Cara Therapeutics Inc (NASDAQ: CARA) is having an overwhelmingly strong start to the trading session in the pre-market hours, and for good reason. The company announced that it has entered into a license agreement that will generate a massive amount of funding and likely help to improve revenue and profits. Today, we’ll talk about:
- The license agreement;
- what we’re seeing from CARA;
- and what we’ll be watching for ahead.
CARA Announces License Agreement
As mentioned above, Cara Therapeutics is having an incredibly strong start to the trading session in the pre-market hours after announcing that it has entered into a license agreement. In a press release issued early this morning, the company announced that it has licensed worldwide rights, with the exception of the United States, Japan, and South Korea, to commercialize KORSUVA to Vifor Fresenius Medical Care Renal Pharma Ltd, a joint company of Vifor Pharma Group and Fresenius Medical Care. KORSUVA (CR845/difelikefalin) is an injection designed for the treatment of chronic kidney disease-associated pruritus in dialysis patients.
Under the terms of the agreement, CARA will receive a payment in the amount of $50 million cash up front. This payment will be combined with an equity investment in the amount of $20 million at a price of $17 per share. The company will also be eligible to receive additional payments of up to $470 million, including $30 million in regulatory milestones and up to $440 million in tiered commercial milestones that are sales related. On top of these payments the company will also be eligible to receive tiered royalties based on net sales in licensed territories. In a statement, Derek Chalmers, Ph.D., D.Sc., President and CEO at CARA, had the following to offer:
As a global leader in providing treatment for chronic kidney disease patients, VFMCRP is an ideal partner to bring KORSUVA injection to dialysis patients across Europe and other licensed territories… Additionally, we believe the ability to leverage VFMCRP’s nephrology-focused commercial expertise in our co-promotion partnership for U.S. Fresenius Medical Care dialysis facilities will provide significant momentum for adoption of KORSUVA injection, if approved in the U.S. Importantly, we continue to retain all rights to KORSUVA/CR845 in other indications.
The above statement was followed up by Stefan Schulze, President of the Executive Committee and COO at Vifor Pharma. Here’s what he had to offer:
CR845 injection is a first-in-class, innovative investigational medicine for treating a highly debilitating disease. It is a natural fit to our leading product portfolio in nephrology, and we look forward to making it available to patients who urgently need better therapy… Sixty to 70% of dialysis patients experience CKD-aP. Nearly 20% suffer from a very severe form, which is associated with much lower survival. And despite this clear unmet medical need, there is no approved treatment for CKD-aP in Europe or the U.S. CR845 does not penetrate the brain and so bypasses unwanted side-effects like opioid addiction. It has significant potential for setting new standards in providing relief, both from CKD- induced itching and post-operative pain.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of Cara Therapeutics, the news proved to be overwhelmingly positive. After all, not only does the license agreement come with large upfront payments, it has the potential to general hundreds of millions of dollars in revenue down the line. So, it comes as no surprise that excited investors are sending the stock screaming for the top. Currently (9:10), CARA is trading at $13.72 per share after a gain of $2.12 per share or 18.28% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CARA. In particular, we’re interested in following the story surrounding the company’s new license agreement and the revenue the agreement drives. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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