Good afternoon and welcome to Cara Therapeutics First Quarter 2021 Financial Results Conference Call. All participants are now 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 Jack Hildick Smith with Stern Investor Relations and welcome to Cara Therapeutics' first quarter 2021 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 planned and 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 Injection for dialysis-dependent CKD-aP, the expected timeline for conducting meetings with the FDA concerning the company's product candidates including Oral KORSUVA for NDD, and CKD-aP, and AD-aP, the potential for the company's product candidates to be alternatives in the therapeutic areas investigated, the potential impact of COVID-19 on the company's clinical development and regulatory timelines and plans 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 recent Annual Report on Form 10-K 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 date on which they were made. Participating on today's call are Dr. Derek Chalmers Cara President and CEO; and Cara Chief Financial Officer, Thomas Reilly. I will now turn the call over to Dr. Chalmers.

Thank you, Jack. Good afternoon everybody and thanks for joining us on the call this afternoon. We have continued to make very important progress across our KORSUVA development pipeline in the first quarter of 2021 culminating with the FDA acceptance of our first NDA filing for our lead product candidate KORSUVA Injection. With priority review granted, we look forward to our PDUFA deferred target action date of August 23 of this year. Our interactions with the FDA on the NDA review have progressed on schedule and through the completion of our mid-cycle review no advisory committee is planned to date. With our PDUFA date tracking for next quarter, our commercial license agreement with Vifor Pharma in place, we remain focused on preparation for the US launch of KORSUVA Injection in the second half of this year. As a reminder, Cara executed a strategic license agreement with Vifor Pharma in the fourth quarter of last year for the commercialization of KORSUVA Injection at US dialysis clinics. We're confident that Vifor's established US nephrology sales force and relationships with US dialysis organizations, both large and small, will support increased launch momentum and adoption of KORSUVA Injection in the US marketplace. The financial considerations received on entering into the Vifor agreement contribute significantly to the current strength of our balance sheet. Further to the terms of that agreement upon US regulatory approval for KORSUVA Injection, the company will be eligible to receive an additional $50 million common stock investment and then post launch be eligible to receive payments of up to $240 million in sales-based commercial milestones. Turning to ex-US commercialization planning, we were also very pleased to announce in the first quarter that the European Medicines Agency accepted the Marketing Authorization Application for difelikefalin Injection for the treatment of pruritus associated with…

Thank you, Derek. As a reminder, the full financial results for the first quarter 2021 can be found in our press release issued today after the market closed. Cash, cash equivalents and marketable securities at March 31, 2021 totaled $228.3 million compared to $251.5 million at December 31, 2020. The decrease in the balance resulted from cash used in operating activities of $23.7 million, partially offset by proceeds of $0.7 million from the exercise of stock options. For the three months ended March 31, 2021, net loss was $23.3 million or $0.47 per basic and diluted share compared to a net loss of $28.9 million or $0.62 per basic and diluted share for the same period in 2020. Total revenue was $1.9 million for the three months ended March 31, 2021, compared to $8.1 million during the same period of 2020. Revenue of $1.9 million during the three months ended March 31, 2021, related to the milestone payment the company earned from Maruishi Pharmaceutical Company's first initiation of a Phase 3 trial for uremic pruritus in Japan. The company recognized $8 million of revenue during the three months ended March 31, 2020, which related to the license fees earned in connection with the agreement with Vifor Fresenius Medical Care Renal Pharma. Research and development expenses were $19.1 million for the three months ended March 31, 2021, compared to $33.5 million in the same period of 2020. The lower R&D expenses in 2021 were principally due to a decrease in costs associated with clinical trials, partially offset by an increase in payroll costs and an increase in stock compensation expense. General and administrative expenses were $6.4 million for the three months ended March 31, 2021, compared to $4.6 million in the same period of 2020. The higher G&A expenses in 2021 were principally due to an increase in stock compensation expense and payroll costs. Other income net was $0.3 million for the three months ended March 31, 2021, compared to $1 million in the same period of 2020. The decrease in other income was primarily due to a decrease in interest income and a decrease in net accretion income resulting from a lower yield on the company's investments in the 2021 period. Now, turning to our financial guidance. Based on timing expectations and projected costs for current clinical development plans, Cara expects that its existing unrestricted cash and cash equivalents and available for sale marketable securities as of March 31, 2021, will be sufficient to fund our currently anticipating operating expenses and capital expenses into 2023, without giving any in fact any potential milestone payments or potential product revenue under existing collaborations. I will now turn the call back over to the operator for Q&A.

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

Hi, thanks for taking the questions. I guess the first question would be just with respect to the KORSUVA Injection, is there any CMC site inspection or anything like that that we should be aware of that could be potentially getting going into that PDUFA date? And then, the second question was with respect to the oral CKD the trial, just maybe if you could give us a little more color on how we should think about the Stage 5 patient population. Specifically, how does that relate to drug effect and variability and perhaps you could put that in light of the recent atopic dermatitis results as well. So, thanks so much.

Great, thank you, Chris. So on the first question on the site inspection, I do understand there has been an issue for a number of moving PDUFA dates in the last few months, but today we don't have any indication there is any issue in relation to site inspection. So as I said in the summary, we are on track for that PDUFA date of August 23. Yes. And then on the oral CKD and the population moving forward there, so you're correct, so provide us as more well-defined in the later stage CKD patients such as Stage 5 and in fact if you look at the prevalence rates in pre-dialysis Stage 5 patients is very similar to that in hemodialysis patients. So we do see do this as a population that should respond very well to Oral KORSUVA. Furthermore, using that population, we also think that Stage 4 patients should and could be incorporated into that as a viable population for the same program and as we believe these advanced Stage 4 patients are eventually transitioning and to Stage 5 presenting with a higher degree of pruritus. So this patient population looks very similar to HD. We want to understand how that makes sense in terms of referencing the safety database, we've already seen and established with KORSUVA Injection in hemodialysis patients and the advantage of focusing on that populations as the FDA is acknowledging there is the possibility of moving forward with a single Phase 3 trial. So overall, and as you know, it's been a major goal for us to obtain a label for Oral KORSUVA in pre-dialysis patients as expeditiously as we can. Overall, if we focused on that group, it should be possible to have a smaller focused Phase 3 registration program with a single pivotal trial and we should be able to complete that in a shorter timeframe.

Yes, okay.

Does that answer your question, Chris?

Yes, I guess, if I may, maybe just sneak in a follow-up here. So if you wanted to include the earlier stage patients into the program is maybe one idea that you include them in any kind of open-label safety study or would it be more towards efficacy-focused study for those earlier stage patients?

Yes, well, it could be both actually Chris because from a logistical standpoint it's likely we would require a proportion of our patients to be in Stage 4s who are going to be transitioning into Stage 5 just to get a long enough exposure for the long-term safety group there. So it could be both on the efficacy side and the safety side, we're including Stage 4 -- we'd like to include Stage 4 patients. And as I said, we're continue in that discussion with the FDA with the idea that we'd like to see both 4 and 5 in that final Phase 3 program.

Yes, okay. I am very good. Well, thanks so much for taking the questions today.

Thanks, Chris.

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

Hey, thanks. So just a couple. First just on the IV, and I realize this is a partnered product, but can you glean anything or any learnings from the experience of Parsabiv how do you think about Parsabiv, IV KORSUVA? That's number one. Number two is -- last call is -- moderate population -- as you move on -- above 10% or below 10% threshold. And is that something that's pretty standard or something that the FDA will accept as the definition, the threshold for mild-to-moderate. Thanks.

David, I don't know if you're on a cell phone, it was a very terrible line, but I think I got to the gist of both your questions. I'll start with the latter one on the KARE data and our proposal to move forward in the mild to moderate AD population, which is I think what you're asking. And that definition we've used there is indeed a standard definition for the agency, mild to moderate would be BSA of less than 10 and moderate to severe would be 10 or greater, sometimes with the addition of an IGA designation for 2 and 3 being mild to moderate, and then 4 being severe. So that is a standard definition and accepted regulatory defined group, and as you know, we certainly have many drugs out there in Derm that are defined as used in mild to moderate atopic dermatitis patients for that, that is standard. On the first one, I couldn't quite make out everything you said but I think you're asking -- if we can glean anything from the experience with Parsabiv in relation to hemodialysis patients and pricing and the success in terms of uptake of Parsabiv. Look, I think we can and we discussed this before in terms of the differences between the two drugs, Parsabiv being the first to go through TDAPA and that was an post TDAPA reimbursement. Parsabiv was reimbursed at a price of approximately $17,000 a year. It's really an additional calcimimetic drug, there were already oral generic equivalents out there, but this is an IV drug, it's given 3 times a week. If you look at the population where there is parathyroid dysfunction, it's approximately the same size as the population we are addressing with KORSUVA Injection approximately 30% to 40% of the hemodialysis population, there was a very fast adoption, presumably because of ease of use of Parsabiv in its first year, I think that was a drug that come in at around about $300 million in sales, and up to over $0.5 billion in its second year. So we think positioning for us is actually better in that we are first-in-class breakthrough medication for the primary symptom, for hemodialysis patients, there really are no alternatives. So yes, we have looked at that and thought that could be a reasonable surrogate for the potential we could see with KORSUVA Injection in that population. Now, I think that was your question. But if I picked it up wrong David then let me know.

No, that's perfect. And I apologize for the bad connection.

Yes, no problem. Thanks for the question.

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

Hi, everyone. This is Nick on for Annabel. Thanks for taking our questions. Just building on Chris' question about the pre-dialysis population, I guess we kind of expected Stage 4 to 5 patients to mostly beyond hemodialysis at that point. So can you give us a sense of how many patients that's applicable for and were there any data cuts in the Phase 2 that you looked at specifically in this population? And then secondly, can you help us think about the Oral KORSUVA label going forward from this point. So if you use kind of a Stage 5 pre-dialysis population and that goes in the label, will that relatively specific population limit the ability for KORSUVA to get that broad anti-pruritic label? Thank you.

Great, thanks, Nick. And I think that was four questions. Well, let me see if I can remember all of those. But in terms of the pre-dialysis patient population, the prevalence rates for late-stage, that's 4 and 5 patients, is approximately 0.7%, so that's roundabout 2 million patients in the US. Based on diagnostic AD patients, a minority of these would be Stage 5, and the median time a patient would remain end Stage 5 before transitioning to dialysis is a little under one year. So they are in Stage 5 for a significant amount of time. And as you know, there is no approved therapies and it's clearly a significant unmet need. In fact, the rates of pruritus we see in Stage 5 patients and late Stage 4 patients is actually very similar to those we see in hemodialysis patients. So there's a very significant unmet need. And in terms of looking at these particular stages in our Phase 2 data set, we have looked at that and based on our Phase 2 data when we look at an analysis of our NRS change in Stage 3 patients, so that's obviously the earlier Stage 3A and 3B versus the data we're seeing in Stage 4 and 5, we do see a much greater effect size in the later stage patients, perhaps not surprisingly, they have the more severe pruritus, in fact, it's -- on mean NRS change, it's approximately 30 points on late stage subpopulation versus approximately 50% of that in the very early Stage 3 patients. So there certainly is data we've already generated that, that is the most sensitive patient population pre-dialysis. An addition and importantly because as you know, we looked at that quite carefully in our Phase 2 CKD study, the placebo rate is much…

No, I think you hit everything. Thanks for handling all the questions and thanks for the clarity.

Yes, thanks for the questions.

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

Hello, good afternoon. This is Chi [ph] on for Jason. Thanks for taking our questions. I guess maybe the first one is just a follow-up as a clarity, sounds like the FDA has accepted Stage 5 as a viable patient population and you're in discussion to incorporate Stage 4 CKD patients into the Phase 3 program as well. Is Phase 3 sort of out of the question right now based on the commentary? And then a follow-up of that would be -- do I have the understanding correctly or commercially you alluding to that doctors the line between Stage 4 and Stage 5 is pretty blurry in such a way that you think you can get approval in Stage 5 you can now raise doctors taking in Stage 4 patients as well. I guess my second or third question would be, can you talk about how often these patients Stage 5 fluctuate between pre-dialysis and post-dialysis and how should we think about sort of the commercialization of between Oral KORSUVA and an IV KORSUVA in this particular set of population? Thank you.

Okay, thanks. Thanks for the questions, Chi. So in order then, you're correct. So, the FDA has indicated in terms of moving forward with the Phase 3 program, we can certainly do that focused on Stage 5 patients. And again, they've indicated, there is a potential there to use data from our previous trials in dialysis patients to support that approval and that was going to allow us to leverage, as you know, over 1,500 exposures in dialysis patients. And the second major advantage would be approval based on a single Phase 3. So we are in discussions and you're correct, when you look at the incidence of pruritus and degree of pruritus in Stage 4 and 5, it's actually quite similar, and that's going to be part of our discussions with the agency and further defining that patient population, the characteristics there, and that is quite different than the very early Stage 3A and 3B. So at this point in terms of defining the degree of pruritus and how that relates to, if you like, quality of life burden for the patients and there are certainly two distinct, if you like, populations there and our current strategy is to focus on the 4 and 5. So ultimately, we'd like to see both of those stages on the label. It's true the patients transition from particularly late Stage 4 into 5 in a relatively defined manner. And then as I said earlier, patients would remain at Stage 5 pre-dialysis in a median range somewhere around just under 1 year. So there is a significant treatment period there for which Oral KORSUVA would be applicable. Another advantage and looking at commercially of course, as we would be capturing, if you like, these pre-dialysis patients earlier in the treatment cycle and of course as we move to hemodialysis that then be candidates for KORSUVA Injection as they move through the dialysis stage of the disease. So right now, I think we have a defined path forward we can explore in Stage 5. We'd like to further expand that population into Stage 4. It seems to make sense when you look at the characteristics of pruritus in those two stages, and as I said earlier, we have good data from our Phase 2 data set that we understand the placebo there, there is a large effect size and we could have high confidence we should see Oral KORSUVA efficacy in that particular patient group. Did I get everything there, Chi?

Yes, got it. It's very clear, thanks so much. Maybe just one follow-up from me, just a confirmation that the indication in Stage 4 -- Stage 5 and/or Stage 4 CKD pre-dialysis patients, they will be get reimbursed differently, and it will not be part of the CMS bundle or put up payment consideration. Do I have it correct?

You have that correct, Chi. The pre-dialysis CKD patients would not be part of the ESRD bundle.

Awesome. Thanks so much.

Thanks, Chi.

Your next question comes from the line of Joseph Stringer from Needham Company. Your line is now open.

Hi, everyone. Thanks for taking our question, I'll switch up gear and go to PBC pruritus, the Phase 2 readout coming up in the second half here. Yes, maybe help us understand or at least maybe set some expectations around with the data readout here and specifically the PBC patient population as it pertains to the 3-point responder analysis. How similar would you expect maybe placebo response rate there relative to CKD or AD in this trial? Thank you.

Thanks. Thanks, Joey. And thanks for the question on PBC. Of course, I think you remember one of the main reasons we've initiated our Oral KORSUVA trial in that particular patient group is this is a patient group for which that older kappa agonist, nalfurafine, that's approved in Japan has received a label extension. So we have high confidence that the mechanism itself that is kappa agonism should be effective in relation to liver disease related pruritus. The other aspect of going after PBC, it really relates to consistency in the pruritus. So there isn't a great deal of data out there in terms of pruritus trials, there is one set of data from nalfurafine, where it seems as though the placebo is quite well behaved in liver patients, but with this more consistent pruritus we see in PBC up to 70% of patients have moderate to severe, we do expect that placebo rate to be more controlled in that particular group. And the issue with placebo rate seems to relate to the liability in early-stage patients as we saw on CKD fluctuating and that can offset the placebo response and lead to false positive. So we do expect, based on the data that's out there in terms of an older kappa agonist that that placebo response will be much -- much more behaved in a PBC patient. Did I get that Joey or…

Yes. Thanks for taking our question.

Thank you.

Your next question comes from the line of Oren Livnat from H.C. Wainwright. Your line is now open.

Thanks. Can you hear me?

We can hear you, Oren.

Great. Appreciate it. I'm sorry if I'm not fully understanding some of the language you're using, so just maybe you can make it more explicit, with regards to the oral CKD program going forward and the choice of going with Stage 5, was that you said the FDA will allow you to do that or accept that, is that something that you pushed or the FDA requested?

So specifically what we were interested, Oren, when we went there was, the idea that we could leverage our hemodialysis program with KORSUVA Injection. So there, we wanted to access that safety database, we wanted to propose, since we had already established efficacy and hemodialysis patients with two large Phase 3 programs, that we propose that we should have a single registration program to obtain the label. The FDA has indicated that that program should work if it's focused on Stage 5 patients. As I said earlier, we understand Stage 5 looked very similar to hemodialysis patients in terms of the frequency and prevalence of the pruritus and the degree of pruritus and they've also indicated to us they would allow us to use data from our previous trials in dialysis patients and they look at approval based on a single Phase 3 trial. So that was the response from the agency, our response is at Stage 4 patients all really look very similar to Stage 5, the degree of pruritus, the prevalence of pruritus there. So our proposal is and we're in dialog on this and would further define in the characteristics of 4 with a 5 as that program should include both Stage 4 patients and Stage 5. So the agency has acknowledged the strategy for Stage 5, our dialog continues as we want to include Stage 4.

So, if I'm understanding you correctly, the primary -- the imperative was to use IV data tier advantage and they said, sure, if you Stage 5 and you're trying to broaden that a little bit.

Yes, okay. That's correct.

And then, if I could follow up, are we sure that one Phase 3 then if you move forward, let's say in Stage 5 alone, just to keep the conversation simple, would suffice or are there some other variables with regards to drug effect size or safety out of that study that will be down the road, determine whether one or two Phase 3s are necessary, assuming it works statistically.

Well, again, and I think we have a high degree of confidence based on our Phase 2 data, we already have this, if you like, subgroup analysis on late stage 4 or 5 versus Stage 3 is a bigger effect size, placebo was more controlled. So we have high confidence as likely KORSUVA would have significant efficacy in the late stage pre-dialysis patients. So, yes, at the minute, they've acknowledged if we concentrate on Stage 5, there would be a path forward for a single Phase 3 trial. We'd like to expand that to include Stage 4 and that's a dialog that's continuing.

Okay. And if I may, I apologize. Just on dosing in Phase 2 you settled down -- after Phase 2. you settled on the highest 1 milligram dose, that was though including a population across Stage 3 to 5. So if you move forward in Stage 5 or late 4 to 5, how confident are you that you have that 1 milligram is the right dose still given that theoretically is a different average level of impairment -- renal impairment in that population?

Right. So if we look at mean NRS change, which as you know, is the most sensitive endpoint, the continuous endpoint, we consistently use in our Stage 2 dose-ranging, in the later stage patients, the Stage 4 and 5, and I mentioned this earlier, we do see a larger effect size. So the effect size there is in the region of 30 points and in the earlier stage patients that effect size is approximately 50% of that. So we already have good data in hand from our Phase 2 trial that, there is a large effect size with KORSUVA in that late stage population.

But you're also comfortable with the safety profile of that dose?

We are -- we are comfortable with the safety profile.

Okay, great, thanks for the clarifications. I appreciate it.

Thanks, Oren.

Thank you. There are no further questions at this time. Turning over back to you Dr. Derek Chalmers.

Great, thank you, Jerome. So, thank you everybody for participating on the call today. I'd also like to thank. [Call ends abruptly]