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Edited Transcript of CARA earnings conference call or presentation 12-Mar-19 8:30pm GMT

Q4 2018 Cara Therapeutics Inc Earnings Call

Shelton Apr 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Cara Therapeutics Inc earnings conference call or presentation Tuesday, March 12, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Derek T. Chalmers

Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director

* Mani Mohindru

Cara Therapeutics, Inc. - CFO & Chief Strategy Officer

* Jane Urheim

Stern Investor Relations - IR

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Conference Call Participants

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* Alan Carr

Needham & Company, LLC, Research Division - Senior Analyst

* Annabel Eva Samimy

Stifel, Nicolaus & Company, Incorporated, Research Division - MD

* Arlinda Anna Lee

Canaccord Genuity Limited, Research Division - Analyst

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Christopher Lawrence Howerton

Jefferies LLC, Research Division - Equity Analyst

* David A. Amsellem

Piper Jaffray Companies, Research Division - MD and Senior Research Analyst

* Esther Lannie Hong

Janney Montgomery Scott LLC, Research Division - Director of Biotechnology

* Jason Matthew Gerberry

BofA Merrill Lynch, Research Division - MD in US Equity Research

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Presentation

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Operator [1]

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Good afternoon, and welcome to Cara Therapeutics' Fourth Quarter and Full Year 2018 Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded at Cara's request.

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

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Jane Urheim, Stern Investor Relations - IR [2]

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Good afternoon. This is Jane Urheim with Stern Investor Relations, and welcome to Cara Therapeutics' Fourth Quarter and Full Year 2018 Financial Results and Update Conference Call. The news release became available just after 4 p.m. 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 completion and announcement of the results of our ongoing clinical trials; the expected timing and design of our planned clinical trials; future regulatory and development milestones for our product candidates; the potential for CR845 to be a therapeutic option in multiple pruritus indications; the size of markets that are potentially addressable by our product candidates; and our 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 annual report on Form 10-K for the year ended December 31, 2018, and its other documents subsequently filed with or furnished to the Securities and Exchange Commission.

Participating on this call are Dr. Derek Chalmers, Cara President and CEO; and Dr. Mani Mohindru, Chief Financial Officer and Chief Strategy Officer.

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

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [3]

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Thank you, Jane, and good afternoon, everybody, and thanks for joining us on the call today. 2018 was certainly a year of significant achievement for us here at Cara, including the advancement of our lead drug candidate, KORSUVA, across a range of clinical populations where pruritus is a significant unmet need, the signing of an important strategic licensing agreement with Vifor Fresenius and the successful completion of a $92 million follow-on offering. So this clinical and corporate progress has certainly laid the groundwork for what we believe will be a transformative year ahead for the company.

In 2018, we expanded our Phase III program of KORSUVA Injection for chronic kidney disease associated pruritus or CKD-aP in hemodialysis patients with the initiation of our 2 pivotal Phase III trials designating KALM-1 and KALM-2. In January of this year, we announced we had completed enrollment of the KALM-1 trial, and we remain on track to read out top line data from this trial in the second quarter of this year as well as top line data from KALM-2 in the second half of this year.

Our ongoing Phase II trial of Oral KORSUVA is enrolling pre-dialysis Stage III to V CKD patients with moderate-to-severe pruritus with top line data expected here in the second half of 2019. We also plan to initiate a Phase II trial of Oral KORSUVA in patients with chronic liver disease associated pruritus or CLD-aP in the second quarter following the recent completion of our Phase I pharmacokinetic and safety trial. And then lastly, we anticipate initiating a multi-dose, proof-of-concept Phase II trial of Oral KORSUVA in atopic dermatitis patients with moderate-to-severe pruritus around the middle of this year. So overall, we're well positioned to execute on our lead pivotal Phase III program for CKD-aP and HD patients as well as progress our Oral KORSUVA program across multiple patient populations in 2019.

So on the call today, I'll provide more detail on each of these programs, but I'd like to first briefly remind you of KORSUVA's profile, which we believe underlies its potential to act as a broad antipruritic agent across clinical conditions.

KORSUVA is, of course, our novel first-in-class selective peripherally acting kappa opioid receptor agonist designed to function without traditional opioid side effects due to its highly specific pharmacological action on kappa receptors and its chemical structure. KORSUVA's mechanism of action is mediated by kappa receptors on peripheral sensory afferents as well as on certain immune cells. The action of KORSUVA on dermal and epidermal immune cells blocks the release of a range of nerve-sensitizing molecules or pruritogens diminishing the stimulation of dermal sensory fibers and we believe that this dual neuronal and anti-inflammatory effect affords KORSUVA an effective antipruritic action, regardless of the initiating pathophysiology, whether that's chronic kidney disease, chronic liver disease or some sort of dermatological dysfunction.

So I'd like to start with updates on our lead program of KORSUVA Injection in hemodialysis patients with CKD-aP. As a brief reminder, the late-stage clinical program for KORSUVA Injection in this patient population currently includes 3 ongoing Phase III studies: the KALM-1 study, a U.S. efficacy trial; the KALM-2 trial, a global efficacy trial; and an open-label 52-week extension safety study. We began enrolling patients in both KALM-1 and KALM-2 in 2018 and we recently announced both the completion of an interim statistical power analysis and the achievement of full enrollment of KALM-1.

Based on the recommendation of the Independent Data Monitoring Committee or IDMC, we did not adjust the sample size of this trial. The IDMC's recommendation was based on its review of the results for the prespecified interim conditional power assessment conducted after approximately 50% of the targeted patient numbers completed the 12-week treatment period. And to further clarify on this analysis, given the prespecified decision rule and the formula used for calculating the conditional power, this outcome indicates that the results observed at the IA are consistent with the assumptions made regarding the sample size to maintain desired power to detect a difference between groups when we first planned the Phase III trial.

Following the IDMC recommendation, we completed enrollment of approximately 350 patients in KALM-1, and we're on track to read out top line data from this trial in the second quarter.

Our second pivotal trial KALM-2 is also designed with a prespecified interim assessment, again, after approximately 50% of patients completed the treatment period. And similarly to KALM-1, we look forward to providing the result of this analysis ahead of top line data, which is expected in the second half of 2019.

Both KALM-1 and KALM-2 are designed to investigate the efficacy of KORSUVA Injection at a dose of 0.5 micrograms per kilo versus placebo, you'll recall, administered 3x per week after scheduled dialysis sessions over a 12-week treatment period. The primary efficacy endpoint as the proportion of patients achieving at least a 3-point improvement from baseline at week 12 with respect to the weekly mean of the daily worst itching intensity score as measured on a standard numeric rating scale or NRS.

Secondary endpoints in the trials measure aspects of itch-related quality of life using validated self-assessment scales, the Skindex-10 and the 5-D itch, which we employed in our completed Phase IIb trial. Additional secondary endpoints include the proportion of patients achieving a greater than 4-point improvement from baseline and the weekly mean of the daily 24-hour worst itching scores at week 12.

The third ongoing Phase III trial in our pivotal program is an open-label, 52-week extension study designed to evaluate the safety of KORSUVA Injection in up to 240 patients. We now have close to full enrollment in this study, with about 125 patients through 6 months of treatment and approximately 40% of these patients passed the 1-year exposure level. To date, the safety and tolerability have been consistent with data reported in Phase II trials of KORSUVA Injection in hemodialysis patients and based on our recently completed independent data safety monitoring board evaluation, no new safety signals have been observed in this study.

With top line data from both KALM-1 and KALM-2 expected this year, we remain on track toward our goal of developing KORSUVA Injection as a breakthrough first-in-class therapeutic for hemodialysis patients suffering from moderate-to-severe pruritus, for which there are currently no FDA-approved treatments.

We also remain focused on advancing Oral KORSUVA for pre-dialysis patients with moderate-to-severe CKD-aP. Based on generic pruritus-related script numbers that is estimated, there are approximately 2.5 million Stage III to V CKD patients suffering from pruritus in the U.S. with current standard of care being predominantly generic corticosteroids and antihistamines. We're currently evaluating Oral KORSUVA in an ongoing U.S. Phase II trial of nondialysis CKD-aP patients. This trial is a multi-center, randomized double-blind, placebo-controlled 12-week trial designed to evaluate the safety and efficacy of 3 doses of Oral KORSUVA, a 0.25 mg tablet, 0.5 mg tablet and a 1 milligram tablet administered once daily.

From our Phase I trial of Oral KORSUVA, we determined that these tablet strengths provided exposure levels in CKD patients with moderate-to-severe renal impairment, which were approximately equivalent to those achieved with the 0.5 microgram per kilo dose of KORSUVA Injection in HD patients, a dose level which you know achieves statistically significant effects in both primary and secondary endpoints in our completed Phase IIb trial.

In this Oral KORSUVA Phase II trial, we expected to enroll 240 patients with 60 per arm. There's an unblinded interim power assessment at 50% enrollment for those who've completed the 12 weeks of treatment that allows the expansion of the study up to 480 patients. This trial is currently on track for patient enrollment and we look forward to providing you with an update on the interim assessment in the coming months, and ultimately, providing top line data in the second half of this year.

Lastly, as we move forward with additional pruritic patient populations that may benefit from Oral KORSUVA, we are presently planning to initiate Phase II trials in both chronic liver disease associated pruritus and pruritus associated with atopic dermatitis. We've recently completed a Phase I trial of Oral KORSUVA at multiple tablet strengths in patients with chronic liver disease. The pharmacokinetic parameters were dose proportional and Oral KORSUVA was generally well tolerated with no unexpected safety signals reported.

Based on best data, we expect to initiate a Phase II trial in the second quarter of this year. We also expect to initiate a Phase II proof-of-concept trial of Oral KORSUVA in atopic dermatitis patients around the middle of this year, and we look forward to updating you on the details of this trial when we have it underway.

So overall, we have a very significant year ahead of us here with multiple late-stage trials expected to read out and an ongoing expanded development pipeline for additional pruritic populations. And we look forward to providing progress updates across all of these programs in the coming months.

And with that, I'll now turn the call over to Mani, who'll discuss our financial results. Mani?

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Mani Mohindru, Cara Therapeutics, Inc. - CFO & Chief Strategy Officer [4]

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Thank you, Derek. As a reminder, the full financial results for the fourth quarter and full year 2018 can be found in our press release issued today after the market closed. For the full year ended December 31, 2018, we reported a net loss of $74 million or $2.06 per basic and diluted share compared to a net loss of $58.1 million or $1.86 per basic and diluted share for 2017.

For the fourth quarter of 2018, we reported a net loss of $20.7 million or $0.52 per basic and diluted share compared to a net loss of $14.2 million or $0.43 per basic and diluted share for the same quarter of 2017.

Revenues for the year ended December 31, 2018, were $13.5 million as compared to $911,000 in 2017. Revenues in 2018 were primarily related to our license agreement with Vifor Fresenius versus revenues of $843,000 in 2017 related to a sublicense fee received from a partner Maruishi Pharmaceuticals in connection with their sublicense agreement with Kissei Pharma.

Revenues in 2018 also included $33,000 from sale of clinical compound compared to -- compound to Maruishi as compared to $68,000 in clinical compound revenue in 2017.

For the fourth quarter of 2018, we recognized revenue of $5.5 million related to the Vifor Fresenius collaboration agreement. We did not recognize any revenues during the fourth quarter of 2017.

Research and development expenses were $75.5 million for the year ended December 31, 2018, as compared to $48.5 million in 2017. The higher R&D expenses in 2018 were primarily due to the increase in clinical trial costs as well as increase in stock compensation and payroll-related expenses.

For the fourth quarter, we reported R&D expense of $22.8 million as compared to $11.6 million in the same period of 2017, again due to increased clinical trial and personnel-related costs.

General and administrative expenses of $15.3 million in 2018 compared to $11.9 million in 2017. The higher G&A expenses in 2018 were mainly due to increase in stock compensation and payroll and consultant-related expenses, partially offset by decreased rent and related costs. G&A expenses were $4.7 million during the fourth quarter of 2018 compared to $3 million in the same period of 2017.

Other income was $3 million for the full year 2018 compared to $1.2 million for 2017. The increase in 2018 was primarily due to higher balance of investments in this period. Other income was $1.2 million in the fourth quarter of 2018 compared to $368,000 in the same period of prior year. As of December 31, 2018, our cash, cash equivalents totaled $182.8 million compared to $92.6 million at the end of 2017. The increase primarily resulted from net proceeds of $92.1 million from the company's follow-on offering in July, proceeds of $70 million related to the license agreement with Vifor Fresenius, which included an upfront payment of $50 million in cash and $20 million of equity investment at premium and the proceeds from exercise of stock options.

Turning to our financial guidance. Based on the projected costs of our clinical development plans and timing expectations, we expect that our current cash, cash equivalents as of December 31, 2018, will be sufficient to fund our operating expenses and capital expenditure requirements into 2021 without taking into account any potential milestones under existing collaborations.

I'll now turn back the call to the operator for questions -- Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question is from Chris Howerton from Jefferies.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [2]

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Great. Well, congrats on the quarter and all the progress and thanks for taking the question. I think, Derek, the main question that I have is maybe just helping contextualize the interim analysis, the powering analysis that was performed earlier this year. I know that you kind of described the process, but it might be helpful at least from my side to better understand what the other potential outcomes would have been. So let's say, that they didn't say you needed to increase the sample size. What would have triggered that? And maybe you could help us understand what the alternative outcomes could have been.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [3]

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Yes, sure. Chris, thanks for that. Yes, so this was really set up in a standard way for this type of analysis. So what we ask the IDMC to calculate is the required sample size to maintain a desired statistical power to see a difference between the 2 groups in the study and their possible advice in relation to that was graded by sample size. So there was a possibility to increase the sample size to X, which was less than maximum, to maintain that power or to increase it to Y, which was fill sample size in the study, which was up to 500 or there was a possibility to not increase the sample size as a desired power to maintain a difference between the 2 groups was evidently maintained. And remember, of course, the IDMC runs this analysis in an unblinded fashion and that was the specific advice we received for the IDMC. And what that tells us is, there are assumptions, again, made based on our odds ratio or effect size observed in Phase IIb were correct in terms of the required sample size to maintain a high level of power to see a difference between the 2 groups. So really what they're modeling in their analysis is maintained in a threshold of statistical power to maintain a difference.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [4]

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Okay, okay. So essentially they observed a sufficient effect or powering enable to meet the initial powering assumptions that you had when you designed the trial. Is that basically the story?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [5]

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Correct, correct. And obviously, we'd stand that threshold at a high level, a conservative level.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [6]

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Right, right. Okay. And then for the chronic liver disease Phase I trial, I know that you kind of described the pharmacokinetics and the safety, there is nothing unexpected. Are there any plans to present those data in a more full way?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [7]

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There is, and we're actually going to present some summary PK data. When we initiate that Phase II trial, you're going to see some overall exposure data, again in a similar fashion to the chronic kidney disease Phase I where we wanted to essentially maintain an overall exposure that would match the efficacious dose we've used in the hemodialysis patient population. So you're going to see that data in summary fashion when we initiate the Phase II.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [8]

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Okay, okay. That makes sense. And then maybe just one last question, if I may. For the atopic dermatitis trial, I think you mentioned that we'll see some more information about that when the trial is actually up and going. But can you give us any preview in terms of what patient population are you planning to target with that?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [9]

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Yes, we're going to look at the breadth of patient population, both in terms of pathophysiology. We'll be looking at both the mild to moderate and the moderate to severe and, obviously, there'll be inclusion criteria related to moderate-to-severe pruritus within those populations.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [10]

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Okay, all right. Well, congrats again and thanks for taking the questions and I'll hop back in the queue. I appreciate it.

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Operator [11]

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Our next question is from Jason Gerberry from Bank of America.

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Jason Matthew Gerberry, BofA Merrill Lynch, Research Division - MD in US Equity Research [12]

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I guess, just -- first question just on the postoperative applications for 845, have you had any recent FDA interactions? It sounds like maybe there weren't. I wasn't sure exactly -- I know there was potentially some discussions just regarding kind of framing the pathway for the PONV indication. And then secondly, can you just talk a little about -- when we think about the safety trial for Oral KORSUVA in the CKD III-V group, can you just talk about how -- what you think about as more of a clinically meaningful effect size in that group?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [13]

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Yes. Thanks, Jason. To the first of those on PONV, our aim there is to get clarity from the agency, both on the regulatory path there and on safety exposures and how already existing postop exposures would fit into that particular program, if we change the label on that. And we will certainly guide when we initiate the next possible PONV trial as to some more detail in relation to regulatory path there. And that's something we'll provide.

On the CKD Oral, we don't prespecify clinically meaningful differences that is really related to statistical significance. There, we will be looking at differences from baseline and measuring down the usual NRS scales in terms of mean changes and worst itching scores, but we don't set those up with prespecified differences. We simply model those in terms of sample sizes, if that's what you're getting at, based on effect sizes we've already observed with KORSUVA in established populations and, obviously, the main effect size we model that on is related to CKD-aP in hemodialysis patients.

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Operator [14]

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Our next question is from David Amsellem from Piper Jaffray.

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David A. Amsellem, Piper Jaffray Companies, Research Division - MD and Senior Research Analyst [15]

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So I had a couple questions about the atopic derm study that you are planning to initiate later this year. So is that going to be a -- have a primary outcome measure looking at a 4-point responder analysis on worst itch or the 3-point responder analysis? And just help us understand what your expectations are given that at least in dermatologic conditions or other antipruritics, the 4-point responder analysis seems to be something that the FDA wants.

And then secondly, on the atopic derm program, any color on dosing and how that may or may not differ from the other doses -- the doses you're evaluating in the CKD and CLD programs?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [16]

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Yes. Thanks, David. That's a great question. And as you know, we've discussed that before in terms of the appropriate endpoint for each of these patient populations. So the endpoint we reached for the hemodialysis-associated pruritus population was really based on an empirical analysis in relation to our breakthrough application and that was something we looked at in collaboration with the FDA. So that was taken data from patients where we see significant differences in their worst itch scores and correlating that with the quality of life scores and the patient impression of change and we empirically derived what would be a clinically meaningful change for those particular patients and from that, we derived a number somewhere around 2.5 on an NRS scale. It would be clinically meaningful and we bumped that to 3 and that's what we ended at in the Phase III trial that's underway.

You are correct, there has been a dogma within the dermatological populations for a 4-point reduction really based on an analysis that was only performed within the psoriatic population, looking at clinical meaningfulness, but nevertheless, a dogma. So our plan in moving Oral KORSUVA into the AD population is indeed to look at that level of reduction as well as mean change from baseline. So we will be looking at the 4-point when we move to the dermatological population and then we're still continuing with the 3-point, which we have again derived empirically on discussion with the FDA for the CKD-associated population.

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David A. Amsellem, Piper Jaffray Companies, Research Division - MD and Senior Research Analyst [17]

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And then dosing -- any color on dosing for the AD study?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [18]

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Yes, we'll guide to that when we initiate the trial. Of course, that's likely to be twice-a-day dosing because unlike with the CKD population, we have a very healthy generally population with AD, healthy renal function. So that's likely to be a BID dosing regimen in that population, and we'll guide to the dose when we start the trial there.

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Operator [19]

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Our next question is from Charles Duncan from Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [20]

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Congrats on a good year of progress. Looks like a pretty interesting one coming up. Couple of quick questions. You laid out very nicely the interim analysis kind of criteria in KALM-1. Can you tell us is KALM-2 exactly the same or different? And also when you look on a blinded basis at the patients being enrolled in KALM-2, how does that compare to KALM-1?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [21]

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Yes. I can't give you the answer to the last one, Charles, because no one lets me near any sort of data on a blinded basis to look at. So we don't look at that routinely. But in terms of the design of the prespecified interim assessment, exactly the same setup as we have for KALM-1. We're going to look at that when 50% of the patients complete the 12-week treatment period. And as I just talked about with Chris, it's going to be the same conditional power analysis. Again, we remain blinded, the IDMC is unblinded and they look to maintain a conservative level of power, which is the same as KALM-1 to see a statistical difference between the 2 groups in that trial.

So it's designed the same way. It's going to be performed at 50% of the patients completing the 12-week treatment period.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [22]

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Okay. That's helpful. So they don't let you near data on an unblinded basis -- or blinded basis. How about on an unblinded?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [23]

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Yes. At the end of the trial I get to see it, that's about it, Charles. So it's a horrible life up here.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [24]

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Okay, great. So also on KALM -- I'll call it KALM-3, the 52-week extension study, I don't know what you call it, you mentioned a fair number of patients have gotten through 6 months and then 12 months and, I guess, is that -- that means that they continue on the regimen of getting the drug infused in dialysis? And how are they doing in terms of concomitant modes or any other, call it, qualitative look at how those patients are doing over time?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [25]

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Yes. So we don't -- there's no other measurements in that particular trial, Charles, other than safety. But you're correct, those patients are dosed in exactly the same manner as we use for our Phase III trials and in exactly the same manner that, that drug is going to be used commercially. So that's 3 times a week post-dialysis sessions. And just to remind you because the drug is renally excreted, we get the depo exposure level for the next 2 days post dialysis, which maintains the antipruritic activity. So they're dosed in exactly the same manner 3 times a week for up to 1 year. We have -- what I said is, we have approximately 125 patients that are through their 6-month mark and about 40% of those are up and through the 1-year mark. And to date we've had regular independent data safety monitoring board analysis on that trial. We just completed one best quarter, and there was no unexpected safety signals within that group at all.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [26]

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Okay, okay. That's helpful. And then just a couple of other quick ones because it's been a couple years since I looked into this. The IP on KORSUVA last -- the new chemical onto the IP lasts through when? And then can you help us understand whether or not there's, I'll call it, a picket fence around other non-KORSUVA molecules that may extend IP?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [27]

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Yes. So there's no -- so there's about a dozen issued patents -- U.S. patents, I presume, you're asking about. Obviously, we have filed worldwide. But there's dozen issued U.S. patents, including composition of matter, of course, and that patent runs to 2027 without extension. So with the 5 years, that goes to 2032. Beyond that, our patent strategy is the normal one. We have, obviously, use patents around where we're using the molecule. And then beyond that, we also have some formulation-related patents and those run into the mid-2030s in fact that we've been working on. So there is a number of, if you like, fences around the sequences.

In terms of likelihood of anyone breaking those patents, unlike small organics where that's much more possible in terms of manipulating the chemistry around these heterocyclic rings, with peptide sequences much more difficult to break, Charles, so we've actually -- we think secured the entire area. And as you know, we tested this empirically a number of years ago on tetrapeptide sequences that have high affinity, specifically for the kappa receptor and, of course, that's our primary claim in relation to most of those patents. So very difficult to break a sequence patent. And so we think we have that quite well controlled in terms of the entire tetrapeptide sequences that can interact specifically with kappa opioid receptors.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [28]

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And last question related to -- going back to David's question on atopic derm, I'm wondering if you have a perspective on kappa opioid agonist mechanism versus NK1 antagonist mechanism? There's a fair amount of activity in terms of pruritus associated with atopic derm with the NK1 antagonist. I'm just -- I know that you've placed your bet, but love to hear your perspective on the relative narrative of 2 mechanisms.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [29]

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Yes. Well, it's a big opportunity; I think there's room for everybody and there's certainly a significant unmet need in that patient population. Our view is that and I think the physiology agrees with us that the endogenous opioid system locally is a very important control mechanism for pruritus and one of the animal models we've used and the industry uses, injection of a kappa antagonist to produce a fairly severe pruritus in animals, which is an indication of how important that system is. And in my view and, as you know, I've done this for a couple of years now in GPCR drug development as the agonism is by far the most potent mechanism when it comes to human therapeutics. And so I think we have a driving system that we're amplifying, which is always nice and it's much more difficult to antagonize, especially in that situation.

So we think we're tapped into one of the main driving systems. And so far, that's proven to be correct as we're seeing efficacy across all animal models we look at with the drug, regardless of the mechanism, and we know from our data and some other Japanese clinical data that this mechanism certainly affect both in chronic kidney disease and chronic liver disease associated pruritus. So so far, the data would bear out the broad antipruritic applicability, but we are going to test that empirically. So stay tuned for about 12 months, and we're going to have the answer to all of this.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [30]

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Very good, helpful reminder of pharmacology 101 with agonist statements.

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Operator [31]

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Our next question is from Annabel Samimy from Stifel.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [32]

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Just wanted to go back to the CLD population. Are there any particular adverse events, side effects that you might have to watch out for in this particular population given the complexity of their disease, any problems? And then with regard to the dose proportionality, should we expect something similar to what you're already looking at in CKD? And do you have any sense of the size of the trial?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [33]

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Annabel, thank you. Yes, so one of the advantages of this chemical class, of course, you remember is, we don't have any liver metabolism. And we don't have any interaction having performed every possible test on this with any of the set enzymes either as a substrate or stimulator or inhibitor. So we didn't predict we'd have specific issues with this patient population, but as you rightly point out, there's a lot of comorbidities in there. So we wanted to empirically ensure that the exposure levels we could attain there were going to match what we knew was efficacious based on our CKD data, and we've done that and we are going to select tablet strengths that are going to give us that.

Difference between this and the CKD Oral is going to be, as I said earlier, we're going to be dosing this twice a day. Despite the fact that some liver patients do have some inhibition of renal function, it's not to the level that we saw significant diminishment and excretion and as you know, 845 or KORSUVA is excreted almost exclusively via the urine, and so we wanted to establish that and make sure that was the case.

So safety looks good. We don't see anything different there than we've seen in other populations and when we start that trial, we'll announce the tablet strengths that we're going to use in that particular population, which is going to be very similar in range to the dosages we're using in the CKD Stage III to V patients. The difference again being there, we can dose once a day, that's just likely to be a twice-a-day dosaging.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [34]

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Okay. And just on the opportunity in CLD, so -- you mentioned CKD is about 2.5 that has Stage III to V chronic kidney disease. Is CLD similarly sized? Is it much larger, is it smaller, just can you give us a sense there?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [35]

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Yes. That's also a good question. Again, we looked to that in a similar fashion, looking at script numbers rather than epidemiological numbers and using ICD-9 codes across that with the various disease states in liver, various liver conditions are associated with moderate-to-severe pruritus. Of course, primary biliary cholangitis being the best known, but viral infections, hep B and hep C, some NASH patients, some cirrhosis patients. When you add all those up and look at that population in the U.S. and, of course, as we know from recent data, some of the medications associated with liver disease situations can also induce pretty severe pruritus. And when we add all those up, it looks like somewhere around a couple of million scripts a year, when we look at all of those conditions.

So that's a significant opportunity there, which is somewhat similar to the pre-dialysis CKD opportunity. And then, of course, when you get to atopic, then that's a different magnitude there in terms of potential addressable patient population.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [36]

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Okay. Great. And then while we're on the atopic dermatitis topic, are there any -- I mean, it's been a difficult illusive disease to treat from pruritic condition? Is there -- or from a pruritic perspective, are there any teachings or anything that you can learn from other trial shortcomings, trial failures that you can apply to your programs that might help with a better outcome?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [37]

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Yes. I think in reality, Annabel, most of the pruritus models that we use and the industry uses are dermatological of one sort of another, and we certainly had KORSUVA through all of those and shown great effect, certainly in contrast to some other mechanisms in those models. But at the end of the day, there really hasn't been a selective peripherally acting kappa tested in that population. Everything that's been used today has been less selective or partial in terms of agonism. So we feel as though there hasn't been an appropriate test yet in that patient population, and we'll be careful how we select patients coming into that trial. So mechanistically, that's something I think we have to look at empirically, but based on all the data we generated both preclinically and the fact that it seems to work, but as this mechanism, peripheral kappa across other patient populations, we are optimistic that we can have a beneficial effect within that patient population.

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Operator [38]

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(Operator Instructions) And our next question is from Arlinda Lee from Canaccord.

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Arlinda Anna Lee, Canaccord Genuity Limited, Research Division - Analyst [39]

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Can you remind us on what the exposure requirements are for filing? And what you will have by the time you mentioned some statistics on the open label extension and I'm just curious how many more patients or durations you'll need to have by the time you file? And then also could you provide some -- you've talked about getting additional regulatory clarity on the postoperative pain, and I'm wondering how high of a priority is that for you guys right now?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [40]

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Yes. So on the last question -- thanks for the question. On the last one, as you know, as we've said pretty consistently, our main priority here is pruritus and that's where we're focusing our effort. The PONV effort is really to get clarity in relation to the endpoints required there for labeling regulatory path, and then some clarity on some of the work we've done so far there in terms of safety exposures. And with that package, I think, we'd be in a much stronger position to look for an appropriate partner to come in and help fund any effort we have on the PONV side. So that's the strategy in relation to that application.

And for the first question, ICH guidelines on exposures for the KORSUVA Injection program are 1,500, and that's how we've designed our program. So both the Phase IIIs that are ongoing have safety exposure extensions beyond those trails, and as you know, we started the 52-week extension study that I mentioned on the call in 2017. So we've been making sure we can get to those exposure levels and looking ways to add up exposures to get the fastest possible path to NDA.

As you know, it's a breakthrough designated compound. There is a possibility that we can file with less safety exposures with such a compound. It's certainly something we will explore with the FDA. We're not [panning] on that path, but once we have our first U.S.-based KALM-1 pivotal data, it's certainly something we'll explore with the FDA, but we've designed our whole program to accommodate normal ICH guidelines, which is 1,500 exposures.

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Operator [41]

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Our next question is from Alan Carr from Needham.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [42]

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Just a follow-up on the last one. Is it feasible for you all to file NDA, MAA by the end of this year after completing both KALM-1 and KALM-2? And then can you also comment on what nonclinical work or items are needed for the NDA? Where do those stand?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [43]

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All right, now, Alan, let me take the last one first. Nonclinical work, we're basically complete. Almost everything we need in the nonclinical sense, preclinical sense is finished and so what we're working on now is, as you point out, completion of -- excuse us, we've got a fire occurring somewhere nearby. We're looking to complete our 2 pivotal KALM-1 and KALM-2 studies and then our safety extension studies on both of those, of course, and then file as quickly as we can afterwards. So we'll be able to guide fairly more accurately if you like on this a little later this year once we have our read outs from KALM-1 and we know where we are with KALM-2 and we've advanced our 52-week safety study. This is something we can guide to a little later this year.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [44]

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What sort of meaning would that be with the FDA after your first Phase III? Is that a -- would that be a formal end of Phase III or something else? How will that work?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [45]

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Yes. So firstly, with the breakthrough designation, we can request meetings fairly frequently, so we probably reserve our pre-NDA meeting for a little later and we'll use another standard meeting to interact with the FDA.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [46]

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Okay. And then last one, any updates on any of your collaborations with -- in Japan or Korea in terms of how they are progressing in development?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [47]

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Both are progressing. The CKD or Chong Kun Dang Pharma is working with us in relation to Korean participation in the global Phase III. Maruishi, as you know, has sublicense commercialized in hemodialysis patients to Kissei and they are advancing that program well and we'll certainly report outcomes in both of those areas when we see the data.

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Operator [48]

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Our next question is from Esther Hong from Janney.

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Esther Lannie Hong, Janney Montgomery Scott LLC, Research Division - Director of Biotechnology [49]

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So my first one is on partnerships over I.V. KORSUVA in hemodialysis patients. So in the U.S., you've got a significant partnership with Vifor Fresenius, one of the largest dialysis center owners in the U.S. So have you had discussions with the other largest owner DaVita. Do the terms of your Vifor Fresenius agreement allow you to also partner with DaVita? And then beyond that, how would I.V. KORSUVA roll out commercially in the Fresenius clinics? Would they be specific to certain regions? Could we imagine that they would be in the majority of clinics? How would it look?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [50]

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Yes. Thanks, Esther. To the last point, so the deal we have, the license agreement we have with Vifor Fresenius is really focused on ex-U. S., so the European rights and some territories in Asia Pacific region, obviously, not Japan and South Korea. Within the U.S., we have a co-promotion agreement, specifically in Fresenius clinics, now it's about 38% of the patient population in the U.S. So the vast majority, I guess, 62%, remains solely in Cara's purview and we are free to market within that population solely and we will do so and are planning to do so. So that's the difference in setup.

What was your other question in relation to Fresenius? Oh, so the Fresenius arrangement in no way restricts us on how we can interact with other dialysis providers in the U.S. We can set up any type of co-promotion license and agreements with any of these dialysis providers.

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Esther Lannie Hong, Janney Montgomery Scott LLC, Research Division - Director of Biotechnology [51]

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Do you expect to have discussions with DaVita or is that an option?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [52]

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We do. As we advance our commercial plans, we will be -- not only DaVita, but some of the other major independent dialysis providers we'll be talking to.

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Operator [53]

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At this time, I am showing no further questions. I would like to turn the call back over to Derek Chalmers for closing remarks.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [54]

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Great. Thank you, and thank you everybody for participating in today's call. I'd like to thank the Cara team for their continued hard work and commitment and to supporting our various programs. Our study investigators and, most importantly, all of the patients who continue to participate in our clinical trials. So thank you, everybody, and we look forward to updating you very, very soon. Thank you very much.

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Operator [55]

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Ladies and gentlemen, this concludes today's call. Thank you again for your participation. You may now disconnect. Have a great day.