Good afternoon and welcome to Cara Therapeutics' Fourth Quarter and Full Year 2020 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 Cara team. Please proceed.

Good afternoon. This is Jack Hildick-Smith with Stern Investor Relations and welcome to Cara Therapeutics' fourth quarter and full year 2020 financial results and update conference call. The news release became 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 data readouts from the company's ongoing clinical trials, the potential results of ongoing clinical trials, timing of future regulatory and development milestones for the company's product candidates, including the company's projected timeline for FDA review, and potential approval and commercial launch of KORSUVA IV, the potential for the company's product candidate to be alternative in the therapeutic areas investigated and the company's 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 most recently filed quarterly report on Form 10-Q and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made in today's call speak only as of the date on which they were made. Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the day on which they were made. Participating in today's call are Dr. Derek Chalmers, Cara President and CEO; and Cara Chief Financial Officer, Thomas Reilly. I'll now turn the call over to Dr. Chalmers.

Thank you, Jack. Good afternoon, everybody. And thanks for joining us on the call this afternoon. So despite the circumstances that we're all painfully aware of, 2020 was certainly a significant and very productive year for Cara, as we advance the late-stage clinical development of our lead product candidate KORSUVA for the treatment of pruritus across a range of patient populations, culminating as we announced today in the recent acceptance and filing of our NDA for KORSUVA Injection for the treatment of pruritus in hemodialysis patients. Thus NDA filing marks a truly significant milestone for our company. And most importantly for the large proportion of hemodialysis patients who suffer from this intractable untreatable pruritus that is so detrimental to their quality of life. And I'd like to thank the entire Cara team, who've worked tirelessly to bring this first-in-class therapeutic from enhanced discovery, through development, to the completion of FDA filing. And we look forward to working with the FDA, throughout the review process. And if granted priority review, potential approval and commercial launch in the second half of this year. Now, with respect to KORSUVA Injection commercial launch, we were also very pleased to execute a strategic license agreement with Vifor Pharma in Q4 of last year, for the commercialization of KORSUVA Injection in U.S. dialysis clinics. We believe that Vifor's established U.S. nephrology sales force and productive relationships with U.S. dialysis organizations will provide a basis for increased launch momentum and adoption of KORSUVA Injection in the U.S. market. And I'll cover the details for that arrangement in a little bit. Lastly, we also expanded our Oral KORSUVA clinical development program with the initiation of a 4th Phase 2 trial in patients suffering from neuropathic related pruritus, specifically Notalgia Paresthetica patients. Evaluating the ability to treat pruritus of…

Thank you, Derek. As a reminder, the full financial results for the fourth quarter and full year 2020 can be found in our press release issued today after the market closed. For the fourth quarter of 2020, we reported a net income of $78.9 million or $1.60 per basic share, and $1.59 per diluted share, compared to a net loss of $28.6 million or $0.61 per basic and diluted share for the same quarter of 2019. In the fourth quarter of 2020, we recognized revenue of $112.1 million, of which $111.6 million related to the 2020 license agreement with Vifor and $0.5 million related to the license agreement with Vifor Fresenius. This compares to $4.5 million of license and milestone revenue during the fourth quarter of 2019, which related to the license agreement with this Vifor Fresenius. Research and development expenses were $27.1 million in the fourth quarter of 2020 compared to $29.9 million in the same period of 2019. The lower R&D expenses in 2020 were principally due to a net decrease in costs associated with clinical trials and travel costs, partially offset by $2.5 million milestone payment made in connection with a license agreement with Enteris, increase in payroll and related costs, and increases in stock compensation expense. General and administrative expenses were $6.7 million in the fourth quarter of 2020, compared to $4.6 million in the same period of 2019. The higher G&A expenses in 2020 were principally due to increases in payroll and related costs, commercial costs and insurance costs. Other income was $0.4 million in the fourth quarter of 2020, compared to $1.2 million in the same period of 2019. The decrease in other income was primarily due to a decrease in interest income, resulting from a lower yield on our portfolio investments in the…

[Operator Instructions] We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of David Amsellem from Piper Sandler. Your line is open. Mr. David Amsellem, your line is open.

We can move on. It's obvious, David has a problem there. Maybe he solves that, we go back then.

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

Hey, everyone. This is Avatar on for Annabel today. A couple of questions from us. Firstly, with the NDA filing for IV KORSUVA accepted in February, when do you expect to know whether the drug is granted priority review? And secondly, are you able to provide an update on progress made by Vifor on TDAPA reimbursement discussions? And does the fact that there are numerous renal drugs seeking TDAPA inclusion make these discussions any more difficult?

Okay, hi, Avatar, thanks for that. Yes, so on the first question on the NDA, so we had confirmation from the FDA this week electronically that the NDA was accepted and filed. But within that confirmation for filing, the FDA also indicated that the official filing letter was still in process. So that was in process, we've not yet received that letter. And therefore, we don't yet have information on priority review or indeed the PDUFA date. So we expect that letter to arrive soon. But the FDA being the FDA, there's no prediction on timing yet, unfortunately. On the reimbursement question, of course, you're aware that TDAPA reimbursement is not discretionary. We qualified for TDAPA reimbursement by meeting the criteria that are legislatively defined in the ESRD legislation. So we're a Class 1 NDA, we're approved after January 2020 and we're going to be using the dialysis setting, so that we're very confident upon. And we have a good team at Cara, who continues to lead our interactions with CMS, and discussions not only related to TDAPA, but reimbursement beyond TDAPA. Now we started to include our partner there in those discussions, and they will have useful input as we progress those discussions. But TDAPA is something we qualify for and we'll be applying for that after we get approval of KORSUVA injection.

And does sort of desire for many companies to be included in TDAPA sort of complicate those discussions or timelines at all?

Well, I don't think so. The way the legislation was defined was to encourage innovation for hemodialysis patients and if those companies' compounds meet those criteria for an innovative compound for the treatment of hemodialysis patients, then they would qualify for TDAPA.

Got it.

Okay, Avatar.

Thank you, Derek.

Thank you too.

Your next question comes from the line of Christopher Howerton from Jefferies. Your line is open.

Hi, everyone. This is Brian Mills on for Chris here. So I have 2 questions. The first one is, if you could speak a little bit about the dosing decisions in the CKD, AD and neuropathic pain studies, and whether this corresponds to any differences in disease severity. So specifically, we're interested in what led to your decision to choose 2 milligrams versus 1 milligram twice daily in then neuropathic pain study. The second question would be around, if there's any relevant differences in the characteristics or underlying biology resulting in pruritus in the CKD and AD populations? And what the key supportive evidence is, that gives you confidence for success in AD? Thanks so much.

Yeah, thanks, Brian. The dosing question is actually really related to PK and availability of the drug. So for the CKD studies, oral studies, as you know, KORSUVA is eliminated almost entirely via the kidney. And so, we looked at the PK exposures, and specifically Stage 3 to 5 CKD patients to define what tablet strength and frequency of dosing would match the AUCs, we know were highly efficacious from our IV studies. And that's why we come up with the dose of 1 milligram qd for the CKD patients. When we move to atopic derm there, those patients, of course, have normal kidney function. And so to meet, and again, we look to the PK in normal individuals and to match that desired AUC, there we needed to get twice-a-day dosing at the 1 milligram level. So that was the rationale, really on those 2 studies. On the notalgia paresthetica, we really view this as a proof-of-concept trial. And we know particularly in preclinical models, looking at neuropathic pain, different modality, but actually same system in terms of peripheral nerve transmission via the DRG that we require slightly higher drug dosage in those neuropathic type models. And so that was partially the rationale behind pushing up the doors there when we look at neuropathic related pruritus. And, also, as a proof-of-concept trial, we'd rather use a higher dose and see what level of efficacy we can achieve their single dose. And as you know, we've dosed this drug up to 10 milligrams a day orally with no safety concerns. So it's well within the range we've used before. And then you're going to, your second 30,000-foot question on mechanism, we've indicated this a few times, I think, when we look at the mechanism for KORSUVA, actually related to activation of kappa receptors directly on the C fibers and the epidermis and dermal, the relay of the pruritus. That mechanism is really agnostic to the initiating pathology. So whether that's a CKD and organ disease, and we know the cytokine profile there, and it's certainly different in the dermatological inflammatory state that really shouldn't make a difference based on our mechanism of action to efficacy. And that's certainly something we've seen in preclinical models of various pathologies. And we've took this drug all the way to transgenic models associated with, for example, atopic dermatitis and showing good efficacy and those validated predictive models. So we have high confidence in the mechanism there, we should really be agnostic to the initiating pathophysiology. But we don't - the good news, Brian, as we don't have too long to wait to actually get the answer on that empirically. So that's upcoming, and we're looking forward to that.

Great. That's helpful. Thank you.

Thanks, Brian.

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

Hi, guys. Thanks for taking my questions. Yeah, I guess, they're just kind of curious to get your thoughts, Amgen's update on Parsabiv kind coming out of the TDAPA space guiding to, I think, a 40% or 50% year-over-year decline in revenue. Is this how investors should be thinking about sort of drugs coming out of this TDAPA space, where there's maybe a better price point, just kind of trying to reconcile that versus the Cara consensus where there's growth in year 3 and year 4 of the launch? But just wondering, how to think about that price reset dynamic that we've talked about in the past. And then second question is just curious about thinking about the Parsabiv launch a little bit more closely, wondering if you have any perspective on why the uptake was low with large dialysis organizations versus small dialysis organizations. Is there a concern amongst the LDOs, that once you start using these medications, it's difficult to kind of pull back in the copay component? This could be something that the LDOs typically absorbed. So wondering, if you can comment on those 2 dynamics that we start to think about commercial here? Thanks.

Yeah. Thanks. Thanks, Jason. I think the first thing to see right up front that you're well aware of Jason, that Parsabiv was an entirely different class here, and directed at an entirely different issue associated with dialysis patients, for which there are existing alternatives already out there, and [couldn't just on drugs and so far] [ph]. So I think that has a lot to do with the point you're raising on revenue decline, as the availability of a number of alternatives out there that are quite frankly much cheaper than Parsabiv was, that will not be the case with KORSUVA, as you know, we're a breakthrough drug. We're really going to be the first drug approved for CKD pruritus. And there are no alternatives for efficacious, certainly nothing we've seen very effective in an RCT in that patient population. So I think, it's quite a bit of apples and oranges there in terms of Parsabiv change for TDAPA. Your question related to the views of LDOs versus the more midsize and independent dialysis organizations. Again, I think, Parsabiv might be specific - has specific issues related to those, I can't really speak to the smaller organizations, we don't really have their view, but as you know, we've worked with Fresenius for a couple of years, and we know the enthusiasm that they've relayed, and the need for this therapeutic for their patients. And as you know, they're all striving as part of their assessment on reimbursement to improve patient standard of care. And they see this as a huge unmet need, and they're very keen to get involved and moving this drug along. So, that doesn't answer the question to the independence and the differentiation there with Parsabiv. But we know from our experience with a large dialysis organization. They're very keen to get in with KORSUVA and use the drug. And of course, they have their own databases related to prevalence of pruritus within their patients.

Okay, great. Thanks so much for the useful insights.

Great. Thanks, Jason. Thanks for the questions.

[Operator Instructions] Your next question comes from the line of Joseph Stringer from Needham & Company. Your line is open.

Hi, everyone, thanks for taking our question. I was wondering if you could detail there the - where Oral KORSUVA or atopic dermatitis, where do you see that fitting into the current treatment paradigm? And then, as a follow up for the upcoming Phase 2 readout, is it fair to think about comparisons to some of the Phase 2 data from the oral JAK in terms of itch NRS reduction and also a 4-point improvement in Itch NRS response rates? Thank you.

Great. Thanks, Joe, and congrats on the new position at Needham. Yeah, so when we think about atopic dermatitis, of course, provided this is the defining symptom for that disorder. And that level of pruritus, high level of pruritus occurs really regardless of the degree of pathophysiology there. So we can recruit and have done in our clinical trials, patients with very high levels of pruritus is only qualifying this moderate-to-severe whether they have mild-to-moderate pathology associated with their atopic dermatitis or indeed moderate-to-severe pathology. So this is a primary symptom across the whole spectrum of atopic dermatitis. Today's therapeutics for the mild-to-moderate are really confined to topical medications. And the medication has been developed in the atopic that are beyond topical. Of course, we have difelikefalin approved as a IL-4, IL-13 biologic, and we have the JAK inhibitors, as you indicate coming through are really targeting the moderate-to-severe pathology, that's their niche, that's where they're going to be reimbursed. And that's where dermatologists are most likely to be willing to use those and accommodate the associated safety risks that are going to issue from both biologics and particularly JAKs. So those molecules coming through are really focused on about 20%, roughly, of the U.S. atopic dermatitis population. KORSUVA, on the other hand, we see positioned has been broadly applicable from mild-to-severe pathology, so it's a much broader applicability. And, frankly, we see it particularly in the mild-to-moderate population has been a candidate for first line therapy. There may be after some topical usage or in combination with the topical. In the moderate-to-severe range, again, I think it could be monotherapy for those patients. And also, theoretically combined with any other modalities, biologics or JAKs, for the more severe patients, and as you know, we've talked about a number of…

Yeah, that's great. Thanks for the detail.

Thanks for the question.

Your next question comes from the line of David Amsellem from Piper Sandler. Your line is open.

Thanks. And sorry for my audio issues earlier, thanks for fitting me in. So wanted to dig more deeply into the atopic derm study, and just - first question is, just remind us about the extent to which patients are not allowed to be on any background medications, whether they're topicals or systemic, and just talk about that as part of the inclusion, exclusion criteria? And then secondly, to the extent that you have favorable data and that you do move into Phase 3, just talk through that same topic, whether you expect you're going to have to include patients with some form of background medications as a form in sort of a real-world design, if you will. And then, secondly, just more broadly on a Phase 3 program in atopic term. Is it safe to assume that's going to be sort of 2 identically designed Phase 3 trials? Are you going to have to do more long-term safety work? And just help us understand just sort of the rough contours of what you think you're going to need to do there. Thanks.

Yeah, thanks. Thanks, David. I guess I'm glad you're back on the line. So in terms of the Phase 3 design, I'm hesitant to go too far into that. As you know, we haven't yet had an end of Phase 2. And we're awaiting our readout from our dose ranging trial. We have started to think about that and prepare for that. And we do see that as a normal Phase 3 program for a chronic use drug and we are planning 2 simultaneous U.S. trials. I can't tell you the ultimate size of those, because I need my Phase 2 data to look at effect size there. But that's our thoughts and exposures that would be in line with ICH guidelines for chronic-use medication. At this point, we're not - again, I don't want to get into promising not to do something or [indiscernible] for guessing with the FDA. But at this point, we're not planning on extensive trials, including co-administration of other medications. And that might be something that comes up particularly with topicals. But at this point, we're not particularly planning on that. And then, I guess, the easier question for your first - answer for your first question on the Phase 2 design, yeah, we watch and have watched these patients that evolve medications as an entry criteria into the Phase 2 trial. So that's really as a pure monotherapy trial with no influence of background medications there. And if anyone did take systemic [risk there] [ph], they would be dropped from the efficacy calculation for that trial. So that is going to be a pure trial with no co-medications there for the patient.

Okay, great. Thank you.

Thanks, David.

Your next question comes from the line of Ben Shim from Canaccord. Your line is open.

Hi, thanks for taking my questions and for all the details on the clinical development. I just have a quick question. And maybe you may not be able to answer this. But what is your sense of vaccine uptake amongst trial center employees, personnel and maybe prospective of Oral KORSUVA trial patients or even currently enrolled ones? I'm just wondering if the increased supply that's expected to come on board over the next few weeks could be a tailwind for your expectations on enrollments.

Thanks, Ben. I think you're right, on your assumption that I'm not sure I can answer that question for you. I am not even sure we've looked at that particular metric in our clinical trials. So I really don't know what the vaccine uptake is at this point in our trials. It may be something we learn at the end of the day for our ongoing trials, but I really don't have any data on that metric right now.

Okay. Maybe a question for Tom. Looking forward to commercialization, what level of visibility will we have on the underlying IV KORSUVA sales, both U.S. and ex-U.S.? I understand that we're going to be seeing profit share, revenue reported in the top-line. I'm just wondering if there's going to be other confirmatory data available.

Sure. Thanks, Ben. So as Vifor will be recognizing the top-line revenue on their side, so net sales will be recorded on their books. So there'll be visibility on that end. And correspondingly, based off the profit share that we receive back, that will be recognized as revenue on our end. So there'll be visibility into the revenues based for that mechanism.

Okay, great. Thank you very much.

You're welcome.

[Operator Instructions] There are no more questions at this time. Turning the call back over to Dr. Derek Chalmers.

Okay, thank you. Thank you, everybody, for participating in the call today. I'd also again like to thank the Cara team, our study investigators and all the patients who continue to participate in our ongoing clinical trials and we look forward to updating you again very soon. Thank you very much and have a good night.

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