Good afternoon, and welcome to Cara Therapeutics Third Quarter and 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 now like to turn the call over to the Cara team. Please proceed.

Good afternoon. This is Jane Urheim with Stern Investor Relations, and welcome to Cara Therapeutics third quarter 2019 financial results and update conference call. The news release become available just after 4:00 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 from our ongoing clinical trials, the expected timing and design of our planned clinical trials, future regulatory and development milestones for our product candidate, the Company's projected timeline for the submission of its first NDA, the potential for CR845 to be a therapeutic option in multiple pruritus indications, the size of 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 the Company'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's President and CEO; and Dr. Mani Mohindru, Chief Financial Officer and Chief Strategy Officer. I'll now turn the call over to Dr. Chalmer.

Thanks, Jane, and good afternoon everybody, and thanks for joining us on today's call. So we've certainly realized significant progress across our clinical development pipeline this quarter and in recent months, including an expansion of our oral KORSUVA clinical program into two new pruritic patient populations with high unmet need atopic dermatitis and chronic liver disease associated pruritus or CLD-aP. We've also advanced our Phase 2 trial of Oral KORSUVA in non-hemodialysis patients with chronic kidney disease associated pruritus or CKD-aP, where we're on track to report top line data before the end of this year. And lastly, following a recommendation from the Independent Data Monitoring Committee or IDMC, we increased the target enrollment of our second pivotal Phase 3 trial of KORSUVA Injection in hemodialysis patients with CKD-aP to come to trial by approximately 20% from 350 patients to 430 patients, to maintain our pre-specified conservative statistical power for KALM-2's primary endpoint. We do expect KALM-2 to fully enroll by the end of this quarter and remain on track to file our first new drug application for KORSUVA Injection in the second half of next year. In addition, on the corporate side, we entered into a non-exclusive commercial license agreement with Enteris BioPharma for oral formulation rights to Enteris' Peptelligence Technology to develop and commercialize Oral KORSUVA in any indication worldwide, excluding South Korea and Japan. Now that aligns with our strategic goals to allow advancement of Oral KORSUVA into Phase 3 trials next year, pending the results from our ongoing Phase 2 trials. And finally, with the strengthened balance sheet from our $136 million follow-on offering in July of this year, we are well positioned for, and we are looking forward to multiple major clinical milestones in the fourth quarter of this year and into 2020. So let's…

Thank you, Derek, and good afternoon everyone. As a reminder, the full financial results for the third quarter of 2019 can be found in our press release issued today after the market closed. For the third quarter of 2019, we reported a net loss of $32.8 million or $0.74 per basic and diluted share compared to a net loss of $19.4 million or $0.51 per basic and diluted share for the same quarter of 2018. For the third quarter of 2019, we recognized revenue of $5.8 million compared to $5.1 million for the same quarter of 2018. For the third quarter of this year, we reported R&D expenses of $36 million versus $22.3 million in the same period of 2018. The increase in the third quarter of 2019 was primarily due to the upfront payment of $8 million related to the license agreement with Enteris, a net increase in clinical trial costs, as well as increases in stock-based compensation expense and payroll-related costs. G&A expenses were $4.2 million during the third quarter of 2019, compared to $3.2 million in the same period of 2018. The increase in 2019 was due to higher consulting and accounting fees, as well as increases in stock-based compensation expense. Other income was $1.3 million for the third quarter of 2019 versus $1 million for the same period of prior year, resulted from an increase in net interest -- increase in interest and accretion income due to higher average balance of our investment portfolio for the 2019 period As of September 30th, 2019, our cash, cash equivalents and marketable securities totaled $249.1 million compared to $182.8 million at December 31st, 2018. This increase in the balance of cash and marketable securities primarily resulted from net proceeds of $136.5 million from the follow-on offering of common stock in July of 2019 and proceeds of approximately $6.1 million from the exercise of stock options that was partially offset by cash used in operations of $78.1 million. Now turning to our financial expectations. Based on the projected cost of our clinical development plans and timing expectations, we expect that our current cash, cash equivalents and marketable securities as of September 30, 2019 will be sufficient to fund our operations into the second half of 2021, not accounting for any potential milestone payments under our existing collaborations. I'll now turn the call back over to Michelle for Q&A session.

[Operator Instructions] Our first question comes from Chris Howerton of Jefferies. Your line is open.

All right. Well, I guess I stayed on the phone line. Thank you, Mani, and team for the background. Anyway, thanks for taking the questions as well. I think for me, just a couple. So for Derek. I think last time we spoke, there was some potential for a discussion with the FDA regarding an accelerated approval and also potentially some discussion about an abbreviated safety database. So just checking and to see maybe if you had that discussion with the FDA and if any of those thinking has evolved over time?

Right. Hey, Chris, thanks for the question. I think what you're referring to is the idea with the Oral KORSUVA program for pre-dialysis patients. There, our thought is from a regulatory perspective that the exposures we've already achieved with IV would be credited towards an NDA for Oral KORSUVA for the pre-dialysis population. So the thought was for that particular application with Oral KORSUVA that would be the possibility, and again, this is obviously up to the FDA per consultation, but the possibility that we could file an SNDA in relation to that particular patient population, whereby we could reference the safety exposures we've already achieved with IV, that's where we think we have a possibility of an abbreviated or shortened NDA, not with our not with our KORSUVA Injection program, where our plan has been all along and still is, despite the fact we have a breakthrough designation. We take the conservative view here. We're going to have two large Phase 3 trials in relation to the efficacy component, and we're going to achieve ICH guidelines, in terms of, both overall exposures and long-term safety exposures. So that's our -- that's our approach for both of those programs.

Got it. Okay. Well, thanks so much for the clarification, I guess. And the -- for the other question I would have, maybe just related to the chronic liver disease, just because I don't think that that's been discussed too much. Just maybe if you could give us some thoughts in terms of what a clinical and meaningful outcome would be in that patient population, in particularly, since we already seeing with the NRS reduction would be in chronic kidney disease. So do you think that same type of magnitude, is the type of effect one would expect and clinicians would hope to see or is it a different frame of reference?

Yeah, that's a great question, Chris. First of all, let me -- let me say right upfront, of course, there is no available effect with therapies for that patient class as of yet. So any color (Multiple Speakers) any therapy here is going to be an advancement. And when it comes to clinical meaningfulness, as you know, we are quite confident in relation to CKD-aP whereby we essentially empirically looked at clinical meaningfulness based on our Phase 2 dataset really at the request of the FDA when we were in discussions related to breakthrough designation. And there, by virtue of that anchorage statistical analysis, we know the threshold for clinical meaningfulness in the CKD hemodialysis patient population as approximately 3 points. That's something we haven't looked at in lever, and so we're going to have endpoints that do accommodate both 3-point and 4-point reductions. And as you know, 4-point has been the dogma in relation to dermatological indications. There hasn't been a great deal of data related pruritus in liver patients, but we're going to look at both thresholds within that patient population.

Got it. Okay. All right. Well, thanks for taking my questions, and I'll hop back in the queue. I appreciate it.

Thanks, Chris.

Our next question comes from Jason Gerberry of Bank of America. Your line is open.

Hey, thanks for taking the questions. This is Chi on for Jason. Two from me. I guess, on the DSMB recommendation to increase the enrollment size by roughly 23% for KALM-2, maybe if you can help us -- help walk us through how that is right and where that that enrollment expansion does or does not have a different expectation for treatment effect size compared to what we compared to what we have seen from KALM-1. And the second question is on atopic term. I was just curious, where do you see Oral KORSUVA fit into the pipeline where there are about, perhaps, a dozen of biologic and oral topical immunomodulators in the mid to late-stage development for atopic term? Thank you.

Okay. Thanks, Chi. So on the first question. So the IDMC recommendation that we increased the sample size and that was based on a conditional power analysis. So there, what we're trying to maintain is a very conservative level of power to see a statistical difference between the two groups. From that analysis, there really is no influence as to what the odds ratio is at that point or the p-value is at that point is really analysis based on beta and not-alpha. So we're trying to make sure we -- if you like, reduced the odds of missing a statistical difference. So there is no read through if you like, from having to increase the sample size to achieve that power as to the size of the -- effect size between the two groups there. So that's really just a beta analysis, it is not an alpha analysis in that forma. And to the second question in terms of AD, you're correct. There seems to be a new biologic for AD every other week popping up, but all of those biologics are essentially focused on the moderate to severe disease atopic population. And as you know, that's the minority of that population with the vast majority been mild to moderate pathology. And what we know and is well known in the literature and we certainly know from enrolling in our trial is that the degree of pruritus in the mild to moderate population can be very severe. And so, there we think, if you like our advantage is going to be as a novel option for the vast majority of atopic dermatitis patients, where biologics are simply not appropriate for that population. And even within the moderate to severe AD population, there may be an opportunity to use Oral KORSUVA in combination with the biologic for the most severe patients, where they're not perhaps getting a more rapid response to the pruritus. There we see no obstacle to use in our molecule or drug candidate with any of these biologics. As you remember, we don't have any metabolic issues with KORSUVA, it's not metabolized through the lever, that's very minimal opportunity for drug-drug interactions here. So there's really -- there is really two aspects to the strategy here, it would be a first-line therapy on it so on, and treating provide us moderate to severe pruritus, really across the AD population. And for the more severe patient, it could be in combination with any of the biologics.

If I may ask a follow-up question on that. Thanks for the color that you provided on the AD. Just curious, I know that you've said previously the Phase 2 main criteria is going to be focusing on the moderate or severe patients, but just curious how you going to be able to leverage the enrollment criteria to make sure you have a healthy mix of them out to moderate and the moderate to severe end of Phase 2? Thank you.

Yeah, Chi, that's the magic of clinical trials. We can -- we can stratify within our groups to make sure we have the desired proportion of mild to moderate patients and moderate to severe patients within those groups and that's what we're doing.

Thank you.

Thanks, Chi.

Our next question comes from David Amsellem of Piper Jaffray. Your line is open.

Thanks. So wanted to delve a little further into the upsizing of the KALM-2 study, and forgive me if you addressed this in some way or even tangentially. But I wanted to get your thoughts, Derek, on what could explain the fact that KALM-1 was not upsize but this was upsize and give some kind of theorizing that, because you have the European site in KALM-2 and -- our patient reported outcomes, measures that there might be some variability between the two studies. And I'm just wondering if you think that that is something that holds any weight or there might be something else going on?

Yeah, thanks David. You've come up with what we regard as one of the most likely explanations, although I have to say we don't have any empirical data. As you know, we don't see any data as part of this interim conditional power assessment as all with the IDMC. But as you well know, there's a historical data out there particularly with patient reported outcomes that they can be differences and response rates in certain regions of Europe versus the US. Our assumption is -- because really the only main difference between the KALM-2 and KALM-1, they're pretty much analogous in design and size is that we've included some ex-US sites in the KALM-2 trial. Our assumption is that we've introduced some additional variability by virtue of having those sites in the trial.

Okay. All right. That's helpful. And then another question, switching gears to the oral -- I wanted to get your thoughts on atopic derm, in particular, I mean, one thing that especially in these populations and with patient and with patient for reported outcomes that we're mindful over placebo responses. Is it your view that in the atopic derm setting, we're more likely to see a more healthy placebo response if you will compare to the more severely ill CKD and PBC patients. How do you think about that?

Yeah, that's a good question, David. I don't know if I have any rationality to sway me one way or the other. We just don't have enough data yet in AD to come up with any of that in terms of placebo rates. What I can say is, based on our study so far, which as you know have focused on CKD, we do tend to see similar placebo rates across trials for this particular outcome for pruritus. So that is one piece of data. We do have as of yet, I can't give you data empirically across patient populations, but that's something we're going to get to next year and we'll have that data available. But we just don't have enough data to know whether the degree of response and placebo is going to be related to the degree of pathology or the duration of that pathology and the patient, and that's all data we were interested in and have thought about, but it's just the data we don't have yet. But as I said a couple of times on these calls, we think by virtue of where we act in the pruritus pathway, we really should have the ability to, if you like, benefit the pruritic response by virtue of the kappa activity, not only in those sensory afference but also on immune cells. So there should be a dual benefit to the patient regardless of what the initiating pathology is there. So that's the theory. And in a couple of quarters time, I guess, we're going to have the data, we can discuss that in real [ph] and clinical detail.

Okay. And then one last question, it is another hypothetical to the extent that you do get a good signal in atopic derm, how does that inform your thinking regarding pruritus. We're exploring for treatment of pruritus in other dermatologic indication such as say psoriasis or in smaller populations like prurigo nodularis, how do you think about that?

Yeah. Again, I think we have a mechanism that that should be broadly applicable by virtue of how we work and are ultimately -- and I know you and I have discussed it a couple of times. I think our ultimate aim for KORSUVA and treating pruritus for Oral KORSUVA is -- for theory is true, and we are broadly applicable then at some point we should have a broad label for the molecule, which would be somewhat analogous to the old approach for chronic pain medications. So our belief, if we ensure efficacy across these efficacy across these major pruritic parts of systemic disease related-pruritus, dermatological related-pruritus, neuropathic related-pruritus, then we could make a strong case that this is a molecule. They should have a broader label and then we can see application really across the spectrum of pruritic conditions. So that's the approach we're taking broadly at this point, but obviously we are focused on patient populations where we think we have the most promise and seen a response and CKD was an obvious place to start. There was a great deal of -- if you like validating information related to the mechanism, and then there's also some interest in data related to atopic dermatitis and kappa that makes us think that could be an interesting patient population also, but ultimately I think if the mechanism is broadly applicable, we'd like to see this with a broad label

Okay, great. Thanks, Derek.

Thanks, David.

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

Hi. Thanks for taking my question. I don't know if you answered this earlier, but have you had that FDA Meeting in the fall, and I know you have a breakthrough destination. Did you mention that you were able to gain fast track -- some kind of fast track status from them or are we still waiting to hear about that?

Yeah, now we are not lined up for fast track status in relation to the KORSUVA Injection program, that's not something we're counting on. And I would say, in earlier Annabel, we've really taken the conservative view that we need to follow ICH guidelines here and we've designed the program that way to make sure that when we file, this is a very robust package that goes to the agency with all the appropriate requirements in terms of overall exposures and long-term exposures within it. So we're not counting on fast track exposure, where we would see a benefit with breakthrough and something we're certainly going to apply for would be priority review once we filed the NDA and that's certainly something we're going to be looking for, but at this point, we're not -- we're not counting on fast track status.

Okay. Actually I meant priority [ph] review first. Thanks for clarifying that. But okay -- secondly, I know that you would mention that with the new powering of KALM-2, you're not -- it's really not alpha, it's the beta that you're really aiming for. But I mean, maybe I can ask it a little bit differently. To what level do you think Delta can drop and still reach statistical significance for KALM-2? Maybe you can help -- help us think about it that way.

Well, I don't know if I can have an answer to that. I'm not qualified statistically to give you that answer, Annabel. Let me just say that we powered both trials similarly based on our Phase 2 effect sizes or odds ratio. So they're both powered if you like with the same assumptions within it. And obviously, our assumptions in relation to standard deviation were based on our US Phase 2 and we did apply that both to our US KALM-1 and our global KALM-2. So there might be some differences there that weren't accommodated in those assumptions. But the actual effect size or odds ratio, we've modeled on, we didn't change between the two trials. And again, we said the power threshold at a conservative level, it's not really related to again a statistical difference here. We're increasing the likelihood that we can see a difference. And from that, I really can't derive an alpha value. I'm sure there's some smart statisticians who could based on some of the data, but they all reside in our IDMC. So we don't see any of that data, and so -- so this is really a means to reduce the odds of a mess, if you like.

Okay. All right. And then just on the last question I have is related to the commercial partnership we have with Vifor Fresenius. Are there any other activities that are going on in the background in their side or there any future milestones you might be expecting on some of the clinical data readout that we should be looking forward to? And just correct me, please. I can't remember if they had any opt-in rights for the oral for the CKD population. If you could just clarify that for us please?

Yeah, so Annabel, the last point just to be clear, they have no opt-in rights for the oral, for anything that with hemodialysis patients. So that license is solely based on KORSUVA Injection. So that formulation specifically for hemodialysis patients with CKD-aP. So there is no opt-in rights there in terms of activities between the two companies. You know, we do have ongoing discussion in relation to that, particularly as to how we're going to deal logistically with the co-promotion here in the US where, as you know, we got -- we have a 50-50 split in terms of Fresenius clinics in the US. So that's an ongoing discussion milestones related to development of regulatory. And as we said before, so regulatory milestones, yes, when we get to that point, and then of course commercial sales milestones in the licensed territory, which is -- which is ex-US, Europe predominantly, some other territories, and then sales tiered by -- sales royalties tiered by sales amounts if you like in the licensed territory. So that's -- how that relationship was drafted.

The next set of milestones is around 30 million tied to the regulatory outcomes here? Is it just outcome or a filing?

It's an outcome.

Okay. All right. Great. Thank you.

Our next question comes from Charles Duncan of Cantor Fitzgerald. Your line is open.

Hi. This is Pete Stavropoulos on for Charles. One question I have for Oral KORSUVA in the CKD-aP in dialysis study. You have varying degrees of kidney function which can affect elimination of the drug. Do you anticipate the varying degrees of kidney function make somehow confound the results, both from the safety and efficacy point?

Hey, Pete, that's a great question. It was actually one of the reasons that before we started the Phase 2, we actually ran a PK study, a Phase 1 study, specifically within these pre-dialysis stage 3 to 5 patients. And there, you are correct, there is some degree of variability and kidney function there, but not enough to change our dosing regimen for all of those patients from once a day. It's really a question of the length of the beta phase on the elimination of 845, and you're correct, that's almost totally via the kidney. But we did -- per PK analysis, we really can cover all of those patient types with once a day dosing with Oral KORSUVA.

Thank you.

Thanks, Pete.

And -- you announced an oral presentation at Kidney Week 2019, what kind of [indiscernible] do we anticipate seeing there?

You're going to see a little more detailed KALM-1 data and that will be presented by one of the KALM-1 PIs, Dr. Stephen Fishbein on Friday afternoon at ASN.

All right. Thank you. Congrats on the quarter.

Thanks, Pete.

Our next question comes from Alan Carr of Needham & Company. Your line is open. Q – Unidentified Analyst: Hi, this is Joe [ph] on for Alan. Thanks for taking our questions. So for the Oral KORSUVA Phase 2, what effect size on H-NRS are you -- do you expect to see based on some of the PK -- earlier PK work that you've done, just in terms of number of patients with greater than 3-point improvement in worst itch NRS. Would you sort of expect it to be similar to what was observed in KALM-1 around 50%?

Yeah. Thanks, Joe. I mean, I won't have the -- I don't have the answer for that today, but we will have the answer to that very, very soon in terms of the absolute number there. But again our assumptions on design and the oral Phase 2 trial were really based on data we had from our IV experience within CKD patients. So if you like the effect size, we've modeled that on is related to the IV effects as you're correct in that assumption. And the other comforting aspect of the Phase 2 data set, of course, as you know, we completed our interim conditional power assessment in July of this year, specifically within the Phase 2 trial, and there we didn't increase the sample size to maintain our conservative power to see a difference between the groups. So that makes us feel good that we -- our assumptions based on IV to oral were actually viable and appropriate and we were in the ballpark of high-power, high beta to see a statistical difference. Q – Unidentified Analyst: Great. Thanks. And just as a follow-up. Would you be disclosing Skindex-10 and 5-D Itch data in the top line as well?

Yes, we will. We will certainly have the main primary, obviously, and the main secondary endpoints. Q – Unidentified Analyst: Great. Thank you.

Thanks, Joey. ‘

Our next question comes from Esther Hong of Janney. Your line is open.

Hi. First question, so as we get close to the data from the Phase 2 trial about Oral KORSUVA and non-dialysis patients, and assuming that it's positive and initiation is set to kick off next year of Phase 3, if it is positive, what would a Phase 3 trial design look like?

Thanks, Esther, and that's really going to be based on what we see in our Phase 2 data. And as you know, that Phase 2 is really a dose ranging trial. We have our ideas based on exposure as to which tablet strength should be appropriate, but we really need that empirical data to see what's the most appropriate tablet strength to carry forward into Phase 3. So that's the first question we need to answer from our Phase 2. We're obviously looking for sustainability of effect and that's why we run this Phase 2 is a -- if you can of like a Phase 3 like 12-week treatment period. So we are going to get valuable data there, that's going to establish sustained effect which is important for us. And based on these types of data outputs, and also as far the effect size we see within that trial that will dictate the powering requirements we need, and therefore the sample size to run the Phase 3. So we really need the Phase 2 data, which is not too far and before we think about what the design of the Phase 3 looks like. But in terms of treatment period, it is going to be analogous to what we've just run in our Phase 2 by design.

All right. And then, what can we expect at the World Congress of Itch meeting this month? Maybe just kind of --

You can expect to see some really nice data from us. You are going to see --

More analysis Phase 2 IV study.

You're going to see some analysis on sleep responses from our eight-week Phase 2 study in hemodialysis patients. You're going to see some more quality of life data presented there also in poster format. And as I just discussed with Joe and Pete, the KALM-1 dataset is going to be an oral late-breaker and you're going to see a little more detail from our KALM-1 Phase 3 trial.

Okay, great. Thank you.

Thanks, Esther.

Our next question is a follow-up from Chris Howerton of Jefferies. Your line is open.

Hey, thanks for taking this up [ph]. Just really quick -- I just wanted to follow-up on Annabel's question with respect to the meeting in the fall with the FDA. Was there -- do we have that wrong that there was going to be a meeting and it is not, you know or if there was the meeting, have you had that -- you know what were you hoping to get alignment there. Just maybe a clarification for that or set it straight, I suppose?

Yeah, Chris, I'm not sure what meeting in the fall you're referring to with the respect to change in the status of the application and trying to go for accelerated or some sort of advanced filing mechanism. That's not something we have in mind. We do have communications with the FDA on the logistics of how we're going to file our data and the various modules and those are going along fine and we have all the answers we need in terms of moving forward. But there wasn't a specific meeting related to accelerated approval.

Okay, great. Totally makes sense, I guess, made it up then. I appreciate the clarification. Thanks for the color.

All right, Chris. Thank you.

There are no further questions. I'd like to turn the call back over for any closing remarks.

Okay. So thank you everybody for joining us today. I'd like to thank the Cara team, our study investigators, and most importantly, the patients who participate in our trials for their continued commitment and support and we look forward to updating everybody again very soon. Thank you everybody. Have a good day.

Thank you.

Ladies and gentlemen, this concludes today's call. Thank you again for your participation. You may now disconnect. Have a great day.+