SVRA

Savara ($SVRA) Executives Buy $700K+ After FDA Refusal - Bottom Signal or Falling Knife?

06/24/2025 02:28

Savara Inc ($SVRA) is attracting attention as insiders aggressively buy shares following the company's steep decline due to FDA approval delays. This clinical-stage biotech company specializes in developing treatments for autoimmune pulmonary alveolar proteinosis (aPAP), a rare respiratory disease. While its lead candidate molgramostim showed positive Phase 3 results, the stock plunged 34.86% in May after receiving an FDA Refusal to File letter for its Biologics License Application (BLA). Contrary to the stock's decline, insiders view this as a buying opportunity. The most notable activity comes from Director David Ramsay, who has made consecutive large purchases: 100,000 shares at $2.88 ($287,600) in November 2024, followed by 150,000 shares at $2.77 ($416,250) in March 2025, totaling over $700,000 in investments. This demonstrates strong confidence in the company's prospects. More significantly, other directors joined the buying spree after the FDA setback. Director Joseph McCracken purchased 10,000 shares at $2.08 ($20,825) on May 29, while Director Richard Hawkins bought 48,225 shares at $2.04 ($98,571) on June 20 in consecutive transactions, showing particularly aggressive buying intent. The timing of these insider purchases is strategically meaningful. With the stock trading near its 52-week low of $1.94 and currently at $2.16, executives with the most intimate knowledge of the company's situation are deploying significant capital. Savara's fundamentals support the insiders' judgment. The company holds $173.3 million in cash against just $29.69 million in debt, resulting in a healthy debt-to-equity ratio of 20.08%. The current ratio of 14.91 indicates excellent short-term liquidity. Additionally, the company secured up to $200 million in non-dilutive debt financing from Hercules Capital in March, further strengthening its financial foundation. The FDA refusal may not be as severe as initially perceived. The FDA raised no safety or efficacy concerns, requesting only additional data on chemistry, manufacturing, and controls (CMC). With resubmission planned for Q4, while approval may be delayed, the ultimate approval prospects remain largely unchanged. The market reflects this sentiment. Analysts maintain an average 'Buy' rating with a $8.75 price target, suggesting over 300% upside potential from current levels. Institutional ownership remains very high at 88-98%, demonstrating professional investor confidence. However, risks remain. As a clinical-stage biotech with no revenue, the company continues posting losses, and short interest is elevated at 12-23%. The stock has declined approximately 44% over the past year, with market cap nearly halving from $688 million to $373 million. Nevertheless, the company's exclusive position in the rare respiratory disease niche, positive Phase 3 results, and most importantly, the consecutive large-scale insider buying suggest significant investment opportunity at current price levels. FDA resubmission and approval could catalyze substantial price recovery. Investors should closely monitor FDA resubmission timing and results, along with the persistence of insider buying patterns. The strong confidence signals from insiders at these trough price levels could present compelling opportunities for long-term investors.

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