Cara Therapeutics Could Climb on Korsuva Drug’s Success

Cara Therapeutics (CARA) is in the headlines after the FDA approved its Korsuva drug to treat pruritus related to chronic kidney disease. Based on this recent development and its growth potential, I am bullish on Cara Therapeutics stock.

Notably, Cara Therapeutics stock has underperformed the broader markets so far this year. However, it is up about 21.9% in Tuesday’s pre-market session following the announcement. (See Cara Therapeutics stock charts on TipRanks)

The clinical-stage biopharmaceutical company partnered with Vifor Pharma to develop and commercialize Korsuva in the United States. Per the deal, Cara and Vifor Pharma have a 60/40 profit sharing ratio in non-Fresenius Medical Care clinics. Meanwhile, the ratio stands at 50/50 in Fresenius clinics. Cara is also entitled to get milestone payments on achieving commercial targets.

Cara stated that Vifor Pharma is likely to promote Korsuva Injection in the first quarter of 2022. Meanwhile, it expects reimbursements in the first half of 2022. 

In response to FDA’s approval, Needham analyst Joseph Stringer said, “Korsuva approval strengthens balance sheet and sets up nicely for a solid revenue stream.” Stringer has a Buy rating on Cara Therapeutics and a price target of $26 (82.1% upside potential). 

The analysts’ bullish outlook and price target assume no delay in clinical development, regulatory approval of Korsuva for chronic kidney disease-associated pruritus, and a “registrational path forward for oral Korsuva in Atopic Dermatitis.” 

Stringer added that “we think +ve regulatory updates from oral Korsuva (unpartnered) in Atopic Dermatitis and CKD-Pruritus” could drive Cara stock into the mid-$20s.

Cara recently posted Q2 results wherein it reported license and milestone fees of $5.1 million. Its research and development expenses stood at $25.2 million, while net loss was $30.7 million. 

On TipRanks, Cara Therapeutics stock commands a Moderate Buy consensus rating, based on 2 Buys and 1 Hold. The average Cara Therapeutics price target of $25.67 implies 79.8% upside potential to current levels.

Disclosure: Amit Singh held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.