What happened

Shares of Cara Therapeutics (NASDAQ:CARA) had plunged 27.8% lower as of 10:54 a.m. EST on Tuesday. The big drop came after the drugmaker announced results from a phase 2 clinical study evaluating Oral Korsuva in treating chronic kidney disease (CKD) patients with moderate to severe pruritis (itching).

Cara said that Oral Korsuva met the primary endpoint of the study -- a statistically significant reduction in mean worst itching intensity numeric rating scale (WI-NRS) score after a 12-week treatment period. However, the drug didn't meet two secondary endpoints.

Hand holding envelopes with "good news" and "bad news" printed on them

Image source: Getty Images.

So what

With Cara's shares tanking, it's obvious that investors are focused more on the failure of Oral Korsuva to achieve the secondary endpoints of the phase 2 study than on the drug's success in meeting the primary endpoint. But there was good news and bad news with those secondary endpoints.

The bad news was that Oral Korsuva didn't achieve statistically significant improvement in the proportion of patients taking a 1 mg dose who posted a 3-point or greater increase from the baseline in the weekly mean of the daily WI-NRS scores after 12 weeks of treatment. Neither did the drug achieve statistically significant improvement for patients on the 1 mg dose in increasing itch-related quality-of-life endpoints on a couple of self-assessment scales.

The good news was that patients receiving the 1 mg dose of Oral Korsuva did experience improvement on both secondary endpoints. Seventy-two percent of patients on 1 mg of Oral Korsuva achieved an improvement from baseline of 3 points or greater in daily WI-NRS scores after 12 weeks of treatment, compared to 58% of patients on placebo. Cara also said that patients on 1 mg of Oral Korsuva "showed positive improvements vs. placebo" on two self-assessment scales for itch-related quality of life. However, in both cases, the level of improvement wasn't enough to be statistically significant.

Investors also could have been looking for more impressive results on the primary endpoint. Patients receiving a 1 mg dose of Oral Korsuva reported a reduction of 4.4 points in the weekly mean of their daily WI-NRS scores, compared to a 3.3-point reduction for patients on placebo. Cara stated that this result "was statistically significant after two weeks of treatment and sustained through the 12-week treatment period."

Now what

Cara Therapeutics CEO Derek Chalmers said that the company expects to begin a pivotal phase 3 clinical study for Oral Korsuva in treating CKD-associated pruritis in 2020. It's possible that a larger clinical study could yield very different results -- either better or worse.

Today's plunge for Cara underscores that investors in biotech stocks always need to read beyond the headlines with drugmakers' clinical updates. Cara stated that it was announcing "positive" data from its phase 2 study. The market's reaction shows that the results weren't as positive as the headlines indicated.