What happened
Cara Therapeutics' (CARA 3.23%) stock has been on a tear following news that Vifor Fresenius Medical Care Renal Pharma Ltd. licensed certain ex-U.S. rights to Korsuva, Cara Therapeutics' treatment for chronic kidney disease-associated itching in dialysis patients. Since the news was reported, Cara Therapeutics shares have risen from less than $12 per share to over $17 per share, including a gain of as much as 12.5% on Friday.
So what
Korsuva is a kappa opioid receptor agonist that relieves pain by targeting nerves in sensory nerves. Because it doesn't target the central nervous system like traditional opioids, it doesn't carry the same risks of abuse or of side effects that they do.
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Last year, Cara Therapeutics reported that Korsuva reduced pain in kidney disease patients with chronic itch by 68% versus placebo on a 0-to-10 rating scale. The findings prompted Cara Therapeutics to initiate a pivotal phase 3 study that's currently ongoing and spurred Vifor Fresenius' interest in securing rights to the drug.
In exchange for rights to use Korsuva for chronic itch in dialysis patients located outside of the U.S., Japan, and South Korea, Cara Therapeutics is receiving $50 million in upfront cash, and it can receive up to $470 million in additional milestones, including $30 million in regulatory milestones and $440 million in sales milestones. Furthermore, it can receive tiered royalties on sales in licensed territories.
Vifor Fresenius Medical Care Renal Pharma Ltd is also acquiring $20 million of Cara Therapeutics stock at a price of roughly $17 per share.
Now what
Cara Therapeutics is retaining its full rights to Korsuva injection in this indication in the U.S., except in Fresenius Medical Care North America dialysis clinics. In those clinics, Cara Therapeutics will promote Korsuva and share profits with Vifor.
Teaming up with Vifor is a big win for Cara Therapeutics because Fresenius is a Goliath in dialysis. There are roughly 468,000 Americans in kidney failure who receive dialysis, and Fresenius clinics treat about 38% of them. Fresenius' global presence in key markets means Cara Therapeutics is spared the expense of trying to come up with and pay for an international commercialization strategy -- and that's a win, too.
Having said that, phase 3 data isn't available yet to confirm Korsuva's efficacy. Therefore, there is a risk that Korsuva will fail to make it to the finish line. There's no set timeline yet for the data in dialysis patients, but the primary completion date listed in Clinicaltrials.gov is February 2019. Before then, we will see data in June 2018 from a separate phase 3 trial evaluating the use of Korsuva in post-operative pain.
Overall, this is great news for the company given that investor optimism was crimped last summer when an oral formulation of Korsuva failed to deliver in hip and knee pain patients. Whether the company's share price continues to rally this year, however, could depend significantly on Korsuva's post-operative pain trial results later this quarter, so investors will want to pay close attention to this stock when that data is unveiled.
