Cara Therapeutics, Inc. — FY 2015 Form 10-K
Filing identity: The supplied filing is for Cara Therapeutics, Inc. (NASDAQ: CARA), not Tvardi Therapeutics, Inc. It covers the fiscal year ended December 31, 2015; the filing was signed March 10, 2016. The requested “2015 Q4” information is included as unaudited quarterly data within the annual report.
Business context and reporting period
Cara was a clinical-stage biopharmaceutical company developing treatments for pain and pruritus. Its lead candidates were intravenous and oral CR845, selective peripheral kappa opioid receptor agonists; CR701 was in preclinical development. The company had no products approved for sale and generated no product-sales revenue. Revenue to date came primarily from license and collaboration arrangements.
Financial results and liquidity
| Metric | FY 2015 | FY 2014 |
|---|---|---|
| Total revenue | $3.803 million | $3.177 million |
| Research and development expense | $21.221 million | $15.068 million |
| General and administrative expense | $7.770 million | $6.181 million |
| Operating loss | $25.188 million | $18.072 million |
| Net loss | $24.690 million | $17.745 million |
| Net loss per share | $1.00 | $0.85 |
| Net cash used in operating activities | $21.478 million | $17.642 million |
Fourth-quarter 2015 revenue was zero, net loss was $9.530 million, and basic and diluted loss per share was $0.35. Annual revenue rose 20%, but remained small relative to operating expenses and reflected collaboration milestones and deferred collaboration revenue, not product sales. R&D spending increased 41%, principally with advancing I.V. CR845 and the Oral CR845 osteoarthritis study. No meaningful product gross margin was reported because the company had no product sales.
At year-end, cash and cash equivalents were $15.101 million and available-for-sale marketable securities were $91.640 million, totaling $106.740 million in unrestricted cash and investments. Total assets were $110.897 million, total liabilities $5.853 million, and stockholders’ equity $105.044 million. The balance sheet reported no debt; prior convertible notes and term debt had been converted or repaid before 2015. Operating cash outflow was funded in part by $75.231 million of net proceeds from the August 2015 follow-on offering. Investing cash outflow of $91.677 million primarily reflected purchases of marketable securities.
Management estimated that year-end cash and marketable securities would fund planned operating expenses and capital expenditures through the end of Q1 2018, excluding any potential collaboration milestones. This estimate depended on clinical-development timing and cost assumptions; management also said additional capital would be needed for all development objectives, particularly Oral CR845 and uremic pruritus.
Material changes versus the prior comparable period
- Revenue increased from $3.177 million to $3.803 million, while net loss widened from $17.745 million to $24.690 million.
- R&D expense rose by $6.153 million and G&A expense by $1.589 million.
- Cash, cash equivalents and marketable securities increased from $52.663 million to $106.740 million, mainly following the 2015 follow-on offering; cash and cash equivalents alone declined because funds were invested in marketable securities.
- In September 2015, Cara initiated a Phase 3 adaptive pivotal trial of I.V. CR845 for postoperative pain. In December, it reported positive top-line Phase 2a Oral CR845 osteoarthritis results.
Outlook, risks and unusual items
- Clinical hold: In February 2016, after year-end, the FDA placed the I.V. CR845 postoperative-pain pivotal trial on IND clinical hold pending a safety review. Four of 90 dosed patients, all in the highest dose group, had transient serum sodium levels at or above 150 mmol/L; the filing reports that they were asymptomatic and levels normalized within 24 hours with standard fluid management. The company anticipated resuming the trial after FDA review and hold removal; neither outcome was assured.
- Development plans: Subject to FDA feedback, Cara planned to initiate a Phase 2/3 adaptive pivotal trial of I.V. CR845 for uremic pruritus in the first half of 2016 and a Phase 2b Oral CR845 osteoarthritis trial in the second half of 2016. These are forward-looking plans, not results.
- Other clinical data: Cara reported statistically significant itch reduction and quality-of-life improvement in its Phase 2 uremic-pruritus study. Its Oral CR845 Phase 2a osteoarthritis study reported up to a 34% reduction in mean baseline pain score after two weeks and an approximately 80% reduction in rescue medication use in the highest-dose group.
- Funding and execution risks: The company expected ongoing losses and increasing development costs, and may need additional financing. Clinical failure or delay, the FDA hold, safety findings including hypernatremia associated with aquaresis, manufacturing and CRO dependence, competition, reimbursement, and partner performance could adversely affect prospects.
- Commercialization and partnerships: Cara planned a U.S. hospital-focused sales organization for I.V. CR845 if approved, while relying on partners for Japan and South Korea. Maruishi and CKD agreements provide potential future milestones and royalties, but no royalties had been earned by year-end.
- Other obligations: The company signed a new Stamford lease in December 2015, with total disclosed future minimum payments of $8.364 million; combined disclosed lease commitments were $10.017 million. It reported no material pending legal proceedings and no off-balance-sheet arrangements.
Most important facts for an investor to verify
- FDA actions and the eventual status, protocol, dose selection and safety findings for the I.V. CR845 postoperative-pain trial placed on hold after year-end.
- Whether the reported Oral CR845 and uremic-pruritus results are confirmed in larger, controlled pivotal studies.
- Actual cash burn, marketable-security availability and whether the stated Q1 2018 runway remains achievable given trial costs and timing.
- Funding needs, potential dilution, and the timing and conditions of collaboration milestones; no product revenue or royalties were reported.
- Whether CR845’s sodium and fluid-balance effects affect trial design, labeling, regulatory approval or commercial use.