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Cara Therapeutics Inc (NASDAQ:CARA)
Q2 2020 Earnings Call
Aug 10, 2020, 6:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to Cara Therapeutics Second Quarter 2020 Financial Results Conference Call.

[Operator Instructions]

I would now like to turn the call over to the Cara team. Please proceed.

Jack Hildick-Smith -- Investor Relations, Stern Investor Relations, Inc.

Good afternoon.

This is Jack Hildick-Smith with Stern Investor Relations, and welcome to Cara Therapeutics Second Quarter 2020 Financial Results and Update Conference Call. The news release became available just after 4:00 PM today and can be found on our website at www.caratherapeutics.com. You may also listen to a live webcast and replay of today's call on the Investors section of the website.

Before we begin, let me remind you that statements made on today's call regarding matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include statements concerning the expected timing of the data readouts from the company's ongoing clinical trials, the potential results of ongoing clinical trials, timing of future regulatory and development milestones of the company's product candidates including the company's projected time line for the submission of its first NDA, the potential for the company's product candidates to be alternatives in the therapeutic areas investigated, and the company's expected cash reach. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

Risks are described more fully in Cara Therapeutics filings with the Securities and Exchange Commission, including the Risk Factors section of the company's most recently filed quarterly report on Form 10-Q and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made in today's call speak only as of the date on which they were made. Cara Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Participating on today's call are Dr. Derek Chalmers, Cara President and CEO, and Mr. Rick Makara, VP and Head of Accounting.

I'll now turn the call over to Dr. Chalmers.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thank you, Jack. Good afternoon, everybody, and thanks for joining us this afternoon.

So in the second quarter, we have made significant advancements in our development programs for both KORSUVA Injection and Oral KORSUVA across a range of pruritic indications. In April, we were pleased to report positive top-line data from the KALM-2 trial, our second pivotal Phase 3 trial of KORSUVA Injection, for chronic kidney disease-associated pruritus, or CKD-aP in hemodialysis patients. The robust antipruritic efficacy of KORSUVA Injection in this study was consistent with that observed in our first Phase 3 KALM-1 trial, and we remain on track to submit our NDA in the fourth quarter of this year.

We're also making good progress in advancing the development of Oral KORSUVA across a number of patient populations where pruritus continues to be a significant unmet need. Recently, in Q2, we completed a planned interim statistical analysis of our KARE Phase 2 dose-ranging trial of Oral KORSUVA for the treatment of moderate-to-severe pruritus in atopic dermatitis patients. The sample size adjustment post analysis of approximately 28% will allow us to maintain the prespecified desired statistical powering of that study, and we project to complete enrollment in the fourth quarter of this year.

Due to the ongoing COVID-19 pandemic and in accordance with the FDA's updated guidance for conducting clinical trials, we have implemented numerous clinical and operational measures to prioritize the health and safety of patients, of our employees and study investigators, and minimize potential disruptions to our ongoing clinical studies. Although we experienced some COVID-related closure of certain clinical sites for ongoing Phase 2 studies in Q2, due to the entire Cara team's continued dedication and very hard work, we've now completed all clinical trials and closed all databases for our NDA submission, and we continued to enroll patients across ongoing Oral KORSUVA trials.

Now let me share an overview of each of our ongoing programs, starting with our lead program for KORSUVA Injection in hemodialysis patients. So as a reminder, this is a patient population where approximately 40% to 50% of patients suffer from moderate-to-severe pruritus. Per the National Kidney Foundation, there are over 500,000 patients on dialysis in the US and approximately 60% experience some form of pruritus. Pruritus can severely worsen patients' quality of life, including sleep disturbances, depression and anxiety, and it's also associated with increased morbidity and mortality in severe patients. There is still significant unmet need with no therapies currently approved in the US or Europe. So we believe KORSUVA Injection has significant potential to change the treatment paradigm for these specific patients.

Our pivotal program includes four Phase 3 studies, KALM-1, a US efficacy trial, which read out positive top-line data last year, KALM-2, a global efficacy trial, which read out positive top-line data in April of this year, and two open-label safety trials. Both KALM-1 and KALM-2 were designed to investigate the efficacy of KORSUVA Injection at a dose of 0.5 micrograms per kilo versus placebo, administered three times per week after scheduled dialysis sessions over a 12-week treatment period. Both Phase 3 trials achieved statistical significance on both the primary and key secondary endpoints. And in both pivotal, KORSUVA Injection was generally well tolerated with a safety profile consistent with our prior clinical trials. All safety databases for our Phase 3 program are now closed with total safety exposures in excess of ICH guidelines to support the NDA submission, with more than 1,500 total patient exposures achieved, including more than 700 patients completing at least six months of continuous treatment and greater than 400 patients completing one year of treatment.

Our focus now at Cara is on preparing our NDA package for submission to the FDA next quarter, at which point we will also be applying for priority review status as, of course, KORSUVA Injection has breakthrough therapy designation for this indication. Pending approval, we're planning for KORSUVA Injection commercial launch in the US as early as next year, and we're focused on executing a cross-functional plan to ensure commercial preparedness. We already established a national MSL group at Cara, and they've been innovative and working hard even in the present COVID environment, employing virtual format symposia and engaging KOLs electronically in an effort to increase awareness of CKD-aP through disease education. We've also established a commercial manufacturing agreement for KORSUVA Injection, and we've begun to fill senior positions in sales and marketing.

Outside of the US, we've established commercial license agreements in other major commercial markets, including the EU, Japan and South Korea. In the EU, our agreement with Vifor Fresenius allows us to leverage both the nephrology-focused expertise of the Vifor sales force and Fresenius's broad reach to dialysis patients across Europe. Vifor Fresenius are planning to submit for a marketing authorization approval to the EMA shortly after we complete the NDA submission next quarter. We're very pleased with the consistent, robust results across our KALM Phase 3 program, and we're now focused on finalizing our NDA package for submission in the coming quarter. And of course, we're going to continue to update you on our commercial strategy as we approach that filing.

I'd also like to briefly update you on our pipeline programs focused on Oral KORSUVA across a range of pruritic patient populations. So starting with our lead program in pre-dialysis CKD patients with moderate-to-severe pruritus. Pruritus is a condition that affects a significant number of pre-dialysis patients. Out of approximately 7.5 million people diagnosed with CKD in the US, we know about 33% received some sort of treatment for pruritus. So it's approximately 2.5 million patient prescriptions. These treatments are typically generic antihistamines or corticosteroids, neither of which effectively alleviate the pruritus burden long term for these patients.

In December last year, we reported positive top-line results from our 12-week Phase 2 trial evaluating the safety and efficacy of three tablet strengths of Oral KORSUVA 0.25, 0.5 and 1 milligram once daily. Based on that data, we identified the 1 mg tablet strength of Oral KORSUVA as the dose level to take forward into Phase 3. So given all KORSUVA's potential in this patient population, we're eager to move to our registration program as soon as we can. And to that end, we plan to launch the safety portion of the pivotal Phase 3 program in CKD-aP in the fourth quarter of this year prior to our planned end of Phase 2 meeting with the FDA, which we project to take place in the first quarter of 2021.

We're also currently evaluating Oral KORSUVA in ongoing Phase 2 trials for atopic dermatitis, or AD, and primary biliary cholangitis, or PBC. And as many of you know, of course, AD is one of the most common chronic inflammatory diseases with prevalence rates up to 5% in adults and approximately 25% in children. Pruritus is the defining symptom of atopic dermatitis with a point prevalence estimated at almost 100%. A majority of patients, around 80%, are in the mild-to-moderate pathology category, where biologics are not indicated, and current treatments consisting of topical corticosteroids, high-dose antihistamines or antidepressants, simply fall short for these patients for this condition. So we believe Oral KORSUVA has the potential to be a first-in-class antipruritic product with a favorable safety profile for patients with atopic dermatitis.

Our ongoing KARE Phase 2 dose-ranging trial was designed to randomize AD patients across three tablet strengths, 0.25, 0.5 and 1 milligram, taken twice daily versus placebo. In June, we completed a planned interim conditional power assessment conducted after approximately 50% of the original targeted patient number completed the designated 12-week treatment period. Based on the independent data monitoring committee's recommendation, we increased the trial size from 320 patients to 410. This increase allows us to maintain the prespecified statistical power of 80% or greater on the trial's primary mean NRS change to endpoint from baseline and the key secondary greater than four-point responder endpoint, which is the accepted clinically meaningful endpoint for regulatory approval of therapeutics for pruritic dermatological indications. With additional clinical sites added in Q2, we expect to have this trial fully enrolled in the fourth quarter of this year.

We are also enrolling patients in our ongoing POC Phase 2 trial of oral KORSUVA in PBC patients with moderate to severe pruritus. Pruritus is a common symptom of cholestatic liver diseases with 20% to 30% of patients experiencing pruritus, with a prevalence of up to 70% in patients with PBC. Our 16-week trial is designed to evaluate the safety and efficacy of 1 mg tablet of Oral KORSUVA taken twice daily versus placebo in approximately 60 patients. And the primary endpoint here is the change from baseline in the weekly mean of the daily 24-hour worst itch NRS score at week 16. Similar to our AD study, we're expanding clinical sites where we can. However, due in part to COVID-19 impact, we now anticipate reporting top-line data from this POC study in the first half of 2021.

So overall, we are pleased with the progress made across all of our development programs in the second quarter, particularly in the present environment, and we're looking forward to achieving significant regulatory and clinical milestones through the end of this year and into 2021.

So with that, I'll now turn the call over to Rick to cover the financial results for the second quarter. Rick?

Rick Makara -- Vice President, Head of Accounting and Controller

Thank you, Derek.

As a reminder, the full financial results for the second quarter of 2020 can be found in our press release that was issued today after the market closed. For the second quarter of 2020, we reported a net loss of $25.1 million or $0.54 per basic and diluted share compared to a net loss of $23 million or $0.58 per basic and diluted share for the same quarter of 2019. In the second quarter of 2020, we recognized revenue of $4.5 million related to the Vifor Fresenius license agreement compared to $5.2 million during the same quarter in 2019. Also in the second quarter of 2020, we recognized approximately $600,000 of license and milestone revenue related to a milestone payment received from CKD Pharmaceutical Corp. Additionally, we recognized approximately $500,000 of clinical compound revenue from the sales of clinical compound in the second quarter of 2020 to Maruishi and Vifor. There were no sales of clinical compound or milestone revenue for the three months ended June 30, 2019.

For the second quarter of 2020, we reported R&D expense of $26.1 million compared to $24.4 million in the same period of 2019. The higher R&D expense in 2020 was primarily due to increases in stock-based compensation expense, payroll and related costs, and cost of clinical compound sales partially offset by a net decrease in clinical trial costs, conferences, and travel and related costs. G&A expenses were $5.4 million during the second quarter of 2020 compared to $5 million in the same period of 2019. The increase in 2020 was primarily due to increases in consultants' costs, legal fees, insurance costs, partially offset by a decrease in stock-based compensation expense.

Other income was approximately $600,000 in the second quarter of 2020 compared to approximately $900,000 in the same period of 2019. The decrease is due to lower interest income on our investments in marketable securities. As of June 30, 2020, our cash, cash equivalents and marketable securities totaled $153 million compared to $218.2 million as of December 31, 2019. The decrease primarily resulted from cash used in operations, slightly offset by proceeds from the exercise of stock options.

Turning to our financial guidance. Based on projected costs for our clinical development plans, we expect that our cash, cash equivalents and marketable securities as of June 30, 2020, will be sufficient to fund our operations into the second half of 2021, not accounting for any potential milestone payments under existing collaborations.

Now I'll turn the call back over to the operator for Q&A.

Derek Chalmers -- Chief Executive Officer, President, and Director

Jimmy? You want to pick up on the Q&A?

Rick Makara -- Vice President, Head of Accounting and Controller

Jimmy?

Derek Chalmers -- Chief Executive Officer, President, and Director

Jack, can you direct the Q&A from your line?

Questions and Answers:

Operator

Apologies for the wait. Now, for the Q&A session.

[Operator Instructions]

Our first question comes from Chris Howerton with Jefferies. Your line is now open.

Christopher Howerton -- Jefferies -- Analyst

Great. Thanks for taking the questions. Appreciate it. So I guess, first, just kind of thinking about financials moving forward, how should we expect the G&A line to change kind of going into potential approval and NDA submission and obviously, commercial preparations? As a corollary to that, what have you disclosed about potential milestones for approval with your agreement with Fresenius? And then the third question for me is, I'm not sure if we discussed this in the past, Derek, and I apologize if I'm just forgetting, but with respect to the sample size readjustment for the atopic dermatitis trial, what specifically do you think was different in terms of your initial empowering assumptions versus what you actually observed within the trial? Thanks, again.

Derek Chalmers -- Chief Executive Officer, President, and Director

Hi Chris. That was expertly done to get three questions in there. So let me start on the financials and the milestone related question. So we've talked about this before, and it's certainly out there and publicly available. This $30 million in approval milestones associated with the Vifor Fresenius agreement, and as Rick highlighted again, of course, those are not incorporated into our runway projection based on current finances. What is incorporated in there in terms of runway projection is projecting commercial costs and of course, MSL costs going through into 2021. So those are already in there. We don't, as you know, guide quarter-to-quarter on changes, in particular, financial subgroups, but what I can tell you is the majority of that commercial cost is going to be incurred at approval. So all of that budgeting is in there, Chris, all the way up to approval, and we wouldn't fully activate a sales force until we have the label approval.

On the AD side, on the sample size adjustment here, it was -- it's a new classification, if you like. As you know, we've predominantly been generating data and CKD-associated pruritus, and this is our first patient group we could categorize as dermatological inflammatory. So we made some assumptions based on the sample size but, of course, we made them from a different patient category and CKD. So the sample size increase here was not to be unexpected. It's one of the reasons, as you know, we employ this strategy and basically, all of our large clinical trials to mitigate the risk of a near-miss here.

So the other aspect of that sample size reestimation is, for the first time, we've looked at two endpoints simultaneously, one of which, of course, is the regulatory approval endpoint. That's a four-point responder. So that's a higher threshold, if you like, endpoint. So in looking at both of those, it's perhaps not surprising that we see a slight adjustment in sample size, and we should say, at the end of the day, if this ends up being one dose versus placebo sample size adjustment, we're still at a sample size of -- that would be approximately 125 per group, which is less than that we've used in our Phase 3 studies in CKD-associated pruritus. So we think that augurs well in terms of the size of that effect. It remains to be determined, of course, when we get the top-line data, but that sample size adjustment is in line with what we'd expect for a patient-reported outcome such as pruritus.

Christopher Howerton -- Jefferies -- Analyst

Right. Yeah. Okay. And what was -- there was -- what was the maximum size that you could have increased? It was more than you did, right?

Derek Chalmers -- Chief Executive Officer, President, and Director

Yes, yes. It could have gone up much higher than we did. I think total patient population could have been close to 500 on that trial. So we definitely didn't get the maximum upsizing advice from the IDMC.

Christopher Howerton -- Jefferies -- Analyst

Okay. All right. Well, very good. Well, thank you for taking the questions, and I'll hop back in the queue. Thanks.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, Chris. Thanks for dialing in.

Operator

Thank you. And our next question comes from David Amsellem with Piper Sandler. Your line is now open.

David Amsellem -- Piper Sandler -- Analyst

Thanks. Just a couple first. Derek, can you just give us your updated thoughts on pricing for IV KORSUVA and maybe help us in your thought process regarding what analogs, comparators, etc., might make sense here? So that's number one. And then secondly, I had a question about the PBC program. So to the extent that you do show proof-of-concept in that program, do you expect that a pivotal study would factor in a wider population of liver disease patients? Or do you expect that the FDA will have you remain on the narrower PBC pathway in terms of indication? Thanks.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, David. Those are good questions. So I think we've had this kind of general discussion before on the pricing, analogs, if you like, for KORSUVA Injection. Of course, that remains to be determined. It's still very early. We certainly need to have a label, first of all, before we get to the details of that. But I think I've said in the past, and I think there's some relevant comparators there that is, if you like, a serious symptom treatment type drug, and it may be analogous to something like a highly differentiated pain drug in terms of price point. Of course, it's going to be part of the TDAPA system related to the ESRD bundle payment, and there -- we don't really have a lot -- as you are well aware, a lot of examples to look at in terms of available price point. There is one drug that's run through the TDAPA system and that's Amgen's Parsabiv, which is about to end its TDAPA period this year. That drug priced in the high teens, approximately $17,000 annually.

And as you're well aware, of course, that was really intravenous formulation of a calcimimetic for which there are other alternatives available. So that might be one price point that's certainly been out there and been paid by CMS. Interestingly enough in the latest update to the ESRD bundle legislation, which was published in July, CMS is proposing to provide additional monies to pay for Parsabiv post TDAPA. And if you work that out based on the per-session increase in reimbursement there, it looks like it's approximately $800 million annually. So that is good news and the first time I have actually seen some data related to where CMS may go and post TDAPA funding. But I think we've said in the past, somewhere between a highly differentiated pain-type drug and maybe a novel derm drug with some premium related to being a first-in-class breakthrough medication, those would be kind of the bookends on that.

And then moving on to the PBC studies here, so the way we look at the Oral KORSUVA potential here is that we are certainly interested in pursuing registration programs for CKD pre-dialysis program -- patients rather and certainly for atopic dermatitis should we see the hope for a positive top-line data there. In terms of PBC and other liver disease-associated pruritus, that's an area where we're generating data that we hope is going to be supportive to getting a general label, ultimately, on that oral formulation. It may not be a program we run into registration as rapidly as those two other programs. However, having said that, as you're well aware, there is a large number of liver disease patients where pruritus is a significant issue.

So there may be something we revisit down the line, but the way we designed that original trial was really to obtain the data to support the idea that we have a mechanism, which should be broadly applicable across patient populations and support that discussion we aim to have with the FDA down the line that really Oral KORSUVA should justify a broad antipruritic label across patient populations.

David Amsellem -- Piper Sandler -- Analyst

Okay. That's helpful. [Speech Overlap]

Derek Chalmers -- Chief Executive Officer, President, and Director

Thank you, David.

David Amsellem -- Piper Sandler -- Analyst

No, that's great. Thanks.

Operator

Thank you. Our next question comes from Annabel Samimy with Stifel. Your line is now open.

Annabel Samimy -- Stifel -- Analyst

Hi all. Thanks for taking my question. So I see that you're not going to have the pre-Phase 3 -- I'm sorry, the post-Phase 2 meeting with FDA about the Phase 3 program for pre-dialysis until first quarter of '21, but you're in advance going to start your safety study. So can you just describe what exactly do they think the safety study is going to entail for this specific program? How much are you going to be able to draw from IV? And as a second question, when it comes to the discussions with FDA with regard to the endpoints that you're looking at, can you just confirm for IV KORSUVA that those are -- that the secondary endpoints are not regulatory endpoints, but rather more to characterize clinical benefit for the label? Will the FDA be looking at those on a pool basis? Are you going to be presenting them on a pool basis? Any color there would be great. Thank you.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, Annabel. Yeah. So the end of Phase 2 meeting for Oral KORSUVA, we will be requesting that meeting next quarter. But there's a time line associated with getting that scheduling from the FDA. So we do expect that to happen most likely in Q1. So in order to get ahead of that time line, if you like, to get that NDA submission, when we want to get that NDA submission, clearly, one of the bottlenecks in these programs is the one-year exposure data. So our plan is to start that open-label safety trial as quickly as we can next quarter even ahead of that meeting, where we really don't need any definition or further feedback on endpoints, right? We're looking for safety exposures in the appropriate patient population. So that's the idea of that sequencing, get ahead of the time line, start the long-term exposures early, and then clarify what we need to clarify with the FDA at the subsequent meeting.

We also wanted to make sure CMC review as an important component for that end of Phase 2 meeting and that time line allows us to ensure that we have completed essentially all the analytical and specification reviews we need to the Phase 3 standards to make sure we can have a successful end of Phase 2 meeting. So that's part of the time line as well.

And what was your other question? Yes. So the other part of that, of course, is that we already essentially have safety exposures from our hemodialysis patient population. So obviously, that will be part of our end of Phase 2 discussion as to use in those patients as part of our overall exposure numbers, since essentially we look at the end stage versus earlier stage for the Oral KORSUVA program. So that will be part of the discussion. And theoretically, it has certainly been the case with other applications where there's a change in formulation, but within the same patient population, it may be possible that we could conduct that registration program with one pivotal trial. It's not certain. Again, it's an item for discussion with the FDA, but certainly something we think is possible and worth raising based on the precedence we see yet there from other previous programs. So that will be something we'll be looking at.

And then your final question, Annabel, was on endpoints for the oral?

Annabel Samimy -- Stifel -- Analyst

Yeah.

Derek Chalmers -- Chief Executive Officer, President, and Director

Yeah. So the endpoint for the oral, as you know, we conducted our Phase 2 trial, or dose-ranging trial, using our most sensitive endpoints to find the optimum dose, and that's a continuous endpoint of NRS measuring itch difference from baseline we included for secondary there, which was the three-point responder, which you know in this patient population we've defined by psychometric analysis as the level for clinical meaningfulness for CKD patients experiencing moderate-to-severe pruritus. So that will be the proposed registration endpoint, the three-point responder endpoint for the oral.

Annabel Samimy -- Stifel -- Analyst

Okay. Sorry, I actually meant for KALM-2, but let me just put that aside for a minute. I just wanted to follow up on something that you said. For the safety studies, for the pre-dialysis population, given that hemodialysis patients are essentially -- the drug is essentially cleared for them, do you think there might be any different metrics that they're looking at in this predialysis population given that they have compromised kidney function?

Derek Chalmers -- Chief Executive Officer, President, and Director

No, we've run the PK analysis in some detail across each of these predefined pre-dialysis stages for CKD. We know precisely how it's excreted in these various stages. Hence, the once-daily administration suffices for CKD pre-dialysis patients, whereas -- and as you know, just to reiterate for everyone who's forgotten here, of course, KORSUVA has excreted almost exclusively via the kidney, whereas when we move away from these dialysis and pre-dialysis CKD patients to normal, if you like, kidney function in patients such as in atopic, we up that dosing paradigm to BID, so they get their drug twice daily. So we have that modeled across the various populations, and we know exactly how it's excreted. We know what it takes to get to steady state in each of those populations, and that's helped define the dosing paradigm you see in these various Phase 2 studies.

Annabel Samimy -- Stifel -- Analyst

Okay. Got it. Thank you.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, Annabel.

Operator

Thank you. Our next question comes from Jason Gerberry with Bank of America. Your line is now open.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Hey. Good evening, and thanks for taking my questions. Derek, can you talk a little bit about how you think about the pivot to going commercial next year in terms of when you'll start to incur some of the commercialization costs versus bringing folks on, on a contingency basis? Would you expect -- we really won't start to see that spend incurred until KORSUVA is approved? And then I appreciate the commentary on the cash runway. Can you talk about -- are there any alternative financing measures on the table mindful that your next sort of natural catalyst would presumably be the Phase 2 AD data? So just sort of wondering how you're sort of thinking about managing some of these puts and takes in terms of the capital runway. Thanks.

Derek Chalmers -- Chief Executive Officer, President, and Director

Yeah. Thanks, Jason. Thanks for those questions. So in terms of preparations, pre-commercial activities, they have been under way for quite some time at the company. So we've established our -- and actually, we're expanding our national MSL team who are working to broaden our KOL universe, increase awareness of CKD-aP. They've been establishing regional and national advisory boards. The usual sponsor in our strategic education opportunities, including CMD symposium at the appropriate meetings and actually, that group's adapted well to the current environment, and those have been virtual essentially since Q2. And we've been increasing our publication footprint to support dissemination of information out there for nephrologists. So all that's been under way for quite some time leading back into early last year.

We've also established our commercial manufacturing capabilities with our CMO that's in place and ready to roll. And we recently completed our first senior commercial hires. So we're not moving down into the larger numbers required for a sales force, as I said earlier, until we get all the way to approval on this, but we're filling in the senior management positions and all that's included in the projections that we've talked about today. We've initiated licensing applications for all of the states. We already have approval on CT. And we continue with these cross-functional plans to make sure we're ready for launch. But the biggest uptick in terms of spend in the commercial, of course, comes with the introduction of the sales force and, as I've said earlier, that's not going to come until approval. So that's a 2021 event. So until that point, this is a relatively modest spend you're going to see here going forward through into 2021.

In terms of financing, as you know, we've been, I think, quite opportunistic and going to the capital markets. Usually, it's been catalyst-driven follow-on offerings where we see a response in our valuation, and we've gone to the capital markets for that. We have a good balance sheet at the minute going forward, but we are always looking for opportunities, Jason. And if it's appropriate, and there's an agreement that can propel us to where we need to be across our various programs, either involving that territory or with a new partner perhaps where appropriate, we are certainly looking at those opportunities. So we're open to those. There are possibilities there, and we're just going to look for the most valuable mechanism and means to make sure we have the appropriate balance sheet when this drug is up for launching.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Okay. And if I can just squeeze a follow-up in. The mechanics of getting your TDAPA add-on payment status, how much time kind of post approval do you think and to what extent you might think there could be a lag factor in terms of getting your TDAPA payment status approved?

Derek Chalmers -- Chief Executive Officer, President, and Director

Yes. That is relatively quick, but it could add -- it could be a case of a quarter in terms of extra time line that may be necessary to make sure we have that all tied up and ready to go. So there could be an additional period.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, Jason.

Operator

Thank you. Our next question comes from Alan Carr with Needham & Company. Your line is now open.

Alan Carr -- Needham & Company -- Analyst

Hi. Thanks for taking my questions. Can you tell us a bit more about the safety trial, the oral safety trial that you're planning? Can you give us a sense of the size of that? And then actually, can you also elaborate a bit on what's gating for that end of Phase 2 meeting for the oral formulation in CKD? Thank you.

Derek Chalmers -- Chief Executive Officer, President, and Director

Great. Thanks. Alan, let me take the second one first because I think I kind of mentioned this in response to David. Of course, end of Phase 2, we want to clarify our clinical plan, make sure that the FDA is in agreement with endpoints and design and so on. But a big part of that meeting, of course, is CMC-related, and at this point, we want to make sure we have appropriate analytical specification analysis for our oral formulation that meet Phase 3 commercial level. So that's what we're running through at the minute. That's really the gating factor in this as we have to manufacture at scale for those and that whole process has been transferred from our biotech partner, which was Enteris, over to our CMO. So that process is well under way, but that is important that we have that complete prior to the meeting.

So that's the main element we need to get, and that fits in nicely with the time line I've indicated here. We're applying for that end of Phase 2 next quarter. Based on the schedule and time line we know with the FDA, we should have everything complete and time for that Q1 end of Phase 2 meeting.

And then on your first question, I wish to add more detail to tell you that's something that's under way in our clinical team in terms of the design of that open label safety trial, it is likely to be a couple of hundred, 250 patients, I would imagine, to make sure we can get the numbers where they need to be for the long-term exposure there and considering potential dropout rates. But I don't -- there is no final design element ready for me to relay at this point. But we'll certainly disclose that when we start the study.

Alan Carr -- Needham & Company -- Analyst

Okay. Thanks for taking my questions.

Derek Chalmers -- Chief Executive Officer, President, and Director

Thanks, Alan.

Operator

[Operator Instructions]

Our next question comes from Ben Shim with Canaccord. Your line is now open.

Ben Shim -- Canaccord Genuity -- Analyst

Hi. Thanks for taking my questions. Derek, for atopic dermatitis and liver, how often are the enrolled patients physically checking into the clinic? And are you seeing a difference in enrollment hesitancy or pace between the two trials? And then my second question, along the lines of new hires, can you update us on the search for a new CFO? Thanks.

Derek Chalmers -- Chief Executive Officer, President, and Director

Yeah. Thanks, Ben. So I mentioned this in the prepared remarks that we have seen some effects in terms of the COVID-19 environment on enrollment in both the AD and the PBC-related Phase 2, for both of those trials, there's been issues with opening up new sites or indeed losing some sites, particularly end of Q1 and end of Q2. But for AD, we've actually seen a very nice rebound there in terms of enrollment rates, and we have opened up novel sites in Q2, which have brought additional patients to that trial. So that enrollment level in AD has recovered very nicely almost to pre-COVID level. So that's gone rather well.

The PBC enrollment has suffered from our inability to open some ex US sites, which we know we're going to supply significant numbers of patients there. And as you know, that's an orphan indication, so it has been challenging to bring those in. So that has suffered a little bit and that we couldn't open those sites, additional sites due to the COVID environment that's improving now, and we hope to add those later in the year. Hence, the guidance that we see that data being delayed in terms of top line to the first half of 2021. So there has been some effect, but we're still seeing patients enrolled. And naturally, in the case of atopic, we're seeing very healthy enrollment rates. And really, these patients come back to the clinic, really, just to renew their tablet supply. So they come back, I believe, it's every two weeks, to get that tablet supply and maybe take some clinical measurements at that point. So that's how that is designed.

On the other question, yes, on the CFO front, we do have an active search under way. We've been screening candidates for quite a while, and I hope to have some news for you on that front in the coming quarter.

Ben Shim -- Canaccord Genuity -- Analyst

All right. That's very helpful. Thanks for taking my questions.

Derek Chalmers -- Chief Executive Officer, President, and Director

All right, Ben. Thanks for dialing in.

Operator

Thank you. And I'm showing no further questions in the queue at this time. I'd like to turn the call back to Derek Chalmers for any closing remarks.

Derek Chalmers -- Chief Executive Officer, President, and Director

All right. Thank you, Jimmy, and thank you, everybody, for participating in today's call. I'd also like to thank the Cara team, our study investigators and all of the patients who continue to participate in our clinical trials. And we certainly look forward to updating you all again very, very soon.

So stay safe, stay healthy. And thank you very much for dialing in. Take care.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Jack Hildick-Smith -- Investor Relations, Stern Investor Relations, Inc.

Derek Chalmers -- Chief Executive Officer, President, and Director

Rick Makara -- Vice President, Head of Accounting and Controller

Christopher Howerton -- Jefferies -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Annabel Samimy -- Stifel -- Analyst

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Alan Carr -- Needham & Company -- Analyst

Ben Shim -- Canaccord Genuity -- Analyst

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