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Savara Inc (SVRA)·Q4 2019 Earnings Summary

Executive Summary

  • Q4 2019: Net loss was $31.7M with diluted EPS of $(0.72); operating expenses were $31.5M including $19.4M in non-cash goodwill impairment; year-end cash, cash equivalents and short-term investments totaled $121.8M .
  • Management reported positive open‑label IMPALA data in aPAP showing sustained or improved gas exchange and patient‑reported outcomes over longer exposure, and confirmed intent to run a second Phase 3 (IMPALA 2) with continuous daily dosing vs placebo; FDA granted Breakthrough Therapy Designation for Molgradex in aPAP .
  • NTM OPTIMA Phase 2a topline: 21% MAC culture conversion, none in MABSC; 14 SAEs and 3 deaths (unlikely related), prompting ongoing assessment of program trajectory alongside ENCORE CF study data .
  • AVAIL (AeroVanc) pediatric enrollment will stop in Q2 2020 at ~140 vs 150 planned, with top‑line now expected early 2021; management noted potential impact on statistical power; COVID‑19 drove decision to cap enrollment and adapt conduct .
  • Potential stock reaction catalysts: Breakthrough designation, sustained IMPALA open‑label benefits and clarity on IMPALA 2 design/initiations; AeroVanc top‑line timing and any updates on NTM program .

What Went Well and What Went Wrong

What Went Well

  • FDA Breakthrough Therapy Designation for Molgradex in aPAP, increasing regulatory engagement cadence; “We believe this designation… is an important development” .
  • IMPALA open‑label period showed maintained or enhanced improvements vs baseline in A‑aDO2, DLCO, SGRQ, 6MWD; placebo patients transitioning to active drug caught up to continuous dosing group; “data… could not have been more convincing” .
  • Strong liquidity and financing: year‑end cash and short-term investments of ~$121.8M and private placement with potential proceeds up to $75M; debt refinanced in Jan 2020, positioning to fund IMPALA 2 .

What Went Wrong

  • IMPALA missed primary endpoint in the double‑blind period and company decided against regulatory filing based on current data; focus shifted to definitive IMPALA 2 .
  • NTM OPTIMA topline was underwhelming: MAC conversions in 5/24 (21%), none in MABSC; high SAE burden including 3 deaths (unlikely related), leading to reassessment of NTM strategy pending ENCORE .
  • COVID‑19 disrupted CF studies; AVAIL pediatric enrollment capped at ~140 vs 150, with management acknowledging a few percentage‑point impact on powering and heightened operational risk .

Financial Results

MetricQ2 2019Q3 2019Q4 2019
Net Loss ($USD Millions)$21.939 $12.4 $31.719
Diluted EPS ($USD)$(0.57) $(0.30) $(0.72)
R&D Expense ($USD Millions)$10.464 $9.6 $8.723
G&A Expense ($USD Millions)$4.211 $2.8 $3.296
Cash & Short‑Term Investments ($USD Millions)$111.732 $106.3 $121.761
Debt Outstanding ($USD Millions)$24.8 ~$25.0 $25.1
Consensus EPSUnavailable*Unavailable*Unavailable*
Consensus RevenueUnavailable*Unavailable*Unavailable*

*Estimates unavailable due to S&P Global request limits; Values would be retrieved from S&P Global.

KPIs (IMPALA Open‑Label and Study Operations)

KPIWeek 24 (DB)Week 48 (OL)Week 72 (OL)
A‑aDO2 improvement – OD group (mmHg)−12.1 −12.2 −18.8
A‑aDO2 improvement – PBO→Molgradex (mmHg)−8.8 −14.6 −17.0
DLCO improvement – OD group (% predicted)+11.6 +13.7 +19.8
DLCO improvement – PBO→Molgradex (% predicted)+3.9 +14.2 +18.0
SGRQ improvement – OD group (points)−12.3 −13.1 −17.4
SGRQ improvement – PBO→Molgradex (points)−4.7 −14.7 −14.9
6MWD improvement – OD group (meters)+39.6 +48.9 +71.7
6MWD improvement – PBO→Molgradex (meters)+6.0 +40.4 +29.9
WLL procedures (count; rate)33 total (9 OD; 17 PBO) 5 total 5 total; pre‑study 0.8 vs OL 0.055 per pt‑yr
IMPALA open‑label completions & dropout128 completed; 7% dropout overall 68 to week 48 60 to week 72

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
IMPALA 2 design (aPAP)2020 planningOngoing FDA/EMA dialogues; second Phase 3 under consideration Single continuous daily dosing arm vs placebo; DLCO primary; 48‑week treatment; initiate ASAP; timing TBD Clarified design; focused on definitive study
Regulatory filing based on IMPALA2019–2020Explore EMA suitability; assess IMPALA for BLA; await FDA Type C response No filing based on current data in any geography; prioritize IMPALA 2 Shifted to development path
AVAIL pediatric enrollment2019–2020Target 150; complete H1’20; top‑line late 2020/early 2021 Enroll until Q2’20; anticipate ~140; top‑line early 2021 Lowered target; timeline maintained
Cash runway / financing2019Cash $111.7M; runway into 2021 Cash & ST investments $121.8M; private placement up to $75M; debt refinanced Jan 2020 Strengthened liquidity
NTM program (OPTIMA/ENCORE)2019–2020OPTIMA topline Q1’20; ENCORE enrolling ~30 CF patients OPTIMA topline: 21% MAC conversions, none MABSC; reassess after ENCORE; COVID limited ENCORE to 14 Strategy under review

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2019)Previous Mentions (Q3 2019)Current Period (Q4 2019)Trend
Regulatory path for aPAP (FDA/EMA)Type C written responses due Oct; potential Breakthrough; totality of data emphasized FDA said data insufficient for efficacy/safety; continued dialogue; plan EMA engagement No filing based on current data; proceed to IMPALA 2; Breakthrough granted From exploratory to defined confirmatory plan
IMPALA open‑label outcomesAnticipated further reduction in WLL; open‑label completing by early Q1’20 KOL support; dose‑frequency dependency observed Sustained/improved A‑aDO2, DLCO, SGRQ, 6MWD; sharp WLL rate reduction Strengthening efficacy narrative
NTM (OPTIMA/ENCORE)OPTIMA topline Q1’20; ENCORE enrolling CF OPTIMA progressing; ENCORE active OPTIMA mixed; 21% MAC conversions; none MABSC; high SAE rate; plan to reassess post ENCORE Cautious outlook; reassessment
AeroVanc (AVAIL)Enrollment challenged; complete H1’20; top‑line late 2020/early 2021 123/150 pediatric enrolled; reaffirm H1’20 completion Pediatric ~140 expected; top‑line early 2021; COVID impacts acknowledged Slightly slower; COVID constraints
Financing & cashCash $111.7M; runway into 2021 Cash $106.3M Cash+ST $121.8M; private placement up to $75M; debt refinance Improved liquidity
COVID‑19 impactNot applicableNot applicableEnrollment/travel challenges; precautions; may cap AVAIL enrollment Operational risk management

Management Commentary

  • “We ended 2019 with positive momentum… additional funding… entering 2020 in a very strong cash position and able to execute on all our corporate priorities.” – CEO Rob Neville .
  • “Data… demonstrated that removing surfactant… translate into a meaningful improvement in gas exchange… improvements continued after longer duration.” – CMO Badrul Chowdhury .
  • “Our number 1 priority is to plan a second Phase 3 clinical study… daily dosing regimen of Molgradex compared to placebo.” – CMO Badrul Chowdhury .
  • “While the results were not quite what we had hoped for [in OPTIMA]… we will continue to assess the full data set… and make decisions about the future of our NTM program.” – COO Taneli Jouhikainen .
  • “As of December 31, 2019, we had cash, cash equivalents, and short-term investments of approximately $122 million… net loss was $31.7 million or $0.72 per share.” – CFO Dave Lowrance .

Q&A Highlights

  • Accelerated approval off IMPALA data: Company decided against filing and will pursue a definitive Phase 3 (IMPALA 2), given data shortcomings and precedent; regulatory plan centers on IMPALA+IMPALA 2 for approval .
  • AVAIL powering: Reducing pediatric enrollment to ~140 impacts power by “a few percent points,” not viewed as a major impact .
  • EMA interactions: FDA alignment first; EMA discussions to follow with convergent design .
  • OPTIMA safety context: 3 deaths reflect severe, advanced disease; not related to study drug; efficacy anecdotes to be examined, but microbiology endpoints drive relevance .
  • COVID‑19: Travel and safety concerns led to capping AVAIL enrollment; company implementing protocols and monitoring impact .

Estimates Context

  • Street consensus comparisons for Q4 2019 EPS and revenue are unavailable due to S&P Global request limits; Savara is pre‑revenue and Q4 included a $19.4M non‑cash goodwill impairment, materially affecting EPS .
  • Given the decision to forgo filing on current data and invest in IMPALA 2, we expect Street models to shift OpEx/milestone timing and extend timelines; AeroVanc pediatric enrollment reduction may slightly lower Phase 3 power and extend top‑line to early 2021 .
  • Estimates unavailable; Values would be retrieved from S&P Global.

Key Takeaways for Investors

  • The aPAP program regained momentum: open‑label IMPALA data show durable and improving efficacy across gas exchange and PROs; IMPALA 2 design clarity (continuous daily dosing, DLCO primary) reduces execution risk .
  • Regulatory path de‑risked by Breakthrough Therapy Designation and plan to run a definitive confirmatory trial; expect increased FDA interactions .
  • Liquidity is strong to fund near‑term priorities; financing up to $75M and $121.8M cash/short‑term investments provide runway for IMPALA 2 and ongoing programs .
  • NTM program is mixed; MAC signals are modest and absent in MABSC, with significant SAE burden—wait for ENCORE CF data before ascribing value .
  • AVAIL remains a potential 2021 catalyst; expect ~140 pediatric enrollments due to COVID; top‑line early 2021; monitor statistical power and efficacy signals .
  • Near‑term trading implication: headlines on IMPALA 2 initiation/design, further publication of IMPALA open‑label data, and any COVID‑related operational updates likely drive stock moves; medium‑term thesis hinges on successful IMPALA 2 execution and AeroVanc readout .
  • Risk monitoring: regulatory feedback shifts, trial operational risks from COVID‑19, and capital allocation across three late‑stage programs should be tracked closely .