Good afternoon and welcome to Cara Therapeutics’ Third Quarter 2017 Financial Results Conference Call. All participants are now in listen-only mode. [Operator Instructions] Please be advised that this call is being recorded at Cara’s request. I would now like to turn the call over to the Cara team. Please proceed.

Good morning. This is Michael Schaffzin with Stern Investor Relations and welcome to Cara Therapeutics third quarter 2017 financial results and update conference call. The news release with our third quarter financial results and corporate update became available just after 4:00 p.m. today and can be found on our website at www.caratherapeutics.com. 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 for future interactions with FDA and regulatory filings with the FDA regarding our development programs, the timing of the completion and announcement of the results of our ongoing clinical trials, the expected timing and design of our planned clinical trials, the potential for CR845 to be a therapeutic option in multiple pruritus indications, future regulatory and development milestones for our product candidates, the size of the markets that are potentially addressable by our product candidates and our expected cash reach. Participating on this call are Dr. Derek Chalmers, Cara President and CEO and Dr. Mani Mohindru, our Chief Financial Officer. I will now turn the call over to Dr. Chalmers.

Okay, thank you, Michael and good afternoon everybody and thanks for being with us on the call today. This was a highly productive quarter for us here at Cara as we continue to make significant progress across development programs for our lead peripheral kappa agonist, CR845. This afternoon, we will summarize that overall progress, provide some more color on the upcoming trials and then walk through the expected milestones. We are particularly pleased with the progress made in our pruritus program this quarter, including the completion of our End-of-Phase 2 meeting with the FDA and we plan to initiate our first pivotal Phase 3 efficacy trial of I.V. CR845 for the treatment of chronic kidney disease, associated pruritus and hemodialysis patients in the U.S. by end of 2017 and I will summarize the general design of that trial shortly. Overall, in consultation, with the FDA, we have now established the key elements of the Phase 3 program to support a new drug application for I.V. CR845 for the treatment of moderate-to-severe chronic kidney disease associated pruritus and hemodialysis patients. This of course as we have said before is an unmet need for which there are currently no approved therapies in the U.S. In addition, in the pruritus area, we are very pleased to recently move oral CR845 forward into Phase 1 trial in non-hemodialysis patients with earlier stage CKD to support our general plans to expand the use of CR845 for the treatment of moderate-to-severe CKD associated pruritus in CKD Stage 3 to 5 patients. Data from this trial will inform dose selection and design of the planned placebo-controlled Phase 2 trial of oral CR845 in Stage 3 to 5 CKD patients, which we plan to initiate in Q1 of 2018. Current CDC estimates indicate that approximately 50% of diagnosed…

Thank you, Derek. As a reminder, our financial results for the third quarter can also be found in our press release issued today after the market closed. For the third quarter of 2017, we reported a net loss of $12.4 million or $0.38 per basic and diluted share compared to a net loss of $11.5 million or $0.42 per basic and diluted share for the same period of 2016. We reported no revenue for third quarter of 2017 or the third quarter of 2016. R&D expenses were $9.8 million, including $619,000 of stock option expense in the third quarter of 2017 compared to $9.7 million, including $375,000 in stock option expense for the same period of 2016. The slight decrease in R&D expenses in the third quarter of 2017 was mainly due to net decrease in direct clinical trial cost partly offset by increases in stock-based compensation and personnel-related costs. General and administrative expenses were $3.8 million, including approximately $1.5 million stock option expense in the third quarter of 2017 compared to $21 million, including $402,000 in stock option expense in the same period of 2016. The increase in G&A expenses are primarily related to increases in stock-based compensation certain personnel-related costs and professional fees. Other income was $375,000 in third quarter of 2017 compared to $176,000 in the third quarter of 2016 due to higher dividend and interest income on a higher average balance of our portfolio of investments in the 2017 period. As of September 30, 2017, cash, cash equivalents and marketable securities were $103 million compared to $58.3 million at the end of December 2016. The increase in cash, cash equivalents and marketable securities primarily resulted from the net proceeds of $86.2 million from the company’s follow-on stock offering in April 2017 and $1.5 million received from the exercise of stock options, which was partially offset by $43.4 million of cash used in operations year-to-date. Our financial guidance remains unchanged versus our prior disclosures. We continue to expect our existing cash, cash equivalents and marketable securities to fund our operating expenses, including our ongoing clinical trials and projected development plans and capital expenditure requirements into 2019 without giving effect to any potential milestone payments under existing collaborations. Now, I will turn the call back to the operator for Q&A.

Thank you. [Operator Instructions] Our first question comes from Charles Duncan with Piper Jaffray. Your line is now open.

Hi, guys. Thanks for taking my questions. It’s Sarah on for Charles. Just two quick questions. First on the Phase 3 design, can you just remind us why you decided to move forward with the single dose of 0.5 micrograms and then any color you can provide around the size and number of sites for these trials?

Yes. Hi, Sarah. You will recall on to the first of those questions, you will recall we ran three doses in our Phase 2b trial, 0.5 being the lowest. Essentially all those doses were equivalent in terms of response of the primary and secondary endpoints. So, it made sense for us to move forward with the minimal effect of dose that was the rationale for moving forward with the 0.5. In terms of the latter question, the current stock is that we are going to recruit the first trial, the U.S. trial we would be looking for approximately up to 80 sites in the U.S. for that particular Phase 3 trial.

Great. And how many patients?

Yes. Based on current statistical analysis, that looks like approximately 150 patients sample size per group, but we are actually going to get to that more precisely when we initiate that Phase 3 trial.

Okay, great. Thanks. And just one follow-up, so for the non-hemodialysis and then liver disease associated pruritus, I’m just curious do you envision any efficiencies you can realize here in the clinical development plan or as of now should we think about each of these meeting a separate Phase 2 and Phase 3 program?

That’s a great question. We certainly envisage efficiencies in relation to CKD patients and some of those patients are going to be later stage patients and most likely also some hemodialysis patients. We are going to look on our oral programs. So there we are going to see efficiencies in terms of exposures. It’s going to be a completely different dataset in chronic liver. That’s going to require de novo exposures in a separate Phase 2 there.

Great. Thank you.

Thanks, Sarah.

Our next question comes from Annabel Samimy with Stifel. Your line is now open.

Hi, thanks for taking my question. Just back on the size I am not sure if you are in a position to talk about this yet, but can you talk to us about the powering of the trial at the 150 per arm trial size and what exactly are you looking for in terms of difference or placebo in terms and the confidence interval you are looking at?

Yes, I can’t go into that in great detail Annabel. Obviously, all our power analysis is based on our Phase 2 data that you have seen across the three dosages. And I will leave it at that, you are going to see more accurate numbers in terms of the sample size when we start the trial.

Okay. And as far as the Phase 1 that you are initiating for the oral, is that going to be in healthy volunteers or is that going to be in renally compromised patients like in the CKD population specifically?

No, that’s going to be renally compromise Stage 3 to 5 patients and the 5 stage patients are pre-dialysis.

Okay. So, that’s why you are doing the dose, I guess you are a dose finding in Phase 1 as opposed in the Phase 2. I guess I am curious why you wouldn’t start just into Phase 2 given that you have had an oral formulation already in Phase 2?

It’s a great question. And just to remind you, in case there has been a slippage here in terms of the PK for our molecule, the CR845 is entirely excluded for the renal. And so it’s very important we designed the PK precisely for these various stages of renal function. So, we want to make sure we have precise exposure numbers which of course we can then match to exposures that give us the efficacy and the same condition in HD patients and then be confident we are picking the correct dose to take forward for each of those stages of compromised renal function.

Okay, great. And if I could just ask a question on the oral CR845 program in pain, I know that when the data initially came out you are thinking about how you can potentially change the dose or modify the trial to continue to pursue this in pain, but I noticed you haven’t really talked about when you might pursue the next trial in the oral? Are you waiting for the IV data to readout before you pursue any further development in the oral?

Yes, we really see those as linked. I know some people like to link those, but I think those are two different aspects of the drug for the OA data we are really looking at anti-inflammatory effect we get with CR845. So as I said we are going to be presenting that data next week at the American Academy of Rheumatology and we do continue to analyze that consult with our KOLs. We do believe there is a signal there, could be dug out within that patient group. At the start of the minute as we would like to move forward ideally with a partner on board, we are exploring that particular aspect currently, particularly, the idea of original partner that could help us with the cost of that. And I think as you could appreciate from the call this afternoon, we are really focused in the near-term and moving forward into Phase 3 with our CKD program for hemodialysis and also finishing off as you indicate the post-op Phase 3 program. So, we still are considering the aspects for OA would ideally like to see a partner come on board and help with the expenditure on that next trial.

Okay, great. Got it, thanks.

Thanks, Annabel.

Our next question comes from Arlinda Lee with Canaccord. Your line is now open.

Hi, guys. Thanks for taking my question. I had really two clarification questions. So, on the oral formulations that you are starting Phase 1 they are going to be a separate population for the Phase 1 and the Phase 2, is that correct?

Yes. So, the Phase 1 for CKD Stage 3 to 5 are in patients who are not necessarily moderate-to-severe pruritic patients. So, those are defined by renal function Stage 3 to 5 CKD patients. The Phase 2 in that population will have an entry criteria that identifies those patients within that range who also have moderate-to-severe pruritus.

Okay, great. And then if you have 150 patients each for the U.S. and ex-U.S. Phase 3 for the IV formulation does that get you to the appropriate number of – or the appropriate exposure and the number of patients to be able to file?

Yes, that’s part to the equation. At the minute, we are planning for 1,500 exposures with that program, standard guidance there with the appropriate exposure level at 1 year and 6 months. So, those are certainly part of the plan to get us to that total number.

Okay great.

Thanks, Arlinda.

The last question is, is there any differences that you expect in the standard of care U.S. versus ex-U.S. that might impact the outcomes in the two different trials? Thanks.

We don’t think so. We are planning our international trial, certainly we have a European component and we are looking at other, if you like, Western type populations to include there, possibly Canada, possibly Australia. So, standard of care across that is pretty uniform.

Okay, great. Thanks very much.

Thanks, Arlinda.

Thank you. Our next question comes from Ken Trbovich from Janney. Your line is now open.

Thanks. Derek, I am kind of curious to hear from a timing standpoint it certainly seems like you have got visibility on starting the trial and I know you guys have had excellent results with regard to enrolling the studies once we are up and running. Is there anything about these 80 sites that differs from the prior studies that you have done as it relates to either the nature of the centers or whether they have been involved in studies that you have done previously?

Yes. Some of them are – hi, Ken, thanks for the questions. Some of them have been involved in previous trials, but a lot of de novo size as you remember, our last trial used about 34 active sites across the U.S. is obviously a large increase in the number for this trial. So, there is a lot of de no sites we are bringing on board. We have been very careful in our site selection and one of the reasons I don’t have Julia today, she is on the road meeting, new PIs and looking for new sites that can efficiently recruit for this particular trial, so a lot of new sites and some of the old sites from the last trial.

But is there any reason to expect there to be much of a difference, I am just historically these have been rapid to enroll and I know if I sort of look back at the last study, it was started middle of last year and completed in the early part of this year, it’s a 9-month horizon that that maybe is too aggressive as we got a bunch of new centers coming on, but at the same time you have got more than double the sites, I am just trying to get a sense for what sort of a reasonable expectation? Is it unreasonable for us to look for data from the study before the end of next year?

Yes, I understand the question, Ken. The issue with these sites really as you know, they are very the very heterogeneous in terms of both the number of patients within the say on the efficiencies in terms of their clinical trial. So, it’s very difficult to predict until we get the trial underway as to enrollment rates. So, I would prefer to guide to that once we get that Phase 3 trial kicked off and we see the recruitment rates across the whole range of sites and then we will guide as we can early next year as to how we see the endpoints for this particular trial, but you are correct we have approximately doubled the sites we are going to use for the Phase 3 versus Phase 2b.

Okay. And then just last question the role if at all in sort of these major dialysis service providers and these types of studies, does it help, does it hurt, does it provide a background for you guys when it comes to looking at the market from a commercial standpoint as you begin the thought process?

Yes. I think it would be impossible to run its clinical trial in the U.S. with either Fresenius or DaVita involved in that canon and we work with both of those groups, so that we get the maximum exposure here in terms of recruitment.

Okay, terrific. Thank you.

Thanks, Ken.

Our last question comes from Francois Brisebois with Laidlaw. Your line is now open.

Thanks for taking the question. Just a couple of quick ones here. So on the pain side for I.V. CR845, enrollment kind of fourth quarter, maybe first quarter should we still be expecting data in the first quarter ‘18 or is it more of a first half ‘18?

Yes, hi Francois. Thank you for the call. And yes, so the way that’s happened unfortunately as you know we’ve had a couple of major hurricanes at the Southern U.S. in the last couple of months and we’ve lost some sites both in Texas and Florida. So there hasn’t been a little bit of slowing up in our recruitment for that particular trial, which is why we think you may slip a little bit into ‘18, but we are going to recruit as quickly as we can’t get out fully enrolled and then report data as quickly as we can next year.

Okay, great. And then lastly, I see, I heard you mentioned there is not much link between IV and oral here for pain. As KOLs and thought leaders have kind of looked at the data, is there any idea of any difference that might happen in OA whether it’s pain, the knee versus the hip like the [indiscernible] that you had or is it still kind of misunderstood why would working one and not the other?

No, that’s a great question and obviously something with us consistently across KOLs. I think as we’ve said previously in the last call it’s not a response that hasn’t been seen before that has been heterogeneity in terms of the response to NSAIDs between joints and one explanation we’ve paradoxically from rheumatologists has been the difference in cartilage between the two joints and that knees tend to degenerate faster than hips and as you know the target for the kappa agonist is right there on the conversation of the cartilage. So one possible explanation is that we use lose target faster and knee joints than we do in hip. And that’s something we’re looking again as we continue to analyze that patient population as the duration of disease between these two populations in that Phase 2b trial. So that has one possible explanation as to the difference between the two joints.

Okay. That’s great. Very helpful. Thank you. That’s it from me.

Thanks, Francois.

We have another question from Ken Trbovich with Janney. Your line is now open.

Hi, Mani, I didn’t want to let you off so easy. So I figured I’d ask if you don’t mind to maybe explain little bit the sequential increase in the G&A I know you talk about year-over-year, but the sequential seems like a pretty significant jump?

Yes. So, there was a one-time stock option expense related expense and that is related of approximately $500,000 and that is related to the departure of prior CFO, who retired after being at Cara for like over a decade. So that is a one-time expense that we don’t anticipate going forward.

Yes and that still a [Indiscernible] Ken, I know you don’t have a time to read it, but it’s in there.

Okay. Yes, hard to read it in the 30 minutes between the call, the release of the press release in the call. So I appreciate the color. Thank you.

Yes. Thanks, Ken.

Thanks.

I am not showing any further questions at this time. I would now like to turn the call back over to the Cara team from any further remarks.

Okay, thank you and thank you everybody for participating in today’s call. And also at this time, I would also like to thank the Cara team for their continued hard work to support the progress of our various programs. I would like to thank our investigators and most importantly the patients and their families who continue to participate and support our trials. And with that, we conclude our call. And I look forward to updating you very soon. Thank you everybody.

Ladies and gentlemen, this concludes today’s program. Thank you once again for your participation. You may all now disconnect. Everyone, have a great day.