Tvardi Therapeutics (TVRD) risk factors, FY2024 10-K

Risks Related to the Merger with Tvardi

1. 01The Merger may not be completed on the terms or timeline currently contemplated, or at all
2. 02by Cara’s stockholders of the required stockholder proposals set forth in the proxy statement/prospectus included in the Registration Statement, (3) the requisite approval by Tvardi’s stockholders, and (4) other customary closing conditions and there can be no assurance that the Merger will be consummated
3. 03The exchange ratio will not be adjusted based on the market price of Cara common stock, so the consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signed
4. 04Cara’s net cash may be less than $22.875 million at the closing of the Merger, which would result in Cara’s stockholders owning a smaller percentage of the combined company and, if Cara’s net cash is less than $18.0 million as of June 30, 2025, could even result in the termination of the Merger Agreement
5. 05Failure to complete the Merger may result in Cara or Tvardi paying a termination fee to the other party and could harm the common stock price of Cara
6. 06If the conditions to the closing of the Merger are not met, the Merger may not occur
7. 07The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and/or other causes
8. 08Some executive officers and directors of Cara have interests in the Merger that are different from the respective stockholders of Cara and that may influence them to support or approve the Merger without regard to the interests of the stockholders of Cara
9. 09The market price of Cara common stock following the Merger may decline as a result of the Merger
10. 10Cara and Tvardi equity holders will have a materially reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the closing of the Merger as compared to their current ownership and voting interest in the respective companies
11. 11During the pendency of the Merger Agreement, Cara and Tvardi may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses
12. 12Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement
13. 13The Piper Sandler Opinion delivered by Piper Sandler to the Cara Board prior to the entry into the Merger Agreement does not reflect changes in circumstances that may occur after the date thereof
14. 14The combined company may become involved in securities litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not be sufficient to cover all costs and damages
15. 15Cara or Tvardi may waive one or more of the conditions to the Merger without recirculation of the proxy statement/prospectus or resoliciting stockholder approval
16. 16Transfers of the combined company’s securities utilizing Rule 144 of the Securities Act may be limited
17. 17Nasdaq may delist the combined company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject the combined company to additional trading restrictions
18. 18The financial projections considered by the Cara Board in evaluating the Merger and used by Piper Sandler at the direction of Cara in rendering its Opinion and performing its related financial analyses, reflect numerous variables, estimates and assumptions and are inherently uncertain

Risks Related to Cara’s Strategic Alternative Process and Potential Strategic Transaction

1. 19Failure to complete, or delays in completing, the Merger with Tvardi could materially and adversely affect Cara’s results of operations, business, financial results and/or stock price
2. 20Cara cannot be sure if or when the Merger will be completed
3. 21company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to Cara stockholders
4. 22Lawsuits may be filed against Cara and the members of the Cara Board arising out of the Merger, which may delay or prevent the proposed merger
5. 23Cara is substantially dependent on its remaining employees to facilitate the consummation of the Merger
6. 24Cara may not be successful in completing the Merger, and any strategic transactions that it may consummate in the future could have negative consequences
7. 25anticipated results could significantly impair Cara’s ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to its stockholders
8. 26If Cara is successful in completing the Merger, it may be exposed to other operational and financial risks
9. 27Cara’s corporate restructuring and the associated reduction in workforce may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt its business
10. 28The impact and results of Cara’s ongoing strategic process are uncertain and may not be successful

Risks Related to Cara’s Financial Condition and Capital Requirements

1. 29Cara has incurred significant losses from Cara’s inception, and Cara anticipates that it may incur losses in the foreseeable future
2. 30Should Cara resume development activities in the future, Cara expects that research and development costs would increase significantly and Cara would continue to incur significant expenses and operating and net losses, as Cara develops and seeks regulatory approval for such product candidates
3. 31If Cara decides to resume development of Cara’s product candidate or any future product candidate, Cara will need additional funding and may be unable to raise capital when needed, which would force Cara to delay, reduce or eliminate its product development programs
4. 32Risks Related to Cara’s Business and the Development and Commercialization of Its Product and Potential Product Candidates
5. 33future product candidate, which would materially harm Cara’s business and Cara may not be able to generate sufficient revenues and cash flows to continue its operations
6. 34Should Cara resume development of its product candidate or any future product candidate, if Cara experiences delays or difficulties in the enrollment of patients in clinical trials, Cara’s receipt of necessary regulatory approvals could be delayed or prevented
7. 35arrangements that would delay its product development activities, should Cara resume development of its product candidate or any future product candidate, and adversely affect its business
8. 36as pandemics or other similar outbreaks, which could negatively impact Cara’s clinical development and commercialization timelines
9. 37Cara faces significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies and other research organizations. Cara’s operating results will suffer if it fails to compete effectively
10. 38Among the companies that currently market or are developing therapies in the pruritus space that, if approved, Cara’s oral difelikefalin would potentially compete with include: Pfizer, AbbVie, Eli Lilly, Amgen, Regeneron, Leo Pharma, Galderma, Chugai, Incyte and others
11. 39Cara faces potential product liability exposure, and if successful claims are brought against Cara, Cara may incur substantial liability and, should Cara resume development of Cara’s product candidate or any future product candidate, may have to limit commercialization of a product candidate
12. 40Cara may expend its limited resources to pursue a particular product candidate or indication and fail to capitalize on its product candidate or indications that may be more profitable or for which there is a greater likelihood of success
13. 41Cara’s future growth may depend on its ability to identify and develop products and, should Cara resume development activities in the future, if Cara does not successfully identify and develop product candidates or integrate them into its operations, Cara may have limited growth opportunities
14. 42approval of a product candidate. Any marketing approval Cara ultimately obtains may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable
15. 43Should Cara resume development of its product candidate or any future product candidate, failure to obtain marketing approval in international jurisdictions would prevent a product candidate from being marketed abroad
16. 44Cara’s agreements with HCR contain various covenants and other provisions, which, if violated, could materially adversely affect Cara’s financial condition
17. 45consummation of the Asset Disposition, and (iii) Sellers to use their commercially reasonable efforts to obtain any needed consents and provide any needed notices in connection with the Asset Disposition

Risks Related to Cara’s Dependence on Third Parties

1. 46Any collaboration arrangements that Cara is a party to or may enter into in the future may not be successful, which, should Cara resume development activities, could adversely affect Cara’s ability to develop and ultimately commercialize its product candidate or any potential future product candidate
2. 47product candidate licensed to it by Cara. If one of Cara’s collaborators terminates its agreement with Cara, Cara may find it more difficult to attract new collaborators and Cara’s reputation in the business and financial communities could be adversely affected

Risks Related to Legal and Compliance Matters

1. 48If Cara fails to comply with federal and state healthcare laws, including fraud and abuse, and transparency laws, Cara could face substantial penalties and its business, results of operations, financial condition and prospects could be adversely affected
2. 49Additionally, certain states have adopted their own privacy and security laws and regulations for health information, some of which may be more stringent than HIPAA
3. 50In addition to data privacy and security laws, Cara is or may become contractually subject to industry standards adopted by industry groups. Cara is also bound by other contractual obligations related to data privacy and security, and Cara’s efforts to comply with such obligations may not be successful
4. 51In March 2010, the Health Care Reform Law was signed into law, which includes provisions that have changed, and likely will continue to change, health care financing and the delivery of health care in the United States
5. 52Governments outside the United States tend to impose strict price controls, which may adversely affect Cara’s revenues, if any
6. 53Cara’s employees, independent contractors, consultants, and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on Cara’s business
7. 54Cara’s business involves the use of hazardous materials and Cara and its third-party manufacturers and suppliers must comply with environmental laws and regulations, which can be expensive and restrict how Cara does business

Risks Related to Intellectual Property

1. 55It is difficult and costly to protect Cara’s proprietary rights and as a result Cara may not be able to ensure their protection and all patents will eventually expire
2. 56If Cara or any current or future collaboration partner are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm Cara’s business
3. 57be existing patents of which Cara is not aware that its current or potential future product candidates may inadvertently infringe
4. 58Cara may be involved in lawsuits to protect or enforce its patents or the patents of its licensors, which could be expensive, time consuming and may ultimately be unsuccessful
5. 59Cara may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms
6. 60Cara may be subject to claims that its employees have wrongfully used or disclosed alleged trade secrets of their former employers
7. 61Cara may not be able to protect its intellectual property rights throughout the world
8. 62The validity and enforceability of the patents and applications that cover difelikefalin can be challenged by competitors

Risks Related to Employee Matters and Managing Growth

1. 63Cara depends on skilled personnel to operate its business effectively in a rapidly changing market, and if Cara is unable to retain existing or hire additional personnel when needed, Cara’s ability to develop and sell its products could be harmed
2. 64If Cara fails to maintain proper and effective internal controls, Cara’s ability to produce accurate financial statements on a timely basis could be impaired
3. 65filer at the end of 2024, which would allow it to forgo the auditor attestation requirement. While Cara has previously voluntarily complied with the auditor attestation requirement when it qualified as a non-accelerated filer in 2023, it has forgone the auditor attestation for the fiscal year ended December 31, 2024

Risks Related to Ownership of Cara Common Stock

1. 66If Cara fails to regain and maintain compliance with the continued listing standards of the Nasdaq Capital Market, Cara may be delisted and the price of its common stock, its ability to access the capital markets and its financial condition could be negatively impacted
2. 67On January 16, 2025, Cara received a letter from the Staff notifying the company that Cara had regained compliance with the minimum bid price requirement. The closing bid price of the Company’s common stock was at or above $1.00 per share for ten consecutive business days, and Nasdaq considers the matter closed
3. 68The market price of Cara’s common stock has been, and is likely to continue to be, highly volatile, and you may not be able to resell your shares at or above the price you paid for them
4. 69If equity research analysts cease to publish research or reports about Cara or if they publish unfavorable research or reports about the company, its business or its market, Cara’s stock price and trading volume could decline
5. 70Cara’s quarterly operating results may fluctuate significantly
6. 71The use of Cara’s net operating loss carryforwards and research tax credits may be limited
7. 72Changes to existing tax laws, or challenges to Cara’s tax positions could adversely affect its business and financial condition
8. 73Because Cara does not intend to pay dividends on its common stock, your returns will be limited to any increase in the value of Cara’s stock
9. 74Provisions in Cara’s corporate charter documents and under Delaware law may prevent or frustrate attempts by Cara’s stockholders to change its management and hinder efforts to acquire a controlling interest in Cara, and the market price of Cara’s common stock may be lower as a result