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August 30, 2024

Following more layoffs, Stamford’s Cara Therapeutics considers ‘strategic alternatives,’ including dissolving company

Contributed Cara Therapeutics is based at 400 Atlantic St. in Stamford.
By David Krechevsky

It’s been such a rough year for Stamford-based Cara Therapeutics that its leadership is considering at least the possibility of liquidating and dissolving the company, according to a recent filing with the U.S. Securities and Exchange Commission.

In a quarterly report filed with the SEC on Aug. 14, the biopharmaceutical company reported a net loss of $20 million, or 37 cents per share, for the quarter ended June 30, down from a loss of $31.5 million, or 58 cents per share, a year earlier. 

According to the filing, on June 14 the board of directors approved a streamlined operating plan “exploring strategic alternatives focused on maximizing shareholder value.” 

The board granted that approval after it decided to “discontinue the clinical program in notalgia paresthetica, or NP,” a chronic neurological disorder that can cause episodic itching or pain on a small patch of the skin on the mid-back area, especially in older women.

Cara Therapeutics had said previously it was prioritizing development of oral difelikefalin as a treatment for NP. The decision to discontinue that program came after a clinical study determined the drug “did not demonstrate a meaningful clinical benefit at any dose” when compared to placebo.

In July, the company announced it had hired Greenwich-based investment bank Piper Sandler & Co. to act as a financial adviser “for the process of exploring and reviewing strategic alternatives.”

“We are committed to evaluating a range of strategic options to maximize value for our shareholders,” Christopher Posner, president & CEO of Cara Therapeutics, said at the time. “As part of this effort, our board of directors has approved a streamlined operating plan focused on cost-containment and cash conservation.”

The company also said “there can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or as to the timing of any such agreements or transactions,” and added it would neither discuss nor disclose “further developments regarding the exploration of strategic alternatives unless or until” its board approved a specific action.

Cara Therapeutics did not respond to a request for comment.

In its recent SEC filing, the company states that its board approved a second reduction in its workforce “by approximately 70%, which the company substantially completed by June 30, 2024.” The first round of layoffs was announced in January, when it reduced its workforce by half. At the time the first round was announced, the company had 84 employees.

As of March 1, 2024, the company said it had 55 employees, down from 106 a year earlier, according to its annual reports. 

According to the SEC filing, the company recorded a pre-tax severance expense of $2.4 million for the quarter ended March 31, while for the quarter ended June 30 it recorded a pre-tax severance expense of $2.6 million. The filing adds that the remaining amount of severance to be paid as of June 30 was just below $3 million.

The filing goes on to say, “There can be no assurance that a strategic transaction will be completed. If a strategic transaction is not completed, our board of directors may decide to pursue a dissolution and liquidation.”

It adds that, “In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision ….”

As of June 30, the company reported it had total financial assets of $58.1 million, down from $102.7 million as of Dec. 31.

Founded in 2004 in Tarrytown, New York, Cara Therapeutics relocated to Connecticut in 2007 with $4 million in financial assistance from Connecticut Innovations, the state’s venture capital arm. The company relocated to Shelton before moving to Stamford in 2015.

Cara Therapeutics does have other novel therapies. In August 2021, it received U.S. Food and Drug Administration (FDA) approval for KORSUVA (difelikefalin) injection for the treatment of moderate-to-severe pruritus associated with chronic kidney disease in adults undergoing hemodialysis. The treatment was launched commercially in April 2022 and the company said it began recording profit-sharing revenues from it in the second quarter of that year.

The company is publicly traded on the Nasdaq exchange under the symbol CARA. As of the morning of Aug. 30, the stock was trading at 35 cents per share, down from a 52-week high of $2.78.

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