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Edited Transcript of CARA earnings conference call or presentation 7-Aug-19 8:30pm GMT

Q2 2019 Cara Therapeutics Inc Earnings Call

Shelton Aug 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Cara Therapeutics Inc earnings conference call or presentation Wednesday, August 7, 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

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Conference Call Participants

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* Alan Carr

Needham & Company, LLC, Research Division - Senior Analyst

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior 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

* Eunshuk Shim

Canaccord Genuity Corp., Research Division - Associate

* Jason Matthew Gerberry

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

* Nicholas Carl Rubino

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

* Syed A. Kareem

Jefferies LLC, Research Division - Equity Associate

* Jane Urheim;Stern Investor Relations, Inc.;Client Lead

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Presentation

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Operator [1]

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And good afternoon, and welcome to Cara Therapeutics Second Quarter and 2019 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, Inc.;Client Lead, [2]

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Good afternoon. This is Jane Urheim with Stern Investor Relations, and welcome to Cara Therapeutics Second Quarter 2019 Financial Results and Update Conference Call. The news release became available just after 4:00 p.m. today and can be found on our website at www.caratherapeutics.com. You may also listen to a live webcast, a 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 timing of regulatory submissions, the potential for CR845 to be a therapeutic option in multiple pruritus indications, the size of the 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's, 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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Thanks, Jane. Good afternoon, everybody, and thanks for joining us on today's call. So we've continued to make very significant progress during the second quarter of 2019, particularly with our lead KORSUVA injection development program, where we reported positive top line data from our first pivotal Phase III trial, KALM-1, in hemodialysis patients with chronic kidney disease associated pruritus or CKD-aP. We are very pleased that KORSUVA treatment resulted in statistically significant improvements in all primary and secondary end points in this trial, and we remain on track to read out top line data from our second pivotal Phase III, KALM-2 trial, in the same patient population in the fourth quarter of this year.

In addition to the KALM-1 data and our ongoing KALM-2 trial, 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. We recently announced the completion of enrollment in our Phase II trial of oral KORSUVA for CKD-aP in stage [III-V CKD] patients, and we remain on track to report the top line data from this trial in the fourth quarter of this year.

We've also initiated 2 additional Phase II trials [out] with the CKD population. The first in patients with chronic liver disease, specifically, primary biliary cholangitis patients suffering from pruritus, and the second, in patients with atopic dermatitis.

So with our recently completed successful follow-on offering, which netted approximately $136 million to the company, we remain well positioned to execute on our lead pivotal Phase III program for I.V. KORSUVA for CKD-aP in hemodialysis patients as well as progress our oral KORSUVA programs across multiple patient populations in the coming quarters.

So before we provide an overview in each of our ongoing programs, I want to briefly remind you of KORSUVA's mechanism of action and why we believe it has the potential to be a treatment of choice for pruritus across patient populations. KORSUVA has been specifically designed to function without traditional mu opioid side effects due to its highly specific pharmacological action on kappa receptors and lack of activity on mu receptors. Due to its unique chemistry that restricts it to the periphery, KORSUVA's mechanism of action is mediated by kappa opioid receptors, specifically on peripheral sensory afferents, which relay pruritus signals, [not within] the CNS as well as its action on kappa receptors on 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 it's that dual neuronal and anti-inflammatory effect that affords KORSUVA an effective antipruritic action, regardless of the initiating pathophysiology in the patient.

So moving on to our clinical programs. Let's start with our lead program, KORSUVA injection for hemodialysis patients with CKD-aP. As we've mentioned before on these calls, this is a patient population where approximately 40% to 50% of patients suffer from moderate to severe pruritus, not only does pruritus severely diminish patients' quality of life in the form of sleep disturbance and depression and anxiety, but it's also associated with increased morbidity and mortality in these patients. Pruritus remains a significant unmet need here in these patients undergoing dialysis with no approved therapies either in the U.S. or in Europe.

Our pivotal program for KORSUVA injection in hemodialysis patients includes 4 Phase III studies, KALM-1, our U.S. efficacy trial; KALM-2, our global efficacy trial and 2 open-label safety studies, one U.S. and one global. 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, administered 3 times per week, or TIW, after scheduled dialysis sessions over a 12-week treatment period with a 52-week open-label extension phase beyond that for safety.

In May, we announced top line results from KALM-1. Analysis of the primary end point demonstrated that KORSUVA injections significantly reduced itch intensity with 51% of subjects achieving at least a 3-point improvement in worst itch intensity as measured on an NRS, or a numeric rating scale, compared to 29% of subjects in the placebo group. As for the secondary end points, 39% of subjects treated with KORSUVA achieved at least a 4-point improvement in the worst itch intensity NRS score compared to 18% in the placebo group.

Impact of itch on quality of life was assessed with 2 complementary multidimensional itch-related quality of life questionnaires, the 5-D itch and the Skindex-10. These questionnaires evaluated itch symptoms and disability due to itch, including impact on sleep, work, social interactions and mood. Notably, patients on KORSUVA experienced a 35% improvement in the average total 5-D itch score and a 43% improvement in the average total Skindex-10 score compared to placebo at week 12, both of which were highly statistically significant improvements. So overall, these data indicate a consistent continued antipruritic effect of KORSUVA over the 3-month treatment period in this patient class.

We continue to make good progress on our second pivotal Phase III trial, KALM-2, which is a global study similar in design to the KALM-1 trial. As with KALM-1, we have designed a prespecified interim conditional [power] assessment into the KALM-2 protocol, and we expect to announce the outcomes of that analysis and full top line data from KALM-2 before the end of this year.

Moving on to our safety studies in this program, our open-label 52-week safety study currently has approximately 165 patients through 6 months of treatment, with over 50% of these patients having completed 1 year of KORSUVA exposure. To date, the safety and tolerability appears to be consistent with data reported from the first Phase III and prior Phase II trials of KORSUVA injection in hemodialysis patients. And based on the most recently completed independent data safety monitoring board evaluations, the last of which was in July of this year, no new or inconsistent safety signals have been observed.

Our second open-label safety study initiated in Q2 of this year is utilizing both the U.S. and European sites and is expected to enroll up to 400 patients. And as a reminder, this trial was not required by any of the regulatory agencies, but rather was part of our strategy to use new clinical sites to accelerate the safety exposures required for a potential NDA filing.

So in summary, our pivotal program for KORSUVA injection in hemodialysis patients with CKD-aP is advancing on track. Pending positive data from KALM-2 later this year, we are undertaking all necessary activities to support submission of the new drug application for KORSUVA injection to the FDA in the second half of 2020.

In anticipation of a successful NDA and a potential KORSUVA injection launch in the U.S., we've also initiated a range of key pre-commercial activities, including the recent completion of a commercial manufacturing agreement with Patheon U.K. Limited.

Now moving on from KORSUVA injection, I'd like to turn to the other part of our pipeline, our ongoing programs with oral KORSUVA. Based on pruritus-related drug prescription data it's estimated that there are at least 2.5 million stage III-V CKD patients suffering from pruritus in the U.S. with current standard of care predominantly being generic corticosteroids and antihistamines. Our ongoing Phase II trial in this patient population is a multicenter, randomized double-blind, placebo-controlled 12-week trial designed to evaluate the safety and efficacy of 3-tablet strengths of oral KORSUVA, 0.25 mg, 0.5 mg and 1 mg, administered once-daily in these patients.

The primary end point on this trial is the change from baseline and the weekly mean of the daily 24-hour worst intensity NRS score at week 12 of the treatment period, and secondary end points include change from baseline and itch-related quality of life scores at the end of week 12, also again, assessed by the total Skindex-10 and 5-D itch scales. And in addition, we're also assessing the proportion of patients achieving an improvement from baseline of greater than or equal to 3 points with respect to the weekly mean of the daily 24-hour worst itching intensity score at week 12.

Based on the recommendation of the independent data monitoring committee, or IDMC, we recently announced that the trial will not require any modifications to the original enrollment target of 240 patients. And this trial is now fully enrolled. This IDMC recommendation was based on the results of a prespecified interim conditional power assessment that was conducted after approximately 50% of the 240 patients completed the designated 12-week treatment period. We remain on track to announce top line data from this trial before year-end.

We also recently initiated Phase II trials for the treatment of pruritus in 2 additional patient populations, atopic dermatitis, or AD patients, and patients with primary biliary cholangitis, or PBC patients. Atopic dermatitis is, of course, one of the most common chronic inflammatory diseases with prevalence rates of up to 5% in U.S. adults and approximately 25% in children, and pruritus is a defining symptom of AD with a point prevalence estimated at 87% to 100% in that patient population. In a similar fashion to CKD-aP, current treatments for pruritus across the AD patient spectrum fall short, consisting of topical corticosteroids, high-dose antihistamines and antidepressants.

We recently initiated randomized double-blind, placebo-controlled Phase II study designed to evaluate the efficacy and safety of oral KORSUVA for the treatment of moderate to severe pruritus in approximately 240 patients with atopic dermatitis. Subjects will be randomized to 3-tablet strengths of oral KORSUVA, 0.25 mg, 0.5 mg and 1 mg, taken twice daily versus placebo for 12 weeks, followed by a 4-week active extension phase. The primary efficacy end point is a change from baseline in the weekly mean of the daily 24-hour itch NRS at week 12 of the treatment period, and secondary end points include change from baseline and itch-related quality of life scores at the end of week 12 as assessed again by Skindex-10 and 5-D itch scales. We're also looking at the proportion of patients achieving an improvement from baseline of at least 4 points with respect to the weekly mean of the daily 24-hour NRS score at week 12.

With respect to chronic liver disease associated pruritus, we also recently initiated a Phase II trial in patients with hepatic impairment due to PBC. Pruritus is a common symptom of cholestatic liver diseases with a prevalence of up to 70% in patients with PBC. This Phase II multi-center randomized double-blind, placebo-controlled 16-week trial is designed to evaluate the safety and efficacy of a 1 mg tablet of oral KORSUVA taken twice daily versus placebo in approximately 60 patients with PBC and moderate to severe pruritus. Primary efficacy end point, change from baseline in the weekly mean or the daily 24-hour worst-itch NRS score at week 16, and secondary end points, again, include change from baseline and itch-related quality of life scores at the end of week 16, again, assessed using Skindex-10 and 5-D itch scales as well as the assessment of the proportion of patients achieving an improvement from baseline of at least 3 points with respect to the weekly mean of the daily 24-hour worst intensity score at week 16.

So we will provide an update on enrollment rates and projected data readout time lines from both these initiated oral KORSUVA Phase II trials as we initiate more clinical sites and as we get a better handle of enrollment rates across both these trials.

So with that, I'd now like to turn the call over to Mani, who will discuss our financial results for the quarter. 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 second quarter of 2019 can be found in our press release issued today after the market closed.

For the second quarter of 2019, we reported a net loss of $23 million or $0.58 per basic and diluted share compared to a net loss of $17.2 million or $0.52 per basic and diluted share for the same period of 2018. For the second quarter of 2019, we recognized revenue of $5.2 million related to the Vifor Fresenius collaboration agreement compared to $2.9 million for the same period of 2018.

For the second quarter of this year, we reported R&D expenses of $24.4 million as compared to $7 million of the first quarter of 2018 -- sorry, of the second quarter of 2018. The higher R&D expenses in 2019 were primarily related to an increase in clinical trial costs as well as increases in stock-based compensation expense and payroll-related costs.

G&A expenses were $5 million during the second quarter of 2019 compared to $3.7 million in the same period of 2018. The increase in 2019 was primarily due to increases in stock-based compensation expense, payroll and related costs as well as franchise taxes.

Other income was $947,000 for the second quarter of 2019 versus $467,000 for the same period in 2018. The increase in 2019 was due to an increase in interest income resulting from a higher average balance of a portfolio of investments in the 2019 period.

At June 30, 2019, our cash, cash equivalents and marketable securities totaled $135.6 million compared to $182.8 million at December 31, 2018. The decrease in the balance of cash, cash equivalents was primarily related -- primarily resulted from cash used in operations of $52.4 million that was partially offset by proceeds of $4.2 million from the exercise of stock options. Additionally, in July of 2019, we raised approximately $136.4 million in net proceeds from our public offering of approximately 6.3 million shares of our common stock.

Now turning on to our financial expectations. Based on the projected costs of our clinical development and subsequent plans as well as the timing expectations, we expect that our current cash, cash equivalents and marketable securities as of June 30, 2019 as well as the $136.4 million from our July offering, will be sufficient to fund our operations into the second half of 2021, without taking into account any potential milestone payments under our existing collaborations.

I'll now turn the call back over to the operator for the Q&A session. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Chris Howerton with Jefferies.

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Syed A. Kareem, Jefferies LLC, Research Division - Equity Associate [2]

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This is Syed in for Chris today. Just wanted to start off by asking if you had any updates in terms of when you could expect to file an NDA for I.V. KORSUVA?

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

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Yes. Syed, thanks for your -- yes, as we said on the call on the summary of the KORSUVA injection program, based on the projected readouts of the ongoing clinical trials, we're expecting to file that NDA in the second half of 2020.

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Syed A. Kareem, Jefferies LLC, Research Division - Equity Associate [4]

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Got you. Sorry, I must have missed that. I'm sorry. Okay. The next question that I had was related to your discussions with CMS on TDAPA. Are there any updates there?

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

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Well, I guess the only update, as you probably know that they have released their annual proposed update to that rule, which is essentially neutral for Cara. We're going to retain our TDAPA eligibility because we're a category 1 NDA, [and] we will be a category 1 NDA, which is an NDA with a new molecular entity. So as far as we can tell from what's proposed in that rule-making out there is essentially neutral for us. One interesting aspect is that they did extend the TDAPA period for I.V. Parsabiv, which as you know is the first drug product to enter the TDAPA status from 2 years to 3 years, which was interesting, to provide a longer assessment period for usage there. But other than that, we didn't see anything that was different for us in terms of our status within that legislation. And as you know, and we've said repeatedly, we continue to interact with CMS. They have been very positive as to solving the issue of post-TDAPA reimbursement for innovation and innovative products, and that interaction continues, and we will certainly update everyone when we see a result of that interaction.

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Syed A. Kareem, Jefferies LLC, Research Division - Equity Associate [6]

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Okay. Perfect. It's great to hear that, that time line actually increased. And then kind of like piggybacking off of that. When you think about oral KORSUVA, it's not really subject to the TDAPA risks 3 years from now, how are you thinking about the opportunity for oral KORSUVA in hemodialysis patients?

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

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Yes. So at this point, we're directing oral KORSUVA towards pre-dialysis patients. As you know, there's a significant unmet clinical need there with some 30% is the estimate from multiple sources, 30% of that patient population suffering from pruritus with no effective treatment. So that's the first patient class we're pursuing with oral KORSUVA. The I.V. form is really ideal for the hemodialysis population, where, as you know, that's a population that's heavily overburdened in terms of drug administration and drug usage. And so we can administer that compound 3 times a week after each dialysis session. So it's really an ideal dosing regimen for the hemodialysis patients. So we're specifically targeting hemodialysis patients with KORSUVA injection and then pre-dialysis patients, and as you know, beyond CKD patients and to these other patient populations with oral KORSUVA with the ultimate aim here that we see really a broad-label potential for oral KORSUVA regardless of the initiating pathophysiology. As I've said, across these patient populations, we believe based on the mechanism of action, this could be a broadly applicable drug. So that's the differentiation there between KORSUVA injection and oral.

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Operator [8]

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And our next question comes from Jason Gerberry with Bank of America.

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Jason Matthew Gerberry, BofA Merrill Lynch, Research Division - MD in US Equity Research [9]

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Just a couple for me. Just first, just coming back on the interactions with CMS. Do you think it's fair to say that the interactions are being held back until you have Q2 positive studies in hand, or do you think that even CMS may want to wait until we're getting closer to the end of the TDAPA period before more substantive discussions, dialogue and actions can take place there?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [10]

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Jason, I don't think so. As a government organization, I take your point and cynicism related to action before necessity. But when we look at the precedent there, which is I.V. Parsabiv from Amgen, they certainly knew they had TDAPA status actually, I'd say, around about the NDA point when that was up for approval. And then they got advice on extension, as you know, well ahead of the limitation on that. So you may be correct that they're going to look for a little more certainty on the NDA, but that's rapidly approaching for us. And as I've said, our interactions there have been very positive at multiple levels, and we really we have a good relationship with CMS. They're well aware of the differentiation between this product, which has breakthrough status for an unmet need in that patient population. And for example, other [made] drugs that certainly address anemia or some other aspect of the dialysis conditions. So they are actively engaged with us in exploring mechanisms that can differentiate and encourage innovation versus what's out there.

So you may be correct, there may be a timing issue related to development. But as I said, we're rapidly approaching NDA, coming up next year. And so we would expect to see some movement from them, certainly, once we have our NDA in submission and up for approval.

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Jason Matthew Gerberry, BofA Merrill Lynch, Research Division - MD in US Equity Research [11]

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Got it. And then my second question just for oral KORSUVA, just thinking about the development pathway, assuming that the Phase II trial is successful, can you talk a little bit about sort of the number of patients you need to dose at the therapeutic dose level? And could the Phase II potentially count as a pivotal trial and thus, enable you to only run a single follow-on Phase III pivotal trial to get to market? Just wondering sort of how those variables shake out.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [12]

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Yes. No, that's a great question. We had thought the same thing, Jason, the argument being that if you're looking at CKD stage III-V versus hemodialysis, that's essentially the same mechanism and same disease process and therefore, we would argue that safety exposures achieved with KORSUVA injection really at a higher exposure level should be relevant for oral KORSUVA development, taking your point. And there, we'd probably make the argument with KORSUVA injection NDA approved that this would be a candidate for an sNDA. And you're right, that would be one pivotal Phase III trial. So yes, that has been our thought that as we've run the trial, as you know, the Phase II trial with a 12-week treatment period, which would be a requirement for supporting efficacy trial. So ultimately, we will explore that avenue, and there's some possibility. We're not going to count on it, but there's some possibility.

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Jason Matthew Gerberry, BofA Merrill Lynch, Research Division - MD in US Equity Research [13]

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Got it. And then my last question, just in terms of the Phase II chronic liver disease trial, just in terms of the slightly smaller number of patients per arm versus some of the other Phase II trials that you've run, are there different powering assumptions with respect to the patient population in this study -- in the GLP study? Just curious if you can comment on that.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [14]

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Yes. So really, the issue there is, as you know, PBC is not a gigantic patient population. And so we -- but we did choose that deliberately because of the range of liver diseases associated with severe pruritus, those patients tend to have the most consistent pruritus issue. And so that's obviously ideal for a proof-of-concept trial. So we really viewed that trial as a proof-of-concept, looking at effect -- drug effect within that patient class. And then after that, we'd probably define that more in terms of dosage. So we've chosen the dosage there which is a little higher. The top of the range, we'd use for other indications where we know we have very good exposure. We have run a Phase I trial in those chronic liver disease patients. So the idea there is really to look at proof of concept. And then after that, we may look at appropriate dosage beyond that particular trial.

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Operator [15]

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And our next question comes from David Amsellem with Piper Jaffray.

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David A. Amsellem, Piper Jaffray Companies, Research Division - MD and Senior Research Analyst [16]

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So Derek, I think you've touched on it earlier about the idea of a broad antipruritic label regarding the underlying disease. But I guess the question here, and maybe it's tough to answer is, it might be a little early to do so but what do you think gets you to that tipping point where you have -- where you can get that kind of broad label? I mean -- and have you had any communications with the FDA in terms of how many different wins in different diseases that they want to see before they get comfortable in terms of that kind of broad indication? So that's number one. Number two, as you began the atopic derm trial, are you thinking more broadly about the dermatology setting, for instance, psoriasis? And will the results of that study inform how broadly you're thinking about the derm setting and how aggressive you want to be in that setting?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [17]

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Right. Thanks, David. Both very good questions and things we've obviously considered. So on the first, on the broad label, I wish I could tell you the FDA derm division had issued a set of guidance on clinical populations to look at to achieve a broad label [but] we're not quite there yet. So we are working our way through the patient populations per ICH to begin with. And as Jason was pointing out, we -- in the last question, we may indeed have a specific advantage to get a fairly rapid label with CKD at this point since we have such a large level of exposure there in the hemodialysis population, so that makes sense as an initiating patient population.

But I'll tell you our thoughts on this is, not necessarily, I should point out, not necessarily the FDA's thoughts on this, but where we would look to this. And our logic on this is, there are various, if you like, pathophysiologies associated with pruritus [that] is obviously dermatological, where, as you point out, we're now embarking on our atopic dermatological trial, this end-organ disease associated pruritus, if you like, and there's neuropathic pruritus. That's the major 3 groups. So there's also some smaller populations associated with psychogenic pruritus. Our thought says if we could sample this, this would be analogous to a broad pain label, where as you know that, that division looks for examples of efficacy across pain types, neuropathic inflammatory and so on. Our thought is if we can show efficacy across these various categories of pruritus, then that would be the case, that would be a mechanism that should achieve a broad label. Again, that's our thought and that's our rationale for how we move forward, not per guidance of the FDA, I want to emphasize. But that's how we're thinking about this as we embark on each of these patient populations.

And then your second question on AD. We do think AD is the most appropriate population here for a couple of reasons. First of all, very large unmet need for antipruritics there and really is a population where the current therapies for pruritus are really, again, these older generic corticosteroids, antihistamines, some high-dose antidepressants, and it's also an area where biologics are really only focused on the moderate to severe subgroup within that patient class. And as you know, that's the minority of that patient class, about 80% of the AD population has mild to moderate, where there really isn't a biological approval there. So we think there's a very large opportunity and an unmet need for an orally available antipruritic versus psoriasis, where we feel -- and again, this is advice we've also received from our KOLs in this area, that, that's an area pretty well served by a range of biologics, which are quite effective in that mechanism there. So our belief is we're focused on the right group there. Not to say that, that mechanism wouldn't be effective in psoriatic-related pruritus, most likely so we haven't run it. And ultimately, there may be an opportunity there to marry this as a first-line therapy. With a biologic [is] , as you know, we have no metabolic issues with that molecule either. So there's no DDI issues whatsoever. So -- but again, we focus on what we think is a bigger opportunity here with this less, if you like, availability of effective biologics.

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Operator [18]

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And our next question comes from Annabel Samimy with Stifel.

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Nicholas Carl Rubino, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [19]

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This is Nick Rubino on for Annabel. We've been discussing the opportunities for antipruritic drugs for CKD and CLD with a number of physicians. And without a doubt, they all see the significant need, the caveat being that these patients are extremely sick, and treating them with systemic agents is usually difficult with the drugs they're taking. So we know that I.V. KORSUVA has been relatively clean, but those patients get dialysis to clear the drugs. The question is, will the FDA require you to conduct any different studies or drug interaction studies for the oral form with the typical drug seen in CKD or CLD?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [20]

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Yes. No, thanks, Nick. That's a good question. And again, I [can] have touched on this in the answer to David's question. Well, you recall, what we've got here with KORSUVA is a pretty unique chemistry. It's not a standard organic heterocycle and in fact, it's a D-amino acid tetrapeptide, so it's not metabolized through the liver at all, not a substrate for any set enzymes, nor does it inhibit or excite any of those enzymes. So we've actually run a very exhaustive DDI panel based on standard FDA guidance there. And I can tell you with some confidence that this molecule does not have great potential for drug-drug interaction based on the standard panels we've look at there.

So we have run this, and you're correct, particularly in the CKD population, they're heavily burdened with co-medications, and you probably heard us discuss this in other calls that we really don't limit that for these patients when we run our trials. In fact, we even allow these patients to come into the trial with their so-called standard antipruritics, which are mostly antihistamines. And we've had no issues whatsoever there. So the drug is very clean.

So the drug is really, really clean by virtue of its metabolic profile, other than the fact that it's dialyzed every 3 days from these patients. And I know you haven't seen the data of that yet, but you're going to see, based on our blinded data, and I think I've said on previous calls, we have our independent safety monitoring board look at our oral safety as well as our I.V., and we're seeing no differences there. So I think you're going to see that there's a good safety profile for the molecule across patient populations and across the formulations.

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Nicholas Carl Rubino, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [21]

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Awesome. And I guess also we just noticed in the CLD population oral study, you have the 1-dose 2 times daily versus 3 doses or 3 times daily for AD. We just want to know the rationale between the choices you made between those 2 studies?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [22]

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Yes. As I said earlier, I think it was Jason who was arguing, we really see the liver study as a proof-of-concept there in that patient population so we went to the upper range of our tablet strengths there, really, to get proof of concept, get a signal there, and then we'll look at proper dose ranging in that group. And the reason we dosed them twice a day is they don't have, for the most part, any inhibition in kidney function. As I said, we ran our Phase I in that trial, and we know dosing twice a day is appropriate for that patient population for -- if I pick you up correctly, I think you're trying to say, for CKD, we dosed that once a day. And the reason for that, as the drug's eliminated essentially whole via the kidney, so on a CKD patient, they have a very long beta phase extension -- excretion phase on their PK. So they really only require once a day dosing versus a liver patient where the kidney function [is normal] and they take twice a day.

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Operator [23]

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And our next question comes from Charles Duncan with Cantor Fitzgerald.

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

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Congrats on the progress in the quarter. Had a quick one regarding KALM-2. Wanted to ask you about timing and sizing. Obviously, KALM-1 was a huge success. Notable data across all end points. But I'm wondering given that result, would you imagine that there could be, I'll call it, increased expectations for good results in KALM-2? And might you consider that in terms of the size of the trial, especially given the upcoming interim analysis?

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

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Yes. Thanks, Charles. Yes, you're right. We were -- and I think I said in our prepared remarks, we are very pleased with the data from KALM-1, where we saw very robust response across end points. So I think that feeds into our confidence that we modeled this correctly in terms of powering, which, as you know, was based on our Phase II KORSUVA data in hemodialysis patients. So my [laurels] wouldn't let me be overconfident in projecting and predicting how great our KALM-2 data is going to be. So we're going to wait and look at the interim analysis. But we have high hopes that, that interim analysis will reflect what we think should be adequate power for seeing a statistical difference there. But we're going to look at the data, and that's coming up in the next couple of months, and we're going to see the data readout by the end of the year on that trial.

So yes, you're correct. KALM-1 was confidence boosting in terms of where we see KALM-2. But at this point, we're going to follow the data and use our interim assessment and make sure we got that power assessment correct. Then again, I think you and others have pointed this out in the past, that with global trials, there can be differences in terms of variability versus U.S. trials. And again, just to reassure you here, we do designate KALM-2 as a global trial, but approximately 50% of the sites in that trial are also U.S., so we're fairly confident that, that should be reflective of the kind of standard deviations we've seen in KALM-1. But again, we're going to make sure of it, and we're going to run our interim conditional power assessment and we're certainly going to advise as to the outcome of that when we have that completed.

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

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Yes. Super. That makes sense to me. Also second question was regarding go-to-market strategy. I think you've mentioned some pre-commercial activities that you plan to engage in over the course of next year. What are some of those go-to-market or pre-commercial endeavors that you'll be pursuing beyond manufacturing? Would you be looking to hire some sales-type people or anything like that? And what would you anticipate the burn to be over the course of the year or spend for that endeavor?

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

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Yes. Thanks, Charles. Well, let me answer the last part of your question first. So in terms of sales and ultimate sales force, that's not something we're going to hire in the next year. That's really going to be ultimately dependent on the NDA approval. So the majority of the expenditure related to what we projected as the necessary sales force for this KORSUVA injection product, which we've said before is relatively modest to serve the dialysis population, somewhere around 65 to 70 sales reps. We're going to see the majority, in fact, almost all of that expenditure is going to come after NDA approval. So what we're talking about in terms of pre-commercial activities right now are standard MSL teams are being assembled. In fact, we have that hiring underway. We're going to embark on education related to the condition itself, both in terms of PI education and patient engagement related to that. We're engaging appropriate ad com boards related to CKD-aP in hemodialysis patients, both locally and nationally, and in fact, internationally, with our European partner, Vifor Fresenius.

So those are the types of activities that we actually already have underway. And obviously, making sure that we develop the appropriate infrastructure here internally at Cara as we convert from a, what I like to call, a company unburdened by revenue, to a company that will move towards a revenue-based biopharmaceutical company. So all of that is underway. All of that is going to be staged based on success. So -- and I can say, and Mani is sitting beside me, all of that's included in the budget from which we make our projections as to our runway after our last follow-on offering. So all of that's in there, but bigger spend is not going to come until we see certainty on our NDA approval.

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Operator [28]

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And our next question comes from Alan Carr with Needham & Company.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [29]

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Can you go over the planned interactions you have with the FDA now that you've got the Phase III KALM-1 data? And then also can you comment on -- and the timing of the NDA submission, what pushes this 2H '20?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [30]

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Yes. Thanks, Alan. So our interactions are really standard interactions for getting an NDA submitted. So we have internally begun to assemble all the necessary modules that are going to be part of the NDA submission. As we said before, all of the preclinical work required here is essentially done and that preparation is underway. And we said also before in this call, we have an upcoming meeting in the fall here with the FDA, and that's going to be really related to safety submission for the NDA and absolutely defining and having certainty on the format and form of how we're going to submit all of the safety data related to our NDA.

We'll also be, again, as we've said before on these calls, we'll also be investigating the composition in terms of the patient types that could be part of that safety exposure number and how we can get to that required number. And again, as we said before in this call, we've been implementing trials really related to ICH guidelines here that are going to achieve the full 1,500 exposures. It's possible that we may get some sort of break on that. As you know, we have breakthrough designation with the compound. So that's going to be the first interaction with the FDA, which is coming up in the fall. And then next year, and we're certainly going to advise as to when this happens, there'll be a standard pre-NDA meeting, where we're going to run through all the necessary requirements to make sure we have everything in place to allow filing of that NDA.

And then back to your time line questions. As you know, and we've guided more confident, we were projecting that we're going to have both KALM-1 and KALM-2 data available by the end of this year. We're also projecting that the majority of our safety exposures are going to come early next year. And with those in hand, then we'll have a full package that allows submission of the NDA. So that's the basis of the guideline that we see this happening in the second half of 2020. If there's some sort of development with the FDA, and we get some recognition of our breakthrough status and the quality of our Phase III data in terms of reduced safety exposures, we'll certainly guide to that. But we're guiding right now based on achieving this full ICH guidelines of the full quarter of safety exposures.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [31]

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Just one last one. Do you have any plans to present or announce any interim data from the -- from those open-label trials that you have running? Or will we only see something after they're completely done?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [32]

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Are you talking about the open-label safety trials, Alan?

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [33]

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Yes, yes, yes...

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [34]

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Yes. Of course, you're going to see an amalgamated safety data, both from KALM-1 and KALM-2, and we are in the process of submitting KALM-1 for publication to a peer-reviewed medical journal, and you're going to see that data, hopefully, relatively soon. And KALM-2 will follow. Ultimately, I think with the amalgamated safety data, that may be something we look to put out there, but that's not going to come in the near term, that's going to be something once we have everything collated and together and something that's meaningful in terms of the population that we want to summarize.

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Operator [35]

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And our next question comes from Esther Hong with Janney.

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Esther Lannie Hong, Janney Montgomery Scott LLC, Research Division - Director of Biotechnology [36]

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So on oral KORSUVA, if the FDA agrees to a single pivotal Phase III study and an sNDA is filed, where does that leave us in terms of a potential time line? Could we see oral KORSUVA in the nonhemodialysis patients launching within 12 months [or] shorter [of] the potential I.V. launch?

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

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Yes. Thanks, Esther. Think it's just a little too early to think about the NDA time line until we get the first Phase II. But I do admire your enthusiasm to push this along. We're equally excited by the oral KORSUVA potential. So if we think about this, realistically, we're going to see our first Phase II data from CKD stage III-V patients next quarter, before year-end, we've guided. And then if that's positive, you're correct, we'd certainly want to talk to the FDA about requirements for registration, and that would occur in 2020. Once we have that data collated. And we'd certainly aim to initiate registration trials as quickly as we possibly could after that meeting. So that would be the -- that would probably be as far as I'd want to project at this point, and depending on the data and the receptivity to the idea we've just discussed in terms of sNDA, then we could guide as to the time line for NDA. But at this point, we're focused first on Phase II data, and then hopefully, with positive outcome, we'd look to an end of Phase II as soon as we could in 2020.

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Operator [38]

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(Operator Instructions) Our next question comes from Arlinda Lee with Canaccord.

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Eunshuk Shim, Canaccord Genuity Corp., Research Division - Associate [39]

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It's Ben calling in for Arlinda. I just had a quick question on atopic dermatitis. Can you give us a little bit more color on the enrollment criteria? What have your KOLs advised you on who to exclude or include?

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

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Yes. Thanks, Ben. Thanks for that question. So as I said earlier, we're actually looking at the whole range of the AD patient population. So we're looking at both mild to moderate disease, if you like as well as moderate to severe. So we're going to look at all patient types. And then we're going to stratify them within the groups in the trial. But the main criteria for entry here is going to be moderate to severe pruritus. So that's going to be assessed in a [run-end] period, they have to qualify with moderate to severe, and then they're entered into the trial. We're not going to allow any background medication. There's going to be a washout period for those patients where we're going to remove all current topicals or certainly systemic medications.

There's not going to be allowed any rescue medication for the first 4 weeks of that trial and any use of a rescue medication there would lead to discontinuation. After 4 weeks, because of the PI judgment for the patient there, we could convert a patient to topical use and remain in the trial receiving drug treatment, but that patient would then be qualified as a nonresponder. So we have thought quite carefully about that population. There will be a washout period, no concurrent systemic or topical antipruritics, possibility of a rescue with a topical only, any use of a rescue with a systemic would nullify that patient and they'd move to discontinuation.

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Eunshuk Shim, Canaccord Genuity Corp., Research Division - Associate [41]

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Okay. Great. That's very helpful. I know you've been spending most of your time talking to CMS. Have you engaged or at what point will you engage the commercial payers and have you already gotten any feedback from them?

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [42]

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Yes. Again, as with Esther's questions, a little early on that. Once we get our first efficacy data on Phase II, and we have a path to registration and we know what that path looks like, then that's the point we start thinking about the engagement on the commercial side.

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Operator [43]

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I'm not showing any further questions at this time. I would now like to turn the call back over to Derek Chalmers for any closing remarks.

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Derek T. Chalmers, Cara Therapeutics, Inc. - Co-Founder, President, CEO & Director [44]

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Great. Thanks, Jewel. Thank you, everybody, for joining us on today's call. I'd like to take this opportunity to quickly thank the Cara team here in Stamford, Connecticut, our study investigators and most importantly, the patients who participate in our trials. We would not be where we are today without your commitment and support. And we look forward to updating everybody again soon. So thank you very much, everybody.

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Operator [45]

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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.