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Item 9A. Controls and Procedures

2024-03-07 compared with 2023-03-30 · 265 added, 372 removed, 696 unchanged (48% of the section changed)

5 unchanged sentences

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, 2023 based on criteria in Internal Control - Integrated Framework (2013) issued by the COSO.

1 unchanged sentence

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.

There were no changes in our internal control over financial reporting that occurred during Savara’s quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

During the quarter ended December 31, 2023, no officer or director of the Company adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities of the Company’s common stock that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement as defined in 17 CFR § 229.408(c).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable

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.

Directors, Executive Off icers, and Corporate Governance.

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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.

This code of ethics is a part of our code of business conduct and ethics, and is available on our corporate website at http://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.

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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”)

Stock Option Plan (the “2008 Plan”)

2021 Inducement Equity Incentive Plan (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

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not approved by security holders

Total (2),(3)

(1) The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding RSUs, which have no exercise price.

(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.

(2) Includes 7,242,443 shares issuable upon the exercise of outstanding options granted under the 2015 Plan, 2,228,438 shares issuable upon the exercise of outstanding options granted under the 2021 Inducement Plan, and 162,186 shares issuable upon the exercise of outstanding options granted under the 2008 Plan.

(3) Includes 2,828,250 shares issuable upon the vesting of RSUs granted under the 2015 Plan and 660,000 shares issuable upon the vesting of RSUs granted under the 2021 Inducement Plan.

Certain Relationships and Related Transactions, and Director Independence.

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• Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’

Equity for the years ended December 31, 2022 and 2021

• Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022

• Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

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Exhibit Number

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.)

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.)

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.)

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.)

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.)

Amended and Restated Bylaws of Savara, Inc, dated March 28, 2023 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 30, 2023).

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.)

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.)

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.)

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.)

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.)

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.)

(Incorporated by reference to Exhibit 4.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

(Incorporated by reference to Exhibit 4.20 to the Registrant’s Annual Report on Form 10-K filed on March 13, 2019.)

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.)

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.)

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.)

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.)

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.)

Form of Pre-Funded Warrant (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 13, 2023).

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.)

and Silicon Valley Bank (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2017.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

(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.)

(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.)

(Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2017.)

(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.)

(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.)

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.)

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.)

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.)

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.)

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.)

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.)

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-K filed on March 30, 2022.)

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-K filed on March 30, 2022.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

Master Services Agreement by and between Savara Inc.

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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.)

First Amendment to Lease Agreement, dated October 26, 2022, between the Registrant and Overlook at Rob Roy Owner, LLC.

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.)

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.)

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.)

Amendment No.

1 to the Manufacture and Supply Agreement, dated December 7, 2022 entered into by and between Savara ApS GEMABIOTECH SAU.

1 to the Manufacture and Supply Agreement, dated December 7, 2022 entered into by and between Savara ApS and GEMABIOTECH SAU (Incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K filed on March 30, 2023.)

Executive Employment Agreement, dated November 10, 2022, between Savara Inc.

and Raymond D.

(Incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K filed on March 30, 2023.)

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.)

List of Subsidiaries

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.)

Lease Agreement, dated July 7, 2021, between Savara Inc.

and 1717 OSSRE, LLC.

(Incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q filed on May 15, 2023.)

First Amendment to Lease Agreement, dated February 28, 2023, between Savara Inc.

and 1717 OSSRE, LLC.

(Incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q filed on May 15, 2023.)

Amendment No.

2 to the Manufacture and Supply Agreement, dated December 13, 2023 entered into by and between Savara ApS GEMABIOTECH SAU .

List of Subsidiaries (Incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed on March 30, 2023.

Consent of RSM US LLP, Independent Registered Public Accounting Firm

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1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’

Equity for the years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

Report of Independent Regist ered Public Accounting Firm

Report of Independent Registered 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).

We have audited the accompanying consolidated balance sheets of Savara Inc.

and its subsidiaries (the Company) as of December 31, 2023 and 2022, 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, 2023 and 2022, 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.

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.

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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.

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.

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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.

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.

During 2023, the Company incurred $44.2 million of research and development expenses.

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Given the significant judgments and estimates in accounting for accrued research and development costs, we have determined this area a critical audit matter.

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:

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.

(4) Performing 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

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Other non-current assets

Liabilities and stockholders’

Liabilities and stockholders’ equity

Current liabilities:

1 unchanged sentence

Accrued expenses and other current liabilities

Current portion of long-term debt

Total current liabilities

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Commitments and contingencies (Note 10)

Stockholders’

Stockholders’ equity:

Common stock, $ 0.001 par value, 300,000,000 shares authorized as of

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Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’

Total stockholders' equity

Total liabilities and stockholders' equity

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Other income (expense), net:

Interest expense, net

Foreign currency exchange loss

Interest income (expense), net

Foreign currency exchange gain (loss)

Tax credit income

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Other comprehensive income (loss):

Loss on foreign currency translation

Unrealized gain (loss) on short-term investments

Gain (loss) on foreign currency translation

Unrealized gain on short-term investments

Total comprehensive loss

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and Subsidiaries

Consolidated Statements o f Changes in Stockholders’

Consolidated Statements o f Changes in Stockholders’ Equity

Years Ended December 31, 2023 and 2022

(in thousands, except share amounts)

Stockholders’

Stockholders’ Equity

Comprehensive

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Balance on December 31, 2021

Issuance of common stock and pre-

funded warrants in public offering, net of

offering costs (1)

Repurchase of outstanding pre-funded warrants

Issuance of common stock upon

exercise of stock warrants, net

Issuance of common stock upon exercise

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Foreign exchange translation adjustment

Unrealized loss on short-term investments

Unrealized gain on short-term investments

Balance on December 31, 2022

Issuance of common stock and pre-funded warrants in

registered direct offering, net of offering cost (1)

Issuance of common stock upon exercise

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Repurchase of shares for minimum tax withholdings

Issuance of common stock upon at the market

offerings, net

Stock-based compensation

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(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.

Stockholders’ Equity , the Company sold (i) an aggregate of 21,000,000 shares of the Company’s common stock, par value $ 0.001 per share and (ii) pre-funded warrants to purchase an aggregate of 5,666,667 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.

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Amortization of right-of-use assets

Non-cash interest income

Foreign currency loss

Foreign currency gain (loss)

Amortization of debt issuance costs

Amortization on premium to short-term investments, net

(Accretion on discount)/amortization on premium to short-term investments

Stock-based compensation

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Accounts payable and accrued expenses and other current liabilities

Long-term liabilities

Net cash used in operating activities

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Cash flows from financing activities:

Repurchase of outstanding pre-funded warrants

Repayment of long-term debt (1)

Proceeds from long-term debt, net (1)

Issuance of common stock and pre-funded warrants in public offering, net of offering costs

Issuance of common stock upon exercise of warrants, net

Issuance of common stock and pre-funded warrants in registered direct offering, net of offering costs

Issuance of common stock upon at the market offerings, net

Proceeds from exercise of stock options

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Effect of exchange rate changes on cash and cash equivalents

Increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents beginning of period

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(1) As discussed in Note 7.

Debt Facility , the Amended Loan Agreement (as defined herein) was accounted for as a modification.

Debt Facility , the Amended Loan Agreement (as defined herein) executed on April 21, 2022 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.

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Description of Business

(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.

(together with its subsidiaries “Savara,” the “Company,” “we” or “us”) is a clinical-stage biopharmaceutical company focused on rare respiratory diseases.

The Company’s sole program, molgramostim nebulizer solution (“molgramostim”), a novel inhaled biologic, is a granulocyte-macrophage colony-stimulating factor in Phase 3 development for autoimmune pulmonary alveolar proteinosis (“aPAP”).

The Company and its wholly-owned subsidiaries operate in one segment with its principal office in Langhorne, Pennsylvania, though a significant portion of employees work remotely.

Since inception, Savara has devoted its efforts and resources to identifying and developing its product candidates, recruiting personnel, and raising capital.

Savara has incurred operating losses and negative cash flow from operations and has no product revenue from inception to date.

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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”).

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.

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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) .

The financial statements of the Company’s wholly-owned subsidiaries are recorded in their functional currency and translated into the reporting currency.

The cumulative effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency is reported in Accumulated other comprehensive loss .

All intercompany transactions and accounts have been eliminated in consolidation.

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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.

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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

and at adequate levels, the Company may need to reevaluate its long-term operating plans.

However, if such additional financing is not available timely 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.

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.

The Company currently maintains depository accounts and has a debt facility with Silicon Valley Bank, as acquired by First Citizens BancShares, Inc.

FCNCA) on March 27, 2023 through an agreement with the Federal Deposit Insurance Corporation ("FDIC").

The acquisition included all of the assets and liabilities of Silicon Valley Bank, including all bank deposits, and allowed Silicon Valley Bank to continue its operations.

In order to mitigate risks associated with our banking deposits, the Company maintains a significant portion of its liquidity in U.S.

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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.

The Company continues to monitor the circumstances surrounding First Citizens BancShares, Inc.

and its acquisition of Silicon Valley Bank and has not experienced nor anticipates any material impacts on its financial condition or operations.

Use of Estimates

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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.

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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.

The product candidate being developed by the Company requires 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.

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

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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’

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.

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We are subject to credit risk from our portfolio of cash equivalents and marketable securities.

These investments were made in accordance with our investment policy which specifies the categories, allocations, and ratings of securities we

may consider for investment.

These investments were made in accordance with our investment policy which specifies the categories, allocations, and ratings of securities we may consider for investment.

The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk.

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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.

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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.

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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

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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.

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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.

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):

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.

ASU 2017-04, Intangibles – Goodwill and Other (Topic 350):

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.

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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.

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Refer to Note 8.

Fair Value Measurements –

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis for additional discussion.

Fair Value Measurements – Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis for additional discussion.

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 .

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Refer to Note 10.

Commitments –

Operating Leases for additional discussion.

Commitments – Operating Leases for additional discussion.

Segment Reporting

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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.

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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;

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.

• 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;

• Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Financial instruments not carried at fair value include accounts payable and accrued liabilities.

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To date, the Company has not generated any product revenue.

The Company’s ability to generate product

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.

The Company’s ability to generate product 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

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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 .

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.

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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.

In December 2023, the FASB issues ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures effective for public business entities for annual periods beginning after Dec.

The Company is currently reviewing ASU 2023-09 and its impact on our consolidated financial statements.

In November 2023, the FASB issues ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses.

ASU 2023-07 is effective for public entities fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently reviewing ASU 2023-07 and its impact on our consolidated financial statements.

Prepaid Expenses and Other Current Asset s

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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.

As of December 31, 2023, 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 and for CMC related activities.

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.

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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):

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, 2023

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government securities

Asset backed securities

Corporate securities

Commercial paper

Total short-term investments (*)

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government securities

Asset backed securities

Corporate securities

Commercial paper

Total short-term investments (*)

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The Company has classified its investments as available-for-sale securities.

These securities are carried at estimated fair value with the aggregate unrealized gains and losses related to these investments reflected as a part of Accumulated

other comprehensive 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.

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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.

(“Aravas”), entered into a loan and security agreement with Silicon Valley Bank, as amended by the First Amendment on October 31, 2017 , the Second Amendment 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.

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.

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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.

The Company may prepay the loan in whole or in part at any time, subject to a prepayment fee of 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.

The Lender 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 contains 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.

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

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.

Approximately $ 0.1 million of fees paid to the Lender were capitalized and will be amortized over the term of the Amended Loan Agreement.

Expenses paid to third parties associated with the Amended Loan Agreement were immediately expensed and recorded in the Interest income (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, and on March 27, 2023, First Citizens BancShares, Inc.

announced that it had entered into an agreement with the FDIC to purchase all of the assets and liabilities of Silicon Valley Bank.

Summary of Carrying Value

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Additional investments in corporate debt securities, commercial paper, and asset-backed securities are considered Level 2 financial instruments because the Company has access to quoted prices but does not have visibility to the volume and frequency of trading for all of these investments.

For the Company’s investments, a market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.

The fair value of these instruments as of December 31, 2023 and 2022 was as follows (in thousands):

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government securities

Asset backed securities

Corporate securities

Commercial paper

As of December 31, 2022

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government securities

Asset backed securities

Corporate securities

Commercial paper

* Designated custodial institution, U.S.

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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 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, 2023, the Company had IPR&D of approximately $ 11.0 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.

Stockh olders’

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

Milestone Warrants

Total Net Proceeds from Private Placement

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’

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).

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):

For the years ended December 31, 2023 and 2022, the Company experienced an increase of approximately $ 0.3 million and a decrease of approximately $ 0.6 million, respectively, in the carrying value of IPR&D, which was due to foreign currency translation.

Stockh olders’ Equity

Registered Direct Offering of Common Stock

On July 17, 2023, the Company sold (i) an aggregate of 21,000,000 shares of the Company’s common stock (the “Common Stock”) for $ 3.00 per share which represented a 1 % premium over the closing price on that date and (ii) pre-funded warrants to purchase an aggregate of 5,666,667 shares of Common Stock at an exercise price of $ 0.001 per share (the “2023 Pre-Funded Warrants”) for $ 2.999 per warrant pursuant to a Registered Direct Offering (the “July 2023 Offering”).

The Common Stock and 2023 Pre-Funded Warrants were offered by the Company pursuant to its existing shelf registration statement (File No.

333-257709) filed with the SEC on July 6, 2021 and declared effective on July 16, 2021 (the "Registration Statement").

The Company determined that the securities issued in the July 2023 Offering were free-standing and that the 2023 Pre-Funded Warrants meet the equity classification requirements pursuant to ASC 480, Distinguishing Liability from Equity , ASC 815, Derivatives and Hedging and Subtopic 815-40, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

The 2023 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).

The July 2023 Offering resulted in net proceeds to the Company of approximately $ 74.9 million , after deducting final underwriting discounts, commissions and offering expenses, as follows (in thousands):

Financial instruments

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Offering expenses

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 Agreement was effective on July 16, 2021 , the date the Registration Statement was declared effective by the SEC.

The Shares will be offered and sold pursuant to the 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.

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.

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:

During the year ended December 31, 2023 , the Company sold 2,071,511 shares of common stock under the Evercore Sales Agreement resulting in net proceeds of $ 8.8 million.

The Company’s amended and restated certificate of incorporation, as amended, 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, 2023 and 2022:

Common stock authorized

Common stock outstanding

The Company’s shares of common stock reserved for issuance as of December 31, 2022 and 2021 were as follows:

The Company’s shares of common stock reserved for issuance as of December 31, 2023 and 2022 were as follows:

April 2017 Warrants

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2021 Pre-funded Warrants

2023 Pre-funded Warrants

Stock options outstanding

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Total shares reserved

The following table summarizes the outstanding warrants for the Company’s common stock as of December 31, 2022:

The following table summarizes the outstanding warrants for the Company’s common stock as of December 31, 2023:

Expiration Date

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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

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 Company is obligated under an operating lease, as amended, for commercial real estate located in Langhorne, Pennsylvania, the Company’s headquarters.

On February 28, 2023, the Company entered into the first amendment (the “Lease Amendment”) to its existing lease agreement, dated July 7, 2021 and which originally commenced on October 1, 2021 .

The Lease Amendment commenced on July 1, 2023 , continues through June 30, 2026 , or an additional thirty-six

months , expands the existing office space, and increases the average monthly rent to an average of approximately $ 14.5 thousand, paid over monthly installments during the Lease Amendment term.

As of December 31, 2023, the carrying value of the right-of-use assets for the operating lease was $ 0.4 million, which is reflected in Other non-current assets and the carrying value of the lease liabilities for the operating lease increased to $ 0.4 million, of which approximately $ 0.2 million related to the current portion of the lease liabilities is recorded in Accrued expenses and other current liabilities and approximately $ 0.2 million related to the non-current portion of the lease liabilities is recorded in Other long-term liabilities .

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, 2023 (in thousands):

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Weighted-average discount rate - operating leases

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.

Under a manufacture and supply agreement with the active pharmaceutical ingredients (“API”) manufacturer for molgramostim, as amended on December 7, 2022 and December 13, 2023, 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.

Additionally, the Company is subject to a purchase requirement under which for ten years following the date of receipt of approval by a regulatory authority of the first regulatory filing for the marketing and sale of the first molgramostim product in any country, each year, the Company will purchase from the API manufacturer the API required to produce a percentage of such molgramostim product it sells (the “Purchase Requirement”);

provided, however, that the Purchase Requirement will no longer apply if (i) the price charged by the API manufacturer exceeds a certain price charged by an alternative supplier, (ii) there is a shortage of supply, or (iii) API manufacturer at any time fails to materially fulfill a purchase order of the Company.

Similarly, the Company may become subject to additional milestone payments for the achievement of certain manufacturing protocols of molgramostim pursuant to a services agreement with a second source product manufacturer, as well as, an integrated contract research and CDMO, pursuant to a service agreement, serving as an additional source of manufacturing of molgramostim drug substances.

As of December 31, 2023, the Company had no significant obligations for any such milestone payments to either of these additional source product manufacturers.

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.

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Molgramostim nebulizer manufacturer:

Achievement of various development activities and regulatory approval of nebulizer utilized

to administer molgramostim

Achievement of various development activities and regulatory approval of nebulizer

utilized to administer molgramostim

Total manufacturing and other commitments

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and (iii) not accrued, as the activities are not deemed probable or reasonably estimable, as of December 31, 2023 .

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.

Contemporaneously with entering the MSA, a work order was executed with Parexel, under which they will provide services related to the IMPALA-2 pivotal trial.

Under that work order and subsequent change orders, the Company will pay Parexel service fees and pass-through expenses estimated to be approximately $ 41.5 million over the course of the IMPALA-2 pivotal clinical trial.

Risk Management

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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.

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 based upon the number of days he was employed by the Company during the relevant performance period, (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, (ii) 100% of the unpaid target bonus, (iii) a pro-rated portion of the unpaid target bonus based on the number of days he was employed by the Company during the relevant performance period, (iv) reimbursement for continued coverage under medical benefit plans for 24 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 24-month anniversary of the termination date or (y) the original expiration date.

Each of the Company’s Chief Financial & Administrative Officer (“CFO”), Chief Medical Officer (“CMO”) and Chief Operating Officer ("COO") is entitled to payments and benefits if the CFO, CMO or COO, respectively, is (i) terminated without cause, (ii) terminated due to the CFO, CMO, or CCO'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, CMO and COO 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.

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.

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.

As an investor with the right to designate a member of the Company’s board of directors, Bain Capital Life Sciences Fund II, L.P., BCIP Life Sciences Associates, LP and their affiliates (collectively "Bain") has significant influence over the Company and is thereby considered a related party.

Pursuant to the July 2023 Offering (as further discussed in Note 9.

Stockholders' Equity ), Bain acquired 5,666,667 of the 2023 Pre-Funded Warrants.

Stock -Based Compensation

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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.

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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.

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As of December 31, 2023, the number of shares of our common stock available for grant under the 2015 Plan was 1,061,102 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.

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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.

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 cliff vest after two years .

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,

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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.

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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.

Fair Value Assumptions for 2015 Plan

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Vested and expected to vest at December 31, 2023

The weighted-average grant date fair values for the Company’s stock options granted during the years ended December 31, 2023 and 2022 were $ 2.79 per share and $ 1.13 per share, respectively.

The total compensation cost related to non-vested stock options not yet recognized as of December 31, 2023 was $ 8.2 million, which will be recognized over a weighted-average period of approximately 3.4 years.

During the years ended December 31, 2023 and 2022 , 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, 2023 and 2022 , respectively.

Option Awards

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Outstanding at December 31, 2023

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, 2023 was $ 10.2 million, which will be recognized over a weighted-average period of 1.8 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.

Stock-Based Compensation

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Total income tax expense (benefit)

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):

Income tax benefit computed at federal statutory tax rate

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Orphan drug & research credits generated

Orphan drug & research credit expense disallowance

Impact of foreign operations

382 Limitation

Foreign deferred tax asset - true up

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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):

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, 2023 and 2022, the valuation allowance increased by $ 23.0 million and $ 3.1 million, respectively.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

Deferred tax liabilities:

Prepaid assets

Total deferred tax liabilities

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Section 174 research and development expenses

ROU liabilities

Accrued liabilities & other

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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.

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.

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As of December 31, 2023 and 2022, the Company had foreign NOL carryforwards of approximately $ 96.0 million and $ 81.8 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.

After taking the Section 382 limitations discussed into account, as of December 31, 2023 and 2022 , the Company had NOLs for federal income tax purposes of approximately $ 109.4 million and $ 98.6 million, respectively.

Federal NOL carryforwards of $ 5.2 million begin to expire in 2037 , with $ 104.2 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.

As of December 31, 2023 and 2022 , the Company had state NOL carryforwards of approximately $ 9.5 million and $ 3.5 million, respectively.

The state NOL carryforwards begin to expire in 2038 .

1 unchanged sentence

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.

As of December 31, 2023 and 2022 , the Company had state research and development tax credit carryforwards of approximately $ 0.5 million and $ 0.5 million, respectively, which will begin to expire i n 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, 2023 and 2022 , the Company had no unrecognized tax benefits.

2 unchanged sentences

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.

As of December 31, 2023, the statute of limitations for assessment by the Internal Revenue Service (“IRS”) is ope n for the 2019 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 2018 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.

The 2019 a nd 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.

15 unchanged sentences

Basic and diluted EPS

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.

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.

Subsequent Events

In February 2024, the Company entered into a Master Services Agreement (the “Agreement”) with Fujifilm Diosynth Biotechnologies UK Limited, Fujifilm Diosynth Biotechnologies Texas, LLC, and Fujifilm Diosynth Biotechnologies U.S.A., Inc.

(collectively, “Fujifilm”), pursuant to which Fujifilm will continue to provide development and manufacturing services related to active pharmaceutical ingredient for the Company’s molgramostim product candidate in accordance with the terms of separate scope of work agreements to be entered into by the parties.

In conjunction with execution of the Agreement, the Company executed Scope of Work #03 between the parties, under which Fujifilm will perform a manufacturing campaign for Process Performance Qualification of the active pharmaceutical ingredient of molgramostim.

The Agreement includes standard and customary provisions regarding, among other things, confidentiality, intellectual property, limitations on liability, indemnification obligations, compliance with laws, and dispute resolution.

The Agreement will continue until it is terminated by the Company or Fujifilm, which either party may do upon three months’ notice if no activities under a scope of work are in process.

The Company may terminate activities under a scope of work at any time by providing written notice, subject to the payment of termination fees, as well as payment for services performed and non-cancelable costs.

The Agreement and any scope of work may also be terminated by either party due to a material uncured breach by the other party, and Fujifilm may terminate for certain unforeseen technical issues.

The Company has evaluated subsequent events through the date these consolidated financial statements were issued and determined there were no additional events that required disclosure or recognition in these consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures