clinical trials, and costs related to acquiring and manufacturing clinical study materials. We do not allocate personnel-related costs, costs associated with our general platform improvements, depreciation or other indirect costs to specific programs, as they are deployed across multiple projects under development and, as such, are separately classified as personnel and other expenses. Research and development activities are central to our business. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, 86 Table of Contents primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase in the foreseeable future as we initiate clinical trials for certain product candidates and pursue later stages of clinical development of our product candidates. In the year ended December 31, 2021, we spent $70.3 million in research and development expenses to advance the development of our product candidates. The following table provides a breakdown of our direct research and development expenses for our two lead development programs, as well as expenses not allocated to the programs and share-based compensation expenses included in research and development expenses, for the years ended December 31, 2021 and 2020, respectively: Year Ended December 31, 2021 2020 (thousands of U.S. Dollars) Research and development expenses related to Viaskin Peanut (1) $ 47,961 $ 70,507 As a percentage of research and development expenses, excluding share-based compensation expense 70 % 70 % Research and development expenses related to Viaskin Milk (1) $ 5,861 $ 4,750 As a percentage of research and development expenses excluding share-based compensation expense 9 % 5 % Other research and development expenses (1) $ 14,868 $ 25,735 Total research and development expenses, excluding share-based compensation expense $ 68,690 $ 100,991 Share-based compensation expenses included in research and development expenses $ 1,646 $ ,616 Total research and development expenses $ 70,336 $ 101,607 (1) Excludes employee share-based compensation expense. We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if, when, or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, many of which are outside of our control including: • the FDA’s approval of our BLA for Viaskin Peanut; • the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval, especially in North America; • the costs of securing manufacturing arrangements for commercial production; • revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval; • the scope, progress in, results and the costs of, our pre-clinical studies and clinical trials and other research and development programs, particularly as we seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials; 87 Table of Contents • the scope, prioritization and number of our research and development programs; • the costs, timing and outcome of regulatory review of our product candidates; • the achievement of milestones or occurrence of other developments that trigger payments under our existing collaboration agreements, and any additional collaboration agreements we may enter into; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under our existing collaboration agreements and future collaboration agreements, if any; and • the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual property rights. A change in the outcome of any of these variables with respect to the development and commercialization of Viaskin Peanut, if approved, or any other product candidate that we are developing could mean a significant change in the costs and timing associated with the development and commercialization of Viaskin Peanut, if approved, or such other product candidate. For example, if the FDA or other regulatory authority were to require us to conduct pre-clinical and clinical trials beyond those which we currently anticipate will be required for the completion of clinical development, if we experience significant delays in enrollment in any clinical trials or if the FDA or other regulatory authority were to require us to conduct post-approval clinical trials, we could be required to spend significant additional financial resources and time on the completion of the clinical development and potential launch of commercialization. Components of Our Results of Operations Operating Income Our operating income consists of other operating income, as described below, as we generated no revenue from our operating activities in 2021 or 2020. Other Operating Income Government Assistance Due to the innovative nature of our product candidate development programs, we have benefited from a number of sources of assistance from the central French government or local public authorities, intended to finance our research and development efforts or the recruitment of specific personnel. These funds are recognized as other income in our consolidated statement of operations for the fiscal year that recorded the financed expenses or expenditures. Research Tax Credits The Research Tax Credit ( Crédit d’Impôt Recherche , or CIR) is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies that prove that they have expenditures that meet the required criteria receive a tax credit that can be used for the payment of the corporate tax due for the fiscal year in which the expenditures were made and the next three fiscal years, or, as applicable, can be reimbursed for the excess portion. The expenditures taken into account for the calculation of the research tax credit involve only research expenses. If a company meets certain criteria in terms of sales, headcount or assets to be considered a Small and Medium-sized Enterprises, or SMEs, under EU law, immediate payment of the CIR can be requested. We no longer benefited from the immediate reimbursement of the CIR due to the loss of the SME status under EU law for the fiscal year ending December 31, 2019 and 2020. The CIRs were to be refunded three years after the tax declaration in the event we could not offset it against corporate income tax due. Beginning in the fiscal year ending December 31, 2021, we recovered our SME status, and became therefore eligible again for the immediate reimbursement of the CIR. We will request the immediate reimbursement of the 88 Table of Contents 2021 fiscal year CIR, as well as former tax credit receivables for 2019 and 2020 fiscal years, for a total amount of $28.1 million. Collaboration agreement with Nestlé Health Science On May 31, 2016, we announced our entry into an exclusive global collaboration with Nestlé Health Science to develop MAG1C, a ready-to-use and standardized atopy patch test tool for the diagnosis of cow’s milk protein allergy in infants and toddlers. Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a pivotal Phase III clinical program, and if appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally, while prioritizing certain agreed-upon countries. We entered into an amendment with Nestlé Health Science on July 12, 2018. We are eligible to receive up to €100.0 million in potential development, clinical, regulatory and commercial milestones, inclusive of a non-refundable upfront payment of €10.0 million that we received in July 2016. In 2021 as in 2020, the ongoing COVID-19 pandemic impacted our current clinical trials, including the Phase II clinical trial, or PII, conducted as part of the development activities pursuant to the collaboration and license agreement with Nestlé Health Science. We experienced a decrease in new patients enrolling in this Phase II clinical trial and had to modify its protocols. As a result of these delays, we expect to incur additional clinical and production costs related to the PII. Accordingly, as of December 31, 2021, we recorded our collaboration agreement’s revenue based on its updated measurement of progress of the PII conducted as part of the agreement. The accrual recorded in the amount of the difference between our current best estimates of costs yet to be incurred and revenues yet to be recognized for the completion of the PII has been updated accordingly Operating Expenses Since inception, our operating expenses have consisted primarily of research and development activities, general and administration costs and sales and marketing costs. Research and Development Expenses Research and development expenditures are charged to expense as costs are incurred in performing research and development activities. Research and development costs include all direct costs, including salaries, share-based payments and benefits for research and development personnel, outside consultants, costs of clinical trials, costs related to manufacturing clinical study materials, sponsored research, clinical trials insurance, other outside costs, depreciation, and facility costs related to the development of drug candidates. The Company records upfront, non-refundable payments made to outside vendors, or other payments made in advance of services performed or goods being delivered, as prepaid expenses, which are expensed as services are performed or the goods are delivered. Certain research and development projects are, or have been, partially funded by collaboration agreements, and the expenses related to these activities are included in research and development costs. The Company records the related reimbursement of research and development costs under these agreements as income in the period in which such costs are incurred. Sales and Marketing Sales and marketing expense consists primarily of personnel costs, consultant fees and share-based compensation for sales and marketing employees, as well as fees related to pre-commercialization activities for Viaskin Peanut in North America and in the European Union, other consulting fees and travel costs. We anticipate that our sales and marketing expenses will increase in the future as we prepare for the potential launch and commercialization of Viaskin Peanut in North America and in the European Union, if approved. 89 Table of Contents General and Administrative General and administrative expense consists primarily of personnel costs and share-based compensation for finance, legal, IT and administrative employees. General and administrative expense also consists of costs related to obtaining a directors and officers liability insurance policy and fees for professional services, mainly related to audit, tax and legal services, real-estate leasing costs, insurance costs, consulting costs, investor relations costs and corporate communication and travel costs. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential launch and commercialization of Viaskin Peanut in North America and in European Union, if approved. We also anticipate continued increased expenses associated with being a public company in the United States. Restructuring Costs We initiated a global restructuring plan in June 2020 to provide operational latitude to progress in the clinical development and regulatory review of investigational Viaskin™ Peanut in the United States and European Union. The full implementation of the organization-wide costs reduction measures was completed during the second half of 2021. It resulted in a reduction of more than 200 jobs and a remaining global team of about 90 individuals dedicated to the pursuit of innovation and scientific development of novel therapies. The restructuring costs were mainly comprised of payroll expenses, restructuring-related consulting and legal fees, as well as impairment of facilities and right of use assets following resizing of facilities. Finance Income (Expense) Our cash and cash equivalents have been deposited primarily in savings and deposit accounts with a remaining maturity at the date of purchase of three months or less, allowing the funds to be freely withdrawn at any time without significant penalty. Savings and deposit accounts generate a limited amount of interest income, with very low counterparty risks. We expect to continue this investment strategy. Results of Operations Comparison of the Years Ended December 31, 2021 and 2020 The following table summarizes our results of operations, derived from our consolidated financial statements, prepared in compliance with generally accepted accounting principles in the United States, or U.S. GAAP, for the years ended December 31, 2021 and 2020: December 31, (Dollar amounts presented in thousands, except per share amounts) 2021 2020 $ change % change Operating income $ 5,708 $ 11,276 (5,568 ) (49 %) Operating expenses Research and development expenses (70,336 ) (101,607 ) 31,271 (31 %) Sales and marketing expenses (4,387 ) (9,879 ) 5,492 (56 %) General and administrative expenses (30,520 ) (35,081 ) 4,561 (13 %) Restructuring income (expenses) 920 (23,552 ) 24,472 (104 %) Total Operating expenses (104,323 ) (170,118 ) 65,795 (39 %) Financial income (expense) 425 (724 ) 1,149 (159 %) Income tax 381 10 371 * Net loss $ (97,809 ) $ (159,555 ) 61,747 (39 %) Basic/diluted Net loss per share attributable to shareholders (1.78 ) (2.95 ) * Percentage not meaningful 90 Table of Contents Operating Income The following table summarizes our operating income for the years presented: December 31, (Dollar amounts presented in thousands) 2021 2020 $ change % change Sales — — Other income 5,708 11,276 (5,568 ) (49 %) Research tax credit 7,505 9,930 (2,425 ) (24 %) Other operating (loss) income (1,797 ) 1,346 (3,142 ) (234 %) Total operating income 5,708 11,276 (5,568 ) (49 %) We generated operating income of $5.7 million for the year ended December 31, 2021 compared to $11.3 million for the year ended December 31, 2020, a decrease of 49.4%. This income was mainly generated from the French research tax credit (Crédit d’Impôt Recherche or CIR), and by revenue recognized under our collaboration agreement with Nestlé Health Science. The decrease in operating income is primarily attributable to the change in the revenue recognized under the Nestlé’s collaboration agreement, as we updated the measurement of progress of the Phase II clinical trial conducted as part of the agreement due to delays in new patient enrollment. The decrease in research tax credit is attributable to the decline in eligible expenses in connection with research and development expenses. Operating Expenses Research and Development Expenses The following table summarizes our research and development expenses for the years presented: December 31, (Dollar amounts presented in thousands) 2021 2020 $ change % change Research and development expenses External clinical-related expenses 39,386 48,721 (9,335 ) (19 %) Employee-related costs excl. share-based payment expenses 12,950 25,087 (12,137 ) (48 %) Share-based payment expenses 1,646 616 1,030 167 % Depreciation, amortization and other costs 16,354 27,183 (10,829 ) (40 %) Total Research and development expenses 70,336 101,607 (31,271 ) (31 %) Our research and development expenses consisted primarily of external costs, such as startup fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials, and costs related to acquiring and manufacturing clinical study materials. Research and development expenses decreased by $31.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to a decrease in most items of expenses, partially offset by an increase in share-based payment expenses. External clinical-related expenses decreased by $9.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to cost containment measures implemented starting the second half of 2020. Employee-related costs, excluding share-based payment expenses, decreased by $12.1 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to the workforce reduction we implemented as part of our 2020 global restructuring plan. The average workforce dedicated to Research and Development decreased from 186 employees in 2020 to 67 employees in 2021. 91 Table of Contents The decrease in depreciation, amortization and other costs was primarily due to the decrease in inventory depreciation, as we wrote down any inventories and work in progress to zero pending regulatory approval in the third quarter of 2020 following the CRL received from the FDA in August 2020. This variation was partially offset by the accrual recorded in the amount of the difference between our current best estimates of costs yet to be incurred and revenues yet to be recognized for the completion of the Phase II clinical trial conducted as part of the Nestlé agreement. Our share-based payment expenses increased by $1.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 because we recognized share-based payment income for the year ended December 31, 2020 triggered by the reversal of share-based payment expenses due to employees’ departures in the context of our global restructuring plan. Sales and Marketing Expenses The following table summarizes our sales and marketing expenses for the years presented: December 31, (Dollar amounts presented in thousands) 2021 2020 $ change % change Sales and marketing expenses External professional services expenses 1,577 3,216 (1,639 ) (51 %) Employee-related costs excl. share-based payment expenses 1,573 7,334 (5,761 ) (79 %) Share-based payment expenses (income) 312 (2,117 ) 2,429 (115 %) Depreciation, amortization and other costs 925 1,446 (521 ) (36 %) Total Sales and marketing expenses 4,387 9,879 (5,492 ) (56 %) Sales and marketing expenses primarily included payroll for the U.S. employees for $1.6 million for the year ended December 31, 2021 compared to $7.3 million the year ended December 31, 2020, as well as fees related to pre-commercialization activities for Viaskin Peanut in North America for $1.6 million for the year ended December 31, 2021 compared to $3.2 million the year ended December 31, 2020. Sales and marketing expenses decreased by $5.5 million for the year ended December 31, 2021 compared to the year ended December 31, 2021, primarily due to a decrease in employee-related costs and external professional services, partially offset by share-based payment expenses. Employee-related costs, excluding share-based payments expenses, decreased by $5.8 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to the workforce reduction we implemented as part of our 2020 global restructuring plan. The average workforce dedicated to sales and marketing decreased in comparison to 2020, from 22 employees to 4 employees in 2021. External professional services expenses decreased by $1.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily as a result of budget discipline measures. The share-based payment expense recognized for the year ended December 31, 2021 and the income recognized for the year ended December 31, 2020 was triggered by the reversal of share-based payment expenses due to employees’ departures in the context of our restructuring plan 92 Table of Contents General and Administrative Expenses The following table summarizes our general and administrative expenses for the years presented: December 31, (Dollar amounts presented in thousands) 2021 2020 $ change % change General and administrative expenses External professional services fees 7,944 12,684 (4,740 ) (37 %) Employee-related costs excl. share-based payment expenses 8,194 9,534 (1,339 ) (14 %) Share-based payment expenses 1,163 372 791 213 % Depreciation, amortization and other costs 13,219 12,492 (727 ) (6 %) Total General and administrative expenses 30,520 35,081 (4,561 ) (13 %) General and administrative expenses decreased by $4.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to cost containment measures and decreased external professional fees, partially offset by an increase in share-based payment expenses. The lower share-based payment expense recognized for the year ended December 31, 2020 as compared to the share-based payment expense recognized for the year ended December 31, 2021 was partially triggered by the reversal of share-based payment expense due to employees’ departures in the context of our 2020 global restructuring plan The average workforce dedicated to general and administrative expenses decreased from 63 employees in 2020 to 31 employees in 2021. Insurance policies increased by $1.5 million, mainly due to the increase in Directors and Officers insurance premium. Restructuring The following table summarizes restructuring costs as of December 31, 2021 and 2020 included in the statement of operations: December 31, (Amounts in thousands of U.S. Dollars) 2021 2020 Employee-related (income) expenses (920 ) 19,194 Effects of restructuring on leases — 2,028 Other restructuring costs — 2,330 Total restructuring (income) expenses (920 ) 23,552 We initiated a global restructuring plan in June 2020 to provide operational latitude to progress in the clinical development and regulatory review of investigational Viaskin™ Peanut in the United States and European Union. Full implementation of the organization-wide cost reduction measures was completed during the second half of 2021, which resulted in a reduction of more than 200 jobs and in a remaining global team of about 90 people dedicated to the pursuit of innovation and scientific development of novel therapies. The restructuring costs were mainly comprised of payroll expenses, restructuring-related consulting and legal fees, as well as impairment of facilities and right of use assets following resizing of facilities. 93 Table of Contents The following table summarizes restructuring flows for the years endeds December 31, 2020 and 2021 included in current provisions and other current liabilities on the statement of consolidated financial position: (Amounts in thousands of U.S. Dollars) Restructuring liabilities Restructuring liability—January 1, 2020 — Restructuring costs 23,552 Restructuring costs—non cash items (2,028 ) Amounts paid (12,137 ) Restructuring liability—December 31, 2020 9,387 of which current contingencies 1,993 of which other current liabilities 7,394 Restructuring liabilities Restructuring liability—January 1, 2021 9,387 Restructuring costs — Amounts paid (7,747 ) Reversal of contingencies (920 ) Other effect including currency translation effect (282 ) Restructuring liability—December 31, 2021 438 of which current contingencies — of which other current liabilities 438 The reversal of contingencies is mainly comprised of unused accruals related to payroll. Financial income (loss) Our financial income was $0.4 million in 2021, compared to a loss of $0.7 million in 2020 and primarily includes the financial income on our financial assets and foreign exchange losses. Liquidity and Capital Resources Financial Condition On December 31, 2021, we had $77.3 million in cash and cash equivalents compared to $196.4 million of cash and cash equivalents on December 31, 2020. We have incurred operating losses and negative cash flows from operations since our inception. Net cash used for operating activities was $108.2 and $165.6 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we recorded a net loss of $97.8 million. Sources and Material Cash Requirements Based on our current operations, as well as our plans and assumptions as revised pursuant to its change of strategy announced in December 2021 and accepted by the FDA, we expect that our balance of cash and cash equivalents of $77.3 million as of December 31, 2021 will be sufficient to fund our operations into the first quarter of 2023. 94 Table of Contents We fund short-term cash requirements primarily from payments associated with research tax credits ( Crédit d’Impôt Recherche ) . During the years ended December 31, 2021 and 2020, we obtained the following financing on the public markets by issuance of securities, net of commissions and estimated offering expenses: Equity capital Bank Loans Other debt Total (Amounts in thousands of U.S. Dollars) 2020 150,010 — — 150,010 2021 — — — — Total 150,010 — — 150,010 In February 2020, the Company announced the closing of an underwritten global offering of an aggregate of 7,500,000 ordinary shares in (i) a public offering of 4,535,581 ordinary shares in the form of 9,071,162 American Depositary Shares (“ADSs”) in the United States, Canada and certain countries outside Europe at a public offering price of $10.25 per ADS (on the basis of an exchange rate of $1.0999 = €1.00), and (ii) an offering exclusively addressed to qualified investors in Europe (including France) of 2,964,419 ordinary shares at an offering price of €18.63 per ordinary share (together, the “Global Offering”). In March 2020, the Company announced that the underwriters partially exercised their option to purchase 338,687 additional ordinary shares in the form of 677,374 ADSs at an offering price of $10.25 per ADS, before deducting commissions and estimated offering expenses (the “Option”). The Option closed on March 4, 2020. Consequently, following partial exercise of the Option, the total number of ordinary shares sold in the global offering was 7,838,687 ordinary shares, including 4,874,268 ordinary shares in the form of 9,748,536 ADSs, bringing the total gross proceeds from the global offering to $160.7 million and net proceeds of $150.0 million. We have incurred net losses each year since our inception. Substantially all of our net losses resulted from costs incurred in connection with our development programs and from general and administrative expenses associated with our operations. We have not incurred any bank debt. As of the date of the filing, our available cash is not projected to be sufficient to support our operating plan for at least the next 12 months. As such, there is substantial doubt regarding our ability to continue as a going concern. We intend to seek additional capital as we prepare for the launch of Viaskin Peanut, if approved, and continue other research and development efforts. We may seek to finance our future cash needs through a combination of public or private equity or debt financings, collaborations, license and development agreements and other forms of non-dilutive financings. We cannot guarantee that we will be able to obtain the necessary financing to meet our needs or to obtain funds at attractive terms and conditions, including as a result of disruptions to the global financial markets due to the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic has already caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to us, including reduced ability to raise additional capital when needed or on acceptable terms, if at all. If we are not successful in our financing objectives, we could have to scale back its operations, notably by delaying or reducing the scope of its research and development efforts or obtain financing through arrangements with collaborators or others that may require us to relinquish rights to its product candidates that we might otherwise seek to develop or commercialize independently. 95 Table of Contents The following table presents our material cash requirements for future periods: Material Cash Requirements Due by the Year Ended December 31, 2022 2023-2024 2025-2026 Thereafter Total (Amounts in thousands) Conditional advances 510 — — — 510 Operating leases 3,003 4,715 1,343 1,089 10,150 Purchase obligations—Obligations Under the Terms of CRO Agreements 22,840 7,455 — — 30,294 Total 26,353 12,170 1,343 1,089 40,954 The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including interest on long-term debt, fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty. Future events could cause actual payments to differ from these estimates. Conditional advances In 2014, BpiFrance Financement granted an interest-free Innovation loan to DBV Technologies to help financing the pharmaceutical development of Viaskin™ Milk. This amount was received in a single disbursement on November 27, 2014. In 2020, due to the COVID-19 pandemic, Bpifrance postponed the repayments for a 6-month period. Repayment will end during the third quarter of 2022. Operating leases Our corporate headquarters are located in Montrouge, France. Our principal offices occupy a 4,470 square meter facility, pursuant to a lease agreement dated March 3, 2015 and represents a $4.4 million cash requirement as of December 31, 2021 which expires March 8, 2024. Our primary U.S. office is located in Summit, New Jersey. In September 2016, we entered into a lease for a commercial facility of 8,919 square feet in Summit, New Jersey, which intended to support the launch and commercialization of Viaskin Peanut in North America, if the appropriate regulatory approvals were received. In July 2018, we entered into a lease for an additional 12,629 square feet in the same building and made both leases co-terminus on July 10, 2028. This lease included extension options of two five-year periods. The Summit offices represent a $5.2 million cash requirement as of December 31, 2021 which expires July 10, 2028. In light of our global restructuring and the current stage of regulatory interactions regarding Viaskin Peanut, the company entered into a termination agreement for its U.S. office. The agreement provided for the termination of the lease effective on February 1, 2022, in exchange for a one-time lump sum early termination fee. Right of use and related lease debt will be adjusted in the 2022 financial period. We also have facilities in North America that were initially intended to support our U.S. subsidiary as well as future commercialization needs. We lease 3,780 square feet of office space in Tower 49, New York, New York. This lease is for a period of 65 months and expires on February 25, 2023. In light of our global restructuring, the current stage of regulatory interactions regarding Viaskin Peanut, and the ongoing COVID-19 pandemic, we entered into a sublease agreement of this office space in June 2021. The NYC office represents a $0.4 million cash requirement as of December 31, 2021 until the first quarter of 2023. Purchase obligations—Obligations Under the Terms of CRO Agreements In connection with the launch of our clinical trials for Viaskin Peanut and Viaskin Milk, we signed agreements with several contract research organizations. Expenses associated with the ongoing trials amounted globally to 96 Table of Contents $94.9 million. As of December 31, 2021, the amount we are still obligated to pay in connection with these contracts through 2024 is $30.3 million. Cash flows The table below summarizes our sources and uses of cash for the years ended December 31, 2021 and 2020. December 31, $ change % change (Amounts in thousands of U.S. Dollars) 2021 2020 Net cash flows used in operating activities (108,242 ) (165,607 ) 57,365 (35 %) Net cash flows used in investing activities (433 ) (2,865 ) 2,433 (85 %) Net cash flows provided by financing activities 274 149,548 (149,273 ) (100 %) Effect of exchange rate changes on cash and cash equivalents (10,651 ) 22,022 (32,673 ) (148 %) Net (decrease) increase in cash and cash equivalents (119,051 ) 3,097 (122,149 ) * * Percentage not meaningful Operating Activities Our net cash flows used in operating activities were $108.2 million and $165.6 million in 2021 and 2020 respectively. Our net cash flows used in operating activities decreased by $57.4 million, or 35%, mainly due to cost containment measures and the decrease in personnel expenses related to the workforce reduction as part of our 2020 global restructuring plan. Cash flows used in operating activities for the year ended December 31, 2021 includes restructuring costs paid for $7.0 million. Investing Activities Our net cash flows used in investing activities were $0.4 million and $2.9 million in 2021 and 2020 respectively. Those investments were mainly for our industrial machinery and equipment, which are commissioned in order to support the commercialization of Viaskin Peanut, if approved. Financing Activities Our net cash flows resulting from financing activities decreased to $0.3 million in 2021 from $149.5 million in 2020. For the year ended December 31, 2020, financing activities are primarily composed of the net proceeds of our February underwritten global offering. Consistent with customary practice in the French securities market, we entered into a liquidity agreement ( contrat de liquidité ) with Natixis on April 13, 2012. The liquidity agreement complies with applicable laws and regulations in France. The liquidity agreement authorizes Natixis to carry out market purchases and sales of our shares on Euronext Paris. The amount is classified in other non-current financial assets in our statement of financial position. At December 31, 2021, 153,631 shares and $0.2 million were in the liquidity account. The liquidity agreement has a term of one year and will renew automatically unless otherwise terminated by either party. Critical Accounting Policies and Significant Judgments and Estimates Our financial statements are prepared in accordance with U.S. GAAP. Some of the accounting methods and policies used in preparing our financial statements under U.S. GAAP are based on complex and subjective assessments by our management or on estimates based on past experience and assumptions deemed realistic and reasonable based on the facts and circumstances concerned. The actual value of our assets, liabilities and 97 Table of Contents shareholders’ equity and of our earnings could differ from the value derived from these estimates if conditions changed and these changes had an impact on the assumptions adopted. We believe that the most significant management judgments and assumptions in the preparation of our financial statements are described below. See Note 1 to our financial statements for a description of our other significant accounting policies. Revenue Recognition —Collaboration agreement with Nestlé Health Science On May 31, 2016, we announced our entry into an exclusive global collaboration with Nestlé Health Science to develop MAG1C, a ready-to-use and standardized atopy patch test tool for the diagnosis of cow’s milk protein allergy in infants and toddlers. Under the terms of the exclusive collaboration, we are responsible for leading the development activities of MAG1C up through a pivotal Phase III clinical program, and if appropriate regulatory approvals are received, Nestlé Health Science will support the commercialization of MAG1C globally, while prioritizing certain agreed-upon countries. We entered into an amendment with Nestlé Health Science on July 12, 2018. We are eligible to receive up to €100.0 million in potential development, clinical, regulatory and commercial milestones, inclusive of a non-refundable upfront payment of €10.0 million that we received in July 2016. In 2021 as in 2020, the ongoing COVID-19 pandemic impacted our current clinical trials, including PII conducted as part of the development activities pursuant to the collaboration and license agreement with Nestlé Health Science. We experienced a decrease in new patients enrolling in this Phase II clinical trial and had to modify its protocols. As a result of these delays, we expect to incur additional clinical and production costs related to the PII. Based on our best estimate of the costs yet to be incurred, the measurement of progress of the PII conducted as part of the agreement has been revised and the revenue recognized recorded accordingly. The accrual recorded in the amount of the difference between our current best estimates of costs yet to be incurred and revenues yet to be recognized for the completion of the PII has also been updated accordingly. The revision of the estimated costs for the year ended December 31, 2020 was $4.0 million compared to December 31, 2021, $9.8 million. Our estimation of costs yet to be incurred and revenues yet to be recognized for the completion of the PII contains uncertainties because they require management to make assumptions and to apply judgment to estimate future cost and timeline for new patient enrollment in this PII. These estimates are subjective and our ability to achieve current best estimates is affected by factors such as ongoing COVID-19 pandemic. Share-Based Compensation We have various share-based compensation plans for employees and non-employees. We account for share-based compensation in accordance with the authoritative guidance on share-based compensation. Under the fair value recognition provisions of this guidance, share-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. Determining the fair value of the share-based payments at the grant date requires judgment. We calculated the fair value of stock options on the grant date using the Black-Scholes option pricing model. The Black-Scholes model requires the input of highly subjective assumptions, including the expected volatility, expected term, risk- free interest rate and dividend yield. Exercise price The exercise price of our stock options is based on the fair market value of our ordinary shares. Risk-free interest rate The risk-free interest rate is based on French government bonds (GFRN) with a maturity corresponding to the maturity of the share options. 98 Table of Contents Expected term We determine the expected term based on the average period the stock options are expected to remain outstanding. Expected volatility We determine the expected volatility based on the historical data period corresponding to the stock options expected maturity. Expected dividend yield We have never declared or paid any cash dividends and we do not presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero. In the following table, the weighted average fair value of underlying shares are provided in euros, as we are incorporated in France and the euro is the currency used for the grants. We estimated the following assumptions for the calculation of the fair value of our stock options: Assumptions per year ended December 31, Stock options per grant date 2020 2021 Weighted average shares price at grant date (in €) 5.54 5.71 Weighted average expected volatility 87.3 % 90.2 % Weighted average risk-free interest rate (0.5 )% (0.06 )% Weighted average expected term (in years) 6.0 6.0 Dividend yield 0 0 Weighted average fair value of stock-options (in €) 3,90 4,17 * The weighted average fair value of underlying shares is presented in euros, as we are incorporated in France and the euro is the currency used for the grants. During the year ended December 31, 2021, pursuant to the authorization granted by the General Meeting of the Shareholders held on May 19, 2021, the Company offered the directors the opportunity to subscribe for warrants to purchase ordinary shares on May 19, 2021, and on June 3, 2021, the directors subscribed for warrants to purchase an aggregate of 39,185 ordinary shares. These warrants have a contractual life of 4 years from their date of issuance and are not subject to a performance condition. Unless otherwise decided by our board of directors, these warrants may be exercised at any time prior to their expiration, provided that the beneficiary still holds a seat on our board of directors at the time of exercise, and subject to applicable French laws and regulations applicable to companies whose securities are listed on a regulated stock market. The fair value of the warrants has been estimated using the Cox-Ross Rubinstein binomial option pricing model. Warrant fair value assumptions during the year ended December 31, 2021 Weighted average share price at grant date (in €) 10.75 Weighted average expected volatility 90.0 % Weighted average risk-free interest rate (0.53 )% Weighted average expected term (in years) 3.21 Dividend yield — Weighted average fair value of warrants (in €) — Smaller Reporting Company Status We are a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended. We may, and intend to, take advantage of certain of the scaled disclosures available to smaller reporting companies and 99 Table of Contents will be able to take advantage of these scaled disclosures for so long as we are a smaller reporting company. We may be a smaller reporting company in any year in which (i) the market value of our voting and non-voting ordinary shares held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) (a) our annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of our voting and non-voting ordinary shares held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 8. Financial Statements and Supplementary Data. The financial statements required by this item are set forth beginning on page F-1 of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.