Cara Therapeutics Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 7, 2023

There are 10 speakers on the call.

Operator

You for standing by, and welcome to Cara Therapeutics Second Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I would now like to hand the call over to Matt Murphy, Investor Relations. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon. After market close today, Cara issued a news release announcing the company's financial and operating results for the Q2 of 2023. Copies of this news release and the associated SEC filing can be found in the Investors section of our website atwww.caratherapeutics.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 1995 and are subject to risks and uncertainties.

Speaker 1

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 Cara's 10 ks For the year ended December 31, 2022, and any subsequent reports filed with the SEC, including its Form 10 Q for the quarter ended June 30, 2023. With that said, I'd like to turn the call over to Chris Posner, ARRIS' Chief Executive Officer. Chris?

Speaker 2

Thanks, Matt. Good afternoon, everyone, and thank you for joining our call. With me today are Ryan Maynard, our Chief Financial Officer Doctor. Joanna Consalves, our Chief Medical Officer and Scott Terrillian, our General Counsel and Head of Government Affairs. I'd like to start by giving a quick overview of what I'll address today.

Speaker 2

First, I will give an update on the KORSUVA Injection launch in the U. S, including clinic level data to provide visibility into underlying demand trends across the different segments of the dialysis market. I will also briefly touch on the proposed calendar year 2024 ESRD PPS rule, which CMS published in late June. Next, I will review the COPUVIA launch progress in countries around the world. Then I will discuss our wholly owned pipeline And the progress of our 3 late stage programs for oral diphila keflin.

Speaker 2

Finally, Ryan will provide a financial update, after which we will open up the call to Q and A. With that, let me discuss the KORSUVA Injection launch in the U. S. For the Q2 of 2023, net sales for KORSUVA were $11,400,000 translating into $5,400,000 of Profit recorded as revenue to Cara. Wholesaler shipments to dialysis clinics totaled approximately 67,000 vials, A 46% increase from the prior quarter.

Speaker 2

67% of these vials We're shipped to FMC clinics with the remainder split between DaVita and the other DOs. This increase in vial shipments suggests a continued drawdown of inventory at FMC and an Acceleration in demand across all DOs. Ongoing anecdotal feedback on KORSUVA from both providers and patients Remains highly positive, highlighting that KORSUVA addresses a significant unmet need. At FMC, orders grew by more than 50% quarter to quarter, reaching 45,000 vials. By the end of the second quarter, over 700 FMC clinics or 27% had placed reorders.

Speaker 2

That's up from 18% at the end of the Q1. More importantly, 1300 clinics or 50% Had dosed at least one patient, that's up from 42% at the end of the Q1. Note, This is a correction. Based on numbers provided to us by FMC, we reported on our Q1 call that 1500 clinics had dosed at least one patient. The growth in the number of FMC clinics reordering as well as clinics dosing a patient Suggest continued drawdown of inventory at the clinic level.

Speaker 2

If this trend continues at the current rate, We believe that the majority of FMC clinics will have depleted their inventory and will be in reorder mode this year. At DaVita, we are seeing continued steady growth in demand. Orders grew by 43% quarter to quarter to 11,000 vials. Over 400 clinics or 15% had ordered KORSUVA at the end of the second quarter. That's up 11% at the end of 1st quarter.

Speaker 2

Reorder rates remain very encouraging with 73% of clinics placing repeat orders. Given the on demand approach at DaVita Clinics for ordering KORSUVA, the growth in clinic orders represents a good proxy for the growth in patient demand. At midsize and independent DOs, KORSUVA utilization continues its momentum. Orders grew by 28% quarter to quarter to 11,000 vials. At the end of the second quarter, 17% of clinics in this market segment have placed orders.

Speaker 2

That's up from 13% at the end of the first quarter. In addition, 68% of these clinics placed repeat orders and that's up 66% at the end of the first quarter. USRC remains the largest buyer of KORSUVA in the MDO and IDO segment. 73% of USRC clinics had ordered KORSUVA by the end of the second quarter and 80% of these clinics have placed repeat orders. While KORSUVA continues to make meaningful progress in the U.

Speaker 2

S, a majority of the market remains untapped And there is significant room for growth. Our partner CSL v4 is fully committed to driving KORSUVA's uptake in this unique ecosystem with the goal of maximizing its commercial potential in the long term. Now, I will briefly touch on the ESRD PPS proposed rule for calendar year 2024. This rule, once it is final, will determine the framework for KORSUVA's reimbursement after its TDAPA period. In late June, CMS proposed a new add on payment adjustment for certain new renal dialysis drugs after their TDAPA period ends.

Speaker 2

The post TDAPA payment adjustment applies to all dialysis treatments For a period of 3 years immediately following the expiration of the drugs to DAPA period. The proposed methodology calculates the add on payment for each treatment based on the prevailing ASP and the drug's utilization during the most recent 12 month period. CMS also proposed a risk sharing arrangement with ESRD facilities calculated at a 35% discount to the prevailing ASP to account for any declines in other drug expenditures. We are pleased that CMS proposed additional funding that is not budget neutral for innovative TDAPA designated drugs that fall into an existing functional category. We are also glad that the new funding starts immediately after the expiration of the TDAPA period and gets adjusted annually by the market basket update.

Speaker 2

However, there are certain limitations to the proposed methodology, which we plan to pointedly address with CMS in the coming months. Specifically, the add on payment applies to all dialysis treatments and does not follow the patient. In addition, a 35% discount to the prevailing ASP does not take into account 1st in class drugs like KORSUVA that don't have a therapeutic substitute. Since the Post post SEDAPA reimbursement methodology makes a drug's uptake during its SEDAPA period a key factor in future reimbursement rate setting. We plan to also address the question around appropriate utilization data with CMS near term.

Speaker 2

More specifically, we will be laying out a case for additional TDAPA time. We will furthermore press for changes to the proposed methodology to account for innovative, 1st in class products that target a minority of ESRD patients. We will continue to work closely with CMS and provide information to highlight the best solution for broad And equitable patient access to innovative drugs like KORSUVA in the final rule, which is expected later this year. Next, on the international front. The rollout of COPUVIA in Europe is progressing well.

Speaker 2

In the Q2, COPUVIA generated $1,200,000 in net sales, translating into $123,000 of royalty revenue to us. Launches have begun in 7 EU countries with more lined up in the coming months. CSL v4 continues to report positive feedback from patients and providers in line or NICE for COPROVIA for the treatment of moderate to severe chronic kidney disease associated pruritus In adult patients on hemodialysis. In Japan, we continue to expect a regulatory decision in the second half of this year. As a reminder, approval in Japan would trigger a $2,000,000 milestone payment to Cara.

Speaker 2

We are pleased with the progress around the world and believe the success of the ex U. S. Launch to date underscores the significant unmet need for an effective antipyretic treatment for hemodialysis patients. Last but not least, let me touch on the development progress of our innovative wholly owned pipeline. Enrollment in our Phase 3 programs in pruritus associated with atopic dermatitis and advanced chronic kidney disease is progressing well.

Speaker 2

We anticipate the internal readout of Part A of our KIND-one AD trial in the Q4 of this year With final top line results from this program in the first half of twenty twenty five, we continue to expect top line results for our kick program in advanced chronic kidney disease in 2024. Our Phase twothree COURAGE trial And Notalja paresthetica commenced in the Q1 of 2023 and is tracking to the internal readout of Part A in the second half of twenty twenty four. We expect top line results for the COURAGE program in the first half of twenty twenty six. We strongly believe that oral diphellekapalen is the centerpiece of our strategy of becoming the leader in the treatment of chronic pruritus and the key to unlocking the long term value of Cara. And we remain committed to driving progress of our pipeline And building our unique nephrology and medical dermatology franchises with oral diphila keflin.

Speaker 2

To summarize, we are pleased with the continued progress of the U. S. KORSUVA launch as evidenced by the acceleration in vial shipments and reorder rates across the dialysis landscape. Following CMS' proposal For a post TDAPA add on payment, we are engaging with CMS to discuss potential modifications to the proposed methodology, as well as an extension of KORSUVA's TDAPA time. We hope to see meaningful changes reflected in the calendar year 2024 final rule later this year.

Speaker 2

Internationally, We continue to receive positive feedback from the rollout of COPUVIA and we are optimistic about the growth trajectory as more countries come online. We also continue to execute on the most significant long term value driver of our company, Our differentiated innovative pipeline, our 3 late stage programs with oral diphila keflin have potential for tremendous value creation and set us apart as a leader in chronic pruritus. We remain laser focused on advancing these programs in order to maximize the potential of diphala Capulin within our 2 exciting therapeutic franchises. I would now like to turn it over to Ryan for additional details on our Over to you, Ryan. Thank you, Chris.

Speaker 3

Total revenue was $6,900,000 for the 3 months ended June 30, 2023, compared to $23,000,000 for the same period in 2022. Now revenue this quarter consisted of $5,400,000 of collaborative revenue related to our profit from CSL v4's net sales of KORSUVA Injection, $1,400,000 of commercial supply revenue and $123,000 of royalty revenue representing our royalties from net sales of Kibruvya. Now revenue in the same period last year included a $15,000,000 milestone payment for the approval of COPUVIA by the European Commission as well as $8,000,000 of collaborative revenue related to our profit from CSL V4 sales of KORSUVA. Cost of goods sold during the 3 months ended June 30, There was no cost of sales during the 3 months ended June 30, 2022, as there was no commercial supply revenue from CSLV IV. R and D expenses were $30,300,000 for the 3 months ended June 30, 2023 compared to 19.9 in the same period of 2022.

Speaker 3

The increase in R and D expenses is primarily due to the increased clinical trial spend related to our 3 late stage clinical programs, partially offset by a decrease in stock based comp. G and A expenses were relatively flat at $7,500,000 for the 3 months ended June 30, 2023 compared to 7.6 in the same period of 2022. Cash, cash equivalents and marketable securities At June 30, 2023, totaled $101,700,000 compared to $123,400,000 at March 30, 2023. The decrease of $21,700,000 this quarter was primarily due to cash used in operating activities. We expect that our current unrestricted cash, cash equivalents and available for sale marketable securities are sufficient to fund our currently anticipated operating plans for at least the next 12 months.

Speaker 3

This guidance assumes all the spend related to our 3 late stage clinical development programs and KORSUVA revenue profit share contribution. We continue to work to extend our runway past the guidance by focusing on non dilutive funding sources. Now back to you, Chris.

Speaker 2

Thanks, Ryan. I want to again emphasize our confidence in the commercial potential of KORSUVA, We continue to believe that our long term strategy We'll make Cara the leader in the treatment of chronic pruritus and we'll deliver meaningful value to our shareholders. With that, Ryan, Joe, Scott and I We'll be happy to take your questions. Operator, you could please open the line for Q and A.

Operator

Our first question comes from the line of Dennis Ding of Jefferies.

Speaker 4

Hi, good afternoon. Thanks for taking our questions. Congratulations on all the progress in the second quarter. Two questions for me. Maybe How do you guys think about the trajectory in the second half and the length of the launch curve?

Speaker 4

I mean, outside of the Outside of the depleting inventory, what else needs to happen for the trajectory to really inflect in the back half of the year? And then my second question is around the CMS draft documents. Maybe remind us what you are looking for or pushing for in the Final ruling in the fall and what would be considered a big win for Cara? Thank you.

Speaker 2

Yes. Thanks, Dennis. Nice to hear from you. So the first question, expectations for the remainder of the year. While we and our commercial partner CSL Vifor are not providing forward looking guidance at this time, Here's what I will say.

Speaker 2

We're certainly very encouraged with the accelerating trends in our key metrics, namely vials being ordered by clinics that increased 46% versus the prior quarter. And in addition, I mentioned in my We're also seeing more and more clinics dosing patients, specifically at the 2 LDOs. We're at FMC, Dennis. Yes, we're at 1300 clinics dosing, that's roughly a 50% penetration. And at DaVita, we're about 4 10 clinics now dosing, But importantly, that's up over 40% versus the prior quarter.

Speaker 2

And most importantly, IV KORSUVA is really holding up in the clinic And the feedback from both patients and providers has been highly positive. The reorder rates, meaning once a clinic starts dosing patients, There is significant buy into the product as over 70% of these clinics continue and consistently place additional orders. And I'll just conclude with this, Dennis. Although we're kind of early in Q3, I can tell you that the growth we see coming out of the 2nd quarter, We are seeing continue in the early part of Q3. And our commercial partner CSL Vifor continues To be highly motivated and their promotional efforts continue in full force.

Speaker 2

That's what I'll say about the second half of this year and our expectations. On CMS, let me introduce Scott, who heads up our government relations in addition to being our General Counsel, who has led The efforts with CMS over the last couple of years. So Scott, maybe you could address what we're doing with CMS.

Speaker 5

Sure. Thanks, Chris. Yes. As Chris said in his remarks, with regard to the rule, we're pleased that there was new money added. That is great and that's a very meaningful movement forward.

Speaker 5

In our interactions with CMS and it's not just us, the broader community is also Taking up very similar issues with CMS, there's 3 things with regard to the proposed rule that we're going to be looking for. 1 is Having the money file the patient, that's particularly important with a product like KORSUVA, where it is going to be used in a minority of patients.

Speaker 2

We want

Speaker 5

to make sure that the funding and the reimbursement is tied to their clinical decision directly to make sure the patients get access to the product. The second thing we're going to be talking about is the 35% discount. Again, we do agree that some sort of set off for savings for Drugs that are not going to be used

Speaker 2

in the bundle as a result

Speaker 5

of the new drug ought to be offset in some way. That's good fiscal policy, makes a lot of sense. However, with a drug like KORSUVA, where there isn't any money in the bundle, there isn't any money being spent to treat these patients or manage the condition before KORSUVA, We think it's important that the set off is rational and it's tied to the actual savings. And with KORSUVA, there's not going to be anything there. The third thing we're going to be looking for is for clarity After the 3rd year, because again, a drug like KORSUVA, there is no money in the bundle and what happens afterwards.

Speaker 5

So we're going to be seeking clarity on that. The other thing that we're going to be pushing CMS on and having a discussion about is making sure that there is a TDAPA period support KORSUVA that allows the community to use the product in the same and knowing what the reimbursement and funding mechanism After the TDAPA period ends. Right now, the product is being used in a context where there isn't any the thought is there would be no money added. So We're going to be trying to get the extra to the APA period, to try to make sure that there's good data that appropriately lines up to the patient access.

Operator

Our next question comes from the line of Annabel Samimy of Stifel.

Speaker 6

Hi. Thanks for taking my question. So I had a few actually. Just while we're talking about CMS, I guess a couple of things. I guess, first, can you Maybe so I guess we understand the parts of BIVV also got an extra year Of tadalafapam.

Speaker 6

And I was just wondering if you can outline what similarities or differences you might have had with Parsabiv, given that's Pretty much the only other drug that's gone through this, and how they got that additional year. And then if KORSUVA stays within the bundle the way that they've described. With this Structure, do you envision incentives for dialysis providers to not use the drug and just collect the payments, as they might have done for Parsabiv? So I just wanted to understand the dynamic that we might see post ADAPA. And then I might have another follow-up.

Speaker 6

Thanks.

Speaker 2

Yes. All right, Annabel. I think let me unpack. The first one is around extending our TDAPA period and the rationale why and why that Is the same or different than Parsabiv? Let me give that to Scott and I may have a couple of words after.

Speaker 5

Yes, sure. So With regard to Parsitiv, it's not a great analog in one sense because the Parsitiv, obviously, there was an oral Generic that was used afterwards. But there is one similarity with regard to why it would make sense and be consistent. And with Parsabiv, CMS was looking to get accurate information to understand how much money to add to the bundle. And that's the same argument we're going to make.

Speaker 5

That at the end of the day, We don't believe that the utilization and the uptake is going to be accurate in an environment where there would be new money added at the end of the SEDAPA period. So we think the precedent there with that regard, which is get better data, is consistent with Parsabot.

Speaker 2

Yes. And Annabel, I think on your second question, hopefully I got it right. Basically, if I understood the question right, the proposed methodology from CMS Could suggest a reverse incentive, meaning that some of the dialysis organizations would be incentivized Just to pocket the additional money and not use KORSUVA. I'll say a couple of things. I mean, one is, it's certainly They could do that.

Speaker 2

Our belief is that that will not happen. Organizations are very much used to working in the capitated environment, meaning they're going to lose some money on some patients and make some money on others. So we remain pretty confident that the appropriate patients will continue to have access to KORSUVA. And listen, we all have the same North Star around patients being at the center. And our kind of what we could control here at Cara and what we're really focused on is making sure that there is adequate And accurate funding, so patients are going to have access to this drug.

Speaker 2

That's what Scott alluded to in his earlier comments and that's really our focus.

Speaker 6

I guess also just to be clear that the payment also is recalculated every year, correct? So if utilization goes down, that's going to go down?

Speaker 2

Well, technically based on their proposal that could happen, correct. But it would be calculated on an annual basis.

Speaker 6

Okay. And then just to switch gears for a bit. Would you say that the reorder rate for DaVita, their independent dialysis provider is 70%, is that about where you would Expect reorder rates to be in a normalized environment for safer Zinnias when the Or is washout?

Speaker 2

Yes, I would. I mean, we've seen it pretty consistent in that 70%. I mean, DaVita is actually this Month or this quarter was or 2nd quarter, sorry, was 73%. It's interesting if you look at USRC, which is the largest of the MDOs, They're about an 80% reorder. But I think we feel pretty comfortable that you're going to be in the range in that 70% reorder rate.

Speaker 2

We've seen that pretty consistently Really since the launch. And I've been really pleased and Annabel, we've talked before. I've been incredibly pleased with that reorder rate. We don't get patient level data. We do look at reorder rates as a proxy for, call it, a really good patient experience.

Speaker 2

And we see this consistent month to month reordering by clinics that have started dosing patients.

Speaker 6

Okay, great. And if I could just squeeze in one more. I did notice that you expected Fresenius to be reordering by the end of the year. Is that changed from your expectation of seeing normalized inventories by mid year?

Speaker 2

No, I would say we've always I mean, we're looking at the growth trends on the quarter to quarter basis and we saw a 48% increase in the number of clinics now exhausting their initial Stock from Q3 and reordering that's roughly 7 20 clinics. If you see that growth continue, We would expect the majority of these clinics to have exhausted their inventory and reorder. And again, with the 70 plus percent reorder rate That we would fully expect, for percentage once they kind of normalize with that. I mean, it really forms a nice growth annuity As more and more patients kind of get this product. So we haven't come off of that.

Speaker 2

We're just kind of analyzing our growth rate And seeing if this continues, we feel pretty good about the majority of these clinics in the second half of the year exhausting their stock.

Speaker 6

Okay, great. Thank you.

Speaker 2

You're welcome.

Speaker 7

Thank you.

Operator

Our next question

Speaker 8

Hi, thanks for taking our question. Now that you're a couple of quarters into the launch, How are you thinking about potential monetization of the IV KORSUVA revenue stream? And what are some of the puts and takes that go into that decision?

Speaker 2

Hey, Joey. So if you are referring to the ex U. S. Royalty revenue, I think We haven't really been terribly specific about what we plan to do from a financing perspective on the non dilutive front. I mean, maybe Ryan,

Speaker 3

Yes. Joe, was that your question? Was it related to non ex U. S. Or were you talking about the U.

Speaker 3

S. Revenue stream?

Speaker 8

If you could comment on both, that would be helpful.

Speaker 2

Yes. I will let me take one off the table. On the U. S, that wasn't our focus. We're from a U.

Speaker 2

S. Perspective, I mean, we get 46% Of net sales essentially. And we're really in the initial quarters of this launch. And we feel there's Pretty significant upside. Now we'll have to see how CMS works itself out over the next couple of months.

Speaker 2

But where our focus has been From a financing side, Ryan, maybe you can comment on the ex U. S. Yes.

Speaker 3

So I think we are in a good position where we do actually have an asset that is generating cash and this is ex U. S. We've discussed in Chris' prepared remarks How well Europe is doing and how both CSL and ourselves are very excited about the potential for Europe going forward. So We are looking at opportunities to potentially monetize that. We also discussed the potential approval of Japan In the second half of the year, that's also another potential cash generating asset.

Speaker 3

So we've got a lot of options and we're hopeful That we can execute on those.

Speaker 8

Okay, great. Thanks for taking our question.

Operator

Our next question comes from the line of Sumant Karkarani of Canaccord Genuity.

Speaker 7

Good afternoon. Thanks for taking our questions. I have a few here. So at what point will you or your partner have a better handle on steady state utilization of KORSUVA IV, so you get the best possible reimbursement rates posted up Or how long do you think it would take to get to that rate?

Speaker 2

So Sumant, it's a tough question because really We're working with 1 payer essentially, right. CMS are the dominant payer in this ecosystem in dialysis. And understanding the funding is going to be really critical that will determine the future trajectory of this drug. And the final rule will be sometime later this year, we're in the 60 day comment period. I think Scott summed it up nice, Sumant.

Speaker 2

I mean, Yes, we found the proposed role. There are some positives there, right? I mean, they are adding additional funding and that's certainly a positive. Certainly moving the needle with CMS to provide access to innovation and properly fund it. But we do have some serious concerns around the reimbursement methodology that Scott Very clearly outlined that that would have an impact on funding and potentially could be a headwind for us.

Speaker 2

So I would say, Samad, it's a little too early to talk about the trajectory until we Fully understand the CMS final rule and what that could mean from a funding standpoint long term. I mean one thing that's really crystal clear to us Is that there is a significant unmet need and this drug is very effective and it actually makes a big difference in patients' lives. So as I said before, patients at the center of everything we do. I know I can speak for my partner there, CSL Vifor with regard to KORSUVA. And our focus during this comment period is really on addressing some of these reimbursement concerns around the proposed rule that they outlined.

Speaker 2

But also Importantly, as Scott said, requesting an extension of the TDAPA period, because we do know TDAPA has had As challenged some of the uptake with some physicians is, listen, I mean their experiences with Parsabiv And they're a little nervous that if they start patients on KORSUVA, they may have to stop them if funding is not available. So we're really focused On this, over these next, I would say 60 days till CMS publishes their final rule.

Speaker 7

Got it. And then given the Relative difficulty of figuring out an optimal utilization rate, what do you think an optimal number of years of extension of TDAPA Would you be asking for and when would you expect to get more clarity on that given CMS is already running a process?

Speaker 2

Sure. Let me give that to Scott to talk about our plan with the extension.

Speaker 5

Yes. Again, we think we have a strong argument that we should get a new TDAPA period, which is essentially 2 years, Because we need to have an amount of time where they can get the full ability to manage the utilization and get the Right. Patient access based on what the funding is going to be. With regard to when we would hear, we expect there's not A specific rule for how that would happen, but we would expect to hear and we would ask to hear in the November final rule what the plan was.

Speaker 7

Got it. Thanks.

Operator

Our next question comes from the line of David Amsellem of Piper Sandler.

Speaker 8

Hey, thanks. So I apologize if I missed any color here. But as you think about the Cash runway and the upcoming clinical milestones. Can you talk about how you're thinking about Oral DFK, strategically in terms of whether this is something you'd look to monetize in some way or keep it and commercialize it. I'm just trying to get a better sense of How are you thinking about the asset just given the cash runway and resource constraints.

Speaker 8

Thanks.

Speaker 3

Hi, David. This is Ryan. I'll start out and kind of give some color on our investment And then I'll pass it over to Chris to talk more about, the long term strategy for it. So The good news is, that we can fully fund diphila Kaplan in these 3 late stage programs, and that's critical. And that's what we actually are working on here at Cara.

Speaker 3

Obviously, CSL is running the launch for KORSUVA, But where we are spending our money, our investment is on these 3 programs. So in the guidance I gave you, those 3 programs, Atopic dermatitis, chronic kidney disease and natology peristaltic are fully funded. I'll pass it to Chris now to talk about How we think about it?

Speaker 2

Yes, David, I mean, we still remain very focused on developing these 2 franchises. From a commercialization standpoint, Yes, we've been very public in saying we would certainly look and we would look for ex U. S. Partners. We do not have an intention right now of Commercializing ex U.

Speaker 2

S. And I would remind you and I know you know this that we own the rights to oral diphala, Kathleen outright. So we would certainly look outside the U. S. For a partner.

Speaker 2

In the U. S, our intention is to stand up a commercial organization To maximize the potential of these products and do it alone.

Speaker 8

Okay. That's helpful. If I may sneak in one more, this is unrelated on Europe. Just remind us what pricing for the drug is? Obviously, it varies market to market, but, how should we think about pricing in Europe in the big markets at least relative to the U.

Speaker 8

S?

Speaker 2

Yes. I mean, so David, you're right. I mean, it varies market to market. What I can tell you in Germany, for example, The price per vial, I believe, is around €48 per vial. So kind of a third of what we have in the U.

Speaker 2

S. It's probably a good way to think about it. I think where we're really encouraged in Europe is the patient population in the EU 5 predominantly is not that dissimilar to the U. S. And we're seeing Ryan alluded to it earlier, we're Pretty good uptake, a very good uptake actually since we launched in Germany in the Q4 last year in terms of both growth in patient sales.

Speaker 2

So We're actually really encouraged what we're seeing. Reimbursement is very different. Again, you don't have a TDAPA sort of system or a cliff, So to speak on TADAPA. So and CSL has got a very good commercial footprint executing really nicely.

Speaker 8

Okay. That's helpful. Thank you.

Speaker 2

Thanks, David.

Operator

Our next question comes from the line of Jason Gerberry of Bank of America Securities.

Speaker 9

Hey, this is Chi on for Jason. Thanks for taking the questions. I guess, regarding the comment about you expect to hear back from CMS on Any update or change to the proposal in the final ruling sometime this fallwinter. Can you remind us some sort of like, if you do get the if you do or do not get the addition of the DAPA, You help us understand, say, if you do not get the addition of the DAPA, how do you think about consensus estimate doubling the sales In 2024 versus 2023, what I'm trying to get at is if the reimbursement mechanism is such that The CMS will look at the prior year utilizations, apply 35% haircut to it. I'm just trying to understand, do dialysis centers just simply have to give up other treatments in order to make way for volume?

Speaker 9

I'm just trying to get a sense of sort of the disconnect between what consensus is forecasting versus the CMS proposal. And So to the extent that you can provide that color, that would be great. And then I'll follow-up after that.

Speaker 2

Sure, Chi. I won't comment on consensus necessarily, but I think your analysis on how this works within a capitated system is correct. If nothing's changed, The onus is on the dialysis facilities to fund the product And actually compensate for it by looking at other avenues within that bundled rate. So what we expect and what I say what we're doing is Working with CMS now in this comment period and Scott mentioned earlier around voicing our concerns with the reimbursement The methodology, we have some concerns around how they're going to calculate the additional funding, but let's be clear, there is going to be funding added to the bundle under proposed rule. And when we kind of understand where CMS is going to land with that, As well as the extra TDAPA period that Scott mentioned, we'll have a better sense of the trajectory Of this drug based on the ability of dialysis facilities to resource it.

Speaker 2

And that will be critical and that will determine kind of the future of this drug. And again, we're encouraged that Encourage, I would say we're confident that we have a strong case for additional to DAPA time that Scott mentioned. We're certainly not going to handicap that at this point. I mean, we are working closely with CMS or at least providing comments to them and we'll engage with them during this period of time.

Speaker 9

So help me maybe help me understand here. So you have a 60 day comment period And then you have this proposal coming out sometime in October, November. Is that sort of like a two way dialogue between you and CMS? Or Is it sort of more like you submit a comment and you won't hear back anything until October, November timeframe? Just help us think about So that the level of visibility you have between now and when the final proposal comes out.

Speaker 5

Sure. Let me give it to Scott. Yes. So We'll be providing as you said, we'll be providing comments during the 60 day period. We will engage with CMS to provide more information.

Speaker 5

We would not expect to get anything back from them before the rule. They're in a comment period. They have rules they have We wouldn't expect there'd be any information back directly to us or certainly publicly, before that November rule came out.

Speaker 9

Okay. Maybe just one last one from me. Can you talk about remind us sort of The connection between the manufacturing supply revenue on KORSUVA and the revenue recognition of IV KORSUVA, It looks like manufacturing supply revenue looks a little light this quarter. And but yes, those are sequential increase in the revenue. So is it just the nature of lumpiness or does it like sort of like Is there any way a leading indicator of TeleFly how much IV core super people will order from Cara?

Speaker 3

Chi, this is Ryan. Thanks for your question. I would start by saying they're really disconnected in the short term. The commercial supply revenue is basically us shipping vials to Vifor based on The release from quality because we're basically we're acting as the manufacturing CRO4v4. And as we get vials released from quality, we ship them immediately to V4 under a PO.

Speaker 3

So there's no connection to short term demand. And as you know, the IV KORSUVA revenue is based on shipments from Vifor To the wholesalers, and that's how we recognize revenue. So you're correct in the sense that this shipment of commercial supply revenue was down from the prior quarter, but that Simply based on the QA releases we get from our provider.

Speaker 9

Okay, great. Thanks for answering the questions.

Speaker 2

Thanks, Chew. No problem.

Operator

Thank you. I would now like to turn the conference back to

Speaker 2

Sir? Thank you, Latif. Well, thanks everyone for joining us today, and I just wish everybody a great afternoon.

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Earnings Conference Call
Cara Therapeutics Q2 2023
00:00 / 00:00