Cara Therapeutics, Inc. (CARA) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Cara Therapeutics KORSUVA Injection FDA Approval Conference Call. [Operator Instructions] 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 will now turn the call over to the Cara team. Please proceed.

Good afternoon. This is Will Gramig with Stern Investor Relations, and welcome to Cara Therapeutics' KORSUVA Injection FDA Approval Conference Call. The news release became available just before 4 p.m. 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 potential time line for launch of KORSUVA Injection, the potential time line for reimbursement and the potential of KORSUVA Injection to be a therapeutic option for CKD-aP in dialysis-dependent patients. 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's filings with the Securities and Exchange Commission including the risk factors section of Cara's annual report on Form 10-K for the year ended December 31, 2020, 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. Except to the extent required by law, Cara 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; Dr. Joana Goncalves, Cara's Chief Medical Officer; and Eric Vandal, Senior Vice President of Commercial. I'll now turn the call over to Dr. Chalmers.

Thanks, Will, and good afternoon, everybody, and thanks for joining us. Today, we are very, very excited to announce that as of this afternoon, we received formal notification from the U.S. FDA that our lead product, KORSUVA Injection, has been approved for the treatment of moderate-to-severe pruritus associated with chronic kidney disease in adults undergoing hemodialysis in the United States. This approval serves as a real watershed moment for patients undergoing hemodialysis as KORSUVA Injection is now the first and only treatment approved by the FDA for chronic kidney disease-associated pruritus. Now pruritus in these patients is an intractable systemic itch that occurs with high frequency, has been consistently correlated with decreased quality of life, increased propensity for other comorbidities, including psychiatric disorders. And mainly related to increased risk of infections and systemic inflammation, pruritus has been identified as an independent predictor of increased mortality in hemodialysis patients. With currently employed antipruritic treatments such as antihistamines unable to provide consistent adequate relief, the approval of KORSUVA Injection today brings these patients one step closer to receiving the effective treatment, which has been severely lacking to this point. Before we get to the details of the prescribing information, let me summarize the main highlights of the approval and the label on Slide #5. So overall, we're very happy that the final label is consistent with our expectations based on our large Phase III dataset encompassing over 1,300 hemodialysis patients. Importantly, our preclinical and our clinical data has consistently indicated a lack of abuse potential and the absence of physical dependency with KORSUVA administration. And we're very pleased that the controlled substance staff at the FDA has acknowledged this and KORSUVA will not be a federally scheduled substance. Also importantly, KORSUVA is not metabolized through the liver. No liver enzyme interactions have been identified. And the molecule is excreted whole predominantly through the kidney. Consequently, Section 7 is absent from our PI with no drug-drug interactions identified. And this is, of course, an ideal characteristic for use in the heavily medication-burdened hemodialysis patients. In addition, based on the observed safety profile of KORSUVA through our Phase III program, no post-marketing studies are indicated at this time. So overall, we're extremely pleased with today's approval. We are now focused, as you're going to hear a little later, on working with our commercial partner, Vifor Pharma, to bring KORSUVA to patients as soon as we possibly can. Finally, I just want to point out that KORSUVA has been developed from first principle at Cara Laboratories from compound screening and optimization through the whole of preclinical and clinical development. And I'd like to recognize all of the Cara teams, present and past, who have worked so diligently through many years to bring this first-in-class compound to patients. Today's approval would not have been possible without their efforts. So with that, I'll now turn it over to Jo and Eric to detail the U.S. prescribing information and provide more color on the commercialization plans and the time lines for commercialization. So Jo, over to you.

Thank you, Derek. As Derek previously stated, KORSUVA is indicated for the treatment of moderate-to-severe pruritus associated with chronic kidney disease in adults undergoing hemodialysis. The recommended dose, 0.5 microgram per kilogram, is administered by intravenous bolus injection into the venous line of the dialysis circuit at the end of each hemodialysis treatment. The dosage form and strengths are as follows, 65 microgram per 1.3 mils of difelikefalin. The FDA approval is based on 2 pivotal Phase III trials, KALM-1 and KALM-2, as well as additional safety trials and supporting clinical trials. KALM-1 was a U.S.-only based trial, and KALM-2 was a global trial. As a reminder, these trials are multicenter, randomized, double-blind, placebo-controlled trials to evaluate the safety and efficacy of KORSUVA Injection for the treatment of moderate-to-severe pruritus associated with chronic kidney disease in subjects undergoing hemodialysis. Subjects were randomized to either KORSUVA at a dose of 0.5 microgram per kilogram or placebo administered as an intravenous bolus injection at the end of the hemodialysis 3 times per week for 12 weeks. In both KALM-1 and KALM-2, there was a significantly greater proportion of subjects on KORSUVA who reported a clinically meaningful itch improvement compared to subjects on placebo. That is 40% of subjects in KALM-1 and 37% of subjects in KALM-2 achieved at least a 4-point improvement from baseline in the worst itch NRS score at week 12 compared to 21% and 26% of subjects on placebo, respectively. In addition, subjects on KORSUVA experienced rapid and sustained itch relief, as you can see in the 2 graphs which are included in the prescribing information. Moving on to the safety highlights of the KORSUVA prescribing information. KORSUVA is approved without any contraindications. Warnings and precautions include dizziness, somnolence, mental status changes and gait disturbances. Centrally acting depressant medications, sedating antihistamines and opioid analgesic should be used with caution during treatment with KORSUVA. Patients are advised not to drive or operate dangerous machinery until the effect of KORSUVA on a patient's ability to drive or operate machinery is known. The most common adverse reactions in greater than 2% of KORSUVA-treated subjects and greater than or equal to 1% higher than placebo include diarrhea, dizziness, nausea, gait disturbances including falls, hyperkalemia, headache, somnolence and mental status change. As you can see on this slide, this is the adverse reactions table that is included in the label with the most common adverse reactions and their respective incidents. I'll now turn the call over to Eric Vandal, our Senior VP of Commercial, to discuss KORSUVA Injection's commercial planning and readiness. Over to you, Eric.

Thanks, Jo, and good afternoon, everybody, and thanks a lot for joining us today. I would like to start by providing a quick overview of the market for KORSUVA Injection for chronic kidney disease-associated pruritus in hemodialysis patients. Currently in the U.S., there are more than 500,000 patients on hemodialysis. 60% of these patients have some level of pruritus, and roughly 40% of the total hemodialysis patient population or approximately 200,000 patients have moderate-to-severe pruritus. And this will be our target patient population based on our indication in our label. If you go to the next slide. If we have -- with the FDA approval of KORSUVA Injection, this significant patient population will now finally have access to an approved treatment option for their moderate-to-severe pruritus. To gain this approval, Cara conducted the largest worldwide clinical development program in hemodialysis patients with chronic kidney disease-associated pruritus. And because there are no approved therapies to treat moderate-to-severe pruritus for this patient population, KORSUVA will help fill a significant unmet medical need. And as such, the FDA awarded KORSUVA with breakthrough therapy designation and priority review. As a reminder, the 2 criteria for breakthrough therapy and priority review are: one, the product must treat a serious medical condition; and two, the clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on clinically significant endpoints. Let's shift our attention to the projected U.S. launch time line. Earlier this year, with our partner, Vifor, we initiated disease state education to help educate health care providers on the prevalence and pathophysiology of chronic kidney disease-associated pruritus in hemodialysis patients. And following our approval today, we expect to file both our TDAPA and HCPCS applications in the third quarter of 2021 and plan to commence disease state education via the Vifor sales team also starting in the fourth quarter of 2021. In the first quarter of 2022, we plan to begin our full promotional launch of KORSUVA through the Vifor sales team. We also anticipate to have both our TDAPA and HCPCS applications approved and providing reimbursement to dialysis organizations and patients during the first half of 2022. 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. The decision to partner with Vifor for the launch of KORSUVA injection was made based on Vifor's established nephrology sales force and strong relationships with U.S. dialysis organizations. Vifor has an established nephrology commercial organization in the U.S. with more than 50% of its corporate net sales generated in the U.S. Vifor has over 100 sales representatives in the U.S. market and provides extensive access and strong relationships with the large dialysis organizations, the midsized dialysis organizations and the independent dialysis organizations as well as nephrologists and other key stakeholders in the dialysis space. Additionally, Vifor brings an established market access team as well as an existing supply chain infrastructure. And because of their well-established infrastructure and expertise in nephrology as well as the dialysis space,and their partnership with Fresenius, Vifor has developed a strong portfolio of nephrology products, which includes Veltassa, Mircera, Velphoro and Retacrit. And as such, we believe Vifor is an excellent commercial partner to help us maximize KORSUVA Injection's market potential. And with that, I will now turn the call back over to the operator for question and answer.

[Operator Instructions] Our first question comes from Jessica Fye, JPMorgan.

This is Daniel for Jessica Fye. A couple for us. First, what's the typical time line for reimbursement negotiation with CMS? And is there an opportunity for CMS to provide feedback on reimbursement and for subsequent launch to occur in early 2022? And second, in your view, do you see the warning language on the label regarding dizziness, somnolence and mental status changes affecting prescription to patients?

Great. Thank you. Thank you, Daniel. Eric, why don't you address the CMS time line for review? And then maybe, Jo, you could talk a little bit about the warnings on the label.

Sure, I'll start with the timing of TDAPA. Well, as I stated earlier in my section, we will be filing both our applications for TDAPA and our HCPCS codes in the coming weeks by the end -- before the end of the third quarter. And depending on time lines of reviewing both applications, we anticipate getting reimbursement in the first half of 2022. And we currently plan a promotional launch for KORSUVA Injection in the first quarter of -- yes, in the first quarter of 2022.

And Jo, do you want to talk about the -- yes, the warning on the label?

Sure. Yes. So the adverse drug reactions included in the proportions and warning section is important information for prescribers so that they can manage the patients appropriately when prescribing KORSUVA. We don't think that this will be a limitation for using KORSUVA as KORSUVA is the only drug indicated for pruritus. And drugs that they've used in the past that were used off-label have actually greater dizziness and somnolence than KORSUVA has if you look at the incidence numbers. So we don't think this will be a limitation.

An example of that, Jo, would be something like gabapentin, right?

Right, exactly. Gabapentin and pregabalin, if you look at the prescribing information, pregabalin, the dizziness is up to about 30% incidence. So we don't think that will be a limitation for the drug.

Our next question comes from Chris Howerton of Jefferies.

Great. Congratulations on the approval, Derek. I know this has been a lot of work and a lot of time, so really, congratulations to you and the rest of the team.

Thanks, Chris.

Absolutely. So I guess for me, maybe just going back to the reimbursement, is the -- what can we -- how are we thinking about pricing at this point? Is this a negotiation that you have to have with CMS? Is there some sort of guidance you can provide to us ahead of that time? And as the corollary to that, is the price going to be set, at least during the TDAPA period, at commercial launch? Or will we know that ahead of time? And then if I may, just a very short follow-up is, is there any CMC work or drug supply issues that are holding up launch? Or is it simply just the logistics and the paperwork stuff?

Great. Thanks, Chris. I can answer the second question. No, there's no issues whatsoever with drug supply. So the timing on the launch is all related to applications for TDAPA and clarity on our reimbursement code, as Eric was talking to. So I'll let Eric talk a little bit about where we are on our pricing review. Eric?

Yes, sure. So sort of a multipart question related to price. First part of the price is it's not a negotiation with CMS. That's not how it works. We would set our WAC price, and then we would get reimbursed on initially at our WAC price. But then eventually under TDAPA, we would get reimbursed at the average selling price, not plus 0, so not average selling price plus 6%. So we haven't finalized the price yet. We haven't completed all of our pricing research and work to date. And we're in discussion with Vifor, our commercial partners, to determine our final pricing and contracting strategy for KORSUVA Injection. And we anticipate to have that final decision in the coming weeks here. I'm trying to remember what the other part of your question was. Would you mind...

No, that was basically it.

Yes. Okay.

Yes, like the timing. And you basically just said that, so that's cool. Okay.

Okay.

All right. I'll hop back in the queue. I appreciate it.

Thank you, Chris.

Our next question comes from David Amsellem of Piper Sandler.

So I got a couple of questions on the commercial landscape. Is it your expectation that you're going to see patients step through gabapentin or pregabalin or antihistamines before getting KORSUVA? Or do you expect that because this is an on-label use and it's sort of -- not sort of but it is first of its kind in terms of the indication, that you think you're going to be able to garner a lot of share in terms of just frontline usage in these moderate-to-severe pruritics? What's the best way to think about that at least early in the commercial launch?

Yes, thanks, David. Eric, do you want to relay our thoughts on that?

Yes. Yes, sure. So actually, we did quite a bit of market research in this area to understand how doctors see it utilized. I think conservative therapies will still be utilized on this first line. Now keep in mind, many of these patients have been itching for years and have tried many of these first-line agents and so, for example, the emollients and creams and things like that because they have dry skin, and it's important to actually keep the skin moisturized. They may try antihistamines. They may or may not stay on them. Where we see the product fitting is right after those conservative therapies, many of which don't actually control these patients' itching and prior to using a product like gabapentin or pregabalin. And that's what was fed back to us by nephrologists when we talked through the profile with them. So that's kind of where we see it fit. Many of these patients have already tried and failed many of these options, so they might actually be able to initiate therapy right away on the drug because most of these patients have had itching for quite some time.

Yes. Just to remind you, David, just on the, if you like, current standard of care, I think approximately 40% of the patients we had in our Phase III program were concomitantly taking antihistamines and still qualifying with moderate-to-severe pruritus for randomization. So we -- the science has known for some time the histamine-dependent mechanism for chronic pruritus. And now thankfully, the therapeutics have caught up with the science here, and this is really the first therapeutic that directly addresses the pruritic pathway.

Right. And if I may sneak in a follow-up, just what's the therapeutic dose for gabapentin as an antipruritic? And then what's the incidence of somnolence at that therapeutic dose as an antipruritic?

That's one for Jo. Jo, do you know what those figures are?

Yes. So the dosing is uptitrated to usually effect, so to what the patient can tolerate. And of course, in this patient population, it's the dizziness that becomes an issue. In their label, I don't believe it's -- I can't recall exactly the number, I believe it's in the 20s. Pregabalin is a little bit more -- it's clearer because it's a newer drug, and so it's 30%. And I believe it's -- yes, it's 20%, it's around 20%. Somnolence and dizziness is 20% in gabapentin. But it is an uptitrated dose. I'm not quite sure at exactly what point that was experienced, at what dose. Yes, so sorry, David, I can't provide you with more information. It's not really set clear when those effects were seen.

That's helpful. I was just trying to get at what the somnolence rate are for the gabapentinoids. So that answered the question.

Thanks, David.

Our next question comes from Jason Gerberry of Bank of America.

This is Chi Meng for Jason. I guess first one is just a follow-up on the dizziness and drowsiness. There's language around warning against driving right after the medication, and there's some language around that. You need to make sure the patient is okay to drive and operate machinery before people then go on to do their task. So I'm just curious, how do you practically see the reality of this driving warning playing out and whether you see that as being a drag or not on the utilization? Maybe if you can speak to how often these patients drive themselves home after dialysis, that will be helpful as well.

Sure. Thanks, Chi. Jo, do you want to take that one?

Right. So that will ultimately be a discussion between the nephrologist and the patient -- the treatment nephrologist and the patient and weighing up the -- and when looking at the adverse drug reactions, when we look at the data, patients experiencing dizziness was 6.8% with 3.8% in placebo and 4.2% and 2.4% for the somnolence. So it really is the minority of patients who experience these adverse reactions. So again, it will be based on the discussion. And not all patients, as we said, 90-plus percent of patients won't experience it. So they don't, and they should be fine to drive, but that will be up to the prescribing physician to make the decision with the patients.

Got it. I'm just curious, based on the clinical trial experience, are -- how are these patients monitored of their ability to drive home and whatnot? Are they sort of like have a waiting area, sit there and wait for 30 minutes just to make that they're okay? I'm just curious what kind of procedures you see dialysis centers take, may potentially implement to mitigate that potential risk of drowsiness that may cause the patient's inability to drive?

And in fact, I mean, as you can see here, there is an adverse reaction. But as you may know, hemodialysis patients post dialysis are incredibly fatigued. They themselves already have some fluid shift repercussion such as feeling dizziness, et cetera, so many of these patients don't drive home on their own anyway. And so there are precautions already taken for these patients not specific to drugs but just the process of hemodialysis. So that would bode well with taking the drug.

Got it. And maybe just another one from me. You talked about some of these patients are already on antihistamines. So I'm just curious, there is also safety language around advice against -- caution against using sedating antihistamines along with IV KORSUVA. How do you see that sort of play out? Do you think physicians would still combine the use of antihistamine with IV KORSUVA? Or do you think that they may have to pick and choose one or the other?

And maybe, Eric, you can speak to this as well.

Sure.

But to date, they haven't had other options. So antihistamines were the predominant antipruritic agent used. But obviously, with the approval of KORSUVA for the indication specifically for this patient population, that could change. But Eric, maybe you can speak more to that.

Yes. So good question. A couple of things. One, I think Jo hit the nail on the head with specifically saying that they don't have a lot of options, and so they give them sedating antihistamine. Typically, doctors or nephrologists admit they don't work very well. And a lot of times, they give them to patients to help them sleep at night because it doesn't help with the itch. I would envision that many doctors would probably -- could remove their antihistamine if it's not really helping their itch and utilize our product. I imagine some doctors will probably add our product on top of that. And keep in mind, and Jo, correct me if I'm wrong, I believe our clinical trials, we did add our drug on top of it. So it's not like we haven't seen that being done and actually have patients have good results with it. There is a caution to -- in our label to monitor the patient if they are on both. But I think it would -- I think many of our nephrologists would probably opt for KORSUVA.

This is helpful. Maybe just one last follow-up from me. I think management has talked about maybe site analogs, and that had a pricing in the $10,000 to $12,000 range as sort of the analog for how sell side could potentially think about the pricing of IV KORSUVA. I'm curious if you have any updated thoughts on the pricing of IV KORSUVA based on the label language that you have seen today?

Yes. No, just as Eric indicated earlier, Chi, we've done our pricing research with our commercial partner. That's under review, and we'll be announcing a price point in due course prior to the launch.