svra-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-32157

Savara Inc.

(Exact name of registrant as specified in its charter)

Delaware		84-1318182
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6836 Bee Cave Road, Building III, Suite 200 Austin, TX		78746
(Address of principal executive offices)		(Zip Code)

(512) 614-1848

(Registrant’s telephone number, including area code)

N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

SVRA

The Nasdaq Global Select Market

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

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 August 6, 2020, the registrant had 54,128,525 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Consolidated Statements of Changes in Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	54
Exhibit Index		55
Signatures		56

Savara Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	47,117		$	49,804
Short-term investments		52,492			71,957
Prepaid expenses and other current assets		2,953			2,306
Total current assets		102,562			124,067
Property and equipment, net		250			352
In-process R&D		11,161			11,111
Other non-current assets		1,173			673
Total assets	$	115,146		$	136,203
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,006		$	3,409
Accrued expenses and other current liabilities		4,447			5,471
Debt facility		—			2,000
Total current liabilities		6,453			10,880
Long-term liabilities:
Debt facility		24,856			23,112
Other long-term liabilities		39			513
Total liabilities		31,348			34,505
Stockholders’ equity:
Common stock, $0.001 par value, 200,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 52,823,312 and 50,790,441 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		54			52
Additional paid-in capital		316,327			309,555
Accumulated other comprehensive income (loss)		119			(17	)
Accumulated deficit		(232,702	)		(207,892	)
Total stockholders’ equity		83,798			101,698
Total liabilities and stockholders’ equity	$	115,146		$	136,203

The accompanying notes are an integral part of these financial statements.

Savara Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	6,079		$	10,464		$	19,279		$	20,483
General and administrative		3,117			4,211			6,099			6,974
Impairment of goodwill		—			7,420			—			7,420
Depreciation and amortization		68			59			126			197
Total operating expenses		9,264			22,154			25,504			35,074
Loss from operations		(9,264	)		(22,154	)		(25,504	)		(35,074	)
Other income (loss), net:
Interest income (expense), net		(332	)		31			(493	)		11
Foreign currency exchange gain		50			110			206			51
Tax credit income		103			115			924			1,079
Change in fair value of financial instruments		54			(41	)		56			(118	)
Total other income (loss)		(125	)		215			693			1,023
Loss before income taxes		(9,389	)		(21,939	)		(24,811	)		(34,051	)
Income tax benefit		—			—			—			—
Net loss	$	(9,389	)	$	(21,939	)	$	(24,811	)	$	(34,051	)
Net loss per share:
Basic and diluted	$	(0.16	)	$	(0.57	)	$	(0.43	)	$	(0.91	)
Weighted average common shares outstanding:
Basic and diluted		58,858,216			38,440,647			58,111,225			37,235,209
Other comprehensive income (loss):
Gain (loss) on foreign currency translation		162			91			34			(134	)
Unrealized gain on short-term investments		85			120			102			146
Total comprehensive loss	$	(9,142	)	$	(21,728	)	$	(24,675	)	$	(34,039	)

The accompanying notes are an integral part of these financial statements.

Savara Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Periods Ended June 30, 2020 and 2019

(In thousands, except share amounts)

(Unaudited)


	Stockholders’ Equity
	Common Stock										Accumulated
	Number of Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Other Comprehensive Income (Loss)			Total
Balance on December 31, 2019		50,790,441	$	52	$	309,555		$	(207,892	)	$	(17	)	$	101,698
Issuance of common stock for settlement of RSUs		12,750		—		—			—			—			—
Issuance of common stock upon exercise of stock options		41,313		—		48			—			—			48
Closing costs for previous issuance of securities in private placement		—		—		(120	)		—			—			(120	)
Incremental cost due to modification of detachable warrants previously issued with debt instrument		—		—		28			—			—			28
Stock-based compensation		—		—		1,194						—			1,194
Foreign exchange translation adjustment		—		—		—			—			(128	)		(128	)
Unrealized gain on short-term investments		—		—		—			—			17			17
Net loss incurred		—		—		—			(15,421	)		—			(15,421	)
Balance on March 31, 2020		50,844,504	$	52	$	310,705		$	(223,313	)	$	(128	)	$	87,316
Issuance of common stock for licensing of assets		1,000,000		1		2,119			—			—			2,120
Issuance of common stock upon at the market offerings, net		942,825		1		2,289			—			—			2,290
Issuance of common stock for settlement of RSUs		12,750		—		—			—			—			—
Issuance of common stock upon exercise of stock options		23,233		—		39			—			—			39
Stock-based compensation		—		—		1,175			—			—			1,175
Foreign exchange translation adjustment		—		—		—			—			162			162
Unrealized gain on short-term investments		—		—		—			—			85			85
Net loss incurred		—		—		—			(9,389	)		—			(9,389	)
Balance on June 30, 2020		52,823,312	$	54	$	316,327		$	(232,702	)	$	119		$	83,798

The accompanying notes are an integral part of these financial statements.

Consolidated Statements of Changes in Stockholders’ Equity

Periods Ended June 30, 2020 and 2019

(In thousands, except share amounts)

(Unaudited)

	Stockholders’ Equity
	Common Stock									Accumulated
	Number of Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Other Comprehensive Income			Total
Balance on December 31, 2018		35,146,096	$	36	$	237,702	$	(129,719	)	$	200		$	108,219
Issuance of common stock upon at the market offerings, net		647,426		—		4,890		—			—			4,890
Issuance of common stock for settlement of RSUs		13,125		—		—		—			—			—
Issuance of common stock upon exercise of stock options		23,593		—		6		—			—			6
Stock-based compensation		—		—		1,000		—			—			1,000
Foreign exchange translation adjustment		—		—		—		—			(225	)		(225	)
Unrealized gain on short-term investments		—		—		—		—			26			26
Net loss incurred		—		—		—		(12,112	)		—			(12,112	)
Balance on March 31, 2019		35,830,240	$	36	$	243,598	$	(141,831	)	$	1		$	101,804
Issuance of common stock upon at the market offerings, net		1,870,500		2		19,035		—			—			19,037
Issuance of common stock upon settlement of contingent liability		1,105,216		1		12,477		—			—			12,478
Issuance of common stock for settlement of RSUs		13,125		—		—		—			—			—
Issuance of common stock upon cashless exercise of warrants		11,119		—		—		—			—			—
Issuance of common stock upon exercise of stock options		73,630		1		60		—			—			61
Stock-based compensation		—		—		1,147		—			—			1,147
Foreign exchange translation adjustment		—		—		—		—			91			91
Unrealized gain on short-term investments		—		—		—		—			120			120
Net loss incurred		—		—		—		(21,939	)		—			(21,939	)
Balance on June 30, 2019		38,903,830	$	40	$	276,317	$	(163,770	)	$	212		$	112,799

The accompanying notes are an integral part of these financial statements.

Savara Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(24,811	)	$	(34,051	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization including right-of-use assets		455			539
Impairment of goodwill		—			7,420
Acquired in-process research and development (Note 7)		5,367			—
Changes in fair value of financial instruments		(56	)		118
Change in fair value of contingent consideration		—			264
Noncash interest (income) expense		143			(69	)
Foreign currency loss		(206	)		(51	)
Amortization of debt issuance costs		259			292
Accretion on discount to short-term investments		(113	)		(688	)
Stock-based compensation		2,369			2,147
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(583	)		115
Non-current assets		(812	)		(838	)
Accounts payable and accrued expenses and other current liabilities		(2,376	)		1,141
Long-term liabilities		(467	)		(103	)
Net cash used in operating activities	$	(20,831	)	$	(23,764	)
Cash flows from investing activities:
Purchase of property and equipment		(24	)		(132	)
Purchase in-process research and development (Note 7)		(3,247	)		—
Purchase of available-for-sale securities, net		(35,614	)		(92,198	)
Maturities of available-for-sale securities		46,400			70,600
Sale of available-for-sale securities, net		8,780			14,129
Net cash (used in) provided by investing activities	$	16,295		$	(7,601