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Cara Therapeutics, Inc. (CARA)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 total revenue was $4.9M, down from $10.8M in Q3 2022 due to the prior-year bolus stocking and mix shift; net loss was $(28.0)M or $(0.52) per share .
  • KORSUVA injection demand metrics improved (vial shipments +36% QoQ to 90,828; Fresenius reorder clinics rose to 37%), but management now expects minimal shipments and revenue in Q4 2023 and Q1 2024 as Fresenius reallocates inventory and post-TDAPA funding is insufficient .
  • CMS finalized ESRD PPS confirming TDAPA until March 31, 2024 and a post-TDAPA add-on methodology; management called the decision disappointing and now sees meaningfully lower U.S. commercial potential for KORSUVA injection .
  • Cash runway extended into 2025 via non-dilutive royalty monetization (received $17.5M; expecting $20M Germany milestone and $2.5M Japan milestone), enabling multiple catalysts including KIND 1 Part A topline efficacy/safety in mid-December 2023 .
  • Forward catalysts: KIND 1 Part A mid-December; Phase 3 KICK CKD topline 2H24; KOURAGE NP Part A 2H24; stock narrative hinges on AD Part A signal and CMS impact on KORSUVA revenue trajectory .

What Went Well and What Went Wrong

What Went Well

  • Pipeline funding and runway: “Closing this nondilutive transaction extends our cash runway into 2025,” enabling three late-stage program milestones within the runway .
  • Operational demand metrics: Q3 wholesaler shipments to dialysis centers rose 36% QoQ to 90,828 vials; Fresenius reorder penetration improved to 37%, DaVita reorder rate reached 76%, and MDO/IDO reorder rate increased to 77% .
  • Near-term clinical catalyst: Management will release topline efficacy and safety for KIND 1 Part A in mid-December to increase visibility; trial enriched for itch-dominant mild-to-moderate AD patients (80% BSA <10%, mean itch >7) .

What Went Wrong

  • Reimbursement headwinds: CMS maintained methodology that management views as flawed; TDAPA will end March 31, 2024, and the add-on adjustment likely underfunds innovation, meaning KORSUVA commercial potential is “meaningfully lower” than previously expected .
  • Near-term revenue impact: Fresenius reallocated inventory across clinics; management expects shipments from CSL Vifor to wholesalers to be small in Q4 2023 and Q1 2024, translating into minimal revenue to Cara in these quarters .
  • Revenue decline and losses: Q3 revenue fell to $4.9M from $10.8M YoY, with net loss widening to $(28.0)M from $(23.2)M; collaborative revenue from U.S. KORSUVA profit share declined to $1.9M vs $7.4M YoY due to prior-year stocking dynamics .

Financial Results

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Total Revenue ($USD Millions)$10.813 $6.165 $6.933 $4.866
Net Loss ($USD Millions)$(23.180) $(26.665) $(31.479) $(28.032)
EPS (Basic & Diluted, $USD)$(0.43) $(0.49) $(0.58) $(0.52)
R&D Expense ($USD Millions)$24.691 $24.334 $30.310 $25.451
G&A Expense ($USD Millions)$6.912 $6.891 $7.545 $6.755

Revenue breakdown (composition):

Revenue ComponentQ3 2022Q1 2023Q2 2023Q3 2023
Collaborative Revenue ($USD Millions)$7.443 $2.750 $5.410 $2.471 (incl. $0.5M allocated Japan milestone)
Commercial Supply Revenue ($USD Millions)$3.370 $3.191 $1.400 $1.252
Royalty Revenue ($USD Millions)$0.000 $0.125 $0.123 $0.167
License & Milestone Fees ($USD Millions)$0.000 $0.000 $0.000 $0.910 (Japan approval milestone allocation)

Operational KPIs:

KPIQ1 2023Q2 2023Q3 2023
Vials shipped (U.S. wholesalers to clinics)45,720 66,852 90,828
Fresenius clinics reordering (% of clinics)18% 27% 37%
Fresenius clinics with ≥1 patient dosed56% 50% (corrected) 55% (1,478 clinics)
DaVita reorder rate (% of ordering clinics)70% 73% 76%
MDO/IDO reorder rate66% 68% 77%

Estimate comparison

  • S&P Global consensus EPS and revenue estimates for Q3 2023 were unavailable via our tool for CARA; therefore, estimate comparisons cannot be provided at this time. Values retrieved from S&P Global were unavailable for this ticker mapping.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash runwayCorporateAt least next 12 months (as of Q2) Into 2025 (post HCR royalty monetization) Raised
KIND 1 Part A topline (AD)Q4 2023Internal readout expected 4Q23 Public topline efficacy and safety mid-December 2023 Increased disclosure
KICK Phase 3 topline (CKD)2H 20242H24 2H24 (unchanged) Maintained
KOURAGE NP Part A topline2H 20242H24 2H24 (unchanged) Maintained
TDAPA period for KORSUVA IVThrough Mar 31, 2024Proposed post-TDAPA methodology (final pending) Final rule confirms TDAPA until Mar 31, 2024; add-on methodology finalized Finalized
U.S. KORSUVA promotion2024n/aExpect more limited promotion from CSL Vifor tied to diminished sales potential Lowered
Near-term KORSUVA shipments/revenueQ4 2023–Q1 2024n/aShipments to wholesalers expected to be small; minimal revenue accrual to Cara Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2023, Q2 2023)Current Period (Q3 2023)Trend
CMS reimbursement/TDAPAAnticipated positive update; advocating for durable post-TDAPA mechanism Final rule disappointment; TDAPA ends 3/31/24; add-on methodology seen as underfunding innovation; seeking extension and changes Negative for KORSUVA IV
KORSUVA demand metricsVials shipped doubled; strong reorder proxies Shipments +36% QoQ; improved reorder penetration; but inventory reallocation drives near-term shipment decline Mixed: demand up, revenue near term down
Oral difelikefalin pipelineAll three late-stage programs progressing; internal KIND Part A readout planned KIND 1 Part A topline mid-Dec; KICK and KOURAGE timelines affirmed Positive execution
Financing strategyExploring non-dilutive options Executed HCR royalty monetization; runway to 2025 Positive balance sheet
Ex-U.S. strategyNICE recommendation; multiple EU launches Monetized ex-U.S. royalties; EU pricing context; Japan approval milestone recognized Monetization executed

Management Commentary

  • “Closing this nondilutive transaction extends our cash runway into 2025. This helps us reach critical catalysts and milestones… and start to display the underappreciated value in Cara.” — CEO Chris Posner .
  • “We now plan to release top line efficacy and safety data for Part A… in mid-December… to increase the visibility into this trial… We’ve enrolled 287 patients… to select the most favorable dosage strength.” — CEO Chris Posner .
  • “Following the ESRD Prospective Payment System rule… we expect shipments… to be small in the fourth quarter… and the first quarter of 2024, translating into minimal revenues accrued to Cara… we now believe that KORSUVA’s commercial potential will be meaningfully lower than we previously expected.” — CEO Chris Posner .
  • “Total revenue was $4.9 million… collaborative revenue $1.9M… $1.4M milestone from Maruishi… cash, cash equivalents and marketable securities… $83.3M… sufficient to fund our currently anticipated operating plan into 2025.” — CFO Ryan Maynard .

Q&A Highlights

  • Post-TDAPA strategy: Expect “more limited promotion” in 2024 from CSL Vifor given diminished sales potential; management is not commenting on further financing needs beyond HCR deal .
  • Advanced CKD oral DFK commercial potential: Management “very bullish,” estimates ~300k addressable U.S. patients; plan to stand up U.S. commercial org, partner ex-U.S. .
  • KIND 1 Part A disclosure: Will share topline efficacy/safety including 4-point WI-NRS responder analysis and dose selection/sample size; Part A not powered for statistical significance .
  • Inventory and near-term shipments: Fresenius reallocating remaining inventory; expect demand-sales disconnect and minimal shipments in Q4 2023–Q1 2024 .
  • Ex-U.S. monetization and pricing: Monetized ex-U.S. royalties; Germany price ~€48–€50 per vial (~one-third of U.S. list) .

Estimates Context

  • S&P Global consensus estimates for Q3 2023 EPS and revenue were unavailable for CARA due to missing mapping in our data source, so we cannot provide a beat/miss analysis this quarter. Values retrieved from S&P Global were unavailable for this ticker mapping.
  • Given the lack of accessible consensus, investors should focus on sequential/YoY trajectory and management commentary pending availability of third-party estimates.

Key Takeaways for Investors

  • Near-term revenue headwind: Expect minimal KORSUVA revenue in Q4 2023 and Q1 2024 due to Fresenius inventory reallocation and CMS funding dynamics; U.S. commercial potential lowered per management .
  • Funding secured: Non-dilutive royalty monetization extends runway into 2025, fully funding key catalysts (AD Part A mid-Dec; KICK and KOURAGE 2024) .
  • Critical December catalyst: KIND 1 Part A topline efficacy/safety in an itch-dominant AD population will shape program’s perceived probability of success and could be a stock-moving data event .
  • Demand indicators vs revenue: Clinic-level adoption and reorder rates are constructive, but reimbursement policy overwhelms near-term translation to revenue—separate demand signals from reported accruals .
  • Policy risk remains central: CMS’s final rule impairs KORSUVA’s trajectory; watch any further engagement on TDAPA extension or methodology adjustments .
  • Ex-U.S. optionality: Royalty deal provides cash today; Germany pricing and EU uptake support ex-U.S. value, with Japan milestone and potential future royalties after cap resumption .
  • Medium-term thesis: Stock narrative pivots to oral difelikefalin across AD, advanced CKD, NP; execution on Phase 3/2-3 milestones and safety/tolerability profile will drive re-rating more than IV KORSUVA .