SVRA 10-Q
Savara Inc (SVRA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 13, 2025, the registrant had
Table of Contents
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PART I. |
1 |
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Item 1. |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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3 |
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5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
Unregistered Shares of Equity Securities and Use of Proceeds |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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i
PART I – FINANCIAL INFORMATION
Item I. Financial Information
Savara Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
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March 31, 2025 |
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December 31, 2024 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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In-process R&D |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Savara Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
(Unaudited)
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For the three months ended March 31, |
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2025 |
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2024 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Other income (expense) |
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Interest income |
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Foreign currency exchange gain (loss) |
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( |
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Tax credit income |
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Loss on extinguishment of debt |
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( |
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— |
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Total other income, net |
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Loss before income taxes |
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( |
) |
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( |
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Income tax benefit |
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— |
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— |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Net loss per share: |
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Basic and diluted |
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$ |
( |
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$ |
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Weighted-average common shares outstanding: |
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Basic and diluted |
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Other comprehensive income (loss): |
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Gain (loss) on foreign currency translation |
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( |
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Unrealized loss on short-term |
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( |
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( |
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Total comprehensive loss |
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$ |
( |
) |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Savara Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Periods Ended March 31, 2025 and 2024
(In thousands, except share amounts)
(Unaudited)
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Stockholders’ Equity |
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Common Stock |
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Number of |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Balance on December 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon |
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— |
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— |
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— |
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Issuance of common stock for |
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— |
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— |
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— |
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— |
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— |
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Repurchase of shares for |
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( |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign exchange translation |
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— |
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— |
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— |
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— |
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Unrealized loss on short-term |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance on March 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Savara Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (continued)
Periods Ended March 31, 2025 and 2024
(In thousands, except share amounts)
(Unaudited)
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Stockholders’ Equity |
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Common Stock |
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Number of |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Balance on December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon |
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— |
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— |
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— |
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Issuance of common stock for |
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— |
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— |
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— |
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— |
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— |
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Repurchase of shares for |
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( |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign exchange translation |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Unrealized gain on short-term |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance on March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Savara Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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For the three months ended March 31, |
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2025 |
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2024 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Reduction in the carrying value of right-of-use assets |
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Foreign currency loss |
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— |
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Amortization of debt issuance costs |
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Loss on extinguishment of debt |
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Accretion on discount to short-term investments |
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( |
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( |
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Stock-based compensation |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Non-current assets |
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( |
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( |
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Accounts payable and accrued expenses and other current liabilities |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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( |
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( |
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Purchase of available-for-sale securities, net |
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( |
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( |
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Maturity of available-for-sale securities |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Repayment of long-term debt |
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( |
) |
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— |
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Proceeds from long-term debt, net |
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— |
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Proceeds from exercise of stock options |
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Repurchase of shares for minimum tax withholdings |
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( |
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( |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Increase (decrease) in cash and cash equivalents |
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( |
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Cash and cash equivalents beginning of period |
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Cash and cash equivalents end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Savara Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Nature of Operations
Description of Business
Savara Inc. (together with its subsidiaries “Savara,” the “Company,” “we” or “us”) is a clinical-stage biopharmaceutical company focused on rare respiratory diseases. The Company’s sole program, molgramostim inhalation solution ("MOLBREEVI" or "molgramostim"), is an investigational inhaled biologic, specifically an inhaled granulocyte-macrophage colony-stimulating factor ("GM-CSF") in Phase 3 development for autoimmune pulmonary alveolar proteinosis (“aPAP”). The Company and its wholly-owned domestic and foreign subsidiaries operate in one segment with its principal office in Langhorne, Pennsylvania, though a significant portion of employees work remotely.
Since inception, Savara has devoted its efforts and resources to identifying and developing its product candidates, recruiting personnel, and raising capital. Savara has incurred operating losses and negative cash flow from operations and has
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) as defined by the Financial Accounting Standards Board (“FASB”). The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments that are necessary to fairly present the statements of financial position, operations and cash flows for the periods presented. The results of operations for interim periods shown in this report are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period.
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted from these condensed consolidated financial statements, as permitted by rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The Company believes the disclosures made in these condensed consolidated financial statements are adequate to make the information herein not misleading. The Company recommends that these condensed consolidated financial statements be read in conjunction with its audited consolidated financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024. The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements. There have been no changes to the Company's significant accounting policies since the date of those financial statements.
Principles of Consolidation
The interim condensed consolidated financial statements of the Company are stated in U.S. dollars and are prepared under U.S. GAAP. These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The financial statements of the Company’s wholly-owned subsidiaries are recorded in their functional currency and translated into the reporting currency. The cumulative effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency is reported in Accumulated other comprehensive loss in the condensed consolidated balance sheet. All intercompany transactions and accounts have been eliminated in consolidation. The condensed consolidated balance sheet at December 31, 2024 has been derived from the Company's audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements.
Liquidity
As of March 31, 2025, the Company had an accumulated deficit of approximately $
The Company is currently focused on the development of MOLBREEVI for the treatment of aPAP and believes such activities will result in the continued incurrence of significant research and development and other expenses related to this program. If the Company’s product candidate does not gain regulatory approval or, if approved, fails to achieve market
6
acceptance, the Company may never become profitable. Even if the Company achieves profitability in the future, it may not be able to sustain profitability in subsequent periods. The Company intends to cover its future operating expenses through cash and cash equivalents on hand, short-term investments, and through a combination of equity offerings, debt financings, government or other third-party funding, and other collaborations and strategic alliances with partner companies. The Company cannot be sure that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to the Company or its stockholders.
The Company’s cash and cash equivalents of $
In order to mitigate risks associated with our banking deposits, the Company maintains a significant portion of its liquidity in U.S. Treasury money market funds and other short-term investments with custodial services provided by U.S. Bank, N.A., and FNZ, refer to Note 5. Short-term Investments and Note 7. Fair Value Measurements.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management’s estimates include those related to the accrual of research and development and general and administrative costs, certain financial instruments recorded at fair value, stock-based compensation, and the valuation allowance for deferred tax assets. The Company bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Accordingly, actual results could be materially different from those estimates.
Risks and Uncertainties
The product candidate being developed by the Company requires approval from the U.S. Food and Drug Administration (“FDA”) or foreign regulatory agencies prior to commercial sales. There can be no assurance that the Company’s product candidate will receive the necessary approvals. If the Company is denied regulatory approval of its product candidate, or if approval is delayed, it will have a material adverse impact on the Company’s business, results of operations, and its financial position.
The Company is subject to a number of risks similar to other life science companies, including, but not limited to, risks related to the successful discovery and development of drug candidates, raising additional capital, development of competing drugs and therapies, protection of proprietary technology, and market acceptance of the Company’s product. As a result of these and other factors and the related uncertainties, there can be no assurance of the Company’s future success.
Concentration of Credit Risk
We are subject to credit risk from our portfolio of cash equivalents and marketable securities. These investments were made in accordance with our investment policy which specifies the categories, allocations, and ratings of securities we may consider for investment. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. We maintain our cash and cash equivalents and marketable securities with a limited number of financial institutions. Deposits held with the financial institutions exceed the amount of insurance provided on such deposits. We are exposed to credit risk in the event of a default by the financial institutions holding our cash, cash equivalents and marketable securities to the extent recorded on the consolidated balance sheets.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The amendments in this update should be applied prospectively, with an option to apply them retrospectively, and are effective for fiscal years beginning after December 15, 2024 for public entities. We began an assessment of the impact that this guidance will have on our consolidated financial statements and related disclosures, and our analysis is currently ongoing.
In March 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), to
7
improve the disclosures about a public business entity’s expenses and to provide more detailed information about the types of expenses in commonly presented expense captions. The amendments in this update should be applied either prospectively or retrospectively, and are effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. We began an assessment of the impact that this guidance will have on our consolidated financial statements and related disclosures, and our analysis is currently ongoing.
3. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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March 31, 2025 |
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December 31, 2024 |
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Prepaid contracted research and development costs |
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$ |
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$ |
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R&D tax credit receivable |
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Prepaid insurance |
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VAT receivable |
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Deposits and other |
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Total prepaid expenses and other current assets |
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$ |
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$ |
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||
Prepaid Contracted Research and Development Costs
As of March 31, 2025, Prepaid contracted research and development costs are primarily comprised of contractual prepayments associated with the Company's clinical trial for MOLBREEVI for the treatment of aPAP. This includes prepaid amounts paid under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and other outside service providers that provide services in connection with the Company's research and development activities.
R&D Tax Credit Receivable
The Company has recorded a Danish tax credit earned by its subsidiary, Savara ApS, as of March 31, 2025. Under Danish tax law, Denmark remits a research and development tax credit equal to
4. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of (in thousands):
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Accrued compensation |
|
$ |
|
|
$ |
|
||
Accrued contracted research and development costs |
|
|
|
|
|
|
||
Accrued general and administrative costs |
|
|
|
|
|
|
||
Lease liability |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
Accrued Compensation
As of March 31, 2025, Accrued compensation includes amounts to be paid to employees for salary, bonuses, vacation and non-equity performance-based compensation. At the end of any period, the amounts accrued for such compensation may vary due to many factors including, but not limited to, timing of payments to employees and vacation usage.
Accrued Contracted Research and Development Costs
As of March 31, 2025, Accrued contracted research and development costs are primarily comprised of costs associated with MOLBREEVI for the treatment of aPAP, including expenses resulting from obligations under agreements with CROs, CMOs, and other outside service providers that provide services in connection with the Company's research and development activities.
8
5. Short-term Investments
The Company’s investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. The following table summarizes, by major security type, the Company’s investments (in thousands):
As of March 31, 2025 |
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Total short-term investments |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2024 |
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Total short-term investments |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The Company has classified its investments as available-for-sale securities. These securities are carried at estimated fair value with the aggregate unrealized gains and losses related to these investments reflected as a part of Accumulated other comprehensive loss in the condensed consolidated balance sheet. Classification as short-term or long-term is based upon whether the initial maturity of the debt securities is less than or greater than twelve months, as further discussed in Note 7 . Fair Value Measurements.
There were
6. Debt Facility
On March 26, 2025 (the “Closing Date”), the Company, as borrower, entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with the lenders party thereto (the “Lenders”) and Hercules Capital, Inc., as administrative agent and collateral agent. The Hercules Loan Agreement provides for the Company to borrow up to $
The initial advance of $
The Company's obligations under the Hercules Loan Agreement are secured, subject to customary permitted liens and other agreed-upon exceptions, by a first-priority perfected security interest in all of the tangible and intangible assets of the Company, other than intellectual property, on which there is a negative pledge. The Hercules Loan Agreement includes customary affirmative and negative covenants, repayment terms, prepayment terms subject to a
9
The Hercules Loan Agreement contains an affirmative covenant requiring the Company to maintain unrestricted cash under an account control agreement equal to
Additionally, if the Company draws more than $
The Company is obligated to pay customary closing fees, a facility charge equal to
As of March 31, 2025 approximately $
The Company has identified certain embedded features within the Hercules Loan Agreement. The Company assessed these features and determined the one feature related to Default Penalty interest due upon an event of default is required to be bifurcated from the debt and accounted for separately at fair value. As of the date of issuance and March 31, 2025, the Default Penalty does not have a discernable fair value and no amounts are recorded.
The Company accounted for the repayment of the SVB Loan as an extinguishment in accordance with the guidance in ASC 470-50 and recognized a loss associated with the extinguishment of approximately $
Summary of Carrying Value
The following table summarizes the components of the long-term debt carrying value, which approximates the fair value (in thousands):
Future minimum payments due during the year ended December 31, |
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
2025 |
|
$ |
— |
|
|
$ |
— |
|
2026 |
|
|
— |
|
|
|
|
|
2027 |
|
|
— |
|
|
|
|
|
2028 |
|
|
|
|
|
— |
|
|
2029 |
|
|
|
|
|
— |
|
|
2030 |
|
|
|
|
|
— |
|
|
Total future minimum payments |
|
|
|
|
|
|
||
Unamortized end of term charge |
|
|
( |
) |
|
|
( |
) |
Debt fees |
|
|
( |
) |
|
|
( |
) |
Debt discount related to warrants |
|
|
— |
|
|
|
( |
) |
Total debt |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
— |
|
|
|
— |
|
Long-term debt |
|
$ |
|
|
$ |
|
||
7. Fair Value Measurements
The Company measures and reports certain financial instruments at fair value on a recurring basis and evaluates its financial instruments subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level in which to classify them in each reporting period.
10
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments annually or whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. These assets and liabilities can include acquired in-process research and development (“IPR&D”) and other long-lived assets that are written down to fair value if they are impaired.
During the three months ended March 31, 2025 and 2024, the Company experienced an increase of approximately $
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company determined that certain investments in debt securities classified as available-for-sale securities were Level 1 financial instruments.
Additional investments in corporate debt securities, commercial paper, and asset-backed securities are considered Level 2 financial instruments because the Company has access to quoted prices but does not have visibility to the volume and frequency of trading for all of these investments. For the Company’s investments, a market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.
The fair value of these instruments as of March 31, 2025 and December 31, 2024 was as follows (in thousands):
|
|
Quoted Prices in |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
As of March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
The Company did
8. Stockholders’ Equity
Evercore Common Stock Sales Agreement Termination
On
On March 31, 2025, pursuant to Section 12(b) of the ATM Agreement, the Company delivered written notice to Evercore that it was terminating the ATM Agreement, effective
During the three months ended March 31, 2025 and 2024, respectively, the Company did
11
Common Stock Reserved for Issuance
The Company’s shares of common stock reserved for issuance as of the periods indicated were as follows:
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
April 2017 Warrants |
|
|
|
|
|
|
||
June 2017 Warrants |
|
|
|
|
|
|
||
December 2018 Warrants |
|
|
|
|
|
|
||
Pre-funded PIPE Warrants |
|
|
|
|
|
|
||
2021 Pre-funded Warrants |
|
|
|
|
|
|
||
2023 Pre-funded Warrants |
|
|
|
|
|
|
||
Stock options outstanding |
|
|
|
|
|
|
||
Issued and nonvested RSUs |
|
|
|
|
|
|
||
Total shares reserved |
|
|
|
|
|
|
||
Warrants
The following table summarizes the outstanding warrants for the Company’s common stock as of March 31, 2025:
Expiration Date |
|
Shares Underlying |
|
|
Exercise Price |
|
||
|
|
|
|
$ |
|
|||
|
|
|
|
$ |
|
|||
|
|
|
|
$ |
|
|||
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
||
Accumulated Other Comprehensive Loss Information
The components of accumulated other comprehensive loss as of the dates indicated and the change during the period were (in thousands):
|
|
Foreign Exchange Translation Adjustment |
|
|
Unrealized Gain (Loss) on ST Investments |
|
|
Total Accumulated Other Comprehensive Loss |
|
|||
Balance, December 31, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Change |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Balance, December 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Change |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Balance, March 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
9. Commitments and Contingencies
Manufacturing and Other Commitments and Contingencies
The Company is subject to various royalties and manufacturing and development payments related to its product candidate, MOLBREEVI.
Additionally, the Company is subject to a purchase requirement under which for ten years following the date of receipt of approval by a regulatory authority of the first regulatory filing for the marketing and sale of the first product containing the API in any country, the Company will purchase from the API manufacturer the API required to produce a percentage of such product it sells each year (the “Purchase Requirement”); provided, however, that the Purchase Requirement will no longer apply if (i) the price charged by the API manufacturer exceeds a certain price charged by an alternative supplier, (ii) there is a shortage of supply, or (iii) API manufacturer at any time fails to materially fulfill a purchase order of the Company.
12
The Company is also subject to certain contingent milestone payments, disclosed in the following table, payable to the manufacturer of the nebulizer used to administer MOLBREEVI. In addition to these milestones, the Company will owe a royalty of three-and one-half percent (
The following table summarizes manufacturing commitments and contingencies as of the period indicated (in thousands):
|
|
March 31, 2025 |
|
|
MOLBREEVI manufacturer: |
|
|
|
|
Achievement of certain milestones related to validation of API and regulatory approval of |
|
$ |
|
|
MOLBREEVI nebulizer manufacturer: |
|
|
|
|
Achievement of various development activities and regulatory approval of nebulizer utilized to administer MOLBREEVI |
|
|
|
|
Total manufacturing and other commitments and contingencies |
|
$ |
|
|
The milestone commitments disclosed in the table above reflect the activities that have (i) not been met or incurred; (ii) not been remunerated; and (iii) not accrued, as the activities are not deemed probable or reasonably estimable, as of March 31, 2025.
Further, in February 2024, the Company entered into a master services agreement with an additional manufacturer to provide development and manufacturing services related to API for the Company’s MOLBREEVI product candidate in accordance with the terms of separate scope of work agreements to be entered into by the parties and to perform a manufacturing campaign for process performance qualification of the API of MOLBREEVI. From inception, the total estimated accumulated fees the Company will have paid the second source manufacturer's services under that original master services agreement, work orders and subsequent change orders is $
Contract Research
As part of its development of MOLBREEVI for the treatment of aPAP, the Company entered into a Master Services Agreement (“MSA”) with Parexel International (IRL) Limited (“Parexel”) pursuant to which Parexel will provide contract research services related to clinical trials. Contemporaneously with entering the MSA, a work order was executed with Parexel, under which they will provide services related to the IMPALA-2 trial. From inception of the the original work order and subsequent change orders, the Company will have paid Parexel service fees, pass-through expenses, and investigator fees estimated to be approximately $
In the second quarter of 2024, the Company initiated an open-label, multicenter clinical trial of MOLBREEVI in pediatric subjects with aPAP ("IMPACT") under a separate work order with Parexel. Pursuant to the IMPACT trial, Parexel has the opportunity to earn up to approximately $
Risk Management
The Company maintains various forms of insurance that the Company's management believes are adequate to reduce the exposure to certain risks associated with operating the Company’s business to an acceptable level.
10. Stock-Based Compensation
Equity Incentive Plans
The Company’s 2024 Omnibus Incentive Plan (the “2024 Plan”) was adopted by the Company’s board of directors in March 2024, was approved by the Company’s stockholders on June 6, 2024, and became effective on June 7, 2024. The 2024 Plan was intended to replace the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”), and upon the effectiveness of the 2024 Plan, no further grants may be made under the 2015 Plan. All outstanding awards under the 2015 Plan will continue in accordance with the 2015 Plan and any award agreement executed in connection with such outstanding awards. The 2024 Plan provides for the grant of stock options (both incentive stock options and non-statutory stock options), stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance units, shares, and other stock-based awards. Stock-based awards are subject to terms and conditions established by the board of directors or the compensation committee of the board of directors. As of March 31, 2025, the number of shares of common stock available for grant under the 2024 Plan was
13
The Company’s 2021 Inducement Equity Incentive Plan (the “Inducement Plan”) was adopted by the Company’s board of directors in May 2021 and subsequently amended to increase the shares available for grant. The Inducement Plan provides for the grant of non-statutory stock options, restricted stock, RSUs, stock appreciation rights, performance units, and performance shares. Each award under the Inducement Plan is intended to qualify as an employment inducement grant in accordance with Nasdaq Listing Rule 5635(c)(4). As of March 31, 2025, the number of shares of common stock available for grant under the Inducement Plan was
The Savara Inc. Stock Option Plan (the “2008 Plan”) was adopted in 2008, and the Company
Stock-Based Awards Activity
The following table provides a summary of stock-based awards activity for the three months ended March 31, 2025:
Stock Options:
Outstanding at December 31, 2024 |
|
|
|
|
Granted |
|
|
|
|
Exercised |
|
|
( |
) |
Expired/cancelled/forfeited |
|
|
( |
) |
Outstanding at March 31, 2025 |
|
|
|
The total compensation cost related to non-vested stock options not yet recognized as of March 31, 2025, was $
RSUs:
Outstanding at December 31, 2024 |
|
|
|
|
Granted |
|
|
|
|
Vested |
|
|
( |
) |
Forfeited |
|
|
( |
) |
Outstanding at March 31, 2025 |
|
|
|
The total compensation cost related to unvested RSUs not yet recognized as of March 31, 2025, was $
Stock-Based Compensation
Stock-based compensation expense is included in the following line items in the accompanying statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024 (in thousands):
|
|
Three months ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation |
|
$ |
|
|
$ |
|
||
11. Segment Reporting
We follow the accounting guidance of ASC Topic 280,
14
geographical segments are presented.
|
|
For the three months ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating expenses: |
|
|
|
|
|
|
||
Research and development operating costs and expenses excluding |
|
|
|
|
|
|
||
Primary program research and development expenses (a) |
|
$ |
|
|
$ |
|
||
Other research and development expenses: |
|
|
|
|
|
|
||
Payroll and benefits |
|
|
|
|
|
|
||
Occupancy and other overhead and operating costs |
|
|
|
|
|
|
||
Total other research and development expenses |
|
|
|
|
|
|
||
Research and development operating costs and expenses excluding |
|
|
|
|
|
|
||
General and administrative expense excluding non-cash stock-based |
|
|
|
|
|
|
||
Other segment income (expense), net (b) |
|
|
|
|
|
|
||
Segment net loss |
|
$ |
( |
) |
|
$ |
( |
) |
12. Net Loss per Share
Basic and diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common stock and pre-funded warrants outstanding during the period without consideration of common stock equivalents. For periods in which the Company generated a net loss, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive. Diluted net loss per share is the same as basic net loss per common share since the effects of potentially dilutive securities are antidilutive.
The following equity instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:
|
|
Three months ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Awards under equity incentive plan |
|
|
|
|
|
|
||
Non-vested restricted shares and restricted stock units |
|
|
|
|
|
|
||
Warrants to purchase common stock(*) |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
* Pre-funded warrants are excluded herein.
15
The following table calculates basic earnings per share of common stock and diluted earnings per share of common stock for the three months ended March 31, 2025 and 2024 (in thousands, except share and per share amounts):
|
|
Three months ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to common |
|
|
( |
) |
|
|
( |
) |
Undistributed earnings and net loss |
|
|
( |
) |
|
|
( |
) |
Weighted-average common shares |
|
|
|
|
|
|
||
Basic and diluted net loss per share |
|
$ |
( |
) |
|
$ |
( |
) |
13. Subsequent Events
The Company has evaluated subsequent events through the date these condensed consolidated financial statements were issued and determined there were no additional events that required disclosure or recognition in these condensed consolidated financial statements.
16
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained herein that involve risks and uncertainties, such as Savara’s plans, objectives, expectations, intentions, and beliefs should be considered forward-looking statements. Savara’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to the following: the ability to project future cash utilization and reserves needed for contingent future liabilities and business operations, the risks associated with the process of conducting clinical trials and developing, obtaining regulatory approval for and commercializing drug candidates that are safe and effective for use as human therapeutics, the timing and ability to raise additional capital as needed to fund continued operations, natural disasters, pandemics, geopolitical events (including the war between Russia and Ukraine and the war in the Middle East), the Company’s ability to maintain compliance with its covenants under its long-term debt instruments and those discussed in the section entitled “Risk Factors” in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("SEC") on March 27, 2025, all of which are difficult to predict.
Statements made herein are as of the date of the filing of this Quarterly Report with the SEC and should not be relied upon as of any subsequent date. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and the consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
Savara Inc. (together with its subsidiaries “Savara,” the “Company,” “we,” “our” or “us”) is a clinical-stage biopharmaceutical company focused on rare respiratory diseases. Our sole program, MOLBREEVI, is an investigational inhaled biologic, specifically, inhaled granulocyte-macrophage colony-stimulating factor ("GM-CSF") in Phase 3 development for autoimmune pulmonary alveolar proteinosis ("aPAP"). Savara previously announced positive top-line results from the Phase 3 clinical trial and, in March 2025, complete the submission of the Biological License Application ("BLA") to the FDA for MOLBREEVI. Savara, together with its wholly-owned subsidiaries, which include Aravas Inc. and Savara ApS, operate in one segment with its principal office in Langhorne, Pennsylvania, though a majority of our employees work remotely.
Since inception, we have devoted our efforts and resources to identifying and developing our product candidates, recruiting personnel, and raising capital. We have incurred operating losses and negative cash flow from operations and have no product revenue from inception to date. From inception to March 31, 2025, we have raised net cash proceeds of approximately $597.9 million, primarily from underwritten offerings of our common stock, private placements of common stock, and debt financings.
We have never been profitable and have incurred operating losses every year since inception. Our net losses for the three months ended March 31, 2025 and 2024 were $26.6 million and $20.3 million, respectively, and the net loss for the year ended December 31, 2024 was $95.9 million. As of March 31, 2025, we had an accumulated deficit of approximately $515.9 million. Our operating losses primarily resulted from expenses attributed to our research and development programs and from general and administrative costs associated with our operations.
We have chosen to operate by outsourcing our manufacturing and most of our clinical operations. We expect to incur significant additional expenses and continue to incur operating losses for at least the next several years as we continue the clinical development of, and seek regulatory approval for, our primary product candidate. We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to the timing of clinical development programs and efforts to achieve regulatory approval.
As of March 31, 2025, we had cash and cash equivalents of $19.6 million and short-term investments of $152.9 million. We will continue to require additional capital to continue our clinical development and potential commercialization activities. Although we have sufficient capital to fund many of our planned activities, we may need to continue to raise additional capital to further fund the development of, and seek regulatory approvals for, our product candidate and begin to commercialize any approved product. The amount and timing of our future funding requirements will depend on many
17
factors, including the pace and results of our clinical development efforts. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidate.
Recent Events
BLA Submission Complete
On March 26, 2025, Savara announced that it had completed its submission of the BLA to the FDA for MOLBREEVI for the potential treatment of aPAP, a chronic and debilitating rare lung disease characterized by the abnormal build-up of surfactant in the alveoli of the lungs. This follows our reporting, in June 2024, of top line results from our pivotal IMPALA-2 trial for the treatment of aPAP that demonstrated improvement compared to placebo in gas exchange, as measured by diffusing capacity of the lungs for carbon monoxide, or DLCO, and clinical benefit, as measured by St. George’s Respiratory Questionnaire, or SGRQ, and exercise capacity, measured in peak METs. MOLBREEVI was well tolerated throughout the 48-weeks and no unexpected safety signals were seen. Previously, on December 18, 2024, the Company announced that it had initiated a rolling submission of a BLA to the FDA for MOLBREEVI. MOLBREEVI was also granted Fast Track and Breakthrough Therapy Designations by the FDA in 2019 for the treatment of patients with aPAP.
Debt Financing
On March 26, 2025, the Company announced that it had entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with the lenders party thereto (the “Lenders”) and Hercules Capital, Inc., as administrative agent and collateral agent. The Hercules Loan Agreement provides for the Company to borrow up to $200 million of term loans (the “Term Loan”) that may be advanced in multiple tranches. The initial advance of $30 million under the Hercules Loan Agreement was drawn on March 26, 2025 and used to repay all outstanding obligations under the Company’s Amended Loan Agreement with Silicon Valley Bank (the “SVB Loan”) as described in Note 6. Debt Facility and extinguish the Company’s obligations thereunder, to pay the Company’s expenses in connection with the Hercules Loan Agreement, including fees and expenses relating to termination of the SVB term loan, and for general corporate purposes. Further Term Loan draws may be made by the Company under the Hercules Loan Agreement as follows:
Sales Agreement Termination
As previously discussed in Note 8. Stockholders’ Equity, on July 6, 2021, the Company entered into a Sales Agreement with Evercore Group L.L.C. (“Evercore”), as sales agent (the “ATM Agreement”), pursuant to which the Company may offer and sell up to an aggregate of $100.0 million of shares of its common stock, par value $0.001 per share, from time to time through Evercore in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended.
On March 31, 2025, pursuant to Section 12(b) of the ATM Agreement, the Company delivered written notice to Evercore that it was terminating the ATM Agreement, effective April 2, 2025. The Company is not subject to any termination penalties related to the termination of the ATM Agreement. Since December 31, 2024, no shares of common stock have been issued or sold pursuant to the ATM Agreement.
Financial Operations Overview
Research and Development Expenses
We recognize all research and development costs as they are incurred. Research and development expenses consist primarily of the following:
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We expect research and development expenses will remain significant in the future as we advance our MOLBREEVI product candidate through clinical trials and pursue regulatory approvals, which will require a significant increased investment in regulatory support and contract manufacturing activities, including investing in the development of a second source manufacturer and clinical supplies.
The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in timely developing and achieving regulatory approval for our product candidate. The probability of success of our product candidate may be affected by numerous factors, including clinical data, competition, intellectual property rights, manufacturing capability, and commercial viability. As a result, we are unable to accurately determine the duration and completion costs of our development projects or when and to what extent we will generate revenue from the commercialization and sale of MOLBREEVI.
General and Administrative Expenses
General and administrative ("G&A") expenses consist primarily of salaries, benefits, and related costs for personnel in executive, finance and accounting, legal, and investor relations; as well as professional and consulting fees for accounting, legal, investor relations, business development, human resources, and information technology services. Other G&A expenses include facility lease and insurance costs.
Other Income (Expense), Net
Other income (expense) includes amortization expense related to capitalized debt issuance costs and debt discount under our loan agreements. Refer to Note 6. Debt Facility in the notes to the condensed consolidated financial statements included in this Quarterly Report. Interest expense is typically reported net of interest income which includes interest earned on our cash, cash equivalent, and short-term investment balances. Other income (expense) also includes net unrealized and realized gains and losses from foreign currency transactions, loss on extinguishment of debt, refundable tax credits generated by some of our foreign subsidiaries, and securities subject to fair value accounting as well as any other non-operating gains and losses.
Critical Accounting Policies and Estimates
There have not been any material changes during the three months ended March 31, 2025, to the methodology applied by management for critical accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. Please read Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2024, for further description of our critical accounting policies.
Results of Operations – Comparison of Three Months Ended March 31, 2025 and 2024
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For the Three Months Ended March 31, |
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Dollar |
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||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
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|||
|
|
(in thousands) |
|
|||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
19,159 |
|
|
$ |
16,807 |
|
|
$ |
2,352 |
|
General and administrative |
|
|
9,246 |
|
|
|
5,636 |
|
|
|
3,610 |
|
Depreciation and amortization |
|
|
30 |
|
|
|
32 |
|
|
|
(2 |
) |
Total operating expenses |
|
|
28,435 |
|
|
|
22,475 |
|
|
|
5,960 |
|
Loss from operations |
|
|
(28,435 |
) |
|
|
(22,475 |
) |
|
|
(5,960 |
) |
Other income, net |
|
|
1,796 |
|
|
|
2,129 |
|
|
|
(333 |
) |
Net loss |
|
$ |
(26,639 |
) |
|
$ |
(20,346 |
) |
|
$ |
(6,293 |
) |
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Research and Development
Research and development expenses increased by $2.4 million, or 14.0%, to $19.2 million for the three months ended March 31, 2025 from $16.8 million for the three months ended March 31, 2024. This increase is primarily due to the performance of tasks related to our MOLBREEVI program with $2.3 million related to regulatory affairs and quality assurance, and $0.1 million in departmental overhead.
General and Administrative
General and administrative expenses increased by $3.6 million, or 64.1%, to $9.2 million for the three months ended March 31, 2025 from $5.6 million for the three months ended March 31, 2024. The increase is due to personnel and related costs of $2.4 million, certain commercial activities of $0.8 million, and other departmental overhead of $0.4 million.
Other Income, Net
Other income, net decreased by $0.3 million to $1.8 million for the three months ended March 31, 2025 from $2.1 million for the three months ended March 31, 2024. The decrease is primarily related to a loss on extinguishment of debt.
Liquidity and Capital Resources
As of March 31, 2025, we had $19.6 million of cash and cash equivalents, $152.9 million in short-term investments, and an accumulated deficit of approximately $515.9 million. As discussed in Note 6. Debt Facility in the notes to the condensed consolidated financial statements included in this Quarterly Report, on March 26, 2025, we entered into the Hercules Loan Agreement which provides for a loan facility of up to $200 million. Proceeds from the initial $30 million tranche drawn under the Hercules Loan Agreement were used to repay all outstanding obligations under the SVB Loan, with a carrying value of $26.7 million, to pay certain expenses incurred in connection with the financing, and for general corporate purposes. Subject to satisfaction of certain conditions, including attainment of FDA approval of MOLBREEVI for the treatment of aPAP, we may draw future tranches under the Hercules Loan Agreement to fund our ongoing business operations including the development, regulatory approval, marketing and commercialization of MOLBREEVI.
Further, on March 31, 2025, pursuant to Section 12(b) of the ATM Agreement, the Company delivered written notice to Evercore that it was terminating the ATM Agreement, effective April 2, 2025.
We have used and intend to use our liquidity and capital for working capital and general corporate purposes, which include, but are not limited to, the funding of clinical development of and pursuing regulatory approval for our product candidate and general and administrative expenses. As we continue to progress on the IMPALA-2 trial, pursue regulatory approval, and invest in pre-commercial activities, we will continue to monitor our liquidity and capital requirements.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
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Three months ended March 31, |
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|
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2025 |
|
|
2024 |
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||
|
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(in thousands) |
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|||||
Cash used in operating activities |
|
$ |
(27,189 |
) |
|
$ |
(20,644 |
) |
Cash provided by investing activities |
|
|
29,329 |
|
|
|
10,793 |
|
Cash provided by financing activities |
|
|
2,318 |
|
|
|
49 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(30 |
) |
|
|
2 |
|
Net change in cash and cash equivalents |
|
$ |
4,428 |
|
|
$ |
(9,800 |
) |
Cash flows from operating activities
Cash used in operating activities for the three months ended March 31, 2025 was $27.2 million, consisting of a net loss of $26.6 million and net $3.1 million in changes due to operating assets and liabilities. This was partially offset by approximately $2.5 million of net noncash charges (comprised of depreciation and amortization including right-of-use assets, amortization of debt issuance costs, loss on extinguishment of debt, accretion on discount to short-term investments, and stock-based compensation).
Cash flows from investing activities
Cash used in investing activities of $29.3 million for the three months ended March 31, 2025 was primarily associated with proceeds from maturities of short-term investments partially offset by purchases of short-term investments.
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Cash flows from financing activities
Cash provided by financing activities of $2.3 million for the three months ended March 31, 2025 was primarily the result of net proceeds from the Hercules Loan Agreement partially offset by repayment of the SVB Loan.
Future Funding Requirements
We have not generated any revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercialize our product candidate. At the same time, we expect our expenses to increase in connection with our ongoing development and manufacturing activities, particularly as we continue the research, development, manufacture, and clinical trials of, and seeking regulatory approval for, our product candidate. In addition, subject to obtaining regulatory approval of our product candidate, we anticipate we may need additional funding in connection with our continuing operations.
As of March 31, 2025, we had cash, cash equivalents, and short-term investments of approximately $172.5 million. Although we have sufficient capital to fund our planned activities, including those discussed in Note 9. Commitments – Manufacturing and Other Commitments and Contingencies, in the notes to the condensed consolidated financial statements included in this Quarterly Report, we may need to raise additional capital to further fund the development of, and seek regulatory approvals for our product candidate and to begin commercialization of any approved product. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidate.
Although we believe we are well capitalized based on our current operations, until we can generate a sufficient amount of product revenue to finance our cash requirements, we may finance our future cash needs primarily through the issuance of additional equity securities and potentially through borrowings, grants, and strategic alliances with partner companies. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or commercialization efforts or grant rights to develop and market our product candidate to third parties that we would otherwise prefer to develop and market ourselves.
Critical Accounting Policies and Estimates
Except as set forth in Note 2. Summary of Significant Accounting Policies – Recent Accounting Pronouncements of the condensed consolidated financial statements in this Quarterly Report, there have been no material changes in our critical accounting policies and use of estimates during the three months ended March 31, 2025 as compared to those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the our Annual Report on Form 10-K for the year ended December 31, 2024.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have market risk exposure related to our cash, cash equivalents, and short-term investment securities. Such interest-earning instruments carry a degree of interest rate risk; however, we have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. A hypothetical 1% change in interest rates during any of the periods presented would not have a material impact on our condensed consolidated financial statements. Additionally, our investment securities are fixed income instruments denominated and payable in U.S. dollars and have short-term maturities, typically less than twelve months, and typically carry credit ratings of “A” at a minimum by two of three Nationally Recognized Statistical Rating Organizations, specifically Moody’s, Standard & Poor’s, or Fitch. As such, we do not believe that our cash, cash equivalents, and short-term investment securities have significant risk of default or illiquidity.
We also have interest rate exposure related to our long-term debt. Refer to Note 6. Debt Facility of the unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q for additional discussion. The Hercules Loan Agreement bears interest equal to the greater of (i) the prime rate reported in The Wall Street Journal, plus 1.45%, which was 8.95% on March 31, 2025. Changes in the prime rate would have impacted our interest expense associated with our secured term loan. If a 10% change in interest rates from the interest rates on March 31, 2025, were to have occurred, this change would not have had a material effect on our interest expense with respect to outstanding borrowed amounts.
We have vendors in Denmark and elsewhere in Europe and pay those vendors in local currency, Danish Krone, British Pound sterling or Euros, respectively. We did not recognize any significant exchange rate losses during the three months ended March 31, 2025 and 2024. A 10% change in the Euro-to-dollar, British Pound sterling-to dollar exchange rate or Krone-to-dollar exchange rate on March 31, 2025, would not have had a material effect on our results of operations or financial condition.
Additionally, inflation generally affects us by increasing our cost of labor, supplies and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial and Administrative Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2025, pursuant to and as required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial and Administrative Officer have concluded that, as of March 31, 2025, our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act, were effective and designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and (ii) information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial and Administrative Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various claims and legal proceedings. Regardless of outcome, litigation and other legal and administrative proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. We are not currently a party to any material pending litigation or other material legal proceeding.
Item 1A. Risk Factors.
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the Annual Report on Form 10-K for the year ended December 31, 2024, and the risk factors and other cautionary statements contained in our other filings with the SEC, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, or future results. Except as set forth below, there have been no material changes in our risk factors from those described in the Annual Report on Form 10-K for the year ended December 31, 2024, or our other SEC filings.
The Hercules Loan Agreement contains covenants which may adversely impact our business and the failure to comply with such covenants could cause our outstanding debt to become immediately payable or accelerate principal payments.
We are a party to the Hercules Loan Agreement, pursuant to which we have borrowed $30 million of term loans and may borrow up to an additional $170 million of term loans if we are able to satisfy the conditions precedent described under Note 6. Debt Facility of the consolidated financial statements in this quarterly report on Form 10-Q. As security for our borrowings under the Hercules Loan Agreement, we pledged substantially all of our assets other than our intellectual property (which is subject to a negative pledge). The Hercules Loan Agreement includes a number of restrictive covenants, including restrictions on incurring additional debt, making investments, granting liens, disposing of assets, paying dividends, and redeeming or repurchasing capital stock, and a number of affirmative covenants, including the Cash Requirement and the Conditional Minimum Revenue Covenant. Collectively, these covenants could constrain our ability to grow our business through acquisitions or engage in other transactions. The Hercules Loan Agreement includes customary events of default, such as our failure to pay amounts due, our failure to comply with covenants, or the occurrence of an event that would reasonably be expected to have a material adverse event on our business. Upon the occurrence and during the continuation of an event of default, the Lenders could declare all outstanding loans under the Hercules Loan Agreement immediately due and payable and exercise remedies against us and the collateral. Such an event would have a material adverse effect on our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.
Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the quarter ended March 31, 2025,
Item 6. Exhibits.
An Exhibit Index has been attached as part of this report and is incorporated by reference.
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Exhibit Index
Exhibit Number |
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Description |
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3.1 |
*
|
Composite Amended and Restated Certificate of Incorporation, as amended, of the Registrant. |
3.2 |
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|
10.1 |
* |
|
31.1 |
*
|
|
31.2 |
*
|
|
32.1 |
*
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
# Indicates management contract or compensatory plan |
|
|
* Filed herewith |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Savara Inc. |
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Date: May 13, 2025 |
By: |
/s/ Matthew Pauls |
|
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Matthew Pauls |
|
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Chief Executive Officer and Chair of the Board of Directors (Principal Executive Officer) |
Date: May 13, 2025 |
By: |
/s/ David Lowrance |
|
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David Lowrance |
|
|
Chief Financial and Administrative Officer (Principal Financial and Accounting Officer) |
25