Good afternoon and welcome to Cara Therapeutics’ Third 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 William Gramig with Stern Investor Relations and welcome to Cara Therapeutics’ third 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 company’s ability to commercialize KORSUVA injection, including the timing of additional regulatory submissions and approvals, the company's ability to maintain coverage and adequate reimbursement of KORSUVA injection, the performance of our commercial partners including Vifor Pharma, expected timing of the initiation, enrollment and 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 products candidates, the potential for the company's products candidates to be alternatives in therapeutic areas investigated, the company's expected cash reach and the potential impact of COVID-19 on the company's commercial launch, clinical development and regulatory timelines and plans. 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 in 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 contained 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’s President and Chief Executive Officer; Mr. Christopher Posner, Cara’s Incoming President and Chief Executive Officer; and Mr. Thomas Reilly, Cara’s Chief Financial Officer. I'll now turn the call over to Dr. Chalmers.

Great. Thank you, Will, good afternoon, everybody. And thanks for joining us today. Cara has had a truly transformative third quarter this year highlighted by the FDA approval on August 23rd of KORSUVA injection for the treatment of moderate-to-severe pruritus associated with chronic kidney disease in hemodialysis patients. As the first and only treatment approved by the FDA for chronic kidney disease associated pruritus, KORSUVA injection represents a true paradigm shift in the treatment of pruritus. This approval is also a testament to the long-term diligence and the collective effort of the entire Cara team to bring this drug over the finish line. With the FDA approval in hand, we continue to be focused along with our U.S. commercial partner, Vifor Pharma, on preparation for the launch of KORSUVA injection in the first half of 2022. We are also continuing to make important progress in our Oral KORSUVA programs and following guidance from the FDA into initiate Phase 3 programs with Oral KORSUVA for the treatment of pruritus in both atopic dermatitis and non-dialysis dependent chronic kidney disease patients in the first quarter of 2022. So, as we reach this transformative stage in Cara's development with the anticipated U.S. commercial launch for KORSUVA injection, with great momentum in our Oral KORSUVA franchise, as we plan to move into registration programs, and with a strong balance sheet in place allowing us to execute on all our strategic goals, I believe that the present moment marks a natural point to transition leadership. As we announced last week, I'll be stepping down from my current role as President and Chief Executive Officer of Cara and transitioning to a Senior Advisor role with the company, and Chris Posner will move into the President and CEO position. Now having worked closely with Chris since he joined Cara as a Board member, I'm confident in his ability to successfully lead the company through its next phase of development. And I look forward to working with him and the Cara leadership to ensure a smooth transition. Now I'd like to invite Chris to say a few words and introduce himself. Chris, please.

Yes. Thanks, Derek. I’m really thrilled to be joining such an inspiring team as Chief Executive Officer to lead Cara into its next phase as a commercial stage biopharmaceutical company. I originally joined Cara in 2018, as Derek said, as a Board member, as a Director. And over the past years, I've worked closely with the entire team -- Cara team in this capacity. And I believe in Cara’s mission to maximize the potential of our novel platform therapeutic KORSUVA, and fundamentally change the way that chronic intractable pruritus is treated to return quality of life to each and every patient living with pruritus. Now I want to take a quick moment just to express my gratitude to the Board of Directors for placing its trust in me to lead the company. And I really want to thank Derek for his support during this transition period. From co-founding the company through to the FDA approval of KORSUVA injection, his contributions to Cara are indelible. And I really look forward to ensuring a smooth leadership transition with his support and building on the immense clinical corporate progress to-date as we really prepare to open a new chapter as a commercial stage organization. I look forward to working with the entire Cara team and getting the work. So back to you Derek.

Great. Thank you, Chris. Now I want to review the recent progress across each of our pipeline programs during the third quarter, and then I'll turn the call over to Tom to detail on our financial results. So starting with KORSUVA injection, as we prepare for commercial launch, our partner Vifor Pharma is currently embarked on the salesforce-driven disease state education program across the U.S. market in anticipation of launch next year. In addition, in September of this year, Vifor Pharma and Cara submitted the required documentation for both TDAPA and reimbursement code to the U.S. Centers for Medicare and Medicaid Services to secure timely reimbursement and patient access to KORSUVA injection and enable a commercial launch in the first half of next year. As a reminder, Cara executed a strategic license agreement with Vifor Pharma in the fourth quarter of 2020 for the expanded commercialization of KORSUVA injection in all U.S. dialysis clinics. That agreement features a Cara 60%, Vifor Pharma 40% profit sharing arrangement in non-Fresenius Medical Care clinics in the U.S. which is approximately 60% of the total market. And under the terms of the agreement, in October of this year, upon U.S. regulatory approval of KORSUVA injection, the company received a $50 million common stock investment at a 20% premium to the 30-day trailing average of Cara’s common stock price. In addition, the company is eligible to receive payments of up to $240 million upon the achievement of certain U.S. sales-based milestones. Under our 2018 license agreement, Vifor Fresenius Medical Care Renal Pharma, and Cara agreed to market KORSUVA injection to Fresenius Medical Care North America dialysis clinics in the U.S. which is approximately 40% of the U.S. market under a Cara 50%, Vifor Pharma 50% profit share arrangement. And under this agreement, in October of…

Thank you, Derek. As a reminder, the full financial results for the third quarter 2021 can be found in our press release issued today after the market closed. Cash, cash equivalents and marketable securities at September 30, 2021 totaled $193.4 million compared to $251.5 million at December 31, 2020. The decrease in the balance primarily resulted from cash used in operating activities of $58.8 million partially offset by proceeds at $1.3 million from the exercise of stock options. For the three months ended September 30, 2021, net loss was $1 million or $0.02 per basic and diluted share compared to a net loss of $16.5 million or $0.35 per basic and diluted share for the same period in 2020. Total revenue was $20.3 million for the three months ended September 30, 2021, compared to $9.3 million during the same period of 2020. The company recognized $20 million licensed and milestone fees for the three months ended September 30, 2021 related to the regulatory milestones the company earned from Vifor and VFMCRP, as the variable consideration was deemed probable upon the regulatory approval of KORSUVA injection in August 2021. One of the $20 million earned, $15 million was from the VFMCRP agreement related to the cash milestone with the regulatory approval and $5 million represented the 20% premium within the [$50 million] equity milestone investment under the agreement with Vifor. License fees revenue of $9.3 million for the three months ended September 30, 2020 was related to license fees earned by us in connection with the VFMCRP agreement. Now turning over to our costs for the quarter. Research and development expenses were $15.5 million for the three months and is September 30, 2021 compared to $21.1 million in the same period of 2022. The lower R&G expenses in 2021 were principally…

[Operator Instructions]. Our first question is from Jessica Fye of JPMorgan. Your line is now open.

Hey, guys. Good afternoon. Thanks for taking the questions. A couple here. Was it always expected that you would need two pivotal Phase 3 trials in the non-dialysis dependent CKD population? How long do you think it will take those trials to enroll?

Yes. Hi, Jess. Thanks for that. So, initially in our initial interaction with the FDA, the guidance from the agency was that, if that program was confined to Stage 5 dialysis -- Stage 5 non-dialysis dependent CKD patients, then the similarity there in their opinion was so high to hemodialysis patients that it may be possible to conduct that program with one pivotal Phase 3 trial. As you know, we've been interacting with the agency since that end of Phase 2 meeting discussing our data and epidemiological data that's published as to the similarity of Stage 4 and Stage 5 patients and CKD patients, and our belief that, that represents a viable population for the Phase 3 program. So now that we have the [extension] from the agency to expand beyond Stage 5 to the portion of Stage 4 patients, they see a more traditional program has been appropriate there are with two pivotal Phase 3 trials. So, that's what we're planning to conduct and get that program underway next quarter.

And how long do you think it'll take them to enroll?

Well, I never liked to guide to outcomes until we start the trials, Jess. So we see how the enrollment is going. So that's what we'll do. Once we get the trials underway and we have at least a quarter under our belt and look at enrollment rates, then we will guide as to when we see output.

Okay. And then how many trials will be in the atopic derm Phase 3 program? And lastly, in light of all these pivotal studies starting out, how should we think about the ramp in R&D spending next year?

Yes. So the AD program is going to be traditional again to standard Phase 3 pivotal trials. And of course we'll be looking for long-term exposure data there as well, 52 week exposure data. So, that's going to be a standard registration program. The guidance that you've just heard from Tom, actually incorporates all of these programs within that. So as you know, we sit today with a very strong balance sheet. We can certainly move on all of these programs simultaneously and still see runway at best point through 2023. And that's not assuming any upcoming profit share income from the launch of KORSUVA injection or any milestones will be seen from either our U.S. license agreement with Vifor or our EU agreement with Vifor. So we are well-positioned to run both programs.

Next question is from Chris Howerton of Jefferies.

Great. Thank you very much for taking the questions. Two for me, I think, one would be -- or maybe three, actually. So first of all, with respect to the Stage 4 CKD patients, maybe first, can you just help us understand maybe the magnitude of that impact in terms of potential patient population that you could address with the Stage 4 versus Stage 5? The second question would be is -- and I think if I'm remembering this right, Derek and apologies if I am not, was that KORSUVA or even Oral KORSUVA is renally excreted. So if that's true, how should we be thinking about the dosing concentration and frequency for the less renally impaired patients? And then the third, I think is just a simple housekeeping one. In terms of the process to getting commercial supply ready and lunch for Vifor and yourselves for the injectable KORSUVA, could you just remind us of what the timelines are for TDAPA and the CMS coding, when you should hear back from those? Thank you.

Yeah. Great, Chris, thanks. Nice, you got a three for there, that's good. So, in terms of the non-dialysis dependent CKD patients and the numbers there. So, as I said, the agency is now guided that program would be appropriate, including both Stage 5 and later Stage 4 patients, Stage 4 patients with advanced CKD in the US is approximately 1.1 million. U.S. patients in Stage 4 at any time. The vast majority of these will progress to advanced Stage 4 or in Stage 5 or some go straight into dialysis. In terms of pruritus incidents across that group of patients, it's approximately 30% at the moderate to severe level. And then Stage 5 NDD patients, approximately 100,000 at any point in the U.S. and approximately 40% of those are seeing moderate-to-severe pruritus. So when you work through those numbers, Chris, and think about those, as you look at your modeling, this is a addressable patient population that's actually slightly bigger than the hemodialysis population when we think of moderate-to-severe pruritus incidents there. So that's the first thing on the patient population. On your second question on PK/PD, yes, you are entirely correct that difelikefalin or KORSUVA is excreted hole via the kidney predominantly. There's no active metabolites here. And you may or may not recall we've actually run pretty extensive PK studies in non-dialysis dependent CKD patients. So we know what exposures we can achieve with appropriate dosing there and the appropriate dosing based on that PK analysis as QD. So it's a once a day dosing in the CKD patients, which contrasts with the AD program, of course, where those patients have normal kidney function and there we're looking at BID dosing. And then on making sure we're prepared for commercial launch next year, we have filed -- as I said, in our prepared, we filed both our HCPCS or J codes on TDAPA applications actually in September of this year. We've been working very closely with CMS and I think the Cara team has really done a great job and led us for a number of years now. And based on those interactions, we expect to hear back from CMS by UN on those applications. And that will allow implementation in the first half of 2022. So that's the timing in relation to commercial launch on those.

That's great. Derek, maybe just one very minor clarification. For the Stage 4 versus Stage 5, are there any anticipated differences in dosing concentration or frequency?

No, none.

Next question is from David Amsellem of Piper Sandler.

So just actually had a couple of questions of Chris, if I may. So just looking ahead longer term at the business, what are your thoughts on the potential build-out of commercial infrastructure, whether it's in a nephrology office setting or for atopic dermatitis to support dermatologic indication. Just wanted to get your thoughts. And are they any different than what Derek and the team have said previously regarding commercial infrastructure? And then secondly, this is a really long-term question, but I feel like asking it anyway. To the extent you do build out commercial infrastructure, you're sort of in the single product company category, if you will. So as you think more expansively about the business, do you think about other assets? Or are you just looking at multiple indications and building out different sales force verticals? Just in general, it's all under the umbrella of kind of where you want to take the company?

Yes. No, it's -- and thanks for asking those. I think the first question was around the commercial infrastructure build-out in the near term and certainly concur with the team, I've been on the Board, so I've been a part of a lot of these discussions. The first thing I'd say is we have a great partner in Vifor that they are taking. They're doing the full commercialization with KORSUVA injection. So we're pretty excited about that and partnering with them. And I think that's some of the value I could bring working on the launch with not only our team at Cara, where we got a great commercial lead and then also working obviously with Vifor. So we'll be really focused on ensuring a successful launch of the KORSUVA injection with Vifor. I think longer term, as we think about commercial infrastructure build-out, something that we'll look as we progress the data. Obviously, I spent a lot of time in dermatology over the last 4.5 plus years, that's an area I know well. We would certainly think about in years to come how we want to approach that market. I think the longer-term question is a really interesting question about obviously utilizing that commercial infrastructure if and when we do build out to look at other adjacencies. It's always a possibility. But I kind of -- listen, end of the day for me, and I know for the Cara team, I mean we're laser-focused on being the world leader in chronic pruritus. That's why I joined the Board 3 years ago. That's really my motivation and my priorities initially in building out not only the KORSUVA injection launch but also really building out and accelerating the clinical programs.

The next question is from Annabel Samimy of Stifel.

I'm sorry if I missed it, but when your -- when you talk about the 2 CKD trials for Phase 3, first, are they going to be simultaneous? And does that also include a safety -- and as you said, it was going to require 52-week safety. And to what extent can you pull from the IV safety database with the phase -- Stage 4 patients in there? And then the second question I had was, I guess, you've alluded to Parsabiv as a good launch proxy for another renal drug. And I'm just wondering what gives you that confidence? Has there been any other drug launches in dialysis that's seen that kind of uptick and what is first of the right proxy?

Thanks, Annabel. Yes, so on the CKD or the anticipated oral CKD program, yes, we will most likely run those Phase 3 trials simultaneously. Obviously, we're looking to advance that program as rapidly as possible. And we'll have extensions on each of those trials that will bring us the required safety numbers, which you're familiar with, for a chronic indication. Of course, I think we will be referencing our IV data as part of that safety database. But we won't be relying on that. We'll make sure we get the ICH appropriate numbers from our Phase 3 program as we design that. What was your other question? Parsabiv has a model of...

As a proxy, yes.

As a proxy, yes. I mean as you know, there are similarities with the Parsabiv story and our story and there are distinct dissimilarities. As an example of what can be done and that's highly concentrated as you're well aware now, market space where really 2 players in Fresenius and DaVita occupy 80% of that market and provide dialysis services to 80% of the patients. And as you know, we already have a relationship with Fresenius as part of our Vifor Fresenius license agreement, which I think will add significantly to the momentum as we launch this drug. Parsabiv in terms of similarity is a drug addressing parathyroid hormone dysfunction. That does occur in approximately 40% of dialysis patients. And of course, we are addressing moderate-to-severe pruritus, which also occurs in approximately 40% or 50%. So that is a similarity in terms of addressable patient population. Dissimilarity of course, is there will be no alternative drugs available for the treatment of pruritus. We're very proud that we are the drug with the first label for that population, and there's no alternative generics or other drugs that could substitute there. So that's a dissimilarity. So that may see additional momentum, we think, in the launch. In terms of the group we're working with, Chris has already emphasized how we see the Vifor team and think they're the appropriate group to really provide a very efficient launch here. And looking for another example of what's achievable in the market space, particularly specifically dialysis space, the Vifor team launched MIRCERA a number of years ago and really saw a very significant uptick there, which was somewhat similar to that achieved by Parsabiv. So we know they have the mechanisms and relationships that can really move product into that space. So that would be the similarity there. And we're really looking forward to getting this to the patients as quickly as possible in the first half of next year.

Great. If I could just ask one quick follow-up on the CLD trials and the notalgia paresthetica, the NP trials. Are you going to be pursuing those all the way through development Phase 3 or just using it as a supplementation for a possible use -- off-label use as a broad antipruritic drug? How should we think about those 2 indications?

Yes. So the present plan, Annabel, is our 2 primary Phase 3 registration programs will be in atopic derm and non-dialysis dependent CKD patients. That's where we're committed to pushing forward and getting those programs underway as soon as we can next year. And the data we're looking for in chronic liver disease patients in notalgia paresthetica is really to satisfy this idea of the mechanism of KORSUVA is broadly applicable, and it's applicable regardless of the initiating pathophysiology that engenders the moderate to severe pruritus. And so our aim is to produce data across each of these major pathophysiological categories, and that includes neuropathic pruritus with NP and systemic pruritus or/and organ disease pruritus with CLD, that would be supportive of the idea that ultimately KORSUVA injection and -- sorry, Oral KORSUVA as a drug where a broader label would be more appropriate if we can see efficacy across all of these various patient populations. So presently, we don't have a plan to push forward with registration programs in either CLD or neuropathic itch.

Next question is from Joseph Stringer of Needham & Company.

This is Ben Ricard on for Joey. Just one question from us. So this is for Chris, based on prior commercial experience, what are some things that you target be doing to maximize profitability on IV KORSUVA?

Yes. Thanks for the question. I mean, we're going to be highly engaged with Vifor as I think about kind of the priorities of this commercial launch, and I'll dig in with the team. It's going to be around reimbursement, it's going to be around formulary and protocol placement in the dialysis organizations and then promotional launch execution. We're going to be highly focused with Vifor in those 3 priorities. And as we think about some of the kind of leading KPIs, key performance indicators, we're going to monitor, we're going to be right in line with those. We're going to really look heavily at the promotional excellence, kind of the sales force reaching frequency. It's a highly concentrated audience, roughly 4,000 nephrologists to count the majority of dialysis patients. And Vifor has a strong, strong track record that Derek just alluded to in terms of their relationships with nephrologists, they are the world leader. So we'll be monitoring that. We're going to clearly look at formulary acceptance across the dialysis clinics, not only the LDOs, but also the mid and smaller size, and then obviously, some of the leading indicators around new patient starts. I mean it's a very patient-centric drug. I mean, pruritus is a chief concern in the hemodialysis clinics. So we're going to really be looking at kind of the strength of adoption, and we'll be monitoring new patient starts.

Thank you, participants. Now I'd like to turn it back over to Dr. Chalmers for closing remarks.

Okay. Well, thanks, and thanks, everybody, for participating on today's call. I'd like to say it has been a distinct privilege to have led Cara for the last 17 years from an early stage research company to now on the verge of a commercial stage organization. And I'd like to thank the entire Cara team for all it's accomplished over this time and for their trust that they placed in me for those 17 years. And I look forward to continuing working with Cara in my new role as an Advisor to the company and look forward to supporting Chris in his new role as the CEO. So thanks again for participating on today's call, and have a great night, everybody. Thank you very much.

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