Cara Therapeutics Announces 1-for-3 Reverse Stock Split in Connection with the Proposed Merger with Tvardi Therapeutics

Rhea-AI Summary

Cara Therapeutics (CARA) has announced a 1-for-3 reverse stock split in connection with its upcoming merger with Tvardi Therapeutics. The split will take effect on April 15, 2025, at 4:01 p.m. Eastern Time, with split-adjusted trading beginning April 16, 2025.

Following the split, the company will be renamed to Tvardi Therapeutics, Inc. and will trade under the new symbol TVRD. The reverse split will reduce CARA's outstanding shares from approximately 4.6 million to 1.5 million shares. After the merger completion, the combined company is expected to have approximately 9.4 million shares outstanding.

The split was approved by stockholders on April 1, 2025. Stockholders will receive cash payments for any fractional shares, and proportionate adjustments will be made to outstanding stock options and equity incentive plans.

Positive

• Merger with Tvardi Therapeutics progressing as planned
• Stockholder approval obtained for strategic corporate actions
• Maintaining Nasdaq listing compliance through share price adjustment

Negative

• Significant share consolidation reducing trading liquidity
• Cash expenditure required for fractional share settlements
• Substantial share dilution post-merger with outstanding shares increasing to 9.4M from 1.5M

Insights

Corporate Finance Analyst

Cara Therapeutics' announcement of a 1-for-3 reverse stock split represents a significant corporate restructuring ahead of its merger with Tvardi Therapeutics. The split will reduce outstanding shares from 4.6 million to 1.5 million, while the post-merger entity will have approximately 9.4 million shares outstanding under the new name "Tvardi Therapeutics, Inc." and ticker "TVRD."

Reverse splits are typically implemented for two primary reasons: to meet exchange listing requirements or to increase share price ahead of strategic transactions. In Cara's case, this appears strategically timed with the merger rather than a distress signal. The reverse split doesn't change the company's market capitalization or intrinsic value, as the proportional ownership of each shareholder remains unchanged (adjusted for fractional shares which will be cash-settled).

The combined entity's post-merger share count of 9.4 million compared to Cara's adjusted 1.5 million shares indicates Tvardi shareholders will hold the majority stake (approximately 84%) in the combined entity. This suggests Tvardi is effectively acquiring Cara in this transaction, though structured as a merger likely for regulatory or tax advantages. The substantial shift in ownership structure signals a fundamental transformation rather than a simple business combination.

STAMFORD, Conn., April 14, 2025 (GLOBE NEWSWIRE) -- Cara Therapeutics, Inc. (Nasdaq: CARA) (the “Company”), today announced that its Board of Directors (the “Board”) has approved a 1-for-3 reverse stock split of its outstanding shares of common stock.

Cara’s common stock is expected to begin trading on a reverse stock split-adjusted basis at the opening of the market on Wednesday, April 16, 2025 under the new name “Tvardi Therapeutics, Inc.” and under the new symbol “TVRD” following the anticipated closing of the merger (the “Merger”) with Tvard Therapeutics, Inc. (“Tvardi”), with a new CUSIP number 140755 307.

The reverse stock split was approved by Cara’s stockholders at Cara’s special meeting of stockholders held on April 1, 2025, to be effected in the Board’s discretion of not less than 1-for-2 and not more than 1-for-4. The final reverse stock split ratio of 1-for-3 was approved by the Board on April 1, 2025 and will become effective as of 4:01 p.m. Eastern Time on Tuesday, April 15, 2025.

At the effective time of the reverse stock split, every three (3) issued and outstanding shares of the Company’s common stock will automatically be combined into one (1) issued and outstanding share of the Company’s common stock without any change in the par value per share. The reverse stock split will reduce the number of issued and outstanding shares of the Company’s common stock from approximately 4.6 million to approximately 1.5 million (prior to giving effect to the closing of the Merger). The reverse stock split will not change the authorized number of shares of Cara’s common stock.

Fractional shares will not be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share will be entitled to receive a cash payment. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s relative interest in the Company’s equity securities, except for any adjustments for fractional shares.

In addition, proportionate adjustments will be made to the number of shares underlying, and the exercise or conversion prices of, the Company’s outstanding stock options, and to the number of shares of common stock issuable under the Company's equity incentive plans.

Following the closing of the Merger, the combined company's total outstanding common stock is expected to be approximately 9.4 million shares.

About Tvardi Therapeutics, Inc.

Tvardi is a privately held, 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. STAT3 is a central mediator across critical fibrotic signaling pathways that drive uncontrolled deposition, proliferation, survival and immune suppression. STAT3 is also positioned at the intersection of many signaling pathways integral to the survival and immune evasion of cancer cells. The company is conducting Phase 2 clinical trials in fibrosis-driven diseases with high unmet need: idiopathic pulmonary fibrosis (NCT05671835) and hepatocellular carcinoma (NCT05440708).

About Cara Therapeutics

Cara is a biopharmaceutical company that has been focused on leading a new treatment paradigm to improve the lives of patients suffering from chronic pruritus. Cara developed an IV formulation of difelikefalin, which is approved for the treatment of moderate-to-severe pruritus associated with advanced kidney disease in adults undergoing hemodialysis in the United States, European Union, and multiple other countries for the treatment of moderate-to-severe pruritus associated with advanced chronic kidney disease in adults undergoing hemodialysis. The IV formulation is out-licensed worldwide.

Forward-looking Statements

Certain statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include statements regarding the anticipated completion and effects of the proposed Merger and the ability of the parties to consummate the Merger on the expected timeline or at all; the reverse stock split and the timing thereof; the impact of the reverse stock split on stockholders, including any adjustments that may result from the treatment of fractional shares, and option holders; the expected number of shares of common stock to be issued and outstanding following the reverse stock split and the Merger, and other statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them,. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include risks related to the Merger, including the completion of the Merger and the satisfaction (or waiver) of closing conditions; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement; the Company’s actual reductions in spending as compared to anticipated cost reductions; the Company’s costs of continuing to operate as a public company; and the other risks described more fully in Cara Therapeutics’ filings with the Securities and Exchange Commission, including the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and its other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

INVESTOR CONTACT:
investor@caratherapeutics.com

FAQ

What is the ratio of Cara Therapeutics' (CARA) reverse stock split announced in April 2025?

Cara Therapeutics announced a 1-for-3 reverse stock split, meaning every 3 shares will be combined into 1 share.

When will CARA stock begin trading under the new Tvardi Therapeutics (TVRD) symbol?

Trading under the new symbol TVRD will begin on April 16, 2025, following the reverse split implementation.

How many shares will CARA have outstanding after the reverse split but before the merger?

After the reverse split, CARA will have approximately 1.5 million shares outstanding, reduced from 4.6 million.

What will be the total number of outstanding shares after the CARA-Tvardi merger completion?

The combined company is expected to have approximately 9.4 million shares outstanding after the merger completion.

How will CARA's reverse stock split affect existing stockholders?

The split will not alter stockholders' relative interest in the company, except for cash payments issued for fractional shares.