Company: TVRD
Filing Date: 2025-02-14
Form Type: 424B3
Source: 0001104659-25-014310
Chunk: 139

Company: Tvardi Therapeutics, Inc.
Filing Date: 2025-02-14
Form: 424B3
Chunk 139
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1. This analysis showed a limited change of ownership had occurred, and the amount of NOL carryforwards and R&D tax credits that could be utilized annually in the future to offset taxable income or tax, respectively. In addition, since Cara will need to raise substantial additional funding to finance its operations, Cara may undergo ownership changes in the future. The Merger, if consummated, may also constitute an ownership change (within the meaning of Section 382 of the Code). Any such annual limitation may significantly reduce the utilization of the NOL carryforwards and R&D tax credits before they expire. In addition, certain states have in the past suspended use of NOL carryforwards for certain taxable years (including Connecticut which currently limits the use of NOL carryforwards by 50% and California, which recently enacted legislation that temporarily suspends the use of California NOLs for three years beginning on or after January 1, 2024), and other states are considering similar measures. As a result, Cara may incur higher state income tax expense in the future. Depending on Cara’s future tax position, limitations on its ability to use NOL carryforwards in states in which Cara is subject to income tax could have an adverse impact on Cara’s results of operations and financial condition.

Changes to existing tax laws, or challenges to Cara’s tax positions could adversely affect its business and financial condition.

The tax regimes to which Cara is subject or under which Cara operates are unsettled and may be subject to significant change. The issuance of additional guidance related to existing or future tax laws, or changes to tax laws or regulations proposed or implemented by the current or a future U.S. presidential administration, Congress, or taxing authorities in other jurisdictions could materially affect Cara’s tax obligations. For example, beginning in 2022, the TCJA eliminated the option to deduct R&D expenditures in the year incurred and instead requires taxpayers to capitalize and subsequently amortize such expenditures over five years for research activities conducted in the United States and over 15 years for research activities conducted outside the United States. In January 2024, the U.S. House of Representatives passed the Tax Relief for American Families and Workers Act, which would retroactively repeal for 2022 and 2023, and defer until 2026, the requirement to capitalize R&D expenditures for research activities conducted in the United States. Uncertainty exists as to whether the bill will be enacted into law. In addition, U.S. federal, state and local tax laws are extremely complex and