Cara Therapeutics Inc (CARA)

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Cara Therapeutics' (CARA) CEO Derek Chalmers on Q3 2016 Results - Earnings Call Transcript

Nov. 3, 2016 11:23 PM ET|
About: Cara Therapeutics Inc. (CARA)
Q3 2016 Earnings Summary

Press Release
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EPS of $-0.42 beats by $0.05 | Revenue of $ (- 100.0% Y/Y) misses by $-0.34M

Cara Therapeutics Inc. (NASDAQ:CARA)

Q3 2016 Earnings Conference Call

November 3, 2016 4:30 PM ET

Executives

Michael Schaffzin – Stern Investor Relations

Derek Chalmers – Chief Executive Officer, President, and Director

Joe Stauffer – Chief Medical Officer

Joe Schoell – Chief Financial Officer

Analysts

Esther – Stifel Financial Corp

Charles Duncan – Analyst

Alan Carr – Analyst

Chiara Russo – H.C. Wainwright

Ken Trbovich – Laidlaw & Co. (NASDAQ:UK) Ltd

Charles Duncan – Piper Jaffray

Operator

Good afternoon, ladies and gentlemen, and welcome to the Q3 2016 Cara Therapeutics Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Mr. Michael Schaffzin.

Michael Schaffzin

Good afternoon. This is Michael Schaffzin with Stern Investor Relations. And welcome to Cara Therapeutics third quarter 2016 earnings conference call. The news release with our third 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 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 including statements concerning the expected rate of patient enrollment in our ongoing and planned clinical trials, 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 the Cara Therapeutics filings with the Securities and Exchange Commission, including the Risk Factor section of the company’s annual report on Form 10-K for the year ended December 31, 2015 and its other documents subsequently filled 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 President and CEO, Dr. Derek Chalmers.

Derek Chalmers

Thanks, Michael. Good afternoon everybody and thanks for being with us on the call. I’m joined today by our Chief Medical Officer, Joe Stauffer; and our Chief Financial Officer, Joe Schoell. So, today, we like to highlight our recent progress in the clinic and walk you through all of our expected upcoming milestones for the rest of 2016 and into the first half of next year.

So during the third quarter of 2016, we’ve made significant progress and we do expect the coming quarters to be an important time for data-readouts across all of our clinical programs. So starting with our Oral CR845 program for chronic pain, in September we announced that we initiated our Phase 2b trial of Oral CR845 for the treatment of chronic pain in patients with osteoarthritis of the knee or head. Building off our Phase 2a data on osteoarthritis patients where we saw both pain and rescue medication reduction over a two week treatment period.


The ongoing Phase 2b trail is a larger approximately 330 patients study, testing three tablet strengths of CR845 over an eight-week treatment period to inform a potential registration trial design for this indication. We’ve been very happy to see exceptional enrollment rates in that trial across now 36 active sites and we are anticipating data-readout during the first half of next year.

Again to remind you, we see this trial as an important POC and step forward in establishing the potential clinical utility of Oral CR845 to provide a safer, nonabusable alternative for osteoarthritis patients and potentially chronic pain patients in general. And Joe is going to provide more color on the design and the endpoints for that trial in just a moment.

Moving onto our adaptive Phase 2/3 trial of I.V. CR845 in dialysis patients suffering from moderate-to-severe uremic pruritus. Part A of this trial is a randomized double-blind placebo controlled study to examine the efficacy of three does levels of I.V. CR845 administered after each dialysis session that is three-times in a week or t.i.w. over an eight-week treatment period to reduce itch intensity in HD patients experiencing moderate-to-severe uremic pruritus. Thus trial has also enrolled very well across 33 active sites and I’m very happy to report today that we’re currently expecting the full enrollment in this quarter with top-line data-readout in Q1 of 2017.

Data from this Part A will inform dose selection for Part B, which will be a pivotal double-blind placebo-controlled trial of one optimized dose of I.V. CR845, administered again three-times a week after dialysis sessions over a 12-week treatment period and up to 240 dialysis patients. In the UP program, we also expect top-line data in Q1 2017 from our pharmacokinetic safety bioequivalent study of Oral CR845 in hemodialysis patients. Aim to define bioequivalent tablets strengths to enable the development of the tablet formulation of CR845 suitable for chronic kidney disease associated pruritus. And Joe again will talk a little more and details related to that trial.

Finally, we are also expecting to conduct our pre-planned conditional power analysis in the first half of 2017 from our adaptive pivotal Phase 3 trail of I.V. CR845 for postoperative pain. We are currently recruiting across 22 active sites. The data will help guide those on any potential adjustments needed prior to competing enrollment at around 450 total patients.

Overall, we continue to operate in a capital efficient manner. And in Q3 with approximately $71 million in cash and we’re encouraged that our strong trial enrollment rates in each of these late-stage programs will afford top-line data-readouts within a relatively short timeframe.

And with that, I’ll turn the call over to Joe Stauffer, who will provide some additional color from our ongoing clinical trials.

Joe Stauffer

Thanks, Derek. As he just walked through we are very pleased to report progress and increased rates of enrollment across our late-stage clinical programs that will allow us to readout top-line data during the first half of next year, and I’d like to give you a more detailed look at the enrollment trends we have seen and why we are confident on hitting these timelines.

Starting with our recently initiated Phase 2b trial with Oral CR845 in OA patients, principal investigator interest in this trial has been overwhelming and this has translated to a rapid uptake in site activations in patient screening activity. Since trial screening initiation in September of this year, we have screened over 500 patients for this trial. And in a similar fashion to our Phase 2a trial in OA patients, we expect this study to enroll quickly to allow top-line data-readout in the first half of 2017.

As a reminder, this is a double-blind placebo-controlled multiple dose Phase 2b design testing three tablet strength of CR845 dose twice-daily over an eight-week treatment period in osteoarthritis patients with moderate-to-severe pain. The trial design incorporates a four-week titration period for response followed by a four-week maintenance period. The primary endpoint will be difference from baseline and pain scores in CR845 treated patients versus placebo at the end of the eight-week treatment period.

Secondary endpoints include the change from baseline in the Western Ontario and McMaster Osteoarthritis Index amount of rescue medication use and the Patient Global Assessment, PGA of osteoarthritis. We would expect the data for this trial to from the basis for an end of Phase 2 discussion with the FDA as the dose selection for a standard 12-week registration trial in the same patient population.

Now moving onto our Phase 2/3 program in uremic pruritus. As we talked about last quarter, Part A is a randomized double-blind placebo-controlled study of three doses of intravenous CR845 administered three times a week after dialysis over an eight-week period in 160 patients, which will inform our optimized dose for Part B. As discussed, this trial has enrolled very efficiently and we expect top-line data-readout in the first quarter of 2017. 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 quality of life measurements.

Then as Derek mentioned, we have also initiated a pharmacokinetic safety trial of multiple doses of Oral CR845 in haemodialysis patients to define bioequivalent tablet strengths to confirm our ability to develop an oral tablet formulation for this indication in both HD patients and also potentially expanding to pruritus in non-haemodialysis CKD patients. And last but very importantly, our adaptive pivotal clinical CLIN-3001 trial in post-operative pain is expected to reach its interim assessment during the first half of next year as well.

As we walk through last quarter and earlier this year, we have moved forward with this study as a three-arm trial, testing one microgram per kilogram and 0.5 micrograms per kilogram of CR845 versus placebo and up to 450 patients undergoing various abdominal surgeries. The trial accommodates an interim assessment for conditional power across doses at approximately 65% enrollment with an adaptation to optimum dose and subsequent progression to complete enrollment. This trial is enrolling very well across 22 active sites, but we expect to report on our interim assessment and full data-readout in the first half of 2017.

As a side note, we were very happy to receive enthusiastic interest in this program in response to our recent symposium at the annual meeting of the American Society of Anesthesiologists. Principal investigators and other physicians clearly see the role for CR845 in the evolving pre-operative treatment paradigm of ERAS otherwise known as enhanced recovery after surgery and the importance of reducing or eliminating the use of Opioid drugs as part of a multimodal approach to post-operative pain.

In summary, we’re very encouraged by our progress across our three late-stage programs where we expect to report top-line data on the total of some 900 patients in the next two quarters.

And with that, I’ll turn it over to Joe Schoell for the financials.

Joe Schoell

Thanks, Joe. As a reminder the full financial results for the third quarter and nine months ended September 30, 2016 can be found in our press release issued today after the market closed. We reported a net loss of $11.5 million or $0.42 per basic and diluted share for the third quarter of 2016 compared to a net loss of $4.8 million or $0.19 per share basic and diluted for the same period 2015.

We did not have any revenue during the third quarter of 2016. For the third quarter of 2015 total revenue recognized was $2.4 million including $1.7 million of license and milestone fees and $730,000 of collaborative revenue comprising revenue which was earned upon the achievement of defined milestones under the license agreements with Maruishi and CKD. As well as revenue that had been deferred upon entry into the license agreement with Maruishi.

R&D expenses were $9.7 million in the third quarter of 2016 compared to $5.6 million in the same period of 2015. The higher R&D expenses in the third quarter of 2016 were principally due to the net increase in direct clinical trial costs, consultant services in support of the clinical trials and an increase in payroll and related costs for R&D personnel.

General and administrative expenses were $2.1 million in the third quarter of 2016 compared to $1.9 million in the same period of 2015. The increase in the third quarter of 2016 was primarily due to increases in payroll and related costs and in franchise taxes. Other income was $176,000 during the third quarter of 2016, which included interest income and dividends earned on cash, cash equivalents and marketable securities and realized gains on the sale of marketable securities compared to $22,000 of interest income during the same period of 2015.

The increase in the third quarter ended September 30, 2016 was primarily due to investments and marketable securities in the 2016 period but not in the 2015 period as well as higher interest rates in 2016 on the company’s money market account balances compared with interest rates in 2015. As of September 30, 2016 cash, cash equivalents and marketable securities totaled $71.4 million compared to $106.7 million at December 31, 2015. The decrease in the balance of cash, cash equivalents and marketable securities primarily resulted from $34.2 million of cash used in operating activities.

Turning to financial guidance based on timing expectations and projected costs for current clinical development plans Cara continues to expect that its existing cash, cash equivalents and available for sale and marketable securities as of September 30, 2016 will be sufficient for the company to fund its operating expenses and capital expenditure requirements through the end of the first quarter of 2018 without giving effect to any potential milestone payments under existing collaborations.

Now we will open it up to Q&A, operator?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Annabel Samimy [Stifel Financial Corp]. Your line is open.

Esther

Hi. This is Esther in for Annabel. I have a question and then a follow-up. So the first question is, it seems like we’re in an increasingly pressing environment in pain with an exceedingly great need for non-narcotic options. So is there anything that can be done to streamline your program just a little bit more as the rate of speed up enrollment open more sites et cetera anything else?

Joe Stauffer

This is Joe, I’ll take that question. I think we’re pretty streamlined as we are going right now, it’s not just as simple as opening up more sites. When you open up more sites you also open up more variability a potential for the data and that’s not a good thing. And so I think you got to keep in mind that it’s not about how many sites you have open, it’s about how many efficient sites you have working for you enrolling patients that’s the real key here.

And so I think that we’ve got that optimized at this point. So for both the I.V. pain trail as well as the osteoarthritis trial. I would say we’re moving about as fast as we can without add in anymore sloppiness for efficiency.

Esther

Okay. And on the oral program, so from the Phase 2b are you going to be doing an adaptive trial design again. And then move to a Phase 3 or can we expect to see something more typical?

Joe Stauffer

Right. So this is a typical Phase 2b trial, it’s a large trial and what we'll do here is – we’ll see it if we have a signal between any of these doses versus placebo and when we do. Then we’ll go to the FDA have a discussion about what that signal looks like and then plan for the Phase 3 pivotals. The difference between those trials would obviously be there will be 12-week trials not an 8-week trial like this one.

Esther

Okay, great and then just a quick question. So on October 28 CMS issued its final rule on payment policies that ESRD perspective payments for 2017, what are your general thoughts on the policy and how do you the think environment will be around the time I.V. CR845 is potentially approved for UP. Thanks.

Derek Chalmers

Yes. Thanks for asking that’s a great question. Obviously there’s a little bit of a gray area based on the current legislation there in terms of the functional groups that are defined in that legislation. And we have began talks with CMS in relation to this. So clearly the antipyretic group that is designed in that legislation is fundamentally no antipyretic in this patient population and I think they're becoming increasingly better educated in that regard. So that's an ongoing conversation we have with them.

We were encouraged to see the ability of Amgen to develop a novel intravenous formulation for another categorized functional group and oral comes from [indiscernible] and actually receive an agreement from the CMS that that would be with the bundle for at least 24 months, to access usage. And we think that's a precedent that we could follow with a novel I.V. with no equivalent essential oral medications. So it's something we are looking at we plan to develop the I.V. and we plan to continue communication with CMS in that regard.

Esther

Great. Thank you.

Derek Chalmers

Thanks Esther.

Operator

Your next question comes from the line of Charles Duncan. Your line is open.

Charles Duncan

Thanks. Hi Derek, Joe and Joe. Thanks for taking my questions and congrats on a good quarter progress. So my first question is on the oral OA study First of all good enrollment progress there. Do you think that speaks to the unmet need the differentiated mechanism or both. And also are you screening for previous opioid experience in those OA patients.

Joe Stauffer

Sure, so three is parts to your question, I think one of the reasons one of the biggest reasons why people are interested in this trial is the mere fact that it's mu opioid. They know it's a newer novel mechanism. So that's interesting to the patients and to the physicians. I think they like this side effect profile or lack of a side effect profile that's very interesting.

I also believe we call it big tailwind quite honestly from the NGX going on clinical hold. Some of those patients – I think that was a little back pain trial but there are a lot of patients that are that are tied up in many of these trials that are osteoarthritis so we're getting some of them as well. And I think the other part of your question had to do, what was the third-party of your question. Charles I thought I had all three of them.

Charles Duncan

Yes. Are you screening for previous opiates?

Joe Stauffer

Previous opiates. Right, good question. So we do allow people coming into the trial who were on previous opiates most of them have not been we only allow certain amount of opioid exposure over a certain period of time before they can come into the trial what we don't want is people who are failing opioids. And then coming into this trial right because they're going to have to get them tapered off of their opioids and go through all the potential side effects that you go through and when you do that. So by in large most of these patients have not been mu opioid exposed although some of them have.

Charles Duncan

And they are other…

Joe Stauffer

I’m sorry to interrupt you. We have a washout period – all patients have to wash out of all their analgesic drug before they're actually randomized.

Charles Duncan

Well and the other reason I ask is because the previous opiate experience may impact the binding, I guess because if you don't have that opiate side effect profile. People may decide that they're on the drug or not.

Joe Stauffer

Yes, the nice part about this drug is that you don't go through opioid withdrawal when you stop our drug.

Charles Duncan

Yes.

Joe Stauffer

And that’s another nice part about being on this drug and in this clinical trial. So I think for those reasons we’re getting the right kind of patients. And as I said before, it's been rolling quite fast actually a lot faster than I've seen in osteoarthritis trials and my previous experience.

Joe Schoell

Charles, it’s possible we're getting a little bit of tailwind from the lack of NGF antibody activity in recent weeks with the hold on that molecule. But the recruitment rate has certainly been outstanding for that particular trial.

Charles Duncan

Yes, that's a positive. I also though wanted to ask you about the IV program in pain, the CLIN3001 study. I'm kind of wondering the timing estimate seems broad sometime in first half of 2017. Is there any way that you can take that up, or is that only a function of enrollment rate or is there something else going on, that is having you call in the first half.

Joe Stauffer

So it's two parts. It’s enrollment rate, but we also remember we have to take a pause, while we do the interim assessment. And the interim assessment, depending upon what it is, will help guide us. So for instance if the interim assessment tells us that we have conditional power, such that we don't need to increase the sample size, that's a good thing. Perhaps we can decrease the sample size that could help us grow faster. If the interim assessment tells us that one of the doses, let's say the lower dose has really no chance of ever reaching any type of efficacy, we could drop that dose. That would cut the sample size down by a third from that point on, which would be nice. That would make things go faster.

So that’s the beauty, and the essence and the whole spirit of the Phase 2/3 adaptive design, is that you get to do these things because you pre-specify them. You don't take a p-value hit as we call in the business.

Charles Duncan

Yes.

Joe Stauffer

And you can kind of fix the plane while you're flying it, not that there's anything to fix, it’s that you can make choices in a smarter way to help reduce your risk of failure.

Charles Duncan

And Joe have you ever talked about the effect size or response rates that you are assuming in terms of taking a look at that interim and deciding whether or not to power out?

Joe Stauffer

No it's not really an effect size story, I mean clearly the standard deviation affects the effect size. But what we're really looking for is just trends toward conditional power to make sure that we get a POS in 0.05. That’s the goal. As you guys have heard me say before, effect size is meaningful only in the context of whether or not the drug is safe. And the FDA has to calculate that in its assessment and we do the same thing as well.

So for me and for us, it's more about do we do we have power to be placebo. The effect size is something that we will not necessarily pre-specify as part of a Phase 3 pivotal trial, going forward.

Charles Duncan

And you're tracking safety in at least the blinded way how do you feel about things?

Joe Stauffer

It's looking good. I mean I look at these numbers every week, in all the trials actually. And it's going quite well. And so I'm very confident there that our safety profile is right where we want it to be.

Charles Duncan

Last question, which I've gotten from in past years is, if you could remind us or help us better understand the evidence that you have for the dose response, particularly given that this trial is studying a lower dose, than was used in Phase 2? Can you provide us any more information at this point or should just wait and see the results of the study?

Derek Chalmers

Yes. Let me start on the [indiscernible] and then Joe can add some more details. So I think you and I have had this conversation on a few occasions. So pharmacologically a microgram per kilo in fact less dosage on a microgram per kilo provides pharmacological power for this drug. As you know we have a very high affinity for the human capital receptor in the region of 300 thinking more of which essentially translates the activity in the picogram per mill level from a plasma concentration wise.

So we know from our PK–PD relationship with the drug that at one microgram per kilo, we have a pharmacologically active dose. We’ve also looked as you know the 90 patients we took an interim work for safety, we’ve also looked to transfer that data. Those patients are quarantined out of the trial. And we've reported that we've seen trends in all three of the parameters we’re interested in those patients, so that obviously helps in terms of confidence.

And finally, as we've discussed, microgram per kilo, is an extremely active dose we've used in the Uremic Pruritus trials and continue to use in the Uremic Pruritus trials. We’re essentially looking at the same mechanism and ambition of the CV preferably and diminishment and the inflammatory response. So we are fairly confident that pharmacologically that should be an active dose.

Charles Duncan

That's helpful, Derek. So you believe there may be some read through if we see some activity in the Uremic Pruritus trial in the first quarter to possibly in – okay.

Derek Chalmers

Absolutely, and again we have seen activity in UP microgram per kilo, you’ll recall our Phase 2a study was microgram per kilo for two weeks and they're getting back to effect size since you brought up that was a 0.7 approximate effect size in those patients. So that was a very robust response.

Charles Duncan

Yes. Okay. Perfect. Thanks for taking my question.

Derek Chalmers

Thanks Charles.

Operator

Your next question comes from the line of Alan Carr. Your line is open.

Alan Carr

Hi. Thanks for taking my questions. Maybe to follow-up on the last one, how much are you going to disclose publicly around your interim analysis in terms of the changes that you make to the I.V. trial while it's ongoing. And then, so far you characterize safety profile is fine so far, but I wonder if you comment whether not there were any – have been any cases of hypernatremia?

Joe Stauffer

No cases of hypernatremia, no patients that we had to drop due to that. So on answer to the last part of your questions first there Alan. Second part is it's an interim assessment not interim analysis. And so we're not as I said taking the p-value hit to do this it's pre-specified between us, the FDA and our outside independent group. And we will have to let everybody know what's happening in terms of what changes we're making to the protocol for instance increase in the sample size or if we're dropping the treatment arm that all has to be laid out for everybody because we have to make those changes in the protocol, let the FDA know that and then put that in clinicaltrials.gov. So that becomes known.

What we won't do is we won't necessarily tell the world what the conditional power is, those exact numbers that those are pieces that we keep close to the investors I said this is a new and adaptive way of looking to clinical trials in pain.

But we've pre-specified what that is and the FDA has agreed to that. {***Spart-000***} {***Epart-000***}


{***Part – 30 to 32***}

new and adaptive way of looking at clinical trials in pain. But we pre-specified of what that is and the FDA has agreed to that. And so, if we're within those parameters then we move forward by either, again, increasing sample size, decreasing sample size, dropping a treatment arm or in the worst case scenario you have to talk about this right maybe there's just nothing there. That's also something that we would do too, but we don't expect that. And as Derek said before, the trends that we saw early on weren't just in pain score reduction, was also nausea, vomiting reduction as well.

Alan Carr

Okay, thanks. And then with respect to the OA trial, the Phase 2 OA trial, you’ve mentioned that maybe assuming positive results takes down to an end of Phase 2 meeting with the FDA to discuss Phase 3 design. So maybe you can comment on strategy here in terms of whether or not you keep something that late stage in-house would you run a Phase 3 yourselves would the cost of that be and or would you partner at that point? Thanks.

Derek Chalmers

Yes, I think we said in the past Alan that we’d most likely look for the suitable partner for the chronic pain trial due to the size of the commercial effort required there. And that’s still our position on that. The other two programs we feel fairly confident. We can push forward ourselves other way to commercial, but at that point we most likely will put partner on the chronic pain.

Alan Carr

Okay. And then last one any expectations for milestone payments from partners? Are there any big events coming from them that might trigger some revenues there? Thanks.

Joe Stauffer

Alan, it’s Joe. We’re usually disclosing the 10-Q that will be filed later tonight. Yes, there will be milestones as we progress on the I.V. trial and complete a Phase 3, we will be getting milestones from Maruishi and CKD.

Alan Carr

Great, thanks very much.

Derek Chalmers

Okay.

Operator

Your next question comes from the line of Jim Molloy [Needham & Company]. Your line is open.

Unidentified Analyst

Hi, this is actually Frank on for Jim. Thanks for taking the question. So for IV CR845 for post-op pain after this interim not analysis but assessment in terms of part three, obviously it depends if you have to add or take out a number of patients but do we expect Phase 3 the last part of this after the interim work. The data to read out before the end of 2017.

Derek Chalmers

Yes. For sure.

Unidentified Analyst

Okay, okay. Great. And then I guess is UP unit pricing and kidney dialysis likely, I guess think there's a chance it sees broad off label usage. If approved or?

Derek Chalmers

Frank. I don't think we'd see off-label usage with the IV formulation but I think with an oral formulation and we do see a fairly high percentage incidence in CKD patients that are non-hemodialysis for pruritus. And there as we talked about the four we think the mechanism for our molecule is probably broadly applicable even beyond the CKD population into pruritus associated with dermatological conditions and also in the endocrinological conditions whatever disease et cetera. So those are areas we plan to investigate starting with CKD patients non-hemodialysis. And then expanding dovetailing into other pruritic populations beyond that.

Unidentified Analyst

Got you. And then for IV CR845 for UP, so you got the Part A I’m expecting the first quarter here. But you guys mentioned a Part B also for that are we expecting is that the last part, is there Part C and should that data read out by end of 2017 as well?

Derek Chalmers

No. Part B is a registration. Part A is three doses, dosed over 8 weeks. We look at that data in Q1 we select the optimum dose for that and the registration trial will be 12 week, registration trial at one optimized dose.


Unidentified Analyst

Okay, great. Now for the Oral CR845 for UP after the PK safety here to figure out tablet strength and such, what should we be expecting after this low kg, This is 1Q 2017 after that what can you guys says about the strategy for oral.

Derek Chalmers

Yes. So Frank, that Joe can comment on this, but that really provides us with optionality as to whether we develop an IV, or we develop an IV and an oral and to the HD population and then we’ve discussed this before there are advantages there from a reimbursement standpoint not really depends on the conversation and where we are with the CMS and their views on the IV, in terms of exception to the bundle. So that’s the main reason to make sure we can define tablet strengths or bioequivalence there to what we know is already active in that population is also providing valuable information for our PK modeling to walk that back, and to CKD patients that are not end stage, but Stage 4 or Stage 5 non-HD and gives as an ability to model what tablets strengths would be – would be suitable to use in that population.

Unidentified Analyst

Great. And then this is probably more for Joe. You’d mentioned just the enrollments going very well and adding sites is not necessary, it adds very variability to the trial. Other than adding sites for more efficacy and just to find efficient centers what else is there that could be done.

Joe Stauffer

In fact we’ve actually gotten rid of some sites which is actually one of the ways you can help to improve your efficacy and efficiencies. So I said before it’s not the number of sites you have, it’s the number of sites that are enrolling well and following the protocol and not giving us any types of headaches during the trial, the sites that we’ve got right now are doing a very good job of doing that and that’s the most important thing. I think the big misunderstanding about clinical trials and operationalization of trials people get hung up on number of sites. I really caution everybody to think about that right. Its good sites, that’s what’s key. And so good sites, good patient screening, good evaluations of selecting the right patients that switch what’s key to the kingdom in terms of making things go fast and this was going faster than we thought which is quite nice.

Unidentified Analyst

Okay. So quality over quantity. And then one last question in terms of safety you said that – you’ve taken a lot of looks at it. Do you guys have DSMB looks in any –its like how frequently do safety looks have when you said every week…

Joe Stauffer

Every week. Right, every week and that’s for all the trials.

Unidentified Analyst

Okay. All right, great. That’s it from me. Thank you.

Joe Stauffer

Thanks, Frank.

Operator

Your next question comes from the line of Chiara Russo [H.C. Wainwright]. Your line is open.

Chiara Russo

Hey, guys. Thank you for taking the question I think I will be pretty quick. Just to take you back off of I think what Ong kind of asking about it, about the hypernatremia, you just saying that you’re not seeing it at all in the side effect profile.

Derek Chalmers

Correct.

Chiara Russo

All right. Okay.

Derek Chalmers

So we have stopping rules in this trial and we have not had anybody that would put into a trial stopping rule the hypernatremia business. So what we – what we’ve done is modifications in the trial that the way that we’re being aggressive with how we handle the patients post-operatively particularly in terms of getting to drink water early, which is fully in the spirit of ERAS which I mentioned earlier in the call. I think that’s helped tremendously and just better education of the monitors the nurses at the sites and the doctors. It’s made a big difference, so I’m feeling pretty good about that.

Chiara Russo

[Indiscernible] (0:38:55) it’s also probably worth mentioning, we monitor our oral trial every week as well and there we don’t have any issue.

Derek Chalmers

Same thing there, so.

Chiara Russo

Same thing there. Okay. Thank you professor, you basically being much more active with the management of the water and take up the patients.

Derek Chalmers

Correct.

Chiara Russo

Okay, okay. And then obviously you’ve got some interesting data coming out. Are you going to be publishing any of that, do we get to look at the posters with the stuff on it?

Derek Chalmers

Well, as soon as we would do that kind of stuff as soon as we get the clinical study reports written but that’s going to be next year, the next year thing at best. A lot of those deadlines for a lot of the posters depending upon the Congress will happen right when we’re unblinding data. So we’ll probably miss some of those deadlines. But as soon as we can get it out there, we will and get it out to as many anesthesia, pain medicine, Congresses, same thing for kidney and renal congresses as well.

Chiara Russo

All right. Awesome. And then you obviously are experiencing some nice enrollment rates generally higher enrollment rate equals higher expenses. Any the color on what we should be expecting for the last quarter of the year for R& D expense heading into first quarter 2017?

Derek Chalmers

Yes. We’ve no get it, third quarter, Chiara but everything…

Joe Stauffer

Your estimates are correct. They are going to go up in the fourth quarter, and throughout the first quarter.

Chiara Russo

Okay, okay. That will work. All right, awesome. Great, great call guys thank you for giving us some nice deadlines so look forward to next year.

Joe Stauffer

Nice, Chiara.

Operator

Your next question comes from the line of Ken Trbovich [Laidlaw & Co. (UK) Ltd]. Your line is open.

Ken Trbovich

Thanks for taking the question, couple quick ones. First on the oral OA study, when the patients wash out of their analgesics, what’s the – what’s a pain score they have to reach in order to qualify for the study?

Joe Stauffer

Right. So they have to have a five or greater.

Ken Trbovich

Got it. And that’s after washing out.

Joe Stauffer

That’s correct. So it’s a classic flare design.

Ken Trbovich

Sure. So can you give us a sense as a five of sleepless night and pain or what’s a five sort of anecdotally relate to in terms of how we might categorize it in other symptomatic versions?

Joe Stauffer

Sure. That’s a good question. So a five on a zero to 10 scale is obviously right in the middle and we consider that moderate pain. So most of – all these patients have to have at least moderate to severe pain, and during that washout period we are obviously don’t force patients to stay in pain. They’re actually allowed to take some amount of acetaminophen rescue during that timeframe. But once they get their threshold then they come in and they start dosing. So it’s moderate to severe pain.

Ken Trbovich

Got it. And then I was looking and I noticed that as it related to Maruishi and the license agreement, you guys have been pretty specific in the fact that on the oral side, you’ve only got rights for acute pain indications and yet obviously you’re doing an oral study in something that is chronic. Can you help us to reconcile, I mean, obviously it means you wouldn’t get milestones associated with this trial, but would Maruishi be a natural partner to look at this just on a credibility basis, because they’ve been an early partner often that you would give them some sort of first right of refusal on the chronic side, or is this open for business, you’ll consider all comers because there’s a separate story out today talking about Shionogi looking at pain and having an interest in meeting with pain companies specifically for licensing and M&A?

Joe Stauffer

Yes. So, Ken, just to clarify the agreement with Maruishi, the field of use there is for strictly for post-operative pain, so obviously that’s intravenous formulation. And also for uremic pruritus using whichever formulation is available for them and it’s really within their territory for them to decide. They are – as you know moving forward with an intravenous formulation, they think that provides significant advantage for them over the marketed kappa agonist there which is [indiscernible] and they can administer that as we do three times a week at the dialysis center and they’re going to get 100% compliance. So they’re happy to move forward due to right, they don’t have rights in terms of chronic pain at this point in Japan.

Ken Trbovich

Okay. But they don’t also have some sort of right of first refusal.

Joe Stauffer

They don’t have a right of first refusal, they have a right to look at our data and we have – in constant communication with my Maruishi and if the conditions were right for us to deal with Maruishi for that territory that would certainly be something we look at.

Ken Trbovich

Okay. And I guess maybe that turnabout on this would be the point at which you enter into discussions with potential partners whether it’s Maruishi or others internationally or even here in the U.S. its sounds like, it’s a second half of them before you can even begin those discussions and earnest with data enhanced.

Joe Stauffer

Yes, that’s going to be related to when the data is available. Ken, you’re correct.

Ken Trbovich

Okay. And then I guess sort of – sorry, catch off.

Joe Stauffer

No, that’s all right. As you say, we’re pretty confident, we’ve guided, we expect data in the first half of 2017.

Ken Trbovich

Sure. And then on you uremic pruritus, Joe I get your point about it’s not about percenters, but if we just talk about months you guys are enrolling 27 patients a month roughly, if we just sort of back into what you guys just told us it would suggest that Part B could be enrolled in about nine months. What sort of a gap should we expect in time between Part A and Part B?

Joe Stauffer

Well, I mean, there’s definitely going to be somewhat of a gap there and now we have to make sure we pick the right dose and make sure that that right dose is also balanced with the right safety profile that’s before expectations. So there won’t be a big gap, there will definitely be some type of gap. I wouldn’t anticipate that it would be longer than, maybe a month or two.

Ken Trbovich

Right. So it doesn’t require going back to the agency and getting feedback from the agency. This trail design is already set. Part B is a matter of you guys meeting with your consultants and deciding which notes.

Joe Stauffer

Yes, and no, I mean we want to make sure that we’re comfortable with the dose and we also want to make sure that the agencies comfortable with the dose, and also that they haven’t changed anything in terms of what their expectations are as well.

Ken Trbovich

So does that mean you could put the median request in before you have the data that you’ve got a placeholder?

Joe Stauffer

Yes. Exactly, I mean, we always try to do things as fast as you can, that’s one of the techniques you do is to have that request in for sure. We would obviously do that.

Ken Trbovich

Okay. And then just with regard to the difference between Part A and Part B as it relates to site selection. You mentioned obviously that that’s key. But certainly it seems that your experience thus far in both studies have been rapid enrollment. We’ve seen that with the studies you’ve done thus far. Is there anything about the pivotal nature of the trial that makes you perhaps reconsider some of those 33 sites and consider different ones or should we just assume that this is truly same sites rolling into the second part of the study?

Joe Stauffer

It’s definitely the same sites that are performing well, but we’re always open to look at new sites. We have people approaching us, that don’t want to get into the trial, they hear about us, they read about us, they see us a congresses, I mentioned that before earlier at ASA for the I.V. post-operative pain trial. So we’re always open to looking at new sites, if not just for these trials but also for trials going forward.

Ken Trbovich

Got it. And in terms of looking at the oral and any sort of special conditions around the oral, I know obviously you haven’t identified a dose from a further testing standpoint. But is there anything about going with the oral route that would cause there to be any additional safety studies or things of that nature that we should be thinking of as it expand to the oral development?

Joe Stauffer

No, not at all. The oral profile, as we said, I look at it every week with the rest of the team, and these patients are taking this drug twice a day. They’re also taking many of their other medications as well, right; so blood pressure meds and diabetes drugs, the drugs for depression. So you think about all the different drugs that an osteoarthritis patient would take and they’re taking our drug on top of that. We have not seen any safety profile that’s getting my tension in a bad way.

Ken Trbovich

Got it. And I met more around the UP side in terms of CKD on the oral side. Is there anything about that patient population whether its drug interaction? I mean obviously on the I.V. side you’ve got the opportunity to look at drug interaction, but is there anything about those CKD patients are on and all dosing that we should be thinking about?

Joe Stauffer

No, same thing, my apologies; I thought your first part was going to be osteoarthritis patients. No, same thing here, right; this drug is really nice. Whether it’s I.V. or whether it’s oral it’s excrete a hole through the kidney and it’s emphatic. So the potential for drug-drug interaction, no matter who you are is very close to zero; whether you’re on dialysis, whether you have pain post-op, whether you have osteoarthritis or whether you have CKD non-hemodialysis.

Ken Trbovich

Got it. Perfect . Thanks again and congratulations on the progress, obviously a rapid development. Looks like it be exciting times when data commence in.

Joe Stauffer

Yes. We’re excited. Thank you.

Joe Schoell

Thanks, Ken.

Operator

[Operator Instructions] Your next question comes from the line of Charles Duncan [Piper Jaffray]. Your line is open.

Charles Duncan

Hi, guys, thanks for taking the follow-up. Lots of questions, so I’m just going to ask really – just one, and that is regarding the oral form of 845. It seems like when we read through the press release there is a lot of talk about hemodialysis and kind of seems like it might be the same mechanism behind kidney dialysis, but really what’s the strategy behind that, what’s what are your basic observations? Suggest if there is a good clinical rationale and commercial opportunity.

Joe Stauffer

Yes, it’s really two fold, Charles. And I think we touched on this slightly earlier. One is we’re looking for an alternative formulation that is automatically with the bundling payment system for assay renal disease patients and that would be oral.

Charles Duncan

Yes.

Joe Stauffer

And so we want to make sure that we can define bioequivalence in HD patients. And also that data as you’re well aware is going to enable us to walk back into CKD patients that are non-HD, that are late stage predominately four and five that have some kidney function, but limited, and because as we said a couple of times here we have a drug that’s excrete hole via the kidney then the PK effects we have to take into account when we administer that to patients with diminished kidney function. So this data is going to help us model which tablets strengths would be effective and appropriate to use in those CKD end-stage patients that are not on HD, not on hemodialysis yet.


Charles Duncan

Not on dialysis yet.

Joe Stauffer

Yes.

Charles Duncan

So perhaps broader market opportunity? Okay, that’s helpful. Appreciate the clarification.

Joe Stauffer

Thanks, Charles.

Operator

I’m showing no further questions at this time. I’d now like to turn the conference call back to Derek Chalmers.

Derek Chalmers

Great. Thank you everybody. Thanks for participating in today’s call. And we certainly look forward to updating you again very soon in the coming two quarter. Thank you, have a good day.

Operator

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect.

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