Q3 2023 Cara Therapeutics Inc Earnings Call
Good afternoon. My name is Lucy and I will be your conference facilitator I would like to welcome everyone to the Cara Therapeutics third quarter financial results and update conference call.
All lines have been placed on mute to avoid any background noise.
The speaker 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 is one one on your telephone keypad.
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Please be advised that this call is being recorded.
I'd now like to introduce Matt Murphy care as 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 company's financial and operating results for the third quarter of 2023 copies.
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 Cara and our programs based on management's current plans and expectations.
These statements are being made under the private Securities Litigation Reform Act of $19 95, 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 investor.
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 September 32023.
That said I'd like to turn the call over to Chris Posner Caris, Chief Executive Officer, Chris.
Thanks, Matt.
Good afternoon, everyone and thank you for joining our call with me today are Ryan Maynard, our Chief Financial Officer, Dr. Joanna Consol This our chief Medical Officer, and Scott's really in our general counsel and head of government Affairs.
Our strategy at Cara Therapeutics is to change the treatment of chronic pruritus with our innovative and differentiated asset that I'll, let kathleen.
Our highest priority is to execute on our three unique late stage programs in dermatology, and nephrology, which drive the greatest potential long term value for our company.
And we are excited to have multiple fully funded value inflection milestones within these programs over the next 12 months.
Today, I will provide an update on the funding of our wholly owned oral Duffala Cephalin pipeline next I will discuss the progress in our three late stage programs, including expectations for part a of our kind one atopic dermatitis study, which is scheduled to read out in December of this year.
<unk>.
Finally, I will address the performance of <unk> injection in the U S and discuss the recently released 2020 for ESR D rule <unk>.
After that Ryan will provide a financial update and we will subsequently open up the call to Q&A.
With that let me start with our recent announcement regarding the monetization of our ex U S royalties for <unk> injection and <unk> on November one we entered into a royalty interest purchase and sale agreement with healthcare royalty.
Under the terms of the agreement <unk> received an initial payment of $17 5 million less certain expenses.
We will receive an additional payment of $20 million upon to prove via receiving a certain minimum price in Germany, which is expected to occur this quarter.
In addition, Carol will receive a $2 5 million milestone payment based upon achieving certain 2024 performance levels of course <unk> in Japan.
And exchange healthcare royalty will receive all royalties due to Kara from <unk> injection that could prove via ex U S license agreements with CSL before and Marion Wuxi.
The aggregate royalty payments to healthcare royalty are capped at two times the payment to care if received before the end of 2029, otherwise the payments are capped at two point X two eight times after which Carol will resume receiving all royalties from both <unk> and <unk>.
The arrangement with healthcare royalty, specifically excludes <unk> injection in the U S and all of <unk> oral diastolic Cephalin internal development programs.
Non dilutive financing is an important part of our strategy to drive the continued development of our very promising pipeline, which has always been key to building sustainable long term value for Kara.
Closing this non dilutive transaction extends our cash runway into 2025.
This helps us reach critical catalysts and milestones that we believe will display the potential of our diphenyl, a careful and pipeline and start to display the underappreciated value and Kara.
Next let me discuss the progress of our multiple late stage pipeline programs first our phase III kind one trial in pruritus associated with atopic dermatitis is approaching a key near term milestone. We now plan to release top line efficacy and safety data for part.
The dose finding portion of this trial in mid December in order to increase the visibility into this trial.
Recall chronic pruritus is the most common and most burdensome symptom of atopic dermatitis affecting almost 100% of the approximately 12 million adult patients in the U S.
In recent years, there has been significant investments and innovation in the treatment of moderate to severe <unk>, resulting in the development and approval of new biologics and JAK inhibitors.
Despite these developments a large segment of the market remains underserved, we're targeting roughly one quarter of the total market. These are mild to moderate patients with moderate to severe itch also referred to as its dominant adie.
Numerically, that's about $3 million addressable <unk> dominant patients in the U S who are primarily managed with topical corticosteroids.
What Tcs may treat skin lesions, they often fail to effectively address the burdensome chronic itch that severely impacts these patients quality of life.
So there is a significant void in the treatment continuum and a need for an oral therapy with a favorable safety and tolerability profile to effectively treat debilitating itch in these patients.
Our current program is tailored to specifically address this unmet need for a targeted oral anti predict treatment for mild to moderate patients who are very itchy.
No company to date has focused on this market segment and enriched its trials with this patient phenotype.
Today, we can confirm that 80% of the patients enrolled in part a of kind one have a baseline body surface area of less than 10% and a mean itch score of greater than seven meaning most patients in the trial have mild to moderate skin lesions with severe itch.
As you will recall. This is also the subgroup of patients that showed the best clinical benefit with oral <unk>, Catherine and our care phase two mono therapy trial.
In contrast to our phase II trial, our phase III <unk> program is designed to mimic likely future real world utilization of patients that fell a caf. One is used on top of mid potent tcs and compare it to Tcs alone an active comparator.
With this higher clinical hurdle and four treatment arms part a of kind one is not powered for statistical significance. We've enrolled 287 patients with the intent to select the most favorable dosage strength and determined the sample size for the confirmatory part of the Phase III program.
The kind one part a readout is a significant catalyst and mirrors the future of this program. We believe that part a will be a good proxy for the likely outcomes of the confirmatory kind, one part b and kind two studies the patient enrollment criteria study conduct and.
Points and the confirmatory studies are expected to be the same as recurring one part a.
In addition, the study sites from part a will participate in part B along with some new added sites.
We are excited to share the results of kind one part a with you in the near future.
Now turning to our other two late stage programs that also targets sizable patient populations with a lack of treatment options.
Enrollment in our phase III phase III kick, one and two trials in pruritus associated with advanced chronic kidney disease is progressing well and we continue to expect top line results in the second half of 2024.
The approval of <unk> injection validated this mechanism laying the foundation for our Nephrology franchise, we see a natural extension of diphenyl, a caf one into earlier stage patients with the oral formulation.
There are roughly 300000 pre dialysis advanced stage CK D patients, who suffer from moderate to severe pruritus in the U S alone.
Importantly, these patients do not fall under the capital reimbursement system that covers dialysis patients, hence we see a significant commercial opportunity in this underserved patient population.
Our phase II three courage one trial in <unk> is tracking to its first data readout of part a in the second half of 2024 with no approved therapies and then an addressable population of at least 650000 patients in the U S who are under the care of a provider most.
Often the dermatologists, we believe oral day fell on Caf, one has the potential to unlock a sizable new market in dermatology.
Now, let me turn to the performance of <unk> injection in the U S for the third quarter of 2023 net sales for <unk> were $4 4 million translating into $1 9 million of profit recorded as revenue to Kara.
Wholesaler shipments to dialysis clinics totaled 91000, vials, a 36% increase from the prior quarter.
68% of these viles were shipped to Fresenius clinics, and the remainder split between Davita and the other dialysis organizations.
<unk> orders grew by more than 37% quarter to quarter, reaching 62000 vials by the end of the third quarter over 1000% as clinics or 37% have placed reorders.
From 27% at the end of the second quarter.
Additionally, 1478 clinics or 55% had dosed at least one patient at the end of the third quarter.
Importantly, following the ESR D prospective payment system rule for Sony has decided to reallocate remaining inventory that was shipped in the shift in the third quarter of 2022 within its network of clinics as a result, we expect shipments from <unk> to <unk>.
Wholesalers to be small in the fourth quarter of this year and the first quarter of 2024 translating translated into minimal revenues accrued to Kara in these quarters.
At Davita, we continue to observe steady growth in demand orders grew by 20% quarter to quarter to 13000 vials over 500 clinics or 19% had ordered core Suva at the end of the third quarter, that's up from 15% at the end of the second quarter.
Reorder rates remains strong with 76% of clinics, placing repeat orders.
As a reminder, since there is minimal inventory held at Davita clinics, we believe the growth in clinic orders represents a good proxy for the growth in patient demand.
At mid sized and independent dialysis organizations core Soobee utilization continued its momentum orders grew by 47% quarter to quarter to over 16000 vials.
At the end of the third quarter, 18% of clinics in this market segment had placed orders that's up from 17% at the end of the second quarter.
In addition, 77% of these clinics placed repeat orders up from 68% at the end of the second quarter.
U S renal care remains the largest buyer of <unk> in the <unk> segments, approximately 80% of U S. R. C clinics had ordered <unk> by the end of the third quarter and 83% of these clinics have placed repeat orders.
Overall, our expectations for <unk> injection are now greatly reduced.
But we remain confident in the mechanism of action and benefit of course Suva.
The provider and patient feedback <unk> remains highly positive and it's good clinical performance has continued to fuel growth in vial demand.
But its use will not likely reflect the existing clinical need.
The significant challenges in the uptake of <unk>, even with its to adapt but designation stemmed from the unique capitate or dialysis reimbursement system in the U S, which really does not foster innovation.
On October 27, CMS published the end stage renal disease prospective payment system final rule for the calendar year 2024.
We are disappointed that CMS rejected our request to extend that to dapper period FERC pursue.
Furthermore, CMS maintained the proposed methodology for calculating the add on adjustment, which in our view is flawed and results in a significant shortfall in funding for <unk> and other innovative drugs with <unk> designation in the future.
As a result, we now believe that <unk> commercial potential will be meaningfully lower than we previously expected.
However, Kara fundamentally as a development company and our greatest source of value is our wholly owned oral diphenyl, a careful and pipeline we remain laser focused on maintaining a strong balance sheet and driving progress and our three late stage programs to deliver value.
<unk> ahead.
I would now like to turn it over to Ryan for additional details on our third quarter financial results results over to Euro.
Chris.
I would like to first take a moment to reinforce what we have stated about our very important financing transaction with healthcare royalty.
We were able to bring forward the value of our ex U S and Japan royalties and add to our balance sheet in a meaningful way.
This allowed us to extend our cash runway in the non dilutive manner that we've been socializing with the investment community over these last few quarters.
As Chris mentioned, we have received the initial payment of $17 5 million and we fully expect to receive the first milestone of $20 million by the end of this quarter.
Now on to the Q3 results.
Total revenue was $4 9 million for the three months ended September 32023, compared to $10 8 million for the same period in 2022.
Revenue this quarter consisted of $1 $9 million of collaborative revenue related to our profit from <unk> net sales of course, Suva injection to third parties.
$1 4 million.
The milestone payment earned from Mariucci for marketing and approve of course Suva injection in Japan.
One 3 million of commercial supply revenue.
And finally 167000 of royalty revenue, representing our royalties from net sales of <unk> in Europe.
Remember that revenue in the same period last year included the large stocking order from FMC.
Cost of goods sold was $1 6 million for the three months ended September 32023, compared to $3 1 million for the same period in 2022.
As a reminder cost of goods sold relates to our shipments of course Suva injection to CSL before.
Research and development expenses were $25 5 million for the three months ended September 32023, compared to $24 7 million in the same period of 2022.
The slight increase in R&D expenses is primarily due to increased clinical trial spend related to our three late stage clinical programs.
Offset by a decrease in stock based compensation expense.
Also R&D expenses for the three months ended September 32022 included $5 million related to a milestone paid to <unk> Biopharma, Inc.
General and administrative expenses were essentially flat at $6 8 million for the three months ended September 32023, compared to $6 nine in the same period of 2022.
Okay.
Cash cash equivalents in marketable securities at September 32023 totaled $83.3 million compared to $101 7 million at June 32023.
The decrease of $18 $4 million this quarter was due to cash used in operating activities.
Finally.
We expect that our current unrestricted cash cash equivalents and available for sale marketable securities, including the proceeds from our recently announced royalty financing.
And the collaborative revenue from our share of profit from core Suva will be sufficient to fund our currently anticipated operating plan into 2025.
Now back to you Chris.
Thanks, Ryan So in summary, I want to highlight the tremendous opportunity we see within our company Cara's oral <unk> franchise has significant potential and we know that the innovation in this product delivers value when used we have three late stage programs and sizeable indicate.
<unk>, which in our view are not recognized by the market today, our improved cash runway allows us to reach multiple value inflection points, which will start to display the potential of our pipeline.
We believe that our kind one part a readout in December represents the first milestone and we look forward to sharing the data.
Now with that Ryan, Joe Scott and I will be happy to take your questions. So let's see if you could open up the line to Q&A.
Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question.
Comes from the line of Joseph Stringer of Needham <unk> Company.
Hi, Thanks for taking our questions just on Q1 and Q.
Can you provide any more detail on some of the enrollment metrics you mentioned that.
Enrollment is tracking well and you're on.
Reschedule for topline readout second half next year, but just curious on screen failure rates are those in line with expectations.
Some of the most common reasons for screening failures and then.
Any plans to open additional target sites for either of those.
Yeah, Hey, Joe Thanks for the question, let me, let me give that to Joe and she can address some of that carry yes.
As Chris had mentioned earlier, so we are on track.
And our anticipation of how this study should be running.
We don't typically give any details regarding the matrix. So at this stage when coming on that Anthony.
With it and on track with the readout next year.
Okay, great. Thanks for taking our question. Thanks.
Thanks, Joe.
Thank you again to ask a question. Please press star one one.
Our next question comes from the line.
Dennis.
<unk> Jefferies.
Okay.
Hi, This is anthea on for Jonathan Thanks for taking our questions.
Kim from I'm, sorry, what is your commercial strategy post.
And what is the best way to maximize Christopher value for shareholders and your view post the CMS decision.
And then secondly.
Any additional ways to extend cash runway beyond the royalty deal recently announced that you are looking at thank you.
Thanks Cynthia.
Yes, So let me tackle the first one so here's our expectation first of all let me just say we have we have a really a great partner in <unk> four in the U S and what we expect given obviously the diminished sales potential due to the lack of funding that CMS.
Put in place with the final rule, we think nothing will change in the promotional outlook for this year, but next year, we would expect.
More limited.
Promotion.
From CSL V for quite frankly, and that'll be really tied to the diminished sales potential.
So that's how we see kind of the promotional activities moving forward.
And I think your second question I'll turn I'll take that one so.
We are.
We're very pleased that the financing that we accomplished allows us to get through three.
Very meaningful value inflection milestones for the company and as you know those are the part a data.
Topic dermatitis, that's the kind that kick one and kick two readouts next year as well as the part a four.
<unk>.
<unk>. So we are in a position with a runway to get through those so we're happy where we are at that point, so no comment on future financing needs.
Okay. Thank you very much.
Thanks Cynthia.
Thank you.
Our next question.
Comes from the line of.
<unk> <unk> of Canaccord Genuity.
Good afternoon, thanks for taking our questions I have two so the first is on your auto gasoline program for advanced CVD clearly reimbursement dynamics are very different for this market versus for the dialysis market on IV comes to us.
But how confident are you in the commercial potential for <unk> in non dialysis <unk> given this dynamic and how are you internally prioritizing your donors for this indication versus EDI and Pete.
Because of what happened with.
The dialysis market here.
Yes, well I think your first question <unk> is around the different reimbursement.
Ecosystems that both play an <unk> injection, obviously plays in the most unique of reimbursement systems and we've talked about that in some of my prepared remarks, and that's in a bundled system and that will not play that's not the system that oral diphenyl, a caf one and advanced CK D will launch into it's more of a what we're used to more of a.
Journal retail pharmaceutical market.
We're really very bullish on advanced CK D.
Again, we estimate the addressable population of around 300000, there is roughly $1 2 million stage, four and five and around 30% of them are identified to have moderate severe rich I think the other thing we've learned even marketing to nephrologist or CSL has done is that there is a <unk>.
Significant unmet need in these patients with this debilitating severe itch have significant implications on their quality of life. So listen end of the day of funding were available for of course <unk> injection, we think.
That product would.
Have a very long runway.
With oral <unk>, we're really pleased I think you.
Your other question, though you asked around.
And how we prioritize 18 hotels hyperstatic in TKD I mean.
If youre asking me what my favorite child is I won't say that I think all three are incredibly valuable programs. They all have very sizable addressable patient populations.
And they all have one thing in common there is no available treatments.
We would be the first FDA approved treatments across these three indications.
A really differentiated positioning to be in.
That's why we're so excited about and we've always been excited about the oral pipeline.
And then as you go into part one.
What exactly do you expect to report externally given party is not powered for.
That is significant I think you used the term that it would be a good proxy for part b. So what would be a good outcome on part D and what might not be a good okay sure.
Sure, let me turn that to Jeff.
Thanks and answer.
Talk a designed really as key.
Gather additional information for a pivotal program.
It has not been powered to show statistical significance, but importantly, it has the appropriate number of patients for us to be able to assess what the sample size needs to be and to be able to select a favorable.
For moving forward.
Program.
So that's exactly what we intend to use that data for so we comfortable with and the patient.
And what we can glean from that.
Thank you.
Thanks, so much.
Yes.
Thank you.
Our next question.
Comes from the line of David and sell them.
Piper Sandler.
Hey, thanks.
Tim David.
Q4 months.
First could you provide some color on the inventory burn that we should expect toward the end of the year I.
I know you had previously guided to depleting that built up inventory towards the back half of the year, but given the lumpiness. This quarter, we want to get you there and then second and Relatedly. How does this tie into your thinking around your cash flow runway I noticed last fourth I guess, a lot more directly monetizing oral GSK in some way off the table.
Super So let me address the first one around the inventory I mean listen I mentioned on the call given the given the role we are already seeing some of the implications I mean, one thing that happened is for semi is now reallocating their remaining inventory in the roughly 1000 clinics that have not started to pay.
On yet and are actually reallocating that to the clinics that are so net net what that's going to mean as I mentioned in the next two quarters, you're going to see.
Further disconnection in terms of demand and sales.
Especially at the Fresenius side.
But I think the bigger picture there Tim is longer term given the lack of funding from CMS that we're incredibly disappointed in that I think we will have broader implications on any innovation going forward, but given the lack of funding that's going to have significant downward pressure on both demand and sales moving forward I think thats the big takeaway.
And on the cash runway, let me tell you so.
I think to kind of answer the second part of your cash run rate question first we've always been very explicit that we are not going to stand up a ex U S sales force for <unk>. So yes, we are looking to continue that effort to find a partner for ex U S for <unk> so that.
It is a part of our plans obviously, it's not included in my cash runway that I gave you.
Okay, great. Thank you.
Sure.
Thank you.
Our next question.
Comes from the line of Annabel <unk> of Stifel.
Please go ahead NOL.
Hi, Thanks for taking my question.
Wanted to get a little bit more granular on.
You might report out for.
<unk> program.
I realize that you are not.
Yes.
And then just to close the thresholds that you were looking at me.
No. Good question on whatever it is or the sample size that youre looking at the standard.
Debbie.
Yes.
Absolute basis or.
On a response rate basis, I mean, you see any of that kind of data.
Or is it just.
And trial size.
Yeah.
This is Paul statistical powering and that's it and then.
Second question I have.
I guess.
You mentioned that 80% of here.
Enrolled patients have a bias surface area.
So that means it's dominant.
Have any expectation that that patients with a greater than 10% body surface area might skew things in any strange lately.
All right.
Sort of offset some of that.
No no absolutely Annabel Great question, Let me, let me turn it to Joe. Thank you. So first on what we report out.
We intend to report out the top line efficacy and safety data.
More than what we had originally stated off just the tariff and the sample size.
So the typical topline data that we have provided.
That includes the footprint respond response analysis.
I think to address your second question and indeed, our we've always targeted this mark to market.
Asian population, who are very itchy.
The dominant phenotype.
What we saw the greatest signal and we're very happy and pleased.
By enriching the study that we have landed with 80% of the patient population, having anti body surface area at least 10% notably.
This study is different khaki program and the things that we are now adding duffin of Cephalin key topical corticosteroids. So the patients have greater than 10% body surface area now has a topical corticosteroid to address these skin lesions and that that's.
Moving to the dermatitis downtime out a form and really represent a dominant.
So we feel comfortable.
With that.
And in addition, just the mechanism of action of the affiliate Cephalin being differentiated from the topical corticosteroid.
<unk> and <unk>, we believe that it could have an additive benefit to these patients are quite comfortable with that additional.
Patient populations, who may have saving 10% body surface area.
Okay, Great that's very helpful and if I could just.
Clarify for <unk> section.
Auction.
Phil.
That's.
Hey, Paul.
Mobile providers just won't be incentivized.
Carlos about their patients are responding to treatment are asking for the treatment.
Is it just not something that they'll be willing to.
Purchase because they're not getting reimbursement.
Annabel I think end of the day.
Policy funding will drive prescribing behavior.
Simply and what we would anticipate happening.
Is kind of what we saw.
In the parse a bit of world a couple of years ago, where you saw significant policy decisions being made at the Dow level.
E restricting or even stopping access.
To this drug I mean before we will continue to make this drug available.
That's for sure, but we think policy will dictate the future of this product and given the lack of funding.
I think there'll be protocols and policies put in place at the dealer level to severely limit access which is incredibly unfortunate given the given the reports we've heard with the patients on this drug incredibly disappointed.
Okay, great. Thank you yes.
Yes.
Okay.
Thank you.
Our next question.
Comes from the line of Orin Loopnet.
H C Wainwright.
Thanks for taking my question I want to focus on the upcoming time, one part a data.
To build on I guess anabolic question and others before.
Can you help us know with any sort of.
Theoretical expectations around what our clinical clinically meaningful improvement in pruritus would even look like in this population in your view or based on your conversations with Kols.
Im thinking we've all seen data and labels for older or more recent.
Biologics or maybe Jack and I'm trying to understand if the.
The difference in this population the characteristics and perhaps staying on top of steroids, which most if not all haven't been for those other ones.
What do you think we should be looking for it because I know youre not powered for stats, but I'm just trying to figure out what even just magnitude of pruritus reduction from baseline as even expected this kind of population.
Absolutely, let me give that to Joe or thanks oriented great question. So first of all I think just to highlight that our study is unique and that the patient population that we have included in kind of one quality has not been investigated before in clinical studies. This is mild to moderate patients who are very itchy.
It's dominant patient population.
So we cannot use prior history from biologic or JAK studies those are only approved for moderate to severe.
So having said that we are conducting the study to have a better understanding of what the data would look like <unk> that can inform us for a pivotal program.
Of course, our primary endpoint looking at the four point responder analysis.
Which is key but we have not powered this study to show statistical significance. We do have internal thresholds that we will use to guide us in making an assessment and those have been visited by dermatologist, but key opinion leaders as well as community teams, but that's all internal thresholds, which will guide us. So this data is really unique data.
Sure.
Which we need to learn from to apply to a pivotal program.
So clearly this is.
Go no go based on your own.
And your Kols.
Input on what's clinically meaningful.
I guess, when we think about <unk>.
Projecting forward.
Is this more of a commercial hurdle what is in fact clinical clinically meaningful or do you think its regulatory such that if you could power this up enough to get stat Sig on a small improvement on <unk>.
Relative improvement in pruritus versus.
Tcf is that still likely an approvable product in your mind.
Just a question of.
How the commercial uptake would be or do you think there is in fact, an FDA hurdle.
I'll, let Joe tackle the first on the regulatory side and I'll tackle the commercial side, yes. So from a regulatory perspective, we know what we need to do in our pivotal program and that's a four point response.
We need to demonstrate that that is statistically significant from a comparison.
The regulators have assessed the full point as what is clinically meaningful so thats from a regulatory perspective, and that's what our pivotal program would demonstrate a first part of the program is really to provide us with the information to be able to answer.
Ensure that the pivotal.
Graham is designed accordingly, and powered accordingly, so that we can achieve that and achieve regulatory 16, yes, I would say we're in on the commercial side. We're very excited is in a position that is our both our clinical and commercial position quite frankly, and that's in the mild to moderate space with these patients being.
Credibly Itchy and in fact, chronic pruritus is the most dominant feature in the mild to moderate space.
<unk> are there necessarily their biggest concerns severe itch and its chronic what's currently being used or topical.
Namely topical steroids as Joe mentioned, they have their own limitations, even some of the newer topical therapies have limitations on chronicity of use so we would be the <unk>. The first and only oral systemic antipruritic agent in this space. So we think we've carved out a really significant.
Space, that's how our clinical programs design.
And that's the feedback we hear on the unmet need in this space.
And it's a sizable market opportunity and we estimated over 3 million patients.
So that's from a commercial side.
Yeah.
Alright, Thank you I look forward to the data.
Got it.
Okay.
Thank you.
Now I'd like to turn the conference back to Chris Posner for closing remarks, Sir.
Yes, so I'd like to wish everybody, a great evening and <unk>.
Hopefully a great upcoming holiday.
Yeah.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Good afternoon, My name is Lucy and I will be your conference facilitator.
I would like to welcome everyone to the Cara Therapeutics third quarter financial results and update conference call.
All lines have been placed on mute to avoid any background noise.
After the speaker 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 is one one on your telephone keypad.
To remove your name from the queue simply press star and the number is one one again.
Please be advised that this call is being recorded.
I would now like to introduce Matt Murphy carries manager of Investor Relations. Mr. Murphy you may begin your call.
Thank you operator, and good afternoon after market close today <unk> issued a news release announcing the Companys financial and operating results for the third quarter of 2023 copies.
Copies of this news release and the associated SEC filing 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 $19 95, and are subject to risks and uncertainties actual.
<unk> 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.
<unk> 2022, and any subsequent reports filed with the SEC, including its Form 10-Q for the quarter ended September 32023.
That said I would like to turn the call over to Chris Posner Caris, Chief Executive Officer, Chris. Thanks.
Thanks, Matt.
Good afternoon, everyone and thank you for joining our call with me today are Ryan Maynard, our Chief Financial Officer, Dr. Julian a consol this our chief Medical Officer, and Scott's really in our general counsel and head of government Affairs.
Our strategy at Cara Therapeutics is to change the treatment of chronic pruritus with our innovative and differentiated asset that fellow Kaplan our highest priority is to execute on our three unique late stage programs in dermatology and neurology, which drive the greatest potential.
Long term value for our company.
And we are excited to have multiple fully funded value inflection milestones within these programs over the next 12 months.
Today, I will provide an update on the funding of our wholly owned oral <unk> capital and pipeline next I will discuss the progress in our three late stage programs, including expectations for part a of our kind one atopic dermatitis study, which is scheduled to read out in December of this year.
<unk>.
Finally, I will address the performance of <unk> injection in the U S and discuss the recently released 2020 for ESR D rule.
After that Ryan will provide a financial update and we will subsequently open up the call to Q&A.
With that let me start with our recent announcement regarding the monetization of our ex U S royalties for <unk> injection and <unk> on November one we entered into a royalty interest purchase and sale agreement with healthcare royalty under the terms of the agreement <unk> received an.
The initial payment of $17 5 million less certain expenses.
We will receive an additional payment of $20 million upon to prove you're receiving a certain minimum price in Germany, which is expected to occur this quarter.
In addition, Carol will receive a $2 5 million milestone payment based upon achieving certain 2024 performance levels of course over in Japan.
In exchange healthcare royalty will receive all royalties due to Kara from <unk> injection that can prove your ex U S license agreements with CSL before and Mary Wuxi.
The aggregate royalty payments to healthcare royalty are capped at two times the payment to care if received before the end of 2029, otherwise the payments are capped at two point X two eight times after which Carol will resume receiving all royalties from both <unk> and <unk>.
The arrangement with healthcare royalty, specifically excludes <unk> injection in the U S and all of <unk> oral diastolic Cephalin internal development programs.
Non dilutive financing is an important part of our strategy to drive the continued development of our very promising pipeline, which has always been key to building sustainable long term value for Kara.
Closing this non dilutive transaction extends our cash runway into 2025. This helps us reach critical catalysts and milestones that we believe will display the potential of our diphenyl, a careful and pipeline and start to display the underappreciated value and Kara.
Next let me discuss the progress of our multiple late stage pipeline programs.
First our phase III kind one trial in pruritus associated with atopic dermatitis is approaching a key near term milestones. We now plan to release top line efficacy and safety data for part a the dose finding portion of this trial in mid December in order to increase the visibility.
Into this trial.
Recall chronic pruritus is the most common and most burdensome symptom of atopic dermatitis affecting almost 100% of the approximately 12 million adult patients in the U S.
In recent years, there has been significant investments and innovation in the treatment of moderate to severe a D, resulting in the development and approval of new biologics and JAK inhibitors.
Despite these developments a large segment of the market remains underserved.
We are targeting roughly one quarter of the total <unk> market. These are mild to moderate patients with moderate to severe itch also referred to as <unk> dominant E D.
Numerically that's about 3 million addressable it's dominant patients in the U S who are primarily managed with topical corticosteroids.
While Tcs may treat skin lesions, they often fail to effectively address the burdensome chronic itch that severely impacts these patients quality of life.
So there is a significant void in the treatment continuum and a need for an oral therapy with a favorable safety and tolerability profile to effectively treat debilitating itch in these patients.
Our current program is tailored to specifically address this unmet need for a targeted oral anti prior to treatment for mild to moderate patients who are very itchy no company to date has focused on this market segment and enriched its trials with this patient phenotype.
Today, we can confirm that 80% of the patients enrolled in part a of kind one have a baseline body surface area of less than 10% and a mean itch score of greater than seven meaning most patients in the trial have mild to moderate skin lesions with severe itch.
As you will recall. This is also the subgroup of patients that showed the best clinical benefit with oral <unk>, Catherine and our care phase two mono therapy trial.
In contrast to our phase II trial, our phase III <unk> program is designed to mimic likely future real world utilization in patients that fell a castle and is used on top of mid potent tcs and compare it to Tcs alone an active comparator.
With this higher clinical hurdle and four treatment arms part a of kind one is not powered for statistical significance. We've enrolled 287 patients with the intent to select the most favorable dosage strength and determined the sample size for the confirmatory part of the Phase III program.
The kind one part a readout is a significant catalysts and mirrors the future of this program. We believe that part a will be a good proxy for the likely outcomes of the confirmatory kind, one part b and kind two studies the <unk>.
<unk> enrollment criteria study conduct and endpoints and the confirmatory studies are expected to be the same as for kind one part a in addition, the study sites from part a will participate in part B along with some new added sites.
We are excited to share the results of kind one part a with you in the near future.
Now turning to our other two late stage programs that also targets sizable patient populations with a lack of treatment options enrollment in our phase through phase III kick one and two trials in pruritus associated with advanced chronic kidney disease is progressing well and we.
To expect top line results in the second half of 2024.
The approval of <unk> injection validated this mechanism laying the foundation for our Nephrology franchise, we see a natural extension of that fellow cephalin into earlier stage patients with the oral formulation.
There are roughly 300000 pre dialysis advanced stage CK D patients, who suffer from moderate to severe pruritus in the U S alone.
Importantly, these patients do not fall under the capital reimbursement system that covers dialysis patients, hence we see a significant commercial opportunity in this underserved patient population.
Our phase II three courage one trial in <unk> is tracking to its first data readout of part a in the second half of 2024 with no approved therapies and then an addressable population of at least 650000 patients in the U S who are under the care of a provider most off.
And the dermatologists, we believe oral day fell on Caf, one has the potential to unlock a sizable new market and dermatology.
Now, let me turn to the performance of <unk> injection in the U S for the third quarter of 2023 net sales for <unk> were $4 4 million translating into $1 9 million of profit recorded as revenue to Kara.
Wholesaler shipments to dialysis clinics totaled 91000, vials, a 36% increase from the prior quarter, 68% of these viles were shipped to Fresenius clinics and the remainder split between Davita and the other dialysis organizations.
At Fresenius orders grew by more than 37% quarter to quarter, reaching 62000 vials by the end of the third quarter over 1000% as clinics or 37% have placed reorders that's up from 27% at the end of the second quarter.
Additionally, 1478 clinics or 55% had dosed at least one patient at the end of the third quarter.
Importantly, following the ESR D prospective payment system rule for <unk> decided to reallocate remaining inventory that was shipped in the shift in the third quarter of 2022 within its network of clinics. As a result, we expect shipments from CSL V for two holes.
Sellers to be small in the fourth quarter of this year and the first quarter of 2024 translating translating into minimal revenues accrued to Kara in these quarters.
At Davita, we continue to observe steady growth in demand.
Orders grew by 20% quarter to quarter to 13000 vials over 500 clinics or 19% had ordered core Suva at the end of the third quarter, that's up from 15% at the end of the second quarter.
Reorder rates remains strong with 76% of clinics, placing repeat orders as a reminder, since there is minimal inventory held at Davita clinics. We believe the growth in clinic orders represents a good proxy for the growth in patient demand.
At mid sized and independent dialysis organizations core Soobee utilization continued its momentum orders grew by 47% quarter to quarter to over 16000 vials.
At the end of the third quarter, 18% of clinics in this market segment had placed orders that's up from 17% at the end of the second quarter. In addition, 77% of these clinics placed repeat orders up from 68% at the end of the second quarter.
U S renal care remains the largest buyer of course, Suva and the <unk> segments.
<unk>, 80% of U S. RFC clinics had ordered <unk> by the end of the third quarter and 83% of these clinics have placed repeat orders.
Overall, our expectations for <unk> injection are now greatly reduced.
But we remain confident in the mechanism of action and benefit of course Suva.
The provider and patient feedback poor core Suva remains highly positive and it's good clinical performance has continued to fuel growth in <unk> demand.
But its use will not likely reflect the existing clinical need.
The significant challenges in the uptake of course, Suva, even with its to adapt but designation stemmed from the unique capitate or dialysis reimbursement system in the U S, which really does not foster innovation.
On October 27, CMS published the end stage renal disease prospective payment system final rule for the calendar year 2024.
We are disappointed that CMS rejected our request to extend the <unk> period for pursue.
Furthermore, CMS maintained the proposed methodology for calculating the add on adjustment, which in our view is flawed and results in a significant shortfall in funding for <unk> and other innovative drugs with <unk> designation in the future.
As a result, we now believe that <unk> commercial potential will be meaningfully lower than we previously expected.
However, Kara fundamentally as a development company and our greatest source of value is our wholly owned oral diphenyl, a careful and pipeline we remain laser focused on maintaining a strong balance sheet and driving progress and our three late stage programs to deliver value.
<unk> ahead.
I would now like to turn it over to Ryan for additional details on our third quarter financial results results over to you right.
Chris.
I would like to first take a moment to reinforce what we have stated about our very important financing transaction with healthcare royalty.
We were able to bring forward the value of our ex U S and Japan royalties and add to our balance sheet in a meaningful way.
This allowed us to extend our cash runway in the non dilutive manner that we've been socializing with the investment community over these last few quarters.
As Chris mentioned, we have received the initial payment of $17 5 million and we fully expect to receive the first milestone of $20 million by the end of this quarter.
Now onto the Q3 results.
Total revenue was $4 9 million for the three months ended September 32023, compared to $10 8 million for the same period in 2022.
Revenue this quarter consisted of $1 $9 million of collaborative revenue related to our profit from <unk> net sales of course, Suva injection to third parties.
$1 4 million.
The milestone payment earned from Mariucci for marketing and approve of course Suva injection in Japan.
One $3 million of commercial supply revenue.
And finally 167000 of royalty revenue, representing our royalties from the net sales of <unk> in Europe.
Remember that revenue in the same period last year included the large stocking order from FMC.
Cost of goods sold was $1 6 million for the three months ended September 32023, compared to $3 1 million for the same period in 2022.
As a reminder cost of goods sold relates to our shipments of course Suva injection to CSL before.
Research and development expenses were $25 5 million for the three months ended September 32023, compared to $24 7 million in the same period of 2022.
The slight increase in R&D expenses is primarily due to increased clinical trial spend related to our three late stage clinical programs.
Offset by a decrease in stock based compensation expense.
Also R&D expenses for the three months ended September 32022 included $5 million related to a milestone paid to <unk> Biopharma, Inc.
General and administrative expenses were essentially flat at $6 8 million for the three months ended September 32023, compared to $6 nine in the same period of 2022.
Cash cash equivalents in marketable securities at September 32023 totaled $83.3 million compared to $101 7 million at June 32023.
The decrease of $18 $4 million this quarter was due to cash used in operating activities.
Finally.
We expect that our current unrestricted cash cash equivalents and available for sale marketable securities, including the proceeds from our recently announced royalty financing.
And the collaborative revenue from our share of profit from core Suva will be sufficient to fund our currently anticipated operating plan into 2025.
Now back to you Chris.
Thanks, Ryan So in summary, I want to highlight the tremendous opportunity we see within our company Cara's oral <unk> capital and franchise has significant potential and we know that the innovation in this product delivers value when use we have three late stage programs and sizeable indicate.
<unk>, which in our view are not recognized by the market today, our improved cash runway allows us to reach multiple value inflection points, which will start to display the potential of our pipeline.
We believe that our kind one part a readout in December represents the first milestone and we look forward to sharing the data.
Now with that Ryan, Joe Scott and I will be happy to take your questions. So let's see if you could open up the line to Q&A.
Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question.
Comes from the line of Joseph Stringer of Needham <unk> Company.
Hi, Thanks for taking our questions just on Q1 and Q2.
Can you provide any more detail on some of the enrollment metrics.
Metrics you mentioned that.
Enrollment is tracking well.
<unk>.
Schedule for topline readout second half next year, but just curious on screen failure rates are those in line with expectations.
There are some of the most common reasons for screening failures and then.
Any plans to open additional target sites for either of those.
Yeah, Hey, Joe Thanks for the question, let me, let me give that to Joe and she could address some of that carry yes.
As Chris had mentioned earlier, so we are on track.
And our anticipation of how this study should be running.
We don't typically give any details regarding the Mexican so at this stage when coming on that debt.
With it and on track with the readout next year.
Okay, great. Thanks for taking our question. Thanks.
Thanks, Joe.
Thank you again to ask a question. Please press star one one.
Our next question comes from the line.
Dennis.
Jefferies.
Okay.
Hi, This is anthea on for Jonathan Thanks for taking our questions.
Tim from Baird.
Sorry.
What is your commercial strategy post.
And what is the best way to maximize Christopher value for shareholders in your view.
CMS decision and then secondly.
Any additional ways to extend cash runway beyond the royalty deal recently announced that Youre looking at thank you.
Thanks Cynthia.
Yeah. So let me tackle the first one so here's our expectation first of all let me just say we have we have a really a great partner in <unk> four in the U S and what we expect given obviously the diminished sales potential due to the lack of funding.
S.
Put in place with the final rule, we think nothing will change in the promotional outlook for this year.
But next year, we would expect.
<unk> limited.
Promotion from CSL V for quite frankly, and that'll be really tied to the diminished sales potential.
So that's how we see kind of the promotional activities moving forward.
And I think your second question I'll turn I'll take that one so.
We are.
We're very pleased that the financing that we accomplished allows us to get through three.
Very meaningful value inflection milestones for the company and as you know those are the part a data.
In atopic dermatitis, that's the kind that kick one and kick two readouts next year as well as the part a four.
<unk>.
<unk>. So we are in a position with our runway to get through those so we're happy where we are at that point, so no comment on future financing needs.
Okay. Thank you very much.
Thanks Cynthia.
Thank you.
Our next question.
Comes from the line of Smart Calcagni of Canaccord Genuity.
Good afternoon, thanks for taking our questions I have two so the first is on your order decade gasoline program for advanced CVD.
Clearly reimbursement dynamics are very different for this market versus for the dialysis market on IV cost to us.
But how confident are you in the commercial potential for <unk> in non dialysis <unk> given this dynamic and how are you internally prioritizing <unk> for this indication versus EDI and Pete.
Because of what happened with.
The dialysis market.
Yes, well I think your first question <unk> is around the different reimbursement.
Ecosystems, both play an <unk> injection, obviously plays in the most unique a reimbursement systems and we've talked about that in some of my prepared remarks, and that's in a bundled system and that will not play that's not the system that oral diphenyl, a caf one and advance CK D will launch into it's more of a what we're used to more of a.
<unk> retail pharmaceutical market.
We're really very bullish on advanced CK D.
Again, we estimate the addressable population of around 300000, there is roughly $1 2 million stage, four and five and around 30% of them are identified to have moderate severe rich I think the other thing we've learned even marketing to neurologists or CSL has done is that there was a <unk>.
Significant unmet need in these patients with this debilitating severe itch have significant implications on their quality of life.
Listen ended the day of funding were available for a <unk> injection, we think.
That product would have.
Very long runway.
With oral <unk>, we're really pleased I think.
Your other question, though you asked around.
And how we prioritize <unk> I mean.
If youre asking me what my favorite child is I won't say that I think all three are incredibly valuable programs. They all have very sizable addressable patient populations.
And they all have one thing in common there is no available treatments.
We would be the first FDA approved treatments across these three indications.
Really differentiate our positioning to be in.
Why we're so excited about and we've always been excited about the oral pipeline.
And then as you go into part a of kind one what exactly do you expect to report externally given party is not powered for statistical significance. I think you used the term that it would be a good proxy for part b. So what would be a good outcome on part D and what might not be a good outcome.
Sure, let me turn that to Jeff.
Thanks, so much.
Talk a designed really as key.
Gather additional information <unk> pivotal program.
It's not been powered to show statistical significance, but importantly, it has the appropriate number of patients for us to be able to assess what the sample size needs to be and to be able to select a favorable.
Full moving forward pivotal program.
So that's exactly what we intend to use that data for so we comfortable with and the patient.
And what we can glean from that.
Thank you.
Thanks, a lot.
Yes.
Thank you.
Our next question.
Comes from the line of David and sell them.
Piper Sandler.
Hey, Thanks This is Tim.
David.
Q4 months.
Could you provide some color on the inventory burn that we should back toward the end of the year.
I know you had previously guided to depleting that built up inventory toward the back half of the year, but given the lumpiness this quarter once again.
And then second and Relatedly, how does this tie into your thinking around your cash flow runway I noticed last fourth I guess more directly monetizing oral GSK in some way off the table.
Super So let me address the first one around the inventory I mean listen I mentioned on the call given the given the role we've already seen some of the implications I mean, one thing that happened is Fresenius is now reallocating their remaining inventory in the roughly 1000 clinics that have not started a patient on yet.
And are actually reallocating that to the clinics that are so net net what thats going to mean as I mentioned in the next two quarters, you're going to see.
Further disconnection in terms of demand in sales, especially.
Especially at the Fresenius side.
But I think the bigger picture there Tim is longer term given the lack of funding from CMS that we're incredibly disappointed in that I think will have broader implications on any innovation going forward, but given the lack of funding that's going to have significant downward pressure in both demand and sales moving forward I think thats the big takeaway.
And on the cash runway, let me tell you so.
I think to kind of answer the second part of your cash run rate question first we've always been very explicit that we are not going to stand up a ex U S sales force for oral diphenyl a kaplan. So yes, we are looking to continue that effort to find a partner for ex U S for <unk> so that.
As a part of our plans obviously it is not included in my cash runway that I gave you.
Okay, great. Thank you.
Yes.
Thank you.
Our next question.
Comes from the line of Annabel <unk> of Stifel.
Please go ahead NOL.
Hi, Thanks for taking my question.
Wanted to get a little bit more granular on.
You might report out for it.
<unk> program.
I realize that you are not.
Yes.
And then just to close the thresholds that you were looking at me.
No. Good question on whatever it is or the sample size that youre looking at is what the standard.
Debbie.
Score is on an absolute basis.
On a response rate basis, I mean, if any of that kind of data.
Joe.
Yes.
And trial size.
Uh huh.
Paul Statistical powering and that's it and then.
Second question I have is.
I guess.
You mentioned that 80% of here.
Uh huh.
Enrolled patients have a bias surface area, 10% so that means it's dominant.
You have any expectation that that patients with a greater than 10% body surface area might skew things in any strange languages.
Paul sort of offset some of that.
No no absolutely Annabel Great question, Let me, let me turn it to Joe Yeah. Thank you Anna.
Based on what we report out.
We intend to report top line efficacy and safety data and more than what we had originally stated off just the tariff and the sample size.
Typical topline data that we have provided.
So that includes the footprint respond.
The analysis.
I think to address your second question.
Indeed, our we've always targeted this mark to market.
Patient population are very itchy and as the dominant phenotype.
That is what we saw the greatest signal and we are very happy and pleased.
By enriching the study that we have landed with 80% of the patient population having.
But at least 10%.
Notably.
This study is different khaki program and the things that we are now, adding duffin of Cephalin too topical corticosteroids. So the patients have greater than 10% body surface area now have a topical corticosteroid to address skin lesions and.
Moving the atopic dermatitis down to Mount a foam and really represent a dominant.
So we feel comfortable.
With that.
And in addition, just the mechanism of action of the affiliate Cephalin being differentiated from the topical corticosteroid.
Predominantly multi tree and we believe that it could have an additive benefit to these patients are quite comfortable with that additional pay.
Patient populations, who may have saving 10% body surface area.
Okay, Great that's very helpful and if I could.
Clarify for <unk> injection.
Section.
Tim.
That's okay.
Hey, Paul.
Mobile providers just won't be incentivized.
Okay.
<unk> are responding to treatment are asking for the treatment.
Is it just not something that they'll be willing to.
Purchase because they're marketing and reimbursement.
Annabel I think end of the day.
Policy funding will drive prescribing behavior.
Quite simply.
And what we would anticipate happening.
Is kind of what we saw in the parse a bit of world. A couple of years ago, where you saw significant policy decisions being made at the <unk> level.
E restricting or even stopping access.
To this drug I mean before we'll continue to make this drug available.
That's for sure, but we think policy will dictate the future of this product and given the lack of funding.
I think there'll be protocols and policies put in place at the dealer level to severely limit access which is incredibly unfortunate given the given the reports we've heard with the patients on this drug incredibly disappointed.
Okay, great. Thank you yes.
Yes.
Okay.
Thank you.
Our next question.
Comes from the line of Orin Loopnet of H C Wainwright.
Thanks for taking my question I want to focus on the upcoming time, one part a data.
To build on.
I guess anabolic question and others before.
Can you help us know with any sort of.
Theoretical expectations around what our clinically clinically meaningful improvement in pruritus would even look like in this population in your view or based on your conversations with Kols.
Im thinking we've all seen data and labels for older or more recent.
Biologics or maybe Jack and I'm trying to understand.
The difference in this population the characteristics and perhaps staying on top of steroids, which most if not all haven't been for those other ones.
What do you think we should be looking for it because I know youre not powered for stats, but I'm just trying to figure out what even just magnitude of pruritus reduction from baseline as even expected this kind of population.
Let me give that to Joe or thanks oriented great question.
First of all I think just to highlight that our study is unique.
The patient population that we have included in kind of one quality has not been investigated before in clinical studies. This is mild to moderate patients who are very itchy its dominant patient population.
So we cannot use prior history from biologic or JAK studies those are only approved for moderate to severe.
So having said that we are conducting the study to have a better understanding of what the data would look like <unk> that can inform us for a pivotal program.
Our primary endpoint looking at the four point responder analysis.
Which is key but we have not powered this study to show statistical significance.
Do you have internal thresholds that we will use to guide us and making an assessment and those have been vetted by dermatologist, but key opinion leaders as well as community teams, but that's all internal thresholds, which will guide us.
Data is really unique data.
Which we need to learn from to apply to a pivotal program.
So clearly this is.
Go no go based on your own.
And your Kols.
Input on what's clinically meaningful.
I guess, when we think about <unk>.
Projecting forward.
Is this more of a commercial hurdle what is in fact clinical clinically meaningful or do you think its regulatory such that if you could power this up enough to get stat Sig on a small improvement on <unk> relative improvement in pruritus for Tcf is that still likely.
Approvable product in your mind.
And just a question of <unk>.
Uh huh.
How the commercial uptake would be or do you think there is in fact.
<unk> hurdle.
Well I'll, let Joe tackled the first on the regulatory side and I'll tackle the commercial side, yes. So from a regulatory perspective, we know what we need to do in our pivotal program.
A full point response.
We need to demonstrate that that is statistically significant from a comparison.
The regulators have assessed the full point as what is clinically meaningful so thats from a regulatory perspective, and that's what our pivotal program will demonstrate a first part of the program is really to provide us with the information to be able to ensure.
Ensure that the pivotal program is designed accordingly, and powered accordingly, so that we can achieve that and achieve regulatory 16, yes, I would say we're in on the commercial side. We're very excited is in a position that is our both our clinical and commercial position and quite frankly, and that's in the mild to moderate.
Space with these patients being incredibly itchy and in fact chronic pruritus is the most dominant feature in the mild to moderate space lesions are necessarily their biggest concerns severe itch and its chronic what's currently being used or topical.
Namely topical steroids as Joe mentioned, they have their own limitations, even some of the newer topical therapies have limitations on chronicity of use so we would be the <unk>. The first and only oral systemic antipruritic agent in this space. So we think we've carved out a really significant.
Space, that's how our clinical programs designed.
And that's the feedback we hear on the unmet need in this space.
And it's a sizable market opportunity and we estimated over 3 million patients.
So that's from a commercial side.
Yeah.
Alright, Thank you I look forward to the data.
Got it.
Yeah.
Thank you I would now like to turn the conference back to Chris Posner for closing remarks, Sir.
Yes, so I'd like to wish everybody, a great evening and Uh huh.
Hopefully a great upcoming holiday.
Yeah.
This concludes today's conference call. Thank you for participating you may now disconnect.