Protara Therapeutics(TARA) - 2023 Q3 - Quarterly Report

PART I Condensed Consolidated Financial Statements Increased net losses for Q3 and 9M 2023 due to higher R&D expenses; current cash sufficient for next 12 months Condensed Consolidated Balance Sheets Total assets decreased to $88.5 million as of September 30, 2023, from $113.3 million at year-end 2022, reflecting reduced cash and marketable securities and lower equity Condensed Consolidated Balance Sheet Highlights (in thousands) | | September 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,768 | $24,127 | | Marketable debt securities | $40,266 | $78,129 | | Total current assets | $77,813 | $86,146 | | Total assets | $88,467 | $113,290 | | Liabilities & Equity | | | | Total current liabilities | $6,775 | $5,740 | | Total liabilities | $11,511 | $11,207 | | Total stockholders' equity | $76,956 | $102,083 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported increased net losses for Q3 and the first nine months of 2023, primarily due to a significant rise in research and development expenses Operating Results Highlights (in thousands, except per share data) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Research and development | $6,218 | $3,466 | $18,608 | $11,819 | | General and administrative | $4,482 | $4,508 | $13,964 | $15,734 | | Loss from operations | ($10,700) | ($7,974) | ($32,572) | ($27,553) | | Net loss | ($9,860) | ($7,691) | ($30,199) | ($26,985) | | Net loss per share | ($0.87) | ($0.68) | ($2.67) | ($2.40) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $28.9 million for the first nine months of 2023, while investing activities provided $38.6 million from marketable securities maturities Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($28,857) | ($21,431) | | Net cash provided by investing activities | $38,589 | $33,295 | | Net cash used in financing activities | ($91) | ($90) | | Net increase in cash | $9,641 | $11,774 | | Cash at end of period | $34,513 | $48,243 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's biopharmaceutical business, confirm sufficient liquidity for the next twelve months, and provide accounting policy specifics - The company is a clinical-stage biopharmaceutical company focused on transformative therapies for cancer and rare diseases, with its portfolio including TARA-002 (for NMIBC and LMs) and IV Choline Chloride[29] - Management believes that the company's current financial resources are sufficient to satisfy its estimated liquidity needs for at least twelve months from the date of the financial statements' issuance[31] Stock-Based Compensation Expense (in thousands) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Research and development | $419 | $361 | $1,233 | $1,150 | | General and administrative | $1,028 | $1,076 | $3,407 | $4,108 | | Total | $1,447 | $1,437 | $4,640 | $5,258 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical progress for TARA-002, increased R&D spending driving higher net losses, and confirms sufficient liquidity for the next 12 months - The company is conducting a Phase 1 trial (ADVANCED-1) and has initiated a Phase 2 trial (ADVANCED-2) for TARA-002 in Non-Muscle Invasive Bladder Cancer (NMIBC)[99][102] - In October 2023, the company initiated STARBORN-1, a Phase 2 clinical trial of TARA-002 in pediatric patients with lymphatic malformations (LMs)[104] - As of September 30, 2023, the company had approximately $74.0 million in cash, cash equivalents, and marketable debt securities[112] - Management believes current financial resources are sufficient to satisfy estimated liquidity needs for at least twelve months from the report's issuance date[132] Results of Operations R&D expenses significantly increased in Q3 and the nine-month period of 2023 due to expanded clinical trial activities for TARA-002, leading to higher net losses Comparison of Operating Expenses (in thousands) | | Three Months Ended Sep 30, | Change | Nine Months Ended Sep 30, | Change | | :--- | :--- | :--- | :--- | :--- | | | 2023 vs 2022 | | 2023 vs 2022 | | | Research and development | $6,218 vs $3,466 | +$2,752 | $18,608 vs $11,819 | +$6,789 | | General and administrative | $4,482 vs $4,508 | -$26 | $13,964 vs $15,734 | -$1,770 | Liquidity and Capital Resources Cash, cash equivalents, and marketable securities totaled $74.0 million as of September 30, 2023, a decrease from year-end 2022, with net cash used in operations increasing to $28.9 million Liquidity and Cash Flow (in millions) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents, & marketable securities | $74.0 | $102.3 | | Working Capital | $71.0 | N/A | - Net cash used in operating activities increased by $7.4 million to $28.9 million for the nine months ended September 30, 2023, compared to the same period in 2022, driven by a higher net loss and changes in working capital[135] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Protara Therapeutics, Inc. is not required to provide the information requested under this item - The company stated this item is 'Not applicable'[144] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[146] - There were no changes in internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[148] PART II – OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings deemed likely to have a material adverse effect on its business - The company is not currently a party to any legal proceedings that are likely to have a material adverse effect on the business[150] Risk Factors This section outlines numerous risks that could materially and adversely affect the company's business, financial condition, and stock price Risks Related to Financial Condition The company faces significant financial risks due to its limited operating history, lack of revenue, and history of substantial losses, necessitating future capital raises - The company has a limited operating history, has never generated any revenues, and expects to incur significant losses for the foreseeable future[152][153] - The company will need to raise additional financing in the future to fund operations, which may not be available on favorable terms or at all[159] Risks Related to Drug/Biologics Development and Commercialization The company's success hinges on the uncertain, long, and expensive clinical development and regulatory approval of its product candidates, TARA-002 and IV Choline Chloride - The company's business depends on the successful clinical development and regulatory approval of its product candidates, TARA-002 and IV Choline Chloride[162] - The company has never completed a clinical trial or submitted a BLA or NDA, which may lead to greater costs and time than anticipated[164] - The company relies on third-party CROs to conduct and oversee clinical trials, and if these parties fail to perform, regulatory approval could be jeopardized[165] Other Risks Related to Our Business The company faces significant competition, has limited marketing capabilities, relies entirely on third-party manufacturers, and depends on attracting and retaining key personnel - The company's product candidates, if approved, will face significant competition from established pharmaceutical companies with greater resources[187] - The company has limited marketing capabilities and no sales organization, which are necessary for successful commercialization[192] - The company relies completely on third-party contractors to supply and manufacture its product candidates, which exposes it to risks of supply disruption, quality issues, and lack of direct control[218][220] Risks Related to Our Common Stock The company's common stock price is expected to be highly volatile, influenced by clinical trial results and regulatory decisions, and it does not anticipate paying dividends - The market price of the company's stock is expected to be highly volatile due to factors common in the biotechnology industry, such as clinical trial outcomes and regulatory news[230] - The company is a 'smaller reporting company' and can take advantage of reduced disclosure requirements, which may make its stock less attractive to some investors[240] - The company does not anticipate paying any dividends in the foreseeable future, meaning capital appreciation is the sole potential source of gain for stockholders[241] Risk Related to Our Ownership Structure and Governance Certain stockholders hold significant influence over corporate actions, and anti-takeover provisions could impede potential acquisitions or management changes - Certain stockholders have the ability to control or significantly influence matters submitted for stockholder approval, including mergers and significant asset sales[243] - Anti-takeover provisions in the company's charter documents and Delaware law could delay or prevent an acquisition or a change in management[244] Risks Related to Intellectual Property Rights The company's success depends on its ability to obtain, maintain, and enforce patents and protect trade secrets globally, while facing the risk of costly infringement lawsuits - The company may not be able to obtain, maintain, or enforce global patent rights of sufficient breadth to prevent third parties from competing[246] - The company may not be able to protect its intellectual property rights throughout the world, as laws and enforcement differ significantly across jurisdictions[252] - The company may be sued for infringing the intellectual property rights of third parties, which could be costly and time-consuming and could prevent or delay product development[257] General Risk Factors The company's IT systems are vulnerable to cyberattacks and security breaches, and it faces stringent and evolving data privacy laws, with non-compliance risking fines and reputational harm - The company's information technology systems and data are vulnerable to compromise from cyberattacks, which could result in regulatory actions, litigation, and business disruptions[263] - The company is subject to stringent and changing data privacy and security obligations (e.g., CCPA, GDPR), and failure to comply could lead to significant fines, penalties, and harm to its business[276] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None reported[288] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[289] Mine Safety Disclosures The company reported no mine safety disclosures - None reported[290] Other Information The company reported no other information under this item - None reported[291] Exhibits This section provides an index of the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and Inline XBRL data files