Savara Stock Dips After Announcing Public Share Offering
The biotech firm is raising capital to fund its lead lung disease drug following a regulatory setback earlier this year, a move that could dilute existing shareholder value.
Shares of Savara Inc. (NASDAQ: SVRA) fell in trading on Wednesday after the biopharmaceutical company announced its plan to sell additional shares of common stock in an underwritten public offering.
The Austin-based firm, which focuses on therapies for rare lung diseases, saw its stock price decline by 1.59% to $4.34 in morning trading. The move comes as investors reacted to the potential for share dilution, a common short-term consequence of secondary offerings as the supply of shares increases.
Savara intends to use the net proceeds for general corporate purposes, which includes funding the clinical development, regulatory approval process, and potential commercialization of its lead drug candidate, molgramostim. The offering, for which Goldman Sachs and Jefferies are acting as joint book-running managers, is a critical step for the company as it navigates a pivotal period.
The capital raise follows a significant regulatory hurdle earlier this year. In May 2025, the U.S. Food and Drug Administration (FDA) issued a refusal-to-file letter for the company's Biologics License Application (BLA) for molgramostim, citing the need for more Chemistry, Manufacturing, and Controls (CMC) data. Savara has since stated it plans to resubmit the BLA in December 2025, making a strong balance sheet essential for the path ahead.
This stock offering is part of a multi-pronged financial strategy. On the same day, Savara also announced it had entered into a $75 million royalty funding agreement with RTW Investments, LP. That deal is contingent on the FDA's approval of molgramostim and is structured to support its potential U.S. launch.
While the market's immediate reaction to the offering was negative, Wall Street analysts have maintained a broadly optimistic long-term outlook for the company. Based on data from seven analysts, Savara holds a consensus "Strong Buy" rating with an average price target of $10.31, suggesting significant potential upside from its current levels. Following the FDA's decision in May, analysts at Guggenheim adjusted their price target to $8.00 from $9.00, noting at the time that the company would likely require additional capital to fund its operations—a forecast that Wednesday's announcement validates.
Savara is developing molgramostim for autoimmune pulmonary alveolar proteinosis (aPAP), a rare lung disease where surfactant builds up in the lungs, impairing breathing. With no currently approved therapies for aPAP, molgramostim has the potential to be a first-in-class treatment, a prospect that has kept both institutional and retail investors engaged.
The company's financial footing appears solid in the short term, with a reported quick ratio of over 10, but the high costs of drug development and commercialization for a product awaiting regulatory approval necessitate a larger cash reserve. Investors will now be closely watching for the planned BLA resubmission in December, which stands as the next major catalyst for the company and its stock.