Savara Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; it does not provide a standalone fourth-quarter financial-results breakdown. Savara is a clinical-stage biopharmaceutical company with no product sales, focused primarily on molgramostim for autoimmune pulmonary alveolar proteinosis (aPAP).
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Product revenue | None | None |
| Milestone revenue | $0 | $0.3 million |
| Research and development expense | $29.0 million | $35.0 million |
| General and administrative expense | $12.4 million | $14.3 million |
| Total operating expenses | $41.5 million | $49.6 million |
| Net loss | $43.0 million | $49.6 million |
| Net loss per share, basic and diluted | $0.32 | $0.84 |
| Cash used in operating activities | $40.1 million | $39.8 million |
- Margins: Not meaningful as Savara had no product revenue. Operating loss was $41.5 million in 2021.
- Liquidity: Year-end cash and cash equivalents were $34.0 million, short-term investments $127.2 million, and working capital approximately $150.3 million. The company stated these resources were sufficient to fund operations for at least 12 months after issuance of the financial statements.
- Debt: $25.0 million gross principal outstanding under the Silicon Valley Bank facility. The balance sheet reported $8.3 million current and $17.3 million long-term debt. Interest is the greater of prime plus 3.0% or 7.75%; principal payments were scheduled to begin July 2022 following achievement of the trial condition.
- Other balance-sheet items: Accumulated deficit was $300.5 million; in-process R&D was $11.3 million. Total assets were $176.6 million and total liabilities $32.1 million.
Material changes versus 2020
- Net loss narrowed by $6.6 million, while operating expenses declined by $8.1 million. There was no milestone revenue in 2021, compared with $0.3 million in 2020.
- R&D expense fell $6.0 million overall: lower spending on discontinued vancomycin and Apulmiq programs more than offset a $6.4 million increase in molgramostim costs as IMPALA-2 started and progressed.
- Cash from operations used was broadly similar year over year. Cash and short-term investments increased substantially, principally following the March 2021 public offering, which generated approximately $122.2 million net proceeds.
- Shares outstanding rose from 54.2 million at year-end 2020 to 114.0 million at year-end 2021. The 2021 offering included 57.5 million common shares and pre-funded warrants for 32.2 million shares, creating significant potential dilution.
Outlook, risks and unusual items
- Lead program: IMPALA-2 is a Phase 3, placebo-controlled trial of approximately 160 patients, with treatment through 48 weeks and a subsequent open-label period. Savara reported continued site activation and enrollment in 2021. At the filing date, it projected full enrollment approximately 20 months after trial initiation and top-line results in the second quarter of 2024.
- Prior trial result: The earlier Phase 3 IMPALA trial did not meet its primary endpoint. Management cited favorable trends or results on several secondary and exploratory measures, but regulatory approval remains uncertain and depends on further clinical evidence.
- Portfolio focus: Development of vancomycin was discontinued after its Phase 3 trial failed its primary endpoint; Apulmiq and molgramostim development for NTM were also discontinued. Resources are concentrated on molgramostim for aPAP.
- Funding and execution: The company expects continuing losses and may need additional capital. Failure to raise funds could delay, reduce, or end development or commercialization plans. Its loan is secured by substantially all assets other than intellectual property and includes restrictive covenants.
- Operational risks: Savara relies on outside manufacturers and CROs, including Parexel for IMPALA-2; it had not yet engaged a second-source manufacturer. Parexel fees and pass-through costs for the trial were estimated at approximately $32 million, including change orders.
- Other risks: COVID-19, supply-chain disruption, clinical enrollment and trial delays, geopolitical instability, regulatory outcomes, reimbursement and market acceptance, and potential impairment of IPR&D. The company reported no material pending legal proceedings and no IPR&D impairment for 2021.
- Audit and controls: The independent auditor gave an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not provide an opinion on internal-control effectiveness.
Key facts for investors to verify
- IMPALA-2 enrollment progress, trial conduct, and whether the projected Q2 2024 data timing remains achievable.
- How the prior IMPALA primary-endpoint failure affects regulatory requirements and the evidence needed for approval.
- Cash burn, trial and manufacturing commitments, debt repayment schedule, and whether additional financing will be required.
- Manufacturing readiness, validation status, and progress in establishing a second source for molgramostim.
- Potential dilution from pre-funded warrants, equity compensation, and any future equity financing.
- Any changes in COVID-19 or geopolitical impacts on enrollment, suppliers, costs, or trial timelines.