After settling at $18 at the beginning of October, Cara Therapeutics (NASDAQ:CARA) proceeded to climb back to the $20s. Its market capitalization approached $1 billion again last week. Why? Markets are enthusiastic that its presentations at Kidney Week 2019 will bring positive news. Here is why biotechnology investors should put CARA stock on their radar.
Cara stock may get a boost this week. Kidney Week 2019, the American Society of Nephrology’s Annual Meeting, is set for Nov. 5-10, 2019, in Washington, DC., unfolds.
Cara is developing and commercializing new chemical entities that will alleviate pruritus (itching as a symptom). It works by selectively targeting peripheral kappa opioid receptors. At the annual meeting, Cara will present data from KALM-1, a Phase 3 clinical trial. IT will also share data for its Phase 2 trial of KORSUVA Injection.
Per Cara’s press release, “KORSUVA Injection is Cara’s first-in-class drug candidate designed to target kappa opioid receptors in the body’s peripheral nervous system, as well as certain immune cells.”
Recent Quarterly Report
Cara Therapeutics reported a GAAP EPS loss of -$0.58 on revenue of $5.2 million. These are not meaningful results because the company is still in the developmental stage of drugs.
What matters is its cash balance and the progress of its clinical trials. In July 2019, Cara sold 6,325,000 shares. This included the full exercise of the underwriters’ option to buy 825,000 additional shares at $23 a share. This net $136.4 million on Cara’s balance sheet.
In the quarter, the company said it started a Phase 2 trial of Oral KORSUVA for treating pruritus in patients with AD (atopic dermatitis). The AD market itself is a multi-billion opportunity.
Pfizer (NYSE:PFE) is developing oral drugs for AD. Regeneron Pharmaceuticals (NASDAQ:REGN) is generating billions from Dupixent, an injectable drug for treating the disease. XBiotech Inc. (NASDAQ:XBIT), whose market cap is half that of Cara, presented its findings for bermekimab in AD treatment in Spain on Oct. 9-13.
Clinical Trial Developments and CARA Stock
Cara saw good safety exposure achieved with Korsuva Injection. So, it could argue that this treatment would get NDA approval and would be a candidate for SNDA (supplemental new drug application) with the FDA.
In its AD study, Cara is looking at all patient types. It will then stratify them in groups in the trial. During that trial period, it will not allow any rescue medication for the first four weeks. It has the option of converting a patient to topical use while leaving them in the trial for drug treatment. And although the subject is qualified as a non-responder, the results will still add meaningfully to the study.
Oral Korsuva is not really subject to the TDAPA risks (Transitional Drug Add-on Payment Adjustment) three years from now. So, Cara will direct oral Korsuva towards pre-dialysis patients. There is a significant clinical need here. An estimate of around 30% from multiple sources of that patient population suffering from pruritus and do not have an effective treatment.
The IV form of treatment is ideal for the hemodialysis population. The treatment involves drugs administered three times a week after each dialysis session.
Your Takeaway on CARA Stock
Three of the analysts on Wall Street who follow CARA stock are highly bullish. The average target price is $32.67, 54.5% above its recent $21.15 closing price (per Tipranks). Holding Cara Therapeutics stock is not without risks. Any disappointing results from its studies would send the stock lower.
But with plenty of cash on the balance sheet, the company has the resources to carry out its clinical studies. Those who believe the company will bring a drug to market will get rewarded when that eventually happens.
Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities.