As filed with the Securities and Exchange Commission on December 18, 2024

Registration No. 333-      ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT
Under
The Securities Act of 1933

CARA THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)

400 Atlantic Street
Suite 500
Stamford, CT 06901
(203) 406-3700

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)​

Christopher Posner
Chief Executive Officer
Cara Therapeutics, Inc.
400 Atlantic Street
Suite 500
Stamford, CT 06901
(203) 406-3700

(Name, address, including zip code, and telephone number, including area code, of agent for service)​

Please send copies of all communications to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13(e)-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. Cara may not sell its securities pursuant to the proposed transactions until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION — DATED DECEMBER 18, 2024

PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Cara Therapeutics, Inc.:

Cara Therapeutics, Inc. (Cara) and Tvardi Therapeutics, Inc. (Tvardi) have entered into an Agreement and Plan of Merger and Reorganization, dated December 17, 2024, as may be amended from time to time (Merger Agreement), pursuant to which CT Convergence Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Cara (Merger Sub), will merge with and into Tvardi, with Tvardi surviving as a wholly owned subsidiary of Cara (Merger). The Merger will result in a clinical-stage biopharmaceutical company focused on the development of novel, oral small molecule therapies targeting STAT3 to treat fibrosis-driven diseases with significant unmet need.

The Merger will become effective at the time the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or such other date and time as is agreed upon by Cara and Tvardi and specified in the Certificate of Merger in accordance with the General Corporation Law of the State of Delaware (DGCL) (such date, the Closing Date, and such time, the Effective Time). At the Effective Time, (i) each outstanding share of common stock of Tvardi, $0.001 par value per share (Tvardi common stock) (after giving effect to the automatic conversion of all shares of preferred stock of Tvardi into common stock of Tvardi prior to the Merger (the Preferred Stock Conversion) and excluding shares held by stockholders who have exercised and perfected appraisal rights and excluding shares held as treasury stock by Cara or held or owned by Cara, Merger Sub or any subsidiary of Cara or Tvardi), will be converted into the right to receive approximately 4.8997 shares of common stock of Cara, $0.001 par value per share (Cara common stock), based on an assumed exchange ratio of 4.8997 (Exchange Ratio), which is subject to certain adjustments as described below, and (ii) the outstanding Convertible Notes (as defined below) of Tvardi will be automatically converted into an aggregate of approximately 46,115,173 shares of Cara common stock, assuming (a) interest on the Convertible Notes is accrued through an anticipated Closing Date of March 31, 2025 and (b) the Convertible Notes are converted into shares of Cara common stock (Conversion Shares) at a conversion price equal to 80% of the implied value of the combined company. The assumed Exchange Ratio was calculated assuming, among other things, that Cara’s net cash at closing will be between $22.875 million and $23.125 million and a number of Conversion Shares equal to approximately 46,115,173. Such assumed Exchange Ratio is subject to certain adjustments, including based on the amount of Cara net cash at closing and the final amount of Conversion Shares. Cara will assume outstanding and unexercised options to purchase shares of Tvardi common stock, and in connection with the Merger they will be converted into options to purchase shares of Cara common stock based on the Exchange Ratio. At the Effective Time, Cara’s stockholders will continue to own and hold their then existing shares of Cara common stock, subject to adjustment for the reverse stock split proposed in connection with the Merger. All outstanding and unexercised options to purchase shares of Cara common stock and outstanding Cara restricted stock units (RSUs) will be accelerated, the RSUs will be net settled, and the options will remain outstanding in accordance with their terms, except that the post-termination exercise period shall not exceed 90 days and the number of shares underlying such options will be adjusted based on the reverse stock split proposed in connection with the Merger.

Immediately following the Merger, the pre-Merger equityholders of Cara are expected to hold approximately 15.25% of the shares of Cara common stock, the pre-Merger equityholders of Tvardi are expected to hold approximately 72.21% of the shares of Cara common stock and the holders of the Convertible Notes are expected to hold approximately 12.54% of the shares of Cara common stock, in each case, on a fully diluted basis, and subject to certain assumptions described below. The expected post-Merger equity ownership split percentages are based on the assumed Exchange Ratio of 4.8997 and an amount of Conversion Shares equal to 46,115,173 and are subject to adjustments, including based on the final Exchange Ratio and final amount of Conversion Shares.

The shares of Cara common stock are currently listed on The Nasdaq Capital Market under the symbol “CARA”. Tvardi will file an initial listing application with The Nasdaq Stock Market LLC (Nasdaq) pursuant to Nasdaq’s “reverse merger” rules. Substantially concurrent with the completion of the Merger, Cara will be renamed “Tvardi Therapeutics, Inc.” and expects to trade on The Nasdaq Capital Market under the symbol “TVRD”. On December 17, 2024, the last trading day before the date of this proxy statement/prospectus, the closing sale price of Cara common stock was $0.2497 per share.

Cara is holding a special meeting of stockholders (Cara special meeting) in order to obtain the stockholder approvals necessary to complete the Merger and other matters. At the Cara special meeting, which will be held exclusively online via live audio-only webcast on         , 2025, at         Eastern Time, unless postponed or adjourned to a later date, Cara will ask its stockholders, among other things, to (i) approve the issuance of shares of Cara common stock as consideration in the Merger and the change of control of Cara resulting from the Merger, as described in this proxy statement/prospectus (Stock Issuance Proposal), (ii) approve the adoption of a new 2025 Equity Incentive Plan (Equity Incentive Plan Proposal), (iii) approve the adoption of a new 2025 Employee Stock Purchase Plan (ESPP Proposal), (iv) approve an amendment to Cara’s certificate of incorporation effecting a reverse stock split of Cara common stock

at a ratio in the range from        -for-1 to        -for-1, with such specific ratio to be mutually agreed upon by the respective Cara and Tvardi boards of directors or, if the issuance of shares of Cara common stock as consideration in the Merger is not approved by Cara stockholders, at a ratio determined solely by the Cara board of directors (Cara’s Board or the Cara Board) following the special meeting, each as described in this proxy statement/prospectus. (Reverse Stock Split Proposal), (v) approve an amendment to Cara’s certificate of incorporation to increase the authorized number of shares of common stock from        shares to        shares (Authorized Share Proposal) and (vi) approve a postponement or adjournment of the Cara special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Stock Issuance Proposal, the Reverse Stock Split Proposal and/or the Authorized Share Proposal, referred to as the Adjournment Proposal.

Please refer to the various provisions of this proxy statement/prospectus for further information with respect to the business to be transacted at the Cara special meeting. As described in this proxy statement/prospectus, certain of Tvardi’s stockholders are parties to support agreements with Cara and certain of Cara’s stockholders are parties to support agreements with Tvardi (collectively, Support Agreements), whereby such stockholders have agreed to vote their shares in favor of the adoption and approval, among other things, of the Merger Agreement and the approval of the transactions contemplated therein, including the Merger, and, with respect to Cara’s stockholders, the issuance of shares of Cara common stock to Tvardi’s stockholders and the change of control resulting from the Merger, subject to the terms of the Support Agreements.

In addition, once this registration statement on Form S-4 (Registration Statement), of which this proxy statement/​prospectus is a part, is declared effective by the Securities and Exchange Commission (SEC) and pursuant to the conditions of the Merger Agreement and the Support Agreements, Tvardi’s stockholders who are party to the Support Agreements will each execute an action by written consent of Tvardi’s stockholders (Tvardi Written Consent) adopting and approving, among other things, the Merger Agreement, and the transactions contemplated therein, including the Merger. No meeting of Tvardi’s stockholders will be held; all of Tvardi’s stockholders will have the opportunity to elect to adopt and approve the Merger Agreement and the transactions contemplated therein, including the Merger, by signing and returning to Tvardi the Tvardi Written Consent.

After careful consideration, Cara’s Board has unanimously: (i) determined that the Merger and the transactions and actions contemplated by the Merger Agreement are fair to, advisable and in the best interests of Cara and its stockholders; (ii) authorized, approved and declared advisable the Merger Agreement and the transactions contemplated therein, including the Merger, the issuance of shares of Cara common stock to the stockholders of Tvardi common stock pursuant to the terms of Merger Agreement and the change of control of Cara resulting from the Merger; and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that the stockholders of Cara vote “FOR” each of the proposals set forth in this proxy statement/prospectus.

More information about Cara, Tvardi and the proposed transactions is contained in this proxy statement/prospectus. Cara urges you to read this proxy statement/prospectus carefully and in its entirety. In particular, you should carefully consider the matters discussed under “Risk Factors” beginning on page 25.

Cara is excited about the opportunities the Merger brings to Cara’s stockholders, and thank you for your consideration and continued support.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated          , 2025 and is first being mailed to Cara’s and Tvardi’s stockholders on or about         , 2025.

 

400 Atlantic Street
Suite 500
Stamford, CT 06901
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On       , 2025

Dear Stockholders of Cara:

The Cara Board is pleased to deliver this proxy statement/prospectus for the proposed Merger between a wholly owned subsidiary of Cara and Tvardi, for the purpose of, among other things, considering the approval of the issuance of Cara common stock pursuant to the Merger Agreement, among Cara, Merger Sub and Tvardi, pursuant to the Merger.

There will not be a physical meeting location. The Cara special meeting will be held exclusively online via live audio-only webcast on           , 2025, at        Eastern Time, and can be accessed by visiting           where you will be able to attend the Cara special meeting via live audio-only webcast. You will be able to vote your shares and submit questions during the Cara special meeting webcast. Online check-in will begin at       Eastern Time, and Cara encourages you to allow ample time for the online check-in procedures. Please note that you will not be able to attend the Cara special meeting in person. Cara is holding the Cara special meeting to consider the following proposals:

1.   Approve (i) the issuance of shares of Cara common stock pursuant to the Merger, which will represent more than 20% of the shares of Cara common stock outstanding immediately prior to the Merger and (ii) the change of control of Cara, pursuant to Rules 5635(a) and 5635(b) of Nasdaq, respectively, referred to as the Stock Issuance Proposal;

2.   Approve the Tvardi Therapeutics, Inc. 2025 Equity Incentive Plan, referred to as the Equity Plan Proposal;

3.   Approve the Tvardi Therapeutics, Inc. 2025 Employee Stock Purchase Plan, referred to as the ESPP Proposal;

4.   Approve an amendment to the amended and restated certificate of incorporation of Cara to effect a reverse stock split of Cara common stock at a ratio within the range between      -for-1 to      -for-1 (with such ratio to be mutually agreed upon by the Cara Board and the Tvardi Board prior to the effectiveness of the Merger or, if the Stock Issuance Proposal is not approved by Cara stockholders, determined solely by the Cara Board), referred to as the Reverse Stock Split Proposal;

5.   Approve an amendment to the Cara amended and restated certificate of incorporation to increase the number of authorized shares of Cara common stock from        shares to        shares, referred to as the Authorized Share Proposal; and

6.   Approve a postponement or adjournment of the Cara special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Stock Issuance Proposal, the Reverse Stock Split Proposal and/or the Authorized Share Proposal, referred to as the Adjournment Proposal.

These six proposals are referred to collectively as the Cara Proposals.

Please read this proxy statement/prospectus for further information with respect to the business to be transacted at the Cara special meeting. The Cara Board has fixed      as the record date for the determination of stockholders entitled to notice of, and to vote at, the Cara special meeting and any adjournment or postponement thereof. Only holders of record of shares of Cara common stock at the close of business on the record date are entitled to notice of, and to vote at, the Cara special meeting.

At the close of business on the record date, Cara had       shares of common stock outstanding and entitled to vote. A complete list of such stockholders entitled to vote at the Cara special meeting will be

 

 

available for examination at the Cara offices in Stamford, Connecticut during normal business hours for a period of ten days prior to the Cara special meeting.

Your vote is important. Approval of each of the Stock Issuance Proposal, the Equity Plan Proposal, the ESPP Proposal, the Reverse Stock Split Proposal and the Authorized Share Proposal requires the affirmative vote of a majority of the voting power of the votes cast by the holders of shares present at the meeting (by virtual attendance) or represented by proxy at the Cara special meeting and entitled to vote on the matter. Approval of the Adjournment Proposal requires the affirmative vote of a majority of shares present in person (by virtual attendance) or represented by proxy at the meeting and entitled to vote on the matter. No Cara Proposal is conditioned upon any other Cara Proposal. However, each of the Stock Issuance Proposal, the Reverse Stock Split Proposal and the Authorized Share Proposal is a condition to the consummation of the Merger. Therefore, the Merger cannot be consummated without the approval of the Stock Issuance Proposal, the Reverse Stock Split Proposal and the Authorized Share Proposal. The Equity Plan Proposal and the ESPP Proposal are conditioned upon the consummation of the Merger.

You are cordially invited to attend the Cara special meeting. The Cara special meeting can be accessed by visiting          , where you will be able to attend the Cara special meeting via live audio-only webcast. In order to attend you must pre-register at        . You will be able to vote your shares and submit questions during the Cara special meeting webcast by logging in using the unique link and password provided upon registration. Whether or not you expect to attend the Cara special meeting, to ensure your representation at the Cara special meeting, Cara urges you to submit a proxy to vote your shares as promptly as possible by (1) visiting the Internet site listed on the enclosed Cara proxy card, (2) calling the toll-free number listed on the enclosed Cara proxy card or (3) submitting your enclosed Cara proxy card by mail by using the provided self-addressed, stamped envelope. Submitting a proxy will not prevent you from attending by means of remote communication the Cara special meeting and voting at the Cara special meeting, but it will help to ensure that a quorum is present and avoid added solicitation costs. Any holder of record of Cara common stock as of the record date who attends the Cara special meeting may vote at the Cara special meeting, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Cara special meeting in the manner described in this proxy statement/prospectus. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction form furnished by your bank, broker or other nominee.

If you own shares in street name through an account with a bank, broker or other nominee and you decide to attend the Cara special meeting, you cannot vote at the Cara special meeting unless you present a “legal proxy,” issued in your name from your bank, broker or other nominee. If your shares are held in a brokerage account or by a bank or other nominee, your ability to vote by telephone or the Internet depends on your broker’s voting process. Please follow the directions provided to you by your broker, bank or nominee.

THE CARA BOARD HAS UNANIMOUSLY DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF, CARA AND ITS STOCKHOLDERS. THE CARA BOARD UNANIMOUSLY RECOMMENDS THAT CARA’S COMMON STOCKHOLDERS VOTE “FOR” THE STOCK ISSUANCE PROPOSAL, THE EQUITY PLAN PROPOSAL, THE ESPP PROPOSAL, THE REVERSE STOCK SPLIT PROPOSAL, THE AUTHORIZED SHARE PROPOSAL AND THE ADJOURNMENT PROPOSAL.

By Order of the Cara Board of Directors,

Scott M. Terrillion
Corporate Secretary
Stamford, CT

         , 2025

 

 

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Cara, constitutes a prospectus of Cara under the Securities Act of 1933, as amended (Securities Act), with respect to the shares of Cara common stock to be issued to the equityholders of Tvardi pursuant to the Merger Agreement. This document also constitutes a notice of a meeting and a proxy statement of Cara under Section 14(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), with respect to the Cara special meeting at which Cara stockholders will be asked to consider and vote on the Cara Proposals.

No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in or incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date on the front cover of those documents. Neither the mailing of this proxy statement/prospectus to Tvardi stockholders nor the issuance by Cara of Cara common stock in connection with the proposed Merger will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Information contained in this proxy statement/prospectus (including the documents incorporated by reference into this proxy statement/prospectus) regarding Tvardi and its business, operations, management and other matters has been provided by Tvardi and information contained in or incorporated by reference into this proxy statement/prospectus regarding Cara and its business, operations, management and other matters has been provided by Cara.

If you would like additional copies of this proxy statement/prospectus or if you have questions about the proposed Merger or the proposals to be presented at the Cara special meeting, please contact Cara’s proxy solicitor listed below. You will not be charged for any of the documents that you request.

You may also request additional copies from Cara’s proxy solicitor using the following contact information:

ALLIANCE ADVISORS, LLC

Stockholders call toll-free: 844-876-6183

Email: CARA@allianceadvisors.com

To ensure timely delivery of these documents, any request should be made no later than       , 2025 to receive them before the Cara special meeting.

Cara intends to mail this proxy statement/prospectus on or about      , 2025 to all stockholders of record entitled to vote at the Cara special meeting.

 

 

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Cara from other documents that are not included in or delivered with this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page 284 of this proxy statement/​prospectus. This information is available to you without charge upon your request.

You can obtain the documents incorporated by reference into this proxy statement/prospectus by requesting them in writing or by telephone at the following address and telephone number:

Cara Therapeutics, Inc.
400 Atlantic Street
Suite 500
Stamford, CT 06901
(203) 406-3700
Attn: Investor Relations

Investors may also consult Cara’s website for more information concerning the Merger described in this proxy statement/prospectus. Cara’s website is www.Caratherapeutics.com. Information included on or accessible through Cara’s website is not incorporated by reference into this proxy statement/prospectus.

 

 

TABLE OF CONTENTS

 

i

 

 

ii

 

 

iii

 

 

iv

 

 

v

 

ANNEX:

 

vi

 

QUESTIONS AND ANSWERS ABOUT THE MERGER

Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed reverse stock split (Reverse Stock Split) of common stock of Cara, as described in Proposal No. 4 beginning on page 180 of this proxy statement/​prospectus. The following section provides answers to frequently asked questions about the proposed Merger and the Cara special meeting. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

Q:

What is the Merger?

​

A:

Cara, Merger Sub, and Tvardi entered into the Merger Agreement on December 17, 2024. The Merger Agreement contains the terms and conditions of the proposed merger transaction among Cara, Merger Sub and Tvardi. Under the Merger Agreement, Merger Sub will merge with and into Tvardi, with Tvardi surviving as a wholly owned subsidiary of Cara. This transaction is referred to as the Merger.

​

The Merger will become effective at the time the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or such other date and time as is agreed upon by Cara and Tvardi and specified in the Certificate of Merger in accordance with the DGCL. At the Effective Time, (i) each share of Tvardi common stock outstanding immediately prior to the Effective Time (after giving effect to the conversion of all shares of Tvardi preferred stock into shares of Tvardi common stock (the Preferred Stock Conversion) and excluding shares held by stockholders who have exercised and perfected appraisal rights as more fully described in the section titled “The Merger Agreement — Appraisal Rights” beginning on page 155 of this proxy statement/prospectus and excluding shares held as treasury stock by Cara or held or owned by Cara, Merger Sub or any subsidiary of Cara or Tvardi) will be automatically converted solely into the right to receive a number of shares of Cara common stock calculated using an exchange ratio formula described in the Merger Agreement and (ii) each Convertible Note that is outstanding immediately prior to the Effective Time will be automatically converted into the right to receive a number of shares of Cara common stock calculated based on a conversion price equal to 80% of the implied value of the combined company (as more fully described in the Section titled “Agreements Related to the Merger” beginning on page 163).

Immediately following the Merger, the pre-Merger equityholders of Cara are expected to hold approximately 15.25% of the shares of Cara common stock, the pre-Merger equityholders of Tvardi are expected to hold approximately 72.21% of the shares of Cara common stock and the holders of the Convertible Notes are expected to hold approximately 12.54% of the shares of Cara common stock, in each case of Cara and Tvardi, on a fully diluted basis and subject to further adjustment as further described below. The expected post-Merger equity ownership split percentages are based on the assumed Exchange Ratio of 4.8997 and an assumed amount of Conversion Shares equal to approximately 46,115,173, and are subject to adjustments based on the final Exchange Ratio and final amount of Conversion Shares. The assumed Exchange Ratio was calculated assuming, among other things, that Cara Net Cash (as defined below) at the closing of the Merger (Closing) will be between $22.875 million and $23.125 million, and an amount of Conversion Shares equal to approximately 46,115,173. Such assumed Exchange Ratio is subject to certain adjustments, including based on the amount of Cara Net Cash at Closing, the final ratio for the Reverse Stock Split of Cara common stock and the final amount of Conversion Shares. The Exchange Ratio formula is based upon a Tvardi fixed valuation of $210.0 million and a Cara valuation of $43.0 million, subject to certain adjustments, including based upon Cara Net Cash at Closing, and an assumed implied value of the combined company of approximately $282 million, subject to certain adjustments, as more fully described in the section titled “The Merger Agreement — Merger Consideration and Exchange Ratio” beginning on page 140 of this proxy statement/prospectus. An $18.0 million Cara Net Cash threshold is a condition for Tvardi to be required to complete the Merger (Net Cash Condition).

Based on the assumed Exchange Ratio of 4.8997 and an assumed amount of Conversion Shares equal to approximately 46,115,173, if Cara Net Cash less than $22.875 million at Closing, the equityholders of Cara (pre-Merger) are expected to hold less than 15.25% of the outstanding shares of Cara common

 

1

 

stock, on a fully diluted basis (subject to further adjustment as further described below), and if Cara Net Cash more than $23.125 million at Closing, the equityholders of Cara (pre-Merger) are expected to hold more than 15.25% of the outstanding shares of Cara common stock on a fully diluted basis, as more fully described in the section titled “The Merger Agreement — Merger Consideration and Exchange Ratio” beginning on page 140 of this proxy statement/prospectus.

At the Effective Time, Cara’s stockholders will continue to own and hold their existing shares of Cara common stock, subject to adjustment in connection with the Reverse Stock Split. All outstanding and unexercised options to purchase shares of Cara common stock and outstanding Cara RSUs will be accelerated, the RSUs will be net settled, and the options will remain outstanding in accordance with their terms, except that the post-termination exercise period shall not exceed 90 days and the number of shares underlying such options will be adjusted based on the Reverse Stock Split. Each option to purchase shares of Tvardi common stock that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, will be assumed and converted into an option to purchase shares of Cara common stock, with the number of shares of Cara common stock subject to such option and the exercise price being appropriately adjusted to reflect the Exchange Ratio. Substantially concurrently with the completion of the Merger, Cara will change its corporate name to “Tvardi Therapeutics, Inc.” as required by the Merger Agreement.

Q:

What will happen to Cara if, for any reason, the Merger does not close?

​

A:

If, for any reason, the Merger does not close, the Cara Board may elect to, among other things, continue the business of Cara, attempt to continue to sell or otherwise dispose of the various assets of Cara, or dissolve and liquidate its assets. Additionally, if the Merger does not close, Cara will not issue shares of Cara common stock to the equityholders of Tvardi as merger consideration and the Convertible Notes will not be converted into shares of Cara common stock. Under certain circumstances, Cara may be obligated to pay Tvardi or Tvardi may be obligated to pay Cara a termination fee of $2.25 million or reimburse certain expenses up to $750,000, as more fully described in the section titled “The Merger Agreement — Termination and Termination Fees” beginning on page 158 of this proxy statement/prospectus. If Cara decides to dissolve and liquidate its assets, Cara would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims. There can be no assurances as to the amount or timing of available cash left to distribute to stockholders after paying the debts and other obligations of Cara and setting aside funds for reserves.

​

Q:

Why are the two companies proposing to merge?

​

A:

Cara believes that the Merger will result in a clinical-stage biopharmaceutical company advancing the development of Tvardi’s novel, oral small molecule therapies targeting STAT3 to treat fibrosis-driven diseases with significant unmet need. For a discussion of Cara’s reasons for the Merger, please see the section titled “The Merger — Cara Reasons for the Merger” beginning on page 111 of this proxy statement/prospectus.

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Q:

Why am I receiving this proxy statement/prospectus?

​

A:

You are receiving this proxy statement/prospectus because you have been identified as a holder of Cara common stock as of the record date.

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This document serves as: (x) a proxy statement of Cara used to solicit proxies for the Cara special meeting and (y) a prospectus of Cara used to offer shares of Cara common stock in exchange for shares of Tvardi common stock (after giving effect to the Preferred Stock Conversion) and the Convertible Notes in the Merger. Information about the Cara special meeting, the Merger, the Merger Agreement and the other business to be considered by Cara stockholders at the Cara special meeting is contained in this proxy statement/prospectus. Cara stockholders should read this information carefully and in its entirety. The enclosed voting materials allow Cara stockholders to vote their shares by proxy without attending the Cara special meeting.

 

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Cara Stockholders

If you are a holder of Cara common stock as of the record date, you are entitled to vote at the Cara special meeting, which has been called for the purpose of approving the following proposals:

1.

Proposal 1 — (i) the issuance of shares of Cara common stock pursuant to the Merger, which will represent more than 20% of the shares of Cara common stock outstanding immediately prior to the Merger and (ii) the change of control of Cara resulting from the Merger, pursuant to Rules 5635(a) and 5635(b) of Nasdaq, respectively, referred to as the Stock Issuance Proposal;

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2.

Proposal 2 —  the Tvardi Therapeutics, Inc. 2025 Equity Incentive Plan, referred to as the Equity Plan Proposal;

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3.

Proposal 3 —  the Tvardi Therapeutics, Inc. 2025 Employee Stock Purchase Plan, referred to as the ESPP Proposal;

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4.

Proposal 4 —  an amendment to the amended and restated certificate of incorporation of Cara to effect a reverse stock split of Cara common stock at a ratio within the range between     -for-1 to     -for-1 (with such ratio to be mutually agreed upon by the Cara Board and the Tvardi Board prior to the effectiveness of the Merger or, if the Stock Issuance Proposal is not approved by Cara stockholders, determined solely by the Cara Board), referred to as the Reverse Stock Split Proposal;

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5.

Proposal 5 —  an amendment to the Cara amended and restated certificate of incorporation to increase the number of authorized shares of Cara common stock from        shares to        shares, referred to as the Authorized Share Proposal; and

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6.

Proposal 6 — the postponement or adjournment of the Cara special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Stock Issuance Proposal, the Reverse Stock Split Proposal and/or the Authorized Share Proposal, referred to as the Adjournment Proposal.

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Cara does not expect that any matter other than these six proposals (the Cara Proposals) will be brought before the Cara special meeting.

Q:

What is required to consummate the Merger?

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A:

To consummate the Merger, holders of Cara common stock must approve the Stock Issuance Proposal (Proposal No. 1 above), the Reverse Stock Split Proposal (Proposal No. 4 above) and the Authorized Share Proposal (Proposal No. 5 above) (collectively, the Required Cara Closing Stockholder Matters).

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Certain of Tvardi’s stockholders and certain of Cara’s stockholders are parties to Support Agreements with Cara and Tvardi, respectively, whereby such stockholders have agreed to vote their shares in favor of the adoption and approval, among other things, of the Merger Agreement and the Contemplated Transactions, subject to the terms of the Support Agreements.

In addition to the requirement of obtaining stockholder approval of the Required Cara Closing Stockholder Matters and the Tvardi Stockholder Matters, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived. For a complete description of the closing conditions under the Merger Agreement, refer to the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 144 of this proxy statement/prospectus.

In the event of a waiver of a condition, the Cara Board will evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of stockholder approval is necessary. For more information, refer to the section titled “Risk Factors Related to the Merger — Cara or Tvardi may waive one or more of the conditions to the Merger without recirculation of this proxy statement/prospectus or resoliciting stockholder approval” beginning on page 29 of this proxy statement/prospectus.

 

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Q:

What will Tvardi’s stockholders, noteholders and option holders receive in the Merger?

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A:

Each share of Tvardi common stock outstanding (after giving effect to the Preferred Stock Conversion) will be converted into the right to receive a number of shares of Cara common stock calculated using the Exchange Ratio. The Convertible Notes (as defined below) will also be converted into the right to receive a number of shares of Cara common stock calculated based on a conversion price equal to 80% of the implied value of the combined company (as more fully described in the Section titled “Agreements Related to the Merger” beginning on page 163). Cara will assume options to purchase shares of Tvardi common stock (each such option, a Tvardi Option), and in connection with the Merger such Tvardi Options will be converted into options to purchase shares of Cara common stock. For a more complete description of what Tvardi’s stockholders and option holders will receive in the Merger, please see the section titled “The Merger Agreement — Merger Consideration and Exchange Ratio” beginning on page 140 of this proxy statement/prospectus.

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Q:

What will Cara’s stockholders and option holders receive in the Merger?

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A:

At the Effective Time, Cara’s stockholders and optionholders will continue to own and hold their existing shares, RSUs or options to purchase shares of Cara common stock, which outstanding options and RSUs will be accelerated. The RSUs will be net settled and the options will remain outstanding in accordance with their terms, except that the post-termination exercise period shall not exceed 90 days and the number of shares underlying such options will be adjusted based on the Reverse Stock Split.

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Q:

Who will be the directors of Cara following the Merger?

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A:

At the Effective Time, the board of directors of the combined company (Combined Company Board) will consist of seven directors and will be comprised of five members designated by Tvardi (Sujal Shah, Michael Wyzga, Wallace Hall, Shaheen Wirk and Imran Alibhai), one member to be designated by Cara prior to Closing and one vacancy, to be designated by Tvardi if prior to the closing of the Merger or by the combined company if following the consummation of the Merger. The Combined Company Board will have an audit committee, a compensation committee and a nominating and corporate governance committee, in accordance with the rules of Nasdaq. All of Cara’s current directors other than the director to be designated by Cara prior to Closing are expected to resign from their positions as directors of Cara, effective upon the Effective Time. For a more complete description of the Combined Company Board, please see the section titled “Management Following the Merger” beginning on page 252 of this proxy statement/prospectus.

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Q:

Who will be the executive officers of Cara following the Merger?

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A:

Immediately following the Merger, the executive management team of the combined company is expected to comprise the following individuals with such additional officers as may be added by the combined company:

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Q:

As a stockholder of Cara, how does the Cara Board recommend that I vote?

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A:

After careful consideration, the Cara Board recommends that the holders of Cara common stock vote:

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•

“FOR” Proposal 1 — the Stock Issuance Proposal;

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•

“FOR” Proposal 2 — the Equity Plan Proposal;

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•

“FOR” Proposal 3 — the ESPP Proposal;

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•

“FOR” Proposal 4 — the Reverse Stock Split Proposal;

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•

“FOR” Proposal 5 — the Authorized Share Proposal; and

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•

“FOR” Proposal 6 — the Adjournment Proposal.

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For more information on each proposal and the Cara Board’s recommendations, please see the section titled “Matters Being Submitted to a Vote of Cara’s Stockholders” beginning on page 166 of this proxy statement/prospectus.

Q:

How many votes are needed to approve each Cara Proposal?

​

A:

Approval of each of the Stock Issuance Proposal, the Equity Plan Proposal, the ESPP Proposal and the Authorized Share Proposal requires the affirmative vote from a majority of the votes cast by the holders of shares present at the meeting (by virtual attendance) or represented by proxy. Approval of the Adjournment Proposal requires votes from the majority of shares present in person (by virtual attendance) or represented by proxy at the meeting and entitled to vote on the matter.

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Q:

What risks should I consider in deciding whether to vote in favor of the Cara Proposals?

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A:

You should carefully review the section titled “Risk Factors,” beginning on page 25 of this proxy statement/prospectus. You also should read and carefully consider the risk factors contained in the documents that are incorporated by reference into this proxy statement/prospectus.

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Q:

When do you expect the Merger to be consummated?

​

A:

We anticipate that the Merger will be consummated during the first half of 2025, soon after the Cara special meeting to be held on      , 2025, but we cannot predict the exact timing. For more information, please see the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 144 of this proxy statement/prospectus.

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Q:

What are the material U.S. Federal Income Tax consequences of the Merger to holders of Cara common stock?

​

A:

Cara stockholders will not sell, exchange or dispose of any shares of Cara common stock as a result of the Merger. Thus, there will be no material U.S. federal income tax consequences to Cara stockholders as a result of the Merger.

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Q:

What are the material U.S. Federal Income Tax consequences of the Reverse Stock Split to U.S. holders of Cara shares?

​

A:

Cara intends to treat the Reverse Stock Split as a “recapitalization” for U.S. Federal Income Tax purposes. If it so qualifies, a Cara stockholder who is a U.S. holder (as defined in the section titled “Matters Being Submitted to a Vote of Cara’s Stockholders — Proposal No. 4: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of Cara Effecting the Reverse Stock Split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 185 of this proxy statement/prospectus) should not recognize gain or loss upon the Reverse Stock Split (other than in respect of cash received in lieu of fractional shares). A U.S. holder’s aggregate tax basis in the shares of Cara common stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis of the shares of Cara common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of Cara common stock), and such U.S. holder’s holding

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5

 

period in the shares of Cara common stock received should include the holding period in the shares of Cara common stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of Cara common stock surrendered to the shares of Cara common stock received in a “recapitalization”. U.S. holders of shares of Cara common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.

Please review the information in the section titled “Matters Being Submitted to a Vote of Cara’s Stockholders — Proposal No. 4: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of Cara Effecting the Reverse Stock Split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 185 of this proxy statement/prospectus for a more complete description of the material U.S. Federal Income Tax consequences of the Reverse Stock Split to Cara U.S. holders.

Q:

What are the Convertible Notes?

​

A:

On December 3, 2024, Tvardi entered into a Note Purchase Agreement to issue and sell convertible promissory notes (Convertible Notes) in an aggregate amount of approximately $28.3 million. The Convertible Notes accrue simple interest at 8% per annum and mature on December 31, 2026. Upon the Closing, the outstanding principal balance of such notes and all unpaid accrued interest will be automatically converted into shares of Cara common stock, at a conversion price equal to 80% of the implied valuation of the combined company in the Merger. The Conversion Shares shall be calculated by multiplying the Post-Closing Cara Shares (as defined below) by (a) the quotient obtained by dividing (i) the Implied Note Valuation (as defined below) by (ii) the Aggregate Post-Bridge Valuation (as defined below). The Post-Closing Shares means the quotient obtained by dividing the Cara Outstanding Shares (as defined below) by the Cara Allocation Percentage (as defined below). The Implied Note Valuation means the quotient obtained by dividing (a) the principal amount of the Convertible Notes plus all accrued and unpaid interest by (b) 80%. The Aggregate Post-Bridge Valuation means the sum of (i) the Tvardi Valuation (as defined below), plus (ii) the Cara Valuation (as defined below) plus (iii) the Implied Note Valuation. The Conversion Shares issued with respect to the 20% discount under the terms of the Convertible Notes (Note Conversion Discount Shares) shall dilute the pre-Merger equityholders of Tvardi as part of calculating the Exchange Ratio. The remaining Conversion Shares shall dilute the pre-Merger Cara equityholders and the pre-Merger Tvardi equityholders on a pro rata basis. Immediately following the conversion of the Convertible Notes, the pre-Merger equityholders of Cara are expected to hold approximately 15.25% of the shares of Cara common stock, the pre-Merger equityholders of Tvardi are expected to hold approximately 72.21% of the shares of Cara common stock, and the holders of the Convertible Notes are expected to hold approximately 12.54% of the shares of Cara common stock, in each case of Cara and Tvardi, on a fully diluted basis and subject to further adjustment as further described below. The expected post-Merger equity ownership split percentages are based on the assumed Exchange Ratio of 4.8997 and an amount of Conversion Shares equal to approximately 46,115,173 and are subject to adjustments based on the final Exchange Ratio and final amount of Conversion Shares. For more information about the Convertible Notes, please see the section titled “Agreements Related to the Merger” beginning on page 163 of this proxy statement/​prospectus.

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Q:

What do I need to do now?

​

A:

Cara urges you to read this proxy statement/prospectus carefully, including its annexes and information incorporated herein, and to consider how the Merger affects you.

​

If you are a common stockholder of Cara, please vote your shares as soon as possible so that your shares will be represented at the Cara special meeting. Please follow the instructions set forth on the enclosed Cara proxy card or on the voting instruction form provided by the record holder of your shares if your shares are held in the name of your bank, broker or other nominee.

 

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Q:

When and where is the Cara special meeting? What must I do to attend the Cara special meeting?

​

A:

The Cara special meeting will be held exclusively online via live audio-only webcast on      , 2025 at Eastern Time. Online check-in will begin at        Eastern Time, and Cara encourages you to allow ample time for the online check-in procedures. Please note that you will not be able to attend the Cara special meeting in person.

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You or your authorized proxy may attend the Cara special meeting if you were a registered or beneficial stockholder of Cara common stock as of the record date.

You will be able to vote your shares and submit questions during the Cara special meeting webcast by logging in to the website listed above using the 16-digit control number included in your proxy card. If you wish to submit a question during the Cara special meeting, log into the Cara special meeting platform at         , type your question into the “Ask a Question” field, and click “Submit.” Cara will respond to as many properly submitted questions during the relevant portion of the Cara special meeting agenda as time allows.

If Cara experiences technical difficulties during the Cara special meeting (e.g., a temporary or prolonged power outage), Cara will determine whether the Cara special meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the Cara special meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, Cara will promptly notify stockholders of the decision via        . Cara will have technicians ready to assist you with any technical difficulties you may have accessing the Cara special meeting website. If you encounter any difficulties accessing the Cara special meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Cara special meeting website log-in page at        .

If you own shares in street name through an account with a bank, broker or other nominee, please send proof of your Cara share ownership as of the record date (for example, a brokerage firm account statement or a “legal proxy” from your intermediary) along with your registration request. If you are not sure what proof to send, check with your intermediary.

If your shares are registered in your name with Cara’s stock registrar and transfer agent, Equiniti Trust Company, LLC, no proof of ownership is necessary because Cara can verify your ownership.

Q:

What is the quorum requirement?

​

A:

A quorum of Cara stockholders is necessary to hold a valid meeting. The presence virtually or by proxy duly authorized, of the holders of one-third of the outstanding shares of common stock entitled to vote, as of the record date, shall constitute a quorum for the transaction of business at the Cara special meeting. As of the record date there were        shares of Cara common stock outstanding and entitled to vote. Accordingly, the holders of at least        shares of Cara common stock must be present virtually or by proxy at the Cara special meeting to establish a quorum.

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Your shares will be counted towards the quorum if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you attend the Cara special meeting and vote your shares during the Cara special meeting. Abstentions and broker non-votes, if applicable, will also be counted towards the quorum requirement. If there is no quorum, the person presiding over the Cara special meeting, or the holders of a majority of shares present at the Cara special meeting or represented by proxy, may adjourn the meeting to another date.

Q:

How are votes with respect to the Cara Proposals counted?

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A:

Votes with respect to the Cara Proposals will be counted by the inspector of elections appointed for the meeting, who will separately count votes “FOR” and “AGAINST,” abstentions and, if applicable, broker non-votes.

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Cara does not expect that any matters other than the Cara Proposals will be brought before the Cara special meeting.

 

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Q:

What are “broker non-votes”?

​

A:

Brokers who hold shares in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to approval of non-routine matters, and, as a result, absent specific instructions from the beneficial owner of such shares, brokers are not empowered to vote those shares, referred to generally as “broker non-votes.” Broker non-votes, if any, will be treated as shares that are present at the Cara special meeting for purposes of determining whether a quorum exists but will not have any effect for the purpose of voting on Proposal No. 1 (Stock Issuance Proposal), Proposal No. 2 (Equity Plan Proposal), Proposal No. 3 (ESPP Proposal), Proposal No. 4 (Reverse Stock Split Proposal), Proposal No. 5 (Authorized Share Proposal) or Proposal No. 6 (Adjournment Proposal).

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Q:

What will happen if I return my proxy form without indicating how to vote?

​

A:

If you submit your proxy form without indicating how to vote your shares on any particular Cara Proposal, the common stock represented by your proxy will be voted as recommended by the Cara Board with respect to that proposal.

​

Q:

May I change my vote after I have submitted a proxy or voting instruction form?

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A:

Cara’s common stockholders of record, other than those Cara stockholders who are parties to Support Agreements, may change their vote at any time before their proxy is voted at the Cara special meeting in one of following ways:

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•

By sending a written notice to the Secretary of Cara stating that you would like to revoke your proxy;

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•

By duly executing a subsequently dated proxy relating to the same shares of common stock and return it in the postage-paid envelope provided or similar means, which subsequent proxy is received before the prior proxy is exercised at the Cara special meeting;

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•

Duly submitting a subsequently dated proxy relating to the same shares of common stock by telephone or via the Internet (i.e., your most recent duly submitted voting instructions will be followed) before       Eastern Time on      , 2025; and

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•

By attending the Cara special meeting and voting such shares during the Cara special meeting.

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If a stockholder who owns Cara shares in “street name” has instructed a broker to vote its shares of Cara common stock, the stockholder must follow directions received from its broker to change those instructions.

Q:

Who is paying for this proxy solicitation?

​

A:

Cara and Tvardi will each pay 50% of the costs of printing and filing of this proxy statement/​prospectus and any amendments and supplements thereto and paid to a financial printer or to the SEC. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Cara common stock for the forwarding of solicitation materials to the beneficial owners of Cara common stock. Cara will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials. In addition, Cara has engaged Alliance Advisors, LLC, a proxy solicitation firm, to solicit proxies from Cara’s stockholders for a fee of up to approximately $50,000 plus certain additional costs associated with solicitation campaigns, which fees and costs will be shared between Cara and Tvardi.

​

Q:

Should Cara’s and Tvardi’s stockholders send in their stock certificates now, to the extent they have any?

​

A:

No. After the Merger is consummated, Tvardi’s stockholders will receive written instructions from the exchange agent for exchanging their certificates or book entry notations representing shares of Tvardi common stock (after giving effect to the Preferred Stock Conversion) for book entry notations

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8

 

representing shares of Cara common stock. Each Tvardi stockholder who otherwise would be entitled to receive a fractional share of Cara common stock will be entitled to receive cash in lieu of fractional shares.

In addition, Cara’s stockholders will receive written instructions, as applicable, from Cara’s transfer agent, Equiniti Trust Company, LLC, for exchanging their certificates representing shares Cara common stock for new certificates giving effect to the Reverse Stock Split, if effected. Cara’s stockholders will also receive a cash payment in lieu of any fractional shares, determined by multiplying such fraction by the average closing trading price of a share of Cara common stock on Nasdaq for the five consecutive trading days ending three trading days immediately prior to the date of the public announcement of the Merger Agreement, which is equal to $0.276.

Q:

Who can help answer my questions?

​

A:

If you are a stockholder of Cara and would like additional copies, without charge, of this proxy statement/​prospectus or if you have questions about the Merger, including the procedures for voting your shares, you should contact Alliance Advisors, LLC, Cara’s proxy solicitor, by telephone, toll-free, at 844-876-6183 or by email at CARA@allianceadvisors.com.

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Name	​	​	Position with the Combined Company	​	​	Current Position at Tvardi	​
Imran Alibhai, Ph.D.	​	​	Chief Executive Officer and Director	​	​	Chief Executive Officer and Director	​
Dan Conn, J.D., M.B.A.	​	​	Chief Financial Officer	​	​	Chief Financial Officer	​
John Kauh, M.D.	​	​	Chief Medical Officer	​	​	Chief Medical Officer	​
Jeffrey Larson, Ph.D., DABT	​	​	Senior Vice President, Research & Development	​	​	Senior Vice President, Research & Development	​
Yixin “Joseph” Chen, Ph.D.	​	​	Vice President, Chemistry, Manufacturing and Controls	​	​	Vice President, Chemistry, Manufacturing and Controls	​

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RISK FACTORS

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in and incorporated by reference into this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of Cara common stock. In addition, you should read and consider the risks associated with the business of Cara because these risks may also affect the combined company. These risks can be found in Cara’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. You should also read and consider the other information in this proxy statement/​prospectus and the other documents incorporated by reference into this proxy statement/prospectus. Realization of any of the risks described below, any of the uncertainties described under “Cautionary Note Regarding Forward-Looking Statements” could have a material adverse effect on Cara’s, Tvardi’s or the combined company’s businesses, financial condition, cash flows and results of operations. Please see the section titled “Where You Can Find More Information” beginning on page 284 of this proxy statement/prospectus.

Risks Related to the Merger

The Merger may not be completed on the terms or timeline currently contemplated, or at all.

The consummation of the Merger is subject to numerous conditions, including (1) the effectiveness of the Registration Statement, (2) the approval by Cara’s stockholders of the Required Cara Closing Stockholder Matters, (3) the approval by Tvardi’s stockholders of the Tvardi Stockholder Matters, and (4) other customary closing conditions and there can be no assurance that the Merger will be consummated. See the section “The Merger Agreement — Conditions to the Completion of the Merger” on page 144 of this proxy statement/prospectus.

If the Merger is not completed for any reason, the price of Cara’s common stock may decline to the extent that the market price of Cara’s common stock reflects or previously reflected positive market assumptions that the Merger would be completed and the related benefits would be realized. In addition, Cara and Tvardi have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory, printing and financial services fees related to the Merger. These expenses must be paid regardless of whether the Merger is consummated.

The 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.

The Exchange Ratio will not change based on changes in the trading price of Cara common stock. Therefore, if before the completion of the Merger, the market price of Cara common stock increases from the market price on the date of the Merger Agreement, Tvardi stockholders could then receive merger consideration with substantially higher value for their shares of Tvardi common stock than the parties had negotiated when they established the Exchange Ratio. The Merger Agreement does not include a price-based termination right. Immediately following the Merger, the pre-Merger equityholders of Cara are expected to hold approximately 15.25% of the shares of Cara common stock, the pre-Merger equityholders of Tvardi are expected to hold approximately 72.21% of the shares of Cara common stock, and the holders of the Convertible Notes are expected to hold approximately 12.54% of the shares of Cara common stock, in each case, on a fully diluted basis (subject to further adjustment as further described below), subject to certain adjustments, including based upon Cara Net Cash at Closing. The calculation of Cara Net Cash at Closing includes, among other things, a credit or reduction for cash proceeds that Cara receives or pays from the Asset Disposition. The Net Cash Condition means that Cara Net Cash must be no less than $18.0 million in order for Tvardi to be required to complete the Merger. For a more complete description of the Merger, please see the section titled “The Merger Agreement — Merger Consideration” beginning on page 140 of this proxy statement/prospectus.

 

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Cara’s net cash may be less than $22.875 million at the Closing, 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 the End Date, could even result in the termination of the Merger Agreement.

For purposes of the Merger Agreement, net cash is subject to certain reductions, including, without limitation, for payments made in connection with the sale, transfer, license, assignment or other divestiture of its intellectual property and other assets and technology in existence on the date of the Merger Agreement on or about the anticipated Closing, accounts payable, accrued expenses (except those related to the Merger), current liabilities payable in cash, unpaid expenses related to the Merger and certain other unpaid obligations. In the event the amount of Cara’s cash is smaller or such reductions are greater than anticipated, Cara stockholders could hold a significantly smaller portion of the combined company.

Failure 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.

If the Merger is not completed, each of Cara and Tvardi is subject to the following risks:

•

upon termination of the Merger Agreement, Cara may be required to pay Tvardi a termination fee of $2.25 million or up to $750,000 in expense reimbursements; or Tvardi may be required to pay Cara a termination fee of $2.25 million or up to $750,000 in expense reimbursements;

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•

the parties have incurred, and will continue to incur, significant expenses related to the Merger, such as legal, financial advisor and accounting fees, which must be paid even if the Merger is not completed;

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•

the price of Cara’s common stock may decline and remain volatile;

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•

Cara may be forced to cease its operations, dissolve and liquidate its assets.

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In addition, if the Merger Agreement is terminated and the Cara Board or Tvardi Board determines to seek another business combination, there can be no assurance that either Cara or Tvardi will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger or any partner at all. Please see “The Merger Agreement — Termination and Termination Fee” beginning on page 158 of this proxy statement/prospectus.

If the conditions to the closing of the Merger are not met, the Merger may not occur.

Even if the Required Cara Closing Stockholder Matters are approved by the stockholders of Cara, specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 144 of this proxy statement/prospectus. Cara and Tvardi cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or will be delayed, and Cara and Tvardi each may lose some or all the intended benefits of the Merger.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and/or other causes.

In general, either Cara or Tvardi can refuse to complete the Merger if there is a Tvardi Material Adverse Effect (as defined in the Merger Agreement) or a Cara Material Adverse Effect (as defined in the Merger Agreement), as applicable, between December 17, 2024, the date of the Merger Agreement, and the closing of the Merger. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Cara or Tvardi, including:

•

general business, political or economic conditions generally affecting the industry in which Tvardi or Cara operate;

​

•

acts of war, the outbreak or escalation of armed hostilities, acts of terrorism, earthquakes, wildfires, hurricanes or other natural disasters, health emergencies, including pandemics (including COVID-19 and any evolutions or mutations thereof) and related or associated epidemics, disease outbreaks or quarantine restrictions;

​

 

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•

changes in financial, banking or securities markets;

​

•

any change in the stock price or trading volume of Cara common stock (it being understood, however, that any effect causing or contributing to any change in stock price or trading volume of Cara common stock may be taken into account in determining whether a material adverse effect with respect to Cara has occurred, unless such effects are otherwise excepted from the definition of Cara material adverse effect);

​

•

any failure by Cara to meet internal or analysts’ expectations or projections or the results of operations of Cara (it being understood, however, that any effect causing or contributing to the failure of Cara to meet internal or analysts’ expectations or projections or the results of operations of Cara may be taken into account in determining whether a material adverse effect with respect to Cara has occurred, unless such effects are otherwise excepted from the definition of Cara material adverse effect);

​

•

any change in, or any compliance with or action taken for the purpose of complying with, any applicable law or GAAP (or interpretations of ay applicable law or GAAP);

​

•

the announcement of the Merger Agreement or the pendency of the Contemplated Transactions; or

​

•

the taking of any action required to be taken by the Merger Agreement.

​

If a material adverse change occurs with respect to either party or both parties and Cara and Tvardi still complete the Merger, the stock price of the combined company following the closing of the Merger may suffer and may reduce the value of the Merger to the stockholders of Cara, Tvardi or both.

Some 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.

Some officers and directors of Cara are parties to arrangements that provide them with interests in the Merger that are different from the stockholders of Cara, including some or all of service as an officer or director of the combined company following the closing of the Merger, severance and retention benefits, the acceleration of equity award vesting and continued indemnification. For more information regarding the interests of the Cara executive officers and directors in the Merger, see the section titled “The Merger — Interests of the Cara Directors and Executive Officers in the Merger” of this proxy statement/​prospectus.

The market price of Cara common stock following the Merger may decline as a result of the Merger.

The market price of Cara common stock may decline as a result of the Merger for a number of reasons, including if:

•

investors react negatively to the prospects of the combined company’s business and prospects following the closing of the Merger;

​

•

the effect of the Merger on the combined company’s business and prospects following the closing of the Merger is not consistent with the expectations of financial or industry analysts; or

​

•

the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by stockholders or financial or industry analysts, or at all.

​

Cara and Tvardi equityholders 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.

Immediately following the Merger, the pre-Merger equityholders of Cara are expected to hold approximately 15.25% of the outstanding shares of Cara common stock, the pre-Merger equityholders of Tvardi are expected to hold approximately 72.21% of the outstanding shares of Cara common stock, and the holders of the Convertible Notes are expected to hold approximately 12.54% of the shares of Cara common stock, in each case, on a fully diluted basis (subject to further adjustment as further described below),

 

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subject to certain adjustments, including based upon Cara Net Cash at Closing. The calculation of Cara Net Cash at Closing includes, among other things, a credit or reduction for cash proceeds that Cara receives or pays from the Asset Disposition. The Net Cash Condition means that Cara Net Cash must be no less than $18 million in order for Tvardi to be required to complete the Merger. For a more complete description of the Merger, please see the section titled “The Merger Agreement — Merger Consideration and Exchange Ratio” beginning on page 140 of this proxy statement/prospectus.

Following the Closing, Sujal Shah will serve as Chairman and Imran Alibhai will serve as the Chief Executive Officer of Cara as the combined company. Additionally, following the closing, the Combined Company Board will consist of seven directors, and will be comprised of five members designated by Tvardi (Sujal Shah, Michael Wyzga, Wallace Hall, Shaheen Wirk and Imran Alibhai), one member to be designated by Cara prior to Closing and one vacancy, to be designated by Tvardi if prior to the closing of the Merger or by the combined company if following the consummation of the Merger.

During 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.

Covenants in the Merger Agreement impede the ability of Cara and Tvardi to make acquisitions, subject to specified exceptions relating to fiduciary duties, or complete other mergers, sales of assets or other business combinations pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into specified extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to specified exceptions, even if any such transaction could be favorable to such party’s stockholders. For a more complete description of the restrictions on pursuing alternative transactions please see the section titled “The Merger Agreement” beginning on page 140 of this proxy statement/prospectus.

Certain 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.

The terms of the Merger Agreement prohibit each of Cara and Tvardi from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances for Cara when the Cara Board determines in good faith, after consultation with its outside financial advisor and outside legal counsel, that an unsolicited competing proposal constitutes, or is reasonably likely to result in, a superior competing proposal and, after consultation with its outside legal counsel, that failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the Cara Board. Even in such circumstances, while the Cara Board may change its recommendation to Cara stockholders, Cara will remain obligated to hold a stockholder vote on the Required Cara Closing Stockholder Matters and may not terminate the Merger Agreement in order to enter into an agreement with respect to a Superior Offer. In addition, if Cara or Tvardi terminate the Merger Agreement under specified circumstances, including terminating because of a decision of the Cara Board to recommend a superior competing proposal, Cara may be required to pay Tvardi a termination fee of $2.25 million and/or up to $750,000 in expense reimbursements or Tvardi may be required to pay Cara a termination fee of $2.25 million, and/or up to $750,000 in expense reimbursements, as defined and described under “The Merger Agreement — Termination and Termination Fee.” This termination fee may discourage third parties from submitting competing proposals to Cara or its stockholders and may cause the Cara Board or the Tvardi Board, as the case may be, to be less inclined to recommend a competing proposal.

Because the lack of a public market for Tvardi’s common stock makes it difficult to evaluate the fairness of the Merger, the stockholders of Tvardi may receive consideration in the Merger that is less than the fair market value of Tvardi’s common stock or Cara may pay more than the fair market value of Tvardi’s common stock.

The outstanding common stock of Tvardi is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Tvardi’s common stock. Because the percentage of Cara equity to be issued to Tvardi stockholders was determined based on

 

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negotiations between the parties, it is possible that the value of the Cara common stock to be received by Tvardi stockholders will be less than the fair market value of Tvardi’s common stock, or Cara may pay more than the aggregate fair market value for Tvardi’s common stock.

The 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.

The Cara Board has not obtained an updated opinion either as of the date of this proxy statement/​prospectus or as of any other date subsequent to the date of the Piper Sandler Opinion from Piper Sandler, Cara’s financial advisor. Changes in circumstances, including without limitation the operations and prospects of Cara or Tvardi, stock prices, general market and economic conditions and other factors, some or all of which may be beyond the control of Cara and Tvardi, are not reflected in the Piper Sandler Opinion. The Piper Sandler Opinion does not speak as of any date other than the date thereof.

The 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.

In the past, securities class action or stockholder derivative litigation often follows certain significant business transactions, such as the sale of a business division or announcement of a merger. The combined company may become involved in this type of litigation in the future in connection with the Merger and the other Contemplated Transactions. Responding to these demands and litigation often is expensive and diverts management’s attention and resources, which could adversely affect the combined company’s business.

Cara or Tvardi may waive one or more of the conditions to the Merger without recirculation of this proxy statement/prospectus or resoliciting stockholder approval.

Conditions to Cara’s or Tvardi’s obligations to complete the Merger may be waived, in whole or in part, to the extent permitted by law, in certain circumstances unilaterally or by agreement of Cara and Tvardi. In the event of a waiver of a condition, the Cara Board will evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of stockholder approval is necessary.

In the event that the Cara Board, in its own reasonable discretion, determines any such waiver is not significant enough to require recirculation of this proxy statement/prospectus and re-solicitation of its stockholders, it will have the discretion to complete the Merger without seeking further stockholder approval, which decision may have a material adverse effect on the Cara stockholders. For example, if Cara and Tvardi agree to waive the requirement that the shares of Cara common stock to be issued in the Merger have been approved for listing (subject to official notice of issuance) on Nasdaq as of the closing of the Merger, and their respective boards of directors elect to proceed with the closing of the Merger, Nasdaq may notify the combined company of its determination to delist the company’s securities based upon the failure to satisfy the initial inclusion criteria in the Nasdaq application. The combined company may appeal the determination to a hearings panel but such appeal will not stay the suspension and delisting action and Nasdaq may notify the combined company that its common stock will be immediately suspended from trading and delisted.

In addition, in order to meet the initial listing requirements of Nasdaq, Cara may release Tvardi stockholders from their Lock-Up Agreements and waive the requirement that such Lock-Up Agreements be in full force and effect immediately following the Effective Time. Such release would increase the number of shares that may be sold in the public market immediately after the Merger and any such sales could cause the combined company’s stock price to decline.

Transfers of the combined company’s securities utilizing Rule 144 of the Securities Act may be limited.

A significant portion of the combined company’s securities will be restricted from immediate resale. Holders should be aware that transfers of Cara’s securities pursuant to Rule 144 under the Securities Act (Rule 144) may be limited as Rule 144 is not available, subject to certain exceptions, for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers

 

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that have previously been a shell company. Cara’s winddown of its historical operations, the suspension of development activities and the proposed Merger will make Cara subject to the SEC requirements applicable to reporting shell company business combinations. Cara anticipates that following the consummation of the proposed transaction, the combined company will no longer be a shell company. As a result, Cara anticipates that holders will not be able to sell their restricted combined company securities pursuant to Rule 144 without registration until one year after the combined company files the Current Report on Form 8-K following the closing that includes the required Form 10 type information that reflects that the combined company is no longer a shell company. For more information, see the section entitled “Securities Act Restrictions on Resale of Combined Company Common Stock — Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies” beginning on page 277 of this proxy statement/prospectus.

Cara’s winddown of its historical operations, the sale of assets, the suspension of development activities and the proposed Merger, resulting in the conversion of Tvardi into a public company, will make Cara subject to the SEC requirements applicable to reporting shell company business combinations. As a result, the combined company will be subject to more stringent reporting requirements, offering limitations and resale restrictions.

According to SEC guidance, the requirements applicable to reporting shell company business combinations apply to any company that sells or otherwise disposes of its historical assets or operations in connection with or as part of a plan to combine with a non-shell private company in order to convert the private company into a public one. Cara has suspended its development activities and, as such, Cara’s plan to merge with Tvardi, resulting in the conversion of Tvardi into a public company, will be subject to the SEC requirements applicable to reporting shell company business combinations, which are as follows:

•

the combined company will need to file a Current Report on Form 8-K to report the Form 10 type information (Super 8-K) after Closing reflecting its status as an entity that is not a shell company;

​

•

the combined company will not be eligible to use a Form S-3 until 12 full calendar months after Closing;

​

•

the combined company will need to wait at least 60 calendar days after the filing of the Super 8-K to file a Form S-8 for any equity plans or awards, such as the 2025 Equity Plan and the 2025 Employee Stock Purchase Plan;

​

•

the combined company will be an “ineligible issuer” for three years following the Closing, which will prevent the combined company from (i) incorporating by reference in its Form S-1 filings, (ii) using a free writing prospectus or (iii) taking advantage of the well-known seasoned issuer (WKSI) status despite its public float;

​

•

investors who (i) were affiliates of Tvardi at the time the Merger was submitted for the vote or consent of Tvardi’s stockholders, (ii) receive securities of the combined company in the Merger and (iii) publicly offer or sell such securities will be deemed to be engaged in a distribution of such securities, and therefore would be underwriters with respect to resales of those securities, and accordingly such securities may not be included in the any resale shelf registration statement unless such securities are sold only in a fixed price offering in which such investors are named as underwriters in the prospectus; and

​

•

Rule 144(i)(2) will limit the ability of holders of restricted securities and any affiliates of the public company to publicly resell Rule 145(c) securities per Rule 145(d), as well as any other “restricted” or “control” securities of the combined company per Rule 144, until one year after the Form 10 information is filed with the SEC. Non-affiliate Cara Stockholders prior the Mergers will not be subject to such restrictions on public resales of their shares.

​

The foregoing SEC requirements will increase the combined company’s time and cost of raising capital, offering stock under equity plans, and complying with securities laws. Furthermore, such requirements will add burdensome restrictions on the resale of the combined company common stock by affiliates of Tvardi and any holders of “restricted” or “control” securities of the combined company.

For more information about the conditions to the completion of the Merger, see the section titled “The Merger Agreement — Conditions to the Completion of the Merger.”

 

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Nasdaq 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.

Currently, Cara’s common stock is publicly traded on The Nasdaq Capital Market. In connection with the proposed Merger, Tvardi will file an initial listing application with Nasdaq pursuant to Nasdaq’s “reverse merger” rules. The combined company will be required to meet the initial listing requirements for its securities to be listed on Nasdaq.

If Cara and Tvardi fail to meet the Nasdaq listing requirements and their respective boards choose to close the merger without Nasdaq’s approval, then Nasdaq may notify the combined company of its determination to delist the company’s securities based upon the failure to satisfy the criteria in the Nasdaq application. For more information, refer to the section titled “Risk Factors Related to the Merger — Cara or Tvardi may waive one or more of the conditions to the Merger without recirculation of this proxy statement/​prospectus or resoliciting stockholder approval” beginning on page 29 of this proxy statement/prospectus.

We cannot assure you that the combined company will be able to meet those initial listing requirements. Even if the combined company’s securities are so listed, the combined company may be unable to maintain the listing of its securities in the future. In order to continue listing its securities on Nasdaq following the proposed Merger, the combined company will be required to maintain certain financial, distribution and stock price levels. If Nasdaq delists the combined company’s securities from trading on its exchange at closing of the Merger (or thereafter) and the combined company is not able to list its securities on another national securities exchange or regain compliance with Nasdaq, the combined company’s securities could be quoted on an over-the-counter market. If this were to occur, the combined company could face significant material adverse consequences, including:

•

a limited availability of market quotations for its securities;

​

•

reduced liquidity for its securities;

​

•

a determination that the combined company’s common stock is a “penny stock” which will require brokers trading in the combined company’s common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

​

•

a limited amount of news and analyst coverage; and

​

•

a decreased ability to issue additional securities or obtain additional financing in the future.

​

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts states from regulating the sale of certain securities, which are referred to as “covered securities.” Since Cara’s common stock is listed on Nasdaq, they are covered securities. Although states are preempted from regulating the sale of covered securities, the federal statute does allow states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then states can regulate or bar the sale of covered securities in a particular case. If Cara was no longer listed on Nasdaq, its securities would not be covered securities and it would be subject to regulation in each state in which it offers its securities, including in connection with the Merger.

Risks Related to Tvardi

Risks Related to Tvardi’s Financial Position and Need for Additional Capital

Tvardi has incurred significant net losses since inception, and expects to continue to incur significant net losses for the foreseeable future.

Development of biopharmaceutical product candidates is a highly speculative undertaking and involves a substantial degree of risk. Tvardi is still in the early stages of development of its product candidates and its lead product candidate, TTI-101, is only in Phase 2 clinical trials for idiopathic pulmonary fibrosis (IPF), and hepatocellular carcinoma (HCC). Tvardi has no products approved for commercial sale and has not generated any revenue to date. Tvardi has incurred significant net losses since its inception and has financed operations principally through equity and debt financing. Tvardi continues to incur significant

 

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research and development and other expenses related to its ongoing operations. Tvardi’s net loss was $16.7 million and $13.0 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, it had an accumulated deficit of $79.5 million. Tvardi has devoted substantially all of its resources and efforts to research and development, and expects that it will be at several years, if ever, before Tvardi has a commercialized product candidate and generates revenue from sales. Even if Tvardi receives marketing approval for and commercializes one or more of its product candidates, Tvardi expects that it will continue to incur substantial research and development and other expenses in order to further develop and, if approved, market additional potential product candidates.

Tvardi expects to continue to incur significant losses for the foreseeable future, and anticipates that its expenses will increase substantially if, and as, it:

•

advances TTI-101, TTI-109 and its other product candidates through clinical development, and, if successful, later-stage clinical trials;

​

•

discovers and develops additional product candidates;

​

•

advances its preclinical development programs into clinical development;

​

•

experiences delays or interruptions to preclinical studies, clinical trials, receipt of services from its third-party service providers on whom Tvardi relies or its supply chain;

​

•

seeks and maintains regulatory approvals for any product candidates that successfully complete clinical trials;

​

•

commercializes TTI-101, TTI-109, any other product candidates and any future product candidates, if approved;

​

•

increases the amount of research and development activities to identify and develop product candidates;

​

•

hires additional clinical development, quality control, scientific and management personnel;

​

•

expands its operational, financial and management systems and increases personnel, including personnel to support its clinical development and manufacturing efforts and operations as a public company;

​

•

establishes a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which it may obtain marketing approval and intends to commercialize on its own or jointly with third parties;

​

•

maintains, expands and protects its intellectual property portfolio;

​

•

invests in or in-licenses other technologies or product candidates;

​

•

continues to build out its organization to engage in such activities; and

​

•

incurs additional legal, accounting, investor relations and other general and administrative expenses associated with operating as a public company.

​

Tvardi has a limited operating history, which may make it difficult to evaluate its prospects and likelihood of success.

Tvardi is a clinical-stage biopharmaceutical company with a limited operating history. Tvardi was incorporated in 2017, has no products approved for commercial sale and has not generated any revenue to date. Tvardi’s operations to date have been limited to organizing and staffing its company, business planning, raising capital, establishing its intellectual property portfolio and performing research and development of its product candidates, signaling and biology, medicinal chemistry and clinical insights to discover and develop novel therapies for the treatment of fibrosis-driven diseases, including IPF and certain cancers. Tvardi’s most advanced product candidate, TTI-101, is in clinical development for the treatment of IPF and HCC, and in preclinical development for the treatment of certain solid tumors. Tvardi’s second product candidate, TTI-109, is still in preclinical development. Both programs will require substantial additional development and clinical research time and resources before Tvardi would be able to apply for or receive regulatory approvals and begin generating revenue from product sales. All of Tvardi’s product candidates are still in

 

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preclinical and early clinical development and may be unable to obtain regulatory approval, manufacture a commercial scale product or arrange for a third party to do so on Tvardi’s behalf, or conduct sales and marketing activities necessary for successful product commercialization. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become commercially viable. In addition, as a business with a limited operating history, Tvardi may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by early-stage biopharmaceutical companies in rapidly evolving fields. Consequently, Tvardi has no meaningful history of operations upon which to evaluate its business, and predictions about any future success or viability may not be as accurate as they could be if Tvardi had a longer operating history or a history of successfully developing and commercializing drug products.

Tvardi has not generated any revenue to date and may never become or remain profitable.

Tvardi’s ability to become profitable depends upon its ability to generate revenue. To date, Tvardi has not generated any revenue. Tvardi does not expect to generate significant product revenue unless or until it successfully completes clinical development and obtains regulatory approval of, and then successfully commercializes, at least one of its product candidates. All of its product candidates will require additional preclinical studies or clinical development as well as regulatory review and approval, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before it can generate any revenue from product sales. Tvardi will face significant development risk as its product candidate advances through clinical development. Tvardi’s ability to generate revenue depends on a number of factors, including, but not limited to:

•

timely completion of its preclinical studies and current and future clinical trials, which may be significantly slower or more costly than currently anticipated and will depend substantially upon the performance of third-party contractors;

​

•

Tvardi’s ability to complete IND application-enabling studies and successfully submit INDs or comparable applications to allow it to initiate clinical trials for current or any future product candidates;

​

•

whether Tvardi is required by the FDA or similar foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of its product candidates or any future product candidates;

​

•

Tvardi’s ability to demonstrate to the satisfaction of the FDA or similar foreign regulatory authorities the safety, potency, purity and acceptable risk-to-benefit profile of its product candidates or any future product candidates;

​

•

the prevalence, duration and severity of potential side effects or other safety issues experienced with its product candidates or future product candidates;

​

•

the timely receipt of necessary marketing approvals from the FDA or similar foreign regulatory authorities;

​

•

the willingness of physicians, operators of clinics and patients to utilize or adopt any of Tvardi’s product candidates or future product candidates as potential cancer treatments;

​

•

Tvardi’s ability and the ability of third parties with whom it contracts to manufacture adequate clinical and commercial supplies of its product candidates or any future product candidates, remain in good standing with regulatory authorities and develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practices (cGMPs);

​

•

Tvardi’s ability to successfully develop a commercial strategy and thereafter commercialize its product candidates or any future product candidates in the United States and internationally, if licensed for marketing, reimbursement, sale and distribution in such countries and territories, whether alone or in collaboration with others; and

​

•

Tvardi’s ability to establish and enforce intellectual property rights in and to its product candidates or any future product candidates.

​

 

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To become and remain profitable, Tvardi must develop and eventually commercialize products with significant market potential. This will require it to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for product candidates, manufacturing, marketing and selling products for which it may obtain marketing approval and satisfying any post-marketing requirements. Tvardi may never succeed in any or all of these activities and, even if it does, it may never generate revenue that is significant enough to achieve profitability. If Tvardi does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Tvardi’s failure to become and remain profitable would decrease the value of the company and could impair its ability to raise capital, maintain research and development efforts, expand its business or continue its operations.

Tvardi’s financial condition raises substantial doubt as to its ability to continue as a going concern.

As of September 30, 2024, Tvardi had approximately $9.4 million in cash and cash equivalents and an accumulated deficit of $79.5 million, and Tvardi has incurred and expects to continue to incur significant costs in developing its product candidates. In light of certain factors, including that Tvardi has suffered recurring losses from operations and has an accumulated deficit of $79.5 million, there is substantial doubt as to its ability to continue as a going concern. To date, Tvardi has not generated product revenues from its activities and has incurred substantial operating losses. Tvardi expects that it will continue to generate substantial operating losses for the foreseeable future until it completes development and approval of its product candidates. It will continue to fund its operations primarily through utilization of its current financial resources and additional raises of capital.

These conditions raise substantial doubt about its ability to continue as a going concern. Tvardi plans to address these conditions by raising funds from this Merger, a public offering, from subsequent public or private offerings of equity or debt securities, and other funding sources. However, there can be no assurance that such funding will be available to Tvardi, will be obtained on terms favorable to Tvardi, or will provide Tvardi with sufficient funds to meet its objectives. The reaction of investors to the inclusion of a going concern statement by its auditors and the potential inability to continue as a going concern may materially adversely affect Tvardi’s ability to raise new capital or enter into partnerships.

Even if this Merger is successful, Tvardi will require substantial additional capital to fund its operations. If Tvardi is unable to raise such capital when needed, or on acceptable terms, it may be forced to delay, reduce and/or eliminate one or more of its research and drug development programs, future commercialization efforts or other operations.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Tvardi’s operations have consumed substantial amounts of cash since inception. Tvardi expects its expenses to increase in connection with its ongoing activities, particularly as it conducts its planned clinical trials of TTI-101, TTI-109 and any future product candidates that it may develop, seek regulatory approvals for its product candidates and launch and commercialize any products for which it receives regulatory approval. Following this Merger, it also expects to incur additional costs associated with operating as a public company. Accordingly, it will need to obtain substantial additional funding in order to maintain its continuing operations. If Tvardi is unable to raise capital when needed or on acceptable terms, it may be forced to delay, reduce or eliminate one or more of its research and drug development programs or future commercialization efforts.

As of September 30, 2024, Tvardi had approximately $9.4 million in cash and cash equivalents and Tvardi will require additional capital in order to complete clinical development of any of its current programs. Tvardi’s monthly spending levels will vary based on new and ongoing development and corporate activities. Because the length of time and activities associated with development of its product candidates is highly uncertain, Tvardi is unable to estimate the actual funds it will require for development, marketing and commercialization activities. Tvardi’s future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

•

the initiation, progress, timing, costs and results of preclinical studies and clinical trials for its product candidates;

​

 

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•

the clinical development plans Tvardi establishes for its product candidates;

​

•

the timelines of its clinical trials and the overall costs to conduct and complete the clinical trials, including any increased costs due to disruptions caused by marketplace conditions, including the effects of health epidemics, or other geopolitical and macroeconomic conditions;

​

•

the cost and capital commitments required for manufacturing its product candidates at clinical and, if approved, commercial scales;

​

•

the number and characteristics of product candidates that Tvardi develops;

​

•

the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

​

•

whether Tvardi is able to enter into future collaboration agreements and the terms of any such agreements;

​

•

the ability to achieve and timing of achieving a favorable pricing and reimbursement decision by the pricing authorities in the markets of interest;

​

•

the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, including patent infringement actions brought by third parties against Tvardi or its product candidates;

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•

the effect of competing technological and market developments;

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the cost and timing of completion of commercial-scale outsourced manufacturing activities; and

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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which Tvardi may receive regulatory approval in regions where it chooses to commercialize its products on its own.

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Tvardi does not have any committed external source of funds or other support for its development efforts and cannot be certain that additional funding will be available on acceptable terms, or at all. Until Tvardi can generate sufficient revenue to finance its cash requirements, which it may never do, it expects to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If Tvardi raises additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect the rights of its common stockholders. Further, to the extent that Tvardi raises additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest will be diluted. In addition, any debt financing may subject Tvardi to fixed payment obligations and covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If Tvardi raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, Tvardi may have to relinquish certain valuable intellectual property or other rights to its product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to Tvardi. Tvardi also may be required to seek collaborators for any of its product candidates at an earlier stage than otherwise would be desirable or relinquish its rights to product candidates or technologies that it otherwise would seek to develop or commercialize alone. Market volatility resulting from challenging financial markets factors, including the effects of health epidemics and geopolitical conflicts or other factors, could also adversely impact Tvardi’s ability to access capital when and in the amounts needed. If Tvardi is unable to raise additional capital in sufficient amounts or on terms acceptable to it, it may have to significantly delay, scale back or discontinue the development or commercialization of one or more of its product candidates or one or more of its other research and development initiatives. Any of the above events could significantly harm its business, prospects, financial condition and results of operations and cause the price of its common stock to decline.

The amount of Tvardi’s future losses is uncertain, and its quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause its stock price to fluctuate or decline.

Tvardi’s quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of its control and may be difficult to predict, including the following:

 

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the timing and success or failure of clinical trials for its product candidates or competing product candidates;

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Tvardi’s ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts;

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Tvardi’s ability to obtain marketing approval for its product candidates, and the timing and scope of any such approvals it may receive;

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the timing and cost of, and level of investment in, research and development activities relating to its product candidates, which may change from time to time;

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the cost of manufacturing its product candidates, which may vary depending on the difficulty of manufacturing, quantity of production and the terms of its agreements with manufacturers;

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Tvardi’s ability to attract, hire and retain qualified personnel;

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expenditures that Tvardi will or may incur to develop additional product candidates;

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the level of demand for its product candidates should they receive approval, which may vary significantly;

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the risk/benefit profile, cost and reimbursement policies with respect to its product candidates, if approved;

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existing and potential future therapeutics that compete with its product candidates;

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changes in the competitive landscape of Tvardi’s industry, including consolidation among competitors or partners;

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general market conditions or extraordinary external events, such as recessions or the effects of health epidemics;

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the changing and volatile U.S. and global economic and political environments; and

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future accounting pronouncements or changes in its accounting policies.

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The cumulative effects of these factors could result in large fluctuations and unpredictability in Tvardi’s quarterly and annual operating results. As a result, comparing Tvardi’s operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in it failing to meet the expectations of industry or financial analysts or investors for any period. If Tvardi’s revenue or operating results fall below the expectations of analysts or investors or below any forecasts Tvardi may provide to the market, or if the forecasts Tvardi provides to the market are below the expectations of analysts or investors, the price of its common stock could decline substantially. Such a stock price decline could occur even when Tvardi has met any previously publicly stated guidance it may provide.

Risks Related to Research and Development and the Biopharmaceutical Industry

Tvardi’s business is highly dependent on the success of its product candidates, TTI-101 and any other product candidates that it advances into the clinic. All of Tvardi’s product candidates will require significant additional preclinical and clinical development before Tvardi may be able to seek regulatory approval for and launch a product commercially.

Tvardi is currently conducting Phase 2 clinical trials of TTI-101 in IPF and HCC, has no products that are approved for commercial sale and may never be able to develop marketable products. Tvardi is early in its development efforts and has only one product candidate, TTI-101, in early clinical development and one product candidate, TTI-109, in preclinical development. If TTI-101, TTI-109 or any of its other product candidates encounter safety or efficacy problems, development delays, regulatory issues or other problems, Tvardi’s development plans and business would be significantly harmed.

Before Tvardi can generate any revenue from sales of its product candidates, TTI-101, TTI-109 or any of its other product candidates, it must undergo additional preclinical and clinical development, regulatory review and approval in one or more jurisdictions. In addition, if one or more of its product candidates are

 

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approved, it must ensure access to sufficient commercial manufacturing capacity and conduct significant marketing efforts in connection with any commercial launch. These efforts will require substantial investment, and Tvardi may not have the financial resources to continue development of its product candidates.

Tvardi may experience setbacks that could delay or prevent regulatory approval of the extent of regulatory protection for or its ability to commercialize, its product candidates, including:

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negative or inconclusive results from preclinical studies or clinical trials or the clinical trials of others for product candidates similar to Tvardi’s, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;

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undesirable product-related side effects experienced by subjects in Tvardi’s clinical trials or by individuals using drugs or therapeutics similar to its product candidates;

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poor efficacy of Tvardi’s product candidates during clinical trials;

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delays in submitting IND applications or comparable foreign applications or delays or failure in obtaining the necessary approvals from FDA or other comparable foreign regulatory authorities to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

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conditions imposed by the FDA or comparable foreign regulatory authorities regarding the scope or design of Tvardi’s clinical trials;

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delays in enrolling subjects in clinical trials, including due to operational challenges or competition with other clinical trials;

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high drop-out rates or screening failures of subjects from clinical trials;

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inadequate supply or quality of product candidates or other materials necessary for the conduct of Tvardi’s clinical trials;

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greater than anticipated clinical trial costs;

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inability to compete with other therapies;

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failure to secure or maintain orphan designation in some jurisdictions;

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unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;

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failure of its third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;

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delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to Tvardi’s technology in particular; or

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varying interpretations of Tvardi’s clinical and preclinical data by the FDA and other comparable foreign regulatory authorities.

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In addition, because Tvardi’s other product candidates, in particular TTI-109, are based on similar mechanisms of action, if TTI-101 encounters safety or efficacy problems, manufacturing or supply interruptions, developmental delays, regulatory issues or other problems, its development plans and business related to those other indications for TTI-101 as well as other product candidates could be significantly harmed. Tvardi does not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to its intellectual property rights and its manufacturing, marketing, distribution and sales efforts or that of any future collaborator.

Preclinical and clinical development involves a lengthy, complex and expensive process, with an uncertain outcome.

To obtain the requisite regulatory approvals to commercialize any product candidates, Tvardi must demonstrate through extensive preclinical studies and clinical trials that its product candidates are safe and effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. In particular, the general approach for FDA approval of a new drug is dispositive

 

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data from two well-controlled, Phase 3 clinical trials of the relevant drug in the relevant patient population. Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete. A product candidate can fail at any stage of testing, even after observing promising signals of activity in earlier preclinical studies or earlier stage clinical trials. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A large number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier clinical trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of Tvardi’s future clinical trials will ultimately be successful or support further clinical development of TTI-101, TTI-109 or any of Tvardi’s other product candidates. Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including:

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later stage clinical trials may show the product candidates to be less effective than expected or to have unacceptable side effects or toxicities;

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failure to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful;

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failure to receive the necessary regulatory approvals;

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development of competing products in the same indication;

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manufacturing costs, formulation issues, pricing or reimbursement issues or other factors that make a product candidate uneconomical; and

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the proprietary rights of others and their competing products and technologies that may prevent one of Tvardi’s product candidates from being commercialized.

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Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their products. Additionally, some of Tvardi’s clinical trials are open-label, where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. In addition, open-label clinical trials may be subject to an “investigator bias,” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. Therefore, it is possible that positive results observed in open-label clinical trials will not be replicated in later placebo-controlled clinical trials.

In addition, the standards that the FDA and comparable foreign regulatory authorities use when regulating Tvardi require judgment and can change, which makes it difficult to predict with certainty how they will be applied. Although Tvardi is initially focusing its efforts on development of small molecule drug products, it may in the future pursue development of other products, which could make it subject to additional regulatory requirements. Any analysis Tvardi performs of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Tvardi may also encounter unexpected delays or increased costs due to new government regulations. Examples of such regulations include future legislation or administrative action, or changes in FDA policy during the period of product development and FDA regulatory review. It is impossible to predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be. The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support approval. The opinion of the Advisory Committee, although not binding, may have a significant impact on Tvardi’s ability to obtain approval of any product candidates that it develops.

 

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Successful completion of clinical trials is a prerequisite to submitting a new drug application (NDA), to the FDA and similar marketing applications to comparable foreign regulatory authorities, for each product candidate, and, consequently, the ultimate approval and commercial marketing of any product candidates. Tvardi may experience negative or inconclusive results, which may result in it deciding, or being required by regulators, to conduct additional preclinical studies or clinical trials or abandon some or all of its product development programs, which could have a material adverse effect on its business.

Tvardi’s ongoing and future clinical trials may reveal significant adverse events or unexpected drug-drug interactions not seen in preclinical studies and may result in a safety profile that could delay or prevent regulatory approval or market acceptance of any of its product candidates.

To obtain the requisite regulatory approvals to market and sell TTI-101 or TTI-109 for any indication, or any of Tvardi’s future product candidates, it must demonstrate through clinical trials that such product candidates are safe and effective for use in each targeted indication. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization. Unforeseen side effects could arise either during clinical development, or, if such side effects are more rare, after Tvardi’s products have been approved by regulatory authorities and the approved product has been marketed, resulting in the exposure of additional patients than if such side effect had arisen during a clinical trial. Further, Tvardi may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a clinical trial can fail at any stage of testing.

Tvardi completed clinical trials of its lead product candidate, TTI-101, in healthy volunteers and in patients with advanced malignancies, where TTI-101 was observed to be generally well-tolerated. However, if significant adverse events or other side effects are observed in any of its ongoing or future clinical trials, Tvardi may have difficulty recruiting patients to its clinical trials, patients may drop out of its clinical trials or it may be required to abandon the clinical trials or development efforts altogether. In addition, in Tvardi’s ongoing Phase 2 clinical trials, Tvardi is evaluating TTI-101 administered alone or in addition to SoC IPF and HCC agents. Tvardi may encounter unexpected drug-drug interactions in planned clinical trials and may be required to further test these product candidates, including additional drug-drug interaction studies, which may be expensive and time-consuming and result in delays to Tvardi’s programs.

For example, in Tvardi’s Phase 1b/2 clinical trial in HCC, Tvardi explored escalating dosages of TTI-101 up to 1200 mg/day and determined 800 mg/day as the recommended monotherapy Phase 2 dose (RP2D). Based upon the HCC RP2D determination as well as other early data, Tvardi requested that the Safety Monitoring Committee of the Phase 2 clinical trial in IPF convene to consider discontinuation of enrollment to 1200 mg/day arm. The Safety Monitoring Committee agreed with Tvardi’s recommendation to discontinue enrollment to the 1200 mg/day arm. In addition, after reviewing the benefit-risk of the remaining arms of the clinical trial, they recommended to continue enrollment to the 400 mg/day, 800 mg/day and placebo arms of the clinical trial.

Separately, early safety data from the combination arms (TTI-101 + pembrolizumab or TTI-101 + atezolizumab + bevacizumab) of the Phase 1b/2 clinical trial in HCC revealed a higher-than-expected incidence of pulmonary-related treatment-emergent adverse events, which are known side effects of treatment with standard of care. Based upon this information, and after consultations with thought leaders and investigators, the protocol was modified to explore lower dosages and intermittent schedules of TTI-101 in combination with pembrolizumab or atezolizumab + bevacizumab.

Clinical trials of Tvardi’s product candidates must be conducted in carefully defined subsets of patients who have agreed to enter into clinical trials. Consequently, it is possible that Tvardi’s clinical trials, or those of any potential future collaborator, may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If one or more of Tvardi’s product candidates receives marketing approval and Tvardi, or others, discover that it is less effective than previously believed or causes undesirable side effects that were not previously identified, including during any long-term follow-up observation period recommended or required for patients who receive treatment using Tvardi’s products, a number of potentially significant negative consequences could result, including:

 

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regulatory authorities may withdraw approvals of such product, seize the product or seek an injunction against its manufacture or distribution;

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Tvardi, or any future collaborators, may be required to recall the product, change the way such product is administered to patients or conduct additional clinical trials;

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additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular product;

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regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication, or impose distribution or use restrictions;

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Tvardi, or any future collaborators, may be required to create a Risk Evaluation and Mitigation Strategy (REMS), which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use;

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Tvardi, or any future collaborators, may be subject to fines, injunctions or the imposition of civil or criminal penalties;

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Tvardi, or any future collaborators, could be sued and held liable for harm caused to patients;

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the product may become less competitive; and

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Tvardi’s reputation may suffer.

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Any of the foregoing could prevent Tvardi from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm its business, results of operations and prospects, and could adversely impact Tvardi’s financial condition, results of operations or the market price of its common stock.

Tvardi may be subject to additional risks because it intends to evaluate its product candidates in combination with the standard of care for the indications that Tvardi is pursuing.

Tvardi intends to evaluate its product candidates in combination with other compounds, specifically the standard of care for the indications that Tvardi is pursuing. The use of Tvardi’s product candidates in combination with such other compounds may subject it to risks that Tvardi would not face if its product candidates were being administered as monotherapy. The outcome and cost of developing a product candidate to be used with other compounds is difficult to predict and dependent on a number of factors that are outside its control. If Tvardi experiences efficacy or safety issues in its clinical trials in which its product candidates are being administered with other compounds, Tvardi may not receive regulatory approval for its product candidates, which could prevent it from ever generating revenue or achieving profitability.

Tvardi may experience delays in initiating, completing or ultimately be unable to complete, the development and commercialization of TTI-101, TTI-109 or any other product candidates.

Tvardi may experience delays in initiating or completing clinical trials. Tvardi also may experience numerous unforeseen events during, or as a result of, any future clinical trials that could delay or prevent its ability to receive marketing approval or commercialize TTI-101, TTI-109 or any other product candidates, including:

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regulators or institutional review boards, or IRBs, or ethics committees may not authorize Tvardi its investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

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the FDA or other comparable regulatory authorities may disagree with Tvardi’s clinical trial design, including with respect to dosing levels administered in its planned clinical trials, which may delay or prevent Tvardi from initiating its clinical trials with its originally intended trial design;

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Tvardi may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective contract research organizations (CROs), which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

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patient enrollment in Tvardi’s clinical trials may be slower than anticipated;

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the number of subjects required for clinical trials of any product candidates may be larger than Tvardi anticipates, or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than Tvardi anticipates;

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Tvardi’s third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to Tvardi in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the clinical trial, which may require that Tvardi add new clinical trial sites or investigators;

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Tvardi may experience delays or interruptions to its manufacturing supply chain, or it could suffer delays in reaching, or may fail to reach, agreement on acceptable terms with third-party service providers on whom it relies;

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additional delays and interruptions to Tvardi’s clinical trials could extend the duration of the clinical trials and increase the overall costs to finish the clinical trials as its fixed costs are not substantially reduced during delays;

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Tvardi may elect to, or regulators, IRBs, Data Safety Monitoring Boards (DSMBs), or ethics committees may require that it or its investigators suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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Tvardi may not have the financial resources available to begin and complete the planned clinical trials, or the cost of clinical trials of any product candidates may be greater than it anticipates;

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the supply or quality of its product candidates or other materials necessary to conduct clinical trials of its product candidates may be insufficient or inadequate to initiate or complete a given clinical trial; and

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the FDA or other comparable foreign regulatory authorities may require Tvardi to submit additional data such as long-term toxicology studies or impose other requirements before permitting it to initiate a clinical trial.

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Tvardi’s product development costs will increase if it experiences additional delays in clinical testing or in obtaining marketing approvals. Tvardi does not know whether any of its clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. If Tvardi does not achieve product development goals in the timeframes it announces and expects, the approval and commercialization of its product candidates may be delayed or prevented entirely. Significant clinical trial delays also could shorten any periods during which it may have the exclusive right to commercialize product candidates and may allow competitors to bring products to market before Tvardi does, potentially impairing its ability to successfully commercialize product candidates and harming its business and results of operations. Any delays in Tvardi’s clinical development programs may harm its business, financial condition and results of operations significantly.

Interim, blinded and preliminary data from Tvardi’s clinical trials that it announces or publishes from time to time may change as more patient data become available or as additional analyses are conducted and as the data are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Tvardi may publish interim, blinded or preliminary data from clinical trials. Interim data from clinical trials that it may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more or longer-term patient data become available. For example, the only Phase 2 clinical data in IPF Tvardi has from the preliminary, blinded safety data review of 45 patients in its Phase 2 clinical trial in patients suffering from IPF, which represents a small sample size relative to Tvardi’s targeted enrollment for the overall clinical trial, and may not be indicative of the clinical trial’s final results. The purpose of this blinded data review was to enable an assessment of the overall management and conduct of the clinical trial, without unblinding any individual patient data. Tvardi cannot make any determinations regarding the safety or efficacy of TTI-101 from this blinded data and it must wait for final unblinded data to make assessments about the safety or efficacy of TTI-101 in IPF. Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data previously published. As a result, interim and preliminary

 

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blinded data should be viewed with caution until the final data are available, as initial clinical trial results as necessarily indicative of results that will be obtained in subsequent clinical trials or clinical practice. Differences between preliminary or interim data and final data could significantly harm Tvardi’s business prospects.

Positive results from early preclinical studies and clinical trials of Tvardi’s current or future product candidates are not necessarily predictive of the results of later preclinical studies and clinical trials of Tvardi’s current or future product candidates. If Tvardi cannot replicate the positive results from preclinical studies or early clinical trials of its current or future product candidates in future clinical trials, Tvardi may be unable to successfully develop, obtain regulatory approval for and commercialize current or future product candidates.

Positive results from Tvardi’s preclinical studies of current or future product candidates, and any positive results it may obtain from early clinical trials of its current or future product candidates, including the ongoing and future clinical trials of TTI-101, may not necessarily be predictive of the results from required later preclinical studies and clinical trials. Similarly, even if Tvardi is able to complete its planned preclinical studies or clinical trials of current or future product candidates according to its current development timeline, the positive results from such preclinical studies and/or clinical trials of current or future product candidates, including TTI-101 and TTI-109, may not be replicated in subsequent preclinical studies or clinical trials. In particular, while Tvardi has conducted certain preclinical studies of TTI-109 and Phase 1 clinical trials of TTI-101, it does not know whether either of these product candidates will perform in planned clinical trials as it has performed in these prior preclinical studies or early clinical trials.

There is no guarantee that preclinical results or early clinical results will be replicated in later clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development, and Tvardi cannot be certain that it will not face similar setbacks. These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain approval from the FDA or comparable foreign regulatory authority. If Tvardi fails to produce positive results in planned preclinical studies or clinical trials of any of its current or future product candidates, the development timeline and regulatory approval and commercialization prospects for its current or future product candidates, and, correspondingly, its business and financial prospects, would be materially adversely affected.

If Tvardi encounters difficulties enrolling patients in clinical trials, its clinical development activities could be delayed or otherwise adversely affected.

Tvardi may experience difficulties in patient enrollment in clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on Tvardi’s ability to enroll a sufficient number of patients who remain in the clinical trial until its conclusion. The enrollment of patients depends on many factors, including:

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the patient eligibility and exclusion criteria defined in the protocol;

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the size of the patient population required for analysis of the clinical trial’s primary endpoints and the process for identifying patients;

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the willingness or availability of patients to participate in Tvardi’s clinical trials;

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the proximity of patients to clinical trial sites;

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the design of the clinical trial;

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Tvardi’s ability to recruit clinical trial investigators with the appropriate competencies and experience;

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clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications Tvardi is investigating or other preclinical studies or clinical trials enrolling for similar diseases;

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the availability of competing commercially available therapies and other competing product candidates’ clinical trials;

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Tvardi’s ability to obtain and maintain patient informed consents; and

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the risk that patients enrolled in clinical trials will drop out of the trials before completion.

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For example, Tvardi is initially developing TTI-101 for the treatment of IPF and HCC. In the United States, IPF is estimated to only affect approximately 150,000 patients in the United States. As a result, Tvardi may encounter difficulties enrolling subjects in its clinical trials of TTI-101 due, in part, to the small size of these patient populations. Tvardi’s clinical trials compete with other clinical trials for product candidates that are in the same therapeutic areas as its product candidates, and this competition will reduce the number and types of patients available to Tvardi, because some patients who might have opted to enroll in Tvardi’s clinical trials may instead opt to enroll in a clinical trial being conducted by one of its competitors. Since the number of qualified clinical investigators is limited, Tvardi expects to conduct some of its clinical trials at the same clinical trial sites that some of its competitors use, which will reduce the number of patients who are available for Tvardi’s clinical trials in such clinical trial site. Certain of Tvardi’s planned clinical trials may also involve invasive procedures such as bronchoscopy and broncho-alveolar lavage, which may lead some patients to drop out of clinical trials to avoid these follow-up procedures.

Additionally, the FDA may modify or enhance clinical trial requirements, which may affect enrollment. For example, in August 2023, the FDA published a guidance document, “Informed Consent, Guidance for IRBs, Clinical Investigators, and Sponsors,” which supersedes past guidance and finalizes draft guidance on informed consent. The FDA’s new guidance presents evolving requirements for informed consent which may affect recruitment and retention of patients in clinical trials. Effects on recruitment and retention of patients may hinder or delay a clinical trial and could cause a significant setback to an applicable program.

The design or execution of Tvardi’s ongoing and future clinical trials may not support marketing approval.

The design or execution of a clinical trial can determine whether its results will support marketing approval, and flaws in the design or execution of a clinical trial may not become apparent until the clinical trial is well advanced. Tvardi is currently recruiting two Phase 2 clinical trials of TTI-101, one in IPF as monotherapy and in addition to SoC therapy and another in HCC as monotherapy and combination with SoC therapy. In some instances, there can be significant variability in safety or efficacy results between different clinical trials with the same product candidate due to numerous factors, including differences in clinical trial protocols, size and type of the patient populations, variable adherence to the dosing regimen or other protocol requirements and the rate of dropout among clinical trial participants. Tvardi does not know whether any clinical trials it conducts will demonstrate consistent or adequate efficacy and safety to obtain marketing approval to market its product candidates.

Further, the FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and in determining when or whether marketing approval will be obtained for any of Tvardi’s product candidates. Tvardi’s product candidates may not be approved even if they achieve their primary endpoints in future Phase 3 clinical trials or registrational trials. The FDA or comparable foreign regulatory authorities may disagree with Tvardi’s clinical trial designs and its interpretation of data from preclinical studies or clinical trials. Further, requirements regarding clinical trial data may evolve. Changes to data requirements may cause the FDA or comparable foreign regulatory authorities to disagree with data from preclinical studies or clinical trials, and may require further studies.

In addition, any of these regulatory authorities may change requirements for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal Phase 3 or registrational clinical trial. In addition, any of these regulatory authorities may also approve a product candidate for fewer or more limited indications than Tvardi requests or may grant approval contingent on the performance of costly post-marketing clinical trials. The FDA or comparable foreign regulatory authorities may not approve the labeling claims that Tvardi believes would be necessary or desirable for the successful commercialization of its product candidates, if approved.

 

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Tvardi may not be successful in its efforts to identify or discover additional product candidates in the future.

Tvardi’s research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

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Tvardi’s inability to design such product candidates with the pharmacological properties that it desires or attractive PK; or

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potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance.

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Research programs to identify new product candidates require substantial technical, financial, and human resources. If Tvardi is unable to identify suitable compounds for preclinical and clinical development, it will not be able to obtain product revenue in future periods, which likely would result in significant harm to it financial position and adversely impact its stock price.

Due to Tvardi’s limited resources and access to capital, it must make decisions on the allocation of resources to certain programs and product candidates; these decisions may prove to be wrong and may adversely affect its business.

Tvardi has limited financial and human resources and intends to initially focus on research programs and product candidates for a limited set of indications. As a result, it may forgo or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. In addition, Tvardi seeks to accelerate its development timelines, including by initiating certain clinical trials of its product candidates before earlier-stage studies have been completed. This approach may cause Tvardi to commit significant resources to prepare for and conduct later-stage clinical trials for one or more product candidates that subsequently fail earlier-stage clinical testing. Therefore, resource allocation decisions may cause Tvardi to fail to capitalize on viable commercial products or profitable market opportunities or expend resources on product candidates that are not viable.

There can be no assurance that Tvardi will ever be able to identify additional therapeutic opportunities for its product candidates or to develop suitable potential product candidates through internal research programs, which could materially adversely affect its future growth and prospects. Tvardi may focus its efforts and resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful.

Tvardi may in the future conduct clinical trials for current or future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such clinical trials.

Tvardi may in the future choose to conduct one or more clinical trials outside the United States. The acceptance of study data from clinical trials conducted outside the United States or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice, (ii) the clinical trials were performed by clinical investigators of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign clinical trials would be subject to the applicable local laws of the foreign jurisdictions where the clinical trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from clinical trials conducted outside of the United States or the applicable jurisdiction. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional clinical trials, which could be costly and time-consuming, and which may result in current or future product candidates that Tvardi may develop not receiving approval for commercialization in the applicable jurisdiction.

 

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Although Tvardi has received U.S. orphan drug designation for TTI-101 for IPF and HCC, it may be unable to obtain and maintain orphan drug designation for other product candidates and, even if Tvardi obtains such designation, it may not be able to realize the benefits of such designation, including potential marketing exclusivity of its product candidates, if approved.

Regulatory authorities in some jurisdictions, including the United States and other major markets, may designate drugs intended to treat conditions or diseases affecting relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA, may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. Although Tvardi has received U.S. orphan drug designation for TTI-101 for IPF and HCC, the designation of any of its product candidates as an orphan drug does not mean that any regulatory agency will accelerate regulatory review of, or ultimately approve, that product candidate, nor does it limit the ability of any regulatory agency to grant orphan drug designation to product candidates of other companies that treat the same indications as Tvardi’s product candidates.

Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or foreign regulatory authorities from approving another marketing application for a product that constitutes a similar medicinal product treating the same indication for that marketing exclusivity period, except in limited circumstances. The applicable period is seven years in the United States. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Although Tvardi received orphan drug designation for TTI-101 for IPF and HCC, that exclusivity may not effectively protect the product candidate from competition because different drugs with different active moieties can be approved for the same condition in the United States. Even after an orphan drug is approved, the FDA may subsequently approve another drug with the same active moiety for the same condition if the FDA concludes that the latter drug is not a similar medicinal product or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. Any legislative changes to the orphan drug provisions could change Tvardi’s opportunities for, or likelihood of success in obtaining, orphan drug exclusivity and would materially adversely affect Tvardi’s business, results of operations, financial condition and prospects.

Although Tvardi has received a Fast Track designation from the FDA for TTI-101 for HCC and intends to seek Fast Track designation for TTI-109 for HCC, it may not benefit from a faster development or regulatory review or approval process, and a Fast Track designation does not increase the likelihood that its product candidates will receive marketing approval.

If a drug product is intended for the treatment of a serious or life-threatening disease or condition and it demonstrates the potential to address unmet medical needs for such a disease or condition, the drug sponsor may apply for FDA Fast Track designation for a particular indication. Tvardi has received Fast Track designation for TTI-101 for the treatment of relapsed/refractory locally advanced, unresectable or metastatic HCC but may never receive Fast Track designation for TTI-109. Marketing applications submitted by sponsors of products in Fast Track development may qualify for priority review under the policies and procedures offered by the FDA, but the Fast Track designation does not assure any such qualification or ultimate marketing licensure by the FDA. Although Tvardi received Fast Track designation for TTI-101, it may not experience a faster development process, review or licensure compared to conventional FDA procedures or pathways, and receiving a Fast Track designation does not provide assurance of ultimate FDA licensure. In addition, the FDA may withdraw any Fast Track designation granted to Tvardi if it believes that the designation is no longer supported by data from Tvardi’s clinical development program. The FDA may also withdraw any Fast Track designation at any time.

 

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Even if a product candidate Tvardi develops receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

Even if TTI-101, TTI-109 or any other product candidate Tvardi develops receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors, such as Medicare and Medicaid programs and managed care organizations, and others in the medical community. In addition, the availability of coverage by third-party payors may be affected by existing and future healthcare reform measures designed to reduce the cost of health care. If the product candidates Tvardi develops do not achieve an adequate level of acceptance, Tvardi may not generate significant product revenues and Tvardi may not become profitable.

The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including:

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efficacy and potential advantages compared to alternative treatments;

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the ability to offer Tvardi’s products, if approved, for sale at competitive prices;

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convenience and ease of administration compared to alternative treatments;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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the recommendations with respect to Tvardi’s product candidates in guidelines published by various scientific organizations applicable to Tvardi and its product candidates;

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the strength of marketing and distribution support;

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the ability to obtain sufficient third-party coverage and adequate reimbursement; and

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the prevalence and severity of any side effects.

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If government and other third-party payors do not provide coverage and adequate reimbursement levels for any products Tvardi commercializes, market acceptance and commercial success would be reduced.

Tvardi faces substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than Tvardi.

The development and commercialization of new drug products is highly competitive. Tvardi may face competition with respect to any product candidates that it seeks to develop or commercialize in the future from major biopharmaceutical companies, specialty biopharmaceutical companies and biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

There are a number of biopharmaceutical and biotechnology companies that are currently pursuing the development of products for the treatment of IPF and HCC. Companies that Tvardi is aware of that are targeting the treatment of various fibrosis indications include companies with significantly more financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, Merck & Co., Inc., Morphic Therapeutics Inc., Novartis AG, Pliant Therapeutics Inc., Scholar Rock Inc. and Takeda Pharmaceutical Company. Companies that Tvardi is aware of that are targeting the treatment of the HCC indication include large companies such as Novartis AG, Bristol Myers Squibb Co., Roche AG, AstraZeneca plc, AbbVie Inc. and Bayer AG.

Many of Tvardi’s current or potential competitors, either alone or with their strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than Tvardi does.

Mergers and acquisitions in the biopharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of competitors. Smaller or early-stage companies

 

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may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with Tvardi in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, its programs. Tvardi’s commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, more convenient or less expensive than any products that Tvardi may develop. Furthermore, products currently approved for other indications could be discovered to be effective treatments of fibrosis as well, which could give such products significant regulatory and market timing advantages over TTI-101, TTI-109 or other product candidates that Tvardi may identify. Tvardi’s competitors also may obtain FDA or other regulatory approval for their products more rapidly than Tvardi may obtain approval for its product candidates, which could result in Tvardi’s competitors establishing a strong market position before Tvardi is able to enter the market. Additionally, products or technologies developed by Tvardi’s competitors may render its potential product candidates uneconomical or obsolete, and Tvardi may not be successful in marketing any product candidates it may develop against competitors. The availability of competitive products could limit the demand, and the price Tvardi is able to charge, for any products that it may develop and commercialize.

Compliance with governmental regulations regarding the treatment of animals used in research could increase Tvardi’s operating costs, which would adversely affect the commercialization of its products.

The Animal Welfare Act (AWA), is the federal law that covers the treatment of certain animals used in research. Currently, the AWA imposes a wide variety of specific regulations that govern the humane handling, care, treatment and transportation of certain animals by producers and users of research animals, most notably relating to personnel, facilities, sanitation, cage size and feeding, watering and shipping conditions. Third parties with whom Tvardi contracts are subject to registration, inspections and reporting requirements under the AWA. Furthermore, some states have their own regulations, including general anti-cruelty legislation, which establish certain standards in handling animals. Comparable rules, regulations and/or obligations exist in many foreign jurisdictions. If Tvardi or its contractors fail to comply with regulations concerning the treatment of animals used in research, Tvardi may be subject to fines and penalties and adverse publicity, and its operations could be adversely affected.

If product liability lawsuits are brought against Tvardi, it may incur substantial financial or other liabilities and may be required to limit commercialization of its product candidates.

Tvardi faces an inherent risk of product liability as a result of testing TTI-101, TTI-109 and any of its other product candidates in clinical trials and will face an even greater risk if it commercializes any products. For example, Tvardi may be sued if its product candidates cause, or are perceived to cause, injury or are found to be otherwise unsuitable during clinical trials, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If Tvardi cannot successfully defend itself against product liability claims, it may incur substantial liabilities or be required to limit commercialization of its product candidates. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

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inability to bring a product candidate to the market;

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decreased demand for Tvardi products;

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injury to Tvardi’s reputation;

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withdrawal of clinical trial participants and inability to continue clinical trials;

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initiation of investigations by regulators;

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fines, injunctions or criminal penalties;

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costs to defend the related litigation;

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diversion of management’s time and its resources;

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•

substantial monetary awards to trial participants;

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product recalls, withdrawals or labeling, marketing or promotional restrictions;

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loss of revenue;

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exhaustion of any available insurance and Tvardi’s capital resources;

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the inability to commercialize any product candidate, if approved; and

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decline in Tvardi’s share price.

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Tvardi’s inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products it develops. Tvardi will need to obtain additional insurance for clinical trials as TTI-101 continues clinical development and as additional product candidates, including TTI-109, enter the clinic. However, Tvardi may be unable to obtain, or may obtain on unfavorable terms, clinical trial insurance in amounts adequate to cover any liabilities from any of its clinical trials. Tvardi’s insurance policies may also have various exclusions, and Tvardi may be subject to a product liability claim for which it has no coverage. Tvardi may have to pay any amounts awarded by a court or negotiated in a settlement that exceed its coverage limitations or that are not covered by its insurance, and Tvardi may not have, or be able to obtain, sufficient capital to pay such amounts. Even if Tvardi’s agreements with any future corporate collaborators entitle it to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

Risks Related to Marketing, Reimbursement, Healthcare Regulations and Ongoing Regulatory Compliance

The regulatory approval process is highly uncertain, and Tvardi may be unable to obtain, or may be delayed in obtaining, U.S. or foreign regulatory approval and, as a result, unable to commercialize TTI-101, TTI-109 or any current or future product candidates. Even if Tvardi believes its current, or planned clinical trials are successful, regulatory authorities may not agree that they provide adequate data on safety or efficacy.

TTI-101, TTI-109 and any other current or future product candidates Tvardi develops are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, post-approval monitoring, marketing and distribution of products. Rigorous preclinical studies and clinical trials and an extensive regulatory approval process are required to be completed successfully in the United States and in many foreign jurisdictions before a new product can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. It is possible that none of Tvardi’s product candidates will obtain the regulatory approvals necessary for Tvardi to begin selling them.

As a company, Tvardi has no prior experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to obtain FDA and other approvals is unpredictable but typically takes many years following the commencement of clinical trials, depending upon the type, complexity and novelty of the product candidate. The standards that the FDA and its foreign counterparts use when regulating Tvardi require judgment and can change, which makes it difficult to predict with certainty their application. Any analysis Tvardi performs of data from preclinical studies and clinical trials is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Tvardi may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. It is impossible to predict whether additional legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or the impact of such changes, if any. Any elongation or de-prioritization of preclinical studies or clinical trials or delay in regulatory review resulting from such disruptions could adversely affect the development and clinical testing of TTI-101, TTI-109 or other current or future product candidates.

Further, the FDA and its foreign counterparts may respond to any NDA that Tvardi may file by defining requirements that Tvardi does not anticipate. Such responses could delay clinical development of TTI-101, TTI-109 or any other current or future product candidates.

 

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Any delay or failure in obtaining required approvals could adversely affect Tvardi’s ability to generate revenue from the particular product candidate for which Tvardi is seeking approval. Furthermore, any regulatory approval to market a product may be subject to limitations on the approved uses for which Tvardi may market the product or on the labeling or other restrictions.

Tvardi is also subject to or may in the future become subject to numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process varies among countries and may include all of the risks associated with the FDA approval process described above, as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. FDA approval does not ensure approval by regulatory authorities outside the United States and vice versa. Any delay or failure to obtain U.S. or foreign regulatory approval for a product candidate could have a material and adverse effect on Tvardi’s business, financial condition, results of operations and prospects.

Even if Tvardi receives regulatory approval for its product candidates, it will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, Tvardi’s product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal. The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Tvardi may be subject to penalties if it fails to comply with regulatory requirements or experience unanticipated problems with its product candidates.

Any regulatory approvals that Tvardi or its future collaborators obtain for its product candidates may also be subject to limitations on the approved indicated uses for which a product may be marketed or to the conditions of approval or contain requirements for potentially costly post-marketing testing and surveillance to monitor the safety and efficacy of the product candidate.

In addition, if the FDA, the European Medicines Agency (EMA), or a comparable foreign regulatory authority approves Tvardi’s product candidates, the manufacturing processes, labeling, packaging, distribution, post-approval monitoring and AE reporting, storage, import, export, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. The FDA has significant post-market authority, including the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate safety risks related to the use of a product or to require withdrawal of the product from the market. The FDA also has the authority to require a REMS plan after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug. The manufacturing facilities Tvardi uses to make a future product, if any, will also be subject to periodic review and inspection by the FDA and other regulatory agencies, including for continued compliance with cGMPs requirements. The discovery of any new or previously unknown problems with Tvardi’s third-party manufacturers, manufacturing processes or facilities may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market. As Tvardi expects to rely on third-party manufacturers, it will not have control over compliance with applicable rules and regulations by such manufacturers.

Any product promotion and advertising will also be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drugs. These regulations include standards and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and off-label promotion. Any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by FDA. Although clinicians may prescribe products for off-label uses as the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, Tvardi’s ability to promote any products will be narrowly limited to those indications that are specifically approved by the FDA. In addition, as Tvardi does not intend to conduct head-to-head comparative clinical trials for its product candidates, it will be unable to make comparative claims regarding any other products in the promotional materials for its product candidates.

If Tvardi promotes its approved products in a manner inconsistent with FDA-approved labeling or otherwise not in compliance with FDA regulations, it may be subject to significant liability and enforcement

 

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action. If Tvardi or its collaborators, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the United States or foreign jurisdictions in which Tvardi seeks to market its product candidates, Tvardi or its collaborators, manufacturers or service providers may be subject to, among other things, fines, warning or untitled letters, holds on clinical trials, delay of approval or refusal by the FDA or comparable foreign regulatory bodies to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, administrative detention of products, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution. The U.S. federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If Tvardi cannot successfully manage the promotion any product candidates, if approved, it could become subject to significant liability, which would materially adversely affect its business and financial condition.

Subsequent discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with Tvardi’s third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

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restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls;

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fines, warning or untitled letters or holds on clinical trials;

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refusal by the Medicines and Healthcare Products Regulatory Agency or the FDA to approve pending applications or supplements to approved applications filed by Tvardi or its strategic partners;

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suspension or revocation of product license approvals;

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product seizure or detention or refusal to permit the import or export of products; and

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injunctions or the imposition of civil or criminal penalties.

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Tvardi also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. Changes in FDA staffing could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all.

Coverage and reimbursement may be limited or unavailable or pricing unfavorable in certain market segments for Tvardi’s product candidates, if approved, which could make it difficult for Tvardi to sell any product candidates profitably.

Significant uncertainty exists as to the coverage and reimbursement status of any products for which Tvardi may obtain regulatory approval. In the United States, sales of any products for which Tvardi may receive regulatory marketing approval will depend, in part, on the availability of coverage and adequacy of reimbursement from third-party payors. Third-party payors include government authorities such as Medicare, Medicaid, TRICARE and the Veterans Administration, managed care providers, private health insurers, and other organizations. Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Patients are unlikely to use Tvardi’s product candidates unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost. Tvardi cannot be sure that coverage and reimbursement will be available for, or accurately estimate the potential revenue from, its product candidates or assure that coverage and adequate reimbursement will be available for any product that Tvardi may develop and, if reimbursement is available, what the level of reimbursement will be.

Government authorities and other third-party payors decide which drugs and treatments they will cover and the amount of reimbursement. Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is:

 

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a covered benefit under its health plan;

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safe, effective and medically necessary;

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appropriate for the specific patient;

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cost-effective; and

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neither experimental nor investigational.

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In the United States, as well as foreign jurisdictions, no uniform policy of coverage and reimbursement for products exists among third-party payors.

Coverage and reimbursement for products may vary depending on the payor, the insurance plan and other factors. As a result, obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require Tvardi to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of Tvardi products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained. Even if Tvardi obtains coverage for a given product, the resulting reimbursement payment rates might not be adequate for it to achieve or sustain profitability or may require co-payments that patients find unacceptably high. Additionally, third-party payors may not cover, or provide adequate reimbursement for, long-term follow-up evaluations required following the use of product candidates, once approved. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for Tvardi’s product candidates, if approved.

A primary trend in the United States and European healthcare industries is toward cost containment, as legislative bodies, government authorities, third-party payors, and others have attempted to control costs by limiting coverage, pricing and the amount of reimbursement available for certain treatments. Such third-party payors, including Medicare, may question the coverage of, and challenge or seek to lower the prices charged for medical products, and many third-party payors limit coverage and reimbursement for newly approved health care products. Moreover, reimbursement, if available, may vary according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers or by future laws, regulations or guidance seeking to limit prescription drug prices. If Tvardi is unable to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payers for any approved products that Tvardi develops, or if net prices are reduced by mandatory discounts or rebates, there could be a material adverse effect on Tvardi’s operating results, its ability to raise capital needed to commercialize products and overall financial condition.

Changes to current healthcare laws and state and federal healthcare reform measures that may be adopted in the future that impact coverage and reimbursement for drug or biologic products may result in additional payment reductions in Medicare and other healthcare funding and otherwise affect the prices Tvardi may obtain for any product candidates for which it may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Recently enacted legislation, future legislation and other healthcare reform measures may increase the difficulty and cost for Tvardi to obtain marketing approval for and commercialize product candidates and may affect the prices Tvardi may set.

In the United States and some foreign jurisdictions, there have been, and Tvardi expects there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect Tvardi’s ability to profitably sell any product candidates for which it obtains marketing approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.

For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the ACA), was enacted in the United States, which resulted in delays in the implementation of, and action taken to repeal or replace, certain aspects of the

 

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ACA. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. In addition, there have been a number of health reform initiatives by the Biden administration that have impacted the ACA. For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA), into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is possible that the ACA will be subject to judicial or congressional challenges in the future. Moreover, the American Taxpayer Relief Act of 2021, effective January 1, 2024, would eliminate the statutory cap on rebate amounts owed by drug manufacturers under the MDRP, which is currently capped at 100% of the Average Manufacturer Price for a covered outpatient drug.

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. For example, the IRA, among other things, (1) directs the Department of Health & Human Services (HHS), to negotiate the price of certain single-source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions will take effect progressively starting in fiscal year 2023. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented. On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges. On August 15, 2024, HHS announced the agreed-upon reimbursement prices of the first ten drugs that were subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges. HHS will select up to 15 additional drugs covered under Part D for price negotiation in 2025. In response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility and improve quality of care. It is unclear whether the models will be utilized in any health reform measures in the future. Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Patent and Trademark Law Amendments Act (the Bayh-Dole Act). On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

Tvardi’s ability to develop and market new drug products may be impacted if litigation challenging the FDA’s approval of another company’s drug continues. In April 2023, the U.S. District Court for the Northern District of Texas invalidated the approval by the FDA of mifepristone, a drug product, which was originally approved in 2000, and whose distribution is governed by various measures adopted under a REMS. The Court of Appeals for the Fifth Circuit declined to order the removal of mifepristone from the market but did hold that plaintiffs were likely to prevail in their claim that changes allowing for expanded access of mifepristone, which the FDA authorized in 2016 and 2021, were arbitrary and capricious. In June 2024, the Supreme Court reversed and remanded that decision after unanimously finding that the plaintiffs did not have standing to bring this legal action against the FDA. Depending on the outcome of this litigation, if it continues, Tvardi’s ability to develop TTI-101, TTI-109 or future product candidates Tvardi may develop may be at risk and could be delayed, undermined or subject to protracted litigation. Finally, Tvardi could be adversely affected by several significant administrative law cases decided by the U.S. Supreme Court in 2024. In Loper Bright Enterprises v. Raimondo, for example, the court overruled Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which for 40 years required federal courts to defer to permissible agency interpretations of statutes that are silent or ambiguous on a particular topic. The Supreme Court stripped federal agencies of this presumptive deference and held that courts must exercise their independent judgment when deciding whether an agency such as FDA acted within its statutory authority under the

 

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Administrative Procedure Act (the APA). Additionally, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the court held that actions to challenge a federal regulation under the APA can be initiated within six years of the date of injury to the plaintiff, rather than the date the rule is finalized. The decision appears to give prospective plaintiffs a personal statute of limitations to challenge longstanding agency regulations. These decisions could introduce additional uncertainty into the regulatory process and may result in additional legal challenges to actions taken by federal regulatory agencies, including the FDA and the Centers for Medicare & Medicaid Services that Tvardi relies on. In addition to potential changes to regulations as a result of legal challenges, these decisions may result in increased regulatory uncertainty and delays and other impacts, any of which could adversely impact Tvardi’s business and operations.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints. Tvardi expects that the ACA, the IRA, and any other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that Tvardi receives for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent Tvardi from being able to generate revenue, attain profitability or commercialize its product candidates, if approved.

Tvardi’s operations and relationships with healthcare providers, healthcare organizations, customers and third-party payors will be subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose Tvardi to, among other things, enforcement actions, criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Tvardi’s future arrangements with healthcare providers, healthcare organizations, third-party payors and customers will expose Tvardi to broadly applicable anti-bribery, fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Tvardi researches, markets, sells and distributes its products, if approved. Restrictions under applicable federal and state anti-bribery and healthcare laws and regulations, include the following:

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the federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal and state healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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the federal criminal and civil false claims laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions against individuals or entities, and the Federal Civil Monetary Penalties Laws, which prohibit, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;

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Health Insurance Portability and Accountability Act (HIPAA), which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their respective implementing regulations, which impose obligations on certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information for or on behalf of a covered entity and their covered subcontractors, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information;

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the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions, to report annually to the Centers for Medicare & Medicaid Services (CMS), information on certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals and certain other health care providers (such as physician assistants and nurse practitioners), as well as ownership and investment interests held by physicians and their immediate family members;

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the U.S. Foreign Corrupt Practices Act of 1977, as amended (FCPA), which prohibits, among other things, U.S. companies and their employees and agents from authorizing, promising, offering or providing, directly or indirectly, corrupt or improper payments or anything else of value to foreign government officials, employees of public international organizations and foreign government owned or affiliated entities, candidates for foreign political office and foreign political parties or officials thereof;

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and

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certain state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to clinicians and other healthcare providers or marketing expenditures and drug pricing information, and state and local laws that require the registration of pharmaceutical sales representatives.

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If Tvardi or its collaborators, manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, it could be subject to enforcement actions, which could affect Tvardi’s ability to develop, market and sell its product candidates successfully and could harm its reputation and lead to reduced acceptance of its products, if approved by the market.

Efforts to ensure that Tvardi’s current and future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs. It is possible that governmental authorities will conclude that Tvardi’s business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If Tvardi’s operations are found to be in violation of any such requirements, it may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of its operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, integrity oversight and reporting obligations or reputational harm, any of which could adversely affect its financial results. These risks cannot be entirely eliminated. Any action against Tvardi for an alleged or suspected violation could cause it to incur significant legal expenses and could divert management’s attention from the operation of its business, even if the defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to Tvardi in terms of money, time and resources.

 

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If Tvardi fails to comply with environmental, health and safety laws and regulations, it could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of its business.

Tvardi is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Tvardi’s research and development activities involve the use of biological and hazardous materials and produce hazardous waste products. Tvardi generally contracts with third parties for the disposal of these materials and wastes. Tvardi cannot eliminate the risk of contamination or injury from these materials, which could cause an interruption of its commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although Tvardi believes that the safety procedures utilized by its third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, it cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Tvardi may be held liable for any resulting damages and such liability could exceed its resources and state or federal or other applicable authorities may curtail its use of certain materials and/or interrupt its business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. Tvardi cannot predict the impact of such changes and cannot be certain of its future compliance. In addition, Tvardi may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair its research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Although Tvardi maintain workers’ compensation insurance to cover costs and expenses it may incur due to injuries to its employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. Tvardi does not carry specific biological waste or hazardous waste insurance coverage, workers’ compensation or property and casualty and general liability insurance policies that include coverage for damages and fines arising from biological or hazardous waste exposure or contamination.

Tvardi’s future growth may depend, in part, on its ability to penetrate foreign markets, where it would be subject to additional regulatory burdens and other risks and uncertainties that could materially adversely affect its business.

Tvardi is not permitted to market or promote any of its current or future product candidates before it receives regulatory approval from the applicable regulatory authority in that foreign market, and Tvardi may never receive such regulatory approval for any of its current or future product candidates. To obtain separate regulatory approval in many other countries, Tvardi must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of its current or future product candidates, and Tvardi cannot predict success in these jurisdictions. If it obtains approval of its current or future product candidates and ultimately commercialize its current or future product candidates in foreign markets, Tvardi would be subject to additional risks and uncertainties, including:

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differing regulatory requirements in foreign countries, such that obtaining regulatory approvals outside of the United States may take longer and be more costly than obtaining approval in the United States;

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Tvardi’s customers’ ability to obtain reimbursement for current or future product candidates in foreign markets;

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the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements;

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different medical practices and customs in foreign countries affecting acceptance in the marketplace;

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import or export licensing requirements;

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longer accounts receivable collection times;

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longer lead times for shipping;

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language barriers for technical training;

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reduced protection of intellectual property rights in some foreign countries;

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the existence of additional potentially relevant third-party intellectual property rights;

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economic weakness, including inflation, or political instability in particular foreign economies and markets;

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compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

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foreign taxes, including withholding of payroll taxes;

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foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

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difficulties staffing and managing foreign operations;

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workforce uncertainty in countries where labor unrest is more common than in the United States;

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potential liability under the FCPA or comparable foreign regulations;

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the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute;

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