Good day ladies and gentlemen and welcome to the Cara Therapeutics Third Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference may be recorded. I would now like to turn the conference over our host for today's call, Mr. Jesse Baumgartner. You may begin.

Good afternoon. This is Jesse Baumgartner with Stern Investor Relations. And welcome to Cara Therapeutics third quarter 2015 earnings conference call. The news release with our third quarter financial results and corporate update became available at 4:01 PM today, and can be found on our Web site at www.caratherapeutics.com. You may also listen to a live webcast and replay of today's call on the Investors section of the Web site. 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 includes statements concerning the expected timing for the company's clinical trials and the reporting of clinical trial results, the potential results of ongoing and planned clinical trials and future regulatory and development milestones for the company's product candidates, the timing of the company's meeting with the FDA to inform the registration program for I.V. CR845 in uremic pruritus, and the company's 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, 2014, the company's quarterly report on 10-Q for the quarter ended September 30th, 2015, and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made on today's call speak only as of the date on which they were made. Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made. Now, let me turn the call over to Cara's President and CEO, Dr. Derek Chalmers.

Thanks, Jesse. Good afternoon everybody. Thanks for being with us on the call. I'm joined today by our Chief Financial Officer, Josef Schoell. So our third quarter progress has certainly being significant across our main clinical development programs and I would like to start by giving an overall summary of that as well as expected upcoming milestones heading into 2016. With our lead I.V. CR845 program now in Phase 3 development, our Oral CR845 formulation approaching its first Phase 2a readout in osteoarthritis patients and a rapidly program for I.V. CR845 in uremic pruritus in dialysis patients, we continue to execute on our plans for overall CR845 development. The third quarter also saw us significantly bolster our balance sheet after the successful completion of a follow-on offering which raised more than $75 million in net proceeds for the company and provides the necessary capital resources to maintain momentum across all of our clinical programs. Starting with our lead Phase 3 acute postoperative pain program for I.V. CR845. In September we were very pleased to announce the start of our first adaptive pivotal trial for patients undergoing a range of abdominal surgeries. And as a reminder, on the design here, this is a multi-center, randomized, double-blind, placebo-controlled, parallel group, adaptive design trial, with repeated doses of I.V. CR845 or placebo administered both prior to and following abdominal surgery in male and female patients. The trial's enrolling up to 600 patients undergoing either hysterectomy, prostatectomy, hemicolectomy or ventral hernia at approximately 30 clinical sites within the U.S. Trial is testing three dose levels of I.V. CR845. 1 microgram, 2 microgram and 5 microgram per kilo compared to placebo and the primary efficacy measure is the change in pain intensity over the 24 hour post-operative period using the standard patient reported numeric rating…

Thanks, Derek. Let me start with our net loss was $4.8 million, or $0.19 per basic and diluted share for the third quarter of 2015, compared to a net loss of $6.5 million, or $0.29 per basic and diluted share for the same period of 2014. License and milestone fees was $1.7 million for the third quarter of 2015, related to our milestones achieved under the license agreements with CKD and Maruishi, compared to $0 in the same period of 2014. Collaborative revenue was $730,000 for the third quarter of 2015, comprising revenue recognized for a portion of the Maruishi milestone payment and revenue that had been deferred upon entry into the Maruishi license agreement, compared to $1.1 million for the same period of 2014, which comprised revenue that had been deferred upon entry into the Maruishi license agreement. Our R&D expenses were $5.6 million in the third quarter of 2015, compared to $6.2 million in the same period of 2014. The lower R&D expenses in the third quarter of 2015 were principally due to a net decrease in direct preclinical studies and clinical trial costs, including consulting services, partially offset by increases in payroll and related costs. including stock option expense associated with R&D personnel. General and administrative expenses were $1.9 million in the third quarter of 2015, compared to $1.5 million in the same period of 2014. The increase in the third quarter of 2015 was primarily due to increases in payroll and related costs including stock option expense, mostly due to increases in headcount. Interest income was $22,000 for the third quarter of 2015, compared to $26,000 for the same period in 2014. At September 30, 2015, cash and cash equivalents were $111.1 million, compared to $43.2 million at June 30, 2015. The increase was principally related to our recent public follow-on offering of common stock, which raised approximately $75.2 million in net proceeds after deducting underwriting discounts and commissions and offering expenses paid or payable by the company. Those net proceeds were partially offset by cash and cash equivalents used in operating activities during the third quarter of 2015. We currently expect our available cash and cash equivalents to be sufficient to fund our operations through the end of the third quarter of 2017 without giving any effect to our potential milestones. Now we will open it up to Q&A. Operator?

[Operator Instructions] Our first question comes from Charles Duncan, Piper Jaffray. Your line is open.

Hi, this is Sarah on for Charles. Congratulations on the progress. I just have a couple of questions. The first is, so if the osteoarthritis results are promising, could you see discussing strategy for our oral CR845 in the same meeting as you [may make] [ph] osteoarthritis.

Hi, Sarah. Is that -- you said your first question, I was waiting on your second -- does that...?

Yes. That’s my first question.

Okay. So, no, as we answer to that. We actually are developing these indications in two separate divisions of the FDA. So if the OA data looks promising from this first Phase 2a trial, the next step there would be a discussion with the analgesia division on the appropriate design for Phase 2b study. Placebo controlled trial, probably at a longer period of investigation for the drug and obviously with a higher [end] [ph] per group. The uremic pruritus indication is being developed with the dermatology division, so that’s a completely separate discussion.

Okay. Thanks. And then can you talk a little bit about enrollment progress and the [301] [ph] trial in terms of percentage of trial sites up and running and any early look at enrollments?

Sure. And there as I said in the monologue that we are looking for approximately 30 sites in total. Presently we have ten sites actively recruiting in the U.S. We expect that number to double this month, in November. And we expect to have between 25 and 30 by the end of the year in terms of actively recruiting sites.

Your next question comes from Alan Carr of Needham Capital. Your line is open.

Can you, I guess, give us an update on the strategy here with the timing of the second trial, second Phase 3 trial for the I.V. formulation, the trigger for that? And any more collaboration milestones expected from your South Korean or Japanese partners in, I guess, the near to intermediate term. And then the last one is, what other gating work is needed for NDA submission in terms of CMC, pre-clinical work or other supportive clinical trials. Thanks.

Okay. I will take those in order Alan. So second Phase 3 for acute post-op pain, we aim to initiate that at the point of the interim assessment of condition power which we expect in the first half of '16. So when we get an indication of optimal doses from that first interim assessment than we would be looking to initiate our second Phase 3 trial. In terms of the last question then I will talk about expected about milestones. The CMC, pre-clinical, we believe we have completed as per guidance everything necessary for that submission other than a couple of standard Phase 1 trials looking at cardiovascular safety and elderly safety for the IV post-op pain indication. And pre-clinically we believe we have a complete package there.

And the CV, what sort of CV trial is done?

Yes. Standard QT prolongation safety trial. That we aim to initiate in the first half of '16. And then your second question, jumping back to that. We did expect some near-term milestones...

Yes, we do. This is Joe. In 2016, we would expect roughly $3 million coming in from our partners. One, from our completion on a Phase 3 trial and then another one where they will initiate another one in Japan.

And our next question comes from Ken Trbovich of Janney. Your line is open.

Data obviously for uremic pruritus. Can you give us an update on sort of the possibility and where you guys are at with regard to discussions for ex-U.S. partnerships or is it just too early and they want to see sort of the next stage of trials before you begin those discussions.

Yes. Ken, I think I missed the beginning of your question but in terms of the prospective partnerships, as you know we have a Japanese and South Korean partnership in place for UP specifically in Japan and broader in South Korea. I think it's a little early to look for European partners. There is certainly something we have thought about or a partner that perhaps covers both the U.S. and the EU, is something we may be interested in. But we would like to, first of all, pass the end of Phase 2 test with the agency, make sure we have a confirmed registration package agreed there and then we will think about the business possibilities after that.

Got it. And from your perspective, I know obviously it's a competitive landscape. There is certainly data available now from your program as well as one other. I know that at least one perspective partner had find advanced -- had actually, I guess, entered into a negotiation and then completed an agreement to actually help to fund Phase 3 development. Is there any reason to think that this marketplace because of some of the setbacks that have occurred with previous competitors or previous attempts to developing products in this market that those partners maybe more reluctant to find prior to completion of a trial as opposed to an advanced one.

Yes. I think they are going to look at our drug, is very different than those original what we like to call first generation centrally acting kappa molecules. Again, this is a very selective kappa receptor agonist with no off-target activity unlike those original molecules. And as you know, we have limited, as far as we can detect, non-CNS activity with molecules certainly at therapeutic doses. So I think we are entirely different than those first generation compounds. We have not had this molecule in over 500 patients from an acute pain standpoint and I think over 70 dialysis patients with extended duration and exposures and haven't had any serious central adverse events. So there has been some original data from first generation kappa as I think we are probably the first to take a pure peripherally acting kappa and to this indication. So the beauty of the follow-on offering can is that we have a balance sheet that enables completion of Phase 3 on our own, and that’s certainly our aim at this point, is to carry those through, all the way to NDA. We are still hoping we can get that NDA submitted in 2017.

Terrific. So obviously you don’t need one to complete the effort but if there is one that’s -- especially ex-U.S., it just seems like there is a lot to go place there for a partner there, at least in Europe there would be an opportunity therefore. With regard to reimbursement, do you guys have any more comfort with regard to positioning of the UP products in the bundle or outside the bundle or is it just too early to the end of surface discussions.

Yes, I think that is too early. As you know the legislation is due for an update this November. It's passed as public comment. We have looked at that update and we have had some preliminary discussions with CMS in this area and exposed our data to CMS and talked about this application for this unmet need. So little early to get into the details of that but we certainly think there is an avenue within that new legislation to contemplate reimbursement for this class of medication.

[Operator Instructions] Our next question comes from Jim Molloy of Laidlaw. Your line is open.

This is actually Frank on for Jim. Thanks for taking the questions. Just a couple in terms of timing. So now that the oral CR845 is fully enrolled with the expected date of fourth quarter '15. What kind of turnaround should we be expecting before the Phase 3 start and should we be still thinking third quarter '16 for this start. And then second also in terms of the I.V. CR845 for UP, with the meeting upcoming fourth quarter '15 here with the FDA, should we still be thinking Phase 3 could start as soon as the first quarter '16 or should we be looking more at second quarter with the data. Should we be looking at early first half '17 or kind of more second quarter '17 too? Thanks.

Thanks, Frank. So your first question, again a reminder, that first trial in OA is a Phase 2a trial so the next trial is a Phase 2b trial. And if data is positive in this first trial and it looks like we have established safety and appropriate PK intolerability, then we would be looking to initiate that Phase 2b trial in the first half of '16. So a push out for '16 for Phase 2b there. In terms of the UP Phase 3 initiation, assuming we have positive feedback from the agency and they are in agreement with our registration plans, that first pivotal Phase 3 should initiate in the first half of '16 with data readout in '17 without first Phase 3.

And I am showing no further questions at this time. I would now like to turn the call back over to management for closing remarks.

Thank you everybody for participating in today's call and we certainly look forward to updating you again in the near future. Thank you. Have a good evening.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.