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Hello, everyone, and 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. All recordings, reproduction or transmission of this call without the expressed written consent of Savara is strictly prohibited. And, as a reminder, today's call is being recorded. And I would now like to turn the call over to Anne Erickson, Head of Investor Relations and Corporate Communications at Savara.

Good afternoon, and thank you for joining us on today's call. A press release reporting our fourth quarter and end of year 2018 financial results was issued earlier today, March 13, 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 [email protected]. 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 March 20th. 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, Wednesday, March 13, 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 field analyst questions at the end of the call. However, we would like to encourage our shareholders on the call to submit questions via email to [email protected]. Time permitting, we will address these questions alongside others recently received by our IR team. Joining me on the call today are Rob Neville, Chief Executive Officer; Taneli Jouhikainen, President and Chief Operating Officer; and Dave Lowrance, Chief Financial Officer. I'll now turn the call over to Rob.

Thanks, Anne; and good afternoon, everyone. A warm welcome to our fourth quarter and year end call for 2018. Building on the press release issued earlier today, I'll brief you on our current business progress and our plans for the coming year. Taneli will then describe our key clinical programs and, finally, Dave will provide details on our financial results. If you followed us throughout 2018, you are aware that we've significantly progressed our clinical development programs, all of which address critical unmet need in orphan lung disease. Savara is building a portfolio of programs through indication expansion and product acquisition that we believe can both increase shareholder value through sustainable growth overtime and establish us as the industry's leading orphan lung disease company. People living with an orphan lung disease have many experiences in common. They often feel neglected, isolated and frustrated by the lack of experience around diagnosis and inadequate treatment option. Savara exist to innovate on behalf of these patients. Through our unique expertise in orphan lung diseases and our ability to leverage overlapping relationships with regulatory divisions, clinicians, industry experts and commercial platforms within this sector, we are developing a rich pipeline of products that truly matter for the patients we serve. Our efforts over the last 12 months laid the groundwork for what could result in a historic year for Savara in 2019, most notably with our new candidate more Molgradex, the inhaled form of GM-CSF. Our pivotal Phase 3 IMPALA Study, which has evaluated Molgradex for the treatment of autoimmune pulmonary alveolar proteinosis or aPAP remains on track to read out in just a few months, specifically at the end of the Q2. In brief, aPAP is a chronic autoimmune disease caused by the buildup of excess surfactant in the lungs. If not properly treated, aPAP can lead to the progressive respiratory impairment, lung infections and ultimately respiratory failure or pulmonary fibrosis requiring a lung transplant. Molgradex is the first inhaled GM-CSF designed to overcome the disease by activating macrophages to clear the excess surfactant and restore surfactant balance in the lungs. Positive results from IMPALA would facilitate the submission of the BLA in the first half of 2020 with an anticipated launch later in 2020 or early 2021. We have high confidence in the Molgradex aPAP program as the pathogenesis of the disease is well known and the efficacy of inhaled GM-CSF is well characterized with numerous physicians sponsored studies and case reports. Importantly, our pivotal study is well powered not only for the primary endpoint, but also for the key secondary endpoints. Well, IMPALA is a blinded study. We're encouraged by strong patient enrollment numbers in our open label extension study called IMPALA-X. This study allows patients who are rolling off IMPALA to continue for treatment up to three additional years. I am happy to report, at the end of last year, 20 out of 21 eligible patients enrolled in the extension study, maintaining this nearly 100% patient retention rates is a very promising sign, since the prior two enrollments, all patients would have been on drug for at least six months with two-thirds active drug for a full year. As you may know, the only treatment option currently available to patients with aPAP is a Whole Lung Lavage, an invasive procedure that comes with significant blip. We believe that Molgradex could significantly lengthen the time between or hopefully entirely eliminate the need for these Whole Lung Lavage procedures, thereby providing an effective convenience and non-invasive treatment option for patients with this debilitating disease. The encouraging feedback from clinical investigators, along with strong enrollments and the extension study has motivated us to start commercial preparations and support other future launch. This work, led by our Chief Commercial Officer, including hiring for management positions as well as initiation of key commercial work streams, including market development, health economic and health outcomes research, pricing and reimbursement research, payroll development and disease state education efforts. If approved by the FDA, we expect the Molgradex combined with the PARI eFlow Nebulizer device, for which we have an exclusive license for GM-CSF could experience strong market adoption rates by patient population with no other approved therapeutic options. With regards to market protection, Molgradex is eligible for seven years of market exclusivity by orphan drug status and could be eligible for 12 years of biologic exclusivity. Additionally, we have strong market protection through a proprietary cell bank used for drug substance manufacturing process, as mentioned before, an exclusive device supply being, for the Nebulizer. Together, we believe this provides us with robust protection from Molgradex and aPAP. Lastly, on the manufacturing fronts, we are now producing the bulk drug substance at commercial scale and are nearing completion of drug substance validation. For the finished drug product, the technology transferred to our commercial manufacturer is complete and preparatory work for validation activities is ongoing. We are enthusiastic about the potential of Molgradex and aPAP and are executing across all the key function, clinical, manufacturing, regulatory and commercial, as we prepare for marketing approval and ultimately a future launch. Simultaneously, as we progress toward the highest near-term corporate priority, announcing top line results for the pivotal IMPALA study, we continue to evolve to other late stage investigational therapies, including Molgradex, NTM, and AeroVanc and look forward to the numerous catalysts for these important programs. Now, I will turn the call over to Taneli, who will share more details about our innovative programs.

Thank you, Rob; and good afternoon, everyone. Given the closeness of the IMPALA top line results, let me begin with providing some more detail on this study. IMPALA is being conducted in 18 countries worldwide with a total of 139 patients enrolled. The double-blind placebo-controlled efficacy period of the study is 24 weeks, followed by a 24-week open label period in which all patients receive the active drug. During the double-blind period, patients are randomized to one of three arms. The first arm receives a continuous regimen of 300 micrograms of Molgradex once daily. The second arm receives an intermittent regimen of 300 micrograms of Molgradex once daily every other week. And, lastly, the control arm receives once daily placebo. The primary analysis will compare the continuous regimen with placebo. The primary endpoint is the absolute change from baseline in the arterial-alveolar oxygen gradient or ((A-a)DO2), which is a measure of the patient's oxygenation status. Key secondary endpoints include the six-minute walk distance, the St. George's Respiratory Questionnaire and the time to hold lung lavage. With 139 patients enrolled, we are well over our 90% power to show a statistically significant treatment effect in the ((A-a)DO2), where the sample size calculation we assumed a difference of 10 millimeters mercury between the treatment arms with variability similar to that observed in the TESARO study, which is the largest of the published studies. In fact, we considered these assumptions to be quite conservative for several reasons. Firstly, the assumed effect size is lower than the range of 12 millimeters to 18 millimeters mercury observed in the key published study. And, secondly, our continuous dose regimen represents about a threefold higher cumulative dose of GM-CSF as compared to the TESARO study. And, lastly, our study population represents a moderate to severe disease severity with an average baseline ((A-a)DO2) in the 40 millimeters mercury range. For inclusion, all patients needed to have a baseline ((A-a)DO2) of 25 or higher. We're therefore quite confident that we will not trip into a common pitfall of Phase 3 clinical trials, which is to enroll too many patients with mild disease and then lose the signal. In other words, you need to treat sick patients in order to demonstrate the robust treatment effect. With regards to the two continuous secondary endpoints, the six-minute walk distance and the St. George's Respiratory Questionnaire, last year, we carried out a blinded interim variability analysis of our own data when approximately 50 patients have completed the 24 weeks of treatment. With the St. George's Respiratory Questionnaire, the blinded analysis indicated that the original sample size, which at the time was 90 patients, was sufficient to achieve 90% power for our assumed endpoint difference between the treatment arms. In order to also achieve 90% power for our assumed 50-meter treatment effect in the six-minute walk distance, the sample size was increased to the current level. These three secondary endpoints will all be analyzed in parallel, applying a correction for multiplicity, thereby allowing us to avoid the ranking of the endpoints prior to the analysis. It is important to note that if the primary endpoint is met, we would definitely expect to see the secondary endpoints moving in the same direction. While the FDA does not necessarily require that we meet statistical significance for any of the secondary endpoints, we do anticipate that we'll be looking for consistency across the primary and secondary endpoints. So, in other words, improved oxygenation should correspond with trends of improved function, as well as improvements in the patient reported outcome measures. And last, but not least, we also hope to see clear reduction or even absence of the need for Whole Lung Lavages in the two active treatment arms. There is little question that IMPALA represents a landmark study in aPAP and a huge milestone for Savara. Positive results could provide aPAP patients with a groundbreaking therapy for a disease with no approved treatment options. As a double-blind period of the study nears completion, we look forward to sharing these results with you very soon. On that note, we expect to issue a press release announcing top line data from IMPALA in about three months from now by the end of the second quarter. Concurrently, we plan to submit the full dataset for potential general publication and presentation at an upcoming scientific conference. While we strive to communicate as much information as possible at the end of Q2, the journal and conference embargo policies may influence the level of detail that we can provide in our top line announcement. Now let's move on to our other Molgradex programs, which targets NTM lung infection. In December of last year, we announced interim results from the OPTIMA study. This is a Phase 2 open-label study evaluating treatment of both Mycobacterium avium complex or MAC and the more difficult to treat Mycobacterium abscessus infections. The interim analysis included 14 patients who completed the 24-week treatment period and had sputum culture results available from at least the 16-week time point. Overall, we were quite pleased with the results as early microbiological data showed an encouraging efficacy signal and seem to be associated with improvements in clinical signs and symptoms. Safety and tolerability for all 32 patients in the study was also assessed and demonstrated that Molgradex was generally well tolerated with a favorable safety profile. Based on these data, we extended the duration of OPTIMA from 24 to 48 weeks. We believe the extension increases our ability to observe a more robust antiinfective effect and we look forward to seeing if the efficacy can be sustained or improved. The final results from the OPTIMA study are now expected in the first quarter of 2020. Molgradex for NTM presents us with a unique opportunity to develop a differentiated therapy for people suffering from the serious and often chronic lung disease. While the current standard of care is to treat the infection with long courses of multiple antibiotics, Molgradex takes an antiinfective immunotherapy approach that attempts to stimulate the immune system and enhance the body's natural ability to fight infection. By targeting the human immune response as opposed to the bacteria directly, Molgradex is now expected to be hampered by the increasing problem of antibiotic resistance. We are continuously looking for indication expansion opportunities within the Molgradex program and this now includes a new Phase II open-label study in people with cystic fibrosis and chronic NTM lung infection. I'm happy to report that we will be initiating the study still this month per guidance with first training scheduled to start soon thereafter. Similar to OPTIMA, the primary endpoint will be NTM sputum culture conversion to negative. In addition to the microbiology endpoints, the study will incorporate a number of clinical endpoints, typical for CF study, including pulmonary function test, respiratory symptoms and a change in body mass index. Lastly, I'd like to brief you on our other CF program, AeroVanc, which is an inhaled vancomycin for the treatment of MRSA lung infection. Our pivotal Phase 3 study AVAIL was initiated in September of 2017 and is currently being conducted at more than 70 sites across the U.S. and Canada. Last month, we updated our guidance for AVAIL enrollment completion. With 146 patients currently enrolled out of a target of 200, we now expect enrollment to complete in the third quarter of this year. Enrollment of the adult population was completed already as of Q1 of last year with a total of 55 patients. Despite high interest toward the study and high screening rates, enrollment of the primary analysis population, subjects between 6 and 21 years of age has been slower than anticipated and we currently have 91 of these younger patients enrolled. The lower enrollment has been largely due to high screening failure rates. The most common reasons for this have been the inability for patients to meet the lung function requirements or pulmonary exacerbations that occurred between time of screening and time of remunization. The high screening numbers indicate that we are clearly reaching a large amount of patients affected by MRSA and the exacerbations on the other hand prior to randomization, demonstrate the high disease burden and need for better treatment options in these subjects. With enrollment expected to complete in Q3 of this year, top line data from AVAIL are now expected in the second quarter of 2020. Now, next I will hand over the call to Dave for our financial update.

Thanks, Taneli; and hello, everyone. Today, we announced our fourth quarter and year-end financial results for 2018. Savara's net loss for the fourth quarter of 2018 was $10.5 million or $0.29 per share compared with a net loss of $6.5 million or $0.23 per share for the fourth quarter of 2017. Research and development expenses were $9.9 million for the fourth quarter of 2018 compared with $6.4 million for the fourth quarter of 2017. General and administrative expenses for the fourth quarter of 2018 were $3.3 million compared with $2.8 million for the fourth quarter of 2017. As of December 31, 2018, we had cash, cash equivalents and short-term investments of $110.8 million. Savara entered the fourth quarter of 2018 with approximately $24.5 million outstanding in long-term debt used to bolster operations and commercial initiatives and to advance our drug candidates. Savara's net loss for the year ended December 31, 2018, was $61.5 million for '18 or $1.85 per share compared with a net loss of $29.8 million or $1.76 per share for the year ended December 31, 2017. Research and development expenses increased by $18.7 million or 101% to $37.2 million for the year ended December 31, 2018, from $18.5 million for the year ended December 31, 2017. The increase was primarily due to $9.4 million in increased development cost associated with Molgradex, including the expansion of the aPAP study in the U.S. and the commencement of the NTM study, an increase of $8.4 million in AeroVanc study cost related to Phase 3 activity and $1 million in expenses for common stock issued to Cardeas Pharma Corporation for the acquisition of their assets. General and administrative expenses decreased by $0.4 million or 4% to $10.7 million for the year ended December 31, 2018, from $11.1 million for the year ended December 31, 2017. The decrease was primarily due to $2 million of expense in connection with the contingent consideration associated with the acquisition of Molgradex recognized during 2017, offset in 2018 by increased non-cash stock-based compensation charges of approximately $1.8 million. As previously disclosed, during Q1 2018, we've recognized a $21.7 million impairment charge to the carrying value of In-Process R&D related to the Aironite drug candidate assumed in our April 2017 merger with Mast and we've reduced the associated deferred tax liability by $4.6 million and recorded an income tax benefit. I want to emphasize that we believe we are sufficiently funded through the Molgradex and AeroVanc data readouts, giving us runway until the latter part of 2020. As we strengthen our commitment to people with rare lung diseases around the world, we will continue to strategically invest in opportunities that maximize shareholder value while appropriately managing our financial risk. I'll now pass the call back to Rob.

Thank you, David and Taneli, and thanks to everybody who dialed in. Your support and belief in Savara are incredibly important to us, but even more important to the courageous people living with an orphaned lung disease. It is our mission to meaningfully and positively impact the lives of these patients and we're committed to creating the pipeline of programs that not only address unmet need for transformative treatment paradigms, but also advance scientific understanding of the hundreds of orphan lung diseases that affect millions of people. Without hesitation, I believe the 2019 will be known as Savara's year of execution. We anxiously await the IMPALA results and are moving full steam ahead on the regulatory manufacturing and commercial fronts, so that when the time comes we'll be prepared to expeditiously file marketing applications with agencies in the U.S. and EU, and launch what we expect to be a game-changing therapy for aPAP patient. At the beginning of the call, Anne encouraged shareholders to submit questions by email to [email protected]. If time permits, we will answer these and other questions that have been submitted to our Investor Relations team. And, with that, I'd like to turn the call back to operator for analyst questions.

Thank you. And we will now begin the question-and-answer session. [Operator Instructions] And the first questioner today will be Dewey Steadman with Canaccord. Please go ahead.

Hi. Good afternoon, and thanks for taking the question. I guess on the AVAIL study, are there any steps that you can take to boost the enrollment pace for the study? I know, it's difficult to, for these patients to make exacerbations to make it even more difficult. And then what the adult cohort in AVAIL? Is there an opportunity for an interim read there, given that most of them have probably gone through the study already?

Well, thanks for your questions, Dewey. To answer your last question first, there is no possibility to do an interim analysis. And so, the adult population is really not the key in this study. It is a smaller subset of the total study population and, therefore, we are not motivated to do any kind of an interim look for that. In terms of the options of improving patient enrollment, it is a combination of all the classical factors of enrollment in clinical studies. You can try to increase the number of sites, you can increase your different activities toward the sites being in constant contact, engage your KOLs to do the same, and we are, of course, doing all of this, except we're not really materially changing the numbers of study sites and we have 70 sites in the study and it really only takes less than one patient per site randomized to complete this study. So that's probably with the current screen failure rate if that continues about two patients screened per site and will be done. Summer, usually, is a better time for enrollment. We will expect to have always more viral infections and different types of reasons for higher screening failures during the winter months, so hopefully we'll be seeing some uptick based on that.

Excellent. And then on, I really love interim reads. Does the CF study in NTM have a similar opportunity to OPTIMA for an interim read?

No. At this time, Dewey, we won't have an interim read for that CF study.

Okay, great. And are there any updates, my final question, just are there any updates on the amikacin/fosfomycin program or sort of timing as to when we'll get more detail on that development program? Thanks.

Right now, we will be, we're anticipating giving you more information about that shortly. We have not yet announced what the first indication will be for that program. We have essentially made that decision internally and we will be coming out with some information quite soon.

And our next questioner today will be Liisa Bayko with JMP Securities. Please go ahead.

Hi. This is Jon on for Liisa. Thanks for taking the questions, and congrats on the progress. I was hoping you could talk a little bit more about your partnership with the PAP Foundation and specifically the patient registry. How many patients are in there now and what kind of initiatives are you guys going to put in place to try and expand that?

Well, first of all, creating a registry that is professionally managed is essential for rare diseases and the PAP Foundation patient registry is not quite that. So what we will be doing is, we will be supporting the Foundation with resources and essentially helping them to create a Foundation, a registry that is much more comprehensive than it is at its current stage. So, right now, I would say that this registry is in its infancy and is not extremely helpful for a company like us. In other facets of this collaboration will, of course, be very important for mapping out where do patients get treated, how many KOLs and how many physicians actually are involved in this community. We want to have as accurate information as possible at the time of launch, so that we know where to go. We know how the patients are currently being handled, who's treating them and this work will be something that is intensifying in the coming months and quarters and we'll be happy to talk more details about that in the coming conference calls.

Great. And then just one more on IMPALA. Following the data in 2Q, what other rate limiting steps will there be between the data and the BLA submission in the first half 2020? What other steps do you guys have to get through to get there? Thanks.

So there will be, of course, the communications with the FDA about the filing and many details in what is called the pre-BLA meeting. We also do have the open-label part of the IMPALA Study that we expect to complete first and only thereafter do the filing. So that is a six-month open-label period and therefore we'll be completing in quarter four.

And our next questioner today will be Josh Schimmer with Evercore ISI. Please go ahead.

Hi. This is Amy on for Josh. Just a quick question on Molgradex and NTM. Now that you have the interim data, what are you sort of looking for on the final data set to move the program forward? Thanks.

Eradications, so culture conversions to negative. If we maintain the current rate of culture conversion, that would definitely be something that would progress this program further.

Got it. So, and if you were to progress sort of into full Phase 2, how are you thinking about the trial design given sort of the conversations and discussions that Insmed has had?

Well, that very much depends on the data when we actually have the final data. We hope to learn a lot about what type of patients actually respond best and how we should design then a controlled study thereafter. And bear in mind that we have two treatment groups in the OPTIMA, those who get concomitant antibiotics with Molgradex and those who only get Molgradex. And it is perfectly possible that these two population actually branch out to separate programs. But it's really too early to say much about the study design for a follow-up study when we're still gathering the learnings from the OPTIMA.

Got it. And one quick question on Molgradex and aPAP. In terms of how you're thinking about launching, do you have a sense of how many patients are already identified in the U.S.? Any numbers or metrics you can give us there?

In terms of the numbers, no, we have not given numbers out right now. This is a key activity and commercial prep to have a good grip of the numbers, the trading positions, the locations and be ready to go where the patients are once the product is approved.

So we expect to go into a lot more detail and address many of these questions immediately after the top line results.

Great. Thank you very much.

And our next questioner today will be Michael Higgins with Ladenburg Thalmann. Please go ahead.

Thanks, operator. Hi, guys. A couple of questions for you. In the NTM CF Phase 2, will the patients also include the MAC patients and abscessus patients like OPTIMA trial, or just MAC given how abscessus did not respond in the OPTIMA? Thank you.

It will be including both MAC as well as abscessus. And, in fact, in the CF population, abscessus is more common proportionally compared to non-CF and is definitely a big problem and the published case reports that we can refer to actually have demonstrated that abscessus can be very well treated also. We have no reason to not include those patients.

Okay. Thank you. And then one other. On AVAIL, can you tell us how many patients are rolling over from the two arms to the one open-label extension arm?

Excuse me, I didn't catch the question. Can you repeat that, please?

Sorry. On AVAIL, you've got patients rolling over, I believe, from the 24-week two-arm study into the open-label extension. Can you give us an update on how many are rolling over?

I don't have the accurate number off the top of my head. I mean, it was, this is something where all patients per protocol will continue into that open-label part. So it is one protocol where everybody is expected to switch over. So this is unlike the IMPALA-X, where we actually have a separate study into which patients are then enrolling, not the same as in AVAIL. So AVAIL is one study, two periods, just like we have in the IMPALA main study. So we decided to make them not to have an extension study on the AVAIL side.

I'm sorry, Rob, that's hard to hear you, can you say it again?

I said that we decided not to have an equivalent extension study as is the case with IMPALA-X for AVAIL.

Okay. How is the roll over from period one, period two? Can you give us any update on how that is going?

No, we don't have an update on that. So I don't have the numbers off the top of my head, unfortunately.

Okay. I Appreciate it. Thanks, guys.

And we had a few questions come in by email. I'll read the first one. So you mentioned that your dose is about threefold higher than the dose used in the TESARO study, can you explain how you came to that conclusion considering they appeared to use a 250 microgram daily dose?

Well, it is true that the dose was 250 micrograms per day in the TESARO study, but they actually applied that dose only for the first three months. And during that time, using an intermittent dosing regimen and then thereafter for the second three months, they actually dropped the dose in half and the dosing frequency in half. So this means that for the first three months of their study, their dose was about half of our dose. And then for the second three months, it was about one eighth of the dose that we have. So these two together cumulatively over the course of the six months give us the difference of about threefold. And so then on top of this, we apply a higher efficiency nebulizer, the PARI eFlow. And this nebulizer is known to produce about a twofold higher lung deposition of the drug. So all this taken together, we have a clear advantage in terms of dose compared to the TESARO study, which we feel was especially for the latter three months very much under dosed. And, therefore, we would expect not only to have a higher average improvement in our primary endpoint compared to TESARO, but also probably faster.

Okay. A couple more here. The next one, with only 20 patients enrolled in IMPALA-X, why are you so encouraged by these numbers?

I'll take that one. So, first of all, as you may recall, only about half the countries in which IMPALA has been conducted are participating in the extension study. And, therefore, we won't see the full enrollment numbers into the extension study. In fact, one of our highest enrolling countries, Japan, is not participating in the extension study. And then, also recall that all patients would have been in the study for a year with all of them having received drug for at least six months. And so, we believe that if patients don't believe the drug is having an effect, we would assume that they would have no reason to continue into the extension study.

Okay. Last question, and this is regarding Molgradex and IMPALA. Can you comment on the safety of the drug, if you're able to?

Well, since the study is blinded, we are not really able to give you much on that front. But we have had routine DSMB meetings throughout the study to monitor safety and each time we've been given green light to continue. Also, our premature drug discontinuation rate is quite low, which suggests that the overall safety and tolerability would not be a major concern.

Great. That was the end of the questions, and William back to you to close the call.

Yes, I'm not seeing anymore current audio questions. So, if anybody have any closing remarks, Mr. Neville, I would like to close it back over to you.

No, just thank you everybody for your interest and some great questions. If there is any further questions, unfortunately, we couldn't get to all the emails. We had a flurry coming in at the last minute, so we will address those back to those folks that had emailed us directly.

Thanks, everyone.