Savara Inc 10-K

Item 9A. 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 Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2022, 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 Officer have concluded that, as of December 31, 2022, our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act, were effective and designed to ensure that (i) information required to be disclosed in our reports filed or submitted under the Exchange Act 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 Officer, as appropriate, to allow timely decisions regarding required disclosures. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of that assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2022 based on criteria in Internal Control - Integrated Framework (2013) issued by the COSO. As a smaller reporting company, we were not required to obtain an audit on the effectiveness of our internal control over financial reporting as of December 31, 2022. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during Savara’s quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Not applicable. 61 PART III Certain information required by Part III of this report is omitted from this report pursuant to General Instruction G(3) of Form 10-K because we will file a definitive proxy statement pursuant to Regulation 14A for our 2023 annual meeting of stockholders (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this report, and the information included in the Proxy Statement that is required by Part III of this report is incorporated herein by reference. Item 10. Directors, Executive Off icers, and Corporate Governance. Code of Ethics We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, as well as all of our other officers, directors, and employees. This code of ethics is a part of our code of business conduct and ethics, and is available on our corporate website at www.savarapharma.com. We intend to disclose future amendments to, or waivers of, certain provisions of our code of ethics that apply to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions on our corporate website within four business days following such amendment or waiver. The other information required by this item will be set forth in the Proxy Statement and is incorporated into this report by reference. Item 11. Executiv e Compensation. The information required by this item will be set forth in the Proxy Statement and is incorporated into this report by reference. Item 12. Security Ownership of Certain Beneficial Own ers and Management and Related Stockholder Matters. The other information required by this item will be set forth in the Proxy Statement and is incorporated into this report by reference. Equity Compensation Plan Information The table below provides information about our common stock that, as of December 31, 2022, may be issued upon the exercise of options and the vesting of RSUs under the following equity compensation plans (which are all our equity compensation plans; provided, however, that new equity awards may only be issued under the 2015 Omnibus Incentive Plan and the 2021 Inducement Plan): • 2015 Omnibus Incentive Plan (the “2015 Plan”) • Savara Inc. Stock Option Plan (the “2008 Plan”) • 2021 Inducement Equity Incentive Plan (the "2021 Inducement Plan”) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 8,172,934 $ 2.23 1,891,422 Equity compensation plans not approved by security holders 1,702,500 $ 1.32 1,197,500 Total 9,875,434 $ 2.08 3,088,922 (1) The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding RSUs, which have no exercise price. 62 (2) Includes 6,434,068 shares issuable upon the exercise of outstanding options granted under the 2015 Plan, 1,542,250 shares issuable upon the vesting of RSUs granted under the 2015 Plan, and 196,616 shares issuable upon the exercise of outstanding options granted under the 2008 Plan. (3) Includes 1,302,500 shares issuable upon the exercise of outstanding options granted under the 2021 Inducement Plan, and 400,000 shares issuable upon the vesting of RSUs granted under the 2021 Inducement Plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item will be set forth in the Proxy Statement and is incorporated into this report by reference. Item 14. Principal Accoun ting Fees and Services. The information required by this item will be set forth in the Proxy Statement and is incorporated into this report by reference. 63 PART IV Item 15. Exhibits, Financ ial Statement Schedules. (a) Documents Filed . The following documents are filed as part of this report: (1) Financial Statements. The following report of RSM US LLP and financial statements: • Report of Independent Registered Public Accounting Firm • Consolidated Balance Sheets as of December 31, 2022 and 2021 • Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 • Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021 • Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 • Notes to Consolidated Financial Statements (1) Financial Statement Schedules. See subsection (c) below. (2) Exhibits. See subsection (b) below. (b) Exhibits. The exhibits filed or furnished with this report are set forth on the Exhibit Index immediately following the signature page of this report, which Exhibit Index is incorporated herein by reference. (c) Financial Statement Schedules . All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Item 16. Form 10-K Summary. Not applicable. 64 Exhibit Index Exhibit Number Description 3.1 Composite Amended and Restated Certificate of Incorporation, as amended, of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-3 filed on July 6, 2021.) 3.2 Composite Amended and Restated Bylaws, as amended, of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed on March 26, 2014.) 4.1 Form of common stock certificate of the Registrant (Incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on March 14, 2018.) 4.2 Warrant to Purchase Shares of Common Stock of the Registrant issued to Life Science Loans II, LLC on April 28, 2017 (Incorporated by reference to Exhibit 4.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2017.) 4.3 Warrant to Purchase Shares of Common Stock of the Registrant issued to Silicon Valley Bank on April 28, 2017 (Incorporated by reference to Exhibit 4.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2017.) 4.4 Amendment to Warrant to Purchase Shares of Common Stock of the Registrant issued to Life Science Loans II, LLC on June 26, 2017. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017.) 4.5 Amendment to Warrant to Purchase Shares of Common Stock of the Registrant issued to SVB Financial Group on June 26, 2017. (Incorporated by reference to Exhibit 4.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017.) 4.6 Warrant to Purchase Shares of Common Stock of the Registrant issued to Life Science Loans II, LLC on June 26, 2017. (Incorporated by reference to Exhibit 4.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017.) 4.7 Warrant to Purchase Shares of Common Stock of the Registrant issued to Silicon Valley Bank on June 26, 2017. (Incorporated by reference to Exhibit 4.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017.) 4.8 Form of Pre-Funded Warrant (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 25, 2017.) 4.9 Warrant to Purchase Shares of Common Stock of the Registrant issued to Life Science Loans II, LLC on December 4, 2018. (Incorporated by reference to Exhibit 4.19 to the Registrant’s Annual Report on Form 10-K filed on March 13, 2019.) 4.10 Warrant to Purchase Shares of Common Stock of the Registrant issued to Silicon Valley Bank on December 4, 2018. (Incorporated by reference to Exhibit 4.20 to the Registrant’s Annual Report on Form 10-K filed on March 13, 2019.) 4.11 Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on December 20, 2019.) 4.12 Form of Pre-Funded Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on December 20, 2019.) 4.13 Second Amendment to Warrant to Purchase Common Stock dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Life Science Loans II, LLC on April 28, 2017 (as amended by that certain Amendment to Warrant to Purchase Common Stock dated as of June 26, 2017) (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 4.14 Second Amendment to Warrant to Purchase Common Stock dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Silicon Valley Bank on April 28, 2017 (as amended by that certain Amendment to Warrant to Purchase Common Stock dated as of June 26, 2017) (Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 4.15 Amendment to Warrant to Purchase Common Stock of the Registrant dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Life Science Loans II, LLC on June 26, 2017 (Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 4.16 Amendment to Warrant to Purchase Common Stock of the Registrant dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Silicon Valley Bank on June 26, 2017 (Incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 65 4.17 Amendment to Warrant to Purchase Common Stock of the Registrant dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Life Science Loans II, LLC on December 4, 2018 (Incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 4.18 Amendment to Warrant to Purchase Common Stock of the Registrant dated January 31, 2020, to Warrant to Purchase Common Stock of the Registrant issued to Silicon Valley Bank on December 4, 2018 (Incorporated by reference to Exhibit 4.6 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 4.19 Description of Registered Securities (Incorporated by reference to Exhibit 4.25 to the Registrant’s Annual Report on Form 10-K filed on March 12, 2020.) 4.20 Form of Pre-Funded Warrant (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2021.) 10.1 Loan and Security Agreement, dated April 28, 2017, among Savara Inc., Aravas Inc. and Silicon Valley Bank (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 5, 2017.) 10.2 First Amendment dated October 31, 2017, to Loan and Security Agreement, dated April 28, 2017, among Savara Inc., Aravas Inc. and Silicon Valley Bank. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2017.) 10.3 Second Amendment, dated December 4, 2018, to Loan and Security Agreement, dated April 28, 2017, as amended on October 31, 2017, among Savara Inc., Aravas Inc. and Silicon Valley Bank. (Incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K filed on March 13, 2019.) 10.4 Third Amendment, dated January 31, 2020, to Loan and Security Agreement, dated April 28, 2017, as amended on October 31, 2017 and December 4, 2018, among the Registrant, Aravas Inc. and Silicon Valley Bank (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 3, 2020.) 10.5 Fourth Amendment, dated March 30, 2021, to Loan and Security Agreement, dated April 28, 2017, as amended on October 31, 2017, December 4, 2018 and January 31, 2021, between the Registrant, Aravas Inc. and Silicon Valley Bank (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 1, 2021.) 10.6 Amended and Restated Loan and Security Agreement, dated April 21, 2022, between the Registrant and its subsidiary, Aravas Inc., as borrowers, and Silicon Valley Bank (Incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on May 11, 2022.) 10.7 # Savara Inc. Amended and Restated 2015 Omnibus Incentive Plan, as amended (Incorporated by reference to Appendix A of the Registrant’s Proxy Statement filed on April 19, 2022.) 10.8 # Form of Non-Statutory Stock Option Grant Agreement – Director (for grants to non-employee directors) under the 2015 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on June 16, 2015.) 10.9 # Form of Incentive Stock Option Grant Agreement – Exempt Employees under the 2015 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on June 16, 2015.) 10.10 # Form of Incentive Stock Option Grant Agreement – Non-Exempt Employees under the 2015 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on June 16, 2015.) 10.11 # Form of Non-Statutory Stock Option Grant Agreement – General under the 2015 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed on March 14, 2018.) 10.12 # Form of Grant of Restricted Stock Units under the 2015 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2017.) 10.13 # Aravas Inc. (formerly Savara Inc.) Stock Option Plan (Incorporated by reference to Exhibit 10.53 to the Registrant’s Registration Statement on Form S-4 filed on February 10, 2017.) 10.14 # Aravas Inc. (formerly Savara Inc.) Form of Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.54 to the Registrant’s Registration Statement on Form S-4 filed on February 10, 2017.) 10.15 Savara Inc. 2021 Inducement Equity Incentive Plan (Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-8 filed on January 20 2023.) 10.16 Form of Non-Statutory Stock Option Agreement – Under the 2021 Inducement Equity Incentive Plan (Incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-QK filed on March 30, 2020.) 66 10.17 Form of Restricted Stock Unit Agreement (Inducement Award) – Under the 2021 Inducement Equity Incentive Plan (Incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-QK filed on March 30, 2020.) 10.18 # Form of Director and Officer Indemnification Agreement (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 23, 2006.) 10.19 + Commercial Supply Agreement dated April 24, 2015 between PARI Pharma GmbH and Serendex Pharmaceuticals A/S (Incorporated by reference to Exhibit 10.62 to the Registrant’s Registration Statement on Form S-4 filed on February 10, 2017.) 10.20 + Research Collaboration and License Agreement dated November 7, 2014 between PARI Pharma GmbH and Serendex Pharmaceuticals A/S (Incorporated by reference to Exhibit 10.63 to the Registrant’s Registration Statement on Form S-4 filed on February 10, 2017.) 10.21 + Amendment No. 1, effective May 23, 2018, to the Research Collaboration and License Agreement between Savara Inc. (as successor in interest to Serendex Pharmaceuticals A/S) and PARI Pharma GmbH dated November 7, 2014 (Incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2018.) 10.22 Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 20, 2019.) 10.23 Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 20, 2019.) 10.24 + Manufacture and Supply Agreement, dated as of April 26, 2019, between Savara ApS and GEMABIOTECH SAU (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2019.) 10.25 + Master Manufacturing Services Agreement, dated June 26, 2019, between Savara ApS and Patheon UK Limited. (Incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed on August 8, 2019.) 10.26 Form of Warrant Repurchase Agreement (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2021.) 10.27 + Master Services Agreement by and between Savara Inc. and Parexel International (IRL) Limited, effective January 6, 2021 (Incorporated by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q filed on May 13, 2021.) 10.28 + Work Order under Master Services Agreement by and between Savara Inc. and Parexel International (IRL) Limited, effective January 6, 2021 (Incorporated by reference to Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q filed on May 13, 2021.) 10.29 First Amendment to Lease Agreement, dated October 26, 2022, between the Registrant and Overlook at Rob Roy Owner, LLC. 10.30 Sales Agreement, dated July 6, 2021, between the Registrant and Evercore Group L.L.C. (Incorporated by reference to Exhibit 1.2 of the Registrant’s Registration Statement on Form S-3 filed on July 6, 2021.) 10.31 Amended and Restated Executive Employment Agreement, dated December 13, 2022, between Savara Inc. and Matthew Pauls (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 15, 2022.) 10.32 Amended and Restated Executive Employment Agreement, dated December 13, 2022, between Savara Inc. and David Lowrance (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 15, 2022.) 10.33 + Amendment No. 1 to the Manufacture and Supply Agreement, dated December 7, 2022 entered into by and between Savara ApS GEMABIOTECH SAU. 10.34 Executive Employment Agreement, dated November 10, 2022, between Savara Inc. and Raymond D. Pratt, M.D. 10.35 Executive Employment Agreement, dated February 13, 2023, between Savara Inc. and Rob Lutz (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 13, 2023.) 21.1 List of Subsidiaries 23.1 Consent of RSM US LLP, Independent Registered Public Accounting Firm 24.1 Power of Attorney included on page of this Form 10-K 31.1 Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) 31.2 Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) 32.1 ** Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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. 67 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) # Indicates management contract or compensatory plan + Indicates confidential treatment has been granted to certain portions of this exhibit, which portions have been omitted and filed separately with the SEC. ** These certifications are being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation by reference language in such filing. 68 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . Savara Inc. Date: March 30, 2023 By: /s/ Matthew Pauls Matthew Pauls Chief Executive Officer and Chair of the Board of Directors POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Matthew Pauls and Dave Lowrance, and each of them acting individually, as his or her attorney-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to any and all amendments to said Report. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Matthew Pauls Chief Executive Officer and Chair of the Board of Directors (Principal Executive Officer) March 30, 2023 Matthew Pauls /s/ Dave Lowrance Chief Financial and Administrative Officer (Principal Financial and Accounting Officer) March 30, 2023 Dave Lowrance /s/ David Ramsay Director March 30, 2023 David Ramsay /s/ Joseph McCracken Director March 30, 2023 Joseph McCracken /s/ Nevan Elam Director March 30, 2023 Nevan Elam /s/ Rick Hawkins Director March 30, 2023 Rick Hawkins /s/ An Van Es-Johansson Director March 30, 2023 An Van Es-Johansson /s/ Ricky Sun Director March 30, 2023 Ricky Sun 69 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F- 2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F- 4 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 F- 5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 F- 7 Notes to Consolidated Financial Statements F- 8 F- 1 Report of Independent Regist ered Public Accounting Firm To the Stockholders and the Board of Directors of Savara Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Savara Inc and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with United States federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accrued Research and Development Costs As described in Note 2 to the consolidated financial statements, the Company records expenses of research and development activities, including nonclinical studies, and third-party contract services for clinical trials and manufacturing development. Clinical trials and contract manufacturing activities performed by third parties are expensed based upon estimates of work completed with respective contract research organizations (“CROs”) or contract manufacturing organizations (“CMOs”) and other third-party vendors. Though expenses are based on signed agreements, the complexity involved in determining expenses arises from agreements containing multiple milestones that require management’s careful analysis with external parties to determine period expenses and potential contractual milestone expenses based on the progress made against benchmarks including but not limited to patients enrolled, services performed and equipment purchased. During 2022, the Company incurred $28 million of research and development expenses. The Company recorded an accrued liability of $1.3 million for expenses incurred but not yet invoiced, and a prepaid expense of $1.8 million for payments made to vendors in excess of costs incurred. Given the significant judgments and estimates in accounting for accrued research and development costs, we have determined this area a critical audit matter. F- 2 Our audit procedures related to the Company’s accrued research and development costs included the following among others: • We evaluated, on a sample basis, the reasonableness of management’s methods and assumptions used in developing the accrued or prepaid research and development costs by: (1) Agreeing key milestones and completion terms, activities, timing, and costs per management provided schedules to signed and executed CMO and CRO contracts, (2) Obtaining evidence from third parties of the research and development activities performed for significant clinical trials and contract manufacturing services, (3) Inquiring of financial and clinical personnel on the status of the clinical trials, progress to completion of clinical trials, method of allocating contractual charges to specific tasks performed during the clinical trials, and the status of change orders, (4) Performed a comparison of current quarterly and annual results compared to prior quarter and prior year to assess the historical accuracy of management’s analysis. /s/ RSM US LLP We have served as the Company's auditor since 2019. Austin, Texas March 30, 2023 F- 3 Savara Inc. and Subsidiaries Consolidated Ba lance Sheets (in thousands, except for share and per share amounts) As of December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 52,100 $ 34,012 Short-term investments 73,776 127,159 Prepaid expenses and other current assets 3,078 3,829 Total current assets 128,954 165,000 Property and equipment, net 51 73 In-process R&D 10,656 11,274 Other non-current assets 116 251 Total assets $ 139,777 $ 176,598 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 1,334 $ 1,443 Accrued expenses and other current liabilities 4,533 4,884 Current portion of long-term debt — 8,333 Total current liabilities 5,867 14,660 Long-term liabilities: Long-term debt 26,078 17,323 Other long-term liabilities 54 117 Total liabilities 31,999 32,100 Commitments and contingencies (Note 10) Stockholders’ equity: Common stock, $ 0.001 par value, 300,000,000 shares authorized as of December 31, 2022 and 2021, respectively; 114,046,345 and 114,036,892 shares issued and outstanding as of December 31, 2022 and 2021, respectively 116 116 Additional paid-in capital 446,938 444,898 Accumulated other comprehensive income (loss) ( 605 ) 5 Accumulated deficit ( 338,671 ) ( 300,521 ) Total stockholders’ equity 107,778 144,498 Total liabilities and stockholders' equity $ 139,777 $ 176,598 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Savara Inc. and Subsidiaries Consolidated Statem ents of Operations and Comprehensive Loss (in thousands, except for share and per share amounts) Years ended December 31, 2022 2021 Operating expenses: Research and development $ 27,879 $ 28,991 General and administrative 10,929 12,350 Depreciation and amortization 31 136 Total operating expenses 38,839 41,477 Loss from operations ( 38,839 ) ( 41,477 ) Other income (expense), net: Interest expense, net ( 88 ) ( 2,282 ) Foreign currency exchange loss ( 19 ) ( 99 ) Tax credit income 796 844 Total other income (expense), net 689 ( 1,537 ) Net loss $ ( 38,150 ) $ ( 43,014 ) Net loss per share: Basic and diluted $ ( 0.25 ) $ ( 0.32 ) Weighted-average common shares outstanding: Basic and diluted 152,771,817 133,919,145 Other comprehensive income (loss): Loss on foreign currency translation ( 648 ) ( 887 ) Unrealized gain (loss) on short-term investments 38 ( 50 ) Total comprehensive loss $ ( 38,760 ) $ ( 43,951 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 Savara Inc. and Subsidiaries Consolidated Statements o f Changes in Stockholders’ Equity Years Ended December 31, 2022 and 2021 (in thousands, except share amounts) Stockholders’ Equity Common Stock Accumulated Number of Shares Amount Additional Paid-In Capital Accumulated Deficit Other Comprehensive Income (Loss) Total Balance on December 31, 2020 54,152,955 $ 55 $ 320,893 $ ( 257,507 ) $ 942 $ 64,383 Issuance of common stock and pre- funded warrants in public offering, net of offering costs (1) 57,479,978 57 122,174 — — 122,231 Repurchase of outstanding pre-funded warrants — — ( 3,909 ) — — ( 3,909 ) Issuance of common stock upon exercise of stock warrants, net 1,737,450 2 2,544 — — 2,546 Issuance of common stock upon exercise of stock options 285,576 1 15 — — 16 Issuance of common stock for settlement of RSUs 443,897 1 ( 1 ) — — — Repurchase of shares for minimum tax withholdings ( 62,964 ) — ( 78 ) — — ( 78 ) Stock-based compensation — — 3,260 — — 3,260 Foreign exchange translation adjustment — — — — ( 887 ) ( 887 ) Unrealized loss on short-term investments — — — — ( 50 ) ( 50 ) Net loss — — — ( 43,014 ) — ( 43,014 ) Balance on December 31, 2021 114,036,892 $ 116 $ 444,898 $ ( 300,521 ) $ 5 $ 144,498 Issuance of common stock upon exercise of stock options 2,344 — 2 — — 2 Issuance of common stock for settlement of RSUs 9,125 — — — — — Repurchase of shares for minimum tax withholdings ( 2,016 ) — ( 3 ) — — ( 3 ) Stock-based compensation — — 2,041 — — 2,041 Foreign exchange translation adjustment — — — — ( 648 ) ( 648 ) Unrealized gain on short-term investments — — — — 38 38 Net loss — — — ( 38,150 ) — ( 38,150 ) Balance on December 31, 2022 114,046,345 $ 116 $ 446,938 $ ( 338,671 ) $ ( 605 ) $ 107,778 (1) As discussed in Note 9. Stockholders’ Equity , the Company sold (i) an aggregate of 57,479,978 shares of the Company’s common stock, par value $ 0.001 per share and (ii) pre-funded warrants to purchase an aggregate of 32,175,172 shares of the Company's common stock at an exercise price, equal to the par value, of $ 0.001 per share. The accompanying notes are an integral part of these consolidated financial statements. F- 6 Savara Inc. and Subsidiaries Consolidated Statem ents of Cash Flows (in thousands) Years ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 38,150 ) $ ( 43,014 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 31 136 Amortization of right-of-use assets 136 231 Non-cash interest income — ( 103 ) Foreign currency loss 19 99 Amortization of debt issuance costs 334 552 Amortization on premium to short-term investments, net 75 1,604 Stock-based compensation 2,041 3,260 Changes in operating assets and liabilities: Prepaid expenses and other current assets 1,336 ( 1,039 ) Non-current assets ( 57 ) — Accounts payable and accrued expenses and other current liabilities ( 319 ) ( 1,763 ) Long-term liabilities — ( 44 ) Net cash used in operating activities ( 34,554 ) ( 40,081 ) Cash flows from investing activities: Purchase of property and equipment ( 9 ) ( 57 ) Purchase of available-for-sale securities, net ( 89,415 ) ( 161,069 ) Maturity of available-for-sale securities 130,793 83,470 Sale of available-for-sale securities, net 11,276 8,200 Net cash provided by (used in) investing activities 52,645 ( 69,456 ) Cash flows from financing activities: Repurchase of outstanding pre-funded warrants — ( 3,909 ) Repayment of long-term debt (1) ( 26,350 ) — Proceeds from long-term debt, net (1) 26,438 — Issuance of common stock and pre-funded warrants in public offering, net of offering costs — 122,231 Issuance of common stock upon exercise of warrants, net — 2,546 Proceeds from exercise of stock options 2 16 Repurchase of shares for minimum tax withholdings ( 3 ) ( 78 ) Net cash provided by financing activities 87 120,806 Effect of exchange rate changes on cash and cash equivalents ( 90 ) ( 137 ) Increase in cash and cash equivalents 18,088 11,132 Cash and cash equivalents beginning of period 34,012 22,880 Cash and cash equivalents end of period $ 52,100 $ 34,012 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,614 $ 1,969 (1) As discussed in Note 7. Debt Facility , the Amended Loan Agreement (as defined herein) was accounted for as a modification. The Company used the proceeds from the Amended Loan Agreement to repay the outstanding amounts under the Loan Agreement from Silicon Valley Bank. The accompanying notes are an integral part of these consolidated financial statements. F- 7 Savara Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Description of Business and Basis of Presentation Description of Business Savara Inc. (together with its subsidiaries “Savara,” the “Company,” “we,” "our" or “us”) is a clinical-stage biopharmaceutical company focused on rare respiratory diseases. The Company’s lead program, molgramostim nebulizer solution (“molgramostim”), is an inhaled granulocyte-macrophage colony-stimulating factor in Phase 3 development for autoimmune pulmonary alveolar proteinosis (“aPAP”). Previously, the Company’s pipeline included molgramostim for nontuberculous mycobacterial (NTM) lung infection in both non-cystic fibrosis (“CF”) and CF patients, vancomycin hydrochloride inhalation powder (“vancomycin”) for persistent methicillin-resistant Staphylococcus aureus (“MRSA”) lung infection in people living with CF and inhaled liposomal ciprofloxacin (“Apulmiq”) for non-CF bronchiectasis. The Company and its wholly-owned subsidiaries operate in one segment with its principal office in Austin, Texas as of December 31, 2022, though a significant portion of our employees work remotely. Since inception, Savara has devoted substantially all of 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 no product revenue from inception to date. The Company has not yet commenced commercial operations. Basis of Presentation The 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 (the “FASB”). Certain prior year amounts have been reclassified for consistency with the current period presentation. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements of the Company are stated in U.S. dollars. These 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 income (loss) . All intercompany transactions and accounts have been eliminated in consolidation. Liquidity As of December 31, 2022, the Company had an accumulated deficit of approximately $ 338.7 million . The Company used cash from operations of approximately $ 34.6 million for the year ended December 31, 2022. The cost to further develop and obtain regulatory approval for any drug is substantial and, as noted below, the Company may have to take certain steps to maintain a positive cash position. Although the Company has sufficient capital to fund many of its planned activities, it may need to continue to raise additional capital to further fund the development of, and seek regulatory approvals for, its product candidate and begin to commercialize any approved product. The Company is currently focused on the development of molgramostim 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 clinical trial for the Company’s product candidate fails or produces unsuccessful results and the product candidate does not gain regulatory approval or, if approved, fails to achieve market 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 had cash and cash equivalents of $ 52.1 million and short-term investments of $ 73.8 million as of December 31, 2022, which is sufficient to fund the Company's operations for the twelve months subsequent to the issuance date of its consolidated financial statements for the year ended December 31, 2022. The Company may continue to raise additional capital as needed through the issuance of additional equity securities and potentially through borrowings and strategic alliances with partner companies. However, if such additional financing is not available timely F- 8 and at adequate levels, the Company may need to reevaluate its long-term operating plans. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. In addition, on March 10, 2023, the FDIC took control of Silicon Valley Bank and created the National Bank of Santa Clara to hold the deposits of Silicon Valley Bank after Silicon Valley Bank was unable to continue its operations. Silicon Valley Bank’s deposits are insured by the FDIC, in amount up to $ 250 thousand for any depositor; any deposit in excess of this insured amount could be lost. The U.S. Department of the Treasury, Federal Reserve Board, and FDIC stated that all depositors of Silicon Valley Bank would have access to all deposits after one business day following the date of closure; we and other depositors with Silicon Valley Bank received such access on March 13, 2023. Additionally, Treasury Secretary Janet L. Yellen, Federal Reserve Chair Jerome H. Powell and FDIC Chairman Martin J. Gruenberg have announced that all bank depositors, including deposits in excess of the FDIC Limit, with SVB will be fully protected. 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., refer to Note 5. Short-term Investments and Note 8. Fair Value Measurements . The Company continues to monitor the circumstances surrounding Silicon Valley Bank and does not anticipate a material impact on its financial condition or operations based upon the FDIC’s management of Silicon Valley Bank’s assets and operations; however, it continues to monitor the situation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates and assumptions that affect the amounts reported in the 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 require approval from the U.S. Food and Drug Administration (the “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 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 products. As a result of these and other factors and the related uncertainties, there can be no assurance of the Company’s future success. Cash and Cash Equivalents Cash and cash equivalents consist of cash and institutional bank money market accounts with original maturities of three months or less when acquired and are stated at cost, which approximates fair value. Short-term Investments The Company has classified its investments in debt securities with readily determinable fair value 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 income (loss) within stockholders’ equity. The fair value of the investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Investments in debt securities are considered to be impaired when a decline in fair value is judged to be other than temporary because the Company either intends to sell or it is more-likely-than not that it will have to sell the impaired security before recovery. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. Refer to Note 5. Short-term Investments for additional discussion. 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 F- 9 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. Accrued Research and Development Costs The Company records the costs associated with research, nonclinical and clinical trials, and manufacturing development as incurred. These costs are a significant component of the Company’s research and development expenses, with a substantial portion of the Company’s on-going research and development activities conducted by third party service providers, including contract research and manufacturing organizations. The Company accrues for expenses resulting from obligations under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which materials or services are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid asset which will be amortized or expensed as the contracted services are performed. As actual costs become known, the Company adjusts its prepaids and accruals. Inputs, such as the services performed, the number of patients enrolled, or the trial duration, may vary from the Company’s estimates, resulting in adjustments to research and development expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. To date, the Company has not experienced any material deviations between accrued and actual research and development expenses. Refer to Note 4. Accrued Expenses and Other Current Liabilities for additional discussion. Business Combinations The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , and as further defined by Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805) , which requires the purchase price to be measured at fair value. When the purchase consideration consists entirely of shares of our common stock, the Company calculates the purchase price by determining the fair value, as of the acquisition date, of shares issued in connection with the closing of the acquisition and, if the transaction involves contingent consideration based on achievement of milestones or earn-out events, the probability-weighted fair value, as of the acquisition date, of shares issuable upon the occurrence of future events or conditions pursuant to the terms of the agreement governing the business combination. If the transaction involves such contingent consideration, our calculation of the purchase price involves probability inputs that are highly judgmental due to the inherent unpredictability of drug development, particularly by development-stage companies. The Company recognizes estimated fair values of the tangible assets and intangible assets acquired, including in process research and development (“IPR&D”), and liabilities assumed as of the acquisition date, and we record as goodwill any amount of the purchase price of the tangible and intangible assets acquired and liabilities assumed in excess of the fair value. License and Collaboration Agreements From time to time the Company enters and may continue to enter into license and collaboration agreements with third parties whereby the Company purchases the rights to develop, market, sell and/or distribute the underlying pharmaceutical products or drug candidates. Pursuant to these agreements, the Company may be required to make up-front payments, milestone payments contingent upon the achievement of certain pre-determined criteria, royalty payments based on specified sales levels of the underlying products, and/or certain other payments. Up-front payments are either expensed immediately as research and development or capitalized. The determination to capitalize amounts related to licenses is based on management’s judgments with respect to stage of development, the nature of the rights acquired, alternative future uses, developmental and regulatory issues and challenges, the net realizable value of such amounts based on projected sales of the underlying products, the commercial status of the unde rlying products, and/or various other competitive factors. Milestone payments made prior to regulatory approval are generally expensed as incurred and milestone payments made subsequent to regulatory approval are generally capitalized as an intangible asset. Royalty payments are expensed as incurred. Other payments made pursuant to license and collaboration agreements, which are generally related to research and development activities, are expensed as incurred. F- 10 Goodwill and Acquired In-Process Research and Development In accordance with ASC Topic 350, Intangibles – Goodwill and Other , the Company's acquired IPR&D and goodwill, when applicable, is determined to have indefinite lives and, therefore, is not amortized. Instead, it is tested for impairment annually and between annual tests if the Company becomes aware of an event or a change in circumstances that would indicate the carrying value may be impaired. For instance, based upon the ultimate scope and scale of the COVID-19 global pandemic, there may be materially negative impacts to the assumptions made with respect to our IPR&D assets that could result in an impairment of such assets. With respect to the impairment testing of acquired IPR&D, ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment , and ASU 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment , provides for a two-step impairment process with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to the determination that it is more-likely-than not (that is, a likelihood of more than 50%) that acquired IPR&D is impaired. If the Company chooses to first assess qualitative factors and it determines that it is more-likely-than not acquired IPR&D is not impaired, the Company is not required to take further action to test for impairment. ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , outlines an impairment model providing us the option to implement a one-step method for determining impairment of goodwill, thereby simplifying the subsequent measurement of goodwill by eliminating Step 2 (quantitative calculation of measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill) from the goodwill impairment test. Under the amendments in this guidance, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. When the Company performs a quantitative assessment of acquired IPR&D, it compares its carrying value to its estimated fair value to determine whether an impairment exists. Due to a lack of Level 1 or Level 2 inputs, the Multi-Period Excess Earnings Method (“MPEEM”), which is a form of the income approach, was used to estimate the fair value of acquired IPR&D when performing a quantitative assessment. Under the MPEEM, the fair value of an intangible asset is equal to the present value of the asset’s projected incremental after-tax cash flows (excess earnings) remaining after deducting the market rates of return on the estimated value of contributory assets (contributory charge) over its remaining useful life. The Company evaluates potential impairment of its acquired IPR&D annually on September 30, utilizing a qualitative approach and determining if it was more-likely-than not that the fair value was impaired. We evaluate potential impairment of our acquired goodwill, if any, annually on or around June 30, performing the quantitative analysis based upon market capitalization. Our determinations as to whether, and if so, the extent to which goodwill and acquired IPR&D become impaired are highly judgmental and, in the case of applying the MPEEM approach to estimate fair value, are based on significant assumptions regarding our projected future financial condition and operating results, changes in the manner of our use of the acquired assets, development of our acquired assets or our overall business strategy, and regulatory, market, and economic environment and trends . If the associated research and development effort is abandoned, the related asset will be written-off, and the Company will record a non-cash impairment loss on its consolidated statements of operations and comprehensive loss. For those products that reach commercialization, the IPR&D asset will be amortized over its estimated useful life. Refer to Note 8. Fair Value Measurements – Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis for additional discussion. Leases The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset's economic benefits in accordance with ASU 2016-02, Leases (Topic 842), as codified in ASC 842, Leases . Lease right-of-use assets and liabilities are initially recorded on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. Leases may include renewal, purchase or termination options that can extend or shorten the term of the lease. The exercise of those options is at the Company's sole discretion and is evaluated at inception and throughout the contract to determine if a modification of the lease term is required. F- 11 In addition to rent, the leases may require the Company to pay additional amounts for taxes, insurance, maintenance, and other expenses, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and liability. Rent expense is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the consolidated statements of operations and comprehensive loss. The Company has made an accounting policy election providing that leases with an initial term of 12 months or less are not recorded as a lease right-of-use asset and corresponding liability in accordance with ASC 842, Leases ; those lease payments are recognized in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Refer to Note 10. Commitments – Operating Leases for additional discussion. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. Our chief operating decision maker is the chief executive officer. We have one operating segment, specialty pharmaceuticals within the respiratory system. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which range from three to five years . Repairs and maintenance that do not improve or extend the useful life of the respective asset are charged to expense as incurred. Refer to Note 6. Property and Equipment, net for additional discussion. Patents and Intellectual Property As the Company’s products are currently under research and development and are not currently approved for market, costs incurred in connection with patent applications are expensed as incurred due to the uncertainty of the future economic benefits of the underlying patents and intellectual property. Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: • Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. Financial instruments carried at fair value include cash and cash equivalents, short-term investments, and foreign exchange derivatives not designated as hedging instruments. Financial instruments not carried at fair value include accounts payable and accrued liabilities. The carrying amounts of these financial instruments approximate fair value due to the highly liquid nature of these short-term instruments. Refer to Note 8. Fair Value Measurements for additional discussion. Revenue Recognition The Company records revenue based on a five-step model in accordance with ASC 606, Revenue from Contracts with Customers . To date, the Company has not generated any product revenue. The Company’s ability to generate product F- 12 revenues, which the Company does not expect will occur in the next several years, if ever, will depend heavily on the successful development, regulatory approval, and eventual commercialization of the Company’s product candidates. Net Loss per Share Basic net loss attributable to common stockholders per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and pre-funded warrants outstanding during the period without consideration of common stock equivalents. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods presented as the inclusion of all potential dilutive securities would have been antidilutive. Refer to Note 14. Net Loss per Share for additional discussion. Stock-Based Compensation The Company recognizes the cost of stock-based awards granted to employees based on the estimated grant-date fair value of the awards. The value of the portion of the award is recognized as expense ratably over the requisite service period. The Company recognizes the compensation costs for awards that vest over several years on a straight-line basis over the vesting period. Forfeitures are recognized when they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. In addition, the Company accounts for any modifications to stock-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation . Refer to Note 12. Stock-Based Compensation for additional discussion. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more-likely-than not to be realized. Refer to Note 13. Income Taxes for additional discussion. Recent Accounting Pronouncements There are no recent accounting pronouncements issued by the FASB, the AICPA, or the SEC that are believed by the Company's management to have a material effect, if any, on the Company’s consolidated financial statements. 3. Prepaid Expenses and Other Current Asset s Prepaid expenses, consisted of (in thousands): December 31, 2022 2021 Prepaid contracted research and development costs $ 1,822 $ 1,902 R&D tax credit receivable 792 838 VAT receivable 162 306 Prepaid insurance 231 427 Deposits and other 71 356 Total prepaid expenses and other current assets $ 3,078 $ 3,829 Prepaid Contracted Research and Development Costs As of December 31, 2022 Prepaid contracted research and development costs are primarily comprised of contractual prepayments associated with the Company's clinical trial for molgramostim for the treatment of aPAP. This includes prepaid amounts paid under agreements with CROs, CMOs, and other outside service providers that provide services in connection with the Company's research and development activities. F- 13 Tax Credit Receivable The Company has recorded a Danish tax credit earned by its subsidiary, Savara ApS, as of December 31, 2022 . Under Danish tax law, Denmark remits a research and development tax credit equal to 22 % of qualified research and development expenditures, not to exceed established thresholds. During the year ended December 31, 2021, the Company generated a Danish tax credit of $ 0.8 million which was received in the fourth quarter of 2022. During the year ended December 31, 2022 , the Company generated a Danish tax credit of $ 0.8 million which is expected to be received in the fourth quarter of 2023. 4. Accrued Expenses and Other Current Liabilities Accrued expenses and other liabilities, consisted of (in thousands): December 31, 2022 2021 Accrued compensation $ 2,365 $ 2,526 Accrued contracted research and development costs 1,322 1,623 Accrued general and administrative costs 782 600 Lease liability 64 135 Total accrued expenses and other current liabilities $ 4,533 $ 4,884 Accrued Compensation As of December 31, 2022 Accrued compensation includes amounts to be paid to employees for salary, vacation and non-equity performance-based compensation. At the end of any period, the amount 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 December 31, 2022 Accrued contracted research and development costs are primarily comprised of costs associated with molgramostim 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. 5. Short-term Investments Short-term Investments in Available-for-Sale Securities 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 December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments U.S. government securities $ 73,784 $ 8 $ ( 16 ) $ 73,776 Asset backed securities — — — — Corporate securities — — — — Commercial paper — — — — Total short-term investments (*) $ 73,784 $ 8 $ ( 16 ) $ 73,776 As of December 31, 2021 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments U.S. government securities $ 12,205 $ — $ ( 15 ) $ 12,190 Asset backed securities 11,349 — ( 3 ) 11,346 Corporate securities 49,095 — ( 29 ) 49,066 Commercial paper 54,557 — — 54,557 Total short-term investments (*) $ 127,206 $ — $ ( 47 ) $ 127,159 * Designated custodial institution, U.S. Bank, N.A. 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 F- 14 other comprehensive income (loss) in the consolidated balance sheet. Classification as short-term or long-term is based upon whether the maturity of the debt securities is less than or greater than twelve months. There were no significant realized gains or losses related to investments for the years ended December 31, 2022 and 2021 . 6. Property and Equipment, Net Property and equipment, net consisted of (in thousands): December 31, 2022 2021 Research and development equipment $ 1,102 $ 1,102 Equipment 666 746 Furniture and fixtures 61 151 Leasehold improvements 145 153 Total property and equipment 1,974 2,152 Less accumulated depreciation ( 1,923 ) ( 2,079 ) Property and equipment, net $ 51 $ 73 Depreciation expense for the years ended December 31, 2022 and 2021 was minimal, respectively. 7. Debt Facility On April 28, 2017, the Company and its subsidiary, Aravas Inc. (“Aravas”), entered into a loan and security agreement with Silicon Valley Bank, as amended by the First Amendment to the Loan and Security Agreement on October 31, 2017 , the Second Amendment to the Loan and Security Agreement on December 4, 2018 , the Third Amendment on January 31, 2020 , and the Fourth Amendment on March 30, 2021 (the “Loan Agreement”), pursuant to which Silicon Valley Bank provided a term loan to us in the principal amount of $ 25.0 million. On April 21, 2022 , the Company and Aravas entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”), as co-borrowers, and Silicon Valley Bank, as lender (the “Lender”), which amended and restated the Loan Agreement in its entirety. The Amended Loan Agreement provides for a $ 26.5 million term loan facility. The Company used the proceeds from the Amended Loan Agreement to repay outstanding amounts under the Loan Agreement, including principal of $ 25.0 million, a prepayment fee of $ 0.1 million, and an end of term charge of $ 1.4 million. Pursuant to the Amended Loan Agreement, the loan has an interest-only monthly payment through April 21, 2026 (the “Interest-Only Period”) and thereafter equal monthly installments of principal plus interest over 12 months until April 21, 2027 (the “Maturity Date”). However, the Company may elect to extend the Interest-Only Period until the Maturity Date if it maintains cash and cash equivalents equal to at least 1.75 times the outstanding principal amount of the loan during the fifth year. If the Interest-Only Period is extended, all principal and unpaid interest is due and payable on the Maturity Date. The loan bears interest at a floating rate equal to the greater of (i) 3 % and (ii) the prime rate reported in The Wall Street Journal, minus a spread of 0.5 %. Savara is obligated to pay customary closing fees and a final payment of 2.75 % of the principal amount advanced under the facility. The Company may prepay the loan in whole or in part at any time, subject to a prepayment fee of 4.25 % if prepaid within the first anniversary of the closing date and 1.0 % if prepaid between the first and second anniversaries of the closing date. Following the second anniversary, there is no prepayment fee. Silicon Valley Bank was granted a perfected first priority lien in all of the Company's assets with a negative pledge on intellectual property. The Amended Loan Agreement contained customary affirmative and negative covenants, including among others, covenants that limit the Company's and its subsidiaries’ ability to dispose of assets, permit a change in control, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments, make certain restricted payments, and enter into transactions with affiliates, in each case subject to certain exceptions. Additionally, the Amended Loan Agreement contains an affirmative covenant providing that if the Company’s balance of cash and cash equivalents falls below $ 40.0 million, the Company is required to maintain cash and cash equivalents equal to at least (i) six months of operating expenses and (ii) 1.2 times the outstanding principal amount of the loan (or 1.75 in the final year of the loan if the Interest-Only Period is extended). In accordance with FASB ASC Topic 470-50, Debt – Modifications and Extinguishments , the Company evaluated the Amended Loan Agreement to determine whether it should be accounted for as a modification or extinguishment. As a result of this analysis, the Amended Loan Agreement was accounted for as a modification. Accordingly, no gain or loss is recognized. Approximately $ 0.1 million of fees paid to the lender were capitalized and will be amortized over the term of F- 15 the Amended Loan Agreement. Expenses paid to third parties associated with the Amended Loan Agreement were immediately expensed and recorded in the Interest expense line item in our consolidated statement of operations. On March 10, 2023, the FDIC took control and was appointed receiver of Silicon Valley Bank. As such, the Company is monitoring the impact on the Amended Loan Agreement. 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, 2023 $ — 2024 — 2025 — 2026 17,667 2027 9,562 Total future minimum payments 27,229 Unamortized end of term charge ( 630 ) Debt issuance costs ( 478 ) Debt discount related to warrants ( 43 ) Total debt 26,078 Current portion of long-term debt — Long-term debt $ 26,078 8 . 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. 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. F- 16 The fair value of these instruments as of December 31, 2022 and 2021 was as follows (in thousands): Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As of December 31, 2022 Cash equivalents (*): U.S. Treasury money market funds $ 48,804 $ — $ — $ 48,804 Short-term investments (*): U.S. government securities 73,776 — — 73,776 Asset backed securities — — — — Corporate securities — — — — Commercial paper — — — — As of December 31, 2021 Cash equivalents (*): U.S. Treasury money market funds $ 30,853 $ — $ — $ 30,853 Short-term investments (*): U.S. government securities 12,190 — — 12,190 Asset backed securities — 11,346 — 11,346 Corporate securities — 49,066 — 49,066 Commercial paper — 54,557 — 54,557 * Designated custodial institution, U.S. Bank, N.A. The Company did no t transfer any assets measured at fair value on a recurring basis to or from Level 1, Level 2, and Level 3 during the years ended December 31, 2022 and 2021. Assets and Li abilities 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 IPR&D and other long-lived assets that are written down to fair value if they are impaired. As of December 31, 2022, the Company had IPR&D of approximately $ 10.7 million . At December 31, 2022, the Company performed an impairment analysis and concluded that the impact of COVID-19 or other factors did not trigger any impairment indicators. For the years ended December 31, 2022 and 2021, the Company experienced a decrease of approximately $ 0.6 million and a decrease of approximately $ 0.9 million, respectively, in the carrying value of IPR&D, which was due to foreign currency translation. F- 17 9. Stockh olders’ Equity Private Placement On December 24, 2019, the Company completed a private placement in a public entity (the “Private Placement” or “PIPE”) under a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional and accredited investors (the “Investors”), pursuant to which we issued and sold to the Investors 9,569,430 shares of our common stock at a price of $ 1.745 per share and pre-funded warrants (“Pre-Funded PIPE Warrants”) to purchase an aggregate of 5,780,537 shares of common stock at $ 1.744 per share (or $ 1.745 minus the exercise price of $ .001 ). The net proceeds after deducting placement fees and offering expenses were approximately $ 25.2 million. We also issued accompanying warrants (the “Milestone Warrants”), with an exercise price of $ 1.48 per share, to purchase an aggregate of up to 32,577,209 additional shares of common stock and may receive up to approximately $ 48.2 million from the exercise of the Milestone Warrants prior to their expiration, totaling potential aggregate gross proceeds of up to approximately $ 75.0 million from the PIPE before deducting placement agent fees and estimated offering expenses. The Milestone Warrants were exercisable at any time prior to the earlier of thirty days following the achievement of a defined clinical milestone or two years after the closing date of the Private Placement. The Pre-Funded PIPE Warrants are exercisable at any time after their original issuance and will not expire. We intend to use the net proceeds from the Private Placement to fund a new clinical trial of molgramostim for the treatment of aPAP and for other general corporate purposes. The net proceeds from the Private Placement were allocated among the instruments based upon their relative fair values at December 24, 2019 resulting in carry values of the respective instruments as follows (in thousands): Financial instruments Relative Fair Value Common stock and Pre-Funded PIPE Warrants $ 11,713 Milestone Warrants 13,534 Total Net Proceeds from Private Placement $ 25,247 Milestone Warrants Immediately prior to the March 15, 2021 Public Offering, discussed below, the Company entered into separate, privately-negotiated warrant repurchase agreements with certain holders of its outstanding Milestone Warrants. The Company paid $ 3.9 million ($ 0.15 per share of Common Stock underlying each milestone warrant) to repurchase milestone warrants with 26,061,769 shares of Common Stock underlying such warrants, and the warrants were terminated. The warrant repurchase was accounted for as an equity transaction and resulted in a reduction to Additional paid-in capital in the consolidated statement of stockholders’ equity. On August 13, 2021, thirty days following the achievement of a defined clinical milestone, the remaining 3,474,902 Milestone Warrants expired and therefore such Milestone Warrants were terminated and no longer outstanding or exercisable . Public Offering of Common Stock On March 15, 2021, the Company sold (i) an aggregate of 57,479,978 shares of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”) for $ 1.45 per share, of which 11,694,150 shares were issued pursuant to the underwriters’ option to purchase additional shares, and (ii) pre-funded warrants to purchase an aggregate of 32,175,172 shares of Common Stock at an exercise price of $ 0.001 per share (the “2021 Pre-Funded Warrants”) for $ 1.449 per warrant (collectively, the “Public Offering”). The Company determined that the securities issued in the Public Offering were free-standing and that the 2021 Pre-Funded Warrants did not contain any settlement obligations that would result in liability classification under ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Contracts in Entity’s Own Equity . The shares encompassed in the 2021 Pre-Funded Warrants were sold at the same price as the underlying common stock, less $ 0.001 (which represents the exercise price of the warrants). F- 18 The Public Offering resulted in net proceeds to the Company of approximately $ 122.2 million , after deducting final underwriting discounts, commissions and offering expenses, as follows (in thousands): Financial instruments Proceeds Common stock $ 83,346 2021 Pre-funded Warrants 46,622 Total 129,968 Offering expenses ( 7,737 ) Net proceeds $ 122,231 Wainwright Common Stock Sales Agreement On April 28, 2017, the Company entered into a Common Stock Sales Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, which was amended by Amendment No. 1 to the Common Stock Agreement (the “Amendment”) on June 29, 2018 (the “Wainwright Sales Agreement”), pursuant to which the Company may offer and sell, from time to time, through Wainwright, shares of Savara’s common stock, par value $ 0.001 per share (the “Shares”), having an aggregate offering price of not more than $ 60.0 million, in addition to the $ 2.3 million in shares sold prior to the Amendment. The Amendment was effective on July 13, 2018, the date the Company’s shelf registration statement on Form S-3, as filed with the Securities and Exchange Commission on June 29, 2018, was declared effective (“2018 Registration Statement”) by the Securities and Exchange Commission. The Shares were offered and sold pursuant to the 2018 Registration Statement. Subject to the terms and conditions of the Wainwright Sales Agreement, Wainwright used its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has provided Wainwright with customary indemnification rights, and Wainwright was entitled to a commission at a fixed commission rate equal to 3.0 % of the gross proceeds per Share sold. Sales of the Shares, if any, under the Wainwright Sales Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended. The Company has no obligation to sell any of the Shares and may at any time suspend sales under the Wainwright Sales Agreement or terminate the Wainwright Sales Agreement . On July 2, 2021, the Company delivered written notice to Wainwright that it was terminating the Wainwright Sales Agreement effective July 12, 2021 . Evercore Common Stock Sales Agreement On July 6, 2021, the Company entered into a Common Stock Sales Agreement with Evercore Group L.L.C. (“Evercore”), as sales agent (the “Sales Agreement”), pursuant to which the Company may offer and sell, from time to time, through Evercore, shares of Savara’s common stock, par value $ 0.001 per share (the “Shares”), having an aggregate offering price of not more than $ 60 million. The Agreement was effective on July 16, 2021 (the “New Registration Statement”), the date the Company’s shelf registration agreement on Form S-3, as filed with the SEC on July 6, 2021, was declared effective by the SEC. The Shares will be offered and sold pursuant to the New Registration Statement. Subject to the terms and conditions of the Sales Agreement, Evercore will use commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has provided Evercore with customary indemnification rights, and Evercore will be entitled to a commission at a fixed commission rate equal to 3 % of the gross proceeds per Share sold. Sales of the Shares, if any, under the Sales Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended. The Company has no obligation to sell any of the Shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement. During the year ended December 31, 2022, the Company did no t sell any shares of common stock under the Evercore Sales Agreement. Common Stock The Company’s amended and restated certificate of incorporation, as amended in June 2021, authorizes the Company to issue 301 million shares of capital stock, consisting of 300 million shares of common stock with $ 0.001 par value per share and one million shares of preferred stock with $ 0.001 par value per share. The following is a summary of the Company’s common stock at December 31, 2022 and 2021: December 31 2022 2021 Common stock authorized 300,000,000 300,000,000 Common stock outstanding 114,046,345 114,036,892 F- 19 The Company’s shares of common stock reserved for issuance as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 April 2017 Warrants 24,725 24,725 June 2017 Warrants 41,736 41,736 December 2018 Warrants 11,332 11,332 2017 Pre-funded Warrants 775,000 775,000 Pre-funded PIPE Warrants 5,780,537 5,780,537 2021 Pre-funded Warrants 32,175,172 32,175,172 Stock options outstanding 7,933,184 6,218,841 Issued and non-vested RSUs 1,942,250 1,272,375 Total shares reserved 48,683,936 46,299,718 Warrants The following table summarizes the outstanding warrants for the Company’s common stock as of December 31, 2022: Expiration Date Shares Underlying Outstanding Warrants Exercise Price October 2024 775,000 $ 0.01 April 2027 24,725 $ 2.87 June 2027 41,736 $ 2.87 December 2028 11,332 $ 2.87 None 37,955,709 $ 0.001 38,808,502 Accumulated Other Comprehensive Income (Loss) Information The components of accumulated other comprehensive income (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 Income (Loss) Balance, December 31, 2020 $ 941 $ 1 $ 942 Change ( 887 ) ( 50 ) ( 937 ) Balance, December 31, 2021 54 $ ( 49 ) 5 Change ( 648 ) 38 ( 610 ) Balance, December 31, 2022 $ ( 594 ) $ ( 11 ) $ ( 605 ) 10. Comm itments Operating Leases The Company has entered into operating leases for real estate in multiple locations. The Company’s leases have lease terms that include options to extend (in some cases, for up to 36 months ). The exercise of lease renewal and termination options are at the Company’s sole discretion with the exception of the Austin Texas lease, as amended, noted below. For purposes of calculating operating lease liabilities, the Company’s leases are deemed not to include an option to extend the lease term until it is reasonably certain that the Company will exercise that option. The Company has operating lease agreements with lease and non-lease components that are accounted for as a single lease component. The Company previously subleased office space pursuant to a sublease that expired at the end of July 2021 . On June 3, 2021 , the Company entered into a lease agreement (the “Antecedent TX Lease”) with the same landlord for a different office suite located in the same building and relocated its headquarters to this location. The Antecedent TX Lease commencement date was August 1, 2021 and continued through December 31, 2022 . On commencement of the Antecedent TX Lease, the Company recorded an operating lease liability and corresponding right-of-use asset of approximately $ 0.1 million. In December 2022, contemporaneously with the expiration of the Antecedent TX Lease, the Company entered into another lease (the "Current TX Lease") with the same landlord for a different office suite located in the same commercial complex and relocated its headquarters to this location. The term for the Current TX Lease is initially six months or June 30, 2023, at which point it converts to a month-to-month arrangement thereafter with termination rights upon thirty days written notice. Due to the duration of the Current Texas Lease term, no right-of-use F- 20 asset or corresponding liability has been recorded in accordance with the Company's election under ASC 842 further described in Note 2. Summary of Significant Accounting Policies . On July 7, 2021, the Company entered into a lease agreement (the “PA Lease”) for an office space in Langhorne, Pennsylvania. The PA Lease commencement date was October 1, 2021 and will continue through September 30, 2024 . On commencement of the PA Lease, the Company recorded an operating lease liability and corresponding right-of-use asset of approximately $ 0.2 million. The Company also terminated a lease agreement during the fourth quarter of 2021 . As a result of the termination, the Company paid a fee of approximately $ 20,000 that would have otherwise been payable as part of the property's annual base rent. This termination resulted in a reduction of right-of-use operating lease assets and operating lease liabilities of approximately $ 0.1 million. The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of December 31, 2022 (in thousands): Year ending December 31, 2023 $ 63 2024 54 Total future minimum lease payments $ 117 Less imputed interest ( 7 ) Total $ 110 Operating cash flows from operating leases $ 151 Weighted-average remaining lease term (in months) - operating leases 21.0 Weighted-average discount rate - operating leases 7.8 % As of December 31, 2022, the carrying value of the right-of-use ass ets for the operating leases was $ 0.1 million, which is reflected in Other non-current assets , and the carrying value of the lease liabilities for operating leases was $ 0.1 million, of which approximately $ 0.06 million related to the current portion of the lease liabilities is recorded in Accrued expenses and other current liabilities , and $ 0.05 million related to the non-curr ent portion of the lease liabilities is recorded in Other long-term liabilities . Manufacturing and Other Commitments and Contingencies The Company is subject to various royalties and manufacturing and development payments related to its product candidate, molgramostim. Under a manufacture and supply agreement with the active pharmaceutical ingredients (“API”) manufacturer for molgramostim, Savara must make certain payments to the API manufacturer upon achievement of the milestones outlined in the table set forth below. Additionally, upon first receipt of marketing approval by Savara from a regulatory authority in a country for a product containing the API for therapeutic use in humans and ending the earlier of (i) ten (10) years thereafter or (ii) the date a biosimilar of such product is first sold in such country, Savara shall pay the API manufacturer a royalty equal to low-single digits of the net sales in that country. 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 molgramostim. The change in the amount of the milestone payments from December 31, 2021 to December 31, 2022 was related to foreign currency translation fluctuations. In addition to these milestones, the Company will owe a royalty of three-and one-half percent ( 3.5 %) to the manufacturer of the nebulizer based on net sales. Manufacturing, Development, and Other Contingent Milestone Payments (in thousands): December 31, 2022 Molgramostim manufacturer: Achievement of certain milestones related to validation of API and regulatory approval of molgramostim $ 2,300 Molgramostim nebulizer manufacturer: Achievement of various development activities and regulatory approval of nebulizer utilized to administer molgramostim 536 Total manufacturing and other commitments $ 2,836 F- 21 The milestone commitments disclosed 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 December 31, 2022. On December 10, 2020, the Company announced that the Phase 3 trial of vancomycin in people living with cystic fibrosis who have MRSA lung infection did not meet the primary endpoint. On January 7, 2021 the Company issued a termination notice to GlaxoSmithKline Trading Services Limited (“GSK”), which manufactures the drug product from bulk vancomycin powder. On January 26, 2021, the Company and GSK entered a change order for termination costs associated with the closeout and wind-down of vancomycin activities. During the year ended December 31, 2021, the Company paid approximately $ 0.8 million of research and development expense related to the termination of the manufacturing agreement. Contract Research On March 5, 2021, 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 wor k order was executed with Parexel, under which they will provide services related to the IMPALA-2 trial. Under that work order and subsequent change orders, the Company will pay Parexel service fees and pass-through expenses estimated to be approximately $ 33.6 million over the course of the IMPALA-2 clinical trial. Risk Management The Company maintains various forms of insurance that the Company's management believes are adequate to reduce the exposure to these risks to an acceptable level. Employment Agreements On December 8, 2020, the Company entered into an employment agreement with the CEO, as amended and restated on December 13, 2022, whereby the CEO is entitled to payments and benefits upon certain events. Upon (i) termination without cause, (ii) termination due to the CEO’s death or disability, or (iii) the CEO’s resignation for good reason, the CEO is entitled to receive (i) a lump sum payment equal to 18 months of base salary, (ii) a lump sum payment equal to 100 % of his target bonus, (iii) a pro-rated portion of the unpaid target bonus, (iv) reimbursement for continued coverage under medical benefit plans for 18 months or until covered under a separate plan from another employer, and (v) the immediate and full vesting of outstanding non-vested Company equity awards. Additionally, all of the CEO’s outstanding stock options will be exercisable through the earlier of (x) the 18 month anniversary of the termination date or (y) the original expiration date. Upon a termination other than for cause, death or disability or resignation for good reason within three months prior to or 12 months following a change in control, the CEO is entitled to receive (i) a lump sum payment of an amount equal to 24 months of base salary, plus 100% of the unpaid target bonus, plus a pro-rated portion of any unpaid bonus earned during the relevant performance period, (ii) reimbursement for continued coverage under medical benefit plans for 24 months or until covered under a separate plan from another employer, and (iii) the immediate and full vesting of outstanding non-vested Company equity awards. Additionally, all of the CEO’s outstanding stock options will be exercisable through the earlier of (x) the 24-month anniversary of the termination date or (y) the original expiration date. Each of the Company’s Chief Financial Officer (“CFO”) and Chief Medical Officer (“CMO”) is entitled to payments and benefits if the CFO or CMO, respectively, is (i) terminated without cause, (ii) terminated due to the CFO or CMO's death or disability, or (iii) resigns for good reason, which includes (i) a lump sum payment equal to 12 months of base salary and a pro-rated portion of their unpaid bonus, (ii) reimbursement for continued coverage under medical benefit plans for 12 months or until covered under a separate plan from another employer, and (iii) accelerated vesting of outstanding non-vested Company equity awards equal to 12 months. Upon a termination other than for cause, death or disability or resignation for good reason within three months prior to or 12 months following a change in control, the CFO or CMO is entitled to receive (i) a lump sum payment of an amount equal to 18 months of base salary, plus 100% of their target bonus, plus a pro-rated portion of their unpaid target bonus, (ii) a lump sum payment equal to the amount required to continue coverage under medical benefit plans for 18 months, and (iii) the immediate and full vesting of outstanding non-vested options at the time of such termination. 11. Related Parties As an investor with the right to designate a member of the Company’s board of directors, Bain has significant influence over the Company and is thereby considered a related party. F- 22 Pursuant to the Public Offering on March 15, 2021 (as further discussed in Note 9. Stockholders' Equity ), Bain acquired 19,517,241 shares of the Company’s common stock and 17,175,172 2021 Pre-Funded Warrants. 12. Stock -Based Compensation A. Equity Incentive Plans 2008 Stock Option Plan The Company adopted the Savara Stock Option Plan (the “2008 Plan”), pursuant to which the Company had reserved shares for issuance to employees, directors, and consultants. The 2008 Plan includes (i) the option grant program providing for both incentive and non-qualified stock options, as defined by the Internal Revenue Code, and (ii) the stock issuance program providing for the issuance of awards that are valued based upon common stock, including restricted stock, dividend equivalents, stock appreciation rights, phantom stock, and performance units. The 2008 Plan also allows eligible persons to purchase shares of common stock at an amount determined by the plan administrator. Upon a participant’s termination, the Company retains the right to repurchase non-vested shares issued in conjunction with the stock issuance program at the fair market value per share as of the date of termination. The Company had previously issued incentive and non-qualified options and restricted stock to employees and non-employees under the 2008 Plan. The terms of the stock options, including the exercise price per share and vesting provisions, were determined by the board of directors. Stock options were granted at exercise prices not less than the estimated fair market value of the Company’s common stock at the date of grant based upon objective and subjective factors including: third-party valuations, preferred stock transactions with third parties, current operating and financial performance, management estimates and future expectations. The Company no longer issues stock-based awards under the 2008 Plan. 2015 Omnibus Incentive Option Plan The Company operates the 2015 Omnibus Incentive Plan (the “2015 Plan”), as amended and restated with approval by our stockholders in June 2018 and amended with approval by our stockholders in May 2020 and June 2022. The 2015 Plan provides for the grant of incentive and non-statutory stock options, as well as share appreciation rights, restricted shares, restricted stock units, performance units, shares and other stock-based awards. Share-based awards are subject to terms and conditions established by our board of directors or the compensation committee of our board of directors. As of December 31, 2022, the number of shares of our common stock available for grant under the 2015 Plan was 1,891,422 shares. Shares of common stock that are subject to awards granted under the 2015 Plan shall be counted against the shares available for issuance under this plan as one share for each share subject to a stock option or stock appreciation right and as 1.34 shares for each share subject to an award other than a stock option or a stock appreciation right such as a restricted stock unit (“RSU”). If any shares of common stock subject to an award granted under any of our stockholder-approved, equity-based incentive plans are forfeited, or an award expires or is settled for cash pursuant to the terms of an award, the shares subject to the award may be used again for awards under the 2015 Plan to the extent of the forfeiture, expiration or cash settlement. The shares of common stock will be added back as one share for every share of common stock if the shares were subject to a stock option or stock appreciation right, and as 1.34 shares for every share of common stock if the shares were subject to an award other than a stock option or stock appreciation right. Under the 2015 Plan, the purchase price of shares of common stock covered by a stock option cannot be less than 100 % of the fair market value of the common stock on the date the stock option is granted. Fair market value of the common stock is generally equal to the closing price for the common stock on the principal securities exchange on which the common stock is traded on the date the stock option is granted (or if there was no closing price on that date, on the last preceding date on which a closing price was reported). Under the 2008 and 2015 Plan, stock option grants typically vest quarterly over four years and expire ten years from the grant date and restricted stock unit grants typically vest quarterly over four years or cliff vest after two years . Inducement Plan The Company has granted equity awards under inducement grants filed in accordance with Nasdaq Listing Rule 5635(c)(4) exclusively to the Company’s CMO as an inducement for the CMO to enter into employment with the Company. 2021 Inducement Equity Incentive Plan The Company adopted the 2021 Inducement Equity Incentive Plan (the “Inducement Plan”) with approval by the Company's board of directors in May 2021. The Inducement Plan provides for the grant of non-statutory stock options, F- 23 restricted stock, restricted stock units, stock appreciation rights, performance units or 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 December 31, 2022 , the number of shares of common stock available for grant under the 2021 Plan was 1,197,500 shares. Under the Inducement Plan, stock option grants typically vest quarterly over four years and expire ten years from the grant date and restricted stock unit grants typically cliff vest after two years . B. Stock Options and Restricted Stock Units The Company values stock options using the Black-Scholes-Merton option pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility, and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company’s employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. The Company uses the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield because dividends are not expected to be paid in the future, consistent with the Company’s history of not paying dividends. The valuation of stock options is also impacted by the valuation of common stock. Restricted stock units are valued at the closing market price of the Company’s common stock on the date of grant. C. Fair Value Assumptions for 2015 Plan The following table summarizes the assumptions used for estimating the fair value of stock options granted to employees for the years ended December 31, 2022 and 2021: 2022 2021 Risk-free interest rate 2.11 % - 3.94 % 0.77 % - 1.27 % Expected term (years) 6.06 6.06 - 6.07 Expected volatility 88.5 % - 97.44 % 79.7 % - 91.2 % Dividend yield 0 % 0 % D. Stock-Based Award Activity The following tables provide a summary for stock option and RSU activity for the year ended December 31, 2022: Stock Options: Shares Underlying Option Awards Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value (in 000's) Outstanding at December 31, 2021 6,218,841 $ 2.25 8.59 $ 354 Granted 2,812,000 1.48 6.06 Exercised ( 2,344 ) 0.65 2 Expired/cancelled/forfeited ( 1,095,313 ) 1.51 Outstanding at December 31, 2022 7,933,184 $ 2.08 8.40 $ 1,440 Options exercisable at December 31, 2022 3,330,099 $ 3.01 7.16 $ 676 Vested and expected to vest at December 31, 2022 7,933,184 $ 2.08 8.40 $ 1,440 RSUs: Shares Underlying Option Awards Weighted-Average Grant Date Fair Value Outstanding at December 31, 2021 1,272,375 $ 1.20 Granted 949,000 1.49 Vested ( 8,672 ) 3.35 Expired/cancelled/forfeited ( 270,453 ) 1.30 Outstanding at December 31, 2022 1,942,250 $ 1.32 F- 24 The weighted-average grant date fair values for the Company’s stock options granted during the years ended December 31, 2022 and 2021 were $ 1.13 per share and $ 0.88 per share, respectively. The total compensation cost related to non-vested stock options not yet recognized as of December 31, 2022 was $ 4.7 million, which will be recognized over a weighted-average period of approximately 3.2 years. The total compensation cost related to unvested RSUs not yet recognized as of December 31, 2022 was $ 1.9 million, which will be recognized over a weighted-average period of 1.7 years. During the years ended December 31, 2022 and 2021 , the Company did no t grant any options to purchase shares of common stock to non-employees. The Company recorded a minimal amount of stock-based compensation expense for options issued to non-employees for the years ended December 31, 2022 and 2021, respectively. E. 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 years ended December 31, 2022 and 2021 (in thousands): Year ended December 31, 2022 2021 Research and development $ 448 $ 1,286 General and administrative 1,593 1,974 Total stock-based compensation $ 2,041 $ 3,260 13. Inc ome Taxes The components of loss before income taxes for the years ended December 31, 2022 and 2021 are as follows (in thousands): December 31, 2022 2021 Domestic $ ( 29,326 ) $ ( 28,705 ) Foreign ( 8,824 ) ( 14,309 ) Total $ ( 38,150 ) $ ( 43,014 ) The Company did no t record a federal tax benefit or expense for the year ended December 31, 2022 . The Company recorded no state provision for income taxes for the years ended December 31, 2022 and 2021 due to revenues below the minimum tax threshold. The components of the benefit for income taxes are as follows for the years ended December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Current: Federal $ — $ — State — — Foreign — — Total Current — — Deferred: Federal — — State — — Foreign — — Total Deferred — — Total income tax expense (benefit) $ — $ — F- 25 A reconciliation of the expected income tax results computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows for the years ended December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Income tax benefit computed at federal statutory tax rate $ ( 8,011 ) $ ( 9,033 ) Change in valuation allowance 4,286 ( 12,253 ) Orphan drug & research credits generated ( 1,677 ) ( 1,966 ) Orphan drug & research credit expense disallowance — — Impact of foreign operations ( 16 ) ( 177 ) Sec. 382 Limitation — 25,249 Foreign deferred tax asset - true up 2,021 ( 3,833 ) Imputed interest 1,006 1,253 Permanent differences 2,213 738 Other 178 22 Total $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has established a valuation allowance due to uncertainties regarding the realization of deferred tax assets based upon the Company’s lack of earnings history. During the years ended December 31, 2022 and 2021 , the valuation allowance increased by $ 3.1 million and decreased by $ 10.9 million, respectively. During 2021, the valuation allowance decreased by $ 25.2 million due to Internal Revenue Code of 1986 Section 382 ("Section 382") limited net operating loss ("NOL") and credits being removed from financial statements; this decrease was offset by increases of approximately $ 13.2 million due to continuing operations and $ 1.1 million due to foreign translation adjustments, which are recorded in OCI. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 31, 2022 2021 Deferred tax liabilities: Prepaid assets $ — $ — Other 329 574 Total deferred tax liabilities 329 574 Deferred tax assets: Net operating loss carryforwards 38,969 36,298 Intangible assets 267 5,380 Amortization 1,165 1,212 Credit carryforwards 5,966 4,351 Section 174 research and development expenses 3,663 — Accrued liabilities & other 1,203 1,107 Total deferred tax assets 51,233 48,348 Subtotal 50,904 47,774 Valuation allowance ( 50,904 ) ( 47,774 ) Net deferred taxes $ — $ — During 2021, the Company completed a Section 382 analysis to determine the amount of losses that are currently available for potential offset against future taxable income. Based on the analysis, it was determined that the utilization of the Company's NOLs and tax credit carryforwards generated in tax periods up to and including December 2019 are substantially limited and may result in the expiration of such carryforwards prior to utilization. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5 % shareholders in the stock of a corporation by more than 50 percentage points in the aggregate over a three-year period. Since the Company's formation, it has raised capital through public or private issuance of common stock on several occasions which have ultimately resulted in multiple changes in ownership, as defined by Section 382. As a result of these ownership changes, $ 47.4 million of NOLs and $ 15.3 million of research and orphan drug credits have been fully restricted from use and were removed from the ending deferred tax assets and 2021 carryforwards mentioned above. As of December 31, 2022 and 2021, the Company still has $ 52.4 million and $ 50.6 million of federal Section 382 NOLs, respectively, which are included in the federal NOL carryforwards below, that are severely limited in future years. F- 26 As of December 31, 2022 and 2021 , the Company had foreign NOL carryforwards of approximately $ 81.8 million and $ 71.8 million, respectively, which have an indefinite carryforward period. After taking the Section 382 limitations discussed into account, as of December 31, 2022 and 2021, the Company had NOLs for federal income tax purposes of approximatel y $ 98.6 million and $ 96.0 million, respectively. Federal NOL carryforwards of $ 5.2 million begin to expire in 2037 , with $ 93.4 million not having an expiration date. As of December 31, 2022 and 2021 , the Company had state NOL carryforwards of approximately $ 3.5 million, respectively. The state NOL carryforwards begin to expire in 2038 . As of December 31, 2022 and 2021 , the Company also had available research and orphan drug tax credit carryforwards for federal income tax purposes of approximately $ 5.2 million and $ 3.6 million, respectively. If not utilized, these carryforwards expire at various dates beginning in 2039 . As of December 31, 2022 and 2021 , the Company had state research and development tax credit carryforwards of approximately $ 0.5 m illion and $ 0.6 million, respectively, which will begin to expire in 2034 if not utilized. The Company applies the accounting guidance in ASC 740 Income Taxes related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. As of December 31, 2022 and 2021 , the Company had no unrecognized tax benefits. During the years ended December 31, 2022 and 2021 , the Company had no interest and penalties related to income taxes. The Company files income tax returns in the U.S. federal, state, and foreign jurisdictions. As of December 31, 2022 , the statute of limitations for assessment by the Internal Revenue Service (“IRS”) is open for the 2018 and subsequent tax years, although carryforward attributes that were generated for tax years prior to then may still be adjusted upon examination by the IRS if they either have been, or will be, used in a future period. The 2017 and subsequent tax years remain open and subject to examination by the state taxing authorities. The 2018 and subsequent tax years remain open and subject to examination by the foreign taxing authorities. There are currently no federal, state, or foreign income tax audits in progress. 14. Net L oss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were 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. As of December 31, 2022 and 2021, potentially dilutive securities include: Year ended December 31, 2022 2021 Awards under equity incentive plan 7,933,184 6,218,841 Non-vested restricted shares and restricted stock units 1,942,250 1,272,375 Warrants to purchase common stock 77,793 77,793 Total 9,953,227 7,569,009 The following table calculates basic earnings per share of common stock and diluted earnings per share of common stock for the years ended December 31, 2022 and 2021 (in thousands, except share and per share amounts): Year ended December 31, 2022 2021 Net loss $ ( 38,150 ) $ ( 43,014 ) Net loss attributable to common stockholders $ ( 38,150 ) $ ( 43,014 ) Undistributed earnings and net loss attributable to common stockholders, basic and diluted $ ( 38,150 ) $ ( 43,014 ) Weighted-average common shares outstanding, basic and diluted 152,771,817 133,919,145 Basic and diluted EPS $ ( 0.25 ) $ ( 0.32 ) F- 27 15. Sub sequent Events Langhorne, PA Lease Amendment On February 28, 2023, the Company entered into its first amendment to the PA Lease ("Amended PA Lease") for an expansion of approximately 3,970 additional square feet for a total of approximately 6,435 square feet of office space in Langhorne, Pennsylvania. The Amended PA Lease commencement date is July 1, 2023 and extends the lease period through June 30, 2026. On the Amended PA Lease commencement date, the Company will reevaluate and record an adjusted operating lease liability and corresponding right-of-use asset. Silicon Valley Bank Receivership On March 10, 2023, the FDIC took control of Silicon Valley Bank and created the National Bank of Santa Clara to hold the deposits of Silicon Valley Bank after Silicon Valley Bank was unable to continue their operations. Silicon Valley Bank’s deposits are insured by the FDIC Limit, in amount up to $ 250 thousand for any depositor and any deposit in excess of this insured amount could be lost. The U.S. Department of the Treasury, Federal Reserve Board, and FDIC stated that all depositors of Silicon Valley Bank would have access to all of their money after one business day following the date of closure; we and other depositors with Silicon Valley Bank received such access on March 13, 2023. 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., refer to Note 5. Short-term Investments and Note 8. Fair Value Measurements . The Company is also monitoring the impact to its Amended Loan Agreement and continues to monitor the circumstances surrounding Silicon Valley Bank. The Company does not anticipate a material impact on its financial condition or operations based upon the FDIC’s management of Silicon Valley Bank’s assets and operations; however, it continues to monitor the situation. The Company has evaluated subsequent events through the date these financial statements were issued. The Company determined there were no further events that required disclosure or recognition in these financial statements. F- 28