Protara Therapeutics(TARA) - 2021 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The company reported a net loss of $37.0 million for the nine months ended Sep 30, 2021, with total assets decreasing to $180.7 million Condensed Consolidated Balance Sheets Total assets decreased to $180.7 million as of September 30, 2021, driven by a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $40,742 | $168,598 | | Marketable debt securities | $97,668 | $0 | | Total Assets | $180,697 | $203,157 | | Total Liabilities | $10,291 | $3,914 | | Total Stockholders' Equity | $170,406 | $199,243 | | Total Liabilities and Stockholders' Equity | $180,697 | $203,157 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss for the nine months ended September 30, 2021, increased to $37.0 million due to higher operating expenses Statement of Operations Summary (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Research & development | $4,093 | $2,796 | $17,020 | $8,330 | | General & administrative | $6,737 | $5,266 | $20,182 | $17,157 | | Total operating expenses | $10,830 | $8,062 | $37,202 | $25,487 | | Net loss | ($10,777) | ($7,970) | ($37,024) | ($25,170) | | Net loss per share | ($0.96) | ($1.26) | ($3.30) | ($4.26) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $27.6 million for the first nine months of 2021, contributing to a $127.9 million decrease in cash Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($27,595) | ($16,641) | | Net cash (used in)/provided by investing activities | ($100,083) | $3,346 | | Net cash (used in)/provided by financing activities | ($228) | $178,686 | | Net (decrease)/increase in cash | ($127,906) | $165,391 | | Cash, cash equivalents, and restricted cash - end of period | $41,487 | $165,955 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's clinical-stage status, accounting policies, and confirmation of sufficient liquidity for the next 12 months - The company is a clinical-stage biopharmaceutical company focused on advancing therapies for cancer and rare diseases, with key programs including TARA-002 (for LMs and NMIBC) and IV Choline Chloride (for IFALD)[28] - Management believes that current financial resources are sufficient to satisfy liquidity needs for at least twelve months from the report's issuance date[31] Stock-Based Compensation Expense (in thousands) | Expense Category | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $392 | $158 | $1,114 | $568 | | General and administrative | $2,324 | $2,623 | $7,340 | $6,839 | | Total | $2,716 | $2,781 | $8,454 | $7,407 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its clinical portfolio strategy, rising operating losses, and sufficient liquidity for the next 12 months Overview and Pipeline Protara is a clinical-stage biopharmaceutical company focused on cancer and rare diseases with key programs TARA-002 and IV Choline Chloride - The company's portfolio includes two main development programs: TARA-002 for non-muscle invasive bladder cancer (NMIBC) and lymphatic malformations (LMs), and IV Choline Chloride for intestinal failure associated liver disease (IFALD)[108][113] - The FDA cleared the Investigational New Drug (IND) application for TARA-002 in NMIBC in October 2021, and the company plans to start a Phase 1 trial by year-end[110] - TARA-002 has received Rare Pediatric Disease designation from the FDA for the treatment of LMs[111] Results of Operations Operating loss for the first nine months of 2021 grew to $37.2 million, driven by increased R&D and G&A expenses Comparison of Results of Operations (in thousands) | Metric | Nine Months 2021 | Nine Months 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $17,020 | $8,330 | $8,690 | | General and administrative | $20,182 | $17,157 | $3,025 | | Operating loss | ($37,202) | ($25,487) | ($11,715) | | Net Loss | ($37,024) | ($25,170) | ($11,854) | Liquidity and Capital Resources The company holds $138.4 million in cash and securities, deemed sufficient to fund operations for at least the next twelve months - As of September 30, 2021, the company had $138.4 million in cash, cash equivalents, and marketable debt securities[135] - The company believes its current financial resources are sufficient to satisfy its estimated liquidity needs for at least twelve months from the issuance of the financial statements[137] - Net cash used in operating activities increased to $27.6 million for the nine months ended Sep 30, 2021, from $16.6 million in the same period of 2020, driven by a higher net loss[140] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company indicates it has no material exposure to market risk requiring disclosure - The company states this item is "Not applicable"[145] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021 - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[147] - There were no changes in internal control over financial reporting during the third quarter of 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[149] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently party to any material legal proceedings - The company is not currently a party to any legal proceedings that are likely to have a material adverse effect on its business[152] Item 1A. Risk Factors Key risks include limited operating history, dependence on key products, future financing needs, and reliance on third parties Risks Related to Financial Condition The company faces significant financial risks from its limited operating history, lack of revenue, and need for additional capital - The company has a very limited operating history, has never generated revenue, and expects to incur significant future losses[154][155] - Future operations depend on raising additional financing, which may not be available on favorable terms or at all, with the COVID-19 pandemic potentially limiting access to capital[160] Risks Related to Drug/Biologics Development Success is highly dependent on the uncertain clinical development and regulatory approval of its main product candidates - The company's business is primarily dependent on the successful clinical development, regulatory approval, and commercialization of TARA-002 and IV Choline Chloride[165] - As a company, Protara has never conducted a clinical trial or submitted a BLA/NDA, which could lead to unforeseen delays and costs[169] - The development of TARA-002 for lymphatic malformations (LMs) is difficult to predict in terms of timing and cost because there are no existing FDA-approved therapies for LMs[170] Other Risks Related to Our Business Business risks include intense competition, reliance on third-party manufacturing, and evolving healthcare regulations - The company faces significant competition from established pharmaceutical companies with greater financial and operational resources[186] - The company currently has limited marketing capabilities and no sales organization, and must build these functions or rely on third parties to commercialize any approved products[196] - Protara relies completely on third-party contractors for the supply, manufacturing, and distribution of its clinical drug supplies, which includes sole-source suppliers[229] - The business is subject to stringent and changing data privacy laws like GDPR and CCPA, and a security breach could lead to significant penalties and operational disruption[255][256][259] Risks Related to Intellectual Property Rights The company's competitive position relies on its ability to obtain, maintain, and enforce its intellectual property rights - The company's success depends on its ability to obtain and maintain patent protection, which is an expensive and uncertain process[266][267] - Protecting intellectual property rights globally is difficult, as laws and enforcement mechanisms in foreign countries, particularly developing ones, may not be as robust as in the U.S.[272] - The company may be sued for infringing third-party intellectual property rights, which could result in costly litigation and prevent or delay the commercialization of its products[277] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None reported[293] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[294] Item 4. Mine Safety Disclosures This item is not applicable to the company's business - None reported[295] Item 5. Other Information The company reports no other information for this item - None reported[296] Item 6. Exhibits This section lists exhibits filed with the report, including corporate governance documents and officer certifications - The Exhibit Index lists all documents filed as part of the Form 10-Q, including corporate governance documents, officer certifications, and XBRL data files[297][299]