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SI

Savara Inc (SVRA)·Q1 2020 Earnings Summary

Executive Summary

  • Q1 2020 net loss was $15.4M ($0.27 per share); R&D rose to $13.2M largely due to a $5.4M Apulmiq licensing expense, partially offset by lower Molgradex and AeroVanc development costs .
  • Cash, cash equivalents and short-term investments totaled $104.987M; debt was $24.731M. Management projects sufficient capital to fund operations into 2022 (including an anticipated $46M second tranche from the Dec. financing) .
  • COVID-19 drove early closure of enrollment in AVAIL (AeroVanc) and ENCORE (Molgradex in CF NTM), with top-line AVAIL results still expected in early 2021; adult AVAIL fully enrolled; younger cohort reached 133 of 150 target .
  • IMPALA 2 (Molgradex in aPAP) design clarified (randomized, double-blind, placebo-controlled, DLCO primary at week 24; 48-week treatment). Note discrepancy on dose: press release indicates 300 µg daily; CMO remarks referenced 200 µg—protocol still being finalized .
  • Near-term catalysts: IMPALA 2 protocol finalization/initiation, Apulmiq FDA discussions for confirmatory Phase 3, and AVAIL top-line in early 2021 .

What Went Well and What Went Wrong

What Went Well

  • Pipeline expansion via Apulmiq (global rights to develop/commercialize inhaled ciprofloxacin for NCFB); management: “2020 has kicked off with a strong start” and expects to work with FDA on a confirmatory Phase 3 .
  • Regulatory clarity: IMPALA 2 study design (DLCO primary; 48-week treatment) with Breakthrough Therapy Designation aiding frequent FDA engagement .
  • Cash runway: ~$105M cash and investments; confidence in funding planned operations into 2022 (CFO reiterated and cited second tranche) .
  • AVAIL progress: adult cohort fully enrolled (55/50 target); younger cohort at 133/150 despite COVID headwinds .
  • aPAP data durability: IMPALA open-label period showed sustained/improved gas exchange and PROs; IMPALA-X fully enrolled with few WLL procedures .

What Went Wrong

  • COVID-19 operational impact forced early enrollment termination in AVAIL and ENCORE; potential statistical power impact acknowledged .
  • Higher quarterly loss driven by $5.4M Apulmiq upfront (cash plus equity) recorded in R&D; YoY R&D up 31.7% .
  • Regulatory pathway: IMPALA dataset not sufficient for filing; requires a new Phase 3 (IMPALA 2), extending timeline to approval .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ3 2019Q4 2019Q1 2020
Revenue ($USD Millions)$0.00 $0.00 $0.00
Net Loss ($USD Millions)$12.4 $31.719 $15.421
EPS ($USD)$(0.30) $(0.72) $(0.27)
Research & Development ($USD Millions)$9.6 $8.723 $13.200
General & Administrative ($USD Millions)$2.8 $3.296 $2.982
Cash + Short-term Investments ($USD Millions)$106.3 $121.761 $104.987
Debt ($USD Millions)$25.0 $25.112 $24.731

Operating Expense Composition (YoY)

MetricQ1 2019Q1 2020
Research & Development ($USD Millions)$10.019 $13.200
General & Administrative ($USD Millions)$2.763 $2.982
Total Operating Expenses ($USD Millions)$12.920 $16.240

Balance Sheet Snapshot

MetricDec 31, 2019Mar 31, 2020
Cash, Cash Equivalents & Short-term Investments ($USD Millions)$121.761 $104.987
Working Capital ($USD Millions)$113.187 $99.716
Total Assets ($USD Millions)$136.203 $119.975
Total Liabilities ($USD Millions)$34.505 $32.659
Stockholders’ Equity ($USD Millions)$101.698 $87.316

Segment and KPIs

  • Segment: Single segment (specialty pharmaceuticals within respiratory) .
  • Clinical KPIs (program execution):
    • AVAIL (AeroVanc): Adult fully enrolled (55/50 target); younger cohort enrolled 133/150; top-line expected early 2021 .
    • ENCORE (Molgradex CF NTM): 14/≈30 patients enrolled; enrollment closed due to COVID-19 .
    • IMPALA-X (aPAP): 60/64 eligible enrolled; only 3 WLL procedures to date .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital runwayCompany operationsWell into 2021 Into 2022 (incl. anticipated $46M tranche) Raised
AVAIL top-line timingEarly 2021Early 2021 Early 2021 Maintained
IMPALA 2 (aPAP) plan2020Planning additional Phase 3; design discussions Randomized DBPC; DLCO primary; 48-week treatment; initiate ASAP Clarified
Apulmiq Phase 3 planning2020N/AWork with FDA to plan confirmatory Phase 3; leverage ORBIT learnings New
Debt terms milestone2021N/AInterest-only period contingent on first patient dosed by Mar 31, 2021 in Molgradex Phase 3/4 New/Constraint

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2019, Q4 2019)Current Period (Q1 2020)Trend
Regulatory path for Molgradex in aPAPFDA indicated IMPALA data insufficient; second Phase 3 likely; engaging EMA IMPALA 2 design clarified; DLCO primary; 48-week; finalize protocol; Breakthrough supports frequent FDA dialog Increasing clarity; execution focus
Trial design specificsIMPALA dosing arms explained; DLCO strong secondary; open-label durability IMPALA 2 primary DLCO; two arms (continuous vs placebo); dose mention varies (300 µg PR vs 200 µg CMO) Converging on design; dose being finalized
COVID-19 operational impactAnticipated enrollment challenges and study operations risk Enrollment closed in AVAIL/ENCORE; telemedicine and “COVID-proof” design options considered Heightened operational risk; mitigations underway
Cash runway and financing$106.3M cash + investments; runway well into 2021 ~$105M cash/investments; debt ~$25M; runway into 2022, with anticipated $46M tranche Extended runway
Apulmiq programN/AGlobal rights licensed; plan confirmatory Phase 3; robust ORBIT insights (exacerbations, P. aeruginosa load) New asset; advancing
AeroVanc AVAILEnrollment nearing; adult fully enrolled; younger cohort ongoing; top-line early 2021 Adult fully enrolled; younger at 133; enrollment closed due to COVID; top-line still early 2021 Progress with COVID impact
NTM programsOPTIMA topline planned Q1 2020; mixed microbiology expectations ENCORE half enrolled; enrollment closed; OPTIMA showed MAC conversions 21% ITT; safety profile noted Mixed efficacy; reassess after ENCORE

Management Commentary

  • CEO: “With the recent clarity around the IMPALA 2 study design, along with the expansion of our pipeline with the Phase 3 Apulmiq development program, 2020 has kicked off with a strong start.”
  • CMO: “We expect [IMPALA 2] to be a 48-week double-blind placebo-controlled study… DLCO will serve as the primary endpoint… supported by SGRQ and treadmill exercise capacity.”
  • CFO: “As of March 31, 2020, we had approximately $105 million in cash, cash equivalents, and short-term investments, with approximately $25 million of debt… we believe we have sufficient capital to fund planned operations well into 2022.”
  • CEO on COVID: “Both studies stopped enrolling new patients at the end of March… we’ve been able to keep the majority of patients in studies through collaboration… and telemedicine visits where possible.”

Q&A Highlights

  • IMPALA 2 differences vs IMPALA: Continuous dosing only vs intermittent; DLCO primary vs A–aDO2; placebo-controlled period extended to 48 weeks .
  • COVID impact on IMPALA 2: Aim to design “COVID-proof” protocols (less frequent visits, endpoint assessments adjusted); uncertainty around potential second wave acknowledged .
  • EMA alignment: Conceptually similar design expected across regions; EMA interactions pending final protocol .
  • Patient selection (aPAP): Confirm autoimmune status; impaired DLCO at baseline to ensure room for improvement .
  • Apulmiq Phase 3 timing/funding: FDA discussions prioritized in 2020; initial activities funded, but Phase 3 initiation will require additional resources .

Estimates Context

  • S&P Global consensus estimates for Q1 2020 EPS and Revenue were unavailable at time of analysis due to access limits; therefore, we cannot assess beats/misses versus Wall Street consensus for this quarter [SPGI access error].
  • Investors should treat forward estimate comparisons as inconclusive for Q1 2020 until S&P Global data can be retrieved.

Key Takeaways for Investors

  • Near-term execution focus: Finalize and initiate IMPALA 2; any protocol clarity (dose, sample size, timelines) will be a stock catalyst .
  • Capital runway into 2022 reduces financing overhang short term; watch for the anticipated $46M tranche and warrant exercises per terms .
  • COVID-19 remains a key operational risk; management is adapting study designs and conduct, but closures may affect AVAIL power and timelines .
  • Apulmiq adds a potentially sizable orphan-lung opportunity; confirmatory Phase 3 design (exacerbation frequency endpoint, high-risk patient selection) will be critical to probability of success .
  • aPAP dataset (IMPALA/IMPALA-X) supports drug activity on gas exchange and PROs; DLCO-focused IMPALA 2 is a sensible path to address prior shortcomings .
  • AVAIL top-line in early 2021 is a meaningful binary event; reduced enrollment may modestly affect powering—factor this into risk assessment .
  • With no product revenue, valuation hinges on clinical/regulatory progress and balance sheet discipline; monitor debt covenants tied to Molgradex Phase 3 dosing milestones by Mar 31, 2021 .