Cara Therapeutics Inc (NASDAQ:CARA) Is A Big Q1 Winner: What's Next?

Back in November, we published this piece on Cara Therapeutics Inc (NASDAQ:CARA). The title of the piece sums up our then-thesis perfectly – "Cara Therapeutics Can’t Stay This Cheap For Long."And we were right – it didn’t.At the time, the company was trading for $8 a share, and our competitors over at Fool were calling it one of the worst marijuana stocks of the year. At the end of March, Cara posted a daily close of $20.25. It has since corrected, and currently trades for just shy of $17.5. That's 120% run to current price, and a more than 150% run to highs.We’re not ones to rest on out laurels, however, so the question now, is what's next?Well, we going to reiterate this one as a long term runner. Here's why.For those new to Cara, it's a biotech stock that is pushing to get its lead development asset, a drug called CR845, approved in a host of different indications. These include post operative pain, chronic pain, pruritus associated with chronic kidney disease and pruritus mono.The key to the drug's potential is the fact that it works on what are called kappa opioid receptors, as opposed to the mu opioid receptors on which the majority of today's opioid pain management drugs work right now. This means it doesn’t need to cross the blood brain barrier to be effective, and this – in turn – removes the impact that traditional opioids have on the brain (read: the euphoria that leads to addiction).If Cara can get its lead approved in a pain management target, then, it could quickly swallow up a large portion of the pain management space – that's billions of dollars in potential revenue, very quickly.So, the pain targets are the real golden tickets, but the pruritus targets are not small markets, and much of the run we've seen over the last couple of months has been rooted in the latter.Most recently, the company announced top line from a phase II in the pruritus CKD indication. The drug hit it out of the park, scoring against both its primary and a host of secondary endpoints, and the company can now approach the FDA with a proposal for the agency to allow the second part of this phase II to serve as a pivotal efficacy trial (which would leave a twelve-month safety follow up as the only necessity post pivotal).The outcome of that meeting in itself is a near term catalyst, but there are some bigger ones we're watching over the coming months.There's a phase III study of an IV formulation of CR845 in post operative pain, and a phase II study of an oral formulation of drug in arthritic pain. Both of these are billion dollar markets at peak sales, and both are set to read out during the second quarter of this year – that's at some point between now and the end of June. If the post op data reads out as positive, it paints the potential for a quick turnaround submission to the FDA, and in turn, a potential commercial launch late 2018.In the wake of the positive pruritus data, Cara announced a secondary that saw it raise a little over $90 million (this is what drove the small correction from the March highs). Management noted in the latest conference call that cash before the raise was enough to give the company a runway through first quarter 2018. Add the secondary to balance, and taken against current burn of a little over $20 million, there's very little dilution risk between now and mid to late 2018.Bottom line here is that with each of these data releases, the risk reward equation tips a little more in favor of the reward, and the company becomes that little bit more attractive as a long term play. Of course, each time this happens, it becomes that little bit more expensive to an operator looking to pick up an exposure.We will be updating our subscribers as soon as we know more. For the latest updates on CARA, sign up below!Disclosure: We have no position in CARA and have not been compensated for this article.