On Thursday, Cara Therapeutics Inc. (NASDAQ:CARA) stock experienced a significant shift in market expectations after Stifel downgraded the stock from Buy to Hold. The investment firm also adjusted the price target to $1.00 from the previous $6.00.
This change comes after the company announced the discontinuation of its clinical program for oral-difelikefalin due to the lack of clinically meaningful benefits in its KOURAGE-1 Part A study.
The study was focused on treating moderate-severe pruritus associated with notalgia paresthetica (NP), a chronic skin condition. Despite earlier clinical proof-of-concept showing promise at lower doses, the recent failure to meet the necessary clinical endpoints has led to the termination of all clinical programs for oral-DFK.
The company is now in a precarious financial position, with only $70 million in cash remaining, which is considered insufficient for further exploration. Cara Therapeutics is winding down its Phase 2/3 clinical program as a result.
This latest development adds to the company's challenges, following a disappointing decision by the Centers for Medicare & Medicaid Services (CMS) regarding the reimbursement of Cara's approved intravenous drug Korsuva.
Sales forecasts for IV-Korsuva are now less reliable due to systemic disincentives, and the company's outside the United States (OUS) royalties have been previously monetized through a royalty deal, benefiting from more supportive reimbursement structures abroad. In light of these setbacks, Cara Therapeutics is currently exploring strategic alternatives, with its remaining value primarily tied to its cash reserves.
In other recent news, Cara Therapeutics experienced a significant downgrade from Canaccord Genuity following disappointing trial results. The firm revised its stance on Cara Therapeutics, moving the stock from Buy to Hold and drastically reducing the price target to $1.00 from the prior $10.00.
This revision came after the company announced its oral difelikefalin (DFK) showed no substantial clinical advantage over a placebo in its KOURAGE Phase 3 study for the treatment of notalgia paresthetica (NP).
The company has decided to discontinue the NP program and explore strategic alternatives due to these unsatisfactory results. Previously, Cara Therapeutics had reported promising Phase 2 proof-of-concept data for oral DFK in treating NP, but the Phase 3 findings did not meet these expectations.
This recent development has led Canaccord Genuity to reevaluate Cara Therapeutics' potential, resulting in the downgrade and price target reduction. The firm's reassessment points to the challenges Cara Therapeutics faces in advancing its treatment portfolio for pruritus-related conditions.
InvestingPro Insights
In the wake of Cara Therapeutics' (NASDAQ:CARA) recent clinical and financial challenges, real-time data from InvestingPro provides a clearer picture of the company's market standing. With a market capitalization of just $37.23 million, the company's valuation reflects significant market skepticism about its future prospects. The InvestingPro data also shows a stark revenue decline in the last twelve months as of Q1 2024, with a decrease of 60.83%, further underscoring the uphill battle the company faces.
Two key InvestingPro Tips highlight the company's current financial health: Cara Therapeutics holds more cash than debt, which is a positive sign of liquidity, yet it is quickly burning through cash reserves. This dichotomy suggests that while the company is currently solvent, its runway for financial stability may be short-lived without a strategic shift or successful new developments. Additionally, with a price that is only 15.27% of its 52-week high and a 1-year price total return of -81.11%, investors have seen a significant erosion in value.
For those considering an investment in Cara Therapeutics, or for current shareholders looking to reassess their position, there are 7 additional InvestingPro Tips available that can offer more in-depth analysis. Access these insights at: https://www.investing.com/pro/CARA and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could provide valuable guidance in navigating this volatile market segment.
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