Why Cara Therapeutics Shares Are Soaring

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Cara Therapeutics Inc. (NASDAQ: CARA) shares made a solid gain on Wednesday after the firm announced that it has licensed rights to commercialize Korsuva (CR845/difelikefalin) injection for the treatment of chronic kidney disease-associated pruritus in dialysis patients.

Previously, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation to Korsuva injection for this indication, for which there are currently no approved therapies in the United States or European Union.

Cara licensed the worldwide rights, except in the United States, Japan and South Korea, to Vifor Fresenius Medical Care Renal Pharma, which specializes in treatments for chronic kidney disease.

Under the terms of the agreement, Cara will receive an upfront payment in the amount of $50 million in cash and an equity investment of $20 million to acquire Cara common stock at a price of roughly $17 per share. Cara also will be eligible to receive additional payments of up to $470 million, which includes $30 million in regulatory and up to $440 million in tiered commercial milestones that are all sales related.

For some scale: Cara currently has a market cap of roughly $450 million.

Derek Chalmers, Ph.D., D.Sc., president and CEO of Cara, commented:

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.

Shares of Cara were last seen up about 33% at $15.50, with a consensus analyst price target of $23.43 and a 52-week range of $11.11 to $28.50.