Cara Therapeutics, Inc.

to Cara Therapeutic's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. To remove yourself from the queue, please press star 1 1 again. I would now like to hand the call over to Matt Murphy, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon. After market closed today, CARA issued a news release announcing the company's financial and operating results for the second quarter of 2023. 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 ended December 31st, 2022, and any subsequent reports filed with the SEC, including its Form 10-Q for the quarter ended June 30th, 2023. With that said, I'd like to turn the call over to Chris Posner, CARES Chief Executive Officer. Chris?

Thanks, Matt. Good afternoon, everyone, and thank you for joining our call. With me today are Ryan Maynard, our Chief Financial Officer, Dr. Joanna Consalves, our Chief Medical Officer, and Scott Derillian, our General Counsel and Head of Government Affairs. I'd like to start by giving a quick overview of what I'll address today. First, I will give an update on the Corsuva injection launch in the U.S., including clinic-level data to provide visibility into underlying demand trends across the different segments of the dialysis market. I will also briefly touch on the proposed calendar year 2024 ESRD PPS rule, which CMS published in late June. Next, I will review the Capruvia launch progress in countries around the world. Then, I will discuss our wholly-owned pipeline and the progress of our three late-stage programs for oral difelocephalin. Finally, Ryan will provide a financial update after which we will open up the call to Q&A. With that, let me discuss the Corsuba injection launch in the U.S. For the second quarter of 2023, net sales for Corsuba were $11.4 million, translating into $5.4 million of profit recorded as revenue to CARA. Wholesaler shipments to dialysis clinics totaled approximately 67,000 vials, a 46% increase from the prior quarter. 67% of these vials were shipped to FMC clinics with the remainder split between DaVita and the other DOs. This increase in vial shipments suggests a continued drawdown of inventory at FMC and an acceleration in demand across all DOs. Ongoing anecdotal feedback on Corsuva from both providers and patients remains highly positive, highlighting that Corsuva addresses a significant unmet need. At FMC, orders grew by more than 50% quarter to quarter, reaching 45,000 vials. By the end of the second quarter, over 700 FMC clinics, or 27%, had placed reorders. That's up from 18% at the end of the first quarter. More importantly, 1,300 clinics or 50% had dosed at least one patient. That's up from 42% at the end of the first quarter. Note, this is a correction. Based on numbers provided to us by FMC, we reported on our first quarter call that 1,500 clinics had dosed at least one patient. The growth in the number of FMC clinics reordering as well as clinics dosing a patient suggest continued drawdown of inventory at the clinic level. If this trend continues at the current rate, we believe that the majority of FMC clinics will have depleted their inventory and will be in reorder mode this year. At DaVita, we are seeing continued steady growth in demand. Orders grew by 43% quarter to quarter to 11,000 vials. Over 400 clinics, or 15%, had ordered Corsuva at the end of the second quarter. That's up 11% at the end of first quarter. Reorder rates remain very encouraging, with 73% of clinics placing repeat orders. Given the on-demand approach at DaVita Clinics for ordering Corsuva, the growth in clinic orders represents a good proxy for the growth in patient demand. At midsize and independent DOs, Corsuva utilization continues its momentum. Orders grew by 28% quarter to quarter to 11,000 vials. At the end of the second quarter, 17% of clinics in this market segment had placed orders. That's up from 13% at the end of the first quarter. In addition, 68% of these clinics placed repeat orders, and that's up 66% at the end of the first quarter. USRC remains the largest buyer of Corsuva in the MDO and IDO segment. 73% of USRC clinics had ordered Corsuva by the end of the second quarter, and 80% of these clinics had placed repeat orders. While Corsuva continues to make meaningful progress in the U.S., a majority of the market remains untapped, and there is significant room for growth. Our partner, CSLv4, is fully committed to driving Corsuva's uptake in this unique ecosystem with the goal of maximizing its commercial potential in the long term. Now, I will briefly touch on the ESRD PPS proposed rule for calendar year 2024. This rule, once it is final, will determine the framework for Corsuva's reimbursement after its Tdapa period. In late June, CMS proposed a new add-on payment adjustment for certain new renal dialysis drugs after their Tdapa period ends. The post-Tdapa payment adjustment applies to all dialysis treatments for a period of three years immediately following the expiration of the drug's Tdapa period. The proposed methodology calculates the add-on payment for each treatment based on the prevailing ASP and the drug's utilization during the most recent 12-month period. CMS also proposed a risk-sharing arrangement with ESRD facilities calculated at a 35% discount to the prevailing ASP to account for any declines in other drug expenditures. We are pleased that CMS proposed additional funding that is not budget neutral for innovative TdapA designated drugs that fall into an existing functional category. We are also glad that the new funding starts immediately after the expiration of the TdapA period and gets adjusted annually by the market basket update. However, there are certain limitations to the proposed methodology which we plan to pointedly address with CMS in the coming months. Specifically, the add-on payment applies to all dialysis treatments and does not follow the patient. In addition, a 35% discount to the prevailing ASP does not take into account first-in-class drugs like Corsuva that don't have a therapeutic substitute. Since the proposed post-ADAPA reimbursement methodology makes a drug's uptake during its TdapA period a key factor in future reimbursement rate setting, we plan to also address the question around appropriate utilization data with CMS near term. More specifically, we will be laying out a case for additional TdapA time. We will furthermore press for changes to the proposed methodology to account for innovative first-in-class products that target a minority of ESRD patients. We will continue to work closely with CMS and provide information to highlight the best solution for broad and equitable patient access to innovative drugs like Corsuva in the final rule, which is expected later this year. Next, on the international front, the rollout of Capruvia in Europe is progressing well. In the second quarter, Capruvia generated $1.2 million in net sales, translating into $123,000 of royalty revenue to us. Launches have begun in seven EU countries, with more lined up in the coming months. CSLv4 continues to report positive feedback from patients and providers, in line with the testimonials we have received in the U.S. We are pleased with the recommendation by England's National Institute for Health and Care Excellence, or NICE, for Ciprovia for the treatment of moderate to severe chronic kidney disease associated pruritus in adult patients on hemodialysis. In Japan, we continue to expect a regulatory decision in the second half of this year. As a reminder, approval in Japan would trigger a $2 million milestone payment to CARA. We are pleased with the progress around the world and believe the success of the XUS launch to date underscores the significant unmet need for an effective antipyretic treatment for hemodialysis patients. Last but not least, let me touch on the development progress of our innovative wholly-owned pipeline. Enrollment in our Phase III programs in pruritus-associated with atopic dermatitis and advanced chronic kidney disease is progressing well. We anticipate the internal readout of Part A of our KIND 1 AD trial in the fourth quarter of this year with final top line results from this program in the first half of 2025. We continue to expect top line results for our KICK program in advanced chronic kidney disease in 2024. Our Phase 2-3 COURAGE trial in Notalgia Parasetica commenced in the first quarter of 2023 and is tracking to the internal readout of Part A in the second half of 2024. We expect top-line results for the COURAGE program in the first half of 2026. We strongly believe that oral diphellocephalin is the centerpiece of our strategy of becoming the leader in the treatment of chronic pruritus and the key to unlocking the long-term value of CARA. And we remain committed to driving progress of our pipeline and building our unique nephrology and medical dermatology franchises with World Diphelic Heflin. To summarize, we are pleased with the continued progress of the U.S. Corsuva launch as evidenced by the acceleration in vial shipments and reorder rates across the dialysis landscape. Following CMS's proposal for a post-TDAPA add-on payment, we are engaging with CMS to discuss potential modifications to the proposed methodology, as well as an extension of Corsuva's TDAPA time. We hope to see meaningful changes reflected in the calendar year 2024 final rule later this year. Internationally, we continue to receive positive feedback from the rollout of Capruvia, and we are optimistic about the growth trajectory as more countries come online. We also continue to execute on the most significant long-term value driver of our company, our differentiated innovative pipeline. Our three late-stage programs with Oral Diabella Keflin have potential for tremendous value creation and set us apart as a leader in chronic pruritus. We remain laser-focused on advancing these programs in order to maximize the potential of difalocalfalin within our two exciting therapeutic franchises. I would now like to turn it over to Ryan for additional details on our second quarter financial results. Over to you, Ryan. Thank you, Chris.