Savara: The Binary Bet On Phase 3 Data

Core Viewpoint - Savara Inc. is a clinical-stage biotech company focused on autoimmune pulmonary alveolar proteinosis (aPAP) with a single drug, Molgramostim, in its pipeline, facing high stakes due to the binary nature of its upcoming trial results [1][2][3] Company Overview - Savara Inc. was formed through a merger between Savara and Mast Therapeutics in April 2017, with Savara holding 77% ownership [1] - The company has faced setbacks with two drugs, Aironite and AeroVanc, which failed to meet primary endpoints in their respective trials [1] - The stock price of Savara has been volatile, particularly after the IMPALA trial results, which missed primary endpoints but showed potential through secondary endpoints [1][6] Drug Pipeline and Trial Insights - Molgramostim is currently the only drug in Savara's pipeline, and its success is critical for the company's future [2][3] - The IMPALA trial demonstrated mixed results, with significant improvements in some surrogate endpoints but failure to meet the primary endpoint of the 6-minute walk test (6MWT) [6][10] - The upcoming IMPALA-2 trial is expected to provide topline data by the end of Q2 2024, which could either de-risk the development or lead to further declines in valuation [1][3] Market Potential and Valuation - The market potential for Molgramostim is significant, with projections estimating a net present value (NPV) of approximately $1.2 billion, equating to about$10 per share [16] - The current market perception of the probability of success (POS) for Molgramostim is around 40%, below the industry average for drugs in phase 3 [16] - If the upcoming trial results are positive, the stock price could rise significantly, while negative results could lead to a sharp decline [16][36] Financial Overview - Savara's cash burn in 2023 was $55 million, with projections indicating sufficient capital to complete ongoing studies and file a Biologics License Application (BLA) [34] - The company has experienced significant dilution, with the number of shares outstanding increasing from approximately 40 million in 2019 to 138 million in 2024 [34][35] Clinical and Scientific Rationale - The mechanism of action for Molgramostim involves alleviating symptoms in aPAP patients by counteracting elevated anti-GM-CSF antibodies [3][5] - Previous research suggests that GM-CSF therapies have shown efficacy in treating aPAP, although large-scale trials are lacking [5][21] - The design of the IMPALA-2 trial has been adjusted to focus on DLCO as the primary endpoint, which may provide more standardized and repeatable results compared to the previous trial [27]