Cara Therapeutics (NASDAQ:CARA)

CARA) started out in life as a company developing alternative pain medications. These days, it’s refined its pipeline to deal with pruritus, which is a fancy medical term for itching.

Constant itchiness can be a big health and quality of life problem, and the causes aren’t always dermatological. A wide variety of conditions can cause a constant, sometimes severe itch.

That includes millions of people in the US with chronic kidney disease. It can cause extremely itchy skin, especially in end stage disease requiring dialysis.

Cara is developing a drug called CR845 to treat chronic kidney disease related pruritus. The drug targets Kappa opioid receptors without producing the addictive side effects of other opioid drugs. Cara was previously developing CR845 for pain management, however, the drug failed in this application.

But CR845 has shown much better results in chronic kidney disease related pruritus. In Phase 3 trials, the compound demonstrated a significant itching reduction in injected patients versus placebo in patients with chronic kidney disease who were on dialysis and had moderate to severe pruritus. The reduction in itch proved to be a big improvement in patient quality of life.

Close to half a million people in the US are on dialysis for renal disease. Of these, some 40% suffer from pruritus. This means Cara has a big market it can target should the FDA approve its drug on its PDUFA date of August 23rd, 2021.

Moreover, the company could one day also target the much larger non dialysis dependent chronic kidney disease segment, which is some 30 million people. In this population, approximately 40% also suffer from moderate to severe pruritus. Cara is planning to put an oral form of CR845 into Phase 3 clinical trials in this group in the second half of the year. Moreover, the company plans to initiate an additional Phase 3 trial in atopic dermatitis at the end of the year. It also expects to report top line Phase 2 data in pruritus associated with liver disease in the second half of this year.

If approved, CR845 will be the first drug specifically approved for this indication. It’s mechanism of action is also unique compared to things like topical steroids: it directly interacts with the cellular receptors responsible for transmitting that itching feeling. The market size for this drug, just in the dialysis patient population, could be larger than Cara’s current market cap.

Overseas, Cara would also be in line for large milestone payments if CR845 is approved in Europe and Japan. Vifor Fresenius has licensed the drug for the EU, and the deal includes up to $440 million in commercial milestone payments as well as tiered sales royalties. In Japan, Maruishi Pharmaceutical is also licensing the drug and paying Cara on a tiered royalty basis, along with $10 million in commercial milestone commitments. The large size of these deals underscores the large market potential of Cara’s drug.

Increasing option activity may be sign of drug development revelation.

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