Good afternoon. My name is May, and I will be your conference facilitator. I would like to welcome everyone to the Cara Therapeutics First Quarter 2022 Financial Results and Update Conference Call. All lines have been placed on mute to avoid any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that this call is being recorded. I would now like to introduce Iris Francesconi, Interim Head of Investor Relations from Cara Therapeutics. Ms. Framcesconi, you may begin your call.

Thank you, May, and good afternoon. Just after market closed today, we issued a press release detailing our corporate progress and financial results for the first quarter 2022. The press release 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. Participating in today's call are Chris Posner, Cara's President and Chief Executive Officer; Tom Reilly, Cara's Chief Financial Officer; and Dr. Joana Goncalves, Cara's Chief Medical Officer. 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 successfully commercialize KORSUVA injection, including the timing of the product launch; planned future regulatory submissions; and potential future regulatory 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; despite and growth of the potential markets for current management; 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 for the year ending December 31st, 2021, 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 recent events that occur or circumstances that exist after the date on which they were made. With this, I will turn it over to -- turn the call over to Chris.

Thanks, Iris, and good afternoon, everyone. The first quarter was pivotal for Cara as we are now a commercial stage company moving our growth story forward. The first few weeks of KORSUVA Injection US launch have proceeded as planned, and all of our programs, many of which we have recently detailed to you remain on track. I will give some highlights on our encouraging progress in a moment. Tom will follow with the financial update, and after that, we will be available to take your questions. Cara Therapeutics has a unique mission, focusing value proposition. We are building the world leader in pruritus. We see this as a differentiated value proposition and opportunity. Chronic pruritus is often a severe, intractable problem for patients in a wide range of diseases, and it is underserved by currently used treatments. This quarter, we continue to execute on our three strategic priorities, which we believe will put Cara on a firm path to sustainable growth. Of course, our first priority is to maximize the commercial potential of KORSUVA injection. We are now in full launch mode in the U.S. As you will recall, the commercialization efforts in the US are being led by our partner, Vifor Pharma, a leading renal pharmaceutical company in the US. While we are still at a very early stage of the launch, so what we will share with you today is largely qualitative, Beginning in Q2, we will provide more quantitative data, which will paint a more detailed picture. Now our primary objectives in the first four weeks of launch were to: A, have products shift to wholesalers; B, have contract negotiations underway with the top dialysis organizations; C, have VO systems upgraded with product pricing and reimbursement information to allow product ordering; D, pivot the sales force from…

Thank you, Chris. As a reminder, the full financial results for the first quarter 2022 can be found in our press release issued today after the market closed. Cash, cash equivalents and marketable securities at March 31, 2020, totaled $209.6 million compared to $236.8 million at December 31, 2021. The decrease in the balance primarily resulted in $25.5 million of cash used in operating activities. For the first quarter of 2022, net loss was $27.7 million or $0.52 per basic and diluted share compared to a net loss of $23.3 million or $0.47 per basic diluted share for the same period in 2021. Total revenue was $4.8 million for the first quarter of 2022 and compared to $1.9 million during the same period of 2021. The $12.8 million in Q1 2022 related to KORSUVA injection commercial supply to Vifor Pharma. In Q1 2021, the $1.9 million related to license revenue earned from Maruishi Pharmaceuticals Company from the first initiation of a Phase 3 trial for uremic pruritus in Japan. In February 2022, the company had not recorded any cost of goods sold related to its commercial supply revenue as all inventory costs were incurred prior to receipt of regulatory approval of KORSUVA injection and accordingly as expense incurred. In March 2022, the company recorded commercial supply revenue of $2.5 million with associated cost of goods sold of $2.1 million as these inventory costs will incur subsequent to the receipt of the regulatory approval of KORSUVA injection. R&D expenses were $21.3 million for the three months ended March 31, 2022, compared to $19.1 million in the same period of 2021. The higher R&D expenses in 2022 were principally due to increases in direct clinical trial costs and payroll-related costs. G&A expenses were $9.3 million for the three months ended March 31, 2022 compared to $6.4 million in the same period of 2021. The higher G&A expenses in 2022 were principally due to an increase in stock-based compensation expense, which includes an additional $1.6 million compensation expense related to the modification of the company's former Chief Executive Officer’s Equity Awards in 2021 as well as an increase in payroll-related costs. Based on timing expectations and projected costs for current clinical development plans, Cara expects that its existing unrestricted cash and cash equivalents and available for marketable securities as of March 31, 2022, including the $15 million regulatory milestone payment earned in April 2022 on European Commission approval Kapruvia, will be sufficient to fund its currently anticipated operating expenses and capital requirements into the first half of 2024, put affect any potential milestone payments under existing collaboration for product revenue and the commercialization post injection. With that, I will now turn the call back over to Chris.

Thanks, Tom. In summary, we are optimistic with the start of this year. Our continued execution propels us down the road of significant value creation. The launch of KORSUVA injection is progressing well. We set our expectations and met them. A, the product can be ordered by all dialysis organizations. Two, reimbursement is in place; three, physicians know the benefit of the product and they're starting to prescribe. And lastly, patients are starting to receive KORSUVA injection. In the EU and UK, Kapruvia is now approved, providing a second significant market opportunity. The EU rollout is expected to start in the second half of 2022 and the associated milestone payment of $15 million extends our cash runway into the first half of 2024. And we are executing to deliver on our pipeline. The oil programs have potential to create a platform product with a much broader market opportunity across many diseases. Pivotal Phase 3 programs in AD and advanced CKD are underway. The Phase 2 proof-of-concept data in the notalgia paresthetica is expected in the second quarter. Our PBC Phase 2 data remain on track for the second half of 2022. While our strategy is to be the leader in bringing new treatments for pruritus to market, an underrealized opportunity of millions of patients. We have taken important steps this quarter to make this happen. Now with that, Tom, Joe and I will be happy to take your questions. Operator, over to you to open the call up for questions.

[Operator Instructions] Your first question comes from the line of Joseph Stringer from Needham & Company. Your line is open.

Hi, good afternoon. Thanks for taking our question. Two questions from us. The first one is on IV KORSUVA. You mentioned that the addressable patient population, you mentioned that 40% or so of dialysis patients that with moderate severe pruritus. Just wondering if you could provide some additional color on maybe what those 40% of those 40% -- are there patients that you believe that you can reach first initially with the drug? Is it sort of tiered on sort of level of response to itch or any additional thoughts on how you think about those in terms of the initial patients for IV KORSUVA and then sort of working your way up the tier to get more patients?

Yes, Joe, nice to hear from you. Certainly, so if you look at the literature, we see roughly 65% of kind of hemodialysis patients in the US suffer from some form of edge -- and again, the miniature about 40% suffer from moderate to severe pruritus that are undergoing dialysis. And you kind of triangulate that now with in practice in the real world, and we're hearing very similar numbers in terms of the addressable population. So the 40%, Joe, is really what we view as the addressable market. There's roughly 500,000 patients undergoing dialysis in the US and about 200,000 of them suffer from kind of this moderate to severe form of pruritus. -- that would be a candidate for KORSUVA injection. And I'd just add, Joe, I mean, the nephrologists agree that this is really a significantly underdiagnosed condition among pace that's really due to the lack of effective treatment options. And the majority of nephrologists that we talked to were hearing it from the field as well, so that they're going to actively start to identify these patients now that they realize that there was a solution available. So we feel pretty good about that number. Q – Joseph Stringer: Okay. Great. Thanks for taking our question. A – Chris Posner: You got it, Joe.

Your next question comes from the line of Jason Gerberry from Bank of America. Q – Chi Tran: Okay good afternoon. Good evening This is Chi for Jason. Thanks for taking our question. Maybe just a quick one. I think there's some -- we've been getting questions of sort of like expectation for second quarter, which is going to be the first quarter of Cara the report net sales and royalty contribution and whatnot. So I'm hoping you can provide some color in terms of sort of what is the one timer, what do you expect from manufacturing fee? And what do you expect from sort of the accounting purpose, sort of like if you can lay it out for us, I think there's going to be a $15 million milestone expected from -- you expect to receive from the approval, how are you going to recognize that from a great perspective. And then the rest of it, is it going to be from the underlying demand of IV KORSUVA launch in the US? And then hoping you can provide some color, you recognize a commercial supply revenue of about $4.8 million in the first quarter. Is it sort of the manufacturing fee that you continue to think is it the recurring item think about from a sales side marketing perspective, should we -- is that going to be a separate item? Is it going to be a recurring item? -- separate from the revenue contribution of IV KORSUVA. So if you can sort of help us understand the different components for second quarter that would be helpful. A – Chris Posner: No, no doubt. So Chi, I mean let me first -- I'll turn it to Tom for some of the accounting on the P&L and how we're going to account for that. But what I would stress is what we intend. I mentioned some qualitative things around the early days of the launch, Q2, we will obviously provide much more quantitative metrics. And the three metrics that we're committed to provide just to reinforce is, is one total net IV KORSUVA sales, two will be Cara’s IV KORSUVA's revenue. And then the third, which I think is really important because it gets transparency on demand generation. That's going to be aggregate wholesaler sales volume to customers. And we do believe this is a really good proxy for end user demand. As I mentioned before, dialysis centers don't carry a lot of inventory. So just want to be clear, those are the three metrics that will track consistently quarter-to-quarter beginning in 2Q. Let me turn it to Tom over P&L accounting standpoint. Hopefully, you get those questions from Chi.

Sure. Thanks, Chris. Thanks, Chi. So the question was more on the transparency related to revenue and in particular, on the commercial supply. So related to the first one, the line the $15 million milestone that will be separated out. That is part of our license amount -- license milestone P&L line item. So that will be separated out. As Chris just mentioned, for transparency perspective, we will be showing on our P&L, the profit split revenue, which also be in a separate P&L line and that will be the disclosing KORSUVA injection net sales, so you'll be able to see the comparison of the profit split versus KORSUVA injection net sales that we disclosed. And I think the third question, see if I got it right, was related to commercial supply revenue. And so, the commercial supply revenue will also be broken out separately. And we mentioned for more forecasting and modeling purposes. So that's related to supply that we ship over to our partner Vifor. And so, as the products demand starts building, we will be sending products to Vifor commercial supply to sell to the channel. So that will be that will be transparent in our P&L on a revenue line item and the associated cost of goods sold that you'll see, will be associated with that promotional supply P&L line. So you'll see from of our disclosures in this quarter, the transparency between what was actually incurred with the relative cost of goods fill starting in March, versus anything that was expensed prior. So, hopefully, that answers all of your questions.

No. This is very clear. Thanks so much. We were getting some questions and we are aware that consensus has served this body and I'm just hoping to sort of like get some clarity, hoping that we will have less body numbers looking at second quarter. So thanks so much for the help. And that's it. I look forward to your host you guys at our conference this week.

Yes, Chi. Looking forward to it

Thanks, Chi.

Thank you.

Your next question comes from the line of Daniel Wolle from JPMorgan. Your line is open.

Good afternoon, guys. Thanks for taking our question. A couple for me. First, with a little bit of over one month of commercial launch behind us, what can you tell us about the initial activities that would indicate that significant uptake is still an expectation for KORSUVA injection. And I have a follow-up.

Yes, Daniel, I'll tackle the first one. So here, let me just tell you, specifically, the first couple of weeks of the launch, I mean, A, the Vifor has really worked diligently to ensure that the product pricing and reimbursement information is loaded into the systems, so orders can be placed. And before ship product to wholesalers and wholesalers have started to ship product to dialysis clinics. So most importantly, patients are receiving commercial product. It’s okay. And then the second thing around execution. I mean, since the launch meetings in March, the Vifor sales force has transitioned from patient identification to product promotion and they are promoting KORSUVA injection to physicians and advanced practice providers and nurses. And I'm really pleased to report that they have actually reached the majority of these ACPs at least once in the past 4 weeks. And anecdotally, I mentioned before in my prepared remarks, there's a high level of excitement. And then lastly, they really upped the efforts in terms of activating and engaging patients, we believe both Vifor and Cara believe that the patients are key drivers of demand. So a lot of activity around activating patients, and I mentioned again in my prepared remarks, a campaign that they just launched with the American Kidney Fund would support from Vifor. So from my standpoint, what we're seeing in the marketplace is quite encouraging. There's a lot of excitement around the product. We're seeing ordering, and we obviously expect that to accelerate in the coming weeks.

Okay. Great. And in terms of activating and engaging these patients, is it possible for you to quantify for us the potential contribution to the addressable patient population that can be driven by raising this patient awareness?

Well, it's hard to quantify at this stage. What I could tell you, it's a multi-pronged demand generation program. Obviously, bottoms up working with nephrologists, advanced practitioners as well as nurses and the patients. And it is a top-down approach, working with the dialysis organization. So the Vifor team, it's hard to put a number on the kind of value creation of each of those. But the Vifor team has done a very nice job leaving no stone unturned in the marketing efforts. That's what I can tell you.

Okay. Great. And then on the European launch, can you provide us some color on how we should think about that your let launch for Kapruvia, the reimbursement dynamics across different countries and then the economics involved with the JV.

Yes. So I'll let Tom tackle the JV question, if you allow me, Daniel. But let me talk a little bit about Europe. Again, early days, I mean, the great thing, a, is we have an approved product called Kapruvia. We announced April 28 via the European Commission. And overall, if you look at the opportunity in Europe, you're looking at about 300,000 patients undergoing dialysis in Europe. And we're hearing kind of the similar sort of prevalence from an addressable population. Around 40% of that population would be addressable for a drug like Kapruvia. And I'd be remiss and I have my medical -- my Chief Medical Officer sitting next to me, I’d be remiss not to tell you that there's a tremendous unmet need in no-proof therapies for these patients in Europe. So that's A. In terms of how -- what we've guided to with Vifor is that launch will occur sequentially with countries beginning in the second half of 2022. Germany will -- is traditionally the first country to launch in Europe will be no different for Kapruvia. And reimbursement is different. Europe is not one country. So reimbursement is different across the different countries. But again, in terms of sequence of launch in Germany, we'll go first in the second half of this year and then the rest of the Western European countries will follow suit into 2024. So we're quite excited about the opportunity in Europe. Again, similar dynamics in the US in terms of high unmet need, no approved therapies and the Vifor team has really done a good job preparing the market. It's not like -- well, they've been preparing the European market really at the same time they've been working in the US market. So we're quite excited about the potential there. In terms of the JV, Tom, maybe you could just talk to Daniel about the JV a real quick.

Sure. No problem. So Daniel, the -- as we mentioned earlier, there will be a $15 million, and it's a cash milestone, which we'll receive based on the approval -- the approval. Relating to the economics, it's our traditional royalty-based agreement outside of the US, first phase of net sales. So it's the royalty is a tiered double-digit royalty structure based on the net sales outside of the US.

Great. Thank you, very much.

Thanks, Daniel.

Your next question comes from the line of David Amsellem from Piper Sandler. Your line is open.

Thanks. I joined late, so I apologize if I missed these topics. But just on the launch, can you just talk about who you think are the ideal initial patients, if you will, or maybe I'll ask a different way. Can you just talk about where is the low-hanging fruit in terms of patients, is that those who have already been on, say, oral antihistamines or gabapentinoids, or how is your partner thinking about that? That's number one. And then number two, can you just talk about pricing in Europe and how you think it's going to shape out relative to the US, I mean, to TDAPA and the bundle, notwithstanding, but at least initially, how do you think that will shake out? Thanks.

Yeah, David, nice to hear from you. Let me tackle the last question, because it's a bit more straightforward. The price in Europe, obviously, we just got an approval Vifor will work on pricing in the European countries with the government committees over the course of the next ex number of months. In terms of the expectation, I would tell you, obviously, it's going to be lower than the US in general to the degree and magnitude of how much lower? We don't know yet. I think that's work to be done by the Vifor team with the value proposition again with the authorities in the European countries. Your first question is a really interesting one on patient segmentation. And again, there's been a lot of market research and a lot of work done by the Vifor team and the Cara team on patient segmentation. There are a lot of patients that have basically tried and simply resigned for the fact that there's no great treatment alternatives. So we really believe that activating these patients to tell their nephrologists and their nursing staff that there's a solution now available, we believe that they are low-hanging for it. And what we're hearing in the marketplace is that once it's kind of like the marketing adage to magnify the problem on the solution, really talking about the solution with these patients, they've been very active now engaging with their nephrologists. So I think instead of getting into individual segmentation, that's what we believe really is a patient population that will be the initial patients to get on drug.

Very good. It’s helpful. Thanks.

You got it, Dave.

[Operator Instructions] Your next question comes from the line of Annabel Samimy from Stifel. Your line is open.

Hi. This is [indiscernible] calling in for Annabel. Congratulations on all the development, and thanks for taking our question. In notalgia paresthetica proof-of-concept data is coming up soon. Will this be reported out in a similar fashion as the Phase 2 atopic dermatitis and pre-dialysis study? Is there any benchmark for notalgia that we should be thinking about? What are some of the assumptions baked in there in terms of placebo and what you need to see over placebo to reach its significance? And if successful, will you be pursuing any basic programs or use the data to lead to establish activity in neuropathic age? And the second question is, do you expect R&D expenses to increase throughout the quarter, or stay in the similar range as this quarter? Thank You so much.

You got it. I'll have Tom tackle the second one if you allow me, but let me turn it to Dr. Goncalves who will answer the notalgia paresthetica question

So thank you for your question. So to tackle the first part of it, we will be sharing the data as we typically have done on this top line results for the study in this quarter, quarter two. You were asking about benchmarks within notalgia paresthetica test. Up to date, there has not been any robust placebo controlled study to be able to begin on what the placebo response would behave like. So we will wait for our data and wait and see what the placebo will look like. But there's really not been anything that it speaks to the unmet need of the total notalgia paresthetica that very low research, actually no research has really been done in this space. So we look forward to our data. And then our future expectations of the data in the next step, as a small group of context study, we are expecting to see a numerical separation from placebo. What we also would like to see is a consistent pace of efficacy that we have seen across all other disease areas. So we thought onset of action and sustained out to the eight-week. We'll wait for the date and review it comprehensively. And then, take it from there on what we expect to see in the development plan.

Great. And on the R&D expenses, Tom, maybe you can just speak to that.

Yes, sure. So we don't guide on R&D expenses on a quarter-by-quarter basis. So what I would suggest or what I would comment is we did provide guidance today related to our cash runway, which carries for -- which will carry in our ongoing operating expenses and development expenses into the first half of 2024 and that does not take into consideration any revenue associated with KORSUVA injection. So I think from that perspective that should help you get a sense of what we're expecting from a cash burn here into the first half of 2024.

Awesome. Thank you, both. It's very helpful.

Thank you.

You're welcome.

Your next question comes from the line of Sumant Kulkarni from Canaccord. Your line is open.

Good afternoon. Thanks for taking my questions. The first is on the launch and the second is a clarification. First, it's good to hear that your partners launch is tracking for your expectations -- it's still early days, you have reimbursement. But if there's been any nitpick or pushback against the use KORSUVA IV? What have those been if at all?

Yes, Sumant, it's great to hear from you. No, we have not heard any pushback. In fact, it's a reverse I check in with the Vifor pretty much daily. And I think the general theme is excitement. There hasn't been a lot of innovation in the CKD space in dialysis to begin with. So a lot of excitement that there is a solution now and that's the general theme.

Understood and then the clarification. You mentioned the inventory dynamics, the way they work in dialysis Connect. So I just wanted to clarify that on the $4.8 million of commercial supply revenue that shipment was close to actual pull-through demand.

Yes, Tom, on…

I'm sorry, to $4.8 million. Yeah. The $4.8 million Sumant, do you mind just repeating the question, sorry.

Oh, the question was for the $4.8 million, how does that ship in recognition work relative to the actual pull-through demand?

Okay. So the way that is related to shipments to our partner, Vifor, it's commercial supply business in Vifor. From there, the actual shipments before, we'll then ship to the wholesalers. And from there, the wholesalers ship to the dialysis organization. So the revenue that we recorded was the commercial supply that gets the change starting over to lease.

Let me ask that another way then, roughly how many months of usage would that correspond to them?

That, we don't disclose

Thanks.

[Operator Instructions] There's no question at this time. Please continue. Oh, we have our next question from the line of Oren Livnat from H.C. Wainwright. Your line is open.

For the last second punch, and I think I tried a couple of times. If I could just ask a little bit about – I know you're limited in what you can say in Vifor is launching this, but I think you can talk big picture about essentially, what is the commercial model for this product in this space? You haven't talked about it in a while. You mentioned the top down effort from dialysis centers. I'm trying to understand, who is really the touch point that's going to drive I guess, awareness and utilization or prescribing this product, does Vifor really have to in a typical pharma since their launch have to make individual nephrologists aware of and fully educated on this product before they even start thinking about prescribing it aside from patient activation. Or given that these patients are actually seeing these dialysis centers every other day, are they really the driving force here such that assuming Fresenius, for example, already is intimately familiar with this product or will be very soon are they reaching out to their affiliated physicians to sort of drive awareness of this new option that's available?

Yeah. It's a great question on the entire buying process. It's a rather unique ecosystem. And that's why I mentioned or that nephrologists have to prescribe the product that -- so they have to be educated and made aware of the product in order to prescribe it, so the patient can get it. The dialysis organizations help demand generation by talking to their clinics and turning their nurses, et cetera, and making it available. So the DOs have a job to play in demand generation as well. And then the third prong of that is the patients kind of similar to other typical prescription markets is when a patient is educate it and activate it and actually ask for a drug, they tend to get it. It works pretty similar here. So the buying process across all those demand levers is where Vifor has allocated resources. And that's why putting the marketing add on, that's why I'm very keen on the launch to date as well as the acceleration in the coming months.

I guess, to ask it another way is without understanding the rules and the laws of the land here intimately myself. Is there a possibility that nephrologists who sends patients to Fresenius centers routinely is going to be receiving any materials coming from the Fresenius side, not from a Vifor rep directly. That is raising their awareness directly about this product being available to their patients that come to Fresenius centers?

Yeah. Well, that's a profound approach the DOs could help raise awareness and educate the community as well. But Vifor' team is taken a bottoms-up approach as well, obviously, targeting the 4,000 or so nephrologists. And as I told you, we're quite keen on execution. And as you probably know very well, launches typically fail because execution is poor. And we're seeing very strong controls on key performance indicators on the execution side by Vifor. And I mentioned before, they hit pretty much all 4,000 nephrologists in the first couple of weeks of launch. It's a very strong execution number. So it's as bottoms off top down approach then I think really caters to the ecosystem in ESRD dialysis.

All right. Sounds like a drinking game, tops up, tops down. The EU commercial dynamics, just also on that front, how concentrated is that market across the swath of the continent there. Is it similar? Do you have large corporate players across a country or countries, or are these government provided stasis facilities, or is it just totally fragmented and should not think about it being similar to the US market?

Yeah. I would say every country is a little different, but I would tell you, it's a fairly concentrated market as well, maybe different players in the US in individual countries, but concentrated as well.

All right. Thanks. I appreciate though.

You got it. Thanks, Oren.

[Operator Instructions] There's no question at this time. Please continue.

Okay. With that, I would like to wish everybody a great afternoon, and thank you so much for joining the call.

This concludes today's conference call. Thank you for participating. You may now disconnect. Presenters, please stand in line.