Cara Therapeutics, Inc. (NASDAQ:CARA) Q3 2023 Earnings Call Transcript

Cara Therapeutics, Inc. (NASDAQ:CARA) Q3 2023 Earnings Call Transcript November 13, 2023

Cara Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.52 EPS, expectations were $-0.5.

Operator: Good afternoon. My name is Latif 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. [Operator Instructions] Please be advised that this call is being recorded. I would now like to introduce Matt Murphy, Cara’s Manager of Investor Relations. Mr. Murphy, you may begin your call.

Matt Murphy: Thank you, Operator, and good afternoon. After market closed today, Cara issued a news release announcing the company’s financial and operating results for the third quarter of 2023. Copies of this news release and the associated SEC filing can be found in the investor section of our website at www.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. 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-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 30, 2023. That said, I’d like to turn the call over to Chris Posner, Cara’s Chief Executive Officer. Chris?

Chris Posner: Thanks, Matt. Good afternoon, everyone, and thank you for joining our call. With me today are Ryan Maynard, our Chief Financial Officer; Dr. Joana Goncalves, our Chief Medical Officer; and Scott Terrillion, 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 difelikefalin. 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 difelikefalin pipeline.

Next, I will discuss the progress in our three late-stage programs including expectations for Part A of our KIND 1 atopic dermatitis study, which is scheduled to read out in December of this year. Finally, I will address the performance of KORSUVA injection in the US and discuss the recently released 2024 ESRD 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-US royalties for KORSUVA injection and Kapruvia. On November 1st, we entered into a royalty interest purchase and sale agreement with Healthcare Royalty. Under the terms of the agreement, Cara received an initial payment of $17.5 million less certain expenses.

We will receive an additional payment of $20 million upon Kapruvia receiving a certain minimum price in Germany, which is expected to occur this quarter. In addition, Cara will receive a $2.5 million milestone payment based upon achieving certain 2024 performance levels of KORSUVA in Japan. In exchange, Healthcare Royalty will receive all royalties due to Cara from KORSUVA injection and Kapruvia ex-US license agreements with CSL Vifor and Maruishi. The aggregate royalty payments to Healthcare Royalty are capped at two times the payment to Cara if received before the end of 2029. Otherwise, the payments are capped at 2.8 times after which Cara will resume receiving all royalties from both CSL Vifor and Maruishi. The arrangement with Healthcare Royalty specifically excludes KORSUVA injection in the US and all of Cara’s oral difelikefalin 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 Cara. 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 difelikefalin catheter pipeline and start to display the underappreciated value in Cara. Next, let me discuss the progress of our multiple late-stage pipeline programs. First, our Phase 3 KIND 1 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 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 US. In recent years, there has been significant investments and innovation in the treatment of moderate to severe AD, resulting in the development and approval of new biologics and JAK inhibitors. Despite these developments, a large segment of the AD market remains underserved. We are targeting roughly one-quarter of the total AD market. These are mild to moderate AD patients with moderate to severe itch, also referred to as itch-dominant AD. Numerically, that’s about 3 million addressable itch-dominant patients in the US, 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 the debilitating itch in these patients. Our KIND program is tailored to specifically address this unmet need for a targeted oral anti-pruritic treatment for mild to moderate AD 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 1 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 difelikefalin in our KARE Phase 2 monotherapy trial. In contrast to our Phase 2 trial, our Phase 3 KIND program is designed to mimic likely future real-world utilization in patients. Difelikefalin is used on top of mid-potent TCS and compared to TCS alone, an active comparator. With this higher clinical hurdle and four treatment arms, Part A of KIND 1 is not powered for statistical significance. We have enrolled 287 patients with the intent to select the most favorable dosage strength and determine the sample size for the confirmatory part of the Phase 3 program. The KIND 1 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 1 Part B and KIND 2 studies. The patient enrollment criteria, study conduct, and end points in the confirmatory studies are expected to be the same as for KIND 1 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 1 Part A with you in the near future. Now turning to our other two late-stage programs that also target sizable patient populations with a lack of treatment options. Enrollment in our Phase 3 KICK 1 and 2 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 KORSUVA injection validated this mechanism, laying the foundation for our nephrology franchise. We see a natural extension of difelikefalin into earlier stage patients with the oral formulation. There are roughly 300,000 pre-dialysis advanced stage CKD patients who suffer from moderate to severe pruritus in the US alone. Importantly, these patients do not fall under the capitated reimbursement system that covers dialysis patients. Hence, we see a significant commercial opportunity in this underserved patient population. Our Phase 2/3 KOURAGE 1 trial in notalgia paresthetica is tracking to its first data readout of Part A in the second half of 2024. With no approved therapies and an addressable population of at least 650,000 patients in the US who are under the care of a provider, most often a dermatologist, we believe oral difelikefalin has the potential to unlock a sizable, new market in dermatology.

Now let me turn to the performance of KORSUVA injection in the US. For the third quarter of 2023, net sales for KORSUVA were $4.4 million, translating into $1.9 million of profit recorded as revenue to Cara. Wholesaler shipments to dialysis clinics totaled 91,000 vials, a 36% increase from the prior quarter. 68% of these vials 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 62,000 vials. By the end of the third quarter, over 1,000 Fresenius clinics, or 37%, have placed reorders. That’s up from 27% at the end of the second quarter. Additionally, 1,478 clinics, or 55%, had dosed at least one patient at the end of the third quarter.

Importantly, following the ESRD prospective payment system rule, Fresenius decided to reallocate remaining inventory that was shipped in the third quarter of 2022 within its network of clinics. As a result, we expect shipments from CSL Vifor to wholesalers to be small in the fourth quarter of this year and the first quarter of 2024, translating into minimal revenues accrued to Cara in these quarters. At DaVita, we continue to observe steady growth in demand. Orders grew by 20% quarter-to-quarter to 13,000 vials. Over 500 clinics or 19% had ordered KORSUVA at the end of the third quarter. That’s up from 15% at the end of the second quarter. Reorder rates remain 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-size and independent dialysis organizations, KORSUVA utilization continued its momentum. Orders grew by 47% quarter-to-quarter to over 16,000 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. US renal care remains the largest buyer of KORSUVA in the MDO/IDO segments. Approximately 80% of USRC clinics had ordered KORSUVA by the end of the third quarter, and 83% of these clinics had placed repeat orders. Overall, our expectations for KORSUVA injection are now greatly reduced, but we remain confident in the mechanism of action and benefit of KORSUVA.

The provider and patient feedback for KORSUVA remains highly positive, and its 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 KORSUVA, even with its TDAPA designation, stem from the unique capitated dialysis reimbursement system in the US, 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 TDAPA period for KORSUVA. 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 KORSUVA and other innovative drugs with TDAPA designation in the future.

As a result, we now believe that KORSUVA’s commercial potential will be meaningfully lower than we previously expected. However, Cara fundamentally is a development company, and our greatest source of value is our wholly-owned oral difelikefalin pipeline. We remain laser-focused on maintaining a strong balance sheet and driving progress in our three late-stage programs to deliver value catalysts ahead. I would now like to turn it over to Ryan for additional details on our third quarter financial results. Over to you, Ryan.

Ryan Maynard: Thank you, 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-US 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 have 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 30th, 2023, 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 CSL Vifor’s net sales of KORSUVA injection to third parties, $1.4 million from the milestone payment earned from Maruishi for marketing and approval of KORSUVA injection in Japan, $1.3 million of commercial supply revenue, and finally $167,000 of royalty revenue representing all royalties from the net sales of Kapruvia 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 30, 2023, compared to $3.1 million for the same period in 2022. As a reminder, cost of goods sold relates to our shipments of KORSUVA injection to CSL Vifor.

Research and development expenses were $25.5 million for the three months ended September 30, 2023, compared to $24.7 million in the same period of 2022. The slight increase in R&D expenses is primarily due to the increased clinical trial spend related to our 3 late-stage clinical programs offset by a decrease in stock-based compensation expense. Also, R&D expenses for the three months ended September 30, 2022, included $5 million related to a milestone paid to Enteris Biopharma Inc. General administrative expenses were essentially flat at $6.8 million for the three months ended September 30, 2023, compared to $6.9 million in the same period of 2022. Cash, cash equivalents and marketable securities at September 30th, 2023, totaled $83.3 million compared to $101.7 million at June 30, 2023.

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-sales marketable securities, including the proceeds from our recently announced royalty financing and the collaborative revenue from our share of profit from KORSUVA, will be sufficient to fund our currently anticipated operating plan into 2025. Now back to you, Chris.

Chris Posner : Thanks, Ryan. So in summary, I want to highlight the tremendous opportunity we see within our company. Cara’s oral difelikefalin franchise has significant potential, and we know that the innovation in this product delivers value when used. We have three late-stage programs in sizable indications, 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 1 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, Latif, you can open up the line of Q&A.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Joseph Stringer of Needham & Company.

Joseph Stringer: Hi, thanks for taking our questions. Just on KICK 1 and KICK 2, can you provide any more detail on some of the enrollment metrics? You mentioned that enrollment is tracking well and you’re on schedule for top line readouts we have next year, but just curious on-screen failure rates, are those in line with expectations and what are some of the most common reasons for, say, a screening failure? And then, any plans to open additional target sites for either of those?

Chris Posner: Yeah. Hey, Joey, thanks for the question. Let me give that to Joe and she can address some of that.

Joana Goncalves: Hi Joey, yeah. So as Chris had mentioned earlier, so we are on track as per our anticipation of how the study should be running. We don’t typically give any details regarding the metrics. So at this stage, won’t comment on that, but I’m very pleased with it and on track with the readout next year.

Joseph Stringer: Okay, great. Thanks for taking our question.

Chris Posner: Thanks, Joey.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Dennis Ding of Jefferies.

Unidentified Analyst: Hi, this is [Anthea] (ph) on for Dennis. Thanks for taking our questions. Two from us. First, what is your commercial strategy post-TDAPA and what is the best way to maximize KORSUVA value for shareholders in your view post CMS decision? And then secondly, what are any additional ways to extend cash runway beyond the Royalty deal recently announced that you’re looking at? Thank you.

Chris Posner: Thanks, Anthea. Yeah, so let me tackle the first one. So here’s our expectation. First of all, let me just say we have a really great partner in CSL Vifor in the US. 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 Vifor quite frankly, and that will 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 to Ryan.

Ryan Maynard: Yeah, I’ll take that one. So we are 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 1 and KICK 2 readouts next year, as well as Part A for the notalgia paresthetica. 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.

Unidentified Analyst: Okay, thank you very much.

Chris Posner: Thanks, Anthea.

Operator: Thank you. Our next question comes from the line of Sumant Kulkarni of Canaccord Genuity.

Sumant Kulkarni: Good afternoon, thanks for taking our questions. I have two. So the first is on your oral difelikefalin program for advanced CKD. Clearly reimbursement dynamics are very different for this market versus for the dialysis market on IV KORSUVA. But how confident are you in the commercial potential for treating itch in non-dialysis CKD, given this dynamic, and how are you internally prioritizing your dollars for this indication versus AD and NP, because of what happened with the dialysis market here?

Chris Posner: Yeah, well I think your first question, Sumant, is around the different reimbursement ecosystems that both play in. I mean, KORSUVA injection obviously plays in the most unique of reimbursement systems and we 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 difelikefalin and advanced CKD will launch into. It’s more of a — what we’re used to, more of a traditional retail pharmaceutical market. We’re really very bullish on advanced CKD. Again, we estimate the addressable population of around 300,000. There’s roughly 1.2 million Stage 4 and 5, and around 30% of them are identified to have moderate severe itch. I think the other thing we’ve learned even marketing to nephrologists or CSL is that you know there is a significant unmet need.

And these patients with this debilitating severe itch have significant implications on their quality of life. So, listen, end of the day, if funding were available for KORSUVA injection, we think that product would have a very long runway. With oral difelikefalin, we’re really pleased. I think your other question though you asked around AD and how we prioritize AD, notalgia paresthetica and CKD, I mean, if you’re 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’s no available treatments. We would be the first FDA-approved treatments across these three indications. It’s 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.

Sumant Kulkarni: And then as you go into Part A of KIND 1, what exactly do you expect to report externally? Given Part A is not powered for statistical significance, I think you use the term that it would be a ‘good proxy’ for Part B. So what would be a good outcome on Part A and what might not be a good outcome?

Chris Posner: Sure. Let me turn that to Joe.

Joana Goncalves: Hey. Thanks, Sumant. So for Part A, it’s designed really as to gather additional information for our pivotal program. So 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 dose for moving forward to the pivotal program. So that’s exactly what we intend to use that data for. So we’re comfortable with the patient numbers and what we can [glean from that] (ph).

Sumant Kulkarni: Thank you.

Chris Posner: Thanks, Sumant.

Operator: Thank you. Our next question comes from the line of David Amsellem of Piper Sandler.

Unidentified Analyst: Hey, thanks. This is [Tim] (ph) David. Just two from me. First, could you provide some color on the inventory burn that we should expect 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 of quarter, we want to [get up] (ph) there. And then second and relatedly, how does this tie into your thinking around your cash flow runway? I know this was asked before, so I guess I’ll ask more directly, is monetizing or oral DFK in some way on the table? Thanks.

Chris Posner: Super. So let me address the first one around the inventory. I mean, listen, I mentioned on the call, given the rule, 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 1,000 clinics that have not started a patient on yet and are actually reallocating that to the clinics that are. So net-net what that’s going to mean is, I mentioned the next two quarters you’re going to see further disconnection in terms of demand and sales especially at the 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 that’s a big takeaway. And on the cash runway, let me…

Ryan Maynard: Yeah. So I think to kind of answer the second part of your cash runway question first, we’ve always been very explicit that we are not going to stand up a ex-US sales force for oral difelikefalin. So yes, we are looking to continue that effort to find a partner for ex-US for oral difelikefalin. So that is a part of our plan. Obviously, it’s not included in my cash runway that I gave you.

Unidentified Analyst: Okay, great, thank you.

Operator: Thank you. Our next question comes from the line of Annabel Samimy of Stifel. Please go ahead, Annabel.

Annabel Samimy: Hi, thanks for taking my question. I just wanted to get a little bit more granular on what you might report out for the KIND program. So I realize that you’re not powered for statistical significance, but are you at least going to disclose the thresholds that you are looking at to have made a go/no-go decision on whatever dose it is or the sample size that you’re looking at? Is it the standard WNRS scores on an absolute basis or on a response rate basis, are we going to see any of that kind of data? Or is it just dose and trial size or statistical powering and that’s it? And then the second question I have is, I guess, you mentioned that 80% of your enrolled patients have a body surface area of less than 10%. So that means it’s dominant. Like, do you have any expectation that the patients with a greater than 10% body surface area might skew things in any strange way? Or do you feel like you’ve had enough to sort of offset some of that? Thanks.

Chris Posner: No, absolutely, Annabel. Great question. Let me turn it to Joe.

Joana Goncalves: Thank you, Annabel. So first on what we report out, we intend to report out the top line efficacy and safety data. So more than what we had originally stated of just the dose and the sample size. So sort of the typical top line data that we have provided. So that includes the 4-point Responder Analysis. And then to address your second question, indeed, we’ve always targeted this mild to moderate patient population who are very itchy, that is the itch-dominant phenotype, as that is what we saw the greatest signal in, and we’re very happy and pleased by enriching the study that we have landed with 80% of the patient population having a body surface area of less than 10%. Notably, this study is different to our care program in the sense that we are now adding difelikefalin to topical corticosteroids.

So the patients who have a greater than 10% body surface area now have a topical corticosteroid to address their skin lesions and as such bring the atopic dermatitis down to a milder form and really represent a itch dominant AD. So we feel comfortable with that. And in addition, just the mechanism of action of difelikefalin being differentiated from the topical corticosteroid as predominantly neuromodulatory in AD, we believe that it could have an additive benefit to these patients. So quite comfortable with that additional patient population who may have greater than 10% body surface area.

Annabel Samimy: Okay, great. That’s very helpful. And if I could just clarify for KORSUVA injection, should we just assume that post-April, the dialysis providers just won’t be incentivized to use it regardless of whether their patients are responding to treatment or asking for the treatment. Is it just not something that they’ll be willing to purchase because they’re not getting the right reimbursement?

Chris Posner: Well, Annabel, I think at the 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 Parsabiv world a couple years ago where you saw significant policy decisions being made at the DO level, i.e. restricting or even stopping access to this drug. I mean Vifor 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 DO level to severely limit access, which is incredibly unfortunate given the reports we’ve heard with the patients on this drug. Incredibly disappointing.

Annabel Samimy: Yeah. Okay. Great, thank you.

Chris Posner: Yep.

Operator: Thank you. Our next question comes from the line of Oren Livnat of H.C. Wainwright.

Oren Livnat: Thanks for taking my question. I want to focus on the upcoming KIND 1 Part A data just to build on, I guess, Annabel’s question and others before. Can you help us now with any sort of theoretical expectations around what a clinically meaningful improvement in pruritis would even look like in this population interview or based on the conversations with KOLs? I’m thinking we’ve all seen data in labels for older or more recent biologics or maybe JECs, and I’m trying to understand if the difference in this population, the characteristics, and perhaps being 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? Because I know you’re not hard for stats, but I’m just trying to figure out what even this magnitude of price reduction from baseline is even expected this kind of population.

Chris Posner: Absolutely, let me give that to Joe, Oren.

Joana Goncalves: Thanks, Oren, it’s a 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 1 Part A has not been investigated before in clinical studies. This is mild to moderate patients who are very itchy. It’s an itch dominant patient population. So we cannot use prior history from biological JAK studies, those are only approved for moderate to severe. So having said that, we are conducting this study to have a better understanding of what the data would look like, right, so that it can inform us for our pivotal program. Of course, our primary endpoint is looking at the 4-point Responder Analysis, which is key, but we have not powered the 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 vetted by dermatologists, but key opinion leaders as well as community derms. But those are internal thresholds which will guide us. So this data is really unique data which we need to learn from to apply to our pivotal program.

Oren Livnat: So clearly this is a go, no go based on your own and your KOL’s input on what’s clinically meaningful. I guess when we think about projecting forward, is this more of a commercial hurdle, what is in fact clinically meaningful, or do you think it’s regulatory, such that if you could power this up enough to get [indescribable] on a small improvement on — relative improvement on pruritus versus TCS, is that still likely an approvable product in your mind? And just a question of you know how the commercial uptake would be or do you think there is in fact an FDA hurdle?

Chris Posner: I’ll let Joe tackle the first on the regulatory side and I’ll tackle this commercial side.

Joana Goncalves: Yeah, so from a regulatory perspective, we know what we need to do in our pivotal program, and that’s a 4-point response. We need to demonstrate that that is statistically significant from our comparator. The regulators have assessed the 4-point as what is clinically meaningful. So that’s from a regulatory perspective, and that’s what our pivotal program will demonstrate. Our first part of the program is really to provide us with the information to be able to ensure that the pivotal program is designed accordingly and powered accordingly so that we can achieve that and achieve regulatory success.

Chris Posner: Yeah, I’d say on the commercial side, where we’re very excited is the position that is both our clinical and commercial position, quite frankly, and that’s in the mild to moderate space with these patients being incredibly itchy. In fact, chronic pruritus is the most dominant feature in the mild to moderate space. Lesions aren’t necessarily their biggest concern, severe itch, and it’s chronic. What’s currently being used are topicals, 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 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 program is 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.

Oren Livnat: All right. Thank you. I look forward to the data.

Chris Posner: You got it.

Operator: Thank you. I would now like to turn the conference back to Chris Posner for closing remarks. Sir?

Chris Posner : Yes, I’d like to wish everybody a great evening and hopefully a great upcoming holiday.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.