Nov 10, 2014
Executives
Jesse Baumgartner – Stern Investor Relations, Inc. Derek Chalmers – President and CEO Josef Schoell – CFO
Analysts
Alan Carr – Needham & Company Chiara Russo – Janney Montgomery Scott
Operator
Good afternoon. And welcome to Cara Therapeutics Third Quarter 2014 Earnings Conference Call.
At this time all participants are in a listen-only mode. There will be a question-and-answer session at the end.
Please be advised that this call is being recorded at Cara's request. I would now like to turn the call over to the Cara team.
Please proceed.
Jesse Baumgartner
Good afternoon. This is Jesse Baumgartner with Stern Investor Relations and welcome to Cara Therapeutics third quarter 2014 conference call.
The news release with our third quarter financial results and corporate update became available at 4 o'clock PM today and can be found on our website at www.caratherapeutics.com. You may also listen to a live webcast and replay of today's call on the 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 such as statements concerning the timing and results of Cara’s ongoing and planned clinical trials and future regulatory and clinical developments are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
Risks are described more fully in Cara Therapeutics' filings with the Securities and Exchange Commission, including the Risk Factors section of the company's Annual Report on Form 10-K for the year ended December 31, 2013 and its other documents subsequently filed with or furnished to the SEC. All forward-looking statements made on today's call speak only as of the date on which they were made.
Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made. Now let me turn the call over to Cara's President and CEO, Dr.
Derek Chalmers.
Derek Chalmers
Good afternoon everyone and thanks for joining us on the call today. We’ve continued to make significant progress with our clinical development plans during the third quarter and early here in the fourth, including the completion of an important human abuse liability trial for CR845 as well as significant progress in both our development of an oral tablet formulation of CR845 and our proof of concept trial of 845 in uremic pruritus.
So what we're going to give you today is some color around those items first and then we’re going to update you on what to expect for the rest of this year and into 2015 and after that we’re going to go through the financials and then into Q&A session. Before we get started, though, I would like to again take a moment and acknowledge the recent unexpected passing of our Chief Medical Officer Dr.
Robert Medve. While he will be missed, I’d like to recognize the significant contribution to our ongoing clinical trials, especially the recently completed and very successful human abuse liability study.
Now with regard to that study, we were very pleased to recently report the topline results indicating the I.V. CR845 met the trial’s primary endpoint by demonstrating highly statistically significant lower drug liking scores as measured by visual analog scale when compared to Schedule IV comparator, pentazocine, as well as highly statistically significant lower feeling high, overall liking and take drug again scores, all standard subjective measures recommended by the FDA to assess the drug’s overall abuse liability.
So I’d encourage you to visit the investor relations portion of our website for the recent conference call webcast, presentation slides, specifically summarizing these results. Suffice it to say we’re extremely pleased with the data and the implications for regulatory and ultimately potential commercial differentiation for CR845.
We believe that data suggests the potential for CR845 to be either the first Schedule V or the non-schedule peripheral opioid for acute pain market presently dominated by short-acting opioids with schedule 2 or schedule three DEA designations. And as a quick reminder, scheduling drugs are classified by the DEA into one of five distinct categories or schedules depending upon the drug’s acceptable medical use and the drug’s abuser dependency potential.
So for example, schedule 2 drugs such as oxycodone and hydrocodone and most other opioid analgesics are considered to the high potential for abuse and have the highest degree of restrictions on their prescription and use. Schedule 5 drugs have the least potential for abuse and therefore the lowest degree of legal restrictions on prescription and use apart from of course unscheduled drugs.
It’s clear that the total cost of prescription opioid misuse and abuse is a significant problem here in the US requiring new non-addictive approaches and the totality of data from this completed CR845 HAL study indicates that CR845 has a potential to be a non-abusable approach to pain management. These HAL results also continue to support our broader therapeutic approach that by selectively targeting peripheral kappa opioid receptors and avoiding the CNS activity of commonly used new agonists we can achieve significant efficacy while avoiding many of the undesirable side effects, in this case euphoria and abusability associated with currently available pain therapeutics.
So with this successful HAL data in hand with our Phase 2 trial data, establishing CR845 analgesic efficacy and two postoperative pain models, we remain on a path to request an end of Phase 2 meeting with the FDA during the fourth quarter of this year to enable initiation of registration trials for I.V.CR845 in acute pain area early in 2015. This development plan will include two phase 3 trials in both hard and soft tissue models, most likely laparoscopic hysterectomy and bunionectomy and we will be providing updates on final protocols prior to initiating those trials in 2015.
Meanwhile we've also continued to execute on the other programs in our pipeline and are looking forward to a couple of near-term readouts this quarter and in the first half of next year. In August, we were very pleased to announce the start of a proof of concept Phase 2 trial in uremic pruritus and intractable type of itch in dialysis patients that is generally resistant to conventional treatments and diminishes quality of life for almost half of all kidney dialysis patients.
In this non-pain indication, we believe that the anti-itch properties of CR845 could provide an important new therapeutic approach for a significant unmet clinical need with no presently approved products in the US or the EU for this condition. We expect to report topline dose ranging PK and safety data from this study in the fourth quarter of this year and then topline efficacy results in the first half of 2015.
Turning now to our oral CR845 program, we still expect to report top line data this quarter from our phase 1, 150 subject single ascending and multiple ascending dose trial of an oral tablet formulation of CR845. The PK safety and biomarker data from this trial will inform appropriate dosing regimens to employ in proof of concept phase 2 trials with this tablet formulation.
We see very significant potential for oral CR845 in both the acute pain space, for example, as a step down treatment for the postoperative patient and discharge and in treating chronic pain conditions where peripherally acting potentially non-abusable analgesic could meet a large unmet need. Additionally on building on our ongoing phase 2 trial in uremic pruritus, we believe the oral tablet formulation may provide a novel therapeutic approach for patients suffering the burden of chronic pruritus associated with a wide spectrum of other clinical conditions, a market that’s presently dominated by nonspecific steroids.
Finally to update activity with our Japanese development partner Maruishi Pharmaceuticals who are developing 845 as a novel treatment for both uremic pruritus and acute postop pain in their territory with their single ascending and multiple ascending dose those phase 1 trials with IV CR845 now successfully complete in a Japanese population. We look forward to reporting progress on their ongoing clinical work with CR845 as we head into 2015.
So in summary, the upcoming expected significant clinical milestones for the end of this year and first part of 2015 will be requesting an end of phase 2 meeting with the US Food and Drug Administration in the fourth quarter of this year to enable initiation of registration trials for IV CR845 in early 2015, reporting topline data from phase 1 SAD and MAD trials for the tablet formulation of oral CR845 in the fourth quarter of this year and reporting topline dose ranging PK and safety data from the POC trial of IV CR845 in uremic pruritus in the fourth quarter of this year with top line efficacy results expected in the first half of 2015. So with that summary of the clinicals, I would is like to turn the call over now to Josef Schoell, our Chief Financial Officer to go through the details of the financial results for this quarter.
Joe?
Josef Schoell
Thank you, Derek. We reported net loss available to common stockholders of$6.5 million or $0.29 per basic and diluted share for the third quarter of 2014 compared to a net loss available to common stockholders of $4.6 million or $1.07 per basic and diluted share for the same period last year.
The weighted-average number of shares used in the per share calculation increased to 22.7 million shares basic and diluted from 4.3 million shares basic and diluted for the respective periods due to common shares sold in our IPO and the automatic conversion of convertible preferred shares into common shares in connection with the IPO during the first quarter of 2014. Collaborative revenue was $1.1 million for the third quarter of 2014 compared to $1 million in the same period of 2013.
Collaborative revenue for the third quarters of 2014 and 2013 included $1.1 million and $960,000 respectively of revenue that had been deferred upon entry into the license agreement with Maruishi and zero and 58,000 respectively from the sale of clinical compound. Research and development expenses were $6.2 million in the third quarter of 2014 compared to $3.8 million in the same period last year.
The higher R&D expenses in the third quarter of 2014 were principally due to a $2.1 million net increase in direct preclinical studies and clinical trial costs and a $300,000 increase in consultant services in support of preclinical studies and clinical trials. The net increase in clinical trial costs resulted from increases in cost incurred in connection with the phase 1 oral CR845 trial which commenced in June of 2014, the IV CR845 HAL trial which commenced in July of 2014, the phase 2 IV CR845 uremic pruritus trial which commenced in August 2014 and the cost of CR845 drug manufacturing.
These costs were partially offset by decreases in costs incurred in connection with the phase 2 IV CR845 bunionectomy trial which was substantially completed in 2013 and the phase 1 IV CR845 renal impairment trial and the costs of tablet formulation for the phase 1 oral CR845 trial. Cost of preclinical studies also declined.
General and administrative costs were $1.5 million in the third quarter of 2014 compared to $0.8 million in the same period last year. The increase in the third quarter of 2014 was primarily due to increases of $0.2 million in directors and officers insurance costs and $0.1 million in public investor relation costs.
There were also increases of $0.3 million in payroll and related costs primarily due to increased headcount and $0.1 million in stock-based compensation expense. Interest income net was $26,000 in the third quarter of 2014 compared to a $1 million interest expense in the third quarter of 2013.
The decrease in interest expense was primarily due to the conversion of the outstanding convertible promissory notes in 2013 which had generated the interest expense. At September 30, 2014 cash and cash equivalents totaled $58.4 million compared to $62.8 million at June 30, 2014 and $12.4 million at December 31, 2013.
Now let's turn the call back over to the operator for Q&A.
Operator
(Operator Instructions) And our first question comes from Alan Carr with Needham.
Alan Carr – Needham & Company
Couple of them. One of them – can you comment on the regulatory path for uremic pruritus, what’s known about that in the US?
And then the second is in getting ready for this submission for CR845, what additional CMC work is needed?
Derek Chalmers
Thanks, Alan. I am not sure I’ve got the first part of your question on uremic pruritus.
I think you asked what’s known about the condition in terms of clinical treatment?
Alan Carr – Needham & Company
Actually – I am sorry, the regulatory path, what’s known in terms of regulatory guidelines and that sort of thing? The other one was – in case if you couldn’t hear me was what CMC work is still needed before the phase 3 start?
Derek Chalmers
Thanks, Alan. Thanks for the question.
Let’s start with the second question, you summarized that quickly. So there is a couple of things going on and they are progressing on schedule.
So the manufacturing process for the API is moving towards validation right on schedule and we expect to have that completed early in ‘15 and then the drug product technology transfer which we talked about last time I believe to the commercial site is ongoing and that’s also currently on schedule. So all this is anticipated to allow us to file a request for an end of phase 2 meeting in relation to CMC, that’s going to be concurrent with the clinical request.
So that’s on schedule. For the first part of the question in terms of UP and the regulatory path, as you know and I think I mentioned there hasn't been an approval in the US for this particular condition and indeed for that matter in the EU.
And so this would be a novel approval. There has of course been approvals in other territories and as you know we're working closely with the Japanese partner and that is the one territory where we have seen an approval for a kappa agonist specifically for this condition and specifically with this label .So we’ve been working with them and looking at approval contents related to that particular molecule in that territory and modelling our approach based on their trial’s endpoint analysis based on their trials and what they had met and also in consultation with the suitable division here in the FDA which is a dermatological division.
So there hasn’t been approval here in this particular territory but we have that model Japanese approval to look for in terms of appropriate path and endpoints associated with this.
Alan Carr – Needham & Company
And then my last one and with respect to finding – do you have any preliminary guidance on bun for ’15 or if you could phrase it as – how much of runway you have in actual cash –
Josef Schoell
I think once we file, we have not given guidance relative to exact dollars going out. However in our 10-Q we do talk about our runway and we still see 18 months going out without any of the licensing milestones coming in.
Certainly as we get into 2015 with the start of the phase 3s the cash burn is going to increase quite a bit.
Operator
Thank you. Our next question comes from Chiara Russo with Janney.
Chiara Russo – Janney Montgomery Scott
I was wondering going forward into your phase 3, have you started looking at any providers or looking at sites and sort of what is your criteria or what do you think your criteria is going to be those? And in terms of enrollment timeline, obviously bunionectomy is going to be a little bit easier to enrol than hysterectomy.
Do you think that we could actually be seeing that bunionectomy data sooner than anticipated, sort of more color on the timeline around the phase 3s.
Derek Chalmers
Okay, thanks Chiara. In terms of providers and say it’s a little early to be selecting those.
As you know there is a number of very suitable well experience providers, CRO providers and sites that are well recognized in providing high-quality data on either of these models. So those are available and of course we've used typical CROs in our phase 2 studies in both these model.
So we have experienced with various providers but it’s a little early to be selecting the ultimate providers there as we move forward. That’s something we’ll do early in ’15.
In terms of timelines, you are correct that traditionally bunionectomies have been rapidly completed studies, there happens to be a large number of young women with particular feet problem associated with high heels in the US and those trials tend to recruit very quickly. So we do anticipate we’d see bunion data ahead of laparoscopic hysterectomy data and depending on the start time for that, that would dictate whether we see that towards the end of ‘15 or early in ’16, but all of that should keep us on track to see an NDA filing for the IV formulation in 2016.
Chiara Russo – Janney Montgomery Scott
And just one other sort of quick question in terms of the exploratory endpoints from the HAL trial, is there any sort of expectation that those can be considered for use on the label if approved?
Derek Chalmers
Well, yes, there could be on the label -- the exploratory endpoints that were really associated with the idea that as we have some kappa pharmacology there we wanted to test and observe any possible non-euphoric effects but possible hallucinogenic or dysphoric effects. And as you saw from the initial readout we reported last week, we certainly don't have any indication of that so far.
So yes this could be useful, ultimately on the label most useful, ultimately for commercial differentiation of the product where as I said in our text if we have a product that is analgesic peripheral acting opioids and potentially schedule 5 or non-schedule that would be unique in the acute pain space and highly differentiating.
Operator
(Operator Instructions) And our next question comes from Annabel Samimy from Stifel.
Unidentified Analyst
Hi Derek, this is Jamie for Annabel. I just had a couple questions.
Preparing for the end of phase 2 meeting with the FDA, are there some of the key issues that you still need agreement on with the FDA whether it’s trial design, or safety database?
Derek Chalmers
Not particular – we remain – in preparing for the end of the phase 2 meeting, today we’re focused on final phase 3 protocol and that will really dictate the direction of the meeting and those protocols are underway. And we anticipate including those in our end of phase two package.
Unidentified Analyst
And just last question about your timeline for the oral. Can you just go into it a little bit more and also in the past you mentioned that the FDA won’t require another abuse liability trial for the oral.
Are you sure about that because the FDA has never encountered kappa before and would they just still make you go through that any way?
Derek Chalmers
I am not sure if I actually said that explicitly. I tend not to try to predict how the FDA is going to react to the set of data.
Bu I think the point that I made in relation to our IV CR845 HAL study was that that was really the highest hurdle in determining abusability and that we administered the compound as a rapid intravenous bolus. So it’s really very rapid high concentration of drug in the bloodstream and of course as you know repetitive entry into the brain is a major determinant of abusability.
So if this is indeed as negative as it appears then it’s a very good argument that a slower uptake of drug i.e. from an oral formulation should certainly also be negative in terms of potential abusability as measured this way.
Whether they require us to run one or not, we will come down to their judgment and if they do require us to run HAL study with the oral formulation we will certainly abide by that and that’s a study as you know that can be relatively quickly completed. So we anticipate that we’ve certainly proven that the molecule itself is not abusable but there is a further requirement for an ultimate formulation on the oral side, we would be happy to abide by the FDA's ruling on that.
Operator
Thank you and I am no showing further questions at this time, I’d now like to turn the call back over to Derek Chalmers for any closing remarks.
Derek Chalmers
So thank you everybody for dialing in today. It’s a little early but we’re not going to talk to you for a little while.
So I like to wish everybody a happy upcoming holiday season and we look forward to updating you again soon early in 2015. Thank you everybody.
Operator
Ladies and gentlemen thank you for participating in today's conference. This does conclude the program and you may all disconnect.
Everyone have a wonderful day.