Good afternoon and welcome to the Cara Therapeutics First 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.

Good afternoon. This is Jesse Baumgartner with Stern Investor Relations and welcome to Cara Therapeutics first quarter 2016 earnings conference call. The news release with our first-quarter financial results and corporate update became available at 4:01 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 investor section of our 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 for the Company's clinical trials and the reporting of clinical trial results, the potential results of ongoing and planned clinical trials and future regulatory and development milestones for the company's product candidates 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 annual report on Form 10-K for the year ended December 31, 2015 and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made on today's call speak only as of the date on which they are 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. Now, let me turn the call over to Cara's President and CEO, Dr. Derek Chalmers.

Thanks, Jesse. Good afternoon, everybody and thanks for being with us on the call. Today, I am joined today by our Chief Medical Officer, Joe Stauffer, and our Chief Financial Officer, Joe Schoell. So, 2016 is shaping up to be a very important year for us here at Cara. Today, we are going to provide updates on our rapidly progressing clinical pipeline as we move into two additional late-stage indications, continuing to execute on our overall development while maintaining a strong financial position. Joe will provide some more color on our upcoming trials but first, I will walk through the higher level overview and the expected news forward during the next two quarters. First, as many of you saw last month, we were very pleased to announce the rapid removal of the clinical hold for CLIN3001, our adaptive Phase 3 trial of I.V. CR845 for post-op pain. Finding, a mutually agreeable path forward so quickly speaks to the efficiency and execution of our clinical team, our productive collaboration with the FDA and the broader safety profiles seen today with I.V. CR845. We are able to use this analysis as an opportunity to take advantage of the trials adaptive design and identify two doses of CR845 moving forward. 1 microgram per kilo and 0.5 microgram per kilo, which we believe will define the optimum therapeutic dose range in less patient population. This is supported by interim efficacy signals for pain, for supplemental opioid use and for opioid related side effects observed through these first 90 patients dosed. With these decisions now behind us, we continue to work through the logistics of implementing this more efficient three-arm pivotal protocol with their clinical size and we expect patient recruitment to resume later this month. Once we have enrolment back up and running, we…

Very good. Thanks, Derek. So, as Derek indicated, we are very pleased to be back on track with our CLIN3001 trial after a timely and productive dialogue with our colleagues at the FDA. And while we continued to expect patient recruitment to resume this month, we are also hard at work preparing for our two additional trial initiations in UP and chronic pain. So, starting with uremic pruritus, we continue to anticipate initiation of our registration program for I.V. CR845 in hemodialysis patients, suffering from moderate to severe uremic pruritus during second quarter. And we're making significant progress on site selection and qualification to this end. The trial will be a two-part Phase 2/3 adaptive design as we discussed last quarter. Part A will be 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 per 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. The dose selected for Part A will be anchored around the 1 microgram per kilogram dose, used in our successful two-week Phase 2 trial in end-stage renal disease patients. Then as Derek touched on, 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. Data from this trial will inform Oral CR845 doses that can be employed…

Thanks, Joe. As a reminder, the full financial results for the first quarter can also be found in our press release issued today after the market close. We reported a net loss of $10.7 million, or $0.39 per basic and diluted share for the first quarter 2016, compared to a net loss of $4.7 million or $0.21 per share basic and diluted share for the same period in 2015. We recognized $7,000 of revenue during the first quarter for the sale of clinical compound to Maruishi. For the first quarter of 2015, collaborative revenue was $489,000, comprising revenue that had been deferred upon entry into the license agreement with Maruishi. R&D expenses were $8.5 million in the first compared to $3.4 million in same period of 2015. The higher R&D expenses in the first quarter of 2016 were principally due to a net increase in direct pre-clinical and clinical trial costs, consultant services in support of pre-clinical and clinical trials, an increase in payroll and related costs for R&D personnel. The acceleration of amortization of leasehold improvements at our Shelton, Connecticut facility prior to the relocation of our corporate headquarters to Stamford, Connecticut and some increased rent. General and administrative expenses were $2.4 million in the first quarter of 2016 compared to $1.8 million in the same period 2015. The increase in the first quarter of 2016 was primarily due to increases in payroll and related costs, in investor relation costs and in professional and consulting fees, franchise taxes and in rent and the acceleration of amortization of leasehold improvements as noted previously. Other income was $149,000 of interest income and dividends earned on cash, cash equivalents and marketable securities during the first quarter of 2016 compared to $14,000 of interest income during the same period in 2015. The increase…

Thank you. [Operator Instructions] Our first question comes from the line of Charles Duncan with Piper Jaffray. Your line is open.

Hi. This is Sarah on for Charles. Thanks for taking the question. I have two. So on the uremic pruritus trial, will patients in Part A be able to roll over into Part B and is it reasonable to say we could expect that data by year end ’17?

Hi, Sarah. Thanks for that. I’m going to let Joe talk about that.

So it will roll over from A to B.

Yes.

Yes. So it would be the expectation now. In terms of finishing out to ‘17, we can give you a much better update once we get the trial started in rolling with our sites. This is a big trial, more sites and before. So, give us time to get back to you with how it really looks and then we can give you some more solid data on timeline.

Okay. Thanks. So then on the post-op pain program are you planning to conduct any additional pre-clinical or Phase 1 work to support the two go-forward doses?

No. We are fine there.

Okay. Thanks for taking my question.

Thanks, Sarah.

Welcome.

Our next question comes from the line of Annabel Samimy with Stifel. Your line is open.

Hi. This is Esther Hong in for Annabel Samimy. My questions are in regards to the Phase 3 post-op pain trial. First, what signals or indications do you have that provide confidence the 1 microgram per dose is the optimal dose? And second if mild hypernatremia is easily manageable, why was the 2 microgram per kg dose dropped and then third is jus timing? When should we expect the second Phase 3 trial to initiate and is the NDA filing still on track for end of 2016, early 2017? Thanks.

Okay. Hi, Esther. Let me start and then I will let Joe talk about time a little bit. So in terms of the dose selection sought and I think we said this last time. Essentially, this is based on the interim trends and efficacy we've seen in these first 90 patients dosed, where we see changes in both pain scores and supplemental opioid use. We also see changes in the usual new opioid related side effects, principally nausea and vomiting that we’ve talked about before. So that was a little like adding bonus, if you like of having this interim assessment for safety that we can look at the numbers and reassure ourselves of those signals. Also, again, I think as we should last time, looking at the basic pharmacology of CR845 that is the potency of the drug, which as you know is in the picomolar range, which essentially means that plasma exposures and the picogram per mill level will be saturating for this drug. And looking at our PK data for the 1 microgram per kilo level, we are certainly well above what would be a saturating concentration for this drug. So, we are comfortable on the pharmacology. We’ve seen interim signals from these first 90 patients. And then the last item that support of -- as we discussed again previously, the very robust efficacy we saw in our uremic pruritus study was at the 1 microgram per kilo level. Again confirming what the same mechanism of action that is reduces hyperactivity, anti-inflammatory activity. We can see robust efficacy for that dependent variable. So, all of that makes us comfortable that we've chosen a dose that's going to show a great pharmacology at the target. As to why we were focused on that dose and not the other those, we saw, as we mentioned in the 10-Q, transient increases to the mild level in serum sodium, And as you know and as we agreed with the agency, we have stopped the rules related to that particular dependent variable, not related to any side effects we have observed. We never have in relation to that but it is one item we’d agreed to monitor. And so at about an interest in not getting anywhere close to stopping rules and stopping criteria and really defined as we said the optimal dosing range both for efficacy and for any perceived, if you like you side effects of the drug as far as the agency is concerned, we chose the 1 microgram dose as a top dose going forward. Joe, do you want to add?

Sure. And you had two other -- well, you had two others parts of your question. Derek answered the 2 microgram part, why did we drop that. We want to continue also to identify a mild factor or low factor as well and that’s why we are adding in the 0.5 micro kilo. It also balances up a trial quite well. And as far as timeline, you said 2016, we are in 2016 now so we plan on submitting the NDA end of 2017 and that depends on enrollment.

Okay. And then when did the second Phase 3 trial?

Sorry about that. Yes. So, we will take an interim assessment to look at this data for this Phase 3 portion. We should do that in first quarter next year and then based on what we see we will start that next trial and then continue on with this trial as well.

Okay. Great. Thank you.

Our next question comes from the line of Alan Carr with Needham & Company. Your line is open.

Hi. Thanks for taking my questions. A couple here. Wonder if you could talk a bit more about FDA's thinking towards hypernatremia in your discussions and their sensitivity to it? And then also for this interim assessment in -- looks like an early 2017. I guess can you tell us more about how that will be carried out on and what changes you might make at that point and then you said that you will start a second Phase 3 trial then reach a level of confidence that you would just run? At some point you talked about three trials. You might run three Phase 3 trials. So can you tell us a little bit about decision process at that point?

Sure. I got. So it’s really three questions here. The first was I believe serum sodium and this is really the last remaining piece for the FDA to look at. We believe it was a pretty quick turnaround with us and them through this clinical hold. So it is something that they haven't seen before in terms of pharmacology. This is a new pharmacology to them. And so unlike other new opioids that have older other inherent side effects that they are kind of attune to respiratory depression and all these other issues. Because this is a kappa, this is something that they wanted us to pay attention to them and we need too and so because if serum sodium goes too high or too low, you can get patients into trouble. We never had that there with any of our doses but it's an optical thing in terms of a blood level. And so we are very comfortable now that we know where we need to be and I think the FDA is as well. In terms of the interim assessment, remember that’s a plan that we have through a charter with an independent data monitoring committee, which is made up of the statistician and an M.D. PhD., neurologists and statisticians as well as anesthesiologists. The charter that’s blessed between us and the FDA, there are rules within that charter for how we take a look at the data and I’m going to obviously share our secrets with everybody how we do. It is something that I'm -- we are pretty proud of that we were able to negotiate with the agency. And in terms of the decision, so once the IDMC looks at the data, they give us guidance as to what they recommend and those choices can…

And can you remind me, the interim is triggered by enrollment of how many patients?

That’s a good question. It is. It’s trigged by approximately 180 patients, or about 60 per arm.

Okay. Great. Thanks very much.

Thanks, Alan.

Our next question comes from the line of Jim Molloy with Laidlaw. Your line is open.

Hi. This is actually Frank on for Jim. Thanks for taking the questions. My first question, first part of the is question is are there any automatic stopping rules in any of the other trials that we should know about beforehand and did the FDA mandate any additional safety laws in the IV pain trial that weren’t already there, like any in the hip, knee, or even in the pruritus trials?

No. There is no other extra stopping rules that we are putting here. So, we just have to continue on doing what we are doing and work with them. The next formal look is the IDMC for interim assessment.

Okay. Great. And then in terms of the partner, Maruishi, are we still on track for second half ’16 pruritus data? Any idea when second half, would it be late or early?

Yes. We haven’t guided on when we are getting data out of the Maruishi Phase 2 but they are on track and they are moving forward with the PMDA discussions and they are on track to move into efficacy trials this year.

Okay. Great. And then another one. Has there been an any interest from larger pharma partners either in license CR845 or exploring outright acquisition of Care overall?

Frank, that’s something we haven't talked about publicly. But we are looking at molecules for very large market spaces. We’ve already proven these are non-usable molecules so. There have been -- and frequent and frequent request for information along the way but that’s something we don't, we haven't talked about.

Okay. Thanks. And then in terms of the -- is it impossible if the first of the Phase 2, 3 trials for the I.V. CR845 for UP hits and it's big enough? Can you possibly use it as a registration trial?

Well, we would. It’s set up to go out to 12 weeks. And so, we can off itself, we can. Even if it hits and if it’s clean. When I say clean, I mean safe and we certainly anticipate it will be safe then we would position it as a pivotal trial. Again, that’s a discussion that we would have to have with the agency though upon review of the deal.

Okay. And then I'm a little confused in terms of the -- can you restate the timing for the Oral CR845 for UP?

Oral for UP, so we are starting that this year. It's just a -- it's a pharmacokinetic trial. So, we want to get a handle on what this drug looks like orally in these patients, right. These patients are quite sick. They have lots of different medications on board. And even though the drug isn’t metabolized, these are not like say osteoarthritis patients or even healthy subjects. And so we just want to make sure that the way they handled the drug orally would be safe and well-tolerated. We certainly expect that. But we won't know that until we get to the trial started and finished but we are going to start soon/

And then one final one. Why is it so easy to -- in terms of efficacy why is it easy to translate the 1 microgram per cake per kg from the UP to post-op pain?

Mechanisms are same, Frank. The mechanism of action here for OA 45 is essentially inhibit sensory nerves and C-fibers and some other fiber types roughly and also inhabit inflammatory responses from a range of inflammatory cells and essentially the TNF-alpha cascade. That’s the mechanism for the drug and that applies to pruritus as well as in -- so that's our argument there is if the exposure is given a reduction in one dependent variable, then it's most likely going to work in the other clinical situation.

Okay. Great. Thanks a lot for taking my questions

Thanks, Frank.

Our next question comes from the line of Ken Trbovich with Janney. Your line is open.

Hi guys. This is actually [indiscernible] on for Ken. Thanks for taking my question. First question, can you just help us think about how to model the upcoming milestones both from a reissuing CKD and I guess, specifically, which trials are those milestones tied to?

This is Joe Schoell. As far as the milestone, CKD’s milestones are predicated on us, completing our trials to completion of the Phase 3. As far as Maruishi’s combination and it’s dealing with them going forward with the uremic pruritus trial, as well as us finishing the pain trials. I think we said in the last quarter we don’t expect milestones in 2016.

So the Maruishi payment is tied to two different clinical progress in multiple trials?

Yes. It’s tied to us, completing our program here in our U.S. trials. We received milestones payments from Maruishi. With the idea of Cara license agreement, they have the ability to use our U.S. trial late and their submissions to the PMDA and we also received milestone payments when they complete their clinical trials, larger payments in uremic pruritus and smaller later payments in Phase 3 for post-op pain.

But there is a $1 million milestone payment that’s tied to a Specific Phase 3 trial, correct?

That’s correct.

And that is we have an ongoing trial.

No, we haven’t disclosed the detail on that. But you are correct, there is $1 million milestone associated with Phase 3 completion.

Okay. And then just -- sorry not to -- I know this has been talked about a lot but just going back to the resumption of recruitment. Because of the un-blinding, have all those patients can no longer be reenrolled into the trial under a different dosage?

That’s correct. Because it's unblinded, all those patients will be used as part of the overall safety database of 1500. But we obviously can’t use them for efficacy. So, we like to use the terms sequester, right. So it’s almost like its own little separate Phase 2 trial. Going forward, the trial is smaller but we can’t use those same patients.

Okay. Great. Thank you so much.

Thank you.

Thank you. And our next question comes from the line of Chiara Russo with Cantor Fitzgerald. Your line is open.

Yes. Hey guys. Thanks for taking the questions. Just kind of a quick question here. I know that you guys came out with sort of an updated dosing schedule for the pain trial. It seems to me -- and please correct me if I’m wrong, it seems like the dosing is converging on both sort of the IV, UP and the unique pruritus trial. Do I have that somewhat correct?

I think you do, yes.

Okay.

Just happing to work out a bit.

Well, obviously, through the full adapter phases but is that due to sort of the pricing and marketing philosophy?

Yes. So the other thing to bear in mind here, Chiara is that the UP dosing is three times a week. They received a three times a week after dialysis. The IV dosing is cue six. So with the pre-surgical dosing that’s five times a day in relation to the post-op trial. So, ultimately, those are very different types of dosing regimens and there will be different concentrations prevail for those. So those are easily translatable into different prices.

Okay. Just wanted to make sure with that. And then my last question is obviously, I think we have a good understanding. We have our hands around the UP itch opportunity but looking out part of that, what does an oral Anti-H look like for instance say in like a dermatology space?

That’s a great question. We actually have looked look at some dermatologic conditions here. Just thinking about where else might have placed atopic dermatitis or itching due to say a psoriasis. Even cholestatic, it's a people that are having livers and/or gallbladder that are not working well. So, what we call cholestatic itch. And we believe that those are nice places to look at as well. Obviously in that case, they would you have to be oral because they are chronic outpatients. But those are kind of the big three or four that we are looking at right now.

Okay. Great. Thanks guys.

Thanks, Chiara.

Thank you. And I’m showing no further questions at this time. I’d like to turn the call back to management for closing remarks.

Okay. Thank you all, everybody for participating in today’s call and we look forward to updating you again very, very soon. Have a good Cinco de Mayo. Thank you, everybody.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.