Good afternoon and welcome to Cara Therapeutics' fourth quarter and full-year 2017 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 the Cara team. Please proceed.

Good afternoon. This is Michael Schaffzin with Stern Investor Relations and welcome to Cara Therapeutics fourth quarter and full-year 2017 financial results and update conference call. The news release 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 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's President and CEO, Dr. Mani Mohindru, our Chief Financial Officer and Chief Strategy Officer and Dr. Joe Stauffer, Cara's CMO. I will now turn the call over to Dr. Chalmers.

Okay. Thank you Michael and good afternoon everybody. Thanks for being with us on the call today. So 2017 was certainly a year of significant progress for us here at Cara as we continue to advance CR845 or difelikefalin through both our pruritus and acute pain programs. During the call this afternoon, I will summarize our overall progress, provide additional insight into our ongoing and planned trials as well as provide some expected upcoming milestones. Let me begin with KORSUVA, our conditionally accepted trade name for CR845 for pruritus indications. During 2017, we reported positive data from our placebo controlled Phase 2b trial of KORSUVA injection in chronic kidney disease-associated pruritus or CKD-aP in patients undergoing hemodialysis. We also received breakthrough therapy designation for KORSUVA for this indication. And we also laid the foundation for initiation of our pivotal Phase 3 program after a successful End-of-Phase 2 Meeting in Q3 of last year. Earlier this year, we started enrolling patients in the U.S. Phase 3 pivotal trial, also known as KALM-1 to support a new drug application for KORSUVA injection for the treatment of moderate-to-severe CKD-aP in hemodialysis patients, a significant unmet need for which there are currently no approved therapies in the U.S. In addition, we are also pleased with the progress being made with oral KORSUVA currently completing assessment in a Phase 1 trial in non-hemodialysis patients with earlier stage or Stage 3 to 5 CKD. Data from this trial will inform dose selection and design of the upcoming Phase 2 trial of oral KORSUVA in Stage 3 to 5 CKD patients with associated pruritus and we plan to initiate this Phase 3 trial in the second quarter of this year. Current CDC estimates indicate that approximately 50% of diagnosed CKD patients are in Stage 3 to 5…

Thank you Derek. As a reminder, the full financial results of our fourth quarter and full year 2017 can also be found in our press release issued today after the market closed. For the year ended December 31, 2017, we reported a net loss of $58.1 million or $1.86 per basic and diluted share, compared to a net loss of $57.3 million or $2.10 per basic and diluted share for 2016. For the fourth quarter of 2017, we reported a net loss of $14.2 million or $0.43 per basic and diluted share, compared to a net loss of $22 million or $0.81 per basic and diluted share for the same prior year period. Revenues for the year ended December 31, 2017 were $911,000 as compared to $86,000 in 2016. Revenues in 2017 included a sub-license fee received from our partner, Maruishi Pharmaceuticals, in connection with its sub-license agreement with Kissei Pharma. No license and milestone fees revenues were recognized in 2016. Revenue for the sale of clinical compound to Maruishi for 2017 were $68,000 as compared to $86,000 in 2016. We did not recognize any revenues during the fourth quarter of either 2017 or 2016. Research and development expenses were $48.5 million for the year ended December 31, 2017, as compared to $49.3 million in 2016. The lower R&D expenses in 2017 were primarily related to a net decrease in clinical trials, rent and amortization which were partially offset by increases in stock-based compensation expense and other personnel related costs. R&D expenses were $11.6 million in the fourth quarter of 2017 compared to $20.3 million for the same period of prior year. The lower fourth quarter R&D expenses were primarily due to lower clinical trial expenses. General and administrative expenses were $11.9 million in 2017 compared to $9.2 million in…

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

Hi guys. Thanks for taking the question. Hopefully you can hear me. I am in an airport. The KALM-1 study is underway in the States and I think you mentioned that you were going to start an international study later this year. I am kind of wondering what the gating steps are to getting that started? And if you could provide any additional color on the size or scope of that study?

Well, let me see. So first of all, Charles, we can hear you. In and out a little bit, but we can hear you. So, yes, we are planning a second international study starting mid-year. The size and scope of that study is going to be very similar to the U.S. trial in terms of design, in terms of endpoints and right now, we are undergoing the required preparatory steps with CROs to make sure we can get that initiated on time.

And when you consider the regulatory strategy, is the international study meant to enable an MAA? Or is it meant to provide a second study for the U.S. for the FDA and its strategy?

Yes. That's a good question. So the primary rationale for going international and you know this, Charles, there is a finite number of dialysis centers here in the U.S. and there is a number of ongoing studies. So we would like to make sure we can complete these studies as rapidly as possible. So it makes sense for us to look our with the U.S., not complete with ourselves and run the trial in ex-U.S. territories

Okay. That makes sense. And then final question is on the acute pain study. I appreciate you going through in your prepared remarks of how that's being conducted. This may seem like a silly question. But I am kind of wondering what you think is the different scenarios, what are the different scenarios that you look for? Obviously the study is either going to work or it's not going to work or maybe it's working but do you have any further thoughts on it?

Well, I am going to let Joe talk to that, Charles.

Yes. Hi Charles. So the study, I think you are right. It's really a black and white situation. It's either going to work or it's not going to work. The p-value is defined as P less than 0.05 as a positive study based on the primary endpoints that we have already articulated. Obviously, it has to be safe as well. That's also a part of a positive study too. So from an efficacy standpoint, we are still blinded, so we don't know. From the safety standpoint, I look at that data all the time and feeling very comfortable there. And based on what we see in that trial, that tells us next steps. If it's positive, we think about how to design the trial. If it's negative, we have to really consider what we are going to do with postoperative.

Okay. That makes sense. And then one final question regarding the evolution of the company. I am just kind of wondering if that trial is positive, would you move forward yourselves or would it make more sense to focus on CKD-aP or pruritus and really in terms of establishing a commercial presence.

Yes. So Charles, we will make that decision a little later on when the data comes along. But yes, you are correct that our focus at the minute has the certainly come around to pruritus indications. We feel as well as though there is a large opportunity there that we want to exploit as quickly as possible. And so you see from our pipeline that we have three to four pruritus studies we are planning to initiate this year. So that is becoming the main focus of the company and we will make a decision on the postop trial and that application indication as the data comes along.

That makes a lot of sense to [indiscernible] to see the progress, pardon the pun and thanks for taking my questions.

Thanks Charles.

Thank you.

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

Hi. Thanks for taking my questions and congratulations from me on starting your pivotal study. So the current pivotal we see start comprises of the efficacy and this 52-week extension. Is that second pivotal trial, first of all, are the patients from the first trial enrolling into that 52nd week extension? For safety reasons, were the requirements from the FDA for fulfilling the safety requirements from a long-term safety perspective and does that second pivotal study that you are looking at internationally also have to feed into that 52-week extension to satisfy those safety requirements. So that's my first question. And also just from the oral perspective, what is the rationale of, I guess, starting two Phase 1s in different indications rather than identifying a dose in one Phase 1 and then moving into multiple Phase 2 in different indications? So what you are going to be doing for each new indication and you also plan on starting early-stage atopic dermatitis given the development field is starting to feed up in that regard. Thanks.

Great. Thanks Annabel. Thanks for the questions. So then you have got three and there are maybe four as well. Let me start with the oral question because I think there is an important point to be made here. The reason we run the Phase 1s in these different patient population all relates to PK differences. So obviously within the CKD pre-dialysis population that is Stage 3 to 5, there are varying degrees of kidney dysfunction. And so, we are been very careful to make sure we can define exposure levels within those patients to very accurately match exposure levels we know are efficacious in our HD population. So that's the reason to run the Phase 1 there. Same for the liver population and these are, as you know, very sick patients. They certainly have liver dysfunction. Most of them, the majority also have concomitant kidney dysfunction. And so again, we want to make sure we get the PK correct there in terms of exposure before we move into the Phase 2 studies. That's a little different when we go to dermatological indications. We haven't guided us to which population we are going to look at there. But for the most part, those tend to be younger, somewhat healthier populations. And as you know, we already have completed Phase 1 studies up to one week repeat dosage in, if you like, normal individuals with normal kidney function. So there we can move a little faster and we will certainly guide as to which patient population we move into there when we decided on that and decided on the design. Back to your first question on the Phase 3 program. Yes, you are correct. The patients from both studies will roll into 52-week safety studies and that's a safety requirement. As you know, from ICH guidelines for chronic therapy, we need to see 100 exposures with 12 months exposure length and up to 300 exposures at six-month. Now, we do have breakthrough therapy designation for this indication. We will be talking to the agency as we develop a bigger safety database and those numbers have a possibility of changing. That's certainly something I can't guide to right now, but we do interact with the agency more frequently.

Okay. Just if I could, I have a follow-up on that. Did I miss it or did you mention when you were going to start the second Phase 3 study? I am just wondering to what extent that second Phase 3 study is going to hold up completing the 52 week extension portion?

No, we are going to start that mid-year. We are actually preparing to get that going right now.

Okay. All right. Great. Thank you very much.

Thanks Annabel.

Our next question comes from the line of Alan Carr with Needham & Company. Your line is now open.

Hi. Thanks for taking questions. Any preliminary guidance on when you might have data from these Phase 3 trials? And then in pruritus, well, the first one that just started, when do you think you will have data from those? And then also, with regard to the Phase 2/3 postoperative pain trial that's wrapping up, can you comment a bit more about any of the blinded data which you see from a safety perspective? And can you also comment maybe on the baseline characteristics of patients there versus some of the other trials? And the last one is around skin. It sounds like you are in the process of sorting out which indications you might pursue. But what are the timelines around making a decision on that and when you might start some trials in those indications? Thanks.

Thanks Alan. So I will let our resident anesthesiologist talk about the postop safety data we have so far. The other two questions, in terms of the skin indication, that's something we will guide to in the next couple of quarters. That's something we are aiming to initiate hopefully in 2018, but we will guide to that as we decide on the design and the patient population there. And I forgot what was your first question?

That was around --

Yes. When we expect to see Phase 3 data? As you know, Alan, we just initiated that trial. We expect to have 60 to 80 sites as part of that enrollment process. Again once we get up and running and we see the recruitment rates from these various sites, we will guide to when we expect to see the data from that first pivotal trial.

Okay.

And on the postop safety, Joe is going to give you some color.

Yes. On the safety on the postop, Alan, I am expecting no surprises there. We have the benefit looking at that data all the time throughout the course of the trial and feeling quite comfortable there from a safety perspective that we have our hands around the safety and risk-benefit profile here of the drug. As far as the efficacy goes, still blinded. And as far as the timing goes, it's second quarter.

And the overall baseline characteristics of the patient population in this trial? How's it coming?

The postop pain, they are relatively healthy patients as a ones, twos, sometimes threes going into the OR. Hysterectomy will represent about half the trial. And the other half of the trial will be ventral hernias.

Okay. Thanks very much.

Yes.

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

Hi guys. Thanks for taking my question. Maybe I will follow-up on the postop pain trial. When did you complete that enrollment? And then on the oral Phase 1, can you maybe provide additional information about what the timing might be and what the data set might look like, i.e., are you going to indicate may be different doses by different renal functions and how that might play into your plans for additional trials? And then lastly, I guess, on the pivotal. If that trial can be expanded to 500 patients, I am kind of curious about the timing of the second pivotal trial and how that factors into or how might the enrollment pace, I guess, of the first trial impact the second?

So it's three questions, I guess.

Yes. Three questions, Arlinda. Let me take the last one first and then I can talk about oral and then Joe can talk about postop. So the last one is, the whole rationale for moving to international trial is to avoid the issue you just raised, which is competition with ourselves essentially, either for open label or our first pivotal Phase 3. So that is the rationale. We think we have a good handle on which territories will provide the most patients with the U.S. and we are running to get that trial initiated by roundabout mid-year this year. So we think that does help us in terms of recruitment rate. On the oral Phase 1, I presume you mean the CKD Stage 3 to 5 patients, that data we are well into that trial and we will release that data and you will see exposure data relative to exposures we see in HD patients treated with an I.V. So in other words, we are looking for tablet strengths that give us equivalent exposures to those which we know are active in HD patients predominately in the moderately impaired CKD patient as I would say, the HD patient is much more analogous to what we have seen with the I.V. in HD patients. So predominately it's going to moderate impairment and you will see a comparison of exposure levels, tablet strengths that match I.V. exposures in HD patients. And then on the postop trial, Joe?

You asked about enrollment. So enrollment will finish up in the second quarter and we will report that data in the second quarter.

Early second quarter.

Well, you have to complete enrollment before you can report that data, right. So early second quarter, I think Derek made that in the comments, is when we expect to complete enrollment and then we will readout the trial later in the second quarter.

Okay. Great. Thank you.

Okay. Arlinda, thank you.

Our next question comes from the line of Michael Jung with Seaport Global Securities. Your line is now open.

Hi. Thanks for taking my call. Just a quick question on patients on peritoneal dialysis. Do you see these patients being treated with the oral formulation of for the I.V. for pruritus?

Yes. Joe is going to take that one.

Yes. The peritoneal dialysis are not patients that we are looking at in any of our trials. So we can only really speculate as to what types of drug they would use. Obviously, if they are an outpatient and they are able to take an oral medication, then that would certainly be appropriate for them. But again, that will be in the future. Right now we are focused on either dialysis patients or patients who are chronic kidney disease patients who are not yet on peritoneal dialysis.

Okay. Thank you.

And I am showing no further questions in queue. At this time, I would like to turn the call back to Dr. Chalmers for closing remarks.

Okay. Thank you Liz and thank you everybody for participating in today's call. I would also like to thank the Cara team for their continued hard work to support the progress of our various programs, our investigators and most importantly the patients who continue to participate in our trials. So thank you everybody and have a very good evening. Thank you.

Thank you.

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