In this Annual Report on Form 10-K, unless the context otherwise dictates, the terms “we,” “us,” “Cara,” the “Company” and “our” refer to Cara Therapeutics, Inc.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections of this Annual Report on Form 10-K titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” but are also contained elsewhere in this Annual Report on Form 10-K. In some cases, you can identify forward-looking statements by the words “aim”, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” or “would,” and or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report on Form 10-K, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain.
The forward-looking statements in this Annual Report on Form 10-K include, among other things, statements about:
| ● | our ability to successfully consummate the proposed merger with Tvardi Therapeutics, Inc., or Tvardi, or any strategic transaction that we may consummate in the future; |
| ● | our ability to successfully consummate the Asset Disposition (as defined below); |
| ● | the approval and closing of the proposed merger, including the timing thereof, our ability to obtain a sufficient number of proxies to approve the proposed merger, other conditions to the completion of the proposed merger and relative ownership levels as of the closing of the proposed merger; |
| ● | our expectations regarding the timing and costs of the consummation of the transactions contemplated by the Merger Agreement (as defined below) and Asset Disposition (as defined below); |
| ● | our ability to realize the anticipated benefits of the proposed merger and our ability to manage the risks of the proposed merger; |
| ● | the effects that the pendency of the proposed merger may have on our business prior to the closing of the proposed merger, or if the proposed merger does not close; |
| ● | the impact of any legal proceedings that may be instituted against us, Tvardi or any of each company’s respective directors or officers related to the Merger Agreement (as defined below) or the transactions contemplated thereby; |
| ● | timing of and costs or charges associated with our restructurings, and the savings benefits we expect to receive from those restructurings; |
| ● | our ability to receive the benefits from our asset dispositions undertaken in contemplation of the proposed merger; |
| ● | substantial uncertainties regarding our continued exploration of strategic alternatives to maximize shareholder value if the proposed merger is not consummated, including whether we are able to identify and implement any other potential strategic alternatives, in a timely manner or at all, whether we realize all or any of the anticipated benefits of any such transaction and whether any such transactions would generate value for stockholders; |
| ● | our ability to regain compliance with the Nasdaq listing requirements; |
| ● | our plans to develop and commercialize our product candidate or any potential future product candidates, should we resume development activities in the future; |
| ● | our ability to execute on our strategic plans, including efforts to significantly reduce our operating expenses; |
| ● | should we resume development of our product candidate or any future product candidates, the timing of our clinical trials and reporting of our results from these trials; |
| ● | should we resume development of our product candidate or any future product candidates, the potential results of preclinical studies and clinical trials and future regulatory and development milestones for our future product candidates; |
| ● | the performance of third-party manufacturers, clinical research organizations, or CROs, should we resume development of our product candidate or any future product candidates, and other vendors; |
| ● | should we resume development of our product candidate or any future product candidates, the size and growth of the potential markets; |
| ● | should we resume development of our product candidate or any future product candidates, the rate and degree of market acceptance of any other future approved indications or products; |
| ● | should we resume development of our product candidate or any future product candidates, our ability to obtain and maintain additional regulatory approval of our future product candidate, and the labeling under any approval we may obtain; |
| ● | should we resume development of our product candidate or any future product candidates, our ability to establish additional collaborations for our future product candidates; |
| ● | the continued service of our key scientific personnel, should we resume development of our product candidate or any future product candidates, or management personnel; |
| ● | should we resume development of our product candidate or any future product candidates, our ability to establish commercialization and marketing capabilities for any future approved products; |
| ● | regulatory developments in the United States and foreign countries; |
| ● | should we resume development of our product candidate or any future product candidates, our ability to obtain and maintain coverage and adequate reimbursement from third-party payers and governments for any other future approved indications or products; |
| ● | our planned use of our cash and cash equivalents and marketable securities and, should we resume development of our product candidate or any future product candidates, the clinical milestones we expect to fund with such proceeds; |
| ● | the accuracy of our estimates regarding expenses, future revenues and capital requirements; |
| ● | our ability to obtain funding for our operations; |
| ● | should we resume development of our product candidate or any future product candidates, our ability to obtain and maintain intellectual property protection for our product candidate or future product candidates and our ability to operate our business without infringing on the intellectual property rights of others; |
| ● | our ability to maintain proper and effective internal controls, especially due to our high dependence on CSL Vifor for timely and accurate information; |
| ● | should we resume development of our product candidate or any future product candidates, the success of competing drugs that are or may become available; |
| ● | the potential effects of any global health crises, geopolitical tensions and macroeconomic conditions on our business, operations and, should we resume development of any future product candidates, clinical development and regulatory timelines and plans; and |
| ● | the performance of our current and future collaborators and licensees, including CSL Vifor, Maruishi Pharmaceuticals Co. Ltd., or Maruishi, and Chong Kun Dang Pharmaceutical Corp., or CKDP, as well as sub-licensees, including Winhealth Pharma and Kissei Pharmaceutical Co. Ltd., or Kissei, and our ability to maintain such collaborations. |
You should refer to Part I Item 1A. “Risk Factors” of this Annual Report on Form 10-K for a discussion of material factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report on Form 10-K will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
You should read this Annual Report on Form 10-K and the documents that we reference in this Annual Report on Form 10-K and have filed as exhibits to this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Risk Factors Summary
Investing in our common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as more fully described below. The principal factors and uncertainties that make investing in our common stock risky include, among others:
| ● | Failure to complete, or delays in completing, the Merger with Tvardi could materially and adversely affect our results of operations, business, financial results and/or stock price. |
| ● | Failure to complete the Merger may result in Cara or Tvardi paying a termination fee to the other party and could harm the common stock price of Cara. |
| ● | The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and/or other causes. |
| ● | The market price of Cara’s common stock has been, and is likely to continue to be, highly volatile, and you may not be able to resell your shares at or above the price you paid for them; The market price of Cara common stock following the Merger may decline as a result of the Merger. |
| ● | Cara and Tvardi equity holders will have a materially reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the closing of the Merger as compared to their current ownership and voting interest in the respective companies. |
| ● | The combined company may become involved in securities litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not be sufficient to cover all costs and damages; Lawsuits may be filed against Cara and the members of the Cara Board arising out of the Merger, which may delay or prevent the proposed merger. |
| ● | Cara’s winddown of its historical operations, the sale of assets, the suspension of development activities and the proposed Merger, resulting in the conversion of Tvardi into a public company, will make Cara subject to the SEC requirements applicable to reporting shell company business combinations. As a result, the combined company will be subject to more stringent reporting requirements, offering limitations and resale restrictions. |
| ● | If Cara fails to regain and maintain compliance with the continued listing standards of the Nasdaq Capital Market, Cara may be delisted and the price of its common stock, its ability to access the capital markets and its financial condition could be negatively impacted; Nasdaq may delist the combined company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject the combined company to additional trading restrictions. |
| ● | Cara may not be successful in completing the Merger, and any strategic transactions that it may consummate in the future could have negative consequences. If Cara does not successfully consummate the Merger or another strategic transaction, Cara’s Board may decide to pursue a dissolution and liquidation of Cara. In such an event, the amount of cash available for distribution to Cara’s stockholders will depend significantly on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities, as to which Cara can give you no assurance. |
| ● | The value to stockholders in the event of a strategic transaction or dissolution may depend on the extent to which Cara will be able to successfully satisfy its existing contractual obligations to third parties and regulatory commitments on favorable terms, which may include the outcome of Cara’s negotiations to reduce or terminate such commitments. |
| ● | Cara is substantially dependent on its remaining employees to facilitate the consummation of the Merger. |
| ● | Cara has incurred significant losses from Cara’s inception, and Cara anticipates that it may incur losses in the foreseeable future. |
| ● | If Cara decides to resume development of Cara’s product candidate or any future product candidate, Cara will need additional funding and may be unable to raise capital when needed, which would force Cara to delay, reduce or eliminate its product development programs. |
| ● | Should Cara resume development of its product candidate or future product candidates, if Cara is unable to successfully complete clinical development, obtain regulatory approvals and commercialize its product candidate or future product candidates, or experience significant delays in doing so, its business will be materially harmed. |
| ● | Should Cara resume development of its product candidate or any future product candidate, Cara expects to continue to rely on third parties to conduct its preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials. |
| ● | Should Cara resume development of its product candidate or any future product candidate, manufacturers upon whom Cara may rely could fail to produce a product candidate in the volumes that Cara may require on a timely basis, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, and Cara could face delays in the development of a product candidate. |
| ● | Any collaboration arrangements that Cara is a party to or may enter into in the future may not be successful, which, should Cara resume development activities, could adversely affect Cara’s ability to develop and ultimately commercialize its product candidate or any potential future product candidate. |
| ● | Should Cara resume development of its product candidate or any future product candidate, if Cara experiences delays or difficulties in the enrollment of patients in clinical trials, Cara’s receipt of necessary regulatory approvals could be delayed or prevented. |
| ● | The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. Should Cara resume development activities in the future, if Cara is not able to obtain, or if there are delays in obtaining, required additional regulatory approvals, Cara will not be able to commercialize any product candidates as expected, and Cara’s ability to generate revenue will be materially impaired. |
| ● | Cara is subject to stringent and evolving U.S. and foreign laws, regulations and standards, contracts, industry standards, policies and other obligations related to data privacy and security. Cara’s actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation (including class claims) and mass arbitration demands, fines and penalties, disruptions of Cara’s business operations, reputational harm, loss of revenue and profits, and otherwise adversely affect Cara’s business, operations and financial performance. |
| ● | Cara may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms. |
