TVRD

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2025, for Tvardi Therapeutics, Inc. (formerly Cara Therapeutics, Inc.). The financial statements presented reflect the operations of the predecessor company, Cara Therapeutics, Inc., prior to the consummation of a merger with Legacy Tvardi Therapeutics, Inc. on April 15, 2025. Following the merger, the combined entity operates as a clinical-stage biopharmaceutical company focused on developing oral STAT3 inhibitors (TTI-101 and TTI-109) for fibrosis-driven diseases. The filing includes retroactive adjustments for a 1-for-12 reverse stock split in December 2024 and a 1-for-3 reverse stock split in April 2025.

Key Financial Metrics

Note: Revenue is primarily derived from collaborative profit-sharing arrangements and non-cash royalty revenue related to the sale of future royalties. The company has no commercial product sales revenue from its own pipeline.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 20% to $2.57 million, driven by a 52% increase in collaborative revenue ($1.20 million vs. $0.79 million) and a 112% increase in "Other revenue" ($1.32 million vs. $0.62 million), which represents non-cash royalty payments earned under agreements with CSL Vifor and Maruishi.
• Expense Reduction: Operating expenses plummeted 84% to $4.96 million from $31.80 million. This was primarily due to a 99% decrease in Research and Development (R&D) expenses ($0.32 million vs. $22.0 million) following the discontinuation of Cara's clinical programs in June 2024. Restructuring expenses, which were $2.4 million in Q1 2024, were $0 in Q1 2025.
• Non-Cash Interest: Non-cash interest expense on the liability related to the sale of future royalties increased 45% to $2.87 million from $1.98 million.
• Liquidity: Cash balances decreased by $3.69 million during the quarter, compared to a decrease of $5.19 million in the prior year period.

Guidance, Outlook, Risks, and Unusual Items

• Merger and Asset Disposition: On April 15, 2025, the company completed a merger with Legacy Tvardi. Concurrently, it sold assets related to its difelikefalin program (KORSUVA) to CSL Vifor for $0.9 million and paid CSL Vifor $3.0 million for incremental future expenses. Future royalty payments to HCR regarding these assets will be made by CSL Vifor, not Tvardi.
• Going Concern: Management has concluded that conditions raise substantial doubt about the company's ability to continue as a going concern. The company expects to incur significant operating losses for the foreseeable future and requires additional funding to advance its clinical programs (TTI-101 and TTI-109).
• Legal Proceedings: Two lawsuits were filed in March 2025 by purported stockholders challenging the Merger Agreement, alleging omissions or misrepresentations in the Proxy Statement/Prospectus. The company intends to vigorously defend against these claims.
• Nasdaq Compliance: As of March 31, 2025, the company had negative stockholders' equity and was not in compliance with Nasdaq listing requirements. Compliance was expected to be regained following the April 2025 merger.
• Unusual Items: The "Other revenue" line item is non-cash and represents royalties that were immediately remitted to HCR under a royalty purchase agreement. Upon the asset disposition in April 2025, the company recorded bad debt expense for receivables related to these royalties as it will no longer receive the cash to pay HCR.

Investor Verification Checklist

• Post-Merger Capitalization: Verify the fully diluted share count and ownership percentages of Legacy Tvardi shareholders versus former Cara shareholders following the April 15, 2025 merger.
• Cash Runway: Assess the combined cash position (approx. $45.7 million as of April 30, 2025) against the projected burn rate for the TTI-101 and TTI-109 clinical trials to determine the timeline for the next capital raise.
• Asset Disposition Terms: Review the specific terms of the Asset Purchase Agreement with CSL Vifor to confirm the extent of the divestiture of the KORSUVA business and the cessation of related revenue streams.
• Legal Exposure: Monitor the status of the stockholder lawsuits regarding the merger to assess potential financial or operational disruptions.
• Internal Controls: Note the disclosure of material weaknesses in Legacy Tvardi's internal controls over financial reporting and the plan to remediate them.