Savara Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Savara is a clinical-stage biopharmaceutical company developing inhaled molgramostim for autoimmune pulmonary alveolar proteinosis (aPAP). It had no product revenue and had not begun commercial operations.
Financial results and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $6.4 million (2021: $7.3 million) | $12.1 million (2021: $14.8 million) |
| General and administrative expense | $3.0 million (2021: $3.2 million) | $5.3 million (2021: $5.9 million) |
| Net loss | $9.2 million (2021: $10.9 million) | $17.5 million (2021: $21.2 million) |
| Basic and diluted loss per share | $0.06 (2021: $0.07) | $0.11 (2021: $0.18) |
| Cash used in operating activities | Not separately stated | $17.7 million (2021: $21.8 million) |
At June 30, cash and cash equivalents were $95.2 million and short-term investments were $47.3 million, totaling $142.4 million; the company reported this funding was sufficient for operations for the twelve months after the financial statements were issued. Total current assets were $145.4 million and current liabilities $3.7 million. Accumulated deficit was $318.0 million. Long-term debt was $25.9 million, with no current portion reported. No meaningful operating or gross margin is presented because the company had no product revenue.
Cash and cash equivalents increased $61.1 million during the first half, largely reflecting $78.9 million of net cash provided by investment activity as securities matured or were sold. Operating cash use remained substantial. Cash plus short-term investments declined from $161.2 million at December 31, 2021 to $142.4 million at June 30, 2022.
Changes versus prior comparable periods
- First-half operating expenses fell $3.4 million, primarily because vancomycin development was wound down; R&D for molgramostim was broadly similar year over year.
- Q2 R&D declined $0.8 million, mainly from timing of molgramostim contract research costs and the end of vancomycin activities. G&A also declined, reflecting streamlined administrative and compensation costs.
- Net loss narrowed by $3.7 million for the first half. Lower interest expense and tax-credit income contributed to the improvement.
- First-half 2021 cash flows included $122.1 million in net public-offering proceeds; there were no comparable equity-offering proceeds in first-half 2022.
Outlook, financing, and risks
- Management expects significant expenses and operating losses for at least the next several years while advancing molgramostim and pursuing regulatory approval. R&D costs are expected to remain significant, including for clinical work, regulatory support, manufacturing, and a second-source manufacturer. No specific earnings or revenue guidance was provided.
- The April 2022 amended $26.5 million term loan refinanced prior Silicon Valley Bank debt. It carries a floating interest rate based on the greater of 3% and the Wall Street Journal prime rate less 0.5%; interest-only payments run through April 2026, followed by scheduled principal and interest through April 2027. The loan is secured by company assets and includes financial covenants, including cash requirements if cash falls below $40 million.
- In June, molgramostim received a UK Innovation Passport, an entry point to a program intended to facilitate development and access; this is not marketing approval.
- Key uncertainties include clinical-trial outcomes and timing, regulatory approval, ability to raise additional capital, and potential COVID-19-related enrollment or supply-chain disruption. The company also cited possible supply and cost impacts from the Russia-Ukraine conflict. Management said the conflict was not then expected to materially affect current operations, but its full impact remained uncertain.
- The IMPALA-2 contract research work order was estimated at approximately $33 million over the trial. Additional contingent manufacturing milestones totaled $3.1 million and were not recognized because they were not considered probable and reasonably estimable; future product royalties would also apply.
- No material pending litigation or material changes to previously disclosed risk factors were reported. Management concluded disclosure controls and internal control over financial reporting were effective at June 30, 2022.
Important facts for investors to verify
- Latest IMPALA-2 enrollment, timing, costs, and clinical results, including any effects from COVID-19 or trial-site disruptions.
- Whether the stated cash runway remains adequate as clinical, manufacturing, and regulatory spending progresses, and whether additional financing will be needed.
- Current interest rate, covenant compliance, and the implications of the loan’s security and cash-balance requirements.
- Potential dilution: the filing lists 38.8 million outstanding warrants and 7.2 million options and nonvested restricted stock units; reported weighted-average shares for EPS also include pre-funded warrants.
- Progress toward regulatory approval and the significance of the UK Innovation Passport, which does not itself assure approval or commercialization.