PROTARA THERAPEUTICS, INC. You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.
Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.
Overview
We are a
Our portfolio includes two development programs utilizing TARA-002, an
investigational cell therapy based on the broad immunopotentiator, OK-432, which
was originally granted marketing approval by the
Our lead oncology program is TARA-002 in NMIBC, which is cancer found in the
tissue that lines the inner surface of the bladder that has not spread into the
bladder muscle. Bladder cancer is the sixth most common cancer in
We are conducting a Phase 1 dose-finding, open-label clinical trial to evaluate
TARA-002 in treatment-naïve and treatment-experienced NMIBC patients with
carcinoma in situ, or CIS, and high-grade papillary tumors, or Ta, known as the
ADVANCED-1 trial. In the initial dose escalation phase of the trial, patients
received six weekly intravesical doses of TARA-002, evaluating the 10KE, 20KE
and 40KE doses (Klinische Einheit, or KE, is a German term indicating a
specified number of dried cells in vial). The primary objective of the trial was
to evaluate the safety, tolerability and preliminary signs of anti-tumor
activity of TARA-002, with the goal of establishing a recommended dose for a
future Phase 2 clinical trial. In
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Preliminary data from the ADVANCED-1 trial suggested that TARA-002 was generally well tolerated at all three dose levels evaluated in the trial, and no dose limiting toxicities were observed. A maximum tolerated dose was not determined, and dose escalation remains ongoing in exploratory cohorts. The Company has selected the 40KE dose for use in subsequent clinical trials. The majority of reported adverse events were Grades 1 and 2 across all dose levels, and treatment-related adverse events, as assessed by study investigators, were in line with typical responses to bacterial immunopotentiation and included fatigue, headache, fever and chills. The most common urinary symptoms were urinary urgency, urinary frequency, urinary tract pain/burning, incomplete emptying, and bladder spasm. Most bladder irritations resolved soon after administration, or in a few hours to a few days. A total of nine patients were enrolled in the study, including three patients with CIS that reached the three-month efficacy assessment. Of those three patients with CIS, one heavily pre-treated BCG-unresponsive patient achieved a complete response (CR) at the 20KE dose, and tumor regression was observed in the other two patients.
The ongoing open-label expansion trial, or ADVANCED-1EXP, is evaluating intravesical TARA-002 at the 40KE dose in 12 CIS patients, including BCG-naïve, BCG-unresponsive, and BCG-inadequately treated patients.
Based on the preliminary results of ADVANCED-1, we are advancing the clinical development of TARA-002 for the treatment of NMIBC. We plan to initiate ADVANCED-2, a Phase 1b/2 open-label trial evaluating intravesical TARA-002 in up to 102 patients with high-grade CIS. The Phase 1b trial is expected to enroll 27 patients with CIS (± Ta/T1), BCG-Naïve or BCG-experienced, who have not received intravesical BCG for at least 24 months prior to CIS diagnosis. The Phase 2 trial is expected to enroll 75 patients with BCG-unresponsive CIS (± Ta/T1). ADVANCED-2 is expected to initiate in the second half of 2023.
In addition, we continue to conduct pre-clinical studies on TARA-002 to better characterize the mechanism of action to help us understand how TARA-002 may perform in potential combinations with other agents used to treat NMIBC. We use pre-clinical data to help us define other cancer targets for TARA-002, both within the urothelial cancer space and other types of cancer affecting different parts of the body.
We are also pursuing TARA-002 in LMs, which are rare, non-malignant cysts of the
lymphatic vascular system that primarily form in the head and neck region of
children before the age of two. In
STARBORN-1 is a Phase 2 single-arm, open-label, prospective clinical trial to evaluate the safety and efficacy of intracystic injection of TARA-002 for the treatment of macrocystic and mixed cystic LMs (? 50% macrocystic disease) in participants six months to less than 18 years of age. Following completion of an age de-escalation safety lead-in, the trial will enroll approximately 30 patients who will receive up to four injections of TARA-002 spaced approximately six weeks apart.
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The primary endpoint of the trial is the proportion of participants with macrocystic LMs and mixed cystic LMs who demonstrated clinical success, defined as having either a complete response (90% to 100% reduction from baseline in total LM volume) or substantial response (60% to less than 90% reduction in total LM volume) eight weeks after the last injection, as measured by axial imaging. Trial start-up activities are well underway in the 10 pediatric centers of excellence participating in the trial and initiation is expected in the fourth quarter of 2023.
The third development program in our portfolio is intravenous, or IV, Choline
Chloride, an investigational phospholipid substrate replacement therapy,
initially in development for patients receiving parenteral nutrition, or PN, who
have intestinal failure associated liver disease, or IFALD. IV Choline Chloride
has been granted Orphan Drug Designation by the FDA for this indication and has
also been granted Fast Track Designation for the treatment of IFALD. We are
conducting a two-part prevalence study to enhance our understanding of the PN
patient population. The first part of the prevalence study was completed in
We have devoted substantial efforts to the development of these programs and do not have any approved products and have not generated any revenue from product sales. TARA-002 has not yet been approved for use for treatment of NMIBC, LMs or any other indications. We do not expect to generate revenues in the near-term, and it is possible we may never generate revenues in the future. To finance our current strategic plans, including the conduct of ongoing and future clinical trials and further research and development costs, we will need to raise additional capital.
Since inception, we have incurred significant operating losses. As of
As a clinical-stage company, our expenses and results of operations are likely to fluctuate significantly from quarter-to-quarter and year-to-year. We believe that our period-to-period comparisons of our results of operations should not be relied upon as indicative of our future performance.
As of
COVID-19 and Related Macroeconomic Conditions
The COVID-19 pandemic and related macroeconomic conditions, such as supply chain shortages, inflation and economic volatility have, and any future global public health crisis may have, an impact on our results of operations. We will continue to monitor whether such conditions would have a material impact on our operations, liquidity and capital resources. Further, rising inflation has, in part, caused a disruption in the capital markets, which may lead to a recession or market correction that could impact our access to capital, and could in the future negatively affect our liquidity. A recession or market correction, continued supply chain disruptions and/or inflation could materially affect our business and the value of our common stock.
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Financial Overview
Research and Development
Research and development expenses consist primarily of costs incurred for the development of TARA-002 and IV Choline Chloride, which include employee-related expenses, including salaries, benefits, travel and stock-based compensation expense, expenses incurred under agreements with clinical research organizations, or CROs, contract development and manufacturing organizations, or CDMOs, the cost of acquiring, developing and manufacturing clinical trial materials, clinical and non-clinical related costs, costs associated with regulatory operations and facilities, depreciation and other expenses, which include expenses for rent and maintenance of facilities and other supplies.
General and Administrative
General and administrative expenses consist principally of employee-related
expenses, including salaries, benefits, travel and stock-based compensation
expense, in executive and other administrative functions. Other general and
administrative expenses also include professional fees for legal, intellectual
property matters, consulting and accounting services, facility related costs, as
well as expenses related to audit, legal, regulatory and tax-related services
associated with maintaining compliance with our Nasdaq listing and
Other Income (Expense), net
Interest and investment income consists of interest income on our cash, cash equivalents and marketable debt securities, accretion of investment discounts and amortization of investment premiums.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial position and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in
Our critical accounting policies are the accounting for accrued research and development expenses, income taxes and the valuation of deferred tax assets.
We record accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are significant components of research and development expenses. A substantial portion of our ongoing research and development activities are conducted by third-party service providers. We accrue costs incurred under these third-party arrangements based on estimates of actual work completed in accordance with the respective agreements. We determine the estimated costs to accrue through discussions with internal personnel and our external service providers as to the percentage of completion of the services and the agreed-upon fees to be paid for such services. Payments made to third parties under these arrangements in advance of performance of the related services are recorded as prepaid expenses until the services are rendered.
It is important that the discussion of our operating results that follow be read
in conjunction with these critical accounting policies which have been disclosed
in our Annual Report on Form 10-K filed with the
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Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
For The
Three Months Ended Period-to-
March 31, Period
2023 2022 Change
Operating expenses:
Research and development $ 5,143 $ 5,269 $ (126 )
General and administrative 4,589 5,605 (1,016 )
Total operating expenses 9,732 10,874 (1,142 )
Loss from operations (9,732 ) (10,874 ) 1,142
Other income (expense), net:
Interest and investment income 687 119 568
Other income (expense), net 687 119 568
Net Loss $ (9,045 ) $ (10,755 ) $ 1,710 Research and Development Expenses. During the three months ended
General and Administrative Expenses. During the three months ended
Other Income (Expense), Net. During the three months ended
Liquidity and Capital Resources
Overview
As of
We are in the business of developing biopharmaceuticals and have no current or near-term revenues. We have incurred substantial clinical and other costs in our drug development efforts. We will need to raise additional capital in order to fully realize management's plans.
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We believe that our current financial resources, as of the date of the issuance of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, are sufficient to satisfy our estimated liquidity needs for at least twelve months.
As a result of volatility in the capital markets, economic conditions, general global economic uncertainty, political change, global pandemics, and other factors, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty or other factors, we may need to curtail planned development activities. Specifically, rising inflation, which is in part, tied to the impacts of the COVID-19 pandemic and resulting supply chain disruptions, has, in part, caused a disruption in the capital markets, which may lead to a recession or market correction that could impact our access to capital, and could in the future negatively affect our liquidity. A recession or market correction, continued supply chain disruptions and/or inflation could materially affect our business and the value of our common stock. Further, recent rises in interest rates have had, and may continue to have, a negative effect on market prices for common stock of public companies, especially those in the pharmaceutical industry and those that have no current or near-term revenue. Further increases in interest rates, which have been implemented, and may be further implemented, to counteract inflationary pressures, may continue to exacerbate this issue.
Cash Flows
The following table summarizes our sources and uses of cash for the three months
ended
For The
Three Months Ended Period-to-
March 31, Period
2023 2022 Change
Net cash used in operating activities $ (12,888 ) $ (10,961 ) $ (1,927 )
Net cash provided by/(used in) investing activities 9,860 745 9,115
Net cash used in financing activities (64 ) (72 ) 8
Net decrease in cash and cash equivalents, and (3,092 7,196
restricted cash $ ) $ (10,288 ) $
Comparison of the Three Months Ended
Net cash used in operating activities was
Net cash provided by investing activities was
Net cash used in financing activities was approximately
Contractual and Other Obligations
Operating lease obligations
Our operating lease obligations primarily consist of lease payments on our
corporate headquarters in
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Other obligations
From time to time, we enter into certain types of contracts that contingently require us to indemnify parties against third-party claims, supply agreements, and agreements with directors and officers. The terms of such obligations vary by contract and in most instances a maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted, thus no liabilities have been recorded for these obligations on our condensed consolidated balance sheet for the periods presented.
We enter into contracts in the normal course of business with CROs, CDMOs, and clinical sites for the conduct of clinical trials, non-clinical research studies, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services. These contracts generally provide for termination on notice, and therefore are cancelable contracts.
Certain of these agreements require us to pay milestones to such third parties upon achievement of certain development, regulatory or commercial milestones as further described in Note 8 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones, which may not be achieved.
We also have obligations to make future payments to third parties that become due and payable on the achievement of certain milestones, including future payments to third parties with whom we have entered into research, development and commercialization agreements. We have not included these commitments on our condensed consolidated balance sheet for the periods presented because the achievement and timing of these milestones is not fixed and determinable.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under the applicable regulations of
the
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