Welcome to the Savara Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call will be available on the Investors section of Savara's website at savarapharma.com. This call is subject to copyright and is the property of Savara. For recording, reproduction and transmission of the call without the expressed written consent of Savara is strictly prohibited. As a reminder, today's call is being recorded. I would like to now turn the conference over to Anne Erickson, Head of Investor Relations and Corporate Communications at Savara.

Good afternoon, and thank you everyone for joining us on today's call. A press release reporting our First Quarter 2019 Financial Results was issued earlier today, May 9, 2019, and can be found on the Investors section of our website at savarapharma.com. If you have not received this release or if you'd like to be added to the company's distribution list, please email me at ir@savarapharma.com. This call is also being webcast live and approximately one hour after the call a replay will be available on the company's website and will remain available for the next 30 days. A telephone replay will also be available through May 16. Please note that today's conference call and webcast contain forward-looking statements within the meaning of the Federal Securities Laws, including statements regarding the company's strategy, 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, Thursday, May 9, 2019, 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 to not place undue reliance on any of the forward-looking statements, which speak only as of today. As usual, we will take analyst questions at the end of the call. However, we would also like to encourage shareholders on the call to submit questions via email to ir@savarapharma.com. Time permitting, we will address these questions alongside others received by our team. Joining me on the call today are Rob Neville, Chief Executive Officer; Taneli Jouhikainen, President and Chief Operating Officer; Dave Lowrance, Chief Financial Officer. I'll now turn the call over to Rob.

Thank you, Anne, and good afternoon, everybody. one. I do appreciate you dialing into our first quarter call for 2019. Expanding on the press release just issued, I will give you quick updates on our business progress and the plans for the coming months. Taneli will then share some important Molgradex developments as well as cover some -- of our future plans on the combination antibiotic we acquired last year; and then as usual Dave will provide a summary of our financial results. So let me start by letting you know that over the last few quarters our primary focus has remained constant and that is preparing for the near-term data readout from IMPALA, a pivotal Phase 3 study of Molgradex in autoimmune pulmonary alveolar proteinosis or aPAP. We noted this growing interest in Savara story and so for those of you who maybe new to the call, aPAP is a chronic autoimmune disease caused by the formation of [indiscernible] antibodies against GM-CSF effect, leading to a buildup of excess surfactant in the lungs and a healthy lung GM-CSF funds to macrophages activating their ability to process lipids and proteins and recycle surfactant. In a diseased lung, GM-CSF autoantibodies impair the function of the macrophage, compromising the healthy balance of surfactant production and recycling. Molgradex is the first investigational and health therapy design of a common [ph] disease are placing the dysfunctional GM-CSF and enabling macrophages to restore balance in the lungs. If not properly treated aPAP can lead to a progressive respiratory impairment, lung infections and ultimately respiratory failure or pulmonary fibrosis requiring a lung transplant. Currently the only treatment option available to patients is a whole lung lavage. This is an invasive procedure performed under general anesthesia. It comes with significant burden and risks and doesn’t stop the…

Thank you, Rob, and good afternoon, everybody. I would first like to focus your attention to our commercial and manufacturing efforts for Molgradex and thereafter describe our plans for one of our earlier stage programs, the combination antibiotic we acquired last year from Cardeas Pharma. Based on the confidence we have in the IMPALA data read, we have begun and are well underway with the commercial preparations necessary to ensure an effective launch. Among the key work streams we initiated a large quantitative market research project with U.S pulmonologist and aPAP patients to better understand the nuances of the aPAP market landscape, including disease awareness, the patient journey through diagnosis to obtaining care, prevailing treatment practices as well as any obstacles in all of these areas. To support the effort of defining best practices of developing international guidelines and assisting with disease data education, our key opinion leaders development is well underway and expanding with an inaugural global steering committee meeting of our KOLs just prior to the American Thoracic Society meeting in Dallas next week. Activities to support our market access strategy include in-depth pricing and reimbursement research focusing now on interviews with U.S payers designed to test our plans for evidence presentation and pricing considerations. Additional market access research is also being conducted with Health Authorities in key European markets. This research will facilitate a two-step process initially looking at pricing within the context of preapproval expanded access programs, which can then serve as benchmarks for eventual post-approval pricing in Europe. In parallel, we continue our work on health economics and outcomes research in the U.S and Europe. This work currently centers on defining the full economic impact of diagnosing and treatment of aPAP, and includes gaining input from the U.K's nice [indiscernible] on specific economic modeling. This…

Thanks, TJ, and hello, everyone. Savara incurred a net loss attributable to common stockholders for the three months ended March 31, 2019 of $12.1 million or $0.34 per share compared with a net loss attributable to common stockholders of $26.8 million or $0.86 per share for the three months ended March 31, 2018. Research and development expenses were $10 million for the three months ended March 31, 2019 compared with $8.5 million for the three months ended March 31, 2018. This was primarily due to $1.9 million of increased costs associated with the development of Molgradex. General and administrative expenses for the three months ended March 31, 2019 were $2.8 million compared with $1.8 million for the three months ended March 31, 2018. This increase was primarily due to personnel costs and other legal accounting insurance and operating activities. As of March 31, 2019, Savara had a carrying value of its debt of approximately $24.7 million and had cash, cash equivalents and short-term investments of approximately $105.2 million. In summary, we are approaching a pivotal data readout with a strong balance sheet, thus ensuring that we are sufficiently funded into the latter part of next year. Advancing our pipeline while closely managing our expenses will position us for sustainable success. And now I will hand the call back to Rob for closing remarks.

Thank you, Dave and thanks everyone on the call. As we’ve outlined, we are [indiscernible] could be a better year for Savara. With eminent readout from our Phase 3 IMPALA study, followed by multiple catalysts from our development pipeline in the launch of our new non-CF bronchiectasis study we are positioned for growth in the short-term that we believe can be sustained over the long-term. At Savara, we are successfully executing against our plans and building an orphan lung disease company that will address unmet medical need for transformative treatment paradigms, while advancing a scientific understanding of the growing number of orphan lung diseases. We do appreciate your continued support. Look forward to sharing our successes with you. At the beginning of the call, Ann encouraged shareholders to submit questions via email to ir@savarapharma.com. If time permits we answer these and other questions that we’ve received. And with that, I would like to turn the call back to Jake for any Analyst questions.

[Operator Instructions] The first question comes from David Steinberg with Jefferies. Please go ahead.

Thanks and good afternoon. I have a couple questions. First, could you give us a little more granularity on your Molgradex commercial effort? Do you have anything to share with [technical difficulty] pricing reimbursement health economics or development of the PAP foundation? To that end of the last point, how are you thinking of approaching and finding those patients? And the second question has to do with business development. Could you give us your latest thoughts of the ex-U.S strategy for Molgradex. Is Japan a specific interest? And what about the U.S as a whole or individual territories? Thank you.

First, hey, David. This is Rob. Thank you for your questions. It was good having dinner with you the other night. Let me answer the second question first as far as interest in Molgradex into Japan. We have partners already in Japan and we are interested obviously in Europe and we expect to take ourselves into some of the key geographies and then partner some of the remaining geographies. As far as granularity on the health economics, I will hand to Taneli to respond to that.

So, thank you, David. I think let me first start with perhaps the most important part, which is finding the patients. So right now our research is focused on a number of different database researches, which allows us to cover remarkably high proportion of all U.S patients. So this means claims database research where we can access the actual diagnosed patients. We can access the doctors and their locations, who are treating these patients. We can also access what treatments are being given, including information about the broadness of the use of whole lung lavage. And so this constitutes the core of the information that we're right now pulling together and it will then be boosted by our disease state education in the rollout of the diagnostic, more broadly hopefully through the commercial lab that will organize it all for us. And we believe this all to put us in a good position to come launch. In terms of the [indiscernible] economic modeling, I can't share much more detail right now about that. We will be rolling out different elements of our learnings as we go forward after the data read. And this will then also include, perhaps more understanding of the reimbursement approach whatnot. But then as you know, we are not going to disclose the details of pricing until the time of launch.

Okay. Thank you.

The next question comes from Liisa Bayko with JMP Securities. Please go ahead.

Hi. Thanks for taking the question. First question is about bronchiectasis. So very interesting choice of indication. Can you may be provide some background as to kind of the evidence for this combination in bronchiectasis and what we should expect from the study?

So the evidence really is based on the antimicrobial effect that we know the combination to have, and also from similar aminoglycoside type antibiotics in bronchiectasis itself. And Liisa, apologies, your second question was what exactly?

Oh, I haven't asked that yet, but I just wanted to maybe you can just talk about kind of the thoughts on enrolling kind of over 40 patients in four months. Can you maybe kind of walk us through that for the CF study?

For the AVAIL study?

Yes.

So, Liisa, as you may recall in IMPALA we had almost a huge hurdle in the last quarter that we were able to successfully enroll and still hit our guidance. And so we -- like I said earlier, we remain steadfast. It is a hurdle that we got a number of activities underway, many of these were started a while back and just starting now to bear fruit. So we remain committed to our guidance and we will certainly give -- we will give you any updates if we don’t think we’re going to hit that.

Okay, great. Thanks.

The next question comes from Dewey Steadman with Canaccord. Please go ahead.

Hey, guys. Thanks for taking the question. I guess on [indiscernible] and bronchiectasis. In terms of what the FDA is looking forward, do you think it's going to be more functional endpoints like a CV-1 or quality-of-life endpoints, like fixing at walk distance or something like that, or can they focus only on or do you think they will focus only on microbiological endpoints? And then on R&D, it's been trending around $10 million a quarter. That’s a good run rate moving forward. As you have always studies underway. Thanks.

Taneli will answer the first one.

Right. So, Dewey, it is very clear that microbiology as an endpoint for non-CF [indiscernible]. This will not carry a product through approval. Lung function also given the pathology of the disease is not a good marker and not a good endpoint. So pivotal studies for this indication will entail use of pulmonary exacerbation as an endpoint. And there's now ample precedent of using that and the FDA have made their expectations quite clear. So we have pretty good regulatory path in front of us. Our first study, though, will be essentially a surrogate endpoint study simply to test our dual treatment strategy approach and also gain some more quantitative understanding of some of the results related to the selected patient population.

Hi, Dewey, then on the second part about the R&D spend. While we don’t give specific guidance on the quarter, what I can comment on is that as we’ve just said there's a focus on AVAIL and to get to our Q3. And so those activities that Rob talked about are rolling on. Certainly there is expense there. We also mentioned the amikacin/fosfomycin study. So we’ve got new cost coming in there and then we also talked about our filing. So if you think about all that, we are committed to ensuring that our cash gets us well through our readouts and deep into 2020s.

Great. And just a follow-up on that, exacerbations. What exactly does FDA classifies exacerbation? What kind of diagnostic criteria are there to determine that if patients having exacerbation.

Well, that is of course something where companies have some freedom to suggest what they feel is best. We are big believers in simplicity in this respect, meaning typically the most reliable way to find an exacerbation is to see if patients were treated with antibiotics by the physician. And also the more sensitive is your recording system. It seems that the better differentiation than between a drug and a placebo.

All right, great. Thank you.

The next question comes from Michael Higgins with Ladenburg Thalmann. Please go ahead.

Thank you. Thanks, guys for taking the questions. Just want to clarify, if we are getting close to IMPALA data. If you have any updates from the CRO along the way that may include things like the number of patient in the trials. Reasons for discontinuation rate or anything like that at all that you’re getting?

So, Michael, thanks for being on the call. So we enrolled a 139 patients we have not disclosed the discontinuation rate. What we’ve said is that it's low, but beyond that we’ve not disclosed any specific numbers.

Okay. That’s helpful. Thanks. If you look out at Europe, actually even in U.S. If you can give us an update on the marketing strategy, specifically how many reps you may have in both of those regions.

So, Michael, the number of reps is still somewhat undefined and depends on a number of factors from our research. We are envisioning right now the number of sales reps in the U.S to be in the region of 30% to 40% range. In Europe it will vary country-by-country and in terms of our own efforts of commercialization, the exact geography has not been yet finally set in terms of what we do ourselves compared to what we partner.

Okay. And then the determination of the European strategy, does it follow from discussions of potential European partners or do you look at the data and make a decision, what’s kind of the begetting [ph] factor there?

Yes, we have three options in Europe basically either we go it alone or we partner or we do what is called a rent to buy option where a partner sets up the sales force to launch the product and then we have an option to capture that sales force and any number of years after launch. And we are in parallel considering all of these options, so right now that’s all I can say of ongoing discussions.

Okay. And then just a quick follow-up on the decision there. Is that something new you make after you got [indiscernible] once you’re talking with partners or how do you make that decision? Not looking for an answer, just trying to get your thought process, I guess.

All of these discussions have first, our own preparations and our sense of what exactly will be needed in the key markets as well as then in parallel considerations of different strategies of potential partner candidates as well as this middle ground option of a rent to buy by. The terms have all those impact our decision and also the specifics of the how to do in terms of our own commercialization. That perhaps opens up a little bit of our thinking, but I do apologize, I can't be more specific at this point.

And Michael just to add some color. So what our intention is it's in June when we announced the top line results. We will then spend a lot more time, we are already working on the commercial launch plans and we will be able to say a lot more at that point. We are just holding it and so we have the technical risk behind us.

Fair enough. I appreciate it. Thanks for the color, guys. Thanks,

[Operator Instructions]

If there are no questions, this is Anne, I got a couple of questions that came in over email. First one is, given that a whole lung lavage results in an improvement in AAD [indiscernible] critical lung lavage is in the placebo group negatively impact the results of the study. And given that do you hope not to see many lavages? Taneli, do you want to take that one?

Sure. Sure. Yes, okay. So what you need to realize is that if patients do require a whole lung lavage, it is a rescue treatment. And of course, we allow that for our patients in all treatment arms. But that threshold of having a whole lung of lavage done is actually quite high. And so you definitely wouldn’t expect to see whole lung lavages in patients who are steady and essentially at their baseline over the course of the six months period. The patients who would get lung lavages will deteriorate, right, from base line and that will trigger then their lung lavage. So this means that on average patients who get lung lavage during the study are certainly not expected to improve some may, some actually will probably worsen even with the Lavage. So overall, the answer is no. We are not concerned about this at all in terms of interfering with our other endpoints. And this also means that we actually hope to have more lavages rather than less, because the lung lavage is arguably the most important of our clinical endpoints. So the more the better in terms of statistical power. And therefore whatever results we see there, I think will have a good shot with enough lavages to actually show statistical significance as well as long as they’re already enough of them.

And I got one more question that came in. As not [indiscernible] chemo-biotech, how did you select them as your manufacturer for drug substance?

Okay. Anne, let me take that as well. So GEMA is actually a very natural choice for us. First of all, they are the company who developed the cell line that is now the source of our GM-CSF. They’ve also manufactured all of the clinical supplies, of course also the nonclinical supplies. But very importantly, we are able to essentially continue in the same plant, with the same equipment, same everything as we have done for the clinical trial, so that eliminates a lot of regulatory risk in our opinion. And GEMA is a company with a long history of biologicals development. They had very high science and quality standards, just great people. And in fact it's a company that was founded and is currently 100% owned by the Struengmann brothers. And for those who don’t these gentlemen, they were the founders of the German generics company Hexal, which is now owned by Novartis. So through that ownership and their history of operations in the biotech area we -- [indiscernible] solid hands there. And we couldn't be more pleased with the quality of our collaboration. And so this represents a totally true partnership instead of a mere fee-for-service engagement, which is perhaps more typical in contract manufacturing.

Well, thank you for those questions on the IR front coming from investors. I appreciate that.

And as said, I think we have no more questions coming in. Thank you everybody for joining the call.

This concludes our question-and-answer session. I would like to turn the conference back over to Rob Neville for any closing remarks.

I think we’ve got it. Thank you for everybody. Those were really good questions. And this is obviously the most exciting time. I’ve now been in Savara 11 years, and this is now the most exciting months coming up in June. So we look forward to announcing the results then. So, take care. Thank you. Bye.

The conference is now concluded. Thank you attending today’s presentation. You may now disconnect.