Protara Therapeutics(TARA) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents Protara Therapeutics, Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, financial instruments, and equity activities Item 1. Condensed Consolidated Financial Statements This section presents Protara Therapeutics, Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, financial instruments, and equity activities Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $31,496 | $162,798 | | Marketable debt securities | $90,720 | $7,494 | | Total current assets | $125,091 | $172,155 | | Total assets | $156,933 | $181,454 | | Total current liabilities | $9,761 | $10,961 | | Total liabilities | $12,510 | $14,320 | | Total stockholders' equity | $144,423 | $167,134 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $10,770 | $6,387 | $19,918 | $14,135 | | General and administrative | $5,816 | $4,274 | $10,792 | $8,377 | | Total operating expenses | $16,586 | $10,661 | $30,710 | $22,512 | | Net income (loss) | $(14,960) | $(9,513) | $(26,874) | $(20,608) | | Net income (loss) per share, basic and diluted | $(0.35) | $(0.45) | $(0.65) | $(1.26) | Condensed Consolidated Statements of Changes in Stockholders' Equity - Total stockholders' equity decreased from $167,134 thousand at December 31, 2024, to $144,423 thousand at June 30, 2025, primarily due to a net loss of $14,960 thousand for the three months ended June 30, 2025, and $11,914 thousand for the three months ended March 31, 2025[21] - Common stock shares outstanding increased from 35,044,772 at December 31, 2024, to 38,581,863 at June 30, 2025, driven by conversions of Series 1 Preferred Stock, exercise of pre-funded warrants, and the Underwriters' Option[21] - Additional paid-in capital increased from $412,077 thousand to $416,161 thousand, reflecting proceeds from equity issuances and stock-based compensation[21] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(26,963) | $(18,066) | | Net cash used in investing activities | $(106,077) | $26,045 | | Net cash provided by financing activities | $1,738 | $42,016 | | Net increase (decrease) in cash and restricted cash | $(131,302) | $49,995 | | Cash and cash equivalents and restricted cash - end of period | $32,241 | $90,326 | Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization and Nature of the Business - Protara Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on cancer and rare diseases, with development programs for TARA-002 (non-muscle invasive bladder cancer and lymphatic malformations) and IV Choline Chloride (patients receiving parenteral support)[25] - The Company has no current or near-term revenues and will require additional capital to fund its drug development efforts, though current financial resources are deemed sufficient for at least the next twelve months[26][27] 2. Summary of Significant Accounting Policies - The financial statements are unaudited and prepared in accordance with GAAP and SEC rules for interim statements, and should be read with the 2024 Annual Report on Form 10-K[36] - Stock-based compensation for stock options, RSUs, and ESPP is measured at fair value on grant date and recognized over the vesting period, using models like Black-Scholes for options and ESPP[29][30][31][32][33][34] - The Company is evaluating new FASB ASUs (2023-09 on Income Tax Disclosures and 2024-03 on Expense Disaggregation Disclosures) but does not anticipate a material impact on its consolidated financial statements from ASU 2023-09[38][39] 3. Fair Value of Financial Instruments - Fair value measurements are categorized into a three-level hierarchy based on input observability (Level 1: quoted prices in active markets; Level 2: observable inputs other than Level 1; Level 3: unobservable inputs)[41][42][43] Fair Value of Financial Assets (in thousands) | Financial Asset (in thousands) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Total (June 30, 2025) | | :----------------------------- | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $30,983 | - | $30,983 | | Restricted cash (money market funds) | $745 | - | $745 | | Corporate bonds | - | $81,141 | $81,141 | | U.S. Treasury securities | $32,971 | - | $32,971 | | Total | $64,699 | $81,141 | $145,840 | Fair Value of Financial Assets (in thousands) | Financial Asset (in thousands) | Level 1 (Dec 31, 2024) | Level 2 (Dec 31, 2024) | Total (Dec 31, 2024) | | :----------------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $162,297 | - | $162,297 | | Restricted cash (money market funds) | $745 | - | $745 | | U.S. Treasury securities | $7,494 | - | $7,494 | | Total | $170,536 | - | $170,536 | 4. Marketable Debt Securities - All marketable debt securities are classified as available-for-sale, with unrealized gains and losses reported in accumulated other comprehensive income (loss)[52] Marketable Debt Securities (in thousands) | Marketable Debt Securities (in thousands) | Amortized Cost (June 30, 2025) | Unrealized Gains (June 30, 2025) | Unrealized Losses (June 30, 2025) | Estimated Fair Value (June 30, 2025) | | :---------------------------------------- | :----------------------------- | :------------------------------- | :-------------------------------- | :----------------------------------- | | U.S. Treasury securities (current) | $27,920 | $31 | $(1) | $27,950 | | U.S. Treasury securities (non-current) | $5,001 | $20 | - | $5,021 | | Corporate bonds (current) | $62,790 | $17 | $(37) | $62,770 | | Corporate bonds (non-current) | $18,324 | $52 | $(5) | $18,371 | | Total | $114,035 | $120 | $(43) | $114,112 | Interest and Investment Income (in thousands) | Interest and Investment Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $1,223 | $1,130 | $2,778 | $1,809 | | Accretion of discount (Amortization of premium), net | $389 | $7 | $555 | $75 | | Dividend income | $14 | $11 | $22 | $20 | | Total | $1,626 | $1,148 | $3,355 | $1,904 | 5. Prepaid Expenses and Other Current Assets Prepaid Expenses and Other Current Assets (in thousands) | Prepaid Expenses and Other Current Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Prepaid research and development | $1,279 | $853 | | Prepaid insurance | $318 | $622 | | Accrued interest on marketable debt securities | $890 | - | | Other prepaid expenses and current assets | $388 | $298 | | Total | $2,875 | $1,863 | 6. Other Assets Other Assets (in thousands) | Other Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid research and development, non-current | $3,039 | $3,245 | | Other non-current assets | $29 | $27 | | Total | $3,068 | $3,272 | 7. Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Accrued Expenses and Other Current Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------ | :---------------- | | Research and development costs | $1,445 | $2,740 | | Employee costs | $1,484 | $2,533 | | Other expenses | $334 | $135 | | Total | $3,263 | $5,408 | 8. Leases - Operating lease expense was $338 thousand for both three-month periods ended June 30, 2025 and 2024, and $676 thousand for both six-month periods[63][64] - As of June 30, 2025, the weighted-average remaining lease term for operating leases was 37 months, with a weighted-average discount rate of 7.0%[65] Operating Lease Payments (in thousands) | Operating Lease Payments (in thousands) | Amount | | :------------------------------------ | :----- | | 2025 (excluding six months ended June 30, 2025) | $715 | | 2026 | $1,429 | | 2027 | $1,429 | | 2028 | $718 | | 2029 | $87 | | Total future operating lease payments | $4,378 | | Less: imputed interest | $430 | | Present value of future minimum lease payments | $3,948 | 9. Commitments and Contingencies - The Company has commitments under license and collaboration agreements, lease agreements, and employment agreements, including annual payments, milestone payments, and royalties[66] - Management believes that the ultimate outcome of any legal proceedings and claims arising in the ordinary course of business would not have a material adverse impact on the Company's financial position or results of operations[67] 10. Stockholders' Equity - As of June 30, 2025, 38,581,863 shares of common stock were issued and outstanding, up from 35,044,772 at December 31, 2024[69] - During the six months ended June 30, 2025, approximately 2,376 shares of Series 1 Convertible Preferred Stock were converted into 2,376,244 shares of common stock, reducing outstanding preferred shares to 5,615[71][72] - The April 2024 Private Placement generated net proceeds of approximately $41,964 thousand from the sale of common stock and pre-funded warrants, with associated common warrants exercisable at $5.25 per share[75] - The December 2024 Public Offering resulted in net proceeds of approximately $93.4 million, and the partial exercise of the Underwriters' Option in January 2025 generated an additional $2.5 million net proceeds[86][90] 11. Stock-Based Compensation - The Company operates several equity incentive plans (2014, 2017, 2020 Inducement, 2024 EIP) and an Employee Stock Purchase Plan (2024 ESPP) to grant stock options, RSUs, and other awards[91][97][100][102][104] - The 2024 EIP was amended to increase shares available for grant by 2,800,000 to 4,300,000 shares[102] RSU Activity | RSU Activity | Non-vested as of Dec 31, 2024 | Granted | Forfeited | Vested | Non-vested as of June 30, 2025 | | :------------- | :---------------------------- | :------ | :-------- | :----- | :----------------------------- | | Restricted Stock Units | 295,914 | 355,131 | (9,689) | (130,411) | 510,945 | | Weighted Average Grant Date Fair Value | $2.69 | $4.27 | $3.41 | $3.32 | $3.61 | Stock Option Activity | Stock Option Activity | Outstanding as of Dec 31, 2024 | Granted | Exercised | Forfeited | Outstanding as of June 30, 2025 | | :-------------------- | :----------------------------- | :------ | :-------- | :-------- | :------------------------------ | | Options | 3,855,478 | 1,735,363 | (2,842) | (24,972) | 5,563,027 | | Weighted Average Exercise Price | $7.30 | $4.17 | $2.91 | $3.46 | $6.34 | Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options | $736 | $953 | $1,448 | $2,028 | | Restricted stock units | $167 | $111 | $288 | $262 | | Total | $903 | $1,064 | $1,736 | $2,290 | 12. Net Income (Loss) per Common Share Net Income (Loss) per Common Share (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders (in thousands) | $(14,960) | $(9,513) | $(26,874) | $(20,608) | | Weighted-average shares outstanding, basic and diluted | 42,270,855 | 21,233,163 | 41,493,714 | 16,327,056 | | Net income (loss) per share, basic and diluted | $(0.35) | $(0.45) | $(0.65) | $(1.26) | - Due to net loss positions, basic and diluted EPS are the same, as potential common equivalent shares (April 2024 Common Warrants, Series 1 Convertible Preferred Stock, Stock options, Restricted stock units) were anti-dilutive[115] 13. Segment Information - The Company operates as a single reportable segment, with the CEO acting as the chief operating decision maker (CODM) who reviews consolidated net income (loss) and total consolidated assets[116] Research and Development Expenses (in thousands) | Research and Development Expenses (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | TARA-002 in NMIBC | $4,898 | $2,164 | $8,455 | $4,954 | | TARA-002 in LMs | $477 | $598 | $1,027 | $1,531 | | IV Choline Chloride | $1,852 | $539 | $4,367 | $797 | | Other research and development | $3,317 | $2,849 | $5,651 | $6,242 | | Total R&D Expenses | $10,770 | $6,387 | $19,918 | $14,135 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Protara Therapeutics' financial condition, operational results, clinical trial progress, and liquidity for the reported periods Overview - Protara Therapeutics is a clinical-stage biopharmaceutical company developing transformative therapies for cancer and rare diseases, with a portfolio including TARA-002 for non-muscle invasive bladder cancer (NMIBC) and lymphatic malformations (LMs), and IV Choline Chloride for patients on parenteral support (PS)[121][122] - TARA-002 in NMIBC: Interim data from ADVANCED-2 trial showed a 100% complete response (CR) rate at any time in BCG-Unresponsive patients (5/5), with CR rates of 100% at six months, 80% at nine months, and 67% at 12 months. For BCG-Naïve patients, the CR rate at any time was 76% (16/21)[126][127] - IV Choline Chloride: FDA alignment on a registrational path for a broader indication as a source of choline for PS patients. THRIVE-1 study found 78% of PS patients were choline deficient. A registrational Phase 3 clinical trial (THRIVE-3) is planned for Q3 2025, with EU-CTR approval already secured[133][134][135] - TARA-002 in LMs: STARBORN-1 Phase 2 trial interim data showed two out of three patients achieved a complete response after one injection. An interim update is expected in Q4 2025[137][138] - The Company has an accumulated deficit of approximately $271.9 million as of June 30, 2025, and expects to incur significant operating losses as it advances product candidates[141] Results of Operations Results of Operations (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :-------------------- | :------------------------------- | :------------------------------- | :----- | | Research and development | $10,770 | $6,387 | $4,383 | | General and administrative | $5,816 | $4,274 | $1,542 | | Total operating expenses | $16,586 | $10,661 | $5,925 | | Net income (loss) | $(14,960) | $(9,513) | $(5,447) | | Interest and investment income | $1,626 | $1,148 | $478 | - Research and development expenses increased by $4.4 million for the three months ended June 30, 2025, primarily due to increased direct expenses for ADVANCED-2 NMIBC clinical trial and startup costs for THRIVE-3 IV Choline Chloride clinical trial[151] Results of Operations (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Research and development | $19,918 | $14,135 | $5,783 | | General and administrative | $10,792 | $8,377 | $2,415 | | Total operating expenses | $30,710 | $22,512 | $8,198 | | Net income (loss) | $(26,874) | $(20,608) | $(6,266) | | Interest and investment income | $3,355 | $1,904 | $1,451 | | Other income | $481 | - | $481 | - General and administrative expenses increased by $2.4 million for the six months ended June 30, 2025, mainly due to higher personnel-related expenses and market development costs[156] Liquidity and Capital Resources - As of June 30, 2025, unrestricted cash, cash equivalents, and marketable debt securities totaled $145.6 million, down from $170.3 million at December 31, 2024[158] - Net cash used in operating activities increased to $(27.0) million for the six months ended June 30, 2025, compared to $(18.1) million in the prior year, driven by increased net loss and working capital adjustments[164] - Net cash used in investing activities was $(106.1) million for the six months ended June 30, 2025, a significant change from $26.0 million provided in the prior year, primarily due to increased purchases of marketable debt securities[165] - Net cash provided by financing activities decreased to $1.7 million for the six months ended June 30, 2025, from $42.0 million in the prior year, reflecting proceeds from the Underwriters' Option exercise versus the 2024 April Private Placement[166] - The Company believes its current financial resources are sufficient for at least twelve months from the filing date, but acknowledges capital market volatility and economic conditions may impact future capital availability[160][162] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no applicable quantitative and qualitative disclosures about market risk for the reporting period - Not applicable for this reporting period[174] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures, concluding their effectiveness with no material changes in internal control over financial reporting - Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level[175][176] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[178] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in legal proceedings expected to have a material adverse effect on its business - The Company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business[180] Item 1A. Risk Factors No material changes to risk factors were reported from the prior Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[181] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None to report[182] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None to report[183] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Not applicable[184] Item 5. Other Information CEO Jesse Shefferman terminated a Rule 10b5-1 trading arrangement on June 11, 2025 - CEO Jesse Shefferman terminated a Rule 10b5-1 trading arrangement on June 11, 2025, which had provided for the sale of up to 76,501 shares of common stock[185] - No other director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[186] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including employment agreements and certifications Exhibits | Exhibit No. | Description | | :------------ | :---------- | | 10.1† | Executive Employment Agreement with Leonardo Nicacio, M.D. | | 10.2*† | Executive Employment Agreement with William Conkling. | | 10.3*† | 2024 Equity Incentive Plan, as Amended. | | 31.1* | Certification of Principal Executive Officer. | | 31.2* | Certification of Principal Financial Officer. | | 32.1** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. | | 101.INS* | Interactive Data Files (Inline XBRL). | | 104 | Cover Page Interactive Data File. | SIGNATURES The report includes duly authorized signatures from the CEO and CFO, affirming the filing on August 11, 2025 - The report was signed by Jesse Shefferman, Chief Executive Officer, and Patrick Fabbio, Chief Financial Officer, on August 11, 2025[196]