1.	Business

Cara Therapeutics, Inc. (the “Company”, “we”, “our” or “us”) is a clinical-stage biopharmaceutical corporation formed on July 2, 2004. The Company is focused on developing and commercializing new chemical entities designed to alleviate pain and pruritus by selectively targeting kappa opioid receptors. The Company’s primary activities to date have been organizing and staffing the company, developing its product candidates, including conducting preclinical studies and clinical trials of CR845-based product candidates and raising capital.

As of September 30, 2015, the Company has raised aggregate net proceeds of approximately $204,800 from several rounds of equity financing, including its follow-on offering, which closed in August 2015 (see Note 5 of Notes to Condensed Financial Statements), and the issuance of debt. In addition, the Company earned approximately $32,500 (of which approximately $2,100 was due to the Company as of September 30, 2015 and received in October 2015) under its license agreements for CR845, primarily with Maruishi Pharmaceutical Co. Ltd. (“Maruishi”) and Chong Kun Dang Pharmaceutical Corp. (“CKD”), and for an earlier product candidate for which development efforts ceased in 2007.

In connection with the license of rights to CR845 in Japan to Maruishi and as part of the earnings described above, in April 2013, the Company received an upfront payment of $15,000, and in August 2014 and September 2015, the Company received an additional $480 and was due an additional $1,725 (net of contractual foreign currency exchange adjustments), respectively, in milestone payments. In connection with the license of rights to CR845 in South Korea to CKD and as part of the earnings described above, in 2012, the Company received aggregate upfront and milestone payments of $1,190, and in August 2015 and September 2015, the Company received an additional $209 and was due an additional $417 (net of South Korean withholding taxes), respectively, in milestone payments.

The Company has incurred substantial net losses and negative cash flows from operating activities in nearly every fiscal period since inception. As of September 30, 2015, the Company had unrestricted cash and cash equivalents of $111,116 and an accumulated deficit of $95,361. The Company had net cash used in operating activities of $17,310 and $11,818 for the nine months ended September 30, 2015 and 2014, respectively. The Company expects that cash and cash equivalents at September 30, 2015 will be sufficient to fund its operations beyond one year. The Company recognized net losses of $4,787 and $15,160 for the three and nine months ended September 30, 2015, respectively, and $6,545 and $13,573 for the three and nine months ended September 30, 2014, respectively, and expects to incur additional net losses and negative cash flows for the full year ending December 31, 2015 and for the foreseeable future.

The Company is subject to risks common to other life science companies including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, development by its competitors of new technological innovations, dependence on key personnel, market acceptance of products, product liability protection of proprietary technology, ability to raise additional financing, and compliance with U.S. Food and Drug Administration (“FDA”) and other government regulations. If the Company does not successfully commercialize any of its product candidates, it will be unable to generate recurring product revenue or achieve profitability.