Business Overview

Cara Therapeutics, Inc. (NASDAQ:CARA) is a biopharmaceutical company leading the charge in transforming the treatment of pruritus. The company's strategic pivot to prioritize the development of oral difelikefalin for the treatment of chronic pruritus associated with notalgia paresthetica (NP) has positioned it for potential success in a highly underserved market.

Cara Therapeutics is a development-stage biopharmaceutical company focused on driving innovation in sizable, yet underserved diseases and conditions. The company's primary focus is on leading a new treatment paradigm to improve the lives of patients suffering from chronic pruritus. Cara's lead product candidate is an oral formulation of difelikefalin, a selective, predominantly peripherally acting, non-scheduled Kappa opioid receptor agonist, for the treatment of chronic neuropathic pruritus associated with NP.

NP: A Significant Unmet Need

Notalgia paresthetica is a common, underdiagnosed neuropathy affecting the upper back, characterized by chronic neuropathic pruritus. An estimated 34 million U.S. patients or 13% of the adult population suffer from chronic pruritus, and approximately 2.7 million or 8% of them have chronic neuropathic pruritus. Out of these chronic neuropathic pruritus patients, 650,000 or 24% are NP patients under the care of a healthcare provider, predominantly dermatologists.

Despite the significant impact on patients' quality of life, NP currently has no approved treatments. Off-label use of therapies indicated for neuropathic pain often provides minimal or no relief, and is associated with significant side effects. In market research, almost 90% of NP patients responded that the treatments they had been offered were minimally or not at all helpful, and almost 75% stated they were not currently on any therapy for NP. This clear unmet need has driven Cara's strategic focus on developing an effective, safe, and well-tolerated treatment for this condition.

Oral Difelikefalin for NP: Promising Clinical Data

Cara's oral difelikefalin has demonstrated promising results in a Phase 2 proof-of-concept study in NP. In this study, oral difelikefalin at a 2 mg twice-daily dose showed a statistically significant separation from placebo on the worst itch numerical rating scale (NRS) as early as day one, with sustained efficacy throughout the 8-week double-blind treatment period. The publication of these data in the February 2023 issue of the New England Journal of Medicine has generated significant excitement among thought leaders, investigators, and patients, leading to rapid enrollment in the ongoing dose-finding portion of Cara's Phase 2/3 COURAGE I study.

COURAGE I: Advancing Toward Pivotal Trials

The COURAGE I study is comprised of two parts. Part A, the dose-finding portion, is a double-blind, placebo-controlled 8-week study comparing three dosage strengths of oral difelikefalin to placebo. Cara has completed enrollment in COURAGE I Part A ahead of schedule, with 214 patients randomized equally across four arms (0.25 mg BID, 1.0 mg BID, 2.0 mg BID, placebo BID). The company expects to report top-line efficacy and safety results from this portion of the trial by the end of the third quarter of 2024.

The readout from COURAGE I Part A will provide key information, specifically the dose and sample size, to initiate the pivotal Phase 3 portions of the program - Part B of COURAGE I and the second study, COURAGE II. These pivotal studies will likely be identical in design, with patients randomized 1:1 to either difelikefalin or matching placebo for an 8-week double-blind treatment period, followed by open-label 52-week extensions. The primary endpoint will likely be the proportion of patients with a ≥4-point improvement at Week 8 from baseline in the worst itch NRS.

Cara expects to release final topline results from the first pivotal study, COURAGE I Part B, by the end of 2025, with results from the second pivotal study, COURAGE II, expected in early 2026.

KORSUVA Injection: Navigating Reimbursement Challenges

In addition to its oral difelikefalin program, Cara has an approved intravenous (IV) formulation of the same molecule, KORSUVA injection, for the treatment of moderate-to-severe pruritus associated with advanced chronic kidney disease in adults undergoing hemodialysis. KORSUVA injection is approved in the United States, European Union, and multiple other countries.

While KORSUVA injection has seen continued demand growth, with a 22% quarter-over-quarter increase in vial shipments to dialysis clinics in the fourth quarter of 2023, unfavorable reimbursement changes following the end of the Transitional Drug Add-on Payment Adjustment (TDAPA) period on March 31, 2024, are expected to significantly restrict access to the product. As a result, Cara does not anticipate meaningful revenue contributions from KORSUVA injection going forward.

Financials

For the full year 2023, Cara reported annual revenue of $20.97 million, annual net loss of $118.51 million, annual operating cash flow of -$92.08 million, and annual free cash flow of -$94.45 million.

In the fourth quarter of 2023, Cara generated revenue of $3.0 million, consisting of $2.3 million in collaborative revenue from its profit-sharing arrangement with CSL Vifor for KORSUVA injection sales, and $0.7 million in other revenue related to royalties and milestone payments under the company's agreement with HealthCare Royalty (HCR). Cost of goods sold was $0.6 million, and research and development expenses were $28.4 million, which included a $1.7 million charge related to an agreement to reimburse Patheon for manufacturing commitments no longer needed due to reduced KORSUVA demand.

As of December 31, 2023, Cara had $100.8 million in cash, cash equivalents, and marketable securities. The company expects its current unrestricted cash, cash equivalents, and available-for-sale marketable securities to be sufficient to fund its anticipated operating plan, which reflects the impact of its strategic prioritization of the NP program, into 2026.

Strategic Pivot and Cost-Containment Measures

In January 2024, Cara announced a strategic prioritization of the oral difelikefalin program for the treatment of chronic pruritus associated with NP, along with a workforce reduction of up to 50% to reduce operating expenses and focus the company's resources on this high-potential program. This streamlined operating plan has extended Cara's cash runway into 2026, allowing the company to reach key value inflection milestones in the NP program.

Risks and Challenges

Cara's success will depend on the continued development and potential regulatory approval of oral difelikefalin for the treatment of NP. The company faces risks associated with the clinical trial process, including the potential for delays or failures in enrollment, execution, and achieving desired endpoints. Additionally, Cara's reliance on its collaboration with CSL Vifor for the commercialization of KORSUVA injection exposes the company to risks related to changes in reimbursement policies and the commercial performance of the product.

Conclusion

Cara Therapeutics has navigated a challenging landscape by sharpening its strategic focus on the development of oral difelikefalin for the treatment of chronic pruritus associated with notalgia paresthetica, a highly underserved condition with significant unmet medical need. The company's promising clinical data, rapid enrollment in its ongoing trials, and extended cash runway position Cara to potentially unlock the growth potential of this program and create sustainable value for its stakeholders.