Protara Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023; filed November 3, 2023. Financial statements are unaudited. Dollar amounts below are in millions unless stated otherwise.
Business context
Protara is a clinical-stage biopharmaceutical company developing TARA-002 for non-muscle invasive bladder cancer (NMIBC) and lymphatic malformations (LMs), and IV Choline Chloride for patients receiving parenteral nutrition. The company has no approved products, has never generated revenue, and expects no near-term revenue.
Key financial metrics
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $6.218 | $3.466 | $18.608 | $11.819 |
| General and administrative | $4.482 | $4.508 | $13.964 | $15.734 |
| Total operating expenses | $10.700 | $7.974 | $32.572 | $27.553 |
| Net loss | $9.860 | $7.691 | $30.199 | $26.985 |
| Net loss per share, basic and diluted | $0.87 | $0.68 | $2.67 | $2.40 |
| Interest and investment income | $0.840 | $0.283 | $2.373 | $0.568 |
| Cash used in operating activities | Not separately presented | Not separately presented | $28.857 | $21.431 |
At September 30, 2023, cash and cash equivalents were $33.768 million and marketable debt securities were $40.266 million, totaling approximately $74.0 million. Working capital was approximately $71.0 million; total assets were $88.467 million and stockholders’ equity was $76.956 million. The company reported no borrowings; operating lease liabilities totaled $5.702 million. Profit margins are not meaningful because the company had no revenue and incurred losses.
Material changes versus prior comparable periods
- Q3 operating expenses rose $2.726 million year over year, primarily from a $2.2 million increase in TARA-002 clinical and nonclinical activity. Q3 net loss increased $2.169 million.
- For the first nine months, R&D expense increased $6.789 million, mainly reflecting $6.1 million of additional TARA-002 activity. G&A decreased $1.770 million, primarily from lower employee-related costs and directors’ and officers’ insurance premiums.
- Nine-month net loss increased $3.214 million. Higher interest and investment income, up $1.805 million, partially offset higher operating expenses.
- Cash, cash equivalents and marketable securities declined from $102.256 million at December 31, 2022 to approximately $74.0 million at September 30, 2023. Operating cash use increased $7.426 million year over year.
Outlook, developments and risks
- Management said available financial resources were expected to fund estimated liquidity needs for at least 12 months from issuance of the financial statements. The company also said additional capital will be needed to fully execute its plans; access to financing on acceptable terms is uncertain.
- Protara initiated the Phase 2 ADVANCED-2 trial of TARA-002 in NMIBC in September 2023, targeting up to 102 patients. Management anticipated preliminary data from the ADVANCED-1 expansion trial in the first half of 2024.
- The company reported initiating the Phase 2 STARBORN-1 trial of TARA-002 in pediatric LMs in October 2023. For IV Choline Chloride, it was completing a prospective prevalence study and planned to consider results and FDA feedback in determining next steps.
- Management cited ongoing clinical-development costs and risks, including uncertain trial results, regulatory requirements, patient enrollment, and reliance on third-party manufacturers and clinical research organizations. Macroeconomic conditions, inflation, elevated interest rates, supply-chain disruption and potential difficulty raising capital could affect operations and liquidity.
- Commitments include leases and potential payments under license and collaboration agreements, including milestone and royalty payments. No material adverse outcome was expected from ordinary-course legal matters, and the filing reported no material legal proceedings. No off-balance-sheet arrangements were reported.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of September 30, 2023; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether trial enrollment, safety and efficacy results, and the stated timing for NMIBC and LM data remain on track; preliminary results may change as data mature.
- Whether the approximately $74.0 million in cash and securities supports planned development spending, and when additional financing may be required.
- Progress and regulatory direction for IV Choline Chloride following completion of the prevalence study and FDA discussions.
- Clinical supply, manufacturing capacity, and dependence on CROs, CDMOs and other third parties for development programs.
- Potential dilution and conversion exposure: 7,991 Series 1 preferred shares remained outstanding at quarter-end, each convertible into approximately 1,000 common shares, subject to adjustments; options and RSUs also represent potential dilution.