Cara's Second Half Catalyst Has The Potential To Change The Scope Of The Biotech Forever

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About: Cara Therapeutics, Inc. (CARA)
by: Terry Chrisomalis
Summary

Cara Therapeutics achieved positive phase 3 results in KALM-1 treating hemodialysis patients with CKD associated pruritus using KORSUVA injection.

A second catalyst opportunity for the biotech is expected in the 2nd half of 2019, which will be phase 3 results from an identical study known as KALM-2.

If the second study KALM-2 also meets the primary endpoint, that would open up Cara to file for regulatory approval soon thereafter for KORSUVA injection.

Cara Therapeutics had $156.1 million in cash as of March 31, 2019 and it should be enough to fund its operations into 2021.

Cara Therapeutics (CARA) announced that it had achieved positive phase 3 results from its phase 3 KALM-1 study treating hemodialysis patients with CKD associated pruritus using KORSUVA injection. There is another catalyst due in the 2nd half of 2019, which are results from an identical late-stage study known as KALM-2. Results from this study will be confirmation for KORSUVA injection and it will also push the biotech to quickly file an NDA for potential approval of treatment for this patient population.

First Set Of Phase 3 Results Make Case For Regulatory Approval

Cara Therapeutics achieved positive results in its phase 3 study KALM-1. This involves treating hemodialysis patients with CKD-aP. Before diving into the study data and analyzing it, it's important to understand what type of population this is. Chronic kidney disease is a condition associated with the gradual loss of kidney function over a specified amount of time. When it is said that these CKD patients have to go through hemodialysis, they go through a process of what the kidney would normally do like remove wastes and toxins from the body. Specifically, this is what hemodialysis is all about:

  • Removing salt, waste, water to stop them from building up inside the body.
  • Maintaining appropriate levels of certain chemicals in a person's blood such as: Sodium, potassium, bicarbonate.
  • The ability to control blood pressure.

Thus far, you can see that these CKD patients need hemodialysis in order to survive. So what exactly is the point of using the KORSUVA injection for these patients on hemodialysis with CKD-aP? That's because whether a patient does hemodialysis or peritoneal dialysis (PD) at some point in time they will have itching (pruritus). Some of the itching for patients is only in one area and for many others it is all over the body. One of the reasons for the itching is phosphorus that remains in the body. The biggest item to point out is that kidney failure is the biggest cause of pruritus. It is reported that about 60% to 70% of CKD hemodialysis patients have itching. The itching is very bad. Matter of fact, it affects a person's quality of life. For instance, their sleep is disturbed, depressed mood occurs and many other problems. There are about 486,000 patients on dialysis in the United States. About 60% of end-stage renal (kidney) disease patients have pruritus and 40% with moderate to severe pruritus. The most crucial item to point out is that there are no FDA approved therapies to treat pruritus for patients on hemodialysis with CKD-aP. That means if Cara can obtain FDA approval in the United States for KORSUVA injection, it will have the entire market to itself.

The most recent positive results were for the KALM-1 phase 3 study. The study recruited a total of 350 hemodialysis patients with moderate to severe pruritus. The primary endpoint for the study was looking to see the amount of patients that could achieve at least a 3-point improvement from baseline to the weekly mean of the daily 24-hour WI-NRS score at week 12. Before going any further you have to understand what this score is. WI-NRS stands for Worst Itch Numeric Rating Scale. It is used to assess the severity of intense itching over the previous 24-hour period. As you can see, the hope is that these hemodialysis patients that receive a KORSUVA injection could see a 3-point improvement from baseline. Baseline meaning initial screening measurements when the patient is recruited. The study evaluated these patients over a 12-week period. The results are both remarkable and quite outstanding. It was noted that the proportion of patients that had achieved the primary endpoint of the WI-NRS score at week 12 was 51%. This compares to only 28% of the patients on placebo. This difference from KORSUVA injection to placebo was statistically significant with a p-value of p=0.000019. The treatment was even shown to be superior over placebo in terms of quality of life improvements as well. The company expects to release results from its second identical phase 3 KALM-2 study in the 2nd half of 2019. This could possibly provide the basis for the filing of an NDA to the FDA for KORSUVA injection for these patients.

Financials

According to the 10-Q SEC filing, Cara Therapeutics had $156.1 million in unrestricted cash and cash equivalents and available-for-sale marketable securities as of March 31, 2019. It believes that it will have enough cash to fund its operations into 2021. One item to point out is that this doesn't include the milestone payments I noted above. That means it just depends on when Cara submits its regulatory filing to the FDA for approval. However, I expect it to at least raise cash a few months before 2021. Especially, if it anticipates approval of KORSUVA injection and it is close to commercialization. The good news is that it won't have to raise that much cash anyways, because the partner it has, Fresnius Medical Care, will likely market the drug in its dialysis centers and other territories.

Conclusion

Cara Therapeutics achieving positive results for its phase 3 KALM-1 study using KORSUVA injection in treating hemodialysis patients with CKD is good news for the biotech. Investors can also take advantage of another upcoming catalyst due in the 2nd half of 2019. This involves a similar study to the one that was just reported, known as KALM-2. If this study also meets the primary endpoint, that would be a good catalyst that could cause the stock to trade higher. It would also provide the basis for Cara to be able to file for regulatory approval soon after for KORSUVA injection. There are several risks to be aware of when investing in Cara. The first risk being that there is no guarantee that the phase 3 KALM-2 study will end up achieving similar results or the primary endpoint compared to the identical KALM-1 study. Secondly, even if a regulatory application is filed with the FDA for KORSUVA, there is no guarantee that it will be approved. Still, Cara Therapeutics is in good shape. If it can capitalize on its CKD associated pruritus program, then things will only get better for it from here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.