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December 18, 2024

Stamford’s Cara Therapeutics to merge with Houston biopharma firm

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

Six months after financially struggling Cara Therapeutics Inc. announced it was “exploring strategic alternatives,” the Stamford-based company has decided to merge with a Houston-based biopharmaceutical firm.

In a joint news release issued Wednesday, Cara said it has entered into an agreement with Tvardi Therapeutics Inc. to merge in an all-stock transaction. 

The deal is expected to result in the ouster of Cara’s top three executives.

Under the terms of the agreement, Tvardi will merge with a wholly owned subsidiary of Cara. Once completed, “pre-merger” Cara stockholders are expected to own about  17% of the combined company, while “pre-merger” Tvardi investors are expected to own about 83%.

Cara said it will have net cash at closing of between $22.88 million and $23.13 million. The percentage of the combined company that pre-merger Cara stockholders and pre-merger Tvardi stockholders will own is subject to further adjustment if Cara’s net cash balance falls outside of that range. 

The deal is expected to close on March 31, 2025. Once completed, the combined company is expected to operate under the name Tvardi Therapeutics Inc. and trade on the Nasdaq Stock Market under the ticker symbol “TVRD.”

Tvardi said it recently raised about $28 million in a private financing round which, when combined with its existing cash and Cara’s anticipated cash balance, is expected to fund the combined company into the second half of 2026.

The merged company will be led by Tvardi CEO Imran Alibhai, Ph.D., who will serve as president and CEO of the combined company. Tvardi CFO Dan Conn will serve in the same role in the combined company, and Dr. John Kauh, Tvardi’s chief medical officer, will serve as CMO of the combined company.

Following the closing, the board of directors of the combined company will consist of seven directors, with six members, including the chairman, designated by Tvardi, one vacancy and one member to be designated by Cara prior to closing. 

The companies said Cara’s top three executives — CEO and President Christopher Posner, CFO Ryan Maynard and General Counsel Scott Terrillion — are each “expected to cease to be the officers of the company.” In addition, existing members of Cara’s board of directors who do not remain with the combined company are expected to tender their resignations from the board.

Posner said his company is “very excited” about the merger agreement.

“Our management and our board of directors thoroughly explored numerous strategic alternatives and believe that this merger with Tvardi is in the best interests of our stockholders,” he said, adding that it provides them with the opportunity to “meaningfully participate in a company treating fibrosis-driven diseases in an innovative way.”

The announcement comes at the end of a difficult financial year for the biopharmaceutical firm. 

Founded in 2004 in Tarrytown, New York, Cara 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.

In June, its board of directors approved a streamlined operating plan “exploring strategic alternatives focused on maximizing shareholder value.” It 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 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.

Along with the merger agreement, Cara said Wednesday it also entered into an asset purchase agreement with Vifor Fresenius Medical Care Renal Pharma Ltd., a company jointly owned by Fresenius Medical Care and by the CSL Vifor business unit of the CSL Group. 

Under the agreement, Cara will sell to CSL Vifor “certain assets and rights to the development, manufacture and commercialization” of difelikefalin, as well as certain associated liabilities, for $900,000. Cara also agrees to pay CSL Vifor $3 million to compensate for “future expenses” related to the acquisition.

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.”

In a quarterly report filed in November with the U.S. Securities and Exchange Commission, the company said that through the first nine months of 2024 it had a net loss of $63 million, or $1.15 per share, down from a loss of $86 million, or $1.59 per share, for the same period in 2023.

Cara also has significantly cut its workforce. It announced a first round of layoffs in January, when it cut its workforce in half, and a second round that was to be “substantially completed” by June 30. In the November filing, it said it now has just 10 employees, down from 106 as of March 1, 2023, a 90.5% reduction.
 

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