Q1 2023 Cara Therapeutics Inc Earnings Call
Okay.
Yeah.
Good afternoon, My name is Lucy and I will be your conference facilitator.
I would like to welcome everyone to the Cara Therapeutics first quarter financial results and update conference call. All lines have been placed on mute to avoid any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star and the number one one on your telephone keypad.
Sure move your name from the queue simply press star and the number one one again.
Please be advised that this call is being recorded I would now like to introduce Matt Murphy <unk> manager of Investor Relations. Mr. Murphy you may begin your call.
Thank you operator and good afternoon.
After market closed today <unk> issued a news release announcing the Companys financial and operating results for the first quarter of 2023.
Copies of this news release and the associated SEC filings can be found in the investors section of our website at Www Dot Cara Therapeutics Dot com before.
Before we begin let me remind you that during the course of this conference call, we will be making certain forward looking statements about Kara and our programs based on management's current plans and expectations.
These statements are being made under the private Securities Litigation Reform Act of 1095 and are subject to risks and uncertainties.
Actual results may differ materially due to various factors and Cara undertakes no obligation to update or revise these statements publicly as a result of new information or future results or developments investors should read the risk factors set forth in <unk> 10-K for the year ended December 31 2022.
And any subsequent reports filed with the SEC, including its Form 10-Q for the quarter ended March 31 2023.
With that said I'd like to turn the call over to Chris <unk>, Chief Executive Officer, Chris.
Thanks, Matt Good afternoon, everyone and thank you for joining our call with me today are Ryan Ryan Maynard, our Chief Financial Officer, and Dr. Joanna <unk>, our Chief Medical Officer.
I'd like to start by giving a quick overview, what I'll address today for the update on the core Suva injection launch in the U S. I will provide additional metrics that we're tracking to give better insight into the progress of demand and uptake. These.
These will help to give some clarity and show the opportunity within the different customers and segments of the market.
I will also review the launch progress in countries around the world.
In addition, I will highlight our robust clinical stage pipeline and the advancement of our high value development program for oral <unk> capital.
I am pleased with the progress to date.
I can confirm that we continue to track to our previously communicated timelines after that Ryan will provide you with a financial update and then we will open up the call to Q&A.
I will begin with the launch of <unk> injection in the U S. For the first quarter of 2023 net sales for <unk> were $5 $7 million translating into $2 $8 million of profit recorded as revenue to us.
Wholesaler shipments to dialysis clinics more than doubled quarter over quarter and reached 46000 vials.
64% of these vials were shipped to fresenius or FMC clinics with the remainder split between Davita and the other dialysis organizations.
This increase in vials shipments suggests a meaningful acceleration in demand.
Anecdotal feedback on core Suva from both providers and patients continues to be highly positive supporting this expansion in breadth and depth and its utilization.
FMC orders more than tripled quarter to quarter, reaching 30000 vials by the end of the first quarter 500, FMC clinics are 18% had placed reorders up from 7% of clinics at the end of Q4.
More importantly, <unk>.
<unk> hundred clinics or 56% of FMC clinics has had dosed at least one patient up from 29% of clinics at the end of Q4.
Total patient demand remains difficult to assess without specific information about the levels of inventory remaining at individual clinics.
However, we continue to see significant growth in the number of FMC clinics exhausting their third quarter 2022, bolus inventory and expect that the majority of the FMC clinics will be in a reorder mode in the second half of this year.
At Davita demand growth continues to be steady at the end of first quarter 300 clinics or 11% of Davita clinics had ordered <unk> Suva, that's up from 7% of clinics at the end of Q4.
Reorder rates among these clinics remained very encouraging with 70% placing repeat orders.
Given the on demand approach at Davita clinics for ordering core Suva the growth in clinic orders represents a good proxy for the growth in patient demand.
At mid size and independent.
<unk> continues to perform well at the end of the first quarter, 13% of these clinics had placed orders and thats up from 11% at the end of Q4.
In addition, 66% of these clinics have placed repeat orders.
Now the strongest performance to date amongst this group has been at <unk> and that's the largest of the midsize deals roughly 66% of clinics have ordered <unk> and 72% of these clinics have placed repeat orders.
Stepping back and looking at the Big picture <unk> overall market penetration leaves significant room for growth with a vast majority of the market is still untapped.
Yet there <unk> continues to make progress building the market navigating the idiosyncrasies of each segment across the entire deal landscape.
This is reflected in key trends this quarter clinic orders doubled quarter to quarter, almost 60% of FMC clinics are dosing a patient and each segment is seeing an increase in clinics ordering the product.
We remain confident in our partner CSL before remains fully dedicated to capturing the laden upside in this market and maximizing the commercial potential of course silver in the long term.
Additionally, we are working in close collaboration with the kidney community to help CMS understand the need for a durable and appropriate reimbursement mechanism for to dapper designated products post there to dapper period.
We remain confident that additional funding will be made available for to dapper designated products and we remain hopeful that a substantive and positive update will be released during this year's rulemaking cycle.
Next on the international front, the rollout of <unk> in Europe continues to gain momentum in the first quarter <unk> generated $1 2 million and net sales translated into a 125000 of royalty revenues to us.
Rollout has begun in four additional countries frac.
France, Finland, the Netherlands, and Switzerland, bringing the total number of launch countries to seven.
The initial feedback from patients and providers has been very encouraging and in line with the patient testimonials. We have received in the U S.
We continue to expect the additional countries in Europe and other countries around the world to come online throughout the next 12 months to 18 months once reimbursement is secured.
Also a decision from the UK National Institute for Health and care excellence or nice is expected imminently.
In Japan, we continue to expect a regulatory decision in the second half of 2023 as a reminder, approval in Japan would trigger a $2 million milestone payment to care.
Last but certainly not least I'd like to briefly discuss our promising wholly owned oral pipeline fundamentally Karen is a development company and we are committed to building our nephrology in medical dermatology franchises with oral <unk>.
These efforts will drive us to our goal of being a differentiated company as the world leader in treating chronic pruritus in the long run.
Enrollment in our phase III programs in pruritus associated with advanced chronic kidney disease.
And in atopic dermatitis is progressing as expected we anticipate the internal readout of part a of our kind one trial in the fourth quarter of this year with final top line results from this program in the first half of 2025. We also continue to expect top line results.
For our kick advanced chronic kidney disease program in the second half of 2024.
Start up activities for our phase III program and <unk> kicked off in the first quarter of this year and they are progressing well.
Program is tracking to the internal readout of courage, one part a in the second half of 2024 and final top line results for the program in the first half of 2026.
To summarize we are continuing to work closely with <unk> to accelerate the uptake of <unk> and we remain confident that these efforts will drive near term growth.
Additionally, we remain optimistic regarding cms's future decision on the post adapt the funding mechanism and hope to see an update during this year's rulemaking cycle.
Underscored by the highly positive feedback we are hearing from patients and providers around the world. We continue to believe in the long term success of course <unk> injection.
More importantly, we see tremendous value creation for Cara with our three late stage programs with oral <unk>. Catherine we are fully committed to advancing these programs as rapidly as possible in order to maximize the potential of <unk> within our two therapeutic franchises.
Yeah.
We look forward to providing you with updates on our progress throughout this year.
Now I'd like to turn the call over to Ryan for additional details on our first quarter financial results over to you Ryan. Thank you Chris.
Total revenue was $6 2 million for the three months ended March 31, 2023, compared to $4 8 million for the same period in 2022.
Revenue this quarter consisted of $2 8 million of collaborative revenue related to our profit from <unk> net sales of course Suva injection.
<unk> third parties and $3 2 million of commercial supply revenue.
We also recognized 125000 of royalty revenue this quarter, representing our royalties from net sales of <unk> in the first quarter of 2023.
Cost of goods sold during the three months ended March 31, 2023 was $62 6 million and relates to our commercial supply shipments of course Suva injection.
<unk> before.
Research and development expenses were $24 3 million for the three months ended March 31 two.
<unk> 2023, compared to $21 3 million in the same period of 2022 the increase in R&D expenses is primarily due to the increased clinical spend related to our three late stage clinical programs.
General and administrative expenses were $6 9 million for the three months ended March 31, 2023, compared to $9 4 million in the same period of 2022.
The reduction in G&A expense was due to a decrease in stock based compensation in the first quarter of 2023 as compared to the same period in 2022.
Stock based compensation in 2022 included costs related to the modification of certain equity awards to our former CEO .
Cash cash equivalents and marketable securities at March 31, 2023 totaled $123 4 million compared to $156 7 million at December 31, 2022.
The decrease and the balance primarily resulted from cash used in operating activities.
We expect that our current unrestricted cash and cash equivalents and available for sale marketable securities are sufficient to fund our currently anticipated operating plan into the second half of 2024.
This guidance assumes all the spend related to our three late stage clinical development programs and core Suva revenue profit share contribution.
Finally I'd.
I'd like to highlight for everyone that we are exploring certain non dilutive financing opportunities to extend our runway further.
I will now turn the call back over to Chris.
Thanks, Ryan I want to reiterate that we are laser focused on making the <unk> injection launch a success and additionally, we remained confident in the massive potential of our pipeline behind oral developed carefully we have full confidence that our long term strategy will help us achieve our goal would be.
<unk> the world leader in the treatment of chronic pruritus and ultimately delivering significant value to our shareholders.
With that Ryan, Joe and I will be happy to take your questions. So Latif, let's open up the line for Q&A.
As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Our first question comes from the line of Joseph Stringer of Needham and company. Please go ahead Joseph.
Hi, Thanks for taking our questions supermodel.
Do you have any visibility.
The inventory in the clinic.
Was that something Thats still okay.
Would you ever gain visibility.
And then secondly.
The inventory levels at wholesalers can you remind us again what.
What was the.
Yes.
Yes.
Inventory levels at wholesalers and <unk>.
Two remained relatively constant.
As the launch progresses here.
Thank you.
Hey, Joey nice hearing you.
Let me tackle both of those so the first is around inventory at the Fresenius level one of the things that we wanted to really focus on this quarter.
And we NCSL knew we needed to provide additional metrics or key performance indicators to give more clarity on uptake demand and really opportunity in the market and we felt it was particularly important with FMC and how its clinics were working through its existing inventory.
So the metrics that we're providing around a penetration rate.
That's what I mentioned, roughly 500 clinics are actually dosing a patient at Fresenius and that's the best insight. We have two how product is being utilized at the clinic level. We don't have specific insight into how much inventory is still remaining but that gives you a good sense of how many clinics are you.
Using the product and then you couple that with the second critical metric and Thats reorder rates.
And here whats important there is that that shows how many clinics that have dose a patient now are becoming recurring customers and for <unk> that metrics, particularly important PSA have exhausted their inventory and that metric is actually 500 clinics and thats up from that's up from roughly 200 clinics in.
The end of Q4.
So we're really encouraged about the drawdown in inventory and I think the punch line. There is that we believe by mid year.
The majority of FMC clinics will have exhausted their inventory and really be in that reorder mode.
To your second question, Joe you're right inventory at the wholesaler level, it's pretty standard.
I don't know the specific contract between CSL and their wholesalers, but it's not really that atypical.
Versus other traditional market so it could be a couple of weeks.
Okay, great. Thanks for taking my questions.
Thank you.
So for our next question.
Our next question comes from the line of.
Annabel <unk> of Stifel. Your question. Please annabel.
Hi, guys. Thanks for taking my question for the progress.
Just want to go.
Yes.
On your comment that you're.
Is there any effort to accelerate uptake.
If any.
They are working with to be able to do that.
West Virginia asking for.
Okay.
I'll follow up.
Yes.
Yes Annabel.
<unk> is doing a really nice job of really working the entire top down bottom up stakeholder base.
They have a series of tactics that they've employed.
From peer to peer programs to direct to patient initiatives.
I also mentioned it for Sony is right I mean, the Fresenius sales forces actually engaged as well and they've deployed their sales force to activate the clinics and really drive utilization.
Punch line there is that we're seeing increases in the number of clinics actually starting patients on therapy, and Thats now 500, and thats up quite significantly versus Q4, and we're seeing a number of those clinics at fresenius draw down that inventory and starting to kind of getting that reorder mode.
The things that <unk> is doing is really starting to pay dividends as we are building this market.
Okay got it.
Sure. Thank you.
Level of detail.
A clinic start.
Using.
And start getting someone on board and they start using it.
Are you noticing any pattern once they start or are they pretty sticky.
Let's start reordering it fell a little bit touch and go there.
Well, we see across the board Annabel that there is really strong by in once these clinics start using the product and I say that there's two metrics I look at anecdotally, we hear from the sales force and we hear actually from provider testimonials as well as patient testimonials at the products really perk.
For me nicely, but the key metric that we look at is around Reorders and.
And the majority of clinics that start.
Reorder the product on a continual basis and it becomes a growth annuity if you will and Thats really what were seeing in the data and that's why we're encouraged.
Okay great.
Yes, that's actually helpful.
I'm going to throw a question out there.
We don't worry about the platinum program so.
Catherine.
So.
It does.
That has not been an indication with a tremendous amount of development. So.
What are your expectations for how rapid enrollment could be here.
Essentially as the first treatment with no real continuing program.
Thanks Annabel.
We're very confident about that.
The program.
Certainly the new England Journal was very helpful for us.
And.
On the operational phase in.
Having looking at SaaS to come on it.
Many thoughtful very interested.
And participating.
With.
Compared to our phase II study with.
Really starting to keep this program off.
It was not.
Yes.
As well received as it is now so I think that's very helpful.
For sure and as I said before.
Are.
The physicians, who see these patients.
So we remain encouraged.
And very confident about the timelines that we have put apple and letting patients.
Okay and are these patients pretty concentrated among physicians.
Got it.
Yeah.
Thank you Dave.
So of course this is a program that will be a little bit.
Bigger than our phase two study.
Having more sites onboard and just to kind of meet those timelines as well.
So we're not contemplating any particular area of the <unk> platform.
Okay, great. Thank you so much.
Thank you.
Our next question.
Comes from the line of.
David Herm for them.
Piper Sandler.
Question. Please visit.
Thanks, So wanted to drill down on.
More on your comments on.
On Davita.
I think Chris in the past you've said that davita.
It tends to have a slower process in terms of activating accounts I'm just wondering if you could comment qualitatively on.
What youre seeing out of Davita are you surprised that the number of clinics that have ordered is that.
11% and what.
What is your partner doing to try to.
To jumpstart that.
That's number one and then.
And then secondly.
Can you just comment if you can on pricing.
Across.
Europe and rest of World then relative to.
What we have in the United States. Thank you.
Yeah, Hey, David let me tackle the last one.
Briefer conversation so in Europe , we have a public price in Germany that I may have mentioned in Q in the Q4 print hopefully I did.
That price is 50.
Zero per vial so.
By and large it's about a third of the price of the vial in the U S, which is 150 list price. So it gives you a sense and that's what I can speak to publicly around Germany and each country, obviously, we'll work with the.
National bodies to secure a price and reimbursement as they come online.
Your first question around Davita, yes, I have alluded to before I mean.
They have a different way they adopt new products.
<unk> tend to take a more phased approach where they try to gain real world experience in a more concentrated area of the country.
And then they roll it out nationally it is available nationally now and you are starting to see.
A pickup in the number of clinics dosing of patients.
I will say this David Davita is a priority for us and our commercial partner for my experience is really not that unusual for two different customers to do things a little differently.
And certainly davita, and fresenius or doing things a little differently.
Davita doesn't have the luxury of an internal sales force and one thing that we see with Davita that's different than a percent is.
Is the ability to access the clinics.
And that is that is a critical factor in driving utilization and educating renal nurses educating.
The lab techs, educating dietitians and social workers are a critical piece of the puzzle.
And at Davita, you mentioned, what's our partner doing well Theyre doing a series of things they have to be a bit more creative.
And theres some lasting effects from the pandemic given these access restrictions. So we've learned a lot around engaging via digital means engaging a conferences and thats exactly what <unk> is doing I think the significant point here is that yes, there are a little behind Fresenius clearly.
But we are seeing month to month pickups in a number of new clinics ordering and I always come back to this David that one of the most important things that is really encouraging to us and our partner is that once a clinic starts to utilize the product given the patient testimonials and provider testimonials that really <unk>.
<unk> significant reorders and over 70% of the Davita clinics that are ordering continue to reorder. So it's a really nice really nice growth annuity.
Yeah.
Okay. That's helpful. Thank you.
Got it.
Thank you.
Our next question.
From the line of Jason <unk> of Bank of America Securities. Your question. Please Jason.
Alright.
Chi on for Jason Thanks for taking our questions.
I guess first one on IV pursue.
Yeah, Keith on metrics, 64% of the order came from <unk> to clinics.
Didn't they try and competitive posture quarters, you'll have to get some metrics around that.
Pardon me, if I missed that earlier and.
Regarding.
How we should think about the timing on when CMS will converge.
Underlying demand I think you had talked about that inventory.
With the drawdown by EFI Watson.
What's your latest thoughts on Wednesday will converge with the underlying demand and maybe my second one on.
Overall of course too.
Can you walk us through a scenario where taking turnover.
The comfort that internally that we can expect what the ADP trial in fourth quarter.
Sure Let me, let me unpack that let me first speak to the.
The evolution of demand orders that was the first part of your question. Yes. We did mentioned this quarter 46000, vials or order from the dialysis clinics and roughly 65% or 64% were driven by Fresenius ordered by percentages and you asked how that compares over the last two quarters.
Given kind of what Fresenius did in Q3 <unk> as Youre aware.
They.
Did a significant stocking order so.
Primary driver of the Q3 I think there was 184000 vials that was pretty much all percentage is about 180000 of that was to Fresenius and then in Q4. There are obviously starting to utilize our products. So the 21000 vials used in Q4.
I would say.
About 40% to 45% was percentage and the rest was.
Split between Davita in the mid size and independent.
So our expectation moving forward it would be probably more akin to what we're seeing in fourth quarter were percentage will be the key driver at least in 2023 in terms of vials order demand.
Your second question around the normalization of demand in sales, yes, we mentioned that by mid year. We would expect the majority of FMC clinics to have kind of drawn down utilize their inventory and what I would say it'd be in reorder mode. So I would say probably as we get into the second half of the year you will.
Start to see sales and demand sort of converge.
And then the last part of your question, let me give that to gel around the oral Hey, hi, Keith Thanks for the questions.
As a reminder, pop.
We are currently.
Enrolling and we have 280 patients that we will be enrolling in the spot and as a reminder, this is.
In a perfect number of patients that will give us the information.
To continue into part B or key.
So it will be specifically looking out.
Looking at the dose as well as the sample size and we will look at all the data.
Exactly.
Thanks.
Keith.
Favorable dose.
That given states that this benefit risk profile, and we will be able to assess the sample size.
What we will be specifically focusing on and sharing.
For <unk>.
If I can clarify this added solano both efficient baked in there or is this just basically determining that dose selection sample size heading into part D.
Well, we are looking exactly for the dose in the sample size, but we will be reviewing the data and see things.
What the outcome of the data demonstrates and assessing whether to move forward or not of course.
<unk>.
Yes.
Okay, great. Thank you.
Thanks Jay.
Thank you again to ask a question. Please press star one one on your telephone again Thats Star one one on your telephone SaaS question.
Our next question.
Comes from the line.
Our smart car Kearney of Canaccord Genuity your question. Please.
Good afternoon, Thanks for taking my question.
Market dynamics.
Do you expect.
<unk> operating margin on this product before it up and.
And how important would that be put that to happen. So you could start realizing substantial collaboration.
So maybe you could clarify youre asking me it was a little muffled my friends. So.
Youre asking me to comment on the operating margins of <unk> four for this product.
So not specifically any quantitative but.
How important will it be for the product.
Operating margin was looked it up again.
Question.
I don't Ryan maybe maybe are you focused on utilization.
Utilization is.
Not really I mean.
For example.
<unk> is in launch mode for a longer time than otherwise.
Wouldn't that impact the <unk>.
Aberrations revenue that you're recognizing that flows down to your bottom line and that's why I was asking I got it yeah.
So he is asking about the profit split Ryan maybe you can I say.
<unk> agnostic to that.
I think the guidance that I've given on how the profit split works, which is we get roughly 46% of every dollar and the.
Mixed between Fresenius and Davita.
More <unk> more davita fluctuate that percentage by maybe one or two points. So it is really not material.
So it is going to be pretty steady from that point of view and Simona just comment like on the marketing expense line on their controllable expenses from our CSL before that doesn't necessarily impact that profit split, yes, it's pretty fix amount.
Right now it doesn't with absolute dollars more than met buckets.
Okay.
Thank you at this time I would like to turn the call back to Christopher Posner for closing remarks, Sir.
Thanks, Latif I, just want to take a minute just to wrap things up.
I said in my comments, if you look at the key performance indicators of the business.
Specifically with <unk> injection, we are encouraged I mean <unk> continues to make progress building. This market, it's really reflected in the key trends this quarter clinics or clinical orders doubled.
60% of the FMC clinics are dosing a patient and each segment is really seeing increases in clinic order. So it is encouraging.
And we're getting very positive feedback from both patients and physicians on the product and Thats really translating into very strong reorder rates.
Again again very positive in terms of where we are we continue to make really good progress and Joe mentioned, a little of that in our pipeline to our stated commitments. So net net we look really forward to continuing to update you on the progress of the core Suva launch and our pipeline as we progress.
So with that all in the call.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Good afternoon. My name is let's say and I will be your conference facilitator.
Like to welcome everyone to the Cara Therapeutics first quarter financial results and update conference call. All lines have been placed on mute to avoid any background noise.
After the Speakers' remarks, there will be a question and answer session if.
If you would like to ask a question. During this time simply press star and the number one one on your telephone keypad.
To remove your name from the queue simply press star and the number one one again.
Please be advised that this call is being recorded I would now like to introduce Matt Murphy <unk> manager of Investor Relations. Mr. Murphy you may begin your call.
Yeah.
Thank you operator and good afternoon.
After market closed today <unk> issued a news release announcing the Companys financial and operating results for the first quarter of 2023.
Copies of this news release and the associated SEC filings can be found in the investors section of our website at Www Dot Cara Therapeutics Dot com.
Before we begin let me remind you that during the course of this conference call, we will be making certain forward looking statements about Kara and our programs based on management's current plans and expectations.
These statements are being made under the private Securities Litigation Reform Act of 1095 and are subject to risks and uncertainties.
Actual results may differ materially due to various factors and care undertakes no obligation to update or revise these statements publicly as a result of new information or future results or developments investors should read the risk factors set forth in <unk> 10-K for the year ended December 31 2022.
And any subsequent reports filed with the SEC, including its Form 10-Q for the quarter ended March 31 2023.
With that said I'd like to turn the call over to Chris Posner, <unk>, Chief Executive Officer, Chris.
Thanks, Matt Good afternoon, everyone and thank you for joining our call with me today are Ryan Ryan Maynard, our Chief Financial Officer, and Dr. Joanne It consolidates, our chief Medical Officer.
I'd like to start by giving a quick overview, what I'll address today for the update on the core Suva injection launch in the U S. I will provide additional metrics that we're tracking to give better insight into the progress of demand and uptake. These.
These will help to give some clarity and show the opportunity within the different customers and segments of the market.
I will also review the launch progress in countries around the world.
In addition, I will highlight our robust clinical stage pipeline and the advancement of our high value development program for oral <unk> capital.
I am pleased with the progress to date.
I can confirm that we continue to track to our previously communicated timelines after that Ryan will provide you with a financial update and then we will open up the call to Q&A.
I will begin with the launch of <unk> injection in the U S. For the first quarter of 2023 net sales for <unk> were $5 $7 million translating into $2 $8 million of profit recorded as revenue to us.
Wholesaler shipments to dialysis clinics more than doubled quarter over quarter and reached 46000 vials.
64% of these vials were shipped to fresenius or FMC clinics with the remainder split between Davita and the other dialysis organizations.
This increase in vial shipments suggests a meaningful acceleration in demand.
Anecdotal feedback on core Suva from both providers and patients continues to be highly positive supporting this expansion in breadth and depth and its utilization.
FMC orders more than tripled quarter to quarter, reaching 30000 vials by the end of the first quarter 500, FMC clinics are 18% had placed reorders up from 7% of clinics at the end of Q4.
More importantly, <unk>.
<unk> hundred clinics or 56% of FMC clinics has had dosed at least one patient up from 29% of clinics at the end of Q4.
Total patient demand remains difficult to assess without specific information about the levels of inventory remaining at individual clinics.
However, we continue to see significant growth in the number of FMC clinics exhausting their third quarter 2022, bolus inventory and expect that the majority of the FMC clinics will be in a reorder mode in the second half of this year.
At Davita demand growth continues to be steady at the end of first quarter 300 clinics or 11% of Davita clinics had ordered <unk> Suva and thats up from 7% of clinics at the end of Q4.
Reorder rates among these clinics remained very encouraging with 70% placing repeat orders.
Given the on demand approach at Davita clinics for order and <unk> the growth in clinic orders represents a good proxy for the growth in patient demand.
At mid size and independent.
<unk> continues to perform well at the end of the first quarter, 13% of these clinics had placed orders and thats up from 11% at the end of Q4.
In addition, 66% of these clinics have placed repeat orders.
Now the strongest performance to date amongst this group has been at U S. RC and that's the largest of the midsized Pos roughly 66% of clinics have ordered <unk> and 72% of these clinics have placed repeat orders.
Stepping back and looking at the Big picture <unk> overall market penetration leaves significant room for growth with a vast majority of the market is still untapped.
To get there.
<unk> continues to make progress building the market navigating the idiosyncrasies of each segment across the entire deal landscape.
This is reflected in key trends this quarter.
Clinic orders doubled quarter to quarter, almost 60% of FMC clinics are dosing a patient and each segment is seeing an increase in clinics ordering the product.
We remain confident in our partner CSL before remains fully dedicated to capturing the laden upside in this market and maximizing the commercial potential of course silver in the long term.
Additionally, we are working in close collaboration with the kidney community to help CMS understand the need for a durable and appropriate reimbursement mechanism for to dapper designated products post there to dapper period.
We remain confident that additional funding will be made available for to DAP are designated products and we remain hopeful that a substantive and positive update will be released during this year's rulemaking cycle.
Next on the international front, the rollout of <unk> in Europe continues to gain momentum in the first quarter <unk> generated $1 2 million and net sales translated into a 125000 of royalty revenues to us.
Rollout has begun in four additional countries.
France, Finland, the Netherlands, and Switzerland, bringing the total number of launch countries to seven.
The initial feedback from patients and providers has been very encouraging and in line with the patient testimonials. We have received in the U S.
We continue to expect the additional countries in Europe and other countries around the world to come online throughout the next 12 months to 18 months once reimbursement is secured.
Also a decision from the UK National Institute for Health and care excellence or nice is expected imminently.
In Japan, we continue to expect a regulatory decision in the second half of 2023 as a reminder, approval in Japan would trigger a $2 million milestone payment to care.
Last but certainly not least I'd like to briefly discuss our promising wholly owned oral pipeline fundamentally Cara is a development company and we are committed to building, our nephrology and medical dermatology franchises with oral <unk>.
These efforts will drive us to our goal of being a differentiated company as the world leader in treating chronic pruritus in the long run.
Enrollment in our phase III programs in pruritus associated with advanced chronic kidney disease.
And in atopic dermatitis is progressing as expected we anticipate the internal readout of part a of our kind one trial in the fourth quarter of this year with final top line results from this program in the first half of 2025. We also continue to expect top line results.
For our kick advanced chronic kidney disease program in the second half of 2024.
Startup activities for our phase III three program and <unk> kicked off in the first quarter of this year and they are progressing well. The EMP program is tracking to the internal readout of courage, one part a in the second half of 2024 and final top line results for the program in the first half of <unk>.
26.
To summarize we are continuing to work closely with <unk> to accelerate the uptake of <unk> and we remain confident that these efforts will drive near term growth.
Additionally, we remain optimistic regarding cms's future decision on the post to DAP, a funding mechanism and hope to see an update during this year's rulemaking cycle.
Underscored by the highly positive feedback we are hearing from patients and providers around the world. We continue to believe in the long term success of course <unk> injection.
More importantly, we see tremendous value creation for Cara with our three late stage programs with oral <unk>. Catherine we are fully committed to advancing these programs as rapidly as possible in order to maximize the potential of <unk> within our two therapeutic franchises.
Yeah.
We look forward to providing you with updates on our progress throughout this year.
Now I'd like to turn the call over to Ryan for additional details on our first quarter financial results over to you. Thank.
Thank you Chris.
Total revenue was $6 2 million for the three months ended March 31, 2023, compared to $4 8 million for the same period in 2022 rare.
Revenue this quarter consisted of $2 8 million of collaborative revenue related to our profit from <unk> net sales of course Suva injection.
Third parties and $3 2 million of commercial supply revenue.
We also recognized 125000 of royalty revenue this quarter, representing our royalties from the net sales of <unk> in the first quarter of 2023.
Cost of goods sold during the three months ended March 31, 2023 was $62 6 million and relates to our commercial supply shipments of course super injection to.
<unk> before.
Research and development expenses were $24 3 million for the three months ended March 31 two.
<unk> 2023, compared to $21 3 million in the same period of 2022 the increase in R&D expenses is primarily due to the increased clinical spend related to our three late stage clinical programs.
General and administrative expenses were $6 9 million for the three months ended March 31, 2023, compared to $9 4 million in the same period of 2022.
The reduction in G&A expense was due to a decrease in stock based compensation in the first quarter of 2023 as compared to the same period in 2022.
Stock based compensation in 2022 included costs related to the modification of certain equity awards to our former CEO .
Cash cash equivalents and marketable securities at March 31, 2023 totaled $123 4 million compared to $156 7 million at December 31, 2022.
The decrease and the balance primarily resulted from cash used in operating activities.
We expect that our current unrestricted cash and cash equivalents and available for sale marketable securities are sufficient to fund our currently anticipated operating plan into the second half of 2020 for.
This guidance assumes all of the spend related to our three late stage clinical development programs and core Suva revenue profit share contribution.
Finally.
I'd like to highlight for everyone that we are exploring certain non dilutive financing opportunities to extend our runway further.
I will now turn the call back over to Chris.
Thanks, Ryan I want to reiterate that we are laser focused on making the <unk> injection launch a success and additionally, we remain confident in the massive potential of our pipeline behind oral debt fell it carefully we have full confidence that our long term strategy will help us achieve our goal.
Becoming the world leader in the treatment of chronic pruritus and ultimately delivering significant value to our shareholders.
With that Ryan, Joe and I will be happy to take your questions. So Latif, let's open up the line for Q&A.
As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Our first question comes from the line of Joseph Stringer of Needham and company. Please go ahead Joseph.
Hi, Thanks for taking our questions. This.
Supermodel.
You have any visibility.
ATV inventory in the clinic.
Or is that something that's still okay and would you ever gaining visibility.
And then secondly design.
The inventory levels at the wholesalers can you remind us again what.
What.
Yes.
Sure.
Uh huh.
Yes.
Inventory levels at wholesalers and do you expect that to remain relatively constant.
The launch progress this year.
Thank you.
Hey, Joey nice hearing you.
Tackle both of those so the first is around inventory at the <unk> level one of the things that we wanted to really focus on this quarter.
And we NCSL knew we needed to provide additional metrics or key performance indicators to give more clarity on uptake demand and really opportunity in the market and we felt it was particularly important with FMC and how its clinics were working through its existing inventory.
So the metrics that we're providing around a penetration rate.
That's what I mentioned, roughly 500 clinics are actually dosing a patient at Fresenius and that's the best insight. We have two how product is being utilized at the clinic level. We don't have specific insight into how much inventory is still remaining but that gives you a good sense of how many clinics are huge.
<unk> the product and then you couple that with the second critical metric and Thats reorder rates.
And here whats important there is that that shows how many clinics that have dose a patient now are becoming recurring customers and for <unk> that metrics, particularly important BSA have exhausted their inventory and that metric is actually 500 clinics and thats up from that's up from roughly 200 clinics in the air.
End of Q4.
So we're really encouraged about the drawdown in inventory and I think the punch line. There is that we believe by mid year.
The majority of FMC clinics will have exhausted their inventory and really be in that reorder mode.
And to your second question, Joe you run inventory at the wholesaler level, it's pretty standard.
Don't know the specific contract between CSL and their wholesalers, but it's not really that atypical versus.
<unk> other traditional market so it could be a couple of weeks.
Okay, great. Thanks for taking my questions.
Thank you.
So for our next question.
Our next question comes from the line of.
Annabel <unk> of Stifel. Your question. Please annabel.
Hi, guys. Thanks for taking my question for the progress.
One to go.
On your comment that you are.
Are there any efforts to accelerate uptake do you have any specific tools that you're working with to be able to do that.
We are asking for.
So first question a follow up from others.
Yes, Annabel I mean.
<unk> is doing a really nice job of really working the entire top down bottom up stakeholder base. So.
Have a series of tactics that Dave.
<unk>.
Peer to peer programs to direct to patient initiatives I'd also mentioned it for Sony is right I mean, the Fresenius sales forces actually engaged as well and they've deployed their sales force to activate the clinics and really drive utilization in the.
The punch line there is that we're seeing increases in the number of clinics actually starting patients on therapy, and that's now 1500, and thats up quite significantly versus Q4, and we're seeing a number of those clinics at fresenius draw down that inventory and starting to kind of getting that reorder mode.
The things that <unk> is doing is really starting to pay dividends as we are building this market.
Okay got it.
I'm not sure if you could give us.
The level of detail.
A clinic sorry.
Anything.
You start getting someone on board and they start using it.
Noticing any pattern once they start or are they pretty well.
I wanted to start reordering it.
Little bit touch and go there.
Well, we see across the board Annabel that there is really strong by in once these clinics start using the product and I say that there's two metrics I look at anecdotally, we hear from the sales force and we hear actually from provider testimonials as well as patient testimonials at the products really.
For me nicely, but the key metric that we look at is around Reorders and.
And the majority of clinics that start.
Reorder the product on a continual basis and it becomes a growth annuity if you will and Thats really what were seeing in the data and that's why we're encouraged.
Okay great.
That's actually helpful and I'm going to throw a question out there.
Joe.
You don't worry about the platinum program so on.
Catherine.
So.
That's helpful.
It has not been an indication with a tremendous mine development.
What are your expectations for how rapid enrollment could be here.
Essentially as the first treatment with no real competing program.
Thanks Annabel.
I think we're very confident about.
The program.
Certainly the new England Journal was very helpful for us and.
Operational phase in.
Having looking at Saks to come on.
Many facts are very interested in.
Participating.
Compared to our phase II study with <unk>.
Really starting to keep this program off.
It was not.
Yes.
As well received as it is now so I think thats very helpful.
Sure.
As I've said before.
Are the physicians, who see these patients so we remain encouraged.
And very confident about the <unk>.
Now that we have put apple and letting these patients.
Okay and are these patients pretty concentrated in long term positions are pattern.
Not that we've seen to date.
So of course this is a program that will be a little bit.
Bigger than our phase two study we are having more sites on board and just to kind of meet those timelines as well.
So we're not concentrated in any particular area of the <unk> platform.
Okay, great. Thank you so much.
Thank you.
Our next question.
Comes from the line of David Hamm for them.
Piper Sandler.
Your question please visit.
Thanks, So wanted to drill down on.
More on your comments on.
Davita and I.
I think Chris in the past you've said that davita.
It tends to have a slower process in terms of activating accounts I'm just wondering if you could comment qualitatively on.
What youre seeing out of <unk>.
Are you surprised that the number of clinics that have ordered is at 11% and what.
What is your partner doing to try to.
To jumpstart that.
That's number one and then.
And then secondly.
Can you just comment if you can on pricing.
Across.
Europe and rest of World then relative to.
What we have in the United States. Thank you.
Yes, Hey, David let me tackle the last one.
Briefer conversation so in Europe , we have a public price in Germany that I may have mentioned in Q in the Q4 print hopefully I did.
That price is 50.
Zero per vial so.
By and large it's about a third of the price of the vial in the U S, which is a 150 list price. So it gives you a sense and Thats why I can speak to publicly around Germany and each country, obviously, we'll work with the Nash.
National bodies to secure a price and reimbursement as they come online.
Your first question around Davita, yes, I have alluded to before I mean.
They have a different way they adopt new products. They tend to take a more phased approach where they try to gain real world experience in a more concentrated area of the country.
And then they roll it out nationally it's available nationally now and you are starting to see.
Pickup in the number of clinics dosing of patients.
I would say this David Davita is a priority for us and our commercial partner for my experience is really not that unusual for two different customers to do things a little differently.
And certainly davita, and fresenius or doing things a little differently.
Davita doesn't have the luxury of an internal sales force and one thing that we see with Davita that's different than a percent is is the ability to access the clinics.
And that is that is a critical factor in driving utilization and educating renal nurses educating.
The lab techs, educating dietitians and social workers are a critical piece of the puzzle.
And at Davita, you mentioned, what's our partner doing well they are doing a series of things they have to be a bit more creative.
And there is some lasting effects from the pandemic given these access restrictions. So we've learned a lot around engaging via digital means engaging at conferences and thats exactly what <unk> is doing I think the significant point here is that yes, there are a little behind Fresenius clearly.
But we are seeing month to month pickups in a number of new clinics ordering and I always come back to this David that one of the most important things that is really encouraging to us and our partner is that once the clinic starts to utilize the product given the patient testimonials and provider testimonials that really Jeff.
<unk> significant reorders and over 70% of the Davita clinics that are ordering continue to reorder. So it's a really nice really nice growth annuity.
Okay. That's helpful. Thank you.
Got it.
Thank you.
Our next question.
Come from the line of Jason <unk>.
<unk> of America Securities. Your question please Jason.
Hi, This is chi on for Jason Thanks for taking our questions.
I guess first one on IV <unk>.
Uh-huh caisson match at 64% of deepwater came from <unk>. The rest of the day now to clinics as they try and competitive posture quarters, you'll have to get some metrics around that.
If I missed that earlier.
<unk>.
Regarding how.
How we should think about the timing on when CMS will converge with underlying demand I think you had talked about that inventory suspect there could be drawdown by midyear.
What's your latest thoughts on when <unk> will converge with the underlying demand and maybe my second one on <unk>.
Overall of course too.
Can you walk us through the scenario, we're taking turnover.
Comfort that internally you have that we can expect what the ADP trial in fourth quarter.
Sure Let me, let me unpack that let me first speak to the.
The evolution of demand orders that was the first part of your question. Yes. We did mentioned this quarter 46000 vials of order from the dialysis clinics and roughly 65% or 64% were driven by 5% is ordered by percentages and you asked how that compares over the last few quarters.
Given kind of what percent of your stood in Q3 Chi as you are aware.
They.
Did a significant stocking order so.
Primary driver of the Q3 I think there was 184000 vials that was pretty much all <unk> is about a 180000 of that was to Fresenius and then in Q4. There were obviously starting to utilize that products. So the 21000 vials used in Q4 I would say.
About 40% to 45% was <unk> and the rest was.
Split between Davita in the mid size and independent.
So our expectation moving forward it would be probably more akin to what we're seeing in fourth quarter were percentage will be the key driver at least in 2023 in terms of vials order demand.
Your second question around the normalization of demand in sales, yes, we mentioned that by mid year. We would expect the majority of FMC clinics to have kind of drawn down utilize their inventory and what I said and reorder mode. So I would say probably as we get into the second half of the year you will.
Start to see sales and demand sort of converge.
And then the last part of your question, let me give that to Joe around the oral Hey, Hi, Keith Thanks for the questions.
As a reminder.
We are currently.
And rolling and we have 280 patients that we will be enrolling in the spot and just as a reminder, this is.
In a perfect number of patients that will give us the information.
To continue into part B or key.
So it will be specific key looking out.
Looking at the dose as well as the sample size and we will look at all the data.
Exactly.
Thanks.
Keith.
Favorable dose.
That given states the big benefit risk profile.
And we will be able to assist the sample size. So.
That's what we will be specifically focusing on and sharing.
Four eight.
If I can clarify this adding solar novo decision baked in there or is just basically determining the dose selection and sample size heading into part D.
Well, we are looking exactly for the dose in the sample size, but we will be reviewing the data and see things.
What the outcome of the data demonstrates and assessing whether to move forward or not of course.
<unk>.
Yes.
Okay, great. Thank you.
Thanks Jay.
Thank you again to ask a question. Please press star one one on your telephone again Thats Star one one on your telephone to ask a question.
Our next question.
Comes from the line.
Our smart Kulkarni of Canaccord Genuity your question. Please.
Good afternoon, Thanks for taking my question.
Market dynamics.
Do you expect your partner.
<unk> operating margin on this product the <unk> and.
And how important would that be put that to happen. So you could start realizing substantial collaboration.
<unk>, maybe you could clarify Youre asking me it was a little muffled my friends. So.
Youre asking me to comment on the operating margins of <unk> four for this product.
So not just specifically any quantity but.
How important will it be for the product.
<unk> operating margin, we've looked it up again.
Questions.
I don't Ryan maybe maybe are you focused on utilization.
Utilization is.
Not really I mean.
For example.
<unk> is in launch mode for a longer time than otherwise.
Wouldn't that impact.
The collaboration revenue that you're recognizing that flows down to your bottom line and that's why I was asking okay got it yeah. So he is asking about the profit split Ryan maybe you could say.
<unk> agnostic to that.
I think the guidance that I've given on how the profit split works, which is we get roughly 46% of every dollar and the.
The mix between Fresenius and Davita.
More <unk> more davita fluctuate that percentage by maybe one or two points. So it's really not material.
So it's going to be pretty steady from that point of view and Simona just comment like on the marketing expense line on their controllable expenses from our CSL before that doesn't necessarily impact that profit split, yes, it's pretty fixed.
Right right.
Absolute dollars more than others.
Sure.
Thank you at this time I would like to turn the call back to Christopher Posner for closing remarks, Sir.
Thanks, Latif I just wanted to take a minute just to wrap things up.
I said in my comments, if you look at the key performance indicators of the business.
Specifically with <unk> injection, we are encouraged I mean <unk> continues to make progress building. This market, it's really reflected in the key trends this quarter clinics or clinical orders doubled.
60% of the FMC clinics are dosing a patient and each segment is really seeing increases in clinic order. So it is encouraging.
And we're getting very positive feedback from both patients and physicians on the product and Thats really translating into very strong reorder rates.
Again.
Again very positive in terms of where we are we continue to make really good progress and Joe mentioned, a little of that in our pipeline to our stated commitments. So net net we look really forward to continuing to update you on the progress of the <unk> launch and our pipeline as we progress so with that.
In the call.
This concludes today's conference call. Thank you for participating you may now disconnect.