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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

OR

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

 

 

i


 

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.

1


 

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.

 

 

2


 

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.

3


 

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.

 

 

 

 

4


 

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