Cara Therapeutics, Inc.

Good afternoon. My name is Josh and I will be your conference facilitator. I would like to welcome everyone to the CARA Therapeutics fourth quarter and full year 2022 financial results and update conference call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number 11 on your telephone keypad. Please be advised that this call is being recorded. I would now like to introduce Matt Murphy, CARA's Manager of Investor Relations. Mr. Murphy, you may begin your call.

Thank you, Operator, and good afternoon. Just after market closed today, CARA issued a news release announcing the company's results for the fourth quarter and full year 2022. Copies of this news release and the associated SEC filing can be found in the investor section of our website at www.caratherapeutics.com. Before we begin, let me remind you that during the course of this conference call, we will be making certain forward-looking statements about CARA and our programs based on management's current plans and expectations. These statements are being made under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Actual results may differ materially due to various factors, and CARA undertakes no obligation to update or revise these statements publicly as a result of new information or future results or developments. Investors should read the risk factors set forth in CARES 10-K for the year end of December 31st, 2022, and any subsequent reports filed with the SEC. With that said, I'd like to turn the call over to Chris Posner, CARES Chief Executive Officer. Chris?

Thanks, Matt, and good afternoon, everyone. With me today are Ryan Maynard, our Chief Financial Officer, and Dr. Joanna Consalves, our Chief Medical Officer. First, I want to give a quick overview of 2022 and our significant progress executing our strategy to become the world leader in the treatment of chronic pruritus. Then, I will share the latest insights into the Corsuva injection launch and the progress in our development programs for oral diflukephalin. Ryan will follow with a financial update. After that, we will be available to take your questions. The U.S. launch of course of injection in the second quarter of 2022 rang in a new era for the treatment of chronic pruritus and propelled CARA forward in our journey to be the category-defining leader in this condition. Chronic pruritus is often a severe, intractable problem for patients in a wide range of diseases, and it is underserved by currently used treatments. In light of this lack of treatment options, chronic pruritus remains underreported even though it can have a significant negative impact on the quality of life of millions of patients. We are committed to enhancing the awareness of this disease and improving the treatment protocols for patient care so that our novel science benefits the most patients possible. Over the past year, we have made great strides in translating our mission into action and firmly establishing our two core franchises in nephrology and dermatology. The launch of Corsuva injection created the foundation for our nephrology franchise. Together with our commercial partner, CSLV4, we are laser-focused on driving the trial and adoption in the U.S. and in countries around the world. Moreover, we are expanding this differentiated and promising nephrology franchise with oral diphalocephalin and the late-stage program in non-dialysis-dependent CKD patients. Enrollment is progressing well, and we continue to target the top-line data release for the second half of 2024. Switching to our dermatology franchise, enrollment in our late-stage atopic dermatitis program is progressing well, and we continue to track to our internal readout in the second half of 2023. The positive Phase II results of oral diphelic keflin and notalgia parasthetica not only confirmed our hypothesis that diphelic keflin can target pruritus independent of the origin of itch, but also created a distinct opportunity to complement our program in AD. This gives us a unique one-two punch to build a truly one-of-a-kind dermatology franchise. We are excited about the launch of our Phase 2-3 program in NP. and the recognition from the New England Journal of Medicine, which recently published our phase two results. Now, let me provide some more details on the quarter and the progress within the strategic priorities of our two franchises. First, on the launch of Korsuv Injection, we are making meaningful progress in the U.S. For the fourth quarter of 2022, net sales for Korsuv Injection were 2.3 million, translating into 1.1 million of profit recorded as revenue to us. And wholesaler shipments to dialysis clinics totaled approximately 21,000 vials. This quarterly performance is reflective of the unique launch dynamics in this ecosystem and represents a transition from the stocking and trial phase to the adoption and demand-based performance phase. After the initial inventory building at both the wholesaler and certain clinics in the second and third quarter, we have started to see inventory being drawn down and orders accelerating. We are pleased to see this momentum continuing through the first two months of 2023. Equally as important, feedback on Corsuva from providers and patients has been highly positive, and we continue to hear that Corsuva is delivering on the promise it demonstrated in the clinical studies and performing as we expected. Let me break out the different dynamics at the various DOs. Starting with Fresenius, we are pleased with the commitment from FMC to the long-term success of Corsuva as reflected by both the addition of the FMC field force in the promotion of Corsuva and the push for its rapid adoption. In the third quarter, with patient care as their number one priority, Fresenius took a non-traditional approach and stock product in most of its clinics to facilitate trial across its network. While this strategy demonstrates FMC's belief in the unmet medical need in CKD-associated pruritus and confidence in Corsuva's value proposition, it created an atypical inventory dynamic. In the fourth quarter, we saw steady growth in the number of FMC clinics utilizing their initial inventory and placing reorders, a clear reflection of their move from trial to adoption. Simply put, and what is very encouraging, when clinics start using Corsuva, there is a strong buy-in and these clinics become repeat customers. This positive trend has accelerated in 2023. Encouragingly, during the first eight weeks of this year, clinic reorders from the wholesalers have already exceeded the entire FMC order volume in the fourth quarter of 2022. Looking ahead, we expect to see continued growth in the number of FMC clinics utilizing their inventory and reordering. And as trial shifts to adoption across the FMC network, we expect most of the inventory at the clinic level will be utilized by mid-2023. At DaVita, we see steady growth in the number of clinics ordering Corsuva. For those clinics that have purchased Corsuva, we continue to see a high reorder rate, which clearly suggests a positive experience with this product. We continue to work with CSLV4 on top-down and bottom-up initiatives to accelerate the adoption of Corsuva at DaVita clinics. On the MDO and IDO front, uptake continues to be strong, both in terms of the number of clinics ordering as well as the reorder rates. While this segment of the market represents less than 20%, we feel that the progress at these organizations underscores the positive experience of patients and providers with Corsuva. To summarize, given the launch and inventory dynamics during the first few quarters, we expect a more normal uptake curve for Coursiva to emerge mid-2023. More specifically, we anticipate that the future sales and vials shipped to dialysis clinics will not be related to any significant stocking at the wholesaler or clinic level. However, until the remaining inventory at the clinic level is depleted, it is important to emphasize that it is the combination of inventory drawdowns at the clinics and new wholesaler shipments to clinics that together represent true patient demand. Overall, we are encouraged by the progress in the U.S. launch and we remain confident in the long-term potential of Corsuba. On the international front, the rollout of Capruvia in Europe continues to gain momentum. Launches in the first four countries, Austria, Germany, Sweden, and Denmark, are progressing well and we expect most of the other countries in Europe to come online in 2023. The initial feedback is very encouraging and in line with the provider and patient testimonials we have received in the U.S. Furthermore, all four of the access consortium countries, Canada, Australia, Singapore, and Switzerland, approved the product in 2022 and we expect launches in these countries to commence once reimbursement is secured in the next 12 to 18 months. Based on the regulatory submission in the second half of 2022 and positive interactions with the PMDA, we continue to expect a regulatory decision in Japan in the second half of 2023. As a reminder, if the product is approved in Japan, we will receive a milestone payment from our partner, Maruishi. The JV of CSL, V4, and FMC also recently announced signing a long-term exclusive licensing agreement for the co-development and commercialization of Corsuva with WinHealth in China. We are very excited by this positive development, and we look forward to work starting in the near term. Lastly, let me briefly touch on Tdapa. In the second quarter of 2022, as part of the proposed rule for the calendar year 2023, CMS issued an RFI regarding an appropriate payment mechanism for drugs with Tdapa designation post the Tdapa period. We generally believe that the different payment mechanisms outlined in the RFI would provide adequate reimbursement for Kursuva post the expiration of its Tdapa period. we further support the concept of linking drug payment to drug utilization in appropriate patients. We continue to work closely with other stakeholders to support CMS in its decision-making process. And while we do not have clear visibility as to the exact timing of a final decision regarding the post-DAPA reimbursement mechanism, We continue to hope for a substantive and positive update from CMS during this year's rulemaking cycle. Moving on to our pipeline, we are building two therapeutic franchises through our work to expand the utility of difalocephaline. Last year, we launched our phase three programs of oral difalocoupline in both pruritus associated with non-dialysis dependent advanced CKD as well as atopic dermatitis. Enrollment in both programs is progressing well and we expect top line results for the CKD program in the second half of 2024 and for the AD program in the first half of 2025. We continue to track to the second half of 2023 for the internal readout of Part A of the Phase 3, Kind 1 study. Additionally, last year, we reported positive data from our Phase 2 trial of oral diphellocephalin in notalgia peresthetica. In the fourth quarter of 2022, we had a positive interaction with the FDA, which cleared the path to initiating our Phase 2, 3 program in MP. Like our AD program, we designed the NP program with the goal to enhance our operational efficiency, to advance the studies as rapidly as possible, and to maximize the potential for success. We expect the internal readout of the dose-finding portion of the COURAGE-1 study in the second half of 2024, with final topline results for the program in the first half of 2026. In conclusion, We believe 2022 was a pivotal year for Kara. Our progress laid the foundation for sustained growth and value creation for our stakeholders and the promising future of our company. On the course of injection launch, we expected variability and a fluctuating dynamic over the first year of launch. We are seeing positive trends in product uptake and remain confident in the long-term potential of course of injection. We have three late stage programs underway demonstrating significant progress toward establishing our two therapeutic franchises and maximizing the potential of difalocouplein. I would now like to turn it over to Ryan for additional details on our fourth quarter and full year results. Over to you, Ryan.