Savara Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Savara is a clinical-stage biopharmaceutical company focused on rare respiratory diseases; it reported no product revenue and has not begun commercial operations. Its lead candidate, inhaled molgramostim, was in Phase 3 development for autoimmune pulmonary alveolar proteinosis (aPAP).
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $5.684 million | $7.589 million |
| General and administrative expense | $2.354 million | $2.778 million |
| Total operating expenses | $8.046 million | $10.414 million |
| Net loss | $8.300 million | $10.217 million |
| Basic and diluted loss per share | $0.05 | $0.13 |
| Cash used in operating activities | $8.425 million | $9.597 million |
With no revenue, profit margins are not meaningful. At March 31, cash and cash equivalents were $79.227 million and short-term investments were $72.570 million, totaling $151.797 million, versus $161.171 million at December 31, 2021. Current assets were $154.537 million and current liabilities $16.323 million. Total debt carrying value was $25.809 million, including $12.500 million current and $13.309 million long-term. Accumulated deficit was $308.821 million. Management said available cash and investments were sufficient to fund operations for at least 12 months after issuance of the financial statements.
Changes and management outlook
- Net loss narrowed by $1.917 million year over year, largely as R&D costs fell by $1.905 million. Lower vancomycin wind-down costs (about $2.5 million) more than offset roughly $0.6 million higher molgramostim costs for trial screening, enrollment and manufacturing-related work.
- G&A expense declined $0.424 million, primarily due to lower administrative and compensation costs following operational streamlining. Other income/expense shifted from $0.197 million income to $0.254 million expense, mainly because tax-credit income declined.
- Operating cash use was $8.425 million. Investing activities provided $53.665 million, chiefly reflecting maturities and sales of short-term investments net of purchases; financing activities were negligible. Cash increased $45.215 million during the quarter, primarily reflecting investment portfolio movements rather than operating cash generation.
- Management expects significant R&D and other expenses and operating losses for at least the next several years as molgramostim development continues. It expects expenses to fluctuate with clinical-trial timing and says additional capital may be needed; no specific revenue or earnings guidance was provided.
- On April 21, 2022, after quarter-end, Savara refinanced its prior debt with a $26.5 million Silicon Valley Bank term loan. The loan has interest-only payments through April 2026, followed by scheduled principal payments through April 2027, subject to extension conditions. A covenant applies if cash and cash equivalents fall below $40 million; the rate is floating, at the greater of 3% or prime less 0.5%.
Risks, contingencies and unusual items
- Clinical and regulatory risk remains substantial: trial outcomes, approval, manufacturing, competition and market acceptance are uncertain. Failure to raise capital when needed could require Savara to delay, reduce or terminate development or seek partners.
- COVID-19 could disrupt trial recruitment, site activity, treatment and suppliers. The company said the Russia-Ukraine conflict could affect supply chains and trial participation, but its full impact was uncertain and it did not then expect a material impact on current operations.
- Manufacturing-related contingent milestones totaled $3.156 million at March 31; these were not recognized because they were not considered probable and reasonably estimable. Additional royalties would apply to future product sales.
- There was no material pending litigation, and the company reported no material changes to previously disclosed risk factors. Management concluded disclosure controls and internal control over financial reporting were effective as of March 31, 2022.
Important facts for investors to verify
- IMPALA-2 trial enrollment, execution, results and expected regulatory milestones for molgramostim.
- Actual quarterly cash burn and whether management’s stated liquidity runway remains adequate as development spending changes.
- The amended loan’s floating-rate cost, cash covenant thresholds, repayment schedule and any effect on financial flexibility.
- Potential dilution: 38.8 million warrants were outstanding at March 31, 2022, in addition to stock options and unvested restricted stock units; the filing reported 114.0 million common shares outstanding at quarter-end.
- Whether COVID-19, geopolitical conditions, manufacturing capacity or contingent commitments materially affect trial timing or costs.