Good afternoon and welcome to Cara Therapeutics' First Quarter 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 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 2019 financial results and update conference call. The news release became available just after 4 PM 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; future regulatory and development milestones for our product candidates; 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 Oral KORSUVA’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 President and CEO; and Dr. Mani Mohindru, Chief Financial Officer and Chief Strategy Officer. I'll now turn the call over to Dr. Chalmers.

Thank you, Michael, and good afternoon everybody, and thanks for joining us on the call today. So, we've continued to make important progress during the first quarter of this year, advancing our lead drug candidate KORSUVA across a range of the clinical populations who have pruritus remains a significant unmet clinical need, and we expect multiple late stage clinical read outs from our pipeline throughout the remainder of this year. As many of you know, KORSUVA is our novel first-in-class selective peripherally-acting kappa opioid receptors agonists, designed to function without traditional opioid side effects due to its highly specific pharmacological action on kappa receptors and its chemical structure. Our lead development program is KORSUVA Injection for chronic kidney disease associated pruritus or CKD-aP in hemodialysis patients where we currently have two ongoing pivotal Phase III trials, designating KALM-1 and KALM-2. Earlier this year, we announced we had completed enrollment of the KALM-1 trial. We're happy to note that as of today, all patients in KALM-1 have now completed the treatment period and last visits and we're on track to report top line data a little later this quarter. Additionally, based on current enrolment progress, we also expect to report top line data from KALM-2 in the second half of 2019. We are also making good progress in advancing the development of Oral KORSUVA across a number of patient populations who have pruritus continues to be a significant unmet need. Firstly, our ongoing Phase 2 trial in pre-dialysis stage III to V CKD patients with moderate-to-severe pruritus is enrolling well, and top line data is expected here in the second half of 2019. Additionally, we plan to initiate two other Phase II trials in non-CKD patient groups, the first in chronic liver disease associated pruritus, a little later this quarter; and…

Thank you, Derek. As a reminder, the full financial results of our first quarter of 2019 can be found in the press release that was issued earlier today after market closed. For the first quarter of 2019, we reported a net loss of 22 million or $0.56 per basic and diluted share compared to a net loss of 16.8 million or $0.51 per basic and diluted share for the same quarter of 2018. For the first quarter of 2018, we recognized revenue of 4.4 million comprised of 4.2 million related to the Vifor Fresenius collaboration agreement and 140,000 related to the sale of clinical compound to a partner Maruishi in Japan. We did not recognize any revenues during the first quarter of 2018. For the first quarter of 2018 of this year, we reported R&D expense of $23.6 million as compared to $13.4 million for the same period of 2018, primarily due to an increase in clinical trial cost as well as increases in stock comp expense and payroll related cost. G&A expenses were $3.9 during the first quarter of 2019, compared to $3.7 million in the same period of 2018. The slight increase in 2019 period was due to increased legal and consulting cost. Other income was $1.1 million for the first quarter of 2019 versus $311,000 for the same period in 2018. The increase in 2019 was due to higher interest income resulting from a higher balance of company's investment portfolio in the 2019 period. As of March 31, 2019, our cash and marketable securities totaled $15.1 million compared to $182.8 million at the end of 2018. The decrease in the balanced cash and cash equivalents and marketable securities, the decrease in the cash equivalents and marketable securities was primarily related to cash used in operations of 27.5 million slightly offset by proceeds of $0.2 million from the exercise of stock option. Turning to our financial guidance. Based on the projected costs of our clinical development plans and timing expectations, we believe that our current cash, cash equivalence and marketable securities as of March 31, 2018 will be sufficient to fund our operations into the fourth quarter of 2020 without taking into account any potential milestones payments under our existing collaborations. This is a revision from our prior guidance of cash runway into 2021 and is primarily due to accelerated and higher clinical trial expense projections related to our Phase III program of KORSUVA Injection for CKD associated pruritus in hemodialysis patients. And now we'll turn back the call to the operator for the Q&A session.

Thank you. [Operator Instructions] Our first question comes from the line of Chris Howerton with Jefferies. Your line is open. Please go ahead.

Pretty straightforward, I think just a couple of questions for me. The first one in terms of the expectations of requirements for the long-term safety exposure, what kind of numbers are we looking for there?

So, standard ACH guidelines as we're looking for 100 exposures at the one year mark and 300 at the six months mark/

So, pretty straightforward. And then the other question I had was, IV KORSUVA would be subject to DAPA for reimbursement. And are you aware of any other products that would fall within that category or assessment?

Upcoming products, you we're talking about Chris or…

Yes.

The products are already within DAPA reimbursement.

I don't think there's any currently, right, so like what might be follow within that category I guess?

Right, so, the only product we know of is ID per se, but from Amgen the [indiscernible] product that was approved a couple of years ago. So, that has paid out what the bundle. Beyond that, we're unaware of other products coming to the market, and in fact we believe we may well be the next product to line the [indiscernible] for to DAPA agreement.

Well, there you get the opportunity to trailblaze a path for us there.

Exactly, and we're looking forward to that.

Alright, like I said, it seemed pretty straightforward and I appreciate the answering the question and obviously look forward to the KALM data coming up soon.

Thank you. And our next question comes from the line of Jason Gerberry with Bank of America. Your line is open. Please go ahead.

This is Chi on for Jason, a couple of questions from me. First one is, can you provide any color on where you're at with the enrollment rate in KALM-2? And when can we roughly expect an interim data analysis for that study? And my follow-up question was a follow-up to the first question. So, if the ICH guideline for exposure is 100 exposure at the one year mark and 300 at the six month mark, it sort of makes sense to me with the 400 patients with the long-term safety study. Just curious how does the second open-label safety study fit in with the 12-week with duration? Is it for a specific regional regulatory requirement? Is there something specific for global as supposed to U.S., if you can provide any color that would be great?

Hi Chi, thanks for that. So let's take the second question first, since that's a little more involved. So, the second open label safety trial we've initiated recently is really to satisfy the overall exposure number required per ICH guidelines, which as you know is 1,500 for a chronic product. We, and I've stipulated on the call and you're aware of the maximum exposure time we anticipate there's going to be 12 weeks of treatment for those patients. We well satisfied the long-term safety exposure numbers that Chris queried about earlier with both our open label 52-week extension study initiated in 2017 and the open-label Phase III extension studies we have as part of our design on both KALM-1 and KALM-2 pivotal. So, that's -- those are how we satisfied both long-term exposure numbers and total safety exposure numbers. On the KALM-2 enrollment as you know, we don't like to guide every quarter on exactly where we are about enrollment as according to plan, and we're still guiding we're going to have top line data by the end of this year. And when we have the appropriate data analyzed for interim assessment as we have done with our KALM-1 study, we certainly gave that to the IDMC recommendations when we finished that particular interim. So, obviously, if we're going to see top line data by the end of this year, second half of the year, then our interim is going occur within the next two quarters.

Thank you and our next question comes from the line of David Amsellem with Piper Jaffray. Your line is open. Please go ahead.

Thanks, so I hear Derek you're planning to provide more color on the design of the liver study in the atopic derm study when you initiate them. But can you -- on the liver study, can you give us a rough sense of the specific patients subgroups you are going through to look at? And what is the FDA told you in terms of specific population since you've guys talked about liver in terms of broadly chronic liver disease that would be helpful to understand? That's number one. And then number two, in atopic dermatitis, we are seeing more and more penetration of biologics in the net setting that and they do work fairly well on pruritus something. So you worried at all that as that market evolves that the opportunities specifically in 80 may not be as attractive as you want. So help us understand your thought process there? Thanks.

So, we'll take the second question first. On atopic, so our belief there is you are correct, well as of today, there is some only one approved biologic within atopic label and that's DUPIXENT. But here, that label is focused on moderate-to-severe atopic patients and so as I am aware, all the biologics are in development are also focused on that subgroup. And what is clear is that moderate-to-severe pruritus occurs, not only with moderate-to-severe pathology, but also with miles-to-moderate pathology. And as you're well aware, David, the majority of atopic patients probably 80% fall within the mile-to-moderate category. So I believe as this is a big still a big opportunity there and as you know patients are somewhat reluctant even than the moderate-to-severe level to take a biologic if there was an oral alternative available. And you're correct that some of these biologics do have some efficacy when it comes to pruritus, but that tends to be a delayed response related to altering the inherent immunology there for that disorder. So, I think we'd see a more rapid response with an Oral KORSUVA product. So, that's our belief in terms of the opportunity on atopic. And the first patient on liver, so when we look to our Phase I and safety and PK study, we did look at upgradations of liver disease through A to C. And as you are well aware, pruritus occurs in the variety of pathologies associated with the liver patients including viral infections, NASH itself, cirrhosis and -- but it's particularly vary on, if you like in primary biliary cholangitis. And at best point, it's very likely that that would be the subgroup of patients we look to, we tend to have a more consistent, more severe pruritus, and there's certainly a very high clinical need there for these patients. So, at this point which seems likely that'd be the patient group would focus on.

Thank you. And our next question comes from the line of Annabel Samimy with Stifel. Your line is open. Please go ahead.

Just want to ask about applying Phase III trial. So, it’s pretty well designed that very high levels hiring in the same placebo assumptions as in Phase 2. But can you tell us what's that kind of expected variance that would translate into to reach physical significant and is there any specific variance that will be viewed by clinicians as clinically relevant? So, that's the first question. The second is, can you help us understand a site overlap between KALM-1 and KALM-2? And how well the -- or how predictive this KALM-1 could be of KALM-2? And then just really quickly, I missed the update numbers -- the updates on the numbers, how many are in -- how many have completed 6 months and how many have completed a year? Thanks.

Hi Annabel, thanks for that. So you snuck in three questions, I will do the last one first. So, the safety exposure reliable on the long-term safety trial is with through 150 at six months and 40% of those are through the one year exposure level. In term of the clinical relevance on the three point -- so, you recall that part of the condition of breakthrough designation is to satisfy the requirement that the change we see in these patients in terms of reducing their moderate-to-severe pruritus is clinically significant. And we analyze basically our Phase IIb data using the standard statistical anchored approach where we look at NRS differences correlated with quality of life changes per patient and just a standard analysis to find clinical meaningfulness. And when we did that we see a three point reduction, I'd say a little less than that as being the threshold for clinical meaningfulness for CKD hemodialysis patients with moderate-to-severe pruritus. Sometimes, there was a clinically significant reduction, our view is and the FDA's view would be, if we have statistical significance on your primary endpoint that would be significant for that patient group. So, that's where we are in clinical significance. And then I've forgotten what your second question was Annabel?

Just can you remind us what the site overlap is between KALM-1 and KALM-2? And how predictive one trial could be for the next?

Yes. So, the latter part of that, first of all there's no site overlap between KALM-1 and KALM-2. We're very careful on that and to maximize our enrollment. But the second part of that, of course, we’re looking at the same pathophysiology, the same patient class. And so, we assume the mechanism is going to be similar there in terms of the anti-pruritic effect for KORSUVA. So, it seems likely that if we see significant effects in KALM-1 that'd be good read through to KALM-2. We recognized there might be some variability. We're using different countries for KALM-2. We're using more sites and that's all being built into the powering assumptions for KALM-2, which is why as you know for KALM-2, we also have an interim conditional prior assessment at 50% enrollment. Of course, we're going to guide after we complete that particular interim also, so should be good read through. We recognize there might be variability differences as there are with all clinical trials, but we think we can accommodate that with the powering assumptions we made for KALM-2.

Thank you. And our next question comes from the line of Alan Carr with Needham & Company. Your line is open. Please go ahead.

In the -- as the FDA, are there any particular secondary endpoints that you think are particularly critical to me, behind the obvious one is the primary point? And then also, can you give us an update on commercial prep, what's the strategy and timing around that? Thanks.

Thanks Alan. So, as you know, primary endpoint is the most important here for the FDA and our label ultimately, so that's the main endpoint for us. We don't anticipate any other quality of life endpoints will make it to the label level. And we are looking at a four point reduction also since that's been a well used end point in non-CKD pruritus trials. So, we will have that data to use with the FDA in discussions there, but the main endpoint as always is our primary and that's the main endpoint we need put for our label. What was your second question, Alan?

Why not commercial?

Little early for launch prep, we like to get through at least the first Phase III trial and confirm efficacy there, but we have started to very initial stages of that and modeling out what we see as necessary in both sales force and economics to launch this product is not something we're going to talk about a little later in the year, once that matures a little bit beyond the planning stages.

Can you give us a sense of what commercial prep, I guess, is triggered after a first positive H3 or after a meeting the FDA? Any guidance around on that or is it just too early?

Yes, really logistic preparation and making sure, we have everything in line for the necessary implementation of logistics across our departments, not just clinical, but we're going to be adding more people on our MSL groups obviously, and then HR and legal and financial. So, it's preparation the switch from development to commercial organization, that kind of planning and actually and then as we get closer to the NDA and I'll talk to you about that's before we already have ideas on the size of sales force here, we think it's very economical and affordable for Cara. We have some assistance in our U.S. launch with our Vifor Fresenius license arrangement. So all of that would detail a little later in the year once we get pass the Phase III data.

Thank you. And our next question comes from the line of Esther Hong with Janney. Your line is open. Please go ahead.

So first question, can you just speak to the severity of the CKD patients on a hemodialysis who are enrolling in the study, how long of these patients been on dialysis? And then second, assuming positive IV KORSUVA trials, what are the studies are expected to be required for ex-U.S. approval? And then on a long same thing under the terms of the agreement with Vifor presenting as, what's the breakdown of the remaining 470 million in regulatory and commercial milestones?

Just to the last one quickly as I have it in my mind, so it's 470 million, 30 million of that is regulatory and 440 million is commercial obviously peered by sales ex-U.S. And then as regards to the patients since severity of the drug pruritus really, from that phase, I don’t have that data from the ongoing Phase III. We know it looks similar in terms of their histories and from our Phase IIb data. The average patient was 5 to 6 years on hemodialysis and the moderate-to-severe pruritus. So, we're seeing similar patients types recruited and enrolled then to our Phase III trial as we've seen in our Phase II.

Then for ex-U.S. filings, what was your…

Yes, ex-U.S. So European filings as you know, we can file in Europe, but there is no approved product in Europe for that's we don’t need a comparator study. So, we'd be using the U.S. package inside to our partners. Vifor Fresenius will be used in the U.S. package for filing in Europe.

Thank you. And our next question comes from the line of Francois Brisebois with Laidlaw. Your line is open. Please go ahead.

I was wondering you talked about quickly the dual mechanism the neuronal -- the neuronal versus any inflammatory aspects to it. Is there -- has there been any evolution understanding of which part might be more important and for which disease you can attack? As just you've mentioned NASH, you've mentioned PBC and maybe going after PBC before NASH as a population is there in mechanistic reasoning? Or is it really that patient population seems to have an issue with pruritus at the time being?

Hi, Franc, thanks for that. So, yes, it's really the latter when it comes to liver patient choice. The PBC pruritus tends to more severe, more consistent, and that's the reason we think we could go after that. We're not the first people to define the anti-inflammatory effect via kappa receptors. There is a great deal of literature of that. We know the cell types involved and mechanistically we know we can reduce and other compounds have been shown to reduce the pro-inflammatory cytokine pathway there. So, I think that is an important part of the mechanism here, and as you know, we have shown in our Phase IIb trials. We can see sustained anti-pruritic effects that last through eight weeks and we think a lot of that has to do with the anti-inflammatory benefits. There may well be more an immediate benefit from the inhibition of the sensory afferents in the particularly epidermis and dermis that really the pruritus, but I think ultimately this dual mechanism that's going to be important here. And since we think kappa is on a whole range of immune cells the point we're making is regardless of whichever cytokine pathway is to the floor in whichever pathophysiology that should be a mechanism, it should be effective across conditions rather than perhaps a specific biologic targeting a specific cytokine that we know is elevated in a particular subgroup of patients. So, that's a mechanism that I think the patient can benefit from, it should be time pan anti-pruritic. If you like and of course that's something, hopefully, we're going to produce more data on in terms of mechanism on the anti-inflammatory effect as we run through these larger trials where we are looking at biologic markers as part of our exploratory measurement. So, we hopefully will have that data in future calls to talk about Franc.

Alright, thank you very much. I just -- so there's no -- is there for you guys kind of a reason why maybe the things wouldn't translate as well from PBC to NASH just because it seems like now obviously these drugs aren't approved yet for NASH, but it seems like the pruritic effect is larger than maybe expected. So, is there any reason when you speak to hepatologists that this might be easier in PBC? Or will just have to see for that?

Yes. So, look, there is certainly a great need that's the message we get in speaking to hepatologists and KOLs that there is great need for effective anti-pruritics for that patient population. It looks as though we have more consistency in PBC, so for us that makes sense. As the first group, we look at, it doesn't mean that ultimately we won't look at other groups within the heterogeneous population, but that consistency of response is important for our first clinical trial and that's where we're going to focus initially.

Thank you, and I'm showing no further questions, and I would like to turn the conference back over to CEO, Derek Chalmers, for closing remarks.

So, thank you everybody. Thanks for participating in today's call. I'd like to thank particularly the CARA team for all their hard work and commitment. I'd like to thank our investors, our study investigators and most importantly, the patients who participate in our ongoing large clinical trials. And we look forward to talking to everybody again very 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.