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 EPIT TM , our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin, an epicutaneous patch (i.e., a skin patch). We have generated significant data demonstrating that Viaskin’s mechanism of action is novel and differentiated. Viaskin targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and 95 Table of Contents 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 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. We believe Viaskin may offer convenient, self-administered, non-invasive immunotherapy to patients, if approved. Our most advanced product candidate is Viaskin Peanut, which has been evaluated as a potential therapy for children with peanut allergy in nine clinical trials, including four Phase 2 trials and three completed Phase 3 trials. We recently completed a Phase 3 trial of Viaskin Peanut in children ages one to three with peanut allergy and we also have an ongoing Phase 3 trial of Viaskin Peanut in children ages four to seven with peanut allergy. 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 its current operations, plans and assumptions as revised pursuant to 2022 announcements related to EPITOPE Phase 3 study topline results and VITESSE Phase 3 partial clinical hold lift, as well as ATM and PIPE financings, the Company expects that its balance of cash and cash equivalents of $209.2 million as of December 31, 2022 will be sufficient to fund its operations for at least the next 12 months. 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 and conflict in Ukraine. The ongoing COVID-19 pandemic and conflict in Ukraine have 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, primarily 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; 96 Table of Contents • 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; • 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; • 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 has adversely affected global economies, financial markets and the overall environment in which we do business. Our ability to conduct clinical trials was and may continue to be affected by any future resurgences of 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 any future resurgences 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 97 Table of Contents 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, 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, 2022, we spent $75.5 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, 2022 and 2021, respectively: Year Ended December 31, 2022 2021 (thousands of U.S. Dollars) Research and development expenses related to Viaskin Peanut (1) $ 47,766 $ 47,961 As a percentage of research and development expenses, excluding share-based compensation expense 65 % 70 % Research and development expenses related to Viaskin Milk (1) $ 8,180 $ 5,861 As a percentage of research and development expenses excluding share-based compensation expense 11 % 9 % Other research and development expenses (1) $ 17,295 $ 14,868 Total research and development expenses, excluding share-based compensation expense $ 73,241 $ 68,690 Share-based compensation expenses included in research and development expenses $ 2,303 $ 1,646 Total research and development expenses $ 75,543 $ 70,336 (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; 98 Table of Contents • 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; • 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 2022 or 2021. 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. 99 Table of Contents 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. During the fiscal year ending December 31, 2022, the Company received the reimbursement of the 2019, 2020 and 2021 fiscal year research tax credits for a total amount of $26.1 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 3 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. Our current clinical trials, including the Phase 2 clinical trial conducted as part of the development activities pursuant to the Development, Collaboration and License agreement with Nestlé Health Science, have been impacted by the Covid-19 pandemic, among other factors. We have experienced difficulties in enrolling new patients in this Phase 2 clinical trial notwithstanding the implementation of a protocol amendment and various other strategies to improve recruitment. As a result of the accumulation of recruitment delays, we expect to incur additional clinical and production costs related to the Phase 2 clinical trial as well as delays in achievement of upcoming milestones. As of December 31, 2022, we recorded our collaboration agreement’s revenue based on our updated measurement of progress of the Phase 2 clinical trial 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 Phase 2 clinical trial has been updated accordingly. The revision of the estimated costs for the year ended December 31, 2022 was $19.8 million compared to December 31, 2021, $9.8 million. 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. 100 Table of Contents 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. 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. 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, 2022 and 2021 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, 2022 and 2021: December 31, (Dollar amounts presented in thousands, except per share amounts) 2022 2021 $ change % change Operating income $ 4,844 $ 5,708 (864 ) (15 )% Operating expenses Research and development expenses (75,543 ) (70,336 ) (5,207 ) 7 % Sales and marketing expenses (1,608 ) (4,387 ) 2,779 (63 %) General and administrative expenses (24,324 ) (30,520 ) 6,196 (20 %) Restructuring income (expenses) — 920 (920 ) (100 %) Total Operating expenses (101,475 ) (104,323 ) 2,848 (3 %) Financial income (expense) 427 425 2 1 % Income tax (70 ) 381 (451 ) (118 %) Net loss $ (96,274 ) $ (97,809 ) 1,535 (32 %) Basic/diluted Net loss per share attributable to shareholders (1.24 ) (1.78 ) 101 Table of Contents Operating Income The following table summarizes our operating income for the years presented: December 31, (Dollar amounts presented in thousands) 2022 2021 $ change % change Sales — — Other income 4,844 5,708 (864 ) (15 )% Research tax credit 5,718 7,505 (588 ) (24 %) Other operating (loss) income (874 ) (1,797 ) 923 (51 %) Total operating income 4,844 5,708 (864 ) (15 )% We generated operating income of $4.8 million for the year ended December 31, 2022 compared to $5.7 million for the year ended December 31, 2021, a decrease of 15%. The decrease in operating income is mainly attributable to the decrease in research tax credit eligible basis (studies ending in the course of 2022) and the change in the revenue recognized under the Nestlé’s collaboration agreement, as we updated the measurement of progress of the Phase 2 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) 2022 2021 $ change % change Research and development expenses External clinical-related expenses 42,248 39,386 2,862 7 % Employee-related costs excl. share-based payment expenses 10,752 12,950 (2,198 ) (17 %) Share-based payment expenses 2,303 1,646 656 40 % Depreciation and amortization 12,965 9,878 3,087 31 % Other costs 7,276 6,476 800 12 % Total Research and development expenses 75,543 70,336 5,207 7 % 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 increased by $5.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. External clinical-related expenses increased by $2.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to upfront fees for the launch of Viaskin Peanut study for children ages 4-7 during the fourth quarter ended December 31, 2022. Employee-related costs, excluding share-based payment expenses, decreased by $2.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 due to the workforce reduction following full implementation of the new organization. 102 Table of Contents The increase in depreciation, amortization was primarily due to the increase of 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 2 clinical trial conducted as part of the Nestlé agreement, partially offset by a decrease in tangible assets depreciation. Sales and Marketing Expenses The following table summarizes our sales and marketing expenses for the years presented: December 31, (Dollar amounts presented in thousands) 2022 2021 $ change % change Sales and marketing expenses Employee-related costs incl. share-based payment expenses 914 1,885 (971 ) (52 %) External professional services and other costs 694 2,502 (1,808 ) (72 %) Total Sales and marketing expenses 1,608 4,387 (2,779 ) (63 %) Sales and marketing expenses primarily included payroll for the U.S. employees as well as fees related to pre-commercialization activities for Viaskin Peanut in North America. Sales and marketing expenses decreased by $2.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to a decrease in employee-related costs, external professional services, and share-based payment expenses. Employee-related costs (including share-based payments expenses) related to payroll for the U.S. employees, decreased by $1.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, 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 2021, from 4 employees to 2 employees in 2022. External professional services and other costs decreased by $1.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily as a result of budget discipline measures of pre-commercialization activities for Viaskin Peanut in North America. General and Administrative Expenses The following table summarizes our general and administrative expenses for the years presented: December 31, (Dollar amounts presented in thousands) 2022 2021 $ change % change General and administrative expenses External professional services fees 5,947 7,944 (1,997 ) (25 %) Employee-related costs excl. share-based payment expenses 7,320 8,194 (874 ) (11 %) Share-based payment expenses 2,688 1,163 1,525 131 % Depreciation, amortization and other costs 8,369 13,219 (4,865 ) (37 %) Total General and administrative expenses 24,324 30,520 (6,196 ) (20 %) General and administrative expenses decreased by $6.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to cost containment measures and decreased external professional fees (decreased by 2.0 million), partially offset by an increase in share-based payment expenses. 103 Table of Contents The average workforce dedicated to general and administrative expenses decreased from 31 employees in 2021 to 27 employees in 2022. Depreciation, amortization and other costs decreased by $4.9 million mainly due to the decrease of insurance policies by $2.7 million, mainly due to the decrease in Directors and Officers insurance premium. Financial income (loss) Our financial income was $0.4 million in 2022 and 2021, and primarily includes the financial income on our financial assets and foreign exchange gains. Income tax Our income tax expense was $70,000 for the year ended December 31, 2022, compared to a US Tax income of $381,000 for the year ended December 31, 2021. Net loss Net loss was $96.3 million for the year ended December 31, 2022, compared to $97.8 million for the year ended December 31, 2021. Net loss per share (based on the weighted average number of shares outstanding over the period) was $1.24 and $1.78 for the year ended December 31, 2022 and 2021, respectively. Liquidity and Capital Resources Financial Condition On December 31, 2022, we had $209.2 million in cash and cash equivalents compared to $77.3 million of cash and cash equivalents on December 31, 2021. We have incurred operating losses and negative cash flows from operations since our inception. Net cash used for operating activities was $55.7 and $108.2 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we recorded a net loss of $96.3 million. Our net cash flows provided by financing activities totaled $194.1 million in 2022, mainly consisting of our global offering in the second quarter of 2022. Sources of Liquidity and Material Cash Requirements Based on its current operations, plans and assumptions as revised pursuant to 2022 announcements related to EPITOPE Phase 3 study topline results and VITESSE Phase 3 partial clinical hold lift, as well as ATM and PIPE financings, the Company expects that its balance of cash and cash equivalents of $209.2 million as of December 31, 2022 will be sufficient to fund its operations for at least the next 12 months. We fund short-term cash requirements primarily from payments associated with research tax credits ( Crédit d’Impôt Recherche ). In May 2022, we established an At-The-Market (“ATM”) program to offer and sell, including with unsolicited investors who have expressed an interest, a total gross amount of up to $100 million of American Depositary Shares (“ADSs”), each ADS representing one-half of one ordinary share of the Company The ATM program is intended to be effective through the expiration of the Company’s existing registration statement registering the ADSs to be issued under the ATM program, i.e. until July 16, 2024, unless terminated prior to such date in accordance with the sales agreement or the maximum amount of the program has been reached. The Company intent is to use the net proceeds, if any, of sales of ADSs issued under the program, together with its existing cash and cash equivalents, primarily for activities associated with potential approval and launch of Viaskin Peanut, as well as to advance the development of the Company’s product candidates using its Viaskin Platform and for working capital and other general corporate purposes. 104 Table of Contents Pursuant to the ATM program, we issued and completed sales of new ordinary shares in form ADSs for a total gross amount of $15.3 million ($14.1 million net of transaction costs), each ADS representing one-half of one ordinary shares of the Company. The new ordinary shares were issued and delivered on May 6, 2022, and represent 10.96% of the existing shares already admitted to trading by this date. In June 2022, we announced an aggregate $194 million private investment in public equity (“PIPE”) financing from the sale of 32,855,669 ordinary shares, as well as pre-funded warrants to purchase up to 28,276,331 ordinary shares. The ordinary shares were sold to the purchasers at a price per ordinary share of €3.00 (corresponding to $3.22), and the pre-funded warrants at a pre-funded price of €2.90 (corresponding to $3.11) per pre-funded warrant, which equals the per share price for the ordinary shares less the remaining €0.10 exercise price for each such pre-funded warrant. Gross proceeds from PIPE financing total $194 million ($180.4 million net of transaction costs), before deducting private placement expenses. During the years ended December 31, 2022 and 2021, 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) 2021 — — — — 2022 194,446 — — 194,446 Total 194,446 — — 194,446 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. 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 and conflict in Ukraine. The ongoing COVID-19 pandemic and the conflict in Ukraine have 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 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. The following table presents our material cash requirements for future periods: Material Cash Requirements Due by the Year Ended December 31, 2023 2024 2025 Thereafter Total (Amounts in thousands) Operating leases 2,051 1,243 71 — 3,364 Purchase obligations—Obligations Under the Terms of CRO Agreements 23,336 20,021 5,378 — 48,735 Total 25,387 21,264 5,449 — 52,099 105 Table of Contents 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 ended 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 $3.4 million cash requirement as of December 31, 2022 which expires March 8, 2024. Our primary U.S. office is located in Basking Ridge, New Jersey. In March 2022, we entered into a lease agreement, commencing on April 1, 2022 and effective for 38 months, for an office of 5,799 square feet in Basking Ridge, New Jersey. The Basking Ridge office represent a $0.4 million cash requirement as of December 31, 2022 which expires June 1, 2025. In light of the current stage of regulatory interactions regarding Viaskin Peanut, we are achieving the resizing of our facility use in North America that were initially intended to support our U.S. subsidiary as well as future commercialization needs: • In January 2022, we entered into a termination agreement for our 21,548 square feet commercial facility in Summit, New Jersey. A one-time lump sum early termination fee of $1.5 million was paid in 2022 and offset by the recognition of an income of $1.2 million due to the early termination of this lease. • In June 2021, we entered into a sublease agreement of our 3,780 square feet office space in Tower 49, New York, New York that both expire in the first quarter of 2023, simultaneously with the lease term. 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. As of December 31, 2022, expenses associated with the ongoing trials amounted globally to $126.1 million, and we had non-cancellable contractual obligations with CRO until year ended 2025 amounting to $48.7 million. 106 Table of Contents Cash flows The table below summarizes our sources and uses of cash for the years ended December 31, 2022 and 2021. December 31, $ change % change (Amounts in thousands of U.S. Dollars) 2022 2021 Net cash flows used in operating activities (55,666 ) (108,242 ) 52,576 (49 %) Net cash flows used in investing activities (100 ) (433 ) 333 (77 %) Net cash flows provided by financing activities 194,120 274 193,846 * Effect of exchange rate changes on cash and cash equivalents (6,461 ) (10,651 ) 4,190 (39 %) Net (decrease) increase in cash and cash equivalents 131,893 (119,051 ) 250,944 * * Percentage not meaningful Operating Activities Our net cash flows used in operating activities were $55.7 million and $108.2 million in 2022 and 2021 respectively. Our net cash flows used in operating activities decreased by $52.6 million, or 49%, mainly due to the reclassification in 2021 (from non-current assets to current assets) of the 2019 to 2021 research tax credit that was fully reimbursed in 2022, and also due to cost containment measures and the decrease in personnel expenses related to the workforce reduction as part of our 2020 global restructuring plan. Investing Activities Our net cash flows used in investing activities were $0.1 million and $0.4 million in 2022 and 2021 respectively. Those investments in 2021 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 increased to $194.1 million in 2022 from $0.3 million in 2021. For the year ended December 31, 2022, financing activities are primarily composed of the net proceeds of our global offering in the second quarter of 2022. 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, 2022, 149,793 shares and $0.3 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 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. 107 Table of Contents 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 3 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. Our current clinical trials, including the Phase 2 clinical trial conducted as part of the development activities pursuant to the Development, Collaboration and License agreement with Nestlé Health Science, have been impacted by the Covid-19 pandemic, among other factors. We have experienced difficulties in enrolling new patients in this Phase 2 clinical trial notwithstanding the implementation of a protocol amendment and various other strategies to improve recruitment. As a result of the accumulation of recruitment delays, we expect to incur additional clinical and production costs related to the Phase 2 clinical trial as well as delays in achievement of upcoming milestones. As of December 31, 2022, we recorded our collaboration agreement’s revenue based on our updated measurement of progress of the Phase 2 clinical trial 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 Phase 2 clinical trial has been updated accordingly. The revision of the estimated costs for the year ended December 31, 2022 was $19.8 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 Phase 2 trial 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 and conflict in Ukraine. 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. 108 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 2022 2021 Weighted average shares price at grant date (in €) 2.33 5.71 Weighted average expected volatility 98.9 % 90.2 % Weighted average risk-free interest rate 2.2 % (0.06 )% Weighted average expected term (in years) 6 6 Dividend yield 0 0 Weighted average fair value of stock-options (in €) 2.23 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. Pre-funded warrants The Company has assessed the pre-funded warrants for appropriate equity or liability classification. During this assessment, the Company determined the pre-funded warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The 2022 Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the 2022 Warrants do not provide any guarantee of value or return. Accordingly, the pre-funded warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. 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 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 109 Table of Contents 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.