Company: TVRD
Filing Date: 2025-02-14
Form Type: S-4/A
Source: 0001104659-25-013053
Chunk: 624

Company: Tvardi Therapeutics, Inc.
Filing Date: 2025-02-14
Form: S-4/A
Chunk 624
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 and timing of services performed relative to the actual status and timing of services performed may vary and may result in Tvardi reporting amounts that are too high or too low in any particular period. To date, Tvardi has not made any material adjustments to its prior estimates of accrued research and development expenses.

Tvardi also record advance payments to service providers as prepaid expenses and other current assets, which are expensed when the contracted services are performed. If the actual timing of the performance of services varies from the estimate, then Tvardi adjusts the amount of the accrued expense or the prepaid expense accordingly.

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TABLE OF CONTENTS

Stock-Based Compensation Expense and Fair Value of Stock-Based Awards

Stock-Based Compensation Expense

Tvardi measures and records the expense related to stock-based awards granted to employees, directors, consultants and advisors based upon their respective fair value at the date of grant. Generally, Tvardi issues stock option awards with service-based vesting conditions and record the expense for these awards using the straight-line method such that the aggregate amount of expense recognized is at least the fair value of what has legally vested. Tvardi estimates the grant date fair value of each common stock option using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions and management’s best estimates. These estimates involve inherent uncertainties and management’s judgement. If factors change and different assumptions are used, Tvardi’s stock-based compensation could be materially different in the future.

These assumptions are estimated as follows:

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Fair value — Because Tvardi’s common stock is not yet publicly traded, it must estimate the fair value of common stock. Tvardi’s board of directors considers numerous objective and subjective factors to determine the fair value of its common stock at each meeting in which awards are approved.

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Expected Volatility — Because Tvardi does not have any trading history for its common stock, the expected volatility is estimated using averages of the historical volatility of its peer group of companies for a period equal to the expected term of the stock options granted. Tvardi’s peer group of publicly traded companies was chosen based on their similar size, stage in the life cycle or area of specialty. Tvardi intends to continue to consistently apply this process using the same or a similar peer group of public companies, until a sufficient amount of historical information regarding the volatility of its own common stock price becomes available.

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Expected Term — Derived from the life of the options granted under the option plan and is based on