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Here's Why Cara Therapeutics (CARA) Shares Plummeted 31% Today

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Shares of Cara Therapeutics (CARA - Free Report) nosedived 31% Friday in morning trading after the company announced disappointing results on the CR845 oral medication from a phase 2b trial.

Cara, a biopharmaceutical company that focuses on developing chemical entities to alleviate pain and pruritus, reported that CR845 failed to produce lower pain scores compared to a placebo. Patients taking 1.0 mg, 2.5 mg, or 5.0 mg of CR845 experienced as much pain as those not taking the medication with osteoarthritis (OA) of the knee or hip.

I.V. CR845, a kappa opioid receptor agonist, is supposed to treat acute and chronic pain. The phase 2b trial results show that CR845 will not be replacing problematic opioids, such as morphine or hydrocodone, as Cara had hoped.

While treating acute and chronic pain would be the most lucrative offering of the medication, CR845 can still be sold to treat pruritus. The phase 2b trial results showed that its disease-associated itching treatment remains very effective and could be sold for a profit.

However, Cara is not giving up yet. The company announced that they will request a meeting with the U.S. Food and Drug Administration to discuss a way forward in which CR845 can be redeveloped to address chronic pain.

These trial results come a few days after Cara stock set an all-time record high, rising 40% in five days after Cara announced positive feedback on CR845. The new results today will wash away that success.

CARA remains a Zacks Rank #3 (Hold). Zacks estimates that the company will have positive year-over-year growth next year, but Cara’s future with CR845 remains unclear.

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