Good afternoon and welcome to Cara Therapeutics' First Quarter 2018 Financial Results and Update Conference Call. All participants are in a 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 first quarter 2018 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, and Dr. Mani Mohindru, our Chief Financial Officer and Chief Strategy Officer. I'll now turn the call over to Dr. Chalmers.

Okay. Thank you Michael and good afternoon everybody. Thanks for being with us again on the call. We made very significant progress this year as we continue to advance CR845 or difelikefalin throughout various pruritus programs and we completed the enrollment of our adaptive Phase 3 trial in acute post-operative pain setting. During this call I'll summarize our overall progress and I'll provide additional insight into our ongoing and planned trials for this year. So let me begin with our lead program which is KORSUVA injection or IV CR845 for the treatment of chronic kidney disease associated pruritus or CKD-aP in patients undergoing hemodialysis. During the first quarter of 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. This is an FDA designated Breakthrough Therapy of course addressing the significant unmet need for which there are currently no approved therapies in the U.S. or indeed the EU at this point. This trial is investigating KORSUVA injection at a dose of 0.5 mcg/kg versus placebo administered three times per week after scheduled dialysis sessions over a 12-week treatment period with a 52-week open label extension phase. The primary efficacy endpoint is the proportion of patients achieving at least a three-point improvement from baseline at week 12 with respect to the weekly mean of the daily worst itching intensity score as measured on a numeric rating scale. As we've shared previously in a post hoc analysis of our completed Phase 2b trial in 2017, the proportion of patients with an improvement from baseline of weekly mean worst itch intensity score of greater than or equal to three points at week 8 in that trial was statistically…

Thank you, Derek. As a reminder, the full financial results for the first quarter of 2018 can also be found in our press release issued today after the market closed. For the first quarter of 2018 we reported net loss of $16.8 million or $0.51 per basic and diluted share compared to a net loss of $22.2 million or $0.81 per basic and diluted share for the same quarter of 2017. We did not recognize any revenue for the first quarter of this year. Total revenue for the first quarter of 2017 was $911,000 that included a sublicense fee of $843,000 received from our Japanese partner Maruishi Pharma in connection with its sublicense agreement with Kissei Pharma as well as $68,000 for the sale of clinical compound to Maruishi. R&D expenses research and development expenses were $13.4 million in the first quarter of 2018 compared to $20.8 million in the same period of 2017. The lower R&D expenses in 2018 were mainly due to a net decrease in direct clinical trial cost which were partially offset by increases in stock compensation expense as well as payroll and related costs for R&D personnel. General and administrative expenses were $3.7 million during the first quarter of 2018 compared to $2.4 million for the same period of 2017. The increase in 2018 was primarily due to increase in stock compensation expense as well as payroll and related costs for G&A personnel. Other income was $311,000 for the first quarter of 2018, compared to $90,000 for the same period of last year. The increase was primarily related to higher dividend and interest income resulting from a higher average balance of portfolio investments in the 2018 period. As of March 31, 2018 our cash, cash equivalents and marketable securities were at $74.5 million compared to $92.6 million at the end of December 31, 2017. The decrease in the balance of cash, cash equivalents and marketable securities primarily resulted from cash used in operations of $18.5 million, partially offset by proceeds of 0.3 million from the exercise of stock options. Now turning to our financial expectations. Based on timing expectations and projected costs of our clinical development plans, we continue to expect that our current cash will be sufficient to fund our operating and CapEx expenses into the first half of 2019 without taking into account any potential milestone payments under existing collaborations. With that, I'll turn the call back to the operator for Q&A.

Thank you. [Operator Instructions] Our first question is from Annabel Samimy of Stifel. Your line is open.

Hi guys, this is Andrew in for Annabel. Thanks for taking my question. I had a few, so starting off what are you looking for in the oral Phase 1 PK study? Do you expect to get the exact dose equivalents the IV dose or are you looking for range to take to the Phase 2? And my second is on the Phase 3 IV CKD study can you tell us if you do the interim analysis of the first of KALM-1 and have to increase enrollment, one, how would that impact your timeline for readout and secondly, is that a direct indication of the enrollment you would need for the second international study or will you also be conducting another look at [50%][ph] enrollment for the second study? And I had a followup to that after?

Okay, so let me start with the first question then, Andrew. So the oral PK study quite simply is to make sure we get AUC exposures or general plasma exposure levels that are equivalent or roughly equivalent to what we've seen with our IV administration of CR845. So we know we're getting the receptor coverage that has provided efficacy in this same class of patients essentially. And as I said earlier, we already know within the tablet strength range we know we can achieve, we can see AUCs in terms of plasma exposure that looks similar to those that were active in our studies of pruritus and HD patients. So that's looking appropriate. So based on that data you are correct, we're going to be following up and moving tablet strength into the Phase 2 of the cover arranged analogous to the coverage we're seeing with the IV administration and the Phase 2 study that we completed. Then on the Phase 3 trial, yes the interim, the idea behind the interim is that, as you know, conditional power analysis is not an interim analysis, so we don't look at the numbers there. There is no p value given, it is simply a guidance from the board as to whether we need to increase the sample size to maintain the power where interested in the release to the effect size we're modeling based on that. And so at that point if we do see if that recommendation is given we would increase that. I can't give you any estimates right now on how that would affect the final readout. Obviously recruitment may change as we bring active size on board but what we will do as we get through that analysis we will provide guidance because at that point we're going to have a more accurate assessment of recruitment rates across sites, we will provide guidance as to our projected time line for readout on that trial. Did that answer your question?

Yes, but secondly on that, you know, is that a direct indication of how enrollment, how much enrollment you would need for the second international study, kind of what kind of read through would you be able to get with that?

No it doesn’t because as you know the variability across these trials varies with the patient populations and the size used and the variability from those patients. So that wouldn't directly relate. So we continue with our standard protocol for the second trial which as I said earlier is modeled on our KALM-1 design and we do have bill and conditional power analysis there. So we would start with the model power and the model and which is 350 patients.

Got it, and my last question, so for that international could you potentially use that for an international filing and would you need an active comparator arm, and if you do does that include an international filing?

Well, it depends what you mean by which international agency. We certainly know we can use that data with our Japanese partner for their PMDA submission in Japan, and you know at this point we are actually taking guidance on what's required for the EU submission as you know. It's very difficult to design a trial with an active comparator when we have no drugs that are effective for this condition. But that's something we are actively looking at right now in terms of guidance for the EU.

Understood, thank you.

Thank you.

Thank you. Our next question is from Alan Carr with Needham & Company. Your line is open.

Good morning. Thanks for taking my questions, a couple of them, one of them around any comments on what you might be thinking about atopic dermatitis? And then also bigger picture, what are your plans I guess with the positive outcome from the pain trial, the Phase 3 pain trial and to what extent are you going to be pursuing a pain indication? You’ve obviously made big shift towards pruritus, but if there is a positive trial in this Phase, positive outcome for this Phase 3 trial, what might you do with it, would you out license or would you look, commercialize that on your own in a hospital setting? Thanks.

Yes, so I’ll take the second one first Alan. So the sequence of events here as planned for the postop indication as we'll have that data that quarter, we'll look at that data. If it's appropriate to go to the FDA and ask for guidance as to what’s required for registration, then we'll be doing that and that's always been our plan and association with us. But as I've said on the last call, we're always in active discussions with people that we can partner with to push these indications forward and that may still be a possibility for the postop pain indication. But that’s something we will certainly announce if and when that occurs. But at this point we're just looking forward to getting the data out of that and then we’ll make a decision based on the data analysis. As to the first question on the atopic you’re correct we've stated a number of times we’re interested and looking at the application of 845 in dermatological conditions. At this point I can’t give you enough and more specific on guidance. Atopic dermatitis is certainly an area we're interested in. Psoriasis and pruritus associated with pruritus that psoriasis is another area and when we decide on which patient population and which design we favor there we are certainly going to announced that when we initiate that trial, but that’s for a little down the line here in 2018.

All right, thanks for taking my questions.

Thanks, Alan.

Thank you. Our next question is from Corey Davis of Seaport. Your line is open.

Hello, thanks. The first one is just a clarification on the Phase 1 oral study. I think the press release said you'd released topline data later this quarter, but in your comments it sounded like you’d kind of already gotten enough PK data to move forward with decisions in the Phase 2, is that correct?

Yes. Hi Corey how are you? That is correct. We certainly will be announcing the initiation of the Phase 2 and most likely as part of that initiation announcement we will provide some background data in relation to the PK that I mentioned earlier.

Did you look at efficacy at all in that study or...?

We did not, it was a pure PK and safety analysis, in fact we did not have any entry criteria related to pruritus for those subjects.

That was my next question, so they were CKD patients, but not necessarily pruritus patients?

Correct.

Okay, thanks very much. And on the Phase 3 study for postop pain do both of the different active arms have to hit statistical significance for the trial to be successful or could either one hit?

No, either one, either one hits then it is successful.

And are you allowed to pool the active arms to show statistical significance?

Well, we can certainly look at that as a post hoc analysis, but as designed this is per drug those analysis versus placebo.

Okay and then I think the last question, unless I come up with another one would be the effect size that you’re hoping to get from the IB dialysis study, does that have to be as large as it was in your post hoc Phase 2b study that was roughly what you say 64% versus 29% or could the differential be less and still hit statistical significance?

It could be less than that we have against the detail how we parried that, but basically we look to our dosages in our Phase 2 and modeled the effect size based on the response we saw across the dose range there and then parried that as I said earlier up to 90% para to see that effect size.

Okay, I’m sorry last one, I promise. You didn’t give any specific timelines for when you’d expect to see data, I know it would depend on whether not you obtained enrollment, but if you don’t is that something you could finish in early 2019 or would it be later than that?

Yes, we are going to guide that. As I said earlier, once we get all our sites active and we think that could be later this quarter as a target and as we guide later in the year and we see the recruitment rates from each of these sites then we will be guiding as to when we project topline readout from that trial.

Okay, great. Thank you.

Thanks, Cory.

Thank you. [Operator Instructions] Our next question is from Francois Brisebois of Laidlaw. Your line is open.

Hi, thanks for taking the questions. Just a couple here, this is going off what Alan said a little bit. So it definitely seems like the emphasis went from pain to Pruritus, I was just wondering when that transition started, has that had anything to do with the OA trial? And then on that case in terms of the OA, any interest from partnership there or any discussions you guys can talk about?

Yes, as to the latter part we can’t talk about specifics on ongoing discussions, but as I said earlier we’re constantly talking to people both in terms of regional deals for CR845 that makes sense for us and also deals related specifically to indications, so those are things that are ongoing for us. In terms of pain versus pruritus, it’s clear a lead program at the moment is CKD associated pruritus and hemodialysis patients, we have a breakthrough designation for that. We have a terrific response rate and a group of patients, we have analysis available for that condition. So the data itself has guided us towards what we’re trying to push faster here and move along. We also think there is an application in pain and so that’s why I’ve said repeatedly when we see the data and we can model off that, that’s still an area we’re interested in, most likely pushing forward with a partner, we'd like to particularly specify spending our own internal funds on pushing pruritus along, but we still have an interest in potential pain levels for CR845.

Okay, that’s helpful and then in terms of the placebo response, you mentioned the CKD-aP, the post hoc look, the efficacy was great, the placebo response was almost around 30%, can you just remind us what you did to try to work on that placebo response and bring it down to a minimum for the Phase 3 here?

You’re talking about placebo response from our Phase 2 trial in hemodialysis?

Yes, I’m talking about, yes you mentioned the efficacy and basically the placebo responders were about 28% I believe you said and I’m just wondering if you had done anything, how do you deal with the placebo response there for CKD-aP and why is it so high?

So that’s actually not tremendously high for those type of patients reported outcome endpoints, somewhere between 20% and 30% both through pain trials and for pruritus trials as kind of standard response there. So that’s not particularly high placebo response. And the most important aspect of that set of data I emphasized earlier is the difference between placebo and the 845 response. And as you saw with a 64% response in drug versus less than 50% of that in placebo, that’s a significant effect size there, a significant benefit of drug over and above what we can see with placebo. So it’s the difference that is important and can you achieve that difference and that really drives the effect of the drug there.

Okay, great. Thank you.

Thank you.

Thank you. And that does conclude our Q&A session for today. I would like to turn the call back over to Mr. Derek Chalmers for any further remarks.

Okay, so thank you everybody for participating on the call. I’d also like to thank the Cara team for their continued hard work here at Cara, our study investigators, and most importantly the patients who continue to participate in our trials every day. So thank you everybody and have a good evening.

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