Cara Therapeutics(CARA) - 2020 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Unaudited condensed financial statements for Q2 2020 show decreased assets, increased net loss, and higher cash used in operations Condensed Balance Sheets Total assets decreased to $168.6 million by June 30, 2020, driven by reduced marketable securities and increased accumulated deficit Condensed Balance Sheet Summary (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $56,967 | $18,305 | | Marketable securities | $96,079 | $199,860 | | Total current assets | $141,915 | $165,656 | | Total assets | $168,613 | $232,959 | | Liabilities & Equity | | | | Total current liabilities | $24,726 | $42,894 | | Total liabilities | $27,685 | $46,246 | | Accumulated deficit | ($454,717) | ($400,727) | | Total stockholders' equity | $140,928 | $186,713 | | Total liabilities and stockholders' equity | $168,613 | $232,959 | Condensed Statements of Comprehensive Loss Q2 2020 revenue slightly increased to $5.6 million, but net loss widened to $25.1 million due to higher R&D expenses Statement of Comprehensive Loss Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $5,634 | $5,208 | $13,727 | $9,590 | | Research and development | $26,108 | $24,356 | $59,644 | $47,964 | | General and administrative | $5,410 | $4,994 | $9,968 | $8,902 | | Operating loss | ($25,884) | ($24,142) | ($55,885) | ($47,276) | | Net loss | ($25,068) | ($22,960) | ($53,990) | ($44,920) | | Net loss per share (Basic and Diluted) | ($0.54) | ($0.58) | ($1.15) | ($1.13) | Condensed Statements of Cash Flows Net cash used in operating activities increased to $66.0 million for H1 2020, offset by $104.3 million from investing activities Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($65,955) | ($52,422) | | Net cash provided by investing activities | $104,341 | $51,627 | | Net cash provided by financing activities | $276 | $4,208 | | Net increase in cash, cash equivalents and restricted cash | $38,662 | $3,413 | Notes to Condensed Financial Statements Notes detail the company's biopharmaceutical business, significant accumulated deficit, reliance on financing, and key collaboration agreements - The company is a clinical-stage biopharmaceutical firm focused on developing and commercializing treatments for pruritus by targeting peripheral kappa opioid receptors[20] - As of June 30, 2020, the company had an accumulated deficit of $454.7 million and expects to incur substantial net losses for the foreseeable future[22] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A discusses KORSUVA's clinical progress, COVID-19 impact, increased R&D expenses, and liquidity sufficient into H2 2021 Product Candidate Pipeline The pipeline focuses on KORSUVA, with NDA submission for injection expected in Q4 2020 and oral formulation in Phase 2 trials - The company expects to submit a New Drug Application (NDA) to the FDA for KORSUVA (CR845/difelikefalin) injection for CKD-aP in the fourth quarter of 2020[223] - Positive top-line results from the pivotal KALM-2 Phase 3 trial were announced in April 2020, with the trial meeting its primary and key secondary endpoints[224] - The Phase 2 trial for Oral KORSUVA in Atopic Dermatitis was expanded to 410 patients to maintain statistical power based on an IDMC recommendation following an interim analysis[239] Collaboration and License Agreements Key KORSUVA commercialization partnerships include VFMCRP (up to $470 million in milestones), Maruishi, and CKDP (received $0.6 million milestone) - The VFMCRP agreement provides for up to $470 million in regulatory and commercial milestone payments, plus tiered double-digit royalties[253] - In June 2020, the company received a $0.6 million milestone payment (net of tax) from CKDP for the completion of a Phase 3 trial for uremic pruritus in the U.S.[259] - The company entered into a Master Manufacturing Services Agreement (MSA) with Patheon in July 2019 to secure commercial supplies of CR845/difelikefalin injection[265][269] Results of Operations Q2 2020 revenue increased to $5.6 million, but R&D expenses rose to $26.1 million, contributing to a wider net loss Comparison of Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $5,634 | $5,208 | $13,727 | $9,590 | | R&D expense | $26,108 | $24,356 | $59,644 | $47,964 | | G&A expense | $5,410 | $4,994 | $9,968 | $8,902 | - The increase in R&D expenses for the six months ended June 30, 2020 was primarily driven by activities related to the KALM-2 Phase 3 trial, the Phase 3 safety trial of KORSUVA injection, and the Phase 2 trial for pruritus associated with Atopic Dermatitis (AD)[291] Liquidity and Capital Resources As of June 30, 2020, the company held $153.0 million in liquidity, sufficient to fund operations into H2 2021 - As of June 30, 2020, the company had $153.0 million in unrestricted cash, cash equivalents, and available-for-sale marketable securities[306] - The company believes its existing cash will be sufficient to fund currently anticipated operating expenses and capital expenditures into the second half of 2021[306][321] - Net cash used in operating activities for the six months ended June 30, 2020 was $66.0 million, an increase from $52.4 million in the prior year period, primarily due to higher net loss and changes in operating assets and liabilities[323][324] Quantitative and Qualitative Disclosures About Market Risk Market risk primarily stems from interest rate fluctuations on investment portfolio, mitigated by short-duration, high-quality debt instruments - The company's primary market risk exposure is interest rate risk on its investment portfolio of cash, cash equivalents, and marketable securities[336][338] - As of June 30, 2020, the company had invested $96.1 million in marketable securities with a yield of approximately 1.70% and maturities through December 2021[337] Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2020, with minor revisions for ASU 2016-13 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[342] PART II – OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings that would materially impact its business or financial condition - The company is not currently a party to any material legal proceedings[348] Risk Factors Significant risks include a history of losses, dependence on KORSUVA's success, clinical development challenges, and COVID-19 disruptions - The company has a history of significant losses, with an accumulated deficit of $454.7 million as of June 30, 2020, and anticipates continued losses for the foreseeable future[350][351] - The business is substantially dependent on the success of its lead product candidate, KORSUVA (CR845/difelikefalin) injection, which may never receive regulatory approval or be successfully commercialized[365][366] - The ongoing COVID-19 pandemic could adversely affect business operations, clinical development timelines, and patient enrollment in trials[374][376] Other Items (2, 3, 4, 5, 6) This section confirms no unregistered equity sales, no defaults on senior securities, and no other material disclosures for the period - There were no unregistered sales of equity securities, defaults upon senior securities, or other material information to report during the period[615][617][621]