Subsequent Events

3 Months Ended

Mar. 31, 2025

Subsequent Events

Subsequent Events

18. Subsequent Events

Consummation of Merger Agreement

On April 15, 2025, Cara, Merger Sub, and Tvardi consummated the transactions contemplated by the Merger Agreement following a Special Meeting (as described below) of Cara’s stockholders. Effective at 4:01 p.m. Eastern Time on April 15, 2025, Cara effected the 2025 Reverse Stock Split (as described below), and effective at 4:02 p.m. Eastern Time on April 15, 2025, Cara increased its authorized shares of common stock to 150,000,000. Effective at 4:03 p.m. Eastern Time on April 15, 2025, pursuant to the Certificate of Merger, Merger Sub was merged with and into Tvardi and Tvardi became a wholly owned subsidiary of Cara. Effective at 4:04 p.m. Eastern Time on April 15, 2025, Cara changed its name to “Tvardi Therapeutics, Inc.”. Following the completion of the Merger, the business conducted by Cara became primarily the business conducted by Tvardi, which is 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.

Under the terms of the Merger, immediately prior to the effective time of the Merger, each share of Tvardi’s preferred stock was converted into one share of Tvardi’s common stock. At the effective time of the Merger, Cara issued an aggregate of 7,805,161 shares of its common stock to Tvardi’s stockholders and holders of outstanding convertible promissory notes, or the Convertible Notes, of Tvardi, based on (i) an exchange ratio of 0.1341 shares of Cara’s common stock for each share of Tvardi common stock outstanding immediately prior to the Merger, including those shares of common stock issued upon conversion of the Tvardi preferred stock (but excluding shares of Tvardi’s common stock held (a) as treasury stock by Tvardi, (b) by Cara, Merger Sub, or any subsidiary of Cara or Tvardi or (c) as dissenting shares of Tvardi’s common stock) and (ii) the automatic conversion of the Convertible Notes, with an aggregate principal amount of approximately $28,300 and approximately $800 in accrued interest, into shares of Cara’s common stock pursuant to the terms of the Convertible Notes, resulting in approximately 9.4 million shares of the Combined Company’s common stock being issued and outstanding immediately following the effective time of the Merger. Immediately following the Merger, pre-Merger Cara equity holders owned, in the aggregate, approximately 15.4% of the Combined Company’s common stock, pre-Merger Tvardi equity holders owned, in the aggregate, approximately 72.0% of the Combined Company’s common stock, and former holders of Convertible Notes owned, in the aggregate, approximately 12.5% of the Combined Company’s common stock, in each case, calculated on a fully diluted basis.

Further, upon closing of the Merger, certain of the options to purchase Cara’s common stock held by non-executive employees and directors and restricted stock units held by directors fully vested, pursuant to the terms of the Merger Agreement. Additionally, the options and restricted stock units held by Cara’s remaining executives prior to the closing accelerated upon closing, pursuant to change-in-control language within preexisting employment agreements or separation agreements.

The issuance of the shares of Cara’s common stock to the former stockholders of Tvardi and the holders of the Convertible Notes was registered with the SEC on Cara’s Registration Statement on Form S-4 (File No. 333-283900), as amended and declared effective by the SEC on February 14, 2025 (the “Registration Statement”).

The shares of Cara’s common stock, which traded on the Nasdaq Capital Market through the close of business on Tuesday, April 15, 2025 under the ticker symbol “CARA,” commenced trading on The Nasdaq Capital Market on a post-2025 Reverse Stock Split adjusted basis under the ticker symbol “TVRD” on April 16, 2025. The Combined Company’s common stock is represented by a new CUSIP number, 140755 307.

The foregoing description of the Merger and the Merger Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was filed as Exhibit 2.1 on the Current Report on Form 8-K filed by Cara on December 18, 2024.

Closing of APA and Asset Disposition

As previously disclosed, on December 17, 2024, the Cara Sellers entered into the APA with Vifor Fresenius Medical Care Renal Pharma, Ltd., a majority-owned, indirect subsidiary of CSL Vifor, pursuant to which, at the consummation of the transaction, Cara Sellers sold to CSL Vifor and CSL Vifor acquired from Cara Sellers certain assets and rights for the development, manufacture and commercialization of difelikefalin as well as certain associated liabilities for a purchase price of $900 (subject to certain adjustments with respect to inventory). The Asset Disposition closed on April 15, 2025.

Pursuant to the APA, in connection with the consummation of the Asset Disposition, CSL Vifor and HCR entered into a letter agreement with Cara providing that CSL Vifor and HCR would enter into an amended and restated purchase agreement to amend and replace the Original HCR Agreement, by and among Cara Royalty Sub, HCRX and HCR. Upon

entering into the amended and restated purchase agreement, effective as of the closing of the Asset Disposition: (i) CSL Vifor became obligated to make certain payments to HCR from and after the date thereof relating to certain revenue and/or royalties from difelikefalin, (ii) each of the Contribution Agreement, the License Agreement and the Pledge Agreement (each as defined in the Original HCR Agreement) were terminated, and (iii) Cara Sellers had no further payment or other obligations to HCR under the Original HCR Agreement. Additionally, pursuant to the APA, at the consummation of the Asset Disposition, Cara paid CSL Vifor $3,000 to compensate CSL Vifor for the estimated incremental future expenses incurred by CSL Vifor as a result of the transfer of the assets acquired and the liabilities assumed by it in connection with the Asset Disposition.

All future payments to HCR subsequent to April 15, 2025, including other non-cash revenue earned by Cara in the first quarter of 2025, will be made by CSL Vifor. As a result, Cara fully reserved for $373 of accounts receivable, net – related party by recording bad debt expense on April 15, 2025 for CSL Vifor, and also fully reserved for $950 of other receivables by recording bad debt expense on April 15, 2025 for Maruishi since Cara will not receive any future revenue payments to pay HCR.

In connection with the consummation of the Merger and Asset Disposition, approximately $2,000 of success and legal fees were paid to Piper Sandler.

Assignment of Difelikefalin Agreements

In connection with the Asset Disposition, Cara assigned the following agreements related to difelikefalin to CSL Vifor:

● License Agreement dated April 4, 2013 and related API supply agreement by and between Cara and Maruishi;

● License and API Supply Agreement effective as of April 16, 2012, as amended on May 1, 2012, by and between Cara and CKDP;

● API Commercial Supply Agreement effective as of July 5, 2021 between Cara and PPL; and

● Master MSA effective as of June 27, 2019 between Cara and Patheon.

The foregoing description of the APA and the Asset Disposition and related transactions does not purport to be complete and is qualified in its entirety by reference to the full text of the APA, which was filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Cara on December 18, 2024.

2025 Reverse Stock Split

As previously disclosed, at a special meeting of Cara’s stockholders held on April 1, 2025 (the “Special Meeting”), Cara’s stockholders approved (i) an amendment to Cara’s amended and restated certificate of incorporation to effect the 2025 Reverse Stock Split and (ii) an amendment to Cara’s amended and restated certificate to increase the authorized number of shares of Cara’s common stock from 16,666,667 shares to 150,000,000 shares. On April 15, 2025, Cara amended its amended and restated certificate of incorporation to (i) effect the 2025 Reverse Stock Split, effective as of 4:01 p.m. Eastern Time on April 15, 2025 and (ii) to increase the authorized number of shares of Cara’s common stock from 16,666,667 shares to 150,000,000 shares, effective as of 4:02 p.m. Eastern Time on April 15, 2025.

As a result of the 2025 Reverse Stock Split, every three shares of Cara’s common stock held by a stockholder immediately prior to the 2025 Reverse Stock Split were combined and reclassified into one share of Cara’s common stock. As such, immediately following the 2025 Reverse Stock Split, there were approximately 1.5 million shares of Cara’s common stock outstanding.

No fractional shares were issued in connection with the 2025 Reverse Stock Split. Any fractional shares resulting from the 2025 Reverse Stock Split were rounded down to the nearest whole number, and each Cara stockholder who would otherwise be entitled to a fraction of a share of common stock upon the 2025 Reverse Stock Split was entitled to receive a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise have been entitled multiplied by the closing price of Cara’s common stock on April 14, 2025.

On April 15, 2025, Cara also amended its amended and restated certificate of incorporation to effect the Name Change, effective as of 4:04 p.m. Eastern Time on April 15, 2025.

The foregoing descriptions of the certificates of amendment to the amended and restated certificate of incorporation of Cara are not complete and are subject in their entirety by reference to the certificates of amendment, copies of which were filed as Exhibit 3.1, Exhibit 3.2 and Exhibit 3.3, respectively, to the Current Report on Form 8-K filed by Cara on April 15, 2025.

Departure of Officers

On April 15, 2025, effective upon the closing of the Merger, the employment of each of Cara’s President and Chief Executive Officer, Chief Financial Officer, and General Counsel, Secretary and Chief Compliance Officer, respectively, was terminated. In connection with their termination of employment, each entered into side letters with Cara which provided for (i) in the case of the Chief Executive Officer, a lump sum payment equal to 18 months of his current base salary, a lump sum payment equal to one and a half times his 2025 target annual bonus and payment of applicable COBRA premiums for up to 18 months following termination, (ii) in the case of the Chief Financial Officer, a lump sum payment equal to 12 months of his current base salary, a lump sum payment equal to his 2025 target annual bonus and payment of applicable COBRA premiums for up to 12 months following termination, and (iii) in the case of the Chief Compliance Officer, a lump sum payment equal to 12 months of his current base salary, a lump sum payment equal to his 2025 target annual bonus and payment of applicable COBRA premiums for up to 12 months following termination. Each executed a release of claims in favor of Cara as a condition to receiving their respective severance benefits. As a result of the closing of the Merger on April 15, 2025, Cara paid approximately $5,400 in aggregate for severance payments to all ten remaining employees of Cara that were terminated at closing, including the Chief Executive Officer, Chief Financial Officer and Chief Compliance Officer above. The Combined Company expects to pay these ten former Cara employees approximately $300 in aggregate for estimated COBRA premiums. The terms of the side letters are pursuant to, and consistent with, the terms of the Cara Therapeutics, Inc. Severance Plan and Form of Participation Agreement, which was filed as Exhibit 10.14 to the Annual Report on Form 10-K filed by Cara on March 1, 2022, and the Chief Executive Officer Employment Agreement, which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed by Cara on November 3, 2021, as applicable.

2018 Equity Incentive Plan

The Combined Company assumed, effective as of the closing of the Merger, the 2018 Equity Incentive Plan of Tvardi (the “2018 Plan”), as well as the outstanding awards granted thereunder, the award agreements evidencing the grants of such awards and the remaining shares available under the 2018 Plan, including any awards granted to the Combined Company’s named executive officers, in each case subject to applicable adjustments in the manner set forth in

the Merger Agreement to such awards. A copy of the 2018 Plan, as well as the forms of option grant notice and option agreement and forms of restricted stock unit grant notice and unit award agreement were filed as Exhibits 10.24, 10.25 and 10.26, respectively, to the Registration Statement on Form S-4 filed with the SEC on December 18, 2024.

2025 Equity Incentive Plan

At the Special Meeting, Cara’s stockholders considered and approved the Combined Company’s 2025 Equity Incentive Plan (the “2025 Plan”), which became effective at the closing of the Merger and following the 2025 Reverse Stock Split. As of the effective time of the Merger, there were 935,554 shares of the Combined Company’s common stock available for grant under the 2025 Plan. In addition, the number of shares initially reserved and available for issuance under the 2025 Plan may be increased at the discretion of the Combined Company’s Board of Directors (and without any further action by the Combined Company’s stockholders) on January 1 of each year for a period of five years, commencing on January 1, 2026 and ending on January 1, 2030, in an amount not to exceed 5% of the total number of shares of the Fully Diluted Common Stock (as defined in the 2025 Plan) determined on December 31 of the preceding year, if the Combined Company’s Board of Directors acts prior to January 1 of a given year to provide that the increase for such year will occur and to determine the applicable number of additional shares of the Combined Company’s common stock. In the absence of action by the Combined Company’s Board of Directors, no such increase will automatically occur. A copy of the 2025 Plan, forms of option grant notices and option agreements and forms of restricted stock unit grant notice and unit award agreement, was attached to the Current Report on Form 8-K on April 15, 2025 as Exhibits 10.14, 10.15 and 10.16, respectively.

2025 Employee Stock Purchase Plan

At the Special Meeting, Cara’s stockholders considered and approved the Combined Company’s 2025 Employee Stock Purchase Plan (the “2025 ESPP”), which became effective at the closing of the Merger and following the 2025 Reverse Stock Split. As of the effective time of the Merger, there were 93,555 shares of the Combined Company’s common stock reserved for issuance under the 2025 ESPP (the “Initial Share Reserve”). Additionally, the number of shares of common stock reserved for issuance under the 2025 ESPP will automatically increase on January 1 of each year for a period of up to ten years, beginning on January 1, 2026 and continuing through and including January 1, 2035, by an amount equal to the lesser of (i) 1% of the total number of shares of the Fully Diluted Common Stock (as defined in the 2025 ESPP) determined on December 31 of the preceding year, and (ii) a number of shares equal to three times the Initial Share Reserve. Notwithstanding the foregoing, the Combined Company’s Board of Directors may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares. A copy of the 2025 ESPP was attached to the Current Report on Form 8-K on April 15, 2025 as Exhibit 10.18.