Cara Therapeutics, Inc. (CARA) Q4 2022 Earnings Call Transcript

Cara Therapeutics, Inc. (NASDAQ:CARA) Q4 2022 Results Conference Call March 6, 2023 4:30 PM ET

Company Participants

Matt Murphy - Manager, IR

Chris Posner - CEO

Ryan Maynard - CFO

Dr. Joana Goncalves - Chief Medical Officer

Conference Call Participants

Sumant Kulkarni - Canaccord Genuity

Joseph Stringer - Needham and Company

Annabel Samimy - Stifel

David Amsellem - Piper Sandler

AJ Velasquez-Mao - Jefferies

Oren Livnat - H.C. Wainwright

Jason Gerberry - Bank of America

Oren Livnat - H.C. Wainwright

Sumant Kulkarni - Canaccord Genuity

Operator

Good afternoon. My name is Josh, and I will be your conference facilitator. I would like to welcome everyone to the Cara Therapeutics Fourth Quarter and Full Year 2022 Financial Results and Update Conference Call. [Operator Instructions]

I would now like to introduce Matt Murphy, Cara's Manager of Investor Relations. Mr. Murphy, you may begin your call.

Matt Murphy

Thank you, operator, and good afternoon.

Just after market close today, Cara issued a news release announcing the Company's results for the fourth quarter and full year of 2022. Copies of this news release and the associated SEC filing can be found in the Investors section of our website at www.caratherapeutics.com.

Before we begin, let me remind you that during the course of this conference call, we will be making certain forward-looking statements about Cara and our programs based on management's current plans and expectations. These statements are being made under the Private Securities Litigation Reform Act of 1995, and are subject to various risks and uncertainties.

Actual results may differ materially due to various factors, and Cara undertakes no obligation to update or revise these statements publicly as a result of new information or future results or developments. Investors should read the risk factors set forth in Cara's 10-K for the year ended December 31, 2022, and any subsequent reports filed with the SEC.

With that said, I'd like to turn the call over to Chris Posner, Cara's Chief Executive Officer. Chris?

Chris Posner

Thanks, Matt, and good afternoon, everyone. With me today are Ryan Maynard, our Chief Financial; and Dr. Joana Goncalves, our Chief Medical Officer.

First, I want to give a quick overview of 2022 and our significant progress executing our strategy to become the world leader in the treatment of chronic pruritus. Then, I will share the latest insights into the KORSUVA injection launch and the progress in our development progress for oral difelikefalin. Ryan will follow with a financial update. After that we will be available to take your questions.

The U.S. launch of KORSUVA injection in the second quarter of 2022 rang in a new era for the treatment of chronic pruritus and propelled care forward in our journey to be the category defining leader in this condition. Chronic pruritus is often a severe, intractable problem for patients in a wide range of diseases, and it is underserved by currently used treatments. In light of this lack of treatment options, chronic pruritus remains underreported, even though it can have a significant negative impact on the quality of life of millions of patients. We are committed to enhancing the awareness of this disease and improving the treatment protocols for patient care so that our novel science benefits the most patients possible.

Over the past year, we made great strides in translating our mission into action and firmly establishing our two core franchises in nephrology and dermatology. The launch of KORSUVA injection created the foundation for our nephrology franchise. Together with our commercial partner CSL Vifor, we are laser focused on driving the trial and adoption in the U.S. and in countries around the world. Moreover, we are expanding this differentiated and promising nephrology franchise with oral difelikefalin and the late stage program in non-dialysis dependent CKD patients. Enrollment is progressing well, and we continue to target the top line data release for the second half of 2024.

Switching to our dermatology franchise, enrollment in our late stage atopic dermatitis program is progressing well. And we continue to track to our internal readout in the second half of 2023. The positive Phase 2 results of oral difelikefalin in notalgia paresthetica not only confirmed our hypothesis, that difelikefalin can target pruritus independent of the origin of itch but also created a distinct opportunity to complement our program in AD. This gives us a unique one-two punch to build a truly one of a kind dermatology franchise. We are excited about the launch of our Phase 2/3 program in NP and the recognition from the New England Journal of Medicine which recently published our Phase 2 results.

Now, let me provide some more details on the quarter and the progress within the strategic priorities of our two franchises. First, on the launch of KORSUVA injection, we are making meaningful progress in the U.S. For the fourth quarter of 2022, net sales for KORSUVA injection were $2.3 million, translating into $1.1 million of profit recorded as revenue to us, and wholesaler shipments to dialysis clinics totaled approximately 21,000 vials.

This quarterly performance is reflective of the unique launch dynamics in this ecosystem and represents a transition from the stocking and trial phase to the adoption and demand based performance phase. After the initial inventory building at both the wholesaler and certain clinics in the second and third quarter, we have started to see inventory being drawn down and orders accelerating. We are pleased to see this momentum continuing through the first two months of 2023.

Equally as important, feedback on KORSUVA from providers and patients has been highly positive. And we continue to hear that KORSUVA is delivering on the promise it demonstrated in the clinical studies and performing as we expected.

Let me break out the different dynamics at the various DOs. Starting with Fresenius, we are pleased with the commitment from FMC to the long-term success of KORSUVA as reflected by both the addition of the FMC field force in the promotion of KORSUVA and the push for its rapid adoption.

In the third quarter with patient care as their number one priority, Fresenius took a non-traditional approach and stock product in most of its clinics to facilitate trial across its network. While this strategy demonstrates FMC’s belief in the unmet medical need in CKD-associated pruritus and confidence in KORSUVA's value proposition, it created an atypical inventory dynamic. In the fourth quarter, we saw a steady growth in the number of FMC clinics utilizing their initial inventory and placing reorders, a clear reflection of their move from trial to adoption.

Simply put, and what is very encouraging, when clinics start using KORSUVA, there is a strong buy in and these clinics become repeat customers. This positive trend has accelerated in 2023. Encouragingly during the first eight weeks of this year, clinic reorders from the wholesalers have already exceeded the entire FMC order volume in the fourth quarter of 2022.

Looking ahead, we expect to see continued growth in the number of FMC clinics utilizing their inventory and reordering. And as trial shifts to adoption across the FMC network, we expect most of the inventory at the clinic level will be utilized by mid-2023.

At DaVita, we see steady growth in the number of clinics order in KORSUVA. For those clinics that have purchased KORSUVA we continue to see a high reorder rate, which clearly suggests a positive experience with this product. We continue to work with CSL Vifor on top down and bottom up initiatives to accelerate the adoption of KORSUVA at DaVita clinics. On the MDO and IDO front, uptake continues to be strong, both in terms of the number of clinics ordering as well as the reorder rates. While this segment of the market represents less than 20%, we feel that the progress at these organizations underscores the positive experience of patients and providers with KORSUVA.

To summarize, given the launch and inventory dynamics during the first few quarters, we expect a more normal uptake curve for KORSUVA to emerge mid-2023. More specifically, we anticipate that the future sales and vial shipped to dialysis clinics will not be related to any significant stocking at the wholesaler or clinic level. However, until the remaining inventory at the clinic level is depleted, it is important to emphasize that it is the combination of inventory draw-downs at the clinics and new wholesaler shipments to clinics that together represent true patient demand.

Overall, we are encouraged by the progress in the U.S. launch and we remain confident in the long-term potential of KORSUVA. On the international front, the rollout of Kapruvia in Europe continues to gain momentum. Launches in the first four countries Austria, Germany, Sweden and Denmark are progressing well and we expect most of the other countries in Europe to come online in 2023. The initial feedback is very encouraging and in line with the provider and patient testimonials we have received in the U.S. Furthermore, all four of the access consortium countries, Canada, Australia, Singapore and Switzerland approved the product in 2022, and we expect launches in these countries to commence once reimbursement is secured in the next 12 to 18 months.

Based on the regulatory submission in the second half of 2022 and positive interactions with the PMDA, we continue to expect a regulatory decision in Japan in the second half of 2023. As a reminder, if the product is approved in Japan, we will receive a milestone payment from our partner Maruishi.

The JV of CSL Vifor and FMC also recently announced signing a long-term exclusive licensing agreement for the co-development and commercialization of KORSUVA with Winhealth in China. We are very excited by this positive development and we look forward to work starting in the near-term.

Lastly, let me briefly touch on TDAPA. In the second quarter of 2022, as part of the proposed rule for the calendar year 2023, CMS issued an RFI regarding an appropriate payment mechanism for drugs with TDAPA designation post the TDAPA period. We generally believe that the different payment mechanisms outlined in the RFI would provide adequate reimbursement for KORSUVA post the expiration of its TDAPA period. We further support the concept of linking drug payment to drug utilization in appropriate patients.

We continue to work closely with other stakeholders to support CMS in its decision-making process. And while we do not have clear visibility as to the exact timing of a final decision regarding the post TDAPA reimbursement mechanism, we continue to hope for a substantive and positive update from CMS during this year's rulemaking cycle.

Moving on to our pipeline. We are building two therapeutic franchises through our work to expand the utility of difelikefalin. Last year, we launched our Phase 3 programs of oral difelikefalin in both pruritus associated with non-dialysis dependent advanced CKD as well as atopic dermatitis. Enrollment in both programs is progressing well and we expect top line results for the CKD program in the second half of 2024 and for the AD program in the first half of 2025. We continue to track to the second half of 2023 for the internal readout of part A of the Phase 3 KIND 1 study. Additionally, last year, we reported positive data from our Phase 2 trial of oral difelikefalin in notalgia paresthetica. In the fourth quarter of 2022, we had a positive interaction with the FDA, which cleared the path to initiating our Phase 2/3 program in NP.

Like our AD program, we designed the NP program with the goal to enhance our operational efficiency to advance the studies as rapidly as possible and to maximize the potential for success. We expect the internal readout of the dose finding portion of the KOURAGE 1 study in the second half of 2024, with final top-line results for the program in the first half of 2026.

In conclusion, we believe 2022 was a pivotal year for Cara. Our progress laid the foundation for sustained growth and value-creation for our stakeholders and the promising future of our company.

On the KORSUVA injection launch, we expected variability and a fluctuating dynamic over the first year of launch. We are seeing positive trends in product uptake and remain confident in the long-term potential of KORSUVA injection. We have three late-stage programs underway, demonstrating significant progress toward establishing our two therapeutic franchises and maximizing the potential of difelikefalin.

I would now like to turn it over to Ryan for additional details on our fourth quarter and full year results. Over to you Ryan.

Ryan Maynard

Thank you, Chris.

Well, I'll be focusing my commentary primarily around the fourth quarter. The full year results for 2022 can be found in our press release issued today after the market closed.

Total revenue was $3.3 million for the three months ended December 31, 2022, compared $0.8 million for the same period in 2021. Revenue this quarter consisted of $1.1 million of collaborative revenue related to our profit from CSL Vifor's net sales of KORSUVA injection to third parties, and $2.1 million of commercial supply revenue.

We also recognized $72,000 of royalty revenue this quarter, representing our royalties from the net sales of Kapruvia in Europe in the fourth quarter of 2022. I also want to highlight that for the year, we have now recognized a total of $16.6 million of collaborative revenue related to our share of the profit of KORSUVA injection sales.

Cost of goods sold during the three months ended December 31, 2022 was $2.1 million and relates to our commercial supply shipments of KORSUVA injection to CSL Vifor. Research and development expenses were $26 million for the three months ended December 31, 2022, compared to $22.8 million in the same period of 2021. The increase in R&D expenses is due to the increased clinical trial spend related to our two Phase 3 clinical programs that were initiated in 2022.

General and administrative expenses were $6.4 million for the three months ended December 31, 2022, compared to $11.5 million in the same period of 2021. The reduction in G&A expense was due to a decrease in stock-based compensation in the fourth quarter of 2022 as compared to the same period in 2021. Stock-based compensation in 2021 included costs relates to the modification of certain equity awards to our former CEO.

Cash, cash equivalents and marketable securities at December 31, 2022 totaled $156.7 million, compared to $236.8 million at December 31, 2021. The decrease in the balance primarily resulted from cash used in our operating activities.

Now, we expect that our current unrestricted cash and cash equivalents and available for sale marketable securities are sufficient to fund our currently anticipated operating plan into at least the first half of 2024. This guidance assumes all the spend related to our three late-stage clinical development programs and KORSUVA revenue profit share contribution.

I will now turn the call back over to Chris.

Chris Posner

Thanks, Ryan. I want to again emphasize how confident we are in the year ahead giving the momentum of the KORSUVA launch and the significant progress in our pipeline. We believe that Cara is well on its way to becoming the world leader in the treatment of chronic pruritus and we look forward to providing you additional updates in the near-term.

With that Ryan, Jo, and I'll be happy to take your questions. So, I could turn it back over to Josh and we can open up the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Sumant Kulkarni with Canaccord Genuity.

Sumant Kulkarni

Good afternoon. Thanks for taking my questions. I have two. Given the significant volatility associated with KORSUVA and the way the supply chain dynamics work, could you give us roughly what percentage of the 207,000 vials that were shipped during the 2022 year might have already been used? Do you have a fraction on that?

Chris Posner

Hey Sumant, it's Chris. So, of the 207 -- I mean, what we look at is we have 20,000 vials that were ordered by the clinics in the Q4 of 2022. What I can tell you is roughly 180,000 of those vials were shipped to Fresenius in Q3 as we reported in the Q3 call.

Sumant Kulkarni

But any sense of how that might translate to actual patient -- vials used during the year?

Chris Posner

Yes. So, if you look at -- if you break it out by customer segments, so if you look at for Fresenius first. So, Fresenius -- over the first three quarters, Fresenius primarily took in 180,000 vials in Q3, and now they're -- obviously, a lot of clinics are starting to pull through that, burning through that inventory and utilizing that. But you also remember there are other segments, namely DaVita in the mid-size that are ordering in a more traditional way. Fresenius did a very atypical thing in terms of stocking. So what we expect is probably by mid-2023, you will start to see more normal -- I call it more normal demand based trajectory.

Sumant Kulkarni

Got it. And then, a question on the TDAPA part, we understand that CMS currently requires reporting on the percentage of a vial that has been unused. I -- think that data might be able to be used for, if at all?

Chris Posner

So Sumant your question is wastage of a vial based on dry body weight? That's your question. I want to make sure I understand it.

Sumant Kulkarni

That's right. And I understand that data needs to be collected or stored somewhere. But do you foresee any potential use of that and where, or is that just a procedural thing?

Chris Posner

That's a procedural thing.

Operator

Our next question comes from Joseph Stringer with Needham and Company.

Joseph Stringer

We're just curious if there's a point in the future where you'd be able to report IV KORSUVA, TRX or scripts written instead of vials shipped.

Chris Posner

Hey Joe, it’s Chris. No is the short answer. Think about this as almost like a Part B type drug. So we get data from the wholesalers of what they ship to the clinics. And typically, Joe, as we talked about before, this does represent the best proxy for demand because we do know that clinics don't typically hold inventory unless they have a patient already on the product. As I mentioned, this case is very different given this unique ecosystem that we're in, namely, with Fresenius, where they in Q3 took on a significant amount of product to activate their entire network, and they invested in that strategy.

So, like I said before, by mid-2023, especially in the Fresenius side, that metric -- quantitative metric that we report, it's unusual right now, but it'll be really the best proxy for patient demand as we get to mid-2023 for Fresenius. The rest, DaVita and the mid-size and independents, it's still the best proxy for demand because it we know they did not employ the same strategy FMC did in activating their network. It's more traditional.

Operator

Our next question comes from Annabel Samimy with Stifel.

Annabel Samimy

Just going back to the timing of Fresenius getting through their inventory. I guess what gives you confidence that it's going to be out -- their inventories can be used by mid-2023. Are you getting -- I guess you must have some order rates from them or reorder rates from them. So is there any sense you can give us of what their reorder rates might be? And are we going to be getting any more granularity on that going forward?

And I guess, the second question is just now that patients have been on for a little bit longer, kind of the KOL that you had at your Capital Markets Day discussed some patients being on therapy persistently and others taking drug holidays. Are you seeing any more of a pattern there and how patients are using the treatment? Thanks.

Chris Posner

Hey Annabel, let me tackle the first one. I'll address maybe the second one, but maybe I'll have Jo speak from a medical standpoint. So the first one in terms of our confidence in Fresenius and the draw-down, their inventory. As I look at Fresenius, their medical office really understands the effectiveness of this drug and its impact on patients. And I mentioned in my prepared remarks, patient care is their number one priority. And they employed this really atypical strategy to facilitate trial and adoption, which gives us confidence is that in Q4, many of their clinics in their network are indeed utilizing the product and a number of these clinics have started to reorder.

And what's really encouraging is when clinics start using KORSUVA, there's a strong buy in. So, what we’ve seen Annabel is that the trends were very encouraging as we exited Q4 2022 and they've accelerated in Q1, and we see that in the reorders. We constantly track that. But those trends gave us a lot of confidence that by midyear a lot of that inventory would have been drawn down at the clinic level.

Now on persistence, overall, from a quantitative standpoint, I'll tell you it's still a little early. We're hearing -- again, I mentioned in my prepared remarks, we're hearing very encouraging remarks from patients and providers. I also look at -- I'm a quantitative guy, I look at the proof point around reorder rates. And the majority of the clinics that start a patient on KORSUVA reorder, there's a strong buy in. So, we see very high reorder rates, which to me is the metric for satisfaction from a provider and patient. Medically, Jo, we turn it to you.

Dr. Joana Goncalves

So, just as a reminder, our label is for chronic pruritus and the drug needs to be given daily as it was conducted in our clinical studies. And as you recall, our clinical studies have pretty good continued use of the drug over time. And so, that is what we expect to see, as Chris mentioned, we haven't really seen anything differently, really to date.

Operator

Our next question comes from David Amsellem with Piper Sandler.

David Amsellem

So, just looking at your cash runway guidance that gets you into the first half of '24, I'm just trying to do some basic math here. And I guess what I'm sort of coming to and just wanted to run this by you is that you're -- given the level of R&D spend with all the clinical programs going on for oral DFK, it would sort of imply that a pretty modest sales number and net profit number for KORSUVA injection for 2023. I mean, I'm not saying that it wouldn't imply growth but it's still pretty modest. So, I guess, is that the right way to think about it? And if it is, then the question is, how is it just inventory that's really explaining what's happening here? In other words, are you caught off-guard by where demand is relative to perhaps, where you thought it might be ahead of the launch? So just wanted to get a sense of your thought process there? And is my basic thinking about it correct? Thank you.

Ryan Maynard

Hi, David. Thanks for the question. This is Ryan. So a couple of things on the runway guidance. First of all, it's consistent with the guidance that was given at the end of Q3. So that was as well, first half of 2024. And you're correct. The expectation that is in this very conservative guidance is definitely a conservative haircut both on our own internal projections, as well as the projections of our partner. So, we're still in the first year of launch. I wanted to be consistent on this guidance, but I wouldn't look into anything on that map that you're doing as it relates to our expectations for KORSUVA.

As far as your second question on -- I'll pass that to Chris.

Chris Posner

Yes. David, on your second question. I mean, we expected variability. I mean, we’re within the first year of launch. And this is a unique dialysis patient ecosystem. And we did expect some variability. We'll be truthful here and that what was surprising was FMC's Q3 strategy with that large purchase, as we mentioned on the Q3 call. I think I used the word pleasantly surprised, too, because this strategy, what they invested in was to activate their entire network certainly shows their commitment. And I do know that their executive team is fully committed to getting this product to patients that are appropriate for it. So that was a surprising part. But, what's really important to point out is that we're seeing the fruits of that now. We're seeing the acceleration, as we exited Q4, and we're actually seeing it accelerate even more in the first eight weeks of Q1. It's actually nearly double than what we saw in coming out of Q4. So, we're actually quite -- we're quite confident in terms of the future performance of this drug.

David Amsellem

If I may just follow-up. Is it something where we should be at all concerned about the magnitude of the inventory drawdown? I mean, in other words, I guess I'll ask the question differently. If demand was indeed robust, would we have seen this kind of magnitude of inventory drawdown?

Chris Posner

Well, I mean, -- so the question, maybe I'll phrase it a little differently, if you don't mind. Should -- or would we have expected this to burn down quicker in Q4, essentially, right? I mean, that's kind of what you're asking, is this one at a time in a way, right? So, what I'd say to that, David, is that, we are building a market from scratch and this market has many stakeholders, as you know, right? In clinic, dialysis care teams, nephrologists, and their affiliated nurses, and patients.

I will tell you, CSL Vifor and their JV partner Fresenius, namely, have done a really strong job at working the elements of the dialysis patient ecosystem. And while all this is happening, you got to remember, there's -- and I'll speak to Fresenius. There's 2,600, plus clinics at Fresenius, and they all have different characteristics, in terms of staffing, how they adopt a product, and some tend to be a little in front of others or a little behind others. But bottom-line is, and I will say the FMC C-suite is putting product on the shelves, and they're making it available to get it used. And the trends are really encouraging towards the end of Q4, and they've accelerated into Q1. So, I think it's one of time. And we're seeing really, really positive trends coming out of Q4 and these first eight weeks of Q1 give us even more confidence as we progress forward.

Operator

Our next question comes from AJ Velasquez-Mao with Jefferies.

AJ Velasquez-Mao

This is AJ for Chris. You mentioned that you're still seeing more clinics come on line and that reorder rates are growing? Could you give us either an -- order of magnitude on those rates or some kind of percent capture?

Chris Posner

Hey AJ, it's Chris. So what I can say is the first eight weeks and we said this in the prepared remarks are certainly more than all of Q4, won't give a range yet. But I will say also on Fresenius, namely, when we look very closely at Fresenius in terms of them pulling through the first eight weeks of this year is significantly more than the eight weeks ending December 30th of 2022. So, we're really encouraged with those trends.

AJ Velasquez-Mao

And I have one kind of follow-up question. So, I feel like it's been a while since you've mentioned the NKS educational campaign. Do you have any visibility on what kinds of engagements you are getting there in terms of awareness of efficacy?

Chris Posner

Actually the NKS is just one of a couple of campaigns out there right now. So, the KPIs that we look at are very positive. If you look at the awareness numbers among the providers, it's very high. And what we're seeing from a patient standpoint is very good advocacy building at the patient -- from the patients. CSL Vifor is partnered with most of the patient advocacy groups, and programs are initiated to raise the awareness. And I mentioned one of the things AJ, and I think you and I spoke about this before. That's a critical lever in terms of driving the trajectory of KORSUVA injection. I look at multiple stakeholders in terms of in dialysis clinic care teams, dialysis care teams, nephrologists and patients. And CSL Vifor has done a very, very good job across the board on each of those levers. And I think that's why you're seeing this acceleration in demand following the purchase, the large purchase from Fresenius in Q3.

Operator

Our next question comes from Oren Livnat with H.C. Wainwright.

Oren Livnat

I'm going to keep along the same track as most people are asking, for obvious reasons. The inventory work-through at the site level isn't totally surprising to me. But of course, we're all just trying to figure out some way to gauge or to understand what your level of understanding is around the demand side of this equation, right? What are you -- what information do you get from CSL with regards to volume, including what's still sitting at the wholesaler in terms of vials? Maybe what's sitting at the center level, which that sounds more difficult to ascertain? And/or just prescription levels? Because obviously, we can say, hey, the first half of this year we're going to keep working through, but if we don't know how much is there to begin with, how much we're working through and what the underlying culture demand is, we have no idea what the exit rate is come mid-2023, right? So, any help you can give us there with clarity, and then I will follow-up.

Chris Posner

Sure, Oren. I mean, so we committed to providing a couple metrics, right, net sales, and that's shipments from CSL to the wholesaler. And then we committed to orders being -- well orders from the dialysis clinics from the wholesalers. And those are the critical metrics. So, we have visibility into what's at the wholesaler. And we have visibility to what clinics order. You're right, what's hard is the visibility at the clinic level from the stocking. So to your question as you model this, as we think about this, and we think about this with our partner, we look very closely -- and I'm going to speak specifically to Fresenius. We look very closely at the orders, the reorder rate for Fresenius. And what gives us a lot of confidence is that we are seeing that accelerate in Q4. And then we're seeing that even quickly or more quicker accelerate in the first eight weeks of Q1. And that's why we're saying we're encouraged with those trends. And that's why we think probably by midyear that the inventory will have been -- would be pretty much drawn down at those clinic levels. We would expect the reorder rates to continue to accelerate as we move forward through the first quarter and the second quarter of this year.

So, we have good visibility, but you mentioned also prescriptions. I mean, we don't get that data, obviously, like I mentioned earlier on the call, this is a buy and build sort of market in a way. So, we look at orders and yes, so that -- I think that was the last part of your question.

Oren Livnat

I mean, someone knows how many boxes or vials are still sitting at the wholesaler per inventory management agreement, I would assume, right?

Chris Posner

Of course.

Oren Livnat

Okay. But we won't tell us that?

Chris Posner

Well, no. I mean, Oren, what’s really important is that we said by mid-2023 we expect what I call a more demand-based trajectory, meaning demand will drive shipments from the wholesalers. They'll converge. Right now we have to work down the inventory of Fresenius. But I view the Fresenius thing as a real positive. They took this very atypical approach because they believe in the product and believe in helping their patients. And they really want to make this available across their network. And they invested significant time and dollars in this. And this is -- that was in Q3, and now we're seeing that drive thru in Q4 and we're seeing that accelerate in the first part of Q1.

Oren Livnat

Also, on those 21,000 vials that were ordered this quarter on top of inventory being worked through. Can you characterize who ordered those? I think you said there were reorders from Fresenius centers. Can you give us any mix on where those went?

Chris Posner

Yes. I would say the 20,000 or 21,000, obviously, it's a combination reorders for Fresenius and also we have two other customer segments, right,? We have DaVita and then we have the mid-size and independents. So I would say Q4 is probably closer to 50-50.

Oren Livnat

And just lastly, if I may, on the post TDAPA bundling decision, I understand, you're still hoping to hear something substantive this fall, it sounds like. Regardless of what that outcome is, in terms of what methodology they use, do you have an idea on when the timing of that should kick in, because I guess we don't -- we only have end of one to go on. And they got three years. And it looks like your two-year anniversary of your approval at least sort of takes you already a third of the way or more into 2024 into your three. So is it -- do you think it's a good chance you're going to have TDAPA pricings through 2024?

Chris Posner

Yes. We don't -- I'm not going to put a probability on that. But I think you got the timing right. TDAPA expires at the end of March 2024, unless we get a third year. But I think what's also really important to point out is exactly what you pointed out is that we have been working with CMS with our partner CSL Vifor and other stakeholders around the post TDAPA funding designation and making that -- working with CMS to change that appropriately to get it outside the bundle to have that an innovative product available for patients afterwards.

So, we're encouraged to where we are with CMS. But I don't have a probability I could give you on third year, there's there is an end of one. It's certainly something that we would be with our partner CSL Vifor talking about at some point. But right now the focus is on working with CMS on changing the policy.

Operator

[Operator Instructions] Our next question comes from Jason Gerberry with Bank of America.

Jason Gerberry

Just thinking about the TDAPA piece a little bit more, how important is it that you build up a more material volume level to generate good pharmacoeconomic argument for the pricing levels that have been so far established during the TDAPA window? And I think to what Oren was getting at, your TDAPA could run out in April 2024 with your cash runway, the first half 2024. So, it seems like it's a really critical aspect of the longevity of this launch for the IV. And then, are there any milestones you anticipate realizing in 2023?

Chris Posner

Hey Jason, it's Chris. I'll tackle each of those. I'll go in order. How about that? Make it easy. So, your first question on urgency around utilization. I would say, as a commercial guy at heart, I mean, regardless of TDAPA, there's always a lot of urgency in getting a product to patients as fast as possible. I do agree with you though that TDAPA heightens that sense of urgency but I'd also remind you, we're still within the first year of launch. So, I know CSL Vifor and their JV partner Fresenius has every inclination, and we see these very encouraging trends that I'm encouraged throughout the year that this is going to be a really, really good trajectory that we're going to see in terms of utilization.

The second question was around how important is TDAPA and when it expires, the durability of the sales. I've always said, I've been at the helm for a little over a year. And I've always said that I still regardless of funding and et cetera. This product will be available if TDAPA continues. And I do believe strongly in the durability of this drug, unlike the analog parsabiv, where there were alternatives, namely a generic oral Sensipar. There are no alternatives. We are the first and only FDA approved drug. And I would find it highly odd that if patients are on therapy that they would be removed from therapy and given back to a non-standard antihistamine that certainly does -- has limited in terms of efficacy and safety.

So I still feel very strongly the durability, but I'm also quite pleased with the efforts from both companies, Cara and CSL Vifor in terms of moving the needle at CMS. And I think CMS has a real open mind to look at the post TDAPA payment mechanisms. So, we'll see how that plays out throughout the year. And your last one, any milestones? Yes, we would expect a Japanese milestone pending approval that we would expect in the second half of this year.

Operator

Our next question comes from Oren Livnat with H.C. Wainwright.

Oren Livnat

Sorry, just that one follow-up on guidance. And I understand historically, you’ve been quite conservative on that front. I think last updated November, which was still for first half '24 runway, but that was based on I think you said, if we just flatlined the current product run rate, and spend what we think we're going to spend, we would make the first half 2024. But of course, you expected the product to grow. Now, it sounds like maybe, in your answer to I think it was David's question. You put it a little differently, which is based on our internal projections, I mean, clearly, you're not basing it on this quarters run rate of sales, because it's artificially depressed, right? But I guess I'm trying to figure out is are -- in your guidance are you projecting, I guess, a more traditional ramp to the year and that's how you get there or is it still like, look, if we went back to sort of an underlying demand number that we think we were at this quarter and flatline that, that’s our still quite conservative guidance? Does that make sense?

Ryan Maynard

Yes. Oren, perfect sense. And this is Ryan again. So yes, I think the way to think about -- and you're correct on kind of the transition of the guidance from Q3 -- up from Q2 to Q3 and where we are now. And I would say that the very conservative number that we have in this runway guidance, as I mentioned, is a haircut to our internal projections for KORSUVA which, as Chris mentioned, we are very positive -- and positive about the full year. So I've kept it to the first half of 2024, but you've also noticed that I said at least into the first half of 2024.

So, the biggest driver, and the biggest variable to this is KORSUVA profit share. And I've hair cut what our internal projection is. And it's also important and we've talked about this before and it’s we at some point, want to give guidance along with our partners CSL Vifor, what our true expectations are for the drug, but we're still in the first year of launch. As we've said, over and over again, there's variability and I've tried to stay ultra conservative in my cash runway forecasts just for that purpose. But that doesn't -- using math to back into what our expectations are, using my runway forecast is not accurate, because I did hair cut substantially from what we believed…

Oren Livnat

So we can't back into either the spend or the revenue?

Ryan Maynard

Correct.

Oren Livnat

Got you. All right. Thanks. I appreciate it.

Operator

Our next question comes from Sumant Kulkarni from Canaccord Genuity.

Sumant Kulkarni

My question is on TDAPA. What's the specific metric used by TDAPA to calculate utilization rate? And how much visibility does Cara have on that variable on a real time basis, if at all?

Chris Posner

Hey Sumant, it’s Chris. So, we don’t -- what they do is look at claims data. And again, I can just take you through what they did with parsabiv. They looked at claims data on the number of units of parsabiv and then multiplied that by their ASP. For parsabiv, they obviously added in the units for the generic and branded oral Sensipar, multiplied by their ASP and divided by the number of total dialysis treatments, and they arrived at roughly $10 a session or roughly, let's say $700 million total for the bundle. So, we don't have real time, neither the CSL -- we don't have real time utilization data that CMS has.

Sumant Kulkarni

So, based off of that kind of dynamic, what do you think the sweet spot would be to calculate that to arrive at a TDAPA kind of reimbursement? Would that be at some point later this year or next year? How should you think about that?

Chris Posner

Yes. So, Sumant, again, I would say -- I mean, what CMS wants to look at, I mean, I'm looking at the current rule and forget -- I'm going to piece off of all that work we're doing on changing the post TDAPA mechanism, which is actually pretty encouraging. But I'll go back to their current kind of rule is that they want to look at two years of utilization. Now, there's one comp, and that's parsabiv, as I mentioned before. The reason they got a third year was they said roughly that, hey, the first six months or so of a launch, given that it's six months in arrears, it’s probably not real stable environment. Because you're -- just like our launch, right? There's interesting dynamics you're building, there's some inventory, so it's not a true reflection of utilization. So that's why they got the third year. So, to answer your question, I would say later next year, at the end of next year, probably the end of 2024 would be the best time to kind of calculate to see what sort of funding would be required for KORSUVA.

Sumant Kulkarni

And then just the last one on those lines, is this instability or volatility in demand an advantage or disadvantage when it comes to TDAPA extension?

Chris Posner

Well, again, I could only look at what parsabiv -- they use it as an advantage to get a third year, right, so say in the first six months of a launch or it's not steady state? That's again, I would say more of a personal opinion. I mean, I don't have many data points to look at other than that.

Operator

Thank you. This concludes the Q&A session. I'd now like to turn the call back over to Chris for any closing remarks.

Chris Posner

Yes. So, I'd like to thank everyone for joining us this afternoon. And we look forward to providing updates in the coming quarter. Thank you very much.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.