Savara Inc. — Q2 2021 Form 10-Q
Business context and reporting period. The filing covers the quarter and six months ended June 30, 2021. Savara is a clinical-stage company developing treatments for rare respiratory diseases; its lead candidate, inhaled molgramostim, is in Phase 3 development for autoimmune pulmonary alveolar proteinosis (aPAP). The first patient in the IMPALA-2 trial was dosed on June 30. Savara has no product revenue and has not begun commercial operations.
Financial results and liquidity
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $7.3 million | $14.8 million |
| Total operating expenses | $10.5 million | $20.9 million |
| Net loss | $10.9 million | $21.2 million |
| Net loss per share, basic and diluted | $0.07 | $0.18 |
| Net cash used in operating activities | — | $21.8 million |
At June 30, 2021, cash and cash equivalents were $40.7 million and short-term investments were $140.0 million, totaling $180.7 million. Current assets were $183.5 million against current liabilities of $5.6 million. The company reported an accumulated deficit of $278.7 million and stated that available cash and investments were sufficient to fund operations for the 12 months following issuance of the financial statements.
Long-term debt carried a balance of $25.4 million; no short-term debt was reported. The interest-only period was extended through June 30, 2022 after the Phase 3 trial condition was met. The filing reports future minimum payments of $8.3 million in 2022 and $18.2 million in 2023.
Changes versus prior comparable periods
- Q2 research and development expense increased $1.2 million year over year, mainly from a $3.6 million increase in molgramostim costs, partly offset by reduced vancomycin activity.
- Q2 net loss increased from $9.4 million to $10.9 million. Other loss also increased, principally reflecting lower investment income.
- For the first six months, R&D expense fell $4.4 million and net loss narrowed from $24.8 million to $21.2 million. The R&D comparison reflects approximately $5.4 million of 2020 expense for the acquired inhaled liposomal ciprofloxacin program, which Savara later discontinued.
- Operating cash use was $21.8 million versus $20.8 million in the first half of 2020. Financing cash flow included $122.1 million of net proceeds from the March 2021 public offering, partly offset by a $3.9 million warrant repurchase.
Outlook, risks and notable items
- Management expects significant expenses and operating losses for at least the next several years as it advances molgramostim, including clinical development, regulatory work, and manufacturing. No product-sales revenue is expected unless and until regulatory approval and commercialization occur.
- The company may need additional capital; its July 2021 sales agreement with Evercore permits at-the-market sales of up to $60 million, subject to company direction, with a 3% commission. The agreement does not require Savara to sell shares.
- COVID-19 could affect trial recruitment, physician availability, suppliers, manufacturing, and operations. Regulatory approval and clinical success are uncertain, and failure to raise capital on acceptable terms could force delays or reductions in development plans.
- Estimated Parexel fees and pass-through costs for the IMPALA-2 trial are approximately $31 million over the trial. The filing also lists $2.9 million of manufacturing milestones that were not considered probable and reasonably estimable at June 30, plus potential product royalties.
- Vancomycin development was discontinued after its Phase 3 trial missed the primary endpoint; Savara paid approximately $0.8 million in first-half 2021 termination-related R&D costs. No material pending litigation was reported.
Important facts for investors to verify
- IMPALA-2 enrollment progress, trial timelines, and any subsequent clinical or safety updates.
- Cash burn and whether the stated 12-month liquidity runway remains adequate as trial and manufacturing costs evolve.
- Debt repayment terms and the company’s ability to meet payments after the interest-only period ends in June 2022.
- Potential dilution from outstanding warrants, equity awards, and any use of the $60 million at-the-market program.
- Whether COVID-19, supply-chain constraints, regulatory requirements, or trial results materially change development plans or funding needs.