Cara Therapeutics, Inc. (CARA) CEO Derek Chalmers on Q2 2019 Results - Earnings Call Transcript

About: Cara Therapeutics, Inc. (CARA)
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Earning Call Audio

Cara Therapeutics, Inc. (NASDAQ:CARA) Q2 2019 Earnings Conference Call August 7, 2019 4:30 PM ET

Company Participants

Jane Urheim - Stern Investor Relations

Derek Chalmers - President & Chief Executive Officer

Mani Mohindru - Chief Financial Officer & Chief Strategy Officer

Conference Call Participants

Jason Gerberry - Bank of America

David Amsellem - Piper Jaffray

Nick Rubino - Stifel

Charles Duncan - Cantor Fitzgerald

Alan Carr - Needham & Company

Esther Hong - Janney


Good afternoon and welcome to Cara Therapeutics Second Quarter and 2019 Financial Results Conference Call. All participants are now in listen-only mode. There will be a question-and-answer session at the end. Please be advised that this call is being recorded at Cara's request.

I would now like to turn the call over to Cara team. Please proceed.

Jane Urheim

Good afternoon. This is Jane Urheim with Stern Investor Relations and welcome to Cara Therapeutics second quarter 2019 financial results and update conference call. The news release became available just after 4 o’clock p.m. today and can be found on our website at You may also listen to a live webcast and replay of today's call on the Investors section of the website.

Before we begin, let me remind you that statements made on today's call regarding matters that are not historical facts, are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include: Statements concerning the expected timing of the completion and announcement of the results of our ongoing clinical trials; the expected timing and design of our planned clinical trials; future regulatory and development milestones for our product candidates; the timing of regulatory submissions, the potential for CR845 to be a therapeutic option in multiple pruritus indications; the size of the markets that are potentially addressable by our product candidates; and our expected cash reach. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks are described more fully in Cara Therapeutics’ filings with the Securities and Exchange Commission, including the “Risk Factors” section of the company's annual report on Form 10-K for the year ended December 31, 2018 and its other documents subsequently filed with or furnished to the Securities and Exchange Commission.

Participating on this call are Dr. Derek Chalmers, Cara's President and CEO; and Dr. Mani Mohindru, Chief Financial Officer and Chief Strategy Officer.

I'll now turn the call over to Dr. Chalmers.

Derek Chalmers

Thanks, Jane. Good afternoon, everybody, and thanks for joining us on today's call. So we've continued to make very significant progress during the second quarter of 2019 particularly with our lead KORSUVA injection development program where we reported positive top line data from our first pivotal Phase III trial KALM-1 in hemodialysis patients with chronic kidney disease associated pruritus or CKD-aP.

We are very pleased that KORSUVA treatment resulted in statistically significant improvements in all primary and secondary endpoints in this trial and we remain on track to read our top line data from our second pivotal Phase III KALM-2 trial in the same patient population in the fourth quarter of this year.

In addition to the KALM-1 data and our ongoing KALM-2 trial, we're also making good progress in advancing the development of oral KORSUVA across a number of patient populations where pruritus continues to be a significant unmet need. We recently announced the completion of enrollment in our Phase II trial of oral KORSUVA for CKD-aP in stage three to five CKD patients and we remain on track to report the top line data from this trial in the fourth quarter of this year. We've also initiated two additional Phase II trials out with the CKD population, the first in patients with chronic liver disease specifically primary biliary colangitis patients suffering from pruritus, and the second in patients with atopic dermatitis.

So with our recently completed successful follow-on offering, which netted approximately $136 million to the company, we remain well positioned to execute on our lead pivotal Phase III program for IV KORSUVA for CKD-aP in hemodialysis patients as well as progress our oral KORSUVA programs across multiple patient population in the coming quarters.

So before we provide an overview on each of our ongoing programs, I want to briefly remind you of KORSUVA's mechanism of action and why we believe it has the potential to be a treatment of choice for pruritus across patient populations. KORSUVA has been specifically designed to function without traditional new opioid side effects. Due to its highly specific pharmacological action on kappa receptors and lack of activity on new receptors. Due to this unique chemistry that restricts it to the periphery, KORSUVA's mechanism of action is mediated by kappa opioid receptors specifically on poriferal sensory afference, which really provide us signals not within the CNS as well as its action on kappa receptors on immune cells.

The action of KORSUVA on dermal and epidermal immune cells blocks the release of a range of nerve sensitizing molecules or pruritogens, diminishing the stimulation of dermal sensory fibers. And we believe that it's best to dual neuronal and anti-inflammatory effect that affords KORSUVA an effective antipruritic action regardless of the initiating pathophysiology in the patient.

So moving on to our clinical program, so let's start with our lead program KORSUVA injection for hemodialysis patients with CKD-aP. As we've mentioned before on these calls this is a patient population where approximately 40% to 50% of patients suffer from moderate to severe pruritus. Not only does pruritus severely diminished patients' quality of life in the form of sleep disturbance and depression and anxiety, but it's also associated with increased morbidity and mortality in these patients.

Pruritus remains a significant unmet need here and these patients undergoing dialysis with no approved therapies either in the U.S. or in Europe. Our pivotal program for KORSUVA injection in hemodialysis patients includes four Phase 3 studies KALM-1 our U.S. efficacy trial; KALM-2 a global efficacy trial and two open-label safety studies one U.S. and one global.

Both KALM-1 and KALM-2 are designed to investigate the efficacy of KORSUVA injection at a dose of 0.5 micrograms per kilo versus placebo administered three times per week or TIW after scheduled dialysis sessions over a 12-week treatment period with a 52-week open-label extension phase beyond that for safety.

In May, we announced top line results from KALM-1. Analysis of the primary endpoint demonstrated that KORSUVA injections significantly reduced itching intensity with 51% of subjects achieving at least a three-point improvement in worst itching intensity as measured on a NRS or Numeric Rating Scale compared to 29% of subjects in the placebo group.

As for the secondary endpoints, 39% of subjects treated with KROSUVA achieved at least a four-point improvement in the worst itching intensity NRS score compared to 18% in the placebo group. Impact of itching quality of life was assessed with two complementary multi-dimensional itch-related quality of life questioners the 5-D itch and the Skindex-10. These questioners evaluated itch symptoms and disability due to itch including impact on sleep, work, social interactions and mood.

Notably patients on KORSUVA experienced a 35% improvement in the average total 5-D itch score and a 43% improvement in the average total Skindex-10 score compared to placebo at week 12 both of which were highly statistically significant improvements. So overall these data indicate a consistent continued antipruritic effect of KORSUVA over the three-month treatment period in this patient class.

We continue to make good progress on our second pivotal Phase 3 trial KALM-2, which is a global study similar and designed to the KALM-1 trial. As with KALM-1, we have designed a pre-specified interim conditional power assessment into the KALM-2 protocol and we expect to announce the outcomes of that analysis and full top line data from KALM-2 before the end of this year.

Moving on to our safety studies in this program, our open-label 52-week safety study currently has approximately 165 patients through six months of treatment with over 50% of these patients having completed one year of KORSUVA exposure. To-date, the safety and tolerability appears to be consistent with data reported from the first Phase 3 and prior Phase 2 trials of KORSUVA injection in hemodialysis patients. And based on the most recently completed independent data safety monitoring board evaluations, the last of which was in July of this year, no new or inconsistent safety signals have been observed.

Our second open-label safety study initiated in Q2 of this year is utilizing both U.S. and European sites and is expected to enroll up to 400 patients. And as a reminder, this trial was not required by any of the regulatory agencies, but rather as part of our strategy to use new clinical sites to accelerate the safety exposures required for a potential NDA filing.

So in summary, our pivotal program for KORSUVA injection in hemodialysis patients with CKD-aP is advancing on track pending positive data from KALM-2 later this year, we are undertaking all necessary activities to support submission of the new drug application for KORSUVA injection to the FDA in the second half of 2020.

In anticipation of a successful NDA and a potential KORSUVA injection launch in the U.S., we've also initiated a range of key pre-commercial activities including the recent completion of a commercial manufacturing agreement with Patheon U.K. Limited.

Now moving on from KORSUVA injection, I'd like to turn to the other part of our pipeline our ongoing programs with oral KORSUVA, based on pruritus-related prescription data is estimated that there are at least 2.5 million stage III-V CKD patients suffering from pruritus in the U.S. with current standard of care predominantly being generic corticosteroids and antihistamines.

Our ongoing Phase 2 trial in this patient population is a multi-center randomized double-blind placebo-controlled 12-week trial designed to evaluate the safety and efficacy of three-tablet strengths of oral KORSUVA 0.25 mg, 0.5 mg and one mg administered once-daily in these patients.

The primary endpoint in this trial is the change from baseline and the weekly mean of the daily 24-hour worst intensity and NRS score at week 12 of the treatment period and secondary endpoints include change from baseline and itch-related quality of life scores at the end of week 12 also, again assessed by the total Skindex-10 and 5-D itch scales.

And in addition we're also assessing the proportion of patients achieving an improvement from baseline of greater than or equal to 3 points with respect to the weekly mean of the daily 24-hour worst itching intensity score at week 12.

Based on the recommendation of the Independent Data Monitoring Committee or IDMC we recently announced that the trial will not require any modifications to the original enrollment target of 240 patients. And this trial is now fully enrolled. This IDMC recommendation was based on the results of a pre-specified interim conditional power assessment that was conducted after approximately 50% of the 240 patients that completed the designated 12-week treatment period.

We remain on-track to announce topline data from this trial before year-end. We also recently initiated Phase II trials for the treatment of pruritus in 2 additional patient populations, Atopic Dermatitis or AD patients and patients with Primary Biliary Cholangitis or PBC patients.

Atopic Dermatitis is of course one of the most common chronic inflammatory diseases with prevalence rates of up to 5% in U.S. adults and approximately 25% in children. And pruritus is a defining symptom of AD with a point preference estimated at 87% to 100% in that patient population.

In a similar fashion to CKD-aP current treatments for pruritus across the AD patient spectrum fall short, consisting of topical corticosteroids, high dose antihistamines and antidepressants.

We recently initiated randomized double-blind placebo-controlled Phase II study designed to evaluate the efficacy and safety of oral KORSUVA for the treatment of moderate to severe pruritus and approximately 240 patients with Atopic Dermatitis.

Subjects will be randomized to 3-tablet strengths of oral reserve 0.25 mgs, 0.5 and 1.0 mg taken twice daily versus placebo for 12 weeks, followed by a 4-week active extension phase. The primary efficacy endpoint is the change from baseline in the weekly mean of the daily 24-hour H-NRS at week 12 of the treatment period and secondary endpoints include change from baseline and itch-related quality of life scores at the end of week 12 as assessed again by Skindex-10 and 5-D itch scales.

We're also looking at the proportion of patients achieving an improvement from baseline of at least 4 points, with respect to the weekly mean of the daily 24-hour NRS score at week 12.

With respect to chronic liver disease associated pruritus, we also recently initiated a Phase II trial in patients with hepatic impairment due to PBC. Pruritus is a common symptom of colostatic liver diseases with a prevalence of up to 70% in patients with PBC.

The Phase II multi-center randomized double-blind placebo-controlled 16-week trial is designed to evaluate the safety and efficacy of a 1.0 mg tablet of oral KORSUVA taken twice daily versus placebo and approximately 60 patients with PBC and moderate to severe pruritus.

Primary efficacy endpoint is the change from baseline in the weekly mean of the daily 24-hour worst itch NRS score at week 16 and secondary endpoints again included change from baseline and itch-related quality of life scores at the end of week 16 again assessed using Skindex-10 and 5-D itch scales, as well as the assessment of proportion of patients achieving an improvement from baseline of at least 3 points with respect to the weekly mean of the daily 24-hour worst intensity score at week 2016.

So we will provide an update on enrollment rates and projected data readout time lines from both these initiated oral KORSUVA Phase II trials as we initiate more clinical sites. And as we get a better handle of enrollment rates across both these trials.

So with that, I'd now like to turn the call over to Mani who will discuss our financial results for the quarter. Mani?

Mani Mohindru

Thank you, Derek. As a reminder the full financial results for the second quarter of 2019 can be found in our press release issued today after the market closed. For the second quarter of 2019, we reported a net loss of $23 million or $0.58 per basic and diluted share compared to a net loss of $17.2 million or $0.52 per basic and diluted share for the same period of 2018.

For the second quarter of 2019, we recognized revenue of $5.2 million related to the Vifor Fresenius collaboration agreement compared to $2.9 million for the same period of 2018.

For the second quarter of this year we reported R&D expenses of $24.4 million as compared to $7 million of the first quarter of 2018 -- sorry of the second quarter of 2018. The higher R&D expenses in 2019 were primarily related to an increase in clinical trial costs, as well as increases in stock-based compensation expense and payroll-related costs.

G&A expenses were $5 million during the second quarter of 2019 compared to $3.7 million in the same period of 2018. The increase in 2019 was primarily due to increases in stock-based compensation expense, payroll, and related costs, as well as franchise taxes.

Other income was $947,000 for the second quarter of 2019 versus $467,000 for the same period in 2018. The increase in 2019 was due to an increase in interest income, resulting from higher average balance of our portfolio of investments in the 2019 period.

At June 30th, 2019, our cash, cash equivalents and marketable securities totaled $135.6 million compared to $182.8 million at December 31st, 2018. The decrease in the balance of cash, cash equivalents was primarily related -- primarily resulted from cash used in operations of $52.4 million that was partially offset by proceeds of $4.2 million from the exercise of stock options. Additionally, in July of 2019, we raised approximately $136.4 million in net proceeds from our public offering of approximately 6.3 million shares of our common stock.

Now, turning on to our financial expectations. Based on the projected costs of our clinical development and subsequent plans, as well as the timing expectations, we expect that our current cash, cash equivalents and marketable securities as of June 30th, 2019, as well as the $136.4 million from our July offering will be sufficient to fund our operations into the second half of 2021 without taking into account any potential milestone payments under our existing collaborations.

I'll now turn the call back over to the operator for the Q&A session. Operator?

Question-and-Answer Session


Thank you. [Operator Instructions] Our first question comes from Chris Howerton at Jefferies. Your line is now open.

Unidentified Analyst

Hi guys, this is [Indiscernible] in for Chris today. Thanks for taking the questions. Just wanted to start off by asking if you had any updates in terms of when you could expect to file an NDA for IV KORSUVA?

Derek Chalmers

Yes. Hi Sayed thanks for your -- yes as we said on the call on the summary of the KORSUVA injection program based on the projected readouts of the ongoing clinical trials, we're expecting to file that NDA in the second half of 2020.

Unidentified Analyst

Got you. Sorry, I must have missed that. I'm sorry. Okay. The next question that I had was related to your discussions with CMS on TDAPA, are there any updates there?

Derek Chalmers

Well, I guess the only update as you probably know that they've released their annual proposed update to that rule which is essentially neutral for Cara. We're going to retain our TDAPA eligibility because we're category one NDA and we will be a category one NDA which is an NDA with a new molecular entity.

So, as far as we can tell from what's proposed in that rule-making up there is essentially neutral for us. One interesting aspect is that they did extend the TDAPA period for IV PERCEVA which as you know is the first drug product to enter the TDAPA status from two years to three years which was interesting to provide a longer assessment period for usage there.

But other than that we didn't see anything that was different for us in terms of our status within that legislation. And as you know and we've said repeatedly we continue to interact with CMS. They've been very positive as to solving the issue of post-TDAPA reimbursement for innovation and innovative products and that interaction continues and we will certainly update everyone when we see a result of that interaction.

Unidentified Analyst

Okay, perfect. It's great to hear that that timeline actually increased. So, thank you for the color there. And then kind of like piggybacking off of that. When you think about oral KORSUVA it's not really subject to the TDAPA risks three years from now how are you thinking about the opportunity for oral KORSUVA in hemodialysis patients?

Derek Chalmers

Yes. So, at this point we're directing oral KORSUVA towards pre-dialysis patients. As you know it's a significant a clinical need there with some 30% is the estimate from multiple sources 30% of that patient population suffering from pruritus with no effective treatment. So that's the first patient class were pursuing with oral KORSUVA.

The IV form is really ideal for the hemodialysis population where as you know that's a population that's heavily overburdened in terms of drug administration and drug usage. And so we can administer that compound three times a week after each dialysis session. So, it's really an ideal dosing regimen for the hemodialysis patients. So, we're specifically targeting hemodialysis patients with KORSUVA injection and then pre-dialysis patients and as you know beyond CKD patients and to these other patient populations with oral KORSUVA would the ultimate aim that we see really a broad label potential for oral KORSUVA, regardless of the initiating pathophysiology. As I've said, across these patient populations, we believe based on the mechanism of action that could be a broadly applicable drug. So that's the differentiation there between KORSUVA Injection and oral.

Unidentified Analyst

Thank you. Again, good luck on the progress. And I’ll hop back in the queue.

Derek Chalmers



Thank you. And our next question comes from Jason Gerberry with Bank of America. Your line is now open.

Jason Gerberry

Hey, good afternoon. Thanks for taking my questions. Just a couple for me. Just first just coming back on the interactions with CMS, do you think it's fair to say that the interactions are being held back until you have Q2 positive studies in hand, or do you think that even CMS may want to wait until we're getting closer to the end of the TDAPA period before more substantive discussions and dialogue and actions can take place there?

Derek Chalmers

Hi, Jason, I don't think so. As a government organization, so I take your point and cynicism related to action before necessity. But when we look at the precedent there, which is IV placebo from Amgen. They certainly knew they had to TDAPA status actually around about the NDA point, when that was up for approval. And then they got advice on extension as you know well ahead of the limitation on that. So you maybe correct that they're going to look for a little more certainty on the NDA, but that's rapidly approaching for us. And as I've said, our interactions there have been very positive at multiple levels and we really we have a good relationship with CMS, they're well aware of the differentiation between this product, which has breakthrough status for an unmet need in that patient population, and for example, [indiscernible] address anemia or some other aspects of the dialysis conditions. So they are actively engaged with us in exploring mechanisms that can differentiate and encourage innovation versus what's out there.

So you maybe correct, there maybe a timing issue related to development. But as I said, we're rapidly approaching NDA coming up next year. And so we would expect to see some movement from them, certainly once we have our NDA submission and not for approval.

Jason Gerberry

Got it. And then my second question just for oral KORSUVA just thinking about the development pathway assuming that the Phase 2 trial is successful, can you talk a little bit about sort of the number of patients you need to dose at your therapeutic dose level? And could the Phase 2 potentially count as a pivotal trial and thus enable you to only run a single follow-on Phase 3 pivotal trial to get to market? Just wondering sort of how those variables shakeout.

Derek Chalmers

Yeah. No, that's a great question. We had thought the same thing, Jason the argument being that, if you're looking at CKD stage three to five versus hemodialysis, it's essentially the same mechanism and same disease process. And therefore, we would argue that safety exposures achieved with KORSUVA Injection really had a higher exposure level, should be relevant for oral KORSUVA development taking your point. And there we probably made the argument with KORSUVA Injection NDA approved that this would be a candidate for an SNDA. And you're right that would be one pivotal Phase 3 trial. So yes, there has been thought that we've run the trial as you know the Phase 2 trial with a 12-week treatment period, which would be a requirement for supporting efficacy trial. So ultimately, we will explore that avenue and there's some possibility. We're not going to count on it, but it's a possibility.

Jason Gerberry

Got it. And then my last question, just in terms of the Phase 2 chronic liver disease trial just in terms of the slightly smaller number of patients per arm versus some of the other Phase 2 trials that you've run, are there different powering assumptions with respect to the patient population in this study in this GLP study? Just curious, if you can comment on that.

Derek Chalmers

Yeah. So really the issue though – as you know PBC is not a gigantic patient population. And so – but we – but we did choose a deliberately, because of the range of liver diseases associated with severe pruritus. Those patients tend to have the most consistent pruritus issue. And so that's obviously ideal for a proof-of-concept trial. So we really view that trial as a proof-of-concept looking at effect, drug effect within that patient class. And then after that, we probably define that more in terms of dosage. So we've chosen the dosage there, which is a little higher. And the top of the range we use for other indications, where we know we have very good exposure. We have run a Phase 1 trial and those chronic liver disease patients. So the idea there is really to look at proof of concept. And then after that, we may look at appropriate dosage beyond that particular trial.

Jason Gerberry

Got it. Thank you so much.

Derek Chalmers

Thanks, Jason.


And our next question comes from David Amsellem with Piper Jaffrey. Your line is now open.

David Amsellem

Thanks. So, Derek I think you touched on it earlier about the idea of a broad antipruritic label regarding of the underlying disease. But, I guess, the question here and maybe it's tough to answer, it might be a little early to do so, but what do you think gets you to that tipping point where you have -- where you can get that kind of broad label? I mean have you had any communications with the FDA in terms of how many different wins in different diseases that they want to see before they get comfortable in terms of that kind of broad indication? So that's number one. And number two is, you began the atopic derm trial, are you thinking more broadly about the dermatology setting for instance psoriasis? Will the results of that study inform how broadly you're thinking about the derm setting and how aggressive you want to be in that setting? Thanks.

Derek Chalmers

Right. Thanks, David. Both very good questions and things we've obviously considered. So, on the first, on the broad label, I wish I could tell you the FDA derm division had issued a set of guidance on clinical populations to look at to achieve a broad label and we're not quite there yet. So we're working our way through the patient populations per ICH to begin with. And as Jason was pointing out in the last question, we may indeed have a specific advantage to get a fairly rapid label with CKD at this point since we have such a large level of exposure there in the hemodialysis population, so that makes sense as an initiating patient population. But I'll tell you our thoughts on this not necessarily -- I should point out, not necessarily the FDA's thoughts on this, but where we would look to this and our logic on this is there are various if you like pathophysiologies associated with pruritus is obviously dermatological where as you point out we're now embarking on our atopic dermatological trial this end organ disease associated pruritus if you like and there's neuropathic pruritus. That's the major three groups. So there's also some smaller populations associated with psychogenics pruritus.

Our thought says that we could sample best to the analogous to a broad pan label where, as you know, that division looks for examples of efficacy across pain types neuropathic inflammatory and so on. Our thought is if we can show efficacy across these various categories of pruritus then that would be the case that would be a mechanism that should achieve a broad label. Again that's our thoughts and that's our rationale for how we move forward not per guidance of the FDA, I want to emphasize. But that's how we're thinking about this as we embark on each of these patient populations.

And then your second question on AD. We do think AD is the most appropriate population here for a couple of reasons. First of all, very large unmet need for antipruritics there and really is a population with the current therapies for pruritus are really again these older generic corticosteroid antisense some high dose antidepressants and it's also an area where biologics are really only focused on the moderate-to-severe subgroup within that patient class. And as you know that's the minority of that patient class, about 80% of the AD population has mild-to-moderate where there really isn't a biological approval there. So we think there's a very large opportunity and an unmet need for an orally available antipruritic versus psoriasis where we feel -- and again this is the advice we've also received from our KOLs in this area, but that's an area pretty well served by a range of biologics which are quite effective in that mechanism there. So our belief is we're focused on the right group there.

Not to say that that mechanism wouldn't be effective in psoriatic-related pruritus most likely so we haven't run it. And ultimately there may be an opportunity there. This is a first-line therapy with the biologic is as you know we have no metabolic issues with that molecule either. So there's no DDI issues whatsoever. So but again we focused on what we think is a bigger opportunity here with is less, if you like, availability of effect of biologics.

David Amsellem

Okay, that’s helpful. Thanks again.

Derek Chalmers

Thanks, David.


Thank you. And our next question comes from Annabel Samimy with Stifel. Your line is now open.

Nick Rubino

This is Nick Rubino on for Annabel. We've been discussing the opportunities for antipruritic drugs for CKD and CLD with a number of physicians. And without a doubt they all see the significant need, the caveat being that these patients are extremely sick and treating them with systemications is usually difficult with the drugs they're taking. So we know the IV KORSUVA has been relatively clean but those patients get dialysis to clear the drugs.

The question is will the FDA require you to conduct any different studies or drug interaction studies for the oral form with the typical drug seen in CKD or CLD?

Derek Chalmers

Yes. No, thanks, Nick. That's a good question. And again I can have touched on this in the answer to David's question. But you recall what we've got here with KORSUVA is a pretty unique chemistry, it's not a standard organic heterocycle and in fact it's the immunoassay teriparatide, so it's not metabolized through the liver at all, not a substrate for any set enzymes nor does it inhibit or excite any of those enzymes.

So we've actually run a very exhaustive DDI panel based on standard FDA guidance there. And I can tell you with some confidence that this molecule does not have great potential for drug-drug interaction, based on the standard panels we've look out there.

So we have run this and you're correct, particularly in the CKD population, they're heavily burdened with co-medications and you probably heard us discuss this in other calls that we really don't limit that for these patients when we run our trials.

In fact, we even allow these patients to come into the trial with their so-called standard antipruritics, which are mostly antihistamines. And we've had no issues whatsoever there. So the drug is very clean. So the drug is really, really clean by virtue of its metabolic profile, other than the fact that it's dialyzed every three days from these patients.

And I know you haven't seen the data on that yet, but you're going to see, based on our blinded data, and I think I've said on previous calls, we have our independent safety monitoring board look at our oral safety as well as our IV and we're seeing no differences there. So I think you're going to see that there's a good safety profile for the molecule across patient populations and across the formulations.

Nick Rubino

Awesome. Thank you. And, I guess, also, we just noticed in the CLD population or study, you have the one dose two times daily versus three doses or three times daily for AD. We just want to know the rationale between the choices you made between those two studies?

Derek Chalmers

Yes. As I said earlier, I think, it was -- Jason was arguing. We really see the liver study as a proof-of-concept there in that patient population. So we went to the upper range of our tablet strengths there, really to get proof-of-concept, get a signal there and then we'll look at proper dose ranging in that group.

And the reason we dosed them twice-a-day as they don't have for the most part any inhibition in kidney function. As I said, we ran our Phase I in that trial and we know dosing twice-a-day is appropriate for that patient population for -- if I picked you up correctly, I think you're trying to see it for CKD. We dose that once-a-day.

And the reason for that is the drug's eliminated essentially whole via the kidney, so on a CKD patient they have a very long beta phase extension -- execution phase on their PK. So they really won't require once-a-day dosing versus a liver patient with the kidney function is normal and they take twice-a-day.

Nick Rubino

Okay, great. Thank you.

Derek Chalmers

Thank you, Nick.


Thank you. And our next question comes from Charles Duncan with Cantor Fitzgerald. Your line is now open.

Charles Duncan

Thank you. Good afternoon Derek and team. Congrats on the progress in the quarter and thanks for taking the question. I had a quick one regarding KALM-2. Wanted to ask you about timing and sizing. Obviously, KALM-1 was a huge success. Notable data across all endpoints. But I'm wondering, given that result would you imagine that there could be, I'll call it, increased expectations for good results in KALM-2? And might you consider that in terms of the size of the trial, especially, given the upcoming interim analysis?

Derek Chalmers

Yes. Thanks, Charles. Yes, you're right. We were -- and I think, I said in our prepared remarks, we are very pleased with the data from KALM-1 where we saw a very robust response across endpoints. So I think that feeds into our confidence that we modeled this correctly, in terms of powering, which as you know was based on our Phase II KORSUVA data in hemodialysis patients.

So my lawyers wouldn't let me be overconfident in projecting and predicting how great our KALM-2 data is going to be. So we're going to wait and look at the interim analysis. But we have high hopes that that interim analysis will reflect what we think should be adequate power for seeing a statistical difference there.

But we're going to look at the data and that's coming up in the next couple of months and we're going to see the data readout by the end of the year on that trial. So, yes, you're correct. KALM-1 was confidence boosting in terms of where we see KALM-2. But at this point we're going to follow the data and use our interim assessment and make sure we got that power assessment correct.

And, again, I think, you and others have pointed this out in the past, but with global trials, there can be differences in terms of variability versus U.S. trials. And, again, just to reassure you here, we do designate KALM-2 as a global trial, but approximately 50% of the sites in that trial are also U.S., so we're fairly confident that that should be reflective of the kind of standard deviations we've seen in KALM-1. But again we're going to make sure of it and we're going to run our interim conditional power assessment which certainly going to advise us to the outcome of that, when we have that completed.

Charles Duncan

Yes. Super. That makes sense to me. Also, second question was regarding go-to-market strategy. I think you've mentioned some pre-commercial activities that you plan to engage in over the course of next year. What are some of those go-to-market or pre-commercial endeavors that you'll be pursuing beyond manufacturing? Would you be looking to hire some sales-type people or anything like that? And what would you anticipate the burn to be over the course of the year or spend for that endeavor?

Derek Chalmers

Yes. Thanks, Charles. Well let me answer the last part of your question first. In terms of sales and ultimate sales force, that's not something we're going to hire in the next year. That's really going to be ultimately dependent on NDA approval. So the majority of the expenditure related to what we projected as a necessary sales force for this KORSUVA injection product which we've said before is relatively modest to serve the dialysis population somewhere around 65 to 70 sales reps. We're going to see the majority in fact almost all of that expenditure is going to come after NDA approval.

So what we're talking about in terms of pre-commercial activities right now are standard MSL teams are being assembled. In fact, we have that hiring underway. We're going to embark on education related to the condition itself both in terms of PI education and patient engagement related to that. We're engaging appropriate adcom boards related to CKD-aP in hemodialysis patients both locally and nationally and in fact internationally with our European partner Vifor Fresenius.

So those are the types of activities that we actually already have underway. And obviously making sure that we develop the appropriate infrastructure here internally at Cara as we convert from a what I like to call company unburdened by revenue to a company that will move towards a revenue-based biopharmaceutical company. So all of that is underway. All of that is going to be staged based on success.

So -- and I can say and Mani is sitting beside me all of that's included in the budget from which we make our projections as to our runway after our last follow-on offering. So all of that's in there, but bigger spend is not going to come until we see certainty on our NDA approval.

Charles Duncan

Sounds great. That will be a good burden ahead. Thanks for taking the questions.

Derek Chalmers

Thanks, Charles.


Thank you. And our next question comes from Alan Carr with Needham & Company. Your line is now open.

Alan Carr

Thanks for taking the questions. Can you go over the planned interactions you have with the FDA now that you've got the Phase III KALM-1 data? And then also can you comment on the timing of the NDA submission what pushes this 2H 2020? Thanks.

Derek Chalmers

Yes. Thanks, Alan. So our interactions are really standard interactions for getting an NDA submitted. So we have internally began to assemble all the necessary modules that are going to be part of the NDA submission. As we said before, all of the preclinical work required here is essentially done and that preparation is underway. And we said also before in this call, we have an upcoming meeting in the fall here with the FDA and that's going to be really related to safety submission for the NDA and absolutely defining and having certainty on the pharma and how we're going to submit all of the safety data related to our NDA. We'll also be again as we've said before on these calls, we'll also be investigating the composition.

In terms of the patient types that could be part of that safety exposure number and how we can get to that required number. And again as we said before in this call, we've been implementing trials really related to ICH guidelines here that are going to achieve the full 1,500 exposures. It's possible that we may get some sort of break on that. As you know we have breakthrough designation with the compounds. So that's going to be the first interaction with the FDA which is coming up in the fall.

And then next year we're certainly going to advise as to when this happens there'll be a standard pre-NDA meeting, where we're going to run through all the necessary requirements to make sure we have everything in place to allow filing of that NDA. And then back to your time line questions. As you know and we've guided and more confident we were projecting that we're going to have both KALM-1 and KALM-2 data available by the end of this year. We're also projecting that the majority of our safety exposures are going to come early next year. And with those in hand then we'll have a full package that allows submission of the NDA.

So that's the basis of the guideline that we see this happening in the second half of 2020 if there's some sort of development with the FDA and we get some recognition of our breakthrough status and the quality of our Phase III data in terms of reduced safety exposures we'll certainly gate to that. But we're guiding right now based on achieving this full ICH guidelines of the full quarter of safety exposures.

Alan Carr

Just one last one. Do you have any plans to present or announcing interim data from the -- from those open-label trials that you have running, or will we only see something after it's complete done?

Derek Chalmers

Are you talking about the open-label safety trials, Alan?

Alan Carr

Yes, yes, yes.

Derek Chalmers

Yes. Of course you're going to see an amalgamated safety data both from KALM-1 and KALM-2 and we are in the process of submitting KALM-1 for publication to a peer-review medical journal and you're going to see that data hopefully relatively soon. And KALM-2 will follow. Ultimately, I think with the amalgamated safety data that may be something, we look to put out there but that's not going to come in the near term that's going to be something once we have everything cumulated and together and something that's meaningful in terms of the population that we want to summarize.

Alan Carr

Great. Thanks for taking my questions.

Derek Chalmers

Thanks Alan.


Thank you. And our next question comes from Esther Hong with Janney. Your line is now open.

Esther Hong

Hi, thanks for taking my question. So on oral KORSUVA, if the FDA agrees to a single pivotal Phase III study and SNDA is filed where does that leave us terms of a potential timeline? Could we see oral KORSUVA in the non-hemodialysis patients launching within 12 months or shorter of the potential IV launch? Thanks.

Derek Chalmers

Yes. Thanks Esther. I think it's just a little too early to think about the NDA time line until we get the first Phase II. But I do admire your enthusiasm to push this along. We're equally excited by the oral KORSUVA potential.

So if we think about this realistically, we're going to see our first Phase II data from CKD stage three to five patients next quarter before year-end we've guided. And then if that's positive, you're correct, we'd certainly want to talk to the FDA about requirements for registration and that would occur in 2020. Once we have that data cumulated.

And we'd certainly aim to initiate registration trials as quickly as we possibly could after that meeting. So that would the – that would probably be as far as I'd want to project at this point.

And depending on the data and the receptivity to the idea we've just discussed in terms of SNDA then we could guide us to timeline for NDA. But at this point we're focused first Phase II data and then hopefully with positive outcome, we'd look to into Phase II as soon as we could in 2020.

Esther Hong

Okay, great. Thank you.

Derek Chalmers

Thanks Esther.


Thank you. [Operator Instructions] Our next question comes from Arlinda Lee with Canaccord.

Q – Unidentified Analyst

Hi, it's Ben calling in for Arlinda. Thanks for taking my question. I just had a quick question on Atopic Dermatitis. Can you give us a little bit more color on the enrollment criteria? What have your KOLs advised you to, who to exclude or include?

Derek Chalmers

Yes. Thanks Ben. Thanks for that question. So as I said earlier, we're actually looking at the whole range of the AD patient population. So we're looking at both mild to moderate disease if you like, as well as moderate to severe.

And so we're going to look at all patient types. And then we're going to stratify them within the groups in the trial. But the main criteria for entry here is going to be moderate to severe pruritus.

So that is going to be assessed in a run end period they have to qualify with moderate to severe and then they're entered into the trial. We're not going to allow any background medication is going to be a washout period for those patients where we're going to remove our current topicals or certainly systemic medications. There's not going to be allowed any rescue medication for the first four weeks of that trial and any use of a rescue medication there would lead to discontinuation after four weeks.

Because PA judgment for the patient there we could convert a patient to topical use and remain in the trial receiving drug treatment but that patient would then be qualified as a non-responder.

So we have thought quite carefully about that population. There will be a washout period, no concurrent systemic or topical antipruritics possibility of a rescue with a topical only, any use of a rescue with a systemic would nullify that patient and they've moved to discontinuation.

Unidentified Analyst

Okay. Great. That's very helpful. I know you've been spending most of your time talking to CMS have you engaged, or at what point will you engage the commercial payers? Have you really get any feedback from them?

Derek Chalmers

Yes. Again as with Esther's questions a little early on that once we get our first efficacy data in Phase II and we have a path to registration and we know what that path looks like then that's the point we start thinking about the engagement on the commercial side.

Unidentified Analyst

Okay. Great. Thanks very much.

Derek Chalmers

Thanks Ben.


Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Derek Chalmers for any closing remarks.

Derek Chalmers

Great. Thanks Joel. Thank you everybody for joining us on today's call. I'd like to take this opportunity to quickly thank the Cara team here in Standford, Connecticut, our study investigators and most importantly the patients who participate in our trials. We would not be where we are today without your commitment and support. And we look forward to updating everybody again soon. So thank you very much everybody.


Ladies and gentlemen this concludes today's call. Thank you again for your participation. You may now disconnect. Have a great day.