Tvardi Therapeutics Inc (TVRD) 2020 Q3 法說會逐字稿

Good afternoon, and welcome to Cara Therapeutics Third Quarter 2020 Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded at Cara's request.

I'd now like to turn the call over to the Cara team. Please proceed.

Good afternoon. This is Jack Hildick-Smith with Stern Investor Relations, and welcome to Cara Therapeutics Third Quarter 2020 Financial Results and Update Conference Call. The news release became available just after 4:00 p.m. 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 are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include statements concerning the expected timing of the data readouts from the company's ongoing clinical trials; the potential results of ongoing clinical trials; timing of future regulatory and development milestones for the company's product candidates, including the company's projected timeline for the submission of its first NDA; the potential for the company's product candidates to be alternatives in the therapeutic areas investigated; the potential benefits of Vifor Pharma's marketing IV Korsuva in the United States; 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 Cara Therapeutics' filings with the Securities and Exchange Commission, including the risk factors section of the company's most recently filed quarterly report on Form 10-Q and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made in today's call speak only as of the date on which they were made. Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Participating on today's call are Dr. Derek Chalmers, Cara President and CEO; and Cara Chief Financial Officer, Thomas Reilly. I'll now turn the call over to Dr. Chalmers.

Great. Thank you, Jack. Good afternoon, everybody, and thanks for joining us today on this day that's very special day for our industry and for science in general. We've also been executing on some excellent signs through the third quarter of this year. We've made significant advancements related to our clinical development programs for both Korsuva Injection and for Oral Korsuva across a range of pruritic indications, and I'll summarize those programs shortly.

In addition, in October, we were very pleased to announce an important commercial license agreement with Vifor Pharma for Korsuva Injection for the treatment of CKD associated pruritus, specifically in U.S. dialysis patients. We see this as an important strategic deal for the company, which we believe will maximize the potential commercial success for Korsuva Injection, if approved. And I'll cover the terms of this agreement a little later in the call.

Additionally in October, we strengthened our management team by welcoming Thomas Reilly on the call with me today as Chief Financial Officer. Tom brings a wealth of experience in biopharma financial strategy from his work at both Allergan and Novartis in the past, and we're very happy to welcome Tom to the team.

Due to the ongoing COVID-19 pandemic and in accordance with the FDA's updated guidance for conducting clinical trials, we have implemented numerous clinical and operational measures to prioritize the health and safety of patients, our employees and study investigators and to minimize potential disruptions to our ongoing clinical studies. Due to the entire Cara team's continued dedication and hard work in this area, we remain on track to meet our main clinical and regulatory goals for the year, and we continue to enroll patients across all of our ongoing trials.

So now let me update you on each of our programs, starting with our lead program for Korsuva Injection in hemodialysis patients with CKD-associated pruritus. As a reminder, this is a patient population where there is significant unmet need with no therapies currently approved in the U.S. or Europe. So we believe Korsuva Injection has significant potential to change the treatment paradigm for these patients. Our Phase III program for this indication is now complete. In both pivotal Phase III trials, the KALM-1 and KALM-2 trials, Korsuva achieved statistical significance on both the primary and key secondary endpoints. And in both studies, Korsuva Injection was generally well tolerated with a safety profile consistent with our prior clinical trials. All safety databases for our Phase III program have been closed with total safety exposures in excess of ICH guidelines to support the NDA submission, with more than 1,500 total patient exposures achieved, including more than 700 patients completing at least 6 months of treatment and greater than 400 patients completing 1 year of treatment.

Through the third quarter, we've been focused on preparing our NDA package, and we remain on track for submission to the FDA a little later this quarter, at which point we'll also be applying for a 6-month priority review status as Korsuva Injection has breakthrough therapy designation for this indication. If granted priority review, a potential 2021 U.S. commercial launch for Korsuva Injection as achievable.

With respect to our U.S. commercialization strategy for Korsuva Injection, we see a number of key advantages from our recently announced license agreement with Vifor Pharma. Most importantly, it allows us to employ Vifor's already established dedicated nephrology-focused commercial organization, including an experienced sales force of some 200 FTEs with existing relationships across large, medium and independent dialysis organization. It also enables us to work with the Vifor market access team to enhance our reimbursement efforts and to leverage existing wholesale and supply chain agreements already in place to our economic advantage. In addition, with no need to build a Cara nephrology-focused sales force, we expect significant savings in projected future commercial infrastructure costs, which consequently extend our estimated cash runway. And we'll get to that a little later in the call.

With those advantages in mind, the financial terms of the agreement also significantly strengthen our balance sheet going forward. This includes: an upfront payment to Cara of $150 million, $100 million of that in cash and $50 million in equity purchase; a U.S. approval milestone consisting of a further $50 million in equity purchase; and potential U.S. commercial sales milestones of up to $240 million. Vifor will have the exclusive rights to commercialize Korsuva Injection in non-Fresenius Medical Care North America clinics in the U.S. under a Cara 60%/Vifor 40% profit sharing arrangement based on profit from net non-Fresenius Medical Care clinic sales. Recall from our original Cara/Vifor/Fresenius license agreement, which we executed in 2018, we have an established 50/50 profit split arrangement already in place for Fresenius Medical Care clinics in the U.S. So overall, we see this as an ideal agreement to provide both significant momentum for launch and adoption of Korsuva Injection in the U.S., and for Cara, importantly, to retain commercial upside from our profit sharing arrangement.

So moving from IV on to our pipeline programs focused on Oral Korsuva, and let's start with our lead program in pre-dialysis CKD patients with moderate to severe pruritus. We've previously reported positive top line results from our 12-week Phase II trial, evaluating the safety and efficacy of 3 tablet strengths of Oral Korsuva, 0.25 mg, 0.5 mg and 1 mg once daily. Based on the data, we identified the 1 mg tablet strength as the dose level to take forward into Phase III. To that end, we plan to launch the safety portion of the Phase III program in CKD-aP in the fourth quarter of this year prior to our planned end of Phase II meeting with the FDA in the first quarter of 2021, which will enable a projected pivotal Phase III trial initiation in Q2 2021.

Moving on to atopic dermatitis. Our ongoing KARE Phase II dose-ranging trial is designed to randomize AD patients across, again, 3 tablet strengths of Oral Korsuva, 0.25, 0.5 and 1, taken twice daily versus placebo. In Q2 of this year, we completed a planned interim conditional power assessment conducted after approximately 50% of the originally targeted patient number completed the designated 12-week treatment period. Based on the Independent Data Monitoring Committee's recommendation to maintain conservative statistical power for both our primary and secondary endpoint of approximately 80%, we increased the target trial size by, again, approximately 28%. I'm happy to announce that based on current patient screening rates, we expect this trial to be fully enrolled at approximately 400 patients a little later this quarter, likely within the calendar month of November.

We're also enrolling patients in our ongoing proof of concept Phase II trial in PBC patients, primary biliary cholangitis with moderate to severe pruritus. Pruritus is a common symptom of cholestatic liver diseases with 20% to 30% of those patients experiencing pruritus, but with the prevalence of up to 70% in patients with PBC. Our 16-week trial is designed to evaluate the safety and efficacy of a 1 mg tablet of Oral Korsuva taken twice daily versus placebo in approximately 60 patients. Primary endpoint is the change from baseline in the weekly mean of the daily 24-hour worst itch NRS score at Week 16 for that trial. And we do aim to report top line data from this study in the first half of 2021.

Finally, in relation to Oral Korsuva, with the goal of further establishing the broad anti-pruritic applicability of Korsuva across patient populations, we're currently planning to initiate a fourth Phase II trial of Oral Korsuva and an additional patient population where chronic pruritus remains a significant unmet need. And we'll provide more details on this study and the targeted patient population a little later this quarter.

So overall, we're pleased with the progress made across all of our development programs in the third quarter, and we're looking forward to achieving significant regulatory and clinical milestones through the end of this year and into 2021. So with that, I'll now turn the call over to Tom to cover the financial results for the quarter. Tom?

Okay. Great. Thank you, Derek. Before I begin the financial review, I'd like to say I'm very excited to have joined the Cara team. I'm really looking forward to contributing to the financial strategy of the company as we continue to advance our pipeline and focus on several key upcoming milestones that will enhance our long-term value.

Now to the financial review. As a reminder, the full financial results for the third quarter 2020 can be found in our press release issued today after the market closed. For the third quarter of 2020, we reported a net loss of $16.5 million, or $0.35 per basic and diluted share, compared to a net loss of $32.8 million, or $0.74 per basic and diluted share, for the same quarter of 2019.

In the third quarter of 2020, we recognized revenue of $9.3 million related to the Vifor Fresenius collaboration agreement compared to $5.8 million during the same quarter in 2019.

For the third quarter of 2020, we reported R&D expense of $21.1 million compared to $36.0 million in the same period of 2019. The lower R&D expenses in the third quarter of 2020 were primarily due to a decrease in clinical trial costs, a 2019 $8.0 million upfront payment upon entering the license agreement within Enteris BioPharma, Inc., and partially offset by a $2.5 million milestone earned by Enteris in 2020.

G&A expenses were $5.2 million during the third quarter of 2020 compared to $4.2 million in the same period of 2019. The increase in 2020 was primarily due to insurance costs, franchise taxes, payroll and related costs, and commercial costs, partially offset by decreases in consultants' costs.

Other income was approximately $0.4 million in the third quarter of 2020 compared to approximately $1.3 million in the same period of 2019. The decrease is due to the lower interest income on our investments in marketable securities.

As of September 30, 2020, our cash, cash equivalents and marketable securities totaled $131.4 million compared to $218.2 million as of December 31, 2019. The decrease in the balance of cash and cash equivalents and marketable securities primarily resulted from cash used in operations.

Turning to our financial guidance. Based on projected costs for our clinical development plans and timing expectations, we expect that our current cash, cash equivalents and marketable securities as of September 30, 2020, with the additional funding of $150 million from the Vifor Pharma license agreement in October 2020, will be sufficient to fund our operations into 2023, not accounting for any potential milestone payments under existing collaborations.

With that, I'll turn the call back over to the operator for Q&A. Thank you.

(Operator Instructions) Our first question comes from David Amsellem with Piper Sandler.

This is Zach Sachar on for David. Just a couple from me. I know you've asked this in a couple different ways before, but could you maybe just give us a sense of your updated thoughts on pricing for the IV form? And maybe help us in your thought process regarding what comparators might make sense there. And then quickly on the oral form, could you provide any initial thoughts on the size of a derm sales force that you might plan to be building out, and what kind of spend, particularly direct-to-consumer activities you envision? We're just trying to get a better sense of the cost structure longer term.

Yes. Zach, thank you. I think the latter question, we're a little too far away from that in terms of projecting what we're going to be spending on a commercial force there. We're just concentrating on getting that program into Phase III next year. And your question on Korsuva Injection was related to pricing or possible pricing? I missed that.

Yes. Your thoughts on pricing.

Yes. We're just a little early on that. As we've said on this call consistently, we're in constant communication with CMS. We believe we have a very good relationship with that group. But we are still a ways away from the label. So it's just a little early to get into detailed discussion in terms of pricing there for Korsuva Injection.

Our next question comes from Annabel Samimy with Stifel.

This is Nick Rubino on for Annabel. Two from us. Now that you have the Vifor deal in hand and accompanied capital flexibility, is there anything that you're doing to accelerate the oral programs? Perhaps opening more sites? And then secondly, you mentioned this new trial in chronic pruritus. I know you're giving later details, but given the population heterogeneity, I guess challenges you saw with pre-dialysis population, what's your general thinking in approaching this broad chronic pruritus population, and are there similar protocols you might be considering?

Yes. Thanks, Nick. On the latter question, let me take that first because I didn't want to leave the impression we're looking at broad non-specific pruritus of non-specific origin. So that is not what we're going to be looking at in the next Phase II. It's going to be a very defined patient population with a very defined pathology associated with that pruritus. And the rationale there in terms of which patient groups we're looking at as we've discussed before, ultimately, we believe that our mechanism of action here is going to be broadly applicable. We're not dependent on blocking any one particular cytokine or other pruritogen that pops up associated with one specific pathology here. So we'd like to be able to ascertain that we're -- we have efficacy in these various pathologies where we see pruritus has been a real chronic unmet need. And so we've kind of satisfied the end organ, if you like, end organ disease-associated pruritus with CKD. As you know, we're looking at dermatological-associated pruritus with atopic. And there are some other categories there that we'd like to look at specifically so that at the end of the day when we have that discussion down the road with the FDA, we've satisfied that in each of these pathologies, which are varied, but all having form in a chronic moderate to severe pruritus which is not treatable with current medications, that we've satisfied that we have efficacy across these various subgroups. So it's not going to be a non-specific pruritus group we look at. It's going to be a defined pathology for this novel Phase II trial that we've been looking at for some time with that strategy in mind. And in terms of our overall capabilities, now you're correct; the Vifor deal has certainly dramatically strengthened our balance sheet, and we have capability now to push forward with larger trials. I think you're going to see the benefit of that in the Phase III trials we plan to initiate in 2021. So there we're hoping to push both CKD pre-dialysis, and assuming positive results, atopic dermatitis into Phase III. So the advantage we see now is that those trials, as you rightly indicate, can be powered in such a way that we can get through those in an accelerated fashion. So whatever is required in terms of clinical sites, we can imply and push those pivotal trials as quickly as possible once we get into those. So that's where I see the advantage of the increased capital power that we've achieved post the Vifor deal.

Our next question comes from Jason Gerberry with Bank of America.

This is [Chi] on for Jason. Just one from me. On the ongoing atopic dermatitis exercise, curious if you monitor -- actively monitoring interruptions in site visit or dose interruption while the trial is ongoing and blinded? And if so, do you have any sense whether you've observed or the data monitor will have observed any interruption in site visit or dose interruption?

No, that's a good question. We actually are using electronic data capture for that particular trial. So we have very detailed information on dosage and when dosage occurs. And so far, we haven't seen any significant interruption issues there. In fact, as we've talked about before in Q2, post the COVID lockdown, we've seen a pretty healthy rebound in enrollment rates in that trial. And we do expect that trial, as I said earlier, to be fully enrolled very soon this quarter. So no, we haven't seen any significant dose interruption issues for those patients.

And our next question comes from Alan Carr with Needham & Company.

One, Derek, can you give us a sense of the scale of this open-label safety Phase III trial that you're going to be starting? What sort of database are you going to need for the oral formulation in total for that? And then a big picture question. Obviously, you've made it clear that you plan to look for more indications for Oral Korsuva. But I'm wondering in the long term, where do you expect to see Cara? Where do you plan to take it? Do you plan to bring in other drugs or maybe look within your existing early stage library of compounds?

On the open-label trial, Alan, we will -- when we start that trial, we'll be releasing details on the size of that trial. And that's when you're going to see everything you've asked in relation to open label. But as we've discussed before, the strategy with CKD pre-dialysis patients for Oral Korsuva is that we feel as though we should have the ability to reference the already established database with IV Korsuva in CKD patients, albeit end stage, if you like, Stage 5 dialysis patients. So I can't give you an absolute answer to that right now because that's going to come obviously post our end of Phase II meeting. But there we'd like to see a reduced overall safety database requirement by virtue of the ability to reference our already established, if you like, IV Korsuva safety database. So that's our strategy there. And again, definitively, we'll have some answers to that post the end of Phase II meeting, which we're targeting for the first quarter of 2021. And then your general 30,000 foot where are we going with this is our first goal is obviously submit our NDA for Korsuva Injection for dialysis patients. Second major goal, moving Oral Korsuva forward with our chosen patient population and to registration trials and getting our first label there and then expanding upon that in terms of the Oral Korsuva application. And then beyond that, if we move that into commercialization, then yes, it may make sense down the road that we look to augment that particular pipeline related to, if you like, dermatologically focused Oral Korsuva. And that may involve both other formulations of Korsuva that we might pursue that would be useful for that patient population. And that may also involve looking at possible in-licensing of, again, therapeutics that make sense to partner with an oral anti-pruritic. But that's a little further down the road and not something I could discuss with any sort of uncertainty right now. It's not something we haven't thought about, but that comes after we push oral forward, get it into Phase III and make sure we can get that to a label, first of all.

And our next question comes from Arlinda Anna Lee with Canaccord.

Congrats on the progress, Derek. I just have a quick question on the forthcoming trial design that you might be contemplating for this new undisclosed indication. It sounds like your prior trials in pruritic indications have provided sort of a template. Can you give us a size of an indication of what the patient population might be? And will the trials be similar in scope to what you've run before and will they have similar features, for example, like a pre-specified interim assessment?

Yes. Yes, thanks for that question. So I think the advantage we have now, as you've indicated, we've established an effective dose range for Oral Korsuva. We do understand the PK associated with that and the patients we've looked at. And so for the new patient population, it's a pretty accurate estimate of where we need to be in terms of exposure level to hopefully see a signal within that population. So the design is going to be more on a proof of concept type design here to make sure we can get a signal there, based on, if you like, the dose ranging data we've already established both in CKD and soon we're going to see data from atopic. So that's going to be the general design. Again, we'll talk about more details when we initiate the trial and talk about that in a little more detail. But the most important thing there is that it's going to allow us to establish efficacy within a different pathology associated with chronic pruritus, which ultimately I think is going to be useful ammunition, if you like, in our discussions with the FDA on eventually getting that broad label. So the design is going to use information we've already gleaned from our prior oral trials in terms of dose range we're going to employ and how we dose there. And it's going to be more in line with seeking signal there since we already established, if you like, our appropriate dose range for the Orals Korsuva.

Okay. Great. Derek, I apologize. I forgot to mention this is Ben calling in for Arlinda.

I did realize it wasn't Arlinda, Ben. I was just going to say...

I'm too focused on the question here. My last question, and I apologize if this has been asked before. But with IV Korsuva, at what point in the NDA process will you get an idea of where this may or may not be DEA scheduled?

Yes. So obviously as part of our NDA submission, we will be submitting a specific document that's going to address that from all the aspects required by the FDA there. So after we submit our document and when we get acceptance of that document, there's a review period there of a couple of months where the FDA are going to look at that and decide whether ultimately they're going to recommend our drug for scheduling. And then at the end of that review period, if they do recommend a scheduling there -- and as you know, we have very strong data that this is a drug that shouldn't be scheduled. And we've talked about that on these calls before. It doesn't have a standard opioid chemistry. It doesn't release dopamine in preclinical studies, or the preclinical models indicate it's not a highly abusable drug. We've run a human abuse liability trial per CSS guidelines. We've run that against a Schedule IV. It didn't look like a Schedule IV. So we'll be presenting all that strong evidence that this should be a non-scheduled compound. But if it is and the FDA decide that it should be scheduled, then the likelihood that they are going to recommend, that would be a schedule V. Then after that review process, there'd be another review process of 3 months at the DEA to confirm that schedule. So that would come at the end of the priority review process.

Okay. That's very helpful. Again, congrats on the progress and best of luck to you.

And I'm showing no further questions in the queue at this time. I'd like to turn the call back to Derek Chalmers for any closing remarks.

Great. Thank you, Jimmy. And thank you, everybody, for participating in today's call. I'd also like to thank the Cara team, our study investigators and all the patients who continue to participate in our clinical trials, and we look forward to updating you again very, very soon. So thank you very much, everybody, for dialing in today, and have a good night.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.