Cara Therapeutics, Inc.
Q2 2016 Earnings Call Transcript

Published: 5 Aug 2016

[Operator:]

Good afternoon and welcome to the Cara Therapeutics Second Quarter 2016 Earnings Conference Call. At this time, all participants are 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.

[Michael Schaffzin:]

Good afternoon. This is Michael Schaffzin with Stern Investor Relations. And welcome to Cara Therapeutics second quarter 2016 earnings conference call. The news release with our second quarter financial results and corporate update became available at 4

[Derek Chalmers:]

Thank you, Michael. Good afternoon, everybody. Thanks for being with us on the call. I’m joined today by our Chief Medical Officer, Dr. Joe Stauffer; and our Chief Financial Officer, Joe Schoell. So the first-half of 2016 has been very productive for us here at Cara. This past quarter alone we resumed patient recruitment in our adaptive Phase 3 trial in postoperative pain, initiated a second late-stage trail in CKD associated pruritus and completed preparation for initiation of a Phase 2b trial in osteoarthritis patients beginning in Q3. Joe will provide more color on these clinical trials. But, first, I’ll walk through a higher level overview and expected news flow for the next few quarter. In June, we were very pleased to resume our adaptive Phase 3 trial of I.V. CR845 in postoperative pain. Enrollment in the study since reopened continues to trend positively. Right now, we have 16 sites active and we expect to reach approximately 25 sites by the end of this quarter. In late June, we were also pleased to initiate our adaptive Phase 2/3 trial of I.V. CR845 in dialysis patients suffering from moderate-to-severe uremic pruritus. As we touched on in the past call, uremic pruritus is an intractable systemic itch condition that occurs with a greatest frequency and intensity in chronic disease kidney patients under hemodialysis or peritoneal dialysis. The majority of dialysis patients, approximately 60%, report pruritus with 30% to 40% reporting moderate-to-severe pruritus. There is currently no approved therapy in the United States and traditional itch medications such as antihistamines and corticosteroids have proven ineffective for these patients. We currently have 11 active sites enrolling for this trial and we expect that to reach 25 by the end of this quarter. So the initiation of this trial is certainly an important milestone and the development of a therapeutic option for the significant unmet medical need. Looking forward to the rest of 2016, we also plan to initiate our Phase 2b trial of Oral CR845 in osteoarthritis patients and this for the third quarter. Building up our Phase 2a data in osteoarthritis patients where we saw both pain and rescue medication reduction over a two-week treatment period. We are now planning to move into a much larger 330 patients study, testing three tablet strengths of CR845 over an eight-week treatment period to inform potential registration trial design for this chronic indication. We view this trial as a very important step towards establishing the potential clinical utility of Oral CR845 to ultimately provide a safer, non-abusable alternative to NSAIDs and narcotic opioids for osteoarthritis patients and potentially generally chronic pain patients overall. So Joe will elaborate on the trial design for this trial shortly. We are going to look forward to updating you throughout the year as these trials progress and as we see recruitment rates develop through the next two quarters for the Phase 2/3 UP trial, the adaptive Phase 3 post-op pain trial and the Phase 2b osteoarthritis trial, we’ll be in a position for more accurately project data-readout timing. So with that, I’ll turn the call over to Joe, who will discuss the upcoming Oral CR845 trial design and provide more detail on the two ongoing studies. Joe?

[Joseph Stauffer:]

Thanks, Derek. As Derek mentioned, we are pleased to have resumed enrollment in our adaptive Phase 3 trial of I.V. CR845 for post-operative pain and initiated our adaptive Phase 2/3 trial of I.V. CR845 in dialysis patients suffering from moderate-to-severe uremic pruritus. As we discussed last quarter, based on interim efficacy signals for pain and supplemental opioid use and opioid-related side-effects observed from interim analysis of the first 90 patients previously enrolled, the adaptive Phase 3 trial in post-op pain is continuing as a three-arm trial testing 1 microgram per kilogram and 0.5 microgram per kilogram of CR845 versus placebo in up to 450 patients undergoing various abdominal surgeries. The primary efficacy measure is the change in pain intensity over the 24-hour post-op period using the patient-reported Numeric Rating Scale score collected at pre-specified time-points through 24 hours. Postoperative nausea and vomiting will be evaluated as a secondary efficacy measure. The trial still accommodates an interim assessment for conditional power across doses at approximately 60 patients per group, and with an adaption to optimum dose and subsequent progression to complete enrollment. Turning to our Phase 2/3 trial in uremic pruritus, this is a two-part design. Part A is a randomized double-blind placebo controlled study of three doses of I.V. CR845, administered three times a week after dialysis over an eight-week period in 160 patients. Part B will be a randomized double-blind placebo-controlled study of one optimized dose of I.V. CR845, administered three times a week over a 12-week treatment period in up to 240 patients. The primary endpoint will be reduction in worst itching scores from baseline values, measured on a standard Numeric Rating Scale alongside secondary quantitative quality of life endpoints measured on the validated Skindex-10 scale and complementary QoL measurements. In addition to the I.V. trial in uremic pruritus patients in the second-half of this year we will also initiate a pharmacokinetic safety trial of multiple doses of Oral CR845 in hemodialysis patients to define bioequivalent tablet strengths to confirm our ability to develop an oral tablet formulation for this indication. We also continue to work diligently to initiate our Phase 2b trial of oral CR845 in osteoarthritis patients during this third quarter. This trial will be a double-blind, multiple-dose Phase 2b with twice-daily doses of Oral CR845 administered over an eight-week treatment period in osteoarthritis patients with moderate-to-severe pain. The study will include 330 patients randomized across three CR845 tablet strengths and a placebo arm in at least 15 sites across the U.S. The primary endpoint will be difference from baseline and pain scores in CR845 treated patients versus placebo at the end of the eight week treatment period. Secondary endpoints include the change from baseline in the Western Ontario and McMaster Osteoarthritis Index and the Patient Global Assessment, PGA of osteoarthritis. I’ll finish by saying that we are pleased with our progress across multiple clinical programs in the last quarter, and look forward to reporting on enrollment milestones as the trials progress. And with that, I’ll turn it over to Josef Schoell for the financials.

[Josef Schoell:]

Thanks, Joe. And as a reminder the full financial results for the second quarter can also be found in our press release issued today after market close. We reported a net loss of $13.1 million or $0.48 per basic and diluted share for the second quarter of 2016 compared to a net loss of $5.7 million, or $0.25 per basic and diluted share, for the same period of 2015. We recognized $79,000 of revenue during the second quarter from the sale of clinical compound material to Maruishi. For the second quarter of 2015, collaborative revenue was $874,000, comprising revenue that had been deferred upon entry into the license agreement with Maruishi. R&D expenses were $10.8 million in the second quarter compared to $4.7 million in the same period of 2015. The higher R&D expenses in the second quarter of 2016 were principally due to a net increase in direct preclinical study and clinical trial costs, consulting services and support of the studies and clinical trials, and an increase in payroll and related costs for R&D personnel, the acceleration of amortization of the leasehold improvements at the company’s Shelton, Connecticut facility prior to the relocation of the company’s corporate headquarters to Stamford, Connecticut in May of 2016 and increased rent, including rent expense for the Stamford lease for the second quarter of 2016 and the remaining rent payments due for the Shelton lease through its term. General and Administrative expenses were $2.6 million in the second quarter of 2016 compared to $1.9 million in the same period of 2015. The increase in the second quarter of 2016 was primarily due to increases in payroll and related costs, franchise taxes and in rent and the acceleration of amortization of leasehold improvements, as previously noted. Other income was a $172,000 of interest income and dividends earned on cash, cash equivalents and marketable securities during the second quarter of 2016, compared to $13,000 of interest income during the same period in 2015. This increase in the second quarter was primarily due to our investments in marketable securities in the 2016 period but not in the 2015 period, as well as higher interest rates on a higher average balance of cash and cash equivalents and marketable securities in 2016 as a result of the company’s follow-on offering of common stock, which closed in August of 2015. As of June 30, cash and cash equivalents and marketable securities totaled $84.8 million compared to $106.7 million at December 31, 2015. The decrease in the balance of cash and cash equivalents and marketable securities primarily resulted from $21.3 million of cash used in operating activities. Turning to financial guidance, based on our timing expectations and projected costs for current clinical development plans, Cara continues to expect that its existing cash and cash equivalents and available-for-sale marketable securities as of June 30, 2016 will be sufficient for the company to fund its operating expenses and capital expenditure requirements through the end of the first quarter of 2018, without giving effect to any potential milestone payments under existing collaborations. Now, we will open up to Q&A. Operator?

[Operator:]

Okay. Thank you. [Operator Instructions] And our first question comes from Annabel Samimy from Stifel. Your line is open.

[Annabel Samimy:]

Question, I was hoping that you could provide some clarification on the - on several of the studies actually. On the I.V. 845 study, did you say that there was going to be another optimization of the doses or did I misunderstand, because I thought that the whole idea with the first part of the study was optimizing to find the right dose?

[Joseph Stauffer:]

You’re correct. So the first part of the study was to find doses that we could take forward into the second part of the study. And that first part was due to safety only. If you remember, at that point we only had - we were only targeting about 30 patients per arm. We took to look at 20 patients per arm. It was purely for safety and that was pre-specified. Now, that we’re down to a placebo and two-arm trial. We still have a pre-specified interim assessment look at around 60 to maybe 65 patients per arm, for conditional power for efficacy. So this is always preplanned from the beginning of even the Phase 2 portion of the trial and we will do that. And then based on the outcome of that conditional power, we’ll then make an assessment for which doses we take forward or not.

[Annabel Samimy:]

Into Phase 3?

[Joseph Stauffer:]

Right, we’re in Phase 3 right now. So this is a Phase 3 trial as it stands.

[Annabel Samimy:]

Right, but you still need another study?

[Joseph Stauffer:]

Correct, yes. We’ll need another placebo-controlled trial to replicate this trial.

[Annabel Samimy:]

Right, so you have no expectation to take more than one dose into the next Phase 3 study. You’re going to identify what that doses that you need right here in this part 2 and then you’re going to move and take that dose into the next Phase 3 study?

[Joseph Stauffer:]

Right, it will be at least one dose. Sometimes, depending upon the spread between the lowest dose and the highest dose, we might actually take two, but really we have to make that decision once we get the interim assessment.

[Annabel Samimy:]

Okay. And so should I assume the same is being done for the uremic pruritus study as well, because I notice there was a part A and part B?

[Joseph Stauffer:]

Right, for the uremic pruritus study, in that case, we’re only going to take forward one dose.

[Annabel Samimy:]

Into what, into the optimization…?

[Joseph Stauffer:]

Into the longer portion. Correct into the optimal…

[Annabel Samimy:]

Into the part B?

[Joseph Stauffer:]

That’s correct. Into the optimization phase with part B.

[Annabel Samimy:]

Okay. And then, after that you need another Phase 3 study correct?

[Joseph Stauffer:]

Correct.

[Annabel Samimy:]

Okay. All right, and then finally, for the oral doses you - I don’t think you mentioned which doses you’re taking into the Phase 2b.

[Joseph Stauffer:]

Right, we haven’t mentioned those doses. But they will be out on ClinicalTrials.gov. You’ll be able to see - it will be three doses of drug, dose BID versus placebo. And then, you’ll see those very quickly once we get the trial starting dosing.

[Derek Chalmers:]

And, Annabel, as we said earlier it’s based on the results from our Phase 2a study. So they will include tablet strengths up to and include the 5 mg tablet strength that was our top dose in the Phase 2a trial.

[Joseph Stauffer:]

That’s correct.

[Annabel Samimy:]

Okay, all right. Great, and sorry, you didn’t mention that, when some of the data releases will come out correct. You just said that that when you have a better idea of how the enrollment is proceeded, then you’d be able to tell us the timing.

[Derek Chalmers:]

Absolutely, yes, once we see the enrollment rates in the next two quarters then, I think, we’ll be in a position to more accurately guide on data readout.

[Annabel Samimy:]

Okay. Great, thank you.

[Derek Chalmers:]

Thanks, Annabel.

[Operator:]

Okay. And our next question comes from Charles Duncan, Ph.D. from Piper Jaffray. Your line is open.

[Sarah Weber:]

Hello, this is Sarah on for Charles.

[Derek Chalmers:]

Hi, Sarah.

[Sarah Weber:]

So I have two questions. Hi, the first time I’ve noticed you’ve had a presence at a lot of recent medical meetings, American Pain, Opioid Conference. Just going to ask what kind of feedback you’ve been getting at those meetings. And then, along those lines, just qualitatively how is enrollment been going in that acute pain trial…?

[Joseph Stauffer:]

Sure, so I’ll take that. So, we’ve had a busy early part of the summer and late spring with meetings. I think the feedback was actually terrific. We are invited to present at Harvard at the International Conference on Opioids and that was quite exciting, and same thing for the various congresses that we do in the late spring. There is always interest I think, because this is a novel compound and an unmet medical need both preoperatively as well as chronically. So the interest comes from practitioners, as well as patients too. On the other - I think the other part of your question was about enrollment. We’re meeting our expectations right now, which is great. I think that we’ll know better, once we’re really into the thick of enrollment, how we’re doing and as Derek said, then we can update you in that score.

[Sarah Weber:]

Okay. Thanks. And just one other on the Phase 2b, the oral compound, I mean…

[Joseph Stauffer:]

Yes. Sorry about that. Yes. One more piece on that and I didn’t really mention this. It’s the nonabusable piece. It is really starting to get a lot of attention with people. Before it was really about kind of the ease of use and the side effect decreases that we can get with the drug, primarily for nausea and vomiting post-operatively. But as we’re moving into the oral dosing of the drug in osteoarthritis, I’m getting a lot more feedback and questions about the abusability of the drug, which is great for us, because we already have the human abuse liability trial out there. So we feel pretty good about that.

[Sarah Weber:]

Yes. It makes sense. And then, my question was just about the Phase 2b with oral compound. I mean, just curious so if you can talk about what you would see as a win from that trial, is it identifying a dose to move forward or seeing activity on multiple markers?

[Joseph Stauffer:]

Right, so, it’s a good question. So this is a true proof-of-concept trial, we’ve got three doses of drug versus placebo. At the very minimal, we just need one of these doses to work. And if one of these doses works well and gets us the P value that we’re looking for as well as other safety measures, as well as good patient tolerability that’s a win for us. Based on that data, we’ll take that into the FDA for an end of Phase 2 meeting for discussions on the Phase 3 program.

[Sarah Weber:]

Okay. Thanks.

[Derek Chalmers:]

Thanks, Sarah.

[Operator:]

Okay. And our next question comes from Ken Trbovich from Janney. Your line is now open.

[Ken Trbovich:]

Thanks. I guess my first question, Joe, you kind of touched on this earlier with regard to sort of the reference to the clinical trial and the timing for completion. I just wanted to clarify. You mentioned the interim analysis for the I.V. post-surgical pain study. Is that after 60 patients total or 60 patients per arm?

[Joseph Stauffer:]

It’s about 60 patients per arm, so maybe about 180 total.

[Ken Trbovich:]

Okay. And from that perspective, if I look a ClinicalTrials.gov it looks like that trial at least according to that source, you’re suggesting the trial is expected to be completed mid next year. Is there a reason why that wouldn’t be an accurate or reliable data or can you give us some color on that?

[Joseph Stauffer:]

Well, we have to put in an approximate data when the trial could end. It could end sooner than that. It could end later than that. A lot of it just depends upon enrollment. You remember the part of the interim assessment that we have, is we can actually increase the sample size, if we had too.

[Ken Trbovich:]

Sure.

[Joseph Stauffer:]

And right now, we are targeting 120 per arm. But we could actually keep the sample size where it’s at or even go lower. If indeed the interim assessment tells us that we’ve got a robust signal in at least one of the treatment arms.

[Ken Trbovich:]

Okay. And would that mean then that we should at least have comfort that we’ll see the interim prior to that middle of next year kind of timeframe?

[Joseph Stauffer:]

I think that’s fair. Yes.

[Ken Trbovich:]

Okay. And then, just a follow-up question with regard to the UP side on the I.V. formulation, there isn’t - as you noted there is not a record in ClinicalTrials.gov. Are all those, there is U.S. centers or any of them ex-U.S. or North American?

[Joseph Stauffer:]

Everything is U.S.

[Ken Trbovich:]

Okay. And then with regard to the centers or some them involving the major - the sort of the two major providers on the service side?

[Joseph Stauffer:]

Yes.

[Ken Trbovich:]

Okay. And then just last question with regard to the Oral and the I.V., is it too early to talk about strategy there in terms of whether you would simply do a bridge or whether you would actually conduct the confirmatory UP study even in Oral as opposed to the I.V.?

[Derek Chalmers:]

Ken, that’s a terrific question. And you’ve identified why we are looking at both formulations. So little too early for us to determine which formulation carries forward, as you know from the reimbursement standpoint the Oral is essentially free and clear, in terms of being out west the bundle at that point, at least the 2024. But there has been some precedence recently of novel I.V. compounds attaining a reimbursement status out west the bundle at least for a limited for time. And that’s something we’re interested in and something we’re looking at, so you’re perfectly correct. I think it’s a little early to determine which formulation we move forward with and it may well involve a bridging study from one to the other at the end of the day.

[Ken Trbovich:]

Sure. Thank you. And then last question for, Josef, on the financial side. Could you quantify for us how much of the sort of R&D and G&A costs were associated with the non-recurring relocation of headquarters?

[Josef Schoell:]

The relocation was all non-cash base. It’s only amortization and liabilities being set up.

[Ken Trbovich:]

No, I understand that, but I’m just trying to get a sense for how much of the total OpEx expense was associated with that non-cash component?

[Josef Schoell:]

Between the two, close to $2 million and you will see that in the 10-Q filing. Will be at least a footnote that describes - the biggest part of that is really the recording of a liability for all of the future payments on the Shelton lease obligation.

[Ken Trbovich:]

Okay, terrific. Thanks so much for taking the questions.

[Josef Schoell:]

You’re welcome.

[Joseph Stauffer:]

Thanks, Ken.

[Josef Schoell:]

Thanks, Ken.

[Operator:]

Okay. And our next question comes from Alan Carr, Ph.D. from Needham & Company. Your line is open.

[Danielle Brill:]

Hi guys, this is Danielle on for Alan. I just…

[Derek Chalmers:]

Hi, Danielle.

[Danielle Brill:]

Hey, I just wanted to clarify a bit more on this interim look for the I. V. pain study. Will you be updating us with results around the interim or will we not hear anything until final data?

[Joseph Stauffer:]

No, we’ll let you know that we’re moving forward or not based on the results of the interim. We won’t go into all the details of what exactly we see, because we have an independent data monitoring committee that’s guiding us there. So you will know and - we will know and then you will know. And then we’ll put out there on ClnicalTrials.gov how we’re moving forward, how many doses are left and what that sample size will be if we have to increase the sample size or decrease the sample size. So that’s what we’ll know and that’s what we’ll tell you.

[Danielle Brill:]

Okay. And that is what we can expect mid next year?

[Joseph Stauffer:]

Correct.

[Danielle Brill:]

All right, great. Thank you.

[Joseph Stauffer:]

Or earlier depending upon how things enroll.

[Danielle Brill:]

Great. Got it.

[Operator:]

And your next question comes from Chiara Russo from Cantor Fitzgerald. Your line is open.

[Chiara Russo:]

Yes, great. Hey, guys, thank you for taking the question. Just some sort of housekeeping questions around the Phase 2b and osteoarthritis pain. I was curious, if you have any more details around like the inclusion period, the inclusion criteria for those patients. Is there a washout period? How is that data going to be collected and have you publicly disclosed too that CRO is running those trials?

[Joseph Stauffer:]

So we have not publicly disclosed the CRO. That’s the answer to your first question. The second - or the first question was what kind of patients do we have? They’re the exact same type of patients that we had in the Phase 2a. So these are patients with OA in their hip or knee. And in general, they tend to be a little bit older than, say, low-back patients on average than the previous patients that we did. I think the average age was around 63 or 64. And, yes, there will be a washout period. Just like we did in the previous trial, we don’t want to have these patients on any of their NSAIDs or COX-2s or any episodic opioids or any other drugs that they’re taking for pain. So we wash them out and they have to have a base-line pain score that qualifies them to get into the trial. They have to have moderate to severe pain on the pain scale before they can come in after their washout.

[Chiara Russo:]

Okay. And remind me again what the primary endpoint on that one is going to be?

[Joseph Stauffer:]

So it’s the - if you use the zero to 10 Numeric Rating Scale and we’re looking from change from baseline to final, over eight weeks.

[Chiara Russo:]

Okay, okay, so just base line to final, okay, okay.

[Joseph Stauffer:]

Correct. And then we have secondaries as well. We have - Chiara we have PGA and the WOMAC as well, pain stiffness and function is part of the WOMAC, and there secondary endpoints that we look at.

[Chiara Russo:]

Okay, and for the I.V. in post-op pain. I’m assuming you also have a rescue medication to open there as well?

[Joseph Stauffer:]

That’s correct. So we use morphine as a rescue and for patients that can tolerate morphine IV, then we also allow other rescue opioids IV and equianalgesic doses to morphine, for instance, hydromorphone.

[Chiara Russo:]

Okay. Does that all skew the results on nausea and vomiting, because obviously morphine and other rest of those tend to show off more of that side effect?

[Joseph Stauffer:]

No, in fact, the beauty of this kind of trials is the placebo-arm, right. So we get to look at what the nausea vomiting signal is in the placebo arm as well. And if you remember from the hysterectomy trial, we can reduce nausea, vomiting above and beyond what we see in the placebo arm even when they’re on opioids.

[Chiara Russo:]

All right, that’s what I needed to know, awesome. Thank you.

[Joseph Stauffer:]

All right, yeah.

[Derek Chalmers:]

Thanks, Chiara.

[Operator:]

Okay. And our next question comes from Jim Molloy from Laidlaw. Your line is open.

[François Brisebois:]

Hi, thanks for taking the questions. This is actually Frank on for Jim. I was just wondering is it so, I guess, it depends on enrollment, but is it fair to expect the data for about mid 2017 for the Oral CR845 for OA if any?

[Joseph Stauffer:]

I think you said it right. It depends on enrollment. I’ll give you a better answer on that. I think once I’m into it next quarter, because have a better sense of how the sites are doing, who is delivering, who is not in terms of quality of patients, speed of enrollment that type of thing. So for now we have it as next year. It could be sooner. It could be later. Again, I’ll know better. I can give you a clear answer once we’re immediate into enrollment.

[François Brisebois:]

Sounds good, and then, in terms of the I.V. CR845 for post-op pain, having dropped the 2 and 5 microgram kilogram doses. Can you talk more about mechanistically like the similarities that would help us predict positive results between the 1-microgram-pick in UP and in post-op pain?

[Joseph Stauffer:]

Yes. So our singles that we had in those first 90 patients, we had some nice efficacy in that trial with the 1 microgram per kilogram dosing. And we’re confident that it’s pharmacologically active. We know this as well from the itch trials too. In fact, that’s why we even chose a lower dose as part of this trial as well. I mean, if you guys remember from the base of pharmacology, this drug is very, very potent, and it’s like 300 picomolar at the receptor. And so again, we’ll know once we get that interim assessment how robust it is, but we’re pretty confident that we will see something at least in one of those doses.

[François Brisebois:]

Sounds good, that’s it for me. Thank you.

[Joseph Stauffer:]

Thank you.

[Derek Chalmers:]

Thank you.

[Operator:]

Okay. And I am showing no further questions at this time. I’d like to turn the call back over to Mr. Derek Chalmers for closing remarks.

[Derek Chalmers:]

Okay. Thank you everybody for participating in today’s call. And we certainly look forward to updating you again very soon next quarter. Thank you very much.

[Operator:]

Ladies and gentlemen, this conference - this concludes today’s presentation. Thank you once again for your participation. You may now disconnect. Everyone have a great day.