Good afternoon and welcome to the Cara Therapeutics Second Quarter 2021 Financial Results Conference Call. All participants are now in a listen-only mode. [Operator Instructions] 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 Cole Herlitz-Ferguson with Stern Investor Relations and welcome to Cara Therapeutics’ second 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 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 or furnished to the Securities and Exchange Commission. All forward-looking statements made in today’s call speak only as of the date in 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’s President and CEO; and Mr. Thomas Reilly, Cara’s Chief Financial Officer. I’ll now turn the call over to Dr. Chalmers.

Okay. Thank you Cole, and good afternoon everybody and thanks for joining us today on the call. We have continued to make significant progress across our KORSUVA development pipeline in the second quarter of this year with our NDA for our lead product candidate KORSUVA Injection for the treatment of moderate-to-severe pruritus and hemodialysis patients under priority review. Our interactions with the FDA have progressed efficiently and on schedule and through the completion of our late-cycle review, we remain on track for an expected PDUFA target action date of August 23 of this year. In addition, we continue to make important progress across our Oral KORSUVA pipeline programs. To that end in Q2 of this year, we reported top line results from our Phase 2 KARE dose ranging clinical trial of Oral KORSUVA for the treatment of moderate-to-severe pruritus in atopic dermatitis patients. Based on pre-specified analysis of that data set, we’ve identified the appropriate patient population and dose strengths to move forward and depending the outcome of discussions with the FDA later this quarter and to initiate a Phase 3 registration program in mild-to-moderate atopic dermatitis patients by year-end. We also plan to meet with the agency in the coming months to discuss the appropriate pre-dialysis CKD patient population to move forward to Phase 3 in that program. And we continue to enroll patients in our ongoing trials in both PBC and notalgia paresthetica with the aim of establishing KORSUVA’s efficacy across a range of patient pathologies for treatment of chronic pruritus remains a significant unmet need. So, the remainder of 2021 is shaping up to be truly transformative for the company with the potential approval and commercial launch of the first therapy for the treatment of pruritus and hemodialysis patients and potential advancement of Oral KORSUVA into registration…

Thank you, Derek. As a reminder, the full financial results for the second quarter 2021 can be found in our press release issued today after the market closed. Cash, cash equivalents, and marketable securities as of June 30, 2021 totaled $207.4 million, compared to $251.5 million at December 31, 2020. The decrease in the balance primarily resulted from cash used in operating activities of $44.7 million, partially offset by proceeds of $1 million from the exercise of stock options. For the second quarter 2021, net loss was $30.7 million, or $0.61 per basic and diluted share, compared to a net loss of $25.1 million or $0.54 per basic and diluted share for the same period in 2020. There was no revenue for the three months ended June 30, 2021. This compared to the $5.6 million during the same period of 2020. The company recognized 5.1 million of license and milestone revenue during the second quarter of 2020, 4.5 million of which related to our license agreement with VFMCRP and 0.6 million of which related to achievement of the development milestone related to our license agreement with CKD Pharmaceutical Corp. The company also recognized $0.5 million of clinical compound revenue in the second quarter of 2020 to Maruishi Pharmaceutical Company and VFMCRP. Research and development expenses were $25.2 million for the three months ended June 30, 2021, compared to $26.1 million in the same period of 2020. The lower R&D expenses in 2021 were principally due to a net decrease in costs associated with clinical trials and stock compensation expense, partially offset by a $10 million milestone earned by Enteris Biopharma during the three months ended June 30, 2021. General and administrative expenses were $5.7 million for the three months ended June 30, 2021. This compared to $5.4 million in the same period of 2020. The higher G&A expenses in 2021 were principally due to an increase in payroll costs, commercial costs, and legal fees, partially offset by a decrease in stock compensation expense. Other income net was [0.1 million] for the three months ended June 30, 2021 compared to 0.6 million in the same period of 2020. The decrease in other income net was primarily due to a decrease in interest income resulting from a lower yield on the company’s portfolio of investments in the 2021 period. Now, turning to our finance guidance, based on timing, expectation, 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 June 30, 2021 will be sufficient to fund our currently anticipated operating expenses and capital expenditures into 2023 without giving effect to 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.

Thank you. [Operator Instructions] We have your first question from Jessica Fye with J.P. Morgan. Your line is open.

Thank you for the questions. Firstly, can you talk about the timing for the recently announced API supply agreement with PPL, is this typical this close with a PDUFA and does it affect the NDA in any way?

Yes. Hi, thanks. Thanks for the question. No, it's a standard commercial API supply agreement, does not affect the PDUFA date or review of the NDA in any way whatsoever.

Okay. And for the Oral program in non-dialysis setting, when do you expect to initiate the Phase 3 program? Would you wait for the FDA decision for inclusion of earlier stage patients in the trial or will you start irrespective of that?

No. So, presently, we're gathering both patient data and, you know, we have physician research underway in relation to incidence and severity of providers in pre-dialysis CKD patients. And once we've gathered that information fully, our plan is to engage with the FDA probably in Q4 of this year, to get an agreement on a viable, pre dialysis CKD population for inclusion in that Phase 3 program, So, it’s likely that that would initiate early in 2022.

Got it. Thank you.

Thank you very much.

We have your next question from Chris Howerton with Jefferies. Your line is open.

Great. Congratulations. Very exciting times for Cara. Thanks for taking the questions. I guess…

Thank you, Chris.

Yeah, of course. So, for the – I guess for the – maybe following up on the added criteria for the Oral CKD program was it the sense that the FDA did not feel like there was unmet need in less severe patients in Stage 5 or was it, you know, simply the case where there was insufficient information and make that kind of judgment call? I guess is one question. And then the second question I had Derek was related to the atopic dermatitis program. I think, I feel like you described this last time, but if you could just remind us what it is that you'd like to align with the FDA with respect to that program? Is there something you know, in addition to what you've described to us here in terms of going after the mild-to-moderate and the dose ranges that you believe to be active?

Right, Thanks, Chris. Let's start with your CKD question. I feel it's the latter of your two options in relation to the FDA. There's a lack of information presently in relation to pruritus incidence and the severity of that in earlier stage CKD patients relatively speaking towards in relation to Stage 5, which is obviously the final stage prior to hemodialysis. So, with that in mind, our view has been, we are empirically developing that information in collaboration with the National Kidney Foundation, we're running patient research, we're also running physician research, and we aim to get if you like, more recent or more up-to-date information we can use there to define the breadth of the pruritus issue in the pre-dialysis CKD population that we can then use as a basis for a discussion with the FDA in relation to where we define that population for inclusion in a Phase 3. So, it's really filling the gap in terms of lack of available information, if you like, real-time in those earlier populations that we have underway. So that's the progress there. And as I said, we aim to have that meeting with the FDA in the coming months to define that. In terms of AD, I'm not quite sure what you're getting out there. Our view on the AD program as we're looking for a label to treat moderate-to-severe pruritus, specifically within mild-to-moderate AD patients that are need of systemic anti-pruritic therapy. And our view there is that based on our Phase 2 data we certainly see an appropriate profile for monotherapy that we can significantly reduce pruritus as a rapid onset. We have a very attractive safety profile for the drug. And so, that's the basis of our – end of Phase 2 briefing book and we'd like to see that program progress with the agents.

Got it. Okay. So, it's simply – got it, okay. Alignment on trial design in the final regulatory path?

Exactly, exactly. You know how that goes.

Okay. Always crystal clear. I guess, maybe if you wouldn't mind, just a quick follow-up to maybe my previous question. Is there – do you have – what have you disclosed about your view of the epidemiology of the Stage 5 patients that would experience moderate-to-severe pruritus?

Well, based on the data as I said, there is some published did out there you could find Chris. There's a DOPS analysis, two DOPS surveys looking at severity and frequency in pre-hemodialysis CKD patients and they're certainly clear of the severity of the pruritus increases with the severity of CKD disease. What we are looking at and beginning to see in our analysis is a somewhat similar frequency in Stage 4 and Stage 5, particularly later Stage 4. And as you know the dividing lines between those are somewhat arbitrary. It seems clear that physicians really regard the patient in terms of late-stage versus earlier around these defined threshold versus EGFR definitions. And from their analysis, and their feedback it's clear that they regard pruritus as a significant issue in late stage pre-dialysis CKD patients. So, we're just trying to put some parameters around that population so we can define that more accurately and then talk to the agency again on what should be included.

Okay. No, that's very clear. I appreciate the added color. Okay, well thanks Derek. Appreciate you answering the questions.

Thank you. Thanks for the questions.

We have your next question from David Amsellem with Piper Sandler. Your line is open.

Hey, thanks. Just a few. So first on AD, I apologize if I missed this, but is the FDA on board with the definition of mild-to-moderate per the body surface area being under 10%? I mean, is that something where there could be potential for daylight between you and the agency just – given me a refresher on that in terms of the mild-to-moderate definition? That's number one. Number two is in liver disease, I guess the question here broadly is to the extent that you do show signal in Phase 2, how wide of a population would you assess in a Phase 3 program? Would it be Primary Biliary Cholangitis or something more broadly in patients with hepatic impairment? And then thirdly in notalgia paresthetica, just I guess maybe getting [an excuse here], but to the extent that you have a signal in that study – what does a Phase 3 program look like? Do you have to run two identical Phase 3 studies? I realize it's new indications. So maybe just help us understand how you would think about that to the extent you move forward? Thanks.

Yeah, thanks David. Three for you. That was well played. So, on AD, yeah, the definition mild-to-moderate, BSA less than 10% is pretty much standard. On that they may add some IGA criteria to that, but that's a standard definition for mild-to-moderate disease based on the extent of lesions in those patients. I don't think that's contentious based on what we see on other labels out there. And as you know, it's a standard regulatory path label-specific for mild-to-moderate patients. That's not anything new for the agency. So, that's that one. On liver disease, now PBC and I think we've had that discussion before – generally, the reason – you're entirely correct that pruritus is broadly an issue across cholestatic liver diseases and a number of other liver related disorders. And the reason we went for PBC initially is the incidents there and the severity is certainly higher than in other liver diseases, close to 70% there. So that we regarded as an important parameter for enrolling patients that we wanted consistency in a pruritus. We've lived this game long enough and patient reported outcome and one of the issues in control and placebo rates here is not the inconsistency and your pruritus response. So that was the reason to use PBC as of course an orphan indication, and that's somewhat better – is a little bit and that is much more difficult to recruit and there are certain centers we'd like to get in there, which have been difficult to get to because of the COVID restrictions and that's a pity. But I think if we can push on here, we're going to see an uptick in our patients there soon. And of course we have high confidence in the mechanism for kappa and that particular disease situations since…

No, no, no, I'm here. I'm sorry, yeah, I was on mute. But yes, no, that was very helpful.

Okay. Thanks, David. Thanks for your questions.

[Operator Instructions] We have your next question from Jason Gerberry with Bank of America. Your line is open.

Hi guys. Thank you for taking my questions. I guess first question is, Derek, how do you envision the ramp of a drug like IV KORSUVA going in the first six months to a year in the dialysis setting? Sort of curious as you looked at other products in the setting like Parsabiv just sort of curious if you see a faster ramp or more cautious early slow trialing and then, sort of a build up after the first 12 months? Just sort of curious, and I guess that had some implications for how the bundle could ultimately reset depending upon utilization and cost? And then my other question, there is some curiosity in the investment community about the potential impact of, I guess super responders within the KALM trials in lieu of the [indiscernible] outcome and some other unfavorable FDA outcomes in the space. So, just curious if you can address that in your comfort level around those dynamics? Thanks.

Thanks, Jason. Thanks for dialing in. So, in terms of ramping KORSUVA Injection, I think we've had this kind of general discussion before. But it is an unusual market highly consolidated in the U.S. as you know with the vast majority of hemodialysis patients covered by two dialysis organizations, one of which we are aligned with and our corporate alliances [Vifor Fresenius] the other being DaVita. So some 80% of U.S. trials are concentrated within those two dialysis organizations and clearly utility of the drug there and protocol adoption of the drug there is highly important to success ultimately, which is one of the reasons we decided to sign our initial agreement with Vifor Fresenius. And as you know and recall from that – part of that agreement as we have a 50/50 profit split within Fresenius clinics. And you're correct, looking at other drugs that have launched recently in that space, Parsabiv, of course been the only example of a drug through TDAPA. There is a rapid adoption there and we do see significant uptick in the first year and certainly two years. And as you know, that's important for any drug in that space is that's where we want to assess utility for future reimbursement post TDAPA. So, looking at, if you like, Vifor's track record here with drugs such as Mircera in that space, they've certainly had great success with rapid uptake and I do think the uptake curve in this particular market space is going to look different than a standard PCP space. We do anticipate a faster ramp with KORSUVA Injection, but good question, yet unusual market dynamics there. Then in terms of the dataset we've used in our NDA for efficacy confirmation, we're very comfortable with that and certainly based on the interactions we've had with the FDA through now our late-cycle meeting, I don't think we're going to have any issues in relation to the dataset we've used there from both KALM-1 and KALM-2 for that submission.

Okay, thank you.

Thanks, Jason.

We have your next question from Jack Padovano with Stifel. Your line is open.

Hi, this is Jack. I'm calling in for Annabel Samimy. Thank you for taking our question. So, a few things related to the PDUFA date for IV KORSUVA set this month; what types of commercial activities are your partners pursuing at this time to prep for launch? And what priority will Vifor be positioning this in their portfolio? And what work has been done ahead of time of the PDUFA to file for the TDAPA payment from CMS? Is that something that can be done ahead of approval or not? And additionally, just for some clarification with the Phase 3 AD trial, what kind of options do you expect to propose to the FDA as far as design adjustments outside of just tailoring to the mild-to-moderate population? Do you feel like there are other modifications you can make to improve the statistics?

Great, Jack. Thanks for the questions. Thanks for dialing in. So, let me – I think I got all of those, but let me start with the PDUFA. So, I think as I said on the call, we still expect PDUFA August 23. In terms of preparing for commercialization, as I said on the call, we will be assuming approval on August 23. We will actually be filing both our TDAPA and HCPCS applications the following month. So, all that is in preparation of approval and will be underway that month. In terms of other commercial prep with Vifor and in combination with Vifor, they'll be launching disease state awareness this quarter and actually into Q4 ahead of reimbursement. We are constantly talking with CMS in terms of reimbursement post TDAPA and that's been very productive and will continue. Vifor is working with large dialysis organizations, of course, some of them, they are very intimately related to and midsize dialysis organizations on optimizing formulary and protocol placement once we get KORSUVA Injection approval. You will see launch activities at the upcoming ASN Annual Meeting in November related to KORSUVA Injection and I certainly know that Vifor has rep training well underway and are planning for a launch meeting in January of 2022. So, all of that has been ongoing. Of course, prior to that, we had disease education directed from both the Cara MSL team and the Vifor MSL team, so all that has been underway and continues to be underway in preparation for commercial launch. And then I think that covers your questions on KORSUVA Injection Jack, but correct me if I'm wrong. And then your last question was Phase 3 trial design and how we see position of that within the patient population. And our view there and again is based on empirical data. And as I've said in our and our prepared remarks, we had known this was a heterogeneous population when we initiated that Phase 2 trial. We pre-specified we were going to look at efficacy both in mild-to-moderate patients, which obviously have a different pathological presentation and actually different systemic immune profile than moderate-to-severe patients and it's clear that we have a drug that shows its greatest efficacy in the mild-to-moderate population. So, we'll also be presenting more data from that study a little later this year, which I think will help you in thinking about this, Jack, in terms of other endpoints, both quality of life and pathology endpoints that will be presented there. But we think we are very confident and where we think this drug works best and that's in the mild-to-moderate patient population, which as you know is a defined patient population for labeling for the FDA. So, that's the positioning we're going to propose when we meet with the agency.

Great, thank you so much. That was very helpful.

Thank you, Jack.

[Operator Instructions] We have your next question from Oren Livnat with H.C. Wainwright. Your line is open.

Hi, I have a couple of questions around the Oral CKD pre-dialysis program. Can you just clear up some confusion I'm having on the Stage 5 versus earlier stage Phase 3 plan? I thought I recalled from last quarter that it was mainly an issue of how streamlined a program you could get away with, with regards to using IV KORSUVA safety data and the FDA essentially saying, by all means, you can go ahead and do that. But if you want to do that, you need to stick with Stage 5 and then you were going to try to convince them Stage 4 makes sense also because Stage 4 and 5 really are the same patient theoretically. Now, I'm hearing a little bit about incidents and disease burden questions. I'm wondering if these are part and parcel of the same issue or if I'm misunderstanding. And then just also on that same program, can you just remind us what have you told us that I might be forgetting about the Phase 2 program in terms of the population in that study. How much of that population was Stage 5 or Stage 4 to 5 and what differential efficacy did you see in that Phase 2? Thanks.

Thanks Oren and thanks for the question. So, yeah, no, you're not misunderstanding on the Stage 5 and Stage 4 information we talked about last time. So, the view or the data we talked about last time was it's clear that Stage 5 is very similar to hemodialysis patients actually based on published data out there and epidemiology data. What's not so clear and what we think is going to become clear as we're looking at data that's emerging from our studies is that Stage 4, particularly late Stage 4 patients are very similar to Stage 5. In fact people don't spend a lot of time in Stage 5. A lot of Stage 4 patients may actually progress straight to hemodialysis. So, we want to just firm that up, make sure we have all the statistics related to pruritus severity incidents in both Stage 4 and Stage 5. In other words, confirm that both Stage 4 and 5 are very similar to hemodialysis patients, which is the argument we've made initially and therefore the same if you like recommendation should apply that we should be able to reference all the data we generated with KORSUVA Injection in hemodialysis patients. As you know, we have a significant number of safety exposures there, really exposure levels that exceed those we see with Oral. And also maybe a possibility of reference in the efficacy data related to both late Stage 4 and Stage 5. That's the exercise we have underway right now is gathering that information and then reengaging with the agency in the coming months to present that data and indicate that, really, yes, it's true that late Stage and Stage 5 look very similar to hemodialysis, but so based on the data we're generating so do late Stage 4 patients and therefore it would make sense to include them in any Phase 3 program and I think we talked about this last time and really from a logistical standpoint to run that Phase 3 program across an efficacy period only with Stage 5 would risk losing very many patients to hemodialysis. So that's another part of the debate or discussion we'll be having with the FDA once we have that dataset. And then I've forgotten what your second question was, Oren.

Yeah, the second question was just, if you could remind us, I can't remember if you've told us before and I just forgot in the Oral pre-CKD the Stage 3 to 5 Phase 2, what was the representation in that study and what efficacy did you see across the difference studies?

Yeah. So, you're right, that was a trial that encompassed all pre-dialysis CKD subgroups from 3A through 3B, 4 and 5. Approximately 50% of the patients in that study were 3A and 3B, but as you know the majority of patients are there in the population. And then, the rest was Stage 4 and Stage 5. In terms of efficacy, that is KORSUVA response is somewhat similar across these stages in terms of drug response. What differs between the early stage and the late stage is that we see a higher placebo rate in early stage CKD patients versus Stage 4 and Stage 5. And that's probably because those early stage patients have more labile pruritus response earlier in the disease process. They don't have consistent a response. So, one benefit, if you like for us moving into Phase 3 and de-risking that Phase 3 program because as you're well aware, one of the main issues with patient reported outcomes is controlling that placebo rate. Moving to Stage 4 and 5 is actually going to be beneficial for us in our late-stage program and that we should be minimizing aberrant placebo responses by focusing on the patient group, subgroups that have the highest and most consistent pruritic responses.

Okay. And I apologize, if I could just get clarification on your previous answer about determining how similar Stage 4 and 5 pre-dialysis patients are to dialysis, do you mean in terms of their perception and severity of their pruritus or do you mean in terms of the actual pathology and the health of those patients so that for relevance in terms of mechanism of action from the IV study and whether we should apply to the same?

Yeah. No, it's actually a bit of both, but we are most interested in the pruritus severity and incidents between those two groups. And as you know, as a continuum for these patients so when we look at the data that's out there and the data we are generating it's certainly clear that very late Stage 4 are very similar to Stage 5. And as you know that pathology difference is slight right for late-Stage 4 to 5. So that's the data we're generating and we're going to use that in our discussion.

Okay. Well, I apologize for asking so many questions. Thanks so much. Good luck.

No, no problem. Thanks for the question, Oren.

[Operator Instructions] I'm showing no further questions at this time. I would now like to turn it back to the Cara team for any closing remarks.

Okay. Thank you, operator and thank you everybody for participating in today's call. I'd also like to thank the entire Cara team, our study investigators, and most importantly, all of the patients who continue to participate in our clinical trials. So, we look forward to updating you again actually very, very soon. And thanks again for dialing in. Have a good rest of the day.

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