Dear Stockholders

Dear Stockholders,

It has been an incredibly productive third quarter for Savara on several fronts. We have continued to execute on our key programs and growth plan in our journey to build Savara into a prominent orphan lung disease company. Notably, our two lead programs, Molgradex and AeroVanc, are both in Phase 3 development. Moreover, we recently announced our expansion strategy for Molgradex in an exciting new indication, nontuberculous mycobacterial (NTM) lung infection, as well as the successful close of our public offering which will help fund this expansion opportunity. Our common stock was also uplisted to the Nasdaq Global Select Market® which has the highest initial listing standards of any of the world’s stock markets. We have continued active engagement with the investment and analyst communities to increase our exposure to institutional investors and we have maintained an active presence amongst institutional investors through investor roadshows, KOL events, industry conferences and other related activities‎. This has all contributed to increased exposure and visibility for Savara in the capital markets, and with the biotech trade media. We are pleased that we are now covered by four well known research analysts from Jefferies, JMP Securities, Canaccord Genuity and ROTH Capital Partners.

Before delving into recent highlights related to our active programs, we would like to provide an update that may be of interest to our prior Mast stockholders. We recently entered into an out-licensing agreement for the exclusive worldwide rights to develop and commercialize vepoloxamer, an asset initially developed by Mast Therapeutics for the treatment of individuals with sickle cell disease. Under the terms of the agreement, Savara is entitled to a nominal upfront payment as well as milestone and royalty payments from future sales of vepoloxamer. Vepoloxamer does not fit with our strategy and we are pleased to be able to out-license the program to an organization with the expertise and interest in its continued development into an undisclosed indication.

Last month, we reported completion of patient enrollment slightly ahead of schedule in the INDIE-HFpEF Phase 2 clinical trial of Aironite, a sodium nitrite solution for inhalation via nebulization, in patients with heart failure with preserved ejection fraction (HFpEF). The study is sponsored by Duke Clinical Research Institute as the Coordinating Center for the Heart Failure Clinical Research Network. We sincerely appreciate Duke’s and the HFN’s recognition of Aironite’s potential as an exciting new investigational treatment option for heart failure, and consistent with prior guidance, we continue to expect top-line results from the INDIE-HFpEF study in the first half of 2018. HFpEF is an area of great unmet medical need, as there are approximately 5.7 million individuals with heart failure in the U.S. with approximately 50% of the patients hospitalized for heart failure having HFpEF. Limitation in exercise capacity is the main factor affecting the function and quality of life in HFpEF patients. Published results from two Aironite Phase 2a clinical trials have demonstrated promising improvements on both exercise hemodynamics in HFpEF patients, as well as on resting hemodynamics in patients with pulmonary hypertension associated with HFpEF.

In September, we announced the initiation of our AVAIL study, a Phase 3, randomized, double-blind, placebo-controlled study of AeroVanc, the first inhaled antibiotic being developed for the treatment of persistent MRSA lung infection in individuals living with cystic fibrosis (CF). We believe AeroVanc represents a promising opportunity to make significant advancement in the treatment of this debilitating infection, which is associated with increased use of intravenous antibiotics, increased hospitalizations, a faster decline of lung function, as well as shortened life expectancy. We look forward to providing additional updates to our AeroVanc program including enrollment updates as they become available. We have not yet given guidance on the anticipated timing of top-line results from our AVAIL study, but will plan to do so when all sites are active and we have gathered additional enrollment data.

I would like to spend some time outlining an important update related to our lead program, Molgradex, which we have been developing for patients with autoimmune PAP, but have recently expanded to a new promising indication, nontuberculous mycobacteria, or NTM lung infection.

In PAP, we are currently conducting a pivotal Phase 3 clinical trial, the IMPALA study, a randomized, double-blind, placebo-controlled study designed to compare the efficacy and safety of Molgradex with placebo in patients with autoimmune PAP. The study was originally designed for EU and Japanese territories, but was expanded earlier this year to also satisfy FDA requirements, and accordingly, is now considered a pivotal study for major territories, including the U.S. The IMPALA study continues to enroll steadily, with more than 70% of the required 90 patients now enrolled, with enrollment expected to be completed in Q1 2018 and top-line data anticipated by the end of 2018.

A key development of the past quarter, we announced our indication expansion strategy for Molgradex for the treatment of NTM lung infection. This is extremely exciting to us as we believe that Molgradex has the potential to help eradicate NTM lung infection with or without the concomitant use of antibiotics by stimulating the innate immune system in the lungs.

By way of background, NTM lung infection is a rare and serious lung disorder associated with increased rates of morbidity and mortality. An NTM infection can occur when an individual inhales the organism from their environment, and if not adequately treated, the infection may become chronic, and develop into a slowly progressive and destructive lung disease. NTM lung infections are a considerable therapeutic challenge due to the unique ability of these bacteria to evade the normal killing mechanisms of alveolar macrophages, a type of immune cell responsible for killing and clearing bacteria in the lungs. Unlike most other bacteria, NTM are able to survive and multiply inside the alveolar macrophages, which facilitates the development of the chronic infection, and also makes the bacteria less susceptible to normal antibiotic treatments. Chronic NTM lung infection can have a significant impact on quality of life. There are more than 50,000 individuals affected by NTM lung infection in the U.S, the most common species being Mycobacterium avium complex, or MAC, and the more problematic Mycobacterium abscessus complex, or M. abscessus. Pulmonary NTM infection poses an increasing problem for clinicians, and treatment is difficult requiring use of multi-drug antibiotic regimens with significant burden, toxicity, and frequent failure of achieving eradication.

There have been few advancements in treatments for NTM in the past decade. However, in a recent Phase 3 clinical trial conducted by Insmed (NASDAQ: INSM), an inhaled form of amikacin was shown to be effective in approximately one third of treatment refractory patients with pulmonary MAC infection. Whereas these results represent a much needed advancement in NTM treatment, new and more effective treatments are still urgently needed, and especially for patients with the more difficult form of NTM species of M. Abscessus.

Notably for Savara, there is increasing scientific literature suggesting that GM-CSF plays an important role in enhancing the ability of macrophages to clear mycobacteria. GM-CSF is not an antibiotic, it is an immunostimulant, targeting the human immune response, not the bacteria directly, thus avoiding the increasing problem of antibiotic resistance. In animal studies, GM-CSF has been shown to kill NTM with similar efficacy compared to commonly used NTM antibiotics, and the simultaneous use of GM-CSF with antibiotics may further improve the antibacterial effect.

Importantly, in some very recent thus far unpublished clinical case reports in CF patients, inhaled GM-CSF was shown to either eradicate or dramatically reduce the bacterial burden in patients with refractory M. abscessus lung infection. Together with the strong scientific rationale, these very promising case reports confirmed to us that that the potential therapeutic role of GM-CSF in NTM lung infection definitely warrants more intensive investigation, and motivated us to pursue a Phase 2 study in this indication.

We are now preparing to initiate a 30-patient open label Phase 2a study early next year. The clinical trial will consist of 24 weeks of treatment and a 12 week follow-up period. The primary endpoint will be sputum culture conversion to negative, and key secondary endpoints will include other microbiological endpoints, as well as functional and symptomatic endpoints. The results of this study will be used to inform us in terms of how to plan a well-controlled Phase 2b study, with adequate design, endpoints, and sample size to qualify for a supportive study in an NDA filing. We believe the product will be eligible for Orphan and Qualified Infectious Disease Status, and if the results of the open label study meet our expectations, we believe the product will also have potential to be considered to receive the FDA breakthrough therapy designation.

Given our exciting expansion into NTM, we wanted to take steps to be adequately funded to aggressively pursue the development of Molgradex in this indication. As a result, late last week, we announced the successful pricing of a public offering of approximately $50 million in net proceeds, led by experienced institutional healthcare investors. In June 2017, we had announced the closing of a public offering of approximately $43 million in net proceeds which were necessary to support the development of our two Phase 3 programs in PAP and CF. With the closing of this latest offering, we believe we are now sufficiently resourced to also pursue the NTM opportunity, with sufficient funds to execute our current business plan into 2020.

We believe that we are building an exceptional business and will continue to grow the company, thus having a positive impact on the patients we aim to treat, the shareholders who invested in us and the employees who make this possible. We sincerely appreciate your continued support and look forward to keeping you updated through our various communication channels including this CEO blog, @SavaraPharma, press releases, webcasts and our SEC filings.

Regards,
Rob Neville
CEO


Savara cautions you that statements herein that are not a description of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words referencing future events or circumstances such as “expect,” “intend,” “plan,” “anticipate,” “believe,” and “will,” among others. Such statements include, but are not limited to, statements relating to our business opportunity, our investor relations strategy, our progress, our product candidates, our strategy, the timing of milestones and goals for our product candidates, our capital needs, uses of cash, adequacy of funding and our future successes. Savara may not actually achieve any of the matters referred to in such forward looking statements, and you should not place undue reliance on these forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon Savara’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, risks and uncertainties associated with the outcome of ongoing clinical trials for our product candidates, the ability to project future cash utilization and reserves needed for contingent future liabilities and business operations, the availability of sufficient resources for Savara’s operations and to conduct or continue planned clinical development programs, the ability to obtain the necessary patient enrollment for our product candidates in a timely manner, the timing and ability of Savara to raise additional equity capital as needed to fund continued operations; the ability to successfully develop our product candidates, and the risks associated with the process of developing, obtaining regulatory approval for and commercializing drug candidates that are safe and effective for use as human therapeutics. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. For a detailed description of our risks and uncertainties, you are encouraged to review our documents filed with the SEC including our recent filings on Form 8-K, Form 10-Q and Form 10-K. You are cautioned not to place undue reliance on our forward-looking statements herein, which speak only as of November 9, 2017 which is the date on which they were made. Savara undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after such date, except as may be required by law.