Combined development pipeline includes treatments for HFpEF, PAP, and DAH

Savara Pharmaceuticals and Mast Therapeutics agreed a stock-based merger deal that values Mast at $36.5 million and Savara at $115 million. Under terms of the proposed deal, which was announced over the weekend, Savara’s shareholders will receive newly issued Mast shares in exchange for their Savara stock and own 76% of the combined entity, which will also retain the Savara name and headquarters in Austin, TX. The merger has been approved by both firms’ boards and is subject to Mast and Savara shareholder approval and customary closing conditions.

Savara is focused on the development of treatments for rare respiratory diseases. If the merger with Mast is finalized, the combined clinical pipeline will include three candidates. Savara’s own AeroVanc is an inhaled dry powder vancomycin for treating methicillin-resistant Staphylococcus aureus (MRSA) pulmonary infection in cystic fibrosis. Savara and Mast anticipate starting a Phase III study with AeroVanc during the latter half of 2017. Savara raised $20 million in a Series C financing round, during the first quarter of 2016, to support the Phase III study.

Mast’s AIR001 is an inhaled, nebulized sodium nitrate solution for treating heart failure with preserved ejection fraction (HFpEF). The drug is in Phase II development. Mast and Savara say they expect to release data from the 100-patient study, which is being conducted by the Heart Failure Clinical Research Network, during the first quarter of 2018.

Molgradex® is an inhaled, nebulized granulocyte-macrophage colony-stimulating factor (GM-CSF) for treating pulmonary alveolar proteinosis (PAP). The drug is undergoing Phase II/III development. Savara acquired Molgradex through its takeover of Danish firm Serendex Pharmaceuticals in July 2016. Topline data from the registration-enabling European and Japanese trial of Molgradex are expected during the early part of 2018. Molgradex has been available for use in selected PAP patients in Denmark, Germany, and Austria, under the Early Patient Access program, since 2015. During May 2016, Savara granted Japanese firm Nobelpharma a license to Molgradex for the treatment of PAP in Japan.

Savara’s preclinical candidate Alveodex is a proprietary, nebulized recombinant human FVIIa, which is in development for the treatment of diffuse alveolar hemorrhage and other high-risk populations with respiratory diseases in a critical care setting. Alveodex was also acquired through the Serendex takeover.

In a statement, Savara chairman and CEO, Rob Neville, called the proposed merger with Mast transformative. “We believe the favorable risk profile of our product candidates combined with their market potential provides a unique opportunity for Savara to become the next breakout company in orphan pulmonary diseases.” Brian M. Culley, current CEO and director of San Diego-based Mast Therapeutics, added, “We are excited for the prospects of the combined company and believe that Savara's management team is well equipped to advance the pipeline toward regulatory approvals and commercialization in the U.S. and EU.”

Law firm DLA Piper represented San Diego-based Mast Therapeutics, Inc.

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