Welcome to the Savara Incorporated Conference Call. At this time, all participants are in listen-only mode. An audio webcast of this call will be available on the Investors Section of Savara’s website at www.savarapharma.com. This call is subject to copyright and it is a property of Savara. All recordings, reproduction or transmission of this call without the expressed written consent of Savara is strictly prohibited. As a reminder, today’s call is being recorded. I would now like to turn the conference over to Ioana Hone, Head of Investor Relations at Savara.

Thank you, Brian. Good afternoon and thank you for joining us. A press release reporting our first quarter 2018 financial results was issued earlier today, May 09, 2018 and can be found on the Investors Section of our website at savarapharma.com. Please note that today’s conference call and webcast will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategies, goals, product candidates, clinical studies and financing matters. Such statements are subject to significant risks and uncertainties including those described in our press release issued today Wednesday, May 9, 2018, and our recent SEC filings on Forms 8-K, 10-K and 10-Q. Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements which speak only as of today. As per usual, we will field analyst questions at the end of the call. However, we would like to encourage our shareholders on the call to submit questions via the live webcast page or send an email to ir@savarapharma.com and time permitting, we will attempt to address some of those as well as others recently received by our investor relations team. With that said, I would like to turn the call over to Rob Neville, Chief Executive Officer of Savara.

Thank you, Ioana and good afternoon, everybody. I am excited to be speaking to you today and thank you for joining us. As usual, with me here in Austin, Texas is Taneli Jouhikainen, our COO and President as well as Dave Lowrance, our Chief Financial Officer. At the end of April, which was about 10 days ago, we did celebrate our one year anniversary as a public company. I believe we have accomplished quite a bit in this short time and we continue to learn and grow as an organization in many respects. In the area of corporate communications, we’d like to start changing these quarterly meetings to be a little more engaging with a focus on more granular information on our enrolment status, which will help provide our shareholders with better visibility into the progress of our clinical studies and some concrete data points to support our guidance. With four clinical studies now ongoing, those being IMPALA, IMPALA-X, and this is a new study we will talk a little bit more about momentarily, OPTIMA and AVAIL, our focus for the remainder of the year will continue to be on the advancements of these studies. In parallel, we’re actively exploring further expansion of our pipeline as we continue building Savara into a prominent orphan lung disease company. Overall, we see many opportunities for growth and exciting milestones during this year that we believe will benefit our shareholders, which we will outline for you shortly. First, let me hand the call over to Taneli to delve into the progress of our clinical studies.

Thank you, Rob and good afternoon, everybody. Let me begin with our pivotal Phase 3 IMPALA study of Molgradex, our inhaled GM-CSF for the treatment of autoimmune PAP. First, as a reminder, as we already disclosed earlier, our IND was approved by the FDA in February around for the expansion of the IMPALA study into the US as well as an increase of the sample size from 90 to 135 patients based on a blinded interim check of variability in two key secondary implants. As of the end of Q4 2017, we had enrolled a total of 80 patients. Subsequent to that, during the first quarter of this year, we enrolled an additional 16 patients, ending the quarter with a total of 96 patients. So in order to enroll the remaining 39 patients by the end of Q3, the quarterly enrolment rate will need to increase slightly. We expect to achieve this through continued efforts at all of our original sites and in particular through the activation of up to eight sites here in the US as well as up to nine new sites in South Korea, Australia and several European countries. Some of these sites have already been initiated and altogether, the new sites will almost double the number of sites to a total of 39. Looking at our current projections, by country and by site, we do remain optimistic that we will achieve our role of completing enrolment by the end of the third quarter with top line data expected in the second quarter of 2019. Next, I would like to spend a few minutes introducing you to a new study that we have recently initiated, called IMPALA-X, focusing on patients who have completed the 12-month IMPALA study. IMPALA-X is an open label, safety extension study that fulfills…

Thanks, Taneli. Good afternoon, everyone. With respect to our first quarter 2018 results, our net loss attributable to common shareholders was 26.8 million or a negative $0.88 per share as compared with a net loss attributable to common shareholders of 5 million or negative $1.65 per share for Q1 2017. Research and development expenses for Q1 were 8.5 million compared with 2.9 million for Q1, 2017 and this increase was due to several factors, including 2.7 million in additional expenses associated with the development of Molgradex, including the expansion of the aPAP study in the US and the commencement of the NTM study, an increase of 2.2 million in AeroVanc study costs related to phase 3 activities and 0.7 related to milestone and development costs of the Aironite study, acquired in a merger with Mast Therapeutics in April 2017. General and administrative expenses in total were consistent when comparing Q1 2018 to Q1 2017, totaling 1.8 million and 1.7 million respectively. Additionally, during Q1, we recognized a one-time non-cash impairment charge of 21.7 million against the acquired in process R&D related to the Aironite program, which we had assumed in the merger. This one-time charge was due to the failed Phase 2 study of Aironite and accordingly, we do not intent to further support or pursue the Aironite program. As a result of the impairment, we fully wrote off the associated deferred tax liability of 4.6 million and recognized the tax credit. As of March 31, 2018, we had a debt balance of approximately 14.9 million and had cash, cash equivalents and short term investments of approximately 85 million. As always, we aim to balance our financial decisions to best support the development of our product candidates, while continuing to execute our clinical studies in a cost effective manner. We continue to believe the company remains sufficiently funded to execute our current business plan into 2020. Now, let me hand the call back to Rob.

Thank you, Dave and Taneli. Appreciate it. On the business development side, consistent with our vision to become a prominent orphan lung disease company, we continue to actively evaluate opportunities for indication expansion and product acquisition. Our Molgradex product was acquired in 2016 and along with its expansion beyond aPAP into NTM, we believe it is now a highly valued asset. We will continue to build on this success and to identify other promising indications and potential new clinical stage assets. Our corporate goal in this regard is to add at lease one new indication or clinical stage assets to our pipeline within 2018. As you can see from our achievements in the last quarter, we are very pleased with the steady progress we continue to make. I hope each of you will appreciate our efforts to provide greater transparency in to our quarterly progress, including enrollment numbers and more granular status updates. We all remain determined and focused to complete our key studies with the highest possible quality and we're committed to doing our very best to deliver future projects in line with our guidance. And so, to summarize then, the key events to look forward to this year include the following. First, we'll be providing, as I just said, relevant quarterly updates related to our four ongoing studies and completing patient enrolment in our pivotal IMPALA study expected in the third quarter of 2018, also completing patient enrolment in our OPTIMA study expected in the third quarter of 2018, the possibility of interim results from OPTIMA study this year, depending on enrollments and other factors and lastly, updates related to the growth of our top line through possible new indication expansion or product acquisition. Ioana did mention at the beginning of the call that we would like to encourage shareholders to submit questions via either the live webcast or just simply send an email to ir@savarapharma.com and we will attempt to address them as well as others recently received by Investor Relations team time permitting, after we address analyst calls. And so with that, I'd like to turn the call back to Brian for analyst questions.

[Operator Instructions] And our first question today comes from Dewey Steadman with Canaccord.

And I guess on IMPALA-X, what do you consider to be a success in terms of the enrolment as a percentage of the original population and what’s the visit schedule like for those patients relative to the existing study. And then how do you anticipate FDA will want to see that data? Will you be able to have an interim look that you'll be able to submit with the NDA?

Okay. So three questions. I suppose the first one is perhaps the most interesting, so what do we expect to see in terms of continuation into the extension study. We do actually hope to see the majority of patients roll over. But it is a little hard still to predict how all this will turn out, because the patient satisfaction is not necessarily the only factor. So in the coming calls, we will be sure to start giving you some updates of how things are progressing. As to the patient visit frequency, it will be quite infrequent. So there will be six month intervals between visits and whereas do we then submit an interim of this to the FDA, I would believe so. This is going to be beyond what we have been requested to provide in terms of the length of treatment. So I think it will be a welcome addition to our package.

Does that six-month visit interval correspond with typical PAP patient visits to the tertiary specialists?

There is really a lot between patients, sometimes, it could be every three months quite often when they're in a better shape as we hope they would be after they've completed open label part of our study. Every six months would not be out of range at all.

And then two quick financial questions, don’t want to leave Dave out. On the ATM, I notice that there was a little bit of a draw. How much is left in that facility and then how should we approach SG&A expense going forward. It's varied quite a bit quarter-to-quarter. I know there’s been some external things that have factored into that, but is it a good run rate that we're seeing this quarter going forward.

Hey, Dewey. Thanks for both questions. Let me kind of kit them in reverse order. I mean with respect to quarter-over-quarter, as we've said in the past, while we don't specifically give guidance there, I mean, what we can’t refer to is that we now have the two phase 3 programs enrolling and so as we've talked about, when we intend to complete enrollment of those, costs will start to shift away. So if you look at the guidance of us saying that we remain confident that we can get into 2020 with our current cash on hand, you can kind of map out from there where that should put us over the next 24 months. And then also actually to piggyback with respect to cost, again, while we don't give specific guidance, we have referenced this new IMPALA-X. The great news is, it's a fairly straightforward study with a limited number of patients and therefore, we would not expect it to have a significant impact on our current operations. And then on the ATM, as we announced back last year, I mean we entered into that -- into a sales agreement with H.C. Wainwright. That was an $18 million ATM. With the disclosure that we made, with respect to the driver in the first quarter, I believe that puts us around in the $16 million mark, but I will get and confirm that for you. That should be about where we’re at. 16 million left available to us. I’ll confirm that. But we’re close to that number.

The next question comes from Liisa Bayko with JMP Securities.

This is John for Lisa. Congrats on the progress and thanks for taking the question. I just had a couple on OPTIMA. In your remarks, you mentioned that there is -- what you’re saying is a typical lag time doing screening, actually beginning treatment. I was wondering if you could talk a little bit more about that duration that you’re seeing and also what other factors beyond enrolment might play into us seeing some data this year from the study.

Right. So the lag time is simply because the growth on the cultures takes long and to get the adequate baseline then, there's just that time we need to wait. That’s typical for all NTM studies. To your question on like what other factors are included, so apart from enrolment rates, obviously response rates, speed of response and type of response. Those all will affect when we might have meaningful data to report. And thinking about the types of response, what we mean with that is that we may see affecting smear samples, we may see effects in quantitative cultures or we may see eradications and this is sort of in the order of the hurdle getting elevated on that list. So depending on the clarity of the data and the amount of data, we may decide to report that as early as end of this year.

Great. And then Rob I guess just one more, when you discuss bringing in potentially more programs, is it something where you're focused exclusively on more inhale therapeutics or is there any chance of you guys kind of expanding your focus, kind of what is your criteria of an appealing program.

So the inhaled, the route of delivery and we’re agnostic to that, but we are focused on orphan lung diseases. And I wanted to ask Taneli if he wanted to give some of the criteria that we're looking at in the business development side.

Well, obviously, we would be looking at areas where there's a high need of niche therapies with little competition and great opportunity commercially. All the normal stuff as you can imagine. But definitely there are many areas in the orphan diseases where in fact the diseases are very, very under-served and sometimes with really no efficacious treatments and so I could flip through a dozen indications, but we don't want to do that because we prefer to then come out with information, which is accurate rather than to speculate on what we might do and what not.

Next question comes from Michael Higgins with Ladenburg Thalmann.

Couple of questions remaining here for me. If you could talk a bit more about IMPALA and IMPALA-X, what’s been the feedback so far from the investigators based on their ability, any additional insights you can give us on what you’re expecting capital rate rollover?

So first of all, on the safety, we have regular DSMB meetings, which is of course important because this is a blinded study to a large extent. We have had three or four of those and there has been no significant signals that would affect the conduct of the study. In terms of the, well, you asked about dropout rates and rolling over to the extension study, it's really early to be able to say how that will actually go and bear in mind that there are sort of two opposing factors here. On the one hand with very good satisfaction and good response and a happy patient, they may very well be highly encouraged to move on to the extension study, but if they feel very, very good, it could be also that they want to see well, how about I try without. So we don't quite know how this is going to play out, but like I said earlier, we do hope that and we believe that the majority of patients will in fact want to move to the extension. Did that roughly answer your question?

Yes. It does. Any requirement by the FDA on the number of patients?

Yeah. So the requirement by the FDA is already satisfied by the IMPALA study, this extension study is not an FDA requirement, so it will be on top of what they would – what they have asked us. It is really to guarantee access to drug for patients who have then completed the study. So that's just a commitment that we have made in the protocol of the study, but it does give us a really nice window to the long term treatments and allows us to collect data in a structured way when we do this in the context of a study.

The next question comes from David Steinberg with Jefferies.

I got on late. So if someone has asked it, I apologize. Want to discuss OPTIMA. What -- couple of questions, what are the estimated cost for the new OPTIMA NTM trial and how would you allocate the cost over the next several years for that program? Secondly, on OPTIMA, have you said or can you remind us or will the patient populations be stratified in the trial to separately evaluate patients with avium and abscesses. And finally, [indiscernible] but not in the other?

So, David. Yeah. This is Dave Lowrance. With respect to any of our studies, we haven't been giving specific program guidance on our expenses, but what we continue to reiterate to everyone is that under our current business plan, we're confident that we are adequately funded to get us into 2020.

And so in terms of the study, we are enrolling patients, both with abscesses as well as M avium and because it's open label, we’re stratifying -- we're guiding the enrolment to be somewhat 50-50 or at least not totally pushing it to one or the other. Also, I would like to note that we are treating patients with Molgradex monotherapy on the one hand, but also some of the patients will be also on standard NTM triple therapy and in those patients, we will add Molgradex on top as a combination. So we will have essentially four main groups of different types of patient profiles to look at

This will conclude one part of the question-and-answer session today. So I would like to turn the conference back over to Rob Neville for any additional questions.

Thank you, Brian. Appreciate that. We do have quite a few questions coming in. So we’ll quickly see if we can address some of these. And the first one speaks about AVAIL enrolment, saying, it looks excellent with 53 patients enrolled last quarter, what do you believe the likelihood of having the study complete enrolment earlier than the Q1 2019? And I'll answer that, I believe that this will -- this is a possibility, but we're still very early on. We would like to see the enrollment of the pediatrics first over a quarter or so before we adjust our guidance. And the next question came from an online investor and this one, great job on the enrollment. Your team appears to be running a very lean burn rate. Could you please talk about possible indication expansion into TB? And I would just say that we're not yet guiding on any other indication expansion beyond where we are. And however even in TB, we’d first want to see the results in NTM, that being a cousin of TB before we pursued TB any further. Taneli, go ahead and add some color to that if you want.

So I think Rob, you're absolutely right that the NTM data will guide us in terms of what might happen with TB, but it's perhaps important to remember that much of the non-clinical and in vitro data is very consistent across different mycobacteria. So, it does seem like there will be a high correlation between efficacy between those different bugs.

Thank you, Taneli. Another question, congratulations to you and your team for doing an excellent job. Could you share the number of patients enrolled in the NTM to date. We actually did share with that a little earlier and we have a dozen -- more than a dozen of screenings and four patients that were already enrolled. And so that was mentioned earlier during the script. Another question that came online, with the IMPALA study, you stated you’re activating clinical sites in the past quarter, why you're only activating them now? And I'll hand that to Taneli.

Well, so it's important to bear in mind that we made a considerable expansion of the study subsequent to the FDA approving our IND and in fact that we have since then added a total of 70 new sites, not all of those are yet active, but in fact, we've done a tremendously good job I feel in ramping up the study and that we have had lots of interest in countries where we were not yet present, including the US and that's a very important part of this expansion. So right now, we feel we're well positioned to push ahead with an expanded number of sites and in the coming months, we hope to have a very active enrolment.

Okay. One last question that's come online. One of the key early clinical results that led to the study was the two patients previously treated for NTM. So two questions on that. Do you have any updates on these patients and are these the only two NTM patients you're aware of that have been treated using GM-CSF.

So, to the answer latter question first. We are not aware of other patients who would have been treated with inhaled GM-CSF such that we would know any meaningful details about them. But to the first question, so I have in fact spoken with Dr. Mark Wylam recently about his experiences. Now, unfortunately, we cannot go into any detail about what exactly is going on, simply because this is something that is a favorable communication and it’s personal publication information. But what I can say is that the patients are still on drug and they are doing well. And Dr. Wylam is quite enthusiastic about the treatment continues to be so.

Okay. Well, that is it. I do appreciate you guys Taneli, Ioana and Dave for the call today. Welcome any feedback as well on the way we conducted the call. This idea of being more transparent and granular with our reporting, so please feel free to e-mail us at ir@savarapharma.com. Or follow up with me directly after the call. Thank you everybody. Take care. Bye.

The conference has now concluded. We want to thank you very much for attending today's presentation. And with that, you may disconnect your lines.