Shares of Cara Therapeutics (NASDAQ: CARA) jumped 26.3% in May, according to data provided by S&P Global Market Intelligence, after the biotech signed a partnership with Vifor Fresenius Medical Care Renal Pharma to license most of the ex-U.S. rights to Korsuva, Cara’s treatment for itching associated with chronic kidney disease in dialysis patients.
For giving up rights to Korsuva outside of the U.S., Japan, and South Korea, Cara gets $50 million up front and is eligible for $30 million in regulatory milestones and $440 million in sales milestones. Vifor is also acquiring $20 million of Cara’s stock at approximately $17 per share, some of which ends up being free cash since shares are trading under that level at the moment. Cara will also get royalties on sales of the drug in Vifor’s territories, although the rates weren’t disclosed other than to say they’re tiered, so Cara will get a higher royalty rate as sales increase.
The cash is nice, but what investors are likely mostly excited about is the endorsement by Vifor, which is a major player in the dialysis business through its stake in Fresenius Medical Care. The phase 2 data released last year looked good, with Korsuva reducing the worst itch score by 68% compared to placebo, but it’s always good for investors to have an experienced company back up the positive interpretation of the data with its cash.
It’s back to waiting for Cara’s investors. A phase 3 trial for Korsuva started in January. Once it’s fully enrolled with 350 hemodialysis patients that have moderate-to-severe itching, the first efficacy readout will come after 12 weeks of treatment; investors should add a month or two onto that for Cara to crunch the numbers before announcing the results.
Later this quarter, investors are scheduled to get phase 3 data for the drug as a treatment for acute post-operative pain in patients undergoing abdominal surgery. An oral version of the drug failed to show a significant effect in patients with joint pain in the knee and hip, so investors should focus on Korsuva’s potential to treat itching and figure any sales for treatment of pain are just a bonus.
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