Cara Therapeutics, Inc. (CARA) CEO Derek Chalmers on Q2 2020 Results – Earnings Call Transcript

Cara Therapeutics, Inc. (NASDAQ:CARA) Q2 2020 Earnings Conference Call August 10, 2020 4:30 PM ET

Company Participants

Jack Hildick-Smith – Stern IR

Derek Chalmers – President and CEO

Rick Makara – VP and Head, Accounting

Conference Call Participants

Chris Howerton – Jefferies

David Amsellem – Piper Sandler

Annabel Samimy – Stifel

Jason Gerberry – Bank of America

Alan Carr – Needham & Company

Operator

Good afternoon and welcome to Cara Therapeutics’ Second Quarter 2020 Financial Results Conference Call. All participants are now in listen-only mode. There will be a question-and-answer session at the end. 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.

Jack Hildick-Smith

Good afternoon. This is Jack Hildick-Smith with Stern Investor Relations and welcome to Cara Therapeutics’ second quarter 2020 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 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 data readouts from the company’s ongoing clinical trials, the potential results of ongoing clinical trials, timing of future regulatory and development milestones for the company’s product candidates, including the company’s projected timeline for the submission of its first NDA, the potential for the company’s product candidates to be alternatives in the therapeutic areas investigated, and the company’s 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 most filed quarterly report on Form 10-Q and its other documents subsequently filed with or furnished to the Securities and Exchange Commission.

All forward-looking statements made in today’s call speak only as of the date on which they were made. Care Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Participating on today’s call are Dr. Derek Chalmers, Cara President and CEO; and Mr. Rick Makara, VP and Head of Accounting.

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

Derek Chalmers

Thank you, Jack. Good afternoon everybody and thanks for joining us this afternoon. So, in the second quarter, we have made significant advancements in our development programs for both KORSUVA Injection and Oral KORSUVA across a range of probiotic indications.

In April, we were pleased to report positive topline data from the KALM-1 trial, our second pivotal Phase 3 trial of KORSUVA Injection for chronic kidney disease associated pruritus or CKD-AP and in hemodialysis patients.

The robust antipruritic advocacy of KORSUVA Injection in this study was consistent with that observed in our first Phase 3 KALM-1 trial and we remain on track to submit our NDA in the fourth quarter of this year.

We’re also making good progress and advancing the development of Oral KORSUVA across a number of patient populations where providers continues to be a significant unmet need

Recently, in Q2, we completed a plan interim statistical analysis of our care Phase 2 dose ranging trial of Oral KORSUVA for the treatment of moderate to severe pruritus and atopic dermatitis patients. The sample size adjustment post analysis of proximately 28% will allow us to maintain the pre specified desire statistical hiring of that study, and we project to complete enrollment in the fourth quarter of this year.

Due to the ongoing COVID-19 pandemic and in accordance with the FDA’s updated guidance for conducting clinical trials, we have implemented numerous clinical and operational measures to prioritize the health and safety of patients, of our employees, and study investigators and minimize potential disruptions to ongoing clinical studies.

Although we experienced some COVID-related closure at certain clinical sites for ongoing Phase 2 studies in Q2 due to the entire Cara team’s continued dedication and very hard work, we’ve not completed all clinical trials and of course all databases for NDA selection and we continue to enroll patients across ongoing Oral KORSUVA trials.

Now, let me share an overview of each of our ongoing programs starting with our lead program for KORSUVA Injection and hemodialysis patients. So as a reminder, this is a patient population where approximately 40% to 50% of patients suffer from moderate to severe pruritus.

For the National Kidney Foundation, there are over 500,000 patients on dialysis in the U.S., and approximately 60% experienced some form of pruritus. Pruritus can severely worsen patient’s quality of life including sleep disturbances, depression, and anxiety. And it’s also associated with increased morbidity and mortality in severe patients. There is still significant unmet need with no therapies currently approved in the U.S. or Europe.

So, we believed KORSUVA Injection has significant potential to change the treatment paradigm for these specifications. Our pivotal program inputs for Phase 2 studies KALM-1, our U.S. efficacy trial which read a positive the topline data last year. KALM-2 a global efficacy trial which right read a positive topline data in April of this year, and two open label safety trials. Both KALM-1 and KALM-2 were designed to investigate the efficacy of KORSUVA Injection at a dose of 0.5 micrograms per kilo versus placebo, administered three times per week after scheduled dialysis sessions over a 12-week treatment period.

Both Phase 3 trials achieved statistical significance on both the primary and key secondary endpoints and then both pivotal to KORSUVA Injection was generally well-tolerated with a safety profile consistent with our prior clinical trials.

All safety databases for our Phase 3 program are now closed with total safety exposures in excess of ICH guidelines to support the NDA submission with more than 1,500 total patient exposures achieved, including more than 700 patients completing at least six months of continuous treatment, and greater than 400 patients completing one year of treatment.

Our focus now at Cara is on preparing our NDA package for submission to the FDA next quarter, at which point we will also be applying for priority review status as of course, KORSUVA Injection has breakthrough therapy designation for this indication.

Pending approval, we’re planning for KORSUVA Injection commercial launch in the U.S. as early as next year and we’re focused on executing a cross-functional plan to ensure commercial preparedness.

We already established the national MSL Group at Cara and they will been innovative and working hard, even in the present COVID environment, employing virtual format symposia, and engaging KOLs electronically in an effort to increase awareness of CKD-AP through disease education.

We’ve also established a commercial manufacturing agreement for KORSUVA Injection, and we’ve begun to fill senior positions in sales and marketing. Outside of the U.S., we’ve established commercial license agreements in other major commercial markets, including the EU, Japan, and South Korea. In the EU, our agreement with Vifor Fresenius allows us to leverage both the nephrology focused expertise of the Vifor salesforce and Fresenius broad reach to dialysis patients across Europe. Vifor Fresenius are planning to submit for a marketing authorization approval to the EMA, shortly after we complete the NDA submission next quarter.

We’re very pleased with the consistent, robust results across our KALM Phase 3 program and we’re now focused on finalizing our NDA package for submission in the coming quarter. And of course, we’re going to continue to update you on our commercial strategy as we approach filing.

I’d also like to briefly take you on our pipeline programs focused on Oral KORSUVA across a range of pruritic patient populations. So, starting with our lead program in pre-dialysis CKD patients with moderate to severe pruritus. Pruritus is a condition that affects a significant number of pre-dialysis patients. Out of approximately 7.5 million people diagnosed with CKD in the U.S., we know about 33% received some sort of treatment for pruritus, so its approximately 2.5 million patient prescriptions. These treatments are typically generic anti-histamines or corticosteroids neither of which effectively alleviate the pruritus burden long-term for these patients.

In December last year, we reported positive topline results from our 12-week Phase 2 trial evaluating the safety and efficacy of three tablet strands of Oral KORSUVA; 0.25, 0.5 and 1 milligram once daily. Based on that data, we identified the one mg tablet strand for Oral KORSUVA as the dose level to take forward into Phase 3.

So, given Oral KORSUVA’s potential investigation population, we’re eager to move to a registration program as soon as we can. And to that end, we plan to launch the safety portion of the pivotal Phase 3 program in CKD-AP in the fourth quarter of this year prior to a plan end the Phase 2 meeting with the FDA, which we predict to take place in the first quarter of 2021.

We’re also currently evaluating Oral KORSUVA and ongoing Phase 2 trials for a atopic dermatitis or AD, and Primary Biliary Cholangitis or PBC. And as many of you know, of course, a D is one of the most common chronic inflammatory diseases, with prevalence rates up to 5% in adults, and approximately 25% in children.

Pruritus is the defining symptom of atopic dermatitis with a point prevalence estimate estimated at almost 100%. A majority of patients around 80% are in the mild to moderate pathology category with biologics are not indicated and current treatments consisting of topical corticosteroids, high dose anti-histamines or anti-depressants simply fall short for these patients for that condition.

So we believe Oral KORSUVA has the potential to be a first-in-class anti-pruritic product with a favorable safety profile for patients with atopic dermatitis. Our ongoing KR Phase 2 dose ranging trial was designed to randomize 50 patients across three tablets strands, 0.25, 0.5, and 1 milligram, taken twice daily versus placebo.

In June, we completed our planned interim conditional power assessment, conducted after approximately 50% of the original targeted patient number, completed the designated 12 week treatment period.

Based on the independent data monitoring committee’s recommendation, we increase the trial size from 320 patients to 410. This increase allows us to maintain the pre-specified statistical power of 80% or greater on the trials primary mean NRS change endpoint from baseline and the key secondary, greater than four point responder endpoint, which is the accepted clinically meaningful endpoint for regulatory approval of therapeutics for pruritic dermatological indications.

With additional clinical sites added in Q2, we expect to have this trial fully enrolled in the fourth quarter of this year. We are also enrolling patients in our ongoing POC Phase 2 trial of Oral KORSUVA and PBC patients with moderate to severe pruritus.

Pruritus is a common symptom of cholestatic liver diseases with 20% to 30% of patients experienced in pruritus with a prevalence of up to 70% in patients with PBC. Our 16-week trial is designed to evaluate the safety and efficacy of 1 mg tablet of Oral KORSUVA taken twice daily versus placebo in approximately 60 patients and the primary endpoint give us a change from baseline, and the weekly mean of the daily 24 hour [ph] score at week 16.

Similar to our AD study, we’re expanding clinical sites where we can, however, due in part to COVID-19 impact, we now anticipate reporting topline data from this POC study in the first half of 2021.

So, overall, we’re pleased with the progress made across all of our development programs in the second quarter, particularly in the present environment. And we’re looking forward to achieving significant regulatory and clinical milestones through the end of this year and into 2021.

So, with that, I’ll turn the call over to Rick to cover the financial results for the second quarter. Rick?

Rick Makara

Thank you, Derek. As a reminder, the full financial results for the second quarter of 2020 can be in our press release that was issued today after the market closed. For the second quarter of 2020, we reported net loss of $25.1 million $0.54 per basic and diluted share compared to a net loss of $23 million or $0.58 per basic and diluted share for the same quarter of 2019.

In the second quarter of 2020, we recognize revenue of $4.5 million related to Vifor Fresenius of the license agreement compared to $5.2 million during the same quarter in 2019. Also in the second quarter of 2020, we recognized approximately $600,000 of license and milestone revenue related to a milestone payment received from CKD Pharmaceutical Corp.

Additionally, we recognized approximately $500,000 of clinical compound revenue in the sales of clinical compound in the second quarter of 2022 to Maruishi and Vifor. There were no sales or clinical compound or milestone revenue for the three months ending June 30th, 2019.

For the second quarter of 2020, we reported R&D expense of $26.1 million compared to $24.4 million in the same period of 2019. The higher and higher R&D expense in 2020 were primarily due to increases in stock-based compensation expense, payroll and related costs, and cost of clinical compound sales, partially offset by a net decrease in clinical trial cost, conferences, and travel and related costs.

G&A expenses were $5.4 million during the second quarter of 2020 compared to 5 million in the same period of 2019. The increase in 2020 was primarily due to increases in consultant’s costs, legal fees, insurance costs, partially offset by a decrease in stock-based compensation expense.

Other income was approximately $600,000 in the second quarter of 2020 compared to approximate $900,000 in the same period of 2019; the decrease is due to lower interest income on our investments in marketable securities.

As of June 30th, 2020, cash, cash equivalents, and marketable securities totaled $153 million compared to $218.2 million as of December 31st, 2019. The decrease primarily resulted from cash used in operations, slightly offset by proceeds from the exercise of stock options.

Turning to our financial guidance, based on projected costs for our clinical development plans, we expect that our cash, cash equivalents, and marketable securities as of June 30th, 2020, will be sufficient to fund our operations into the second half of 2021 not accounting for any potential milestone payments under existing collaboration.

Now, I’ll turn call back over to the operator for Q&A.

Derek Chalmers

Jimmy, you want to pick up on the Q&A. Jimmy? Jack, can you direct the Q&A from your line?

Question-and-Answer Session

Operator

Apologies for the wait. Now, for the Q&A session. [Operator Instructions]

Our first question comes from Chris Howerton with Jefferies. Your line is now open.

Chris Howerton

Great. Thanks for taking the questions. Appreciate it. So, I guess, first, just kind of thinking about financials moving forward, how should we expect the G&A line to change kind of going into potential approval and NDA submission and obviously, commercial preparations?

As a corollary to that, what have you disclosed about potential milestones for approval with your agreement with presenting it? And then the third question for me is I’m not sure if we discussed this in the past, Derek, and I apologize If I’m just forgetting but with respect to the sample size, readjustment for the atopic, dermatitis trial, what specifically do you think was different in terms of your initial empowering assumptions versus what you actually observed within the trial? Thanks again.

Derek Chalmers

Hi, Chris. That was expertly done to get three questions in there. So, let me start with that — let me start on the financials and the milestone related question. So, we’ve talked about this before and it’s certainly out there and publicly available, this $30 million and approval milestones associated with the Vifor Fresenius agreement and as Rick highlighted again, of course, those are not incorporated into our one-way projection based on current finances.

What is incorporated in there in terms of runway projection is projected commercial costs and of course, MSL costs going through into 2021. So, those are already in there. I mean, we don’t, as you know, guide quarter-to-quarter on changes in particular financial subgroups, but what I can tell you as the majority of that commercial cost is going to be incurred at approval. So, all of that questioning is there, Chris, all the way up to approval and we wouldn’t fully activate a salesforce until we have the label approval.

On the AD side — on the sample size adjustment here, it was — with — it’s a new classification, if you like, as you know, we’ve dominantly been generating data and CKD-associated pruritus and this is our first patient group we could categorize as dermatological inflammatory. And so we made some assumptions based on a sample size, but of course, we made them from a different patient category in CKD.

So, the sample size increase here was not to be unexpected. That’s one of the reasons as you know; we employ this strategy and basically all of our large clinical trials to mitigate the risk of a new mess here. So, the other aspect of that sample size re-estimation is, for the first time we’ve looked at two endpoints simultaneously, one of which, of course, is the regulatory approval endpoint not support point responder. So, that’s the higher threshold if you like endpoint.

So and looking at both of those is perhaps not surprising that we see a slight adjustment in sample size. And we should say at the end of the day, if this ends up being $1 versus placebo sample size adjustment, we’re still at a sample size of there’ll be approximately 125 per group, which is less than that we’ve used in our Phase 3 studies in CKD associated pruritus.

So, we think that augurs well in terms of the size of that effect, it remains to be determined of course when we get the topline data, but that sample size adjustment is in line with what we’d expect for patient reported outcome, such as, such as pruritus.

Chris Howerton

Right. Yes. Okay. And what was — there was — what was the maximum size that you could have increased to was more than you did, right?

Derek Chalmers

Yes, yes. It could have gone up much higher with that. I think — total patient population could have been close to 500 on a trial. So, we definitely didn’t get the maximum upsizing advice from the IDMC.

Chris Howerton

Okay. All right. Well, very good. Well, thank you for taking the questions and I’ll hop back in the queue.

Derek Chalmers

Thanks Chris. Thanks for dialing in.

Operator

Thank you. And our next question comes from David Amsellem with Piper Sandler. Your line is now open.

David Amsellem

Hello and thanks. So, just a couple first. Eric, can you just give us your updated thoughts on pricing for IV KORSUVA and maybe help us in your thought process regarding what analogs, comparators, et cetera might make sense here. So, that’s number one.

And then secondly, I had a question about the PBC program. So to the extent that you do show proof-of-concept in that program, do you expect that a pivotal study would factor in a wider population of liver disease patients? Or do you expect that the FDA will have you remain on the narrower PBC pathway in terms of indication? Thanks.

Derek Chalmers

Thanks, David. Those are good questions. So I think we’ve had this kind of general discussion before on the pricing, analogs, if you like for KORSUVA injection, of course, that remains to be determined. It’s still very early. We certainly need to have a label, first of all, before we get to the details of that.

But that — I think I’ve said in the past, I think, there’s some relevant comparators there that versus if you like, serious symptom treatment, take a drug, and it might be analogous to something like a highly differentiated pain drug. In terms of price point, of course, it’s going to be part of the TDAPA system related to the ESRD bundle payment.

And there we don’t really have a lot — as you’re well aware, a lot of examples to look at in terms of available price point, there is one drug that’s run through the TDAPA system, and that’s Amgen placebo which is about to end this the TDAPA period this year. That drug priced in the high teens approximately 17,000 annually and as you’re well aware, of course, that was really an intravenous formulation of a calcimimetic for which there are other alternatives available.

So that might be one price point that’s certainly been out there and being paid by CMS. Interestingly enough, in the latest update to the ESRD bundle legislation, which was published in July, CMS is proposing to provide additional monies to pay for placebo post-TDAPA. And if you work that out, based on the per session increasing and reimbursement there looks like it’s approximately $800 million annually. So that’s good news.

On the first time, we’ve actually seen some data related to where CMS may go and post-TDAPA funding, but I think we said in the past, somewhere between highly differentiated pain type drug and maybe a novel derm drug with some premium related to being a first-in-class breakthrough medication, those would be kind of the bookends on that.

And then moving on to the PBC studies here. So the way we look at the Oral KORSUVA potential here is that we are certainly interested in pursuing registration programs for CKD pre-dialysis program, patients rather, and certainly for atopic dermatitis should we see the whole process of top line data there.

In terms of PBC and other liver disease-associated pruritus, that’s an area where we’re generating data that we hope is going to be supportive to getting a general label ultimately on that oral formulation. It may not be a program we run into registration as rapidly as those two other programs have ever happened.

I thought you’re well aware; there is a large number of liver disease patients where pruritus is a significant issue. So it may be something we revisit down the line, but the way we’ve designed that original trial is really to obtain the data to support the idea that we have a mechanism which should be broadly applicable across patient populations and support that discussion, we aim to have with the FDA down the line, that really Oral KORSUVA should justify a broad antipruritic label across patient populations.

David Amsellem

Thanks. That’s all I have. I’ll back in line.

Derek Chalmers

[indiscernible]

David Amsellem

No, that’s great. Thanks.

Operator

Thank you. Our next question comes from Annabel Samimy with Stifel. Your line is now open.

Annabel Samimy

Hi, all. Thanks for taking my question. So I see that you’re not going to have the 3 — Phase 3 — I’m sorry, the post Phase 2 meeting with FDA about the Phase 3 program for pre-dialysis until first quarter 2021, but you’re in advanced going to start your safety studies. So can you just describe that what exactly do they think the safety study is going to entail for this specific program? How much are you going to be able to draw from IV?

And as a second question, when it comes to the discussions with FDA with regard to the endpoints that you’re looking at, can you just confirm for IV KORSUVA that those are the secondary endpoints are not regulatory endpoints, but rather more to characterize clinical benefits for the label? Will FDA be looking at those on a pool basis, where are you going to be presenting them on a pool basis, any color there would be great? Thank you.

Derek Chalmers

Thanks, Annabel. So yes, so the end of Phase 2 meeting for Oral KORSUVA, we will be requesting that meeting next quarter. But there’s a timeline associated with getting that scheduling from the FDA. So we do expect that to happen most likely in Q1. So in order to get ahead of that timeline, if you like to get that NDA submission, when we want to get that NDA submission, and clearly one of the bottlenecks in these programs is the one year exposure data.

So our plan is to start that open label safety trial as quickly as we can next quarter even ahead of that meeting where we really don’t need any definition or further feedback on endpoints where we’re looking for safety exposures, and the appropriate patient population. So that’s the idea of that sequencing, get ahead of the timeline, start the long-term exposures early and then clarify what we need to clarify with the FDA at the subsequent meeting.

We also wanted to make sure CMC reviews an important component for that end of Phase 2 meeting. And that timeline allows us to ensure that we have completed, essentially all the analytical and specification reviews, we need to the Phase 3 standards to make sure we can have a successful end of Phase 2 meeting. So that’s part of that timeline as well.

And what was your other question — oh, yes. So the other part of that, of course, yes, is that we already essentially have safety exposures from our hemodialysis patient population. So obviously, that will be part of our end of Phase 2 discussion as to use in those patients as part of our overall exposure numbers since essentially we’re looking at the end stage versus earlier stage for the Oral KORSUVA program. So that will be part of the discussion and theoretically it has certainly been the case with other applications where there’s a change in formulation, but within the same patient population, it may be possible that we could conduct that registration program with one pivotal trials, not certain.

Again, it’s an item for discussion with the FDA, but certainly something we think is possible and worth raising based on the precedent we see it there from other previous programs. So that will be something we’ll be looking at.

And then your final question, Annabel was on endpoints for the oral?

Annabel Samimy

Yes.

Derek Chalmers

Yes. So the endpoints for the oral, as you know, we conducted our Phase 2 trial or dose range in trial using our most sensitive endpoints to find the optimal dose and that’s the continuous endpoint of NRS measuring itch difference from baseline included for secondary there, which was the three-point responder, which — and as patient population we’ve defined by psychometric analysis is as the level for clinical meaningfulness for CKD patients experiencing moderate to severe psoriasis. So that will be the proposed registration endpoint the three-point responder endpoint for the oral.

Annabel Samimy

Okay, sorry, I actually meant for KALM-2, but let me just put that aside for a minute. I just wanted to follow-up on something you said for the safety studies for this pre-dialysis population. Given that hemodialysis patients are essentially — the drug is essentially cleared for them. Do you think there might be any different metrics that they’re looking at in this pre-dialysis population given they have compromised kidney function?

Derek Chalmers

No, we’ve run the PK analysis and some detail across each of these predefined pre-dialysis stages for CKD. We know precisely how is excreted and these various stages. Hence, the ones daily administration suffices for CKD pre-dialysis patients whereas, and as you know, just to reiterate for everyone who is forgotten here, of course, could serve as a created almost exclusively via the kidney. And whereas when we move away from these, dialysis and pre-dialysis CKD patients to normal, if you like kidney functioning patients such as an entire session we offer that those in paradigm to BID so they get their drug twice daily. So we have that modeled, across the various populations and we know exactly how it’s excluded. We know what it takes to get to steady state and each of those populations and that’s helped define the dose and paradigm you see in these various Phase2 studies.

Annabel Samimy

Okay. Got it. Thank you.

Derek Chalmers

Thanks, Annabel.

Operator

Thank you. Our next question comes from Jason Gerberry with Bank of America. Your line is now open.

Jason Gerberry

Hey, good evening, and thanks for taking my questions. Derek, can you tell us a little bit about how you think about the pivot to going commercial next year in terms of when you’ll start to incur some of the commercialization costs versus, bringing folks on a contingency basis? Would you expect, we really won’t start to see that spend incurred until, and, of course, who was approved?

And then, you know, I appreciate the commentary on the cash runway. Can you talk about are there any alternative financing measures on the table mindful that your next sort of natural catalysts would presumably be the Phase 2b data? So this sort of wondering how you’re sort of thinking about managing some of these puts and takes in terms of the capital or runway? Thanks.

Derek Chalmers

Yes. Thanks, Jason. Thanks for those questions. So, in terms of preparations, pre commercial activities they’ve been underway for quite some time at the company. So we’ve established — actually we’re expanding our national MSL team, who are working to broaden our KOL universe, increase awareness of CKD-AP they’ve been establishing regional national advisory boards.

The usual sponsor in our strategic education opportunities, including CME symposia at the appropriate meetings and actually NKF group’s adopted well to the current environment. And those have been virtual essentially since Q2.

And we’ve been increasing our publication footprint to support you know, dissemination of information out there for nephrologists. So all that’s been underway for quite some time leading back into early last year, we’ve also established our commercial manufacturing capabilities with our CMO that’s in place and ready to roll. And we recently completed our first senior commercial hire.

So we’re not moving down into the larger numbers required for sales force, as I said earlier, until we get all the way to approve on this, but we’re filling in the senior management positions and all that’s included in the projections that we’ve talked about today. We’ve initiated, you know, licensing applications through for all of the stage, we already have approval on CT.

And we continue with these, cross functional plans to make sure we’re ready for launch but the biggest uptake in terms of band and that commercial, of course, comes with the introduction of the sales force, and as I said earlier, that’s not going to come until approval. So that’s a 2021 event. So until that point, this is a relatively modest. And you’re going to see here going forward through into 2021.

In terms of finance, and as you know, we’ve been, I think, quite opportunistic and going to the capital markets, usually, it’s been catalyst driven follow on offerings where we see a response in our — in our valuation, and we’ve gone to the capital markets for that, if we have a good balance sheet at the minute going forward, but we are always looking for opportunities, Jason.

And if it’s appropriate, and there’s an agreement that can propel us to where we need to be across our various programs, either involve in territory, or with a new partner, perhaps, where appropriate, we are certainly looking at those opportunities. So we’re open to those. There are possibilities there and we’re just going to look for the most valuable mechanism and means to make sure we have the appropriate balance sheet when this — when this stroke is up for launching.

Jason Gerberry

Okay. And if I can squeeze a follow-up in the mechanics of getting your to adapt add-on payment status. How much time kind of post approval do you think? And to what extent you might think there could be a lag factor in terms of getting here to adapt past payment status approved?

Derek Chalmers

Yes. That is relatively quick, but it could add, it could be a case of a quarter in terms of extra timeline that may be necessary to make sure we have that, all tied up and ready to go. So that could turn into an additional period.

Jason Gerberry

Got it. Thanks.

Derek Chalmers

Thanks, Jason.

Operator

Thank you. Our next question comes from Alan Carr with Needham & Company. Your line is now open.

Alan Carr

Thanks for taking my questions. Tell us bit more about the safety trial, the overall safety challenge. Can you give us a sense of the size of that? And then, actually, can you also elaborate a bit on what’s gating for that in the Phase 2 meeting — the oral formulation in CKD? Thank you.

Derek Chalmers

Great. Thanks, Alan. Let me take the second one first, because I think it kind of mentioned this, and I’m in response to David. But you know, of course, in Phase 2, we want to clarify our clinical plan, make sure that the FDA is in agreement with endpoints and design and so on. But a big part of that meaning of course, is CMC related.

And at this point, we want to make sure we have appropriate analyticals specification analysis for our oral formulations but meet Phase 3 through a commercial level. So that’s what we’re running through at the minute. That’s really the gating factor. And that’s as we have to manufacturer at scale for those. And that whole process has been transferred from our biotech partner, which is Enteris over to our CMO.

So that process is well underway, but that it’s important that we have that complete prior to the meeting. So that’s — that’s the main element we need to get. And that fits in nicely with the timeline. I’ve indicated here, we’re applying end of the Phase 2 next quarter, based on the schedule and timeline we know what the FDA, we should have everything complete in time for that — for that Q1 and Phase 2 meeting.

And then on your first question, I wish I had more detail to tell you that something that’s underway in our clinical team in terms of the design of that open-label safety trial is likely to be 200 to 250 patients, I would imagine to make sure we can get that — the numbers where the need to be for the long term exposure there and considering potential dropout rates, but I don’t — there is no final design element ready for me to really at this point. But we will certainly disclose that when we start the study.

Alan Carr

Okay. Thanks for taking my questions.

Derek Chalmers

Thanks, Alan.

Operator

Thank you. [Operator Instructions]

Our next question comes from Ben Jim [ph] with Canaccord. Your line is now open.

Unidentified Analyst

Hi. Thanks for taking my questions. Derek, for atopic dermatitis and liver, how often are the enrolled patients physically checking into the clinic? And are you seeing a difference in enrollment hesitancy or pace between the two trials? And then my second question along the lines of new hires, can you update us on the search for new CFO? Thanks.

Derek Chalmers

Yes, thanks, Ben. So, I mentioned this in the prepared remarks that we have seen some effects in terms of the COVID-19 environment on enrollment, at both the AD and the PBC related Phase 2 for both of those files, there’s been issues with opening up new sites or indeed losing some sites, particularly end of Q1 and Q2.

But for AD, we’ve actually seen a very nice rebound in terms of enrollment rates. And we have opened up novel face in Q2 which have brought additional patients to that trial. So that enrollment level in AD has recovered very nicely almost to pre-COVID level. So that’s done rather well.

The PBC enrollment has suffered from our inability to open some accu-air sites, which we know are going to supply, significant numbers of patients. As you know, that’s an often indication. So it has been challenging to bring those in. So, that has suffered a little bit and that we couldn’t open those sites, additional sites due to the COVID environment that’s improving that.

And we hope to add those later in the year. Hence, the guidance that we see that data been delayed in terms of top line to the first half of 2021. So there has been some effect, but we’re still seeing patients enrolled. And actually, in the case of atopic, we’re seeing very healthy enrollment rates, and really, these patients come back to the clinic really just to renew their tablets supply. So they come back, I believe it’s every two weeks to get that tablet supply and maybe take some clinical measurement to that point. So that’s how that is designed.

On the other question, yes, on the CFO front, we do have an active search underway. We’ve been screening candidates for quite a while. And I hope to have some news for you on that front in the coming — in the coming quarter.

Unidentified Analyst

Very helpful. Thanks for taking my questions.

Derek Chalmers

All right, Ben. Thanks for dialing in.

Operator

Thank you. And I’m showing up for the questions in the queue. At this time, I’d like to turn the call back to Derek Chalmers for any closing remarks.

All right. Thank you, Jimmy. And thank you everybody for participating in today’s call. I’d also like to thank the Cara team, our study investigators and all of the patients who continue to participate in our clinical trials. And we certainly look forward to updating you all again very, very soon. So stay safe, stay healthy. Thank you very much for dialing-in. Take care.

Operator

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude your program and you may now disconnect.

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