Item 1A. Risk Factors 31
Item 1B. Unresolved Staff Comments 60
Item 1C. Cybersecurity 60
Item 2. Properties 61
Item 3. Legal Proceedings 61
Item 4. Mine Safety Disclosures 61
PART II
Item 6. Reserved 62
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69
Item 8. Financial Statements and Supplementary Data 70
Item 9A. Controls and Procedures 96
Item 9B. Other Information 96
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 96
PART III
Item 10. Directors, Executive Officers and Corporate Governance 97
Item 11. Executive Compensation 97
Item 14. Principal Accountant Fees and Services 97
PART IV
Item 15. Exhibits and Financial Statement Schedules 98
i
PART
I
FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 10-K, including sections entitled “Business,” “Risk Factors,” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and other materials accompanying this Annual
Report on Form 10-K contain forward-looking statements or incorporate by reference forward-looking statements. Statements, other
than statements of historical facts, contained in this document, including statements regarding our business, operations and
financial performance and conditions, as well as our plans, objectives and expectations for our business operations and financial
performance and condition, are forward-looking statements. These statements relate to future events or to our future financial
performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking statements. In some cases, you can identify these forward-looking statements by terminology such as
“believes,” “expects,” “potential,” “continues,” “may,”
“will,” “should,” “seek,” “approximately,” “predict,”
“intend,” “plans,” “estimates,” “anticipates” or the negative version of these
terms or other comparable terminology.
These
forward-looking statements include, but are not limited to, statements about:
● expectations regarding the safety and efficacy of our product candidates;
● expectations regarding the timing, costs and outcomes of our clinical trials;
● expectations regarding potential market size;
● developments and projections relating to our competitors and industry;
● our ability to remain listed on the Nasdaq Capital Market, or Nasdaq;
● the impact of government laws and regulations;
● the timing or likelihood of regulatory filings and approvals;
● our ability to protect our intellectual property position; and
We
undertake no obligation to update or revise any of the forward-looking statements contained in this Annual Report on Form 10-K after
the date of this report, except as required by law or the rules and regulations of the U.S. Securities and Exchange Commission, or SEC.
We caution readers not to place undue reliance on forward-looking statements. Our actual results could differ materially from those discussed
in this Annual Report on Form 10-K. The forward-looking statements contained in this Annual Report on Form 10-K, and other written and
oral forward-looking statements made by us from time to time, are subject to certain risks and uncertainties that could cause actual
results to differ materially from those anticipated in the forward-looking statements, including the risks, uncertainties and assumptions
identified under the heading “Risk Factors” in this Annual Report on Form 10-K.
1
SUMMARY
OF RISKS AFFECTING OUR BUSINESS
Below
is a summary of the principal factors that make an investment in our securities speculative or risky. This summary does not address all
of the risks that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, and other risks
and uncertainties that we face, are set forth in Part I, Item 1A, Risk Factors, and should be carefully considered, together with other
information in this Annual Report on Form 10-K and our other filings with the SEC before making investment decisions regarding our securities.
● We have a limited operating history and have never generated any revenues.
2
Item
1. Business.
Overview
We
are a New York City based clinical-stage biopharmaceutical company committed to advancing transformative therapies for the treatment
of cancer and rare diseases. We were founded on the principle of applying modern scientific, regulatory or manufacturing advancements
to established mechanisms in order to create new development opportunities. We prioritize creativity, diverse perspectives, integrity
and tenacity to expedite our goal of bringing life-changing therapies to people with limited treatment options.
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 Japanese Ministry of Health and Welfare as an immunopotentiating cancer
therapeutic agent. This cell therapy is currently approved in Japan and Taiwan for LMs and multiple oncologic indications. We have secured
worldwide rights to the asset excluding Japan and Taiwan and are exploring its use in oncology and rare disease indications. TARA-002
was developed from the same master cell bank of genetically distinct group A Streptococcus pyogenes as OK-432 (marketed as Picibanil®
in Japan and Taiwan by Chugai Pharmaceutical Co., Ltd., or Chugai Pharmaceutical). We are currently developing TARA-002 in non-muscle
invasive bladder cancer, or NMIBC, and in LMs.
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 the United States, with NMIBC representing approximately
80% of bladder cancer diagnoses. Approximately 65,000 patients are diagnosed with NMIBC in the United States each year. Very few new
therapeutics have been approved for NMIBC since the 1990s and the current standard of care for NMIBC includes intravesical Bacillus Calmette–Guérin,
or BCG. The mechanism of action of TARA-002 is similar in some ways to that of BCG. TARA-002 and BCG are both intravesically administered,
elicit a Th1 type immune response and produce a locally-activated generally similar array of cytokines and immune cells.
We
are conducting a Phase 1 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 weight of dried cells in vial). The primary objective of the trial is to evaluate
the safety, tolerability and preliminary signs of anti-tumor activity of TARA-002, with the goal of establishing a recommended Phase
2 dose. In April 2023, we announced positive preliminary data from the Phase 1a dose escalation component of the ongoing ADVANCED-1 trial
through the 40KE dose, in which TARA-002 indicated favorable tolerability and anti-tumor activity in NMIBC patients. A maximum tolerated
dose was not determined, and dose escalation remains ongoing in exploratory cohorts.
3
Preliminary data from the
ADVANCED-1 trial suggested that intravesical TARA-002 was generally well tolerated at the three dose levels evaluated in the initial phase
of the trial, and no dose limiting toxicities were observed. 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 dose escalation portion of the study through the 40KE dose. Of those, three patients with CIS,
one of whom was a heavily pre-treated BCG-unresponsive patient, achieved a complete response at the 20KE dose, and tumor regression
was observed in the other two patients. Results from six patients with high-grade, non-invasive papillary, or HGTa, tumors showed five
of six patients with high-grade recurrence free survival, or HGRFS, at week 12. The patient who did not achieve HGRFS was dosed at 10KE,
the lowest dose of TARA-002 offered in the trial.
The ongoing open-label expansion trial, or ADVANCED-1EXP, is evaluating
intravesical TARA-002 at the 40KE dose in up to 12 CIS patients, including BCG-naïve, BCG-unresponsive, and BCG-inadequately treated
patients. Dosing is progressing in the trial, and we anticipate having preliminary data from this trial in the first half of 2024.
Based on the preliminary
results of ADVANCED-1, we are proceeding with the clinical development of TARA-002 for the treatment of NMIBC. In September 2023, we
initiated ADVANCED-2, a Phase 2 open-label trial evaluating intravesical TARA-002 in at least 102 patients with high-grade CIS. Cohort
A of the Phase 2 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. Cohort B of the Phase 2 trial is expected to enroll 75-100 patients with
BCG-unresponsive CIS (± Ta/T1). The Company expects to share preliminary results from a pre-planned risk-benefit analysis of the
ongoing Phase 2 open-label ADVANCED-2 trial in the second half of 2024. The analysis is expected to include approximately 10 patients
who are six-month evaluable.
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 urothelial cancer 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 July 2020,
the FDA granted Rare Pediatric Disease designation for TARA-002 for the treatment of LMs and in May 2022 the European Medicines Agency
granted orphan drug designation to TARA-002 for the treatment of LMs. In addition to the clinical experience in Japan, we have secured
the rights to a dataset from one of the largest ever conducted Phase 2 trials in LMs, in which OK-432 was administered via a compassionate
use program led by the University of Iowa to over 500 pediatric and adult patients. We have an investigational new drug application for
LMs with the Vaccines and Related Products Division of the FDA, or Vaccines Division.
In October
2023, we initiated 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. Including
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.
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) as measured by axial imaging.
The third development program in our portfolio is intravenous, or IV,
Choline Chloride, an investigational phospholipid substrate replacement therapy, for patients receiving parenteral nutrition, or PN. The
FDA has granted IV Choline Chloride Orphan Drug Designation for the prevention of choline deficiency in PN patients. We have conducted
a two-part prevalence study to enhance our understanding of the PN patient population. The first, or retrospective, part of the prevalence
study was completed in September 2021, when we reported results that supported that there was a significant unmet medical need in patients
dependent on PN. We have concluded the second, or prospective part, of the prevalence study, which is a multi-center, cross-sectional
observational study that assessed the prevalence of choline deficiency in patients dependent on PN. We shared these results with the FDA
to inform our discussion on next steps for the IV Choline Chloride program. There are currently no IV formulations of choline available
or in development for PN patients.
4
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. Neither TARA-002 nor IV Choline Chloride have
been approved for use for any 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. See “Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Liquidity and Capital Resources” for additional information about our liquidity
and capital resource needs.
Our
Product Candidate Pipeline
The
following chart summarizes the current status of our product candidate pipeline:
* TARA-002 Granted Rare Pediatric Disease Designation for the treatment of LMs
** Granted Orphan Drug Designations by the U.S. FDA
Our
Corporate Strategy:
We
are an oncology and rare disease company focused on applying modern scientific advancements to established mechanisms to deliver efficient
de-risked clinical programs. Leveraging the drug development and commercialization experience of our management team, our goal is to
build a leading biopharmaceutical company focused on bringing life-saving therapies to patients with significant unmet needs. Our current
key initiatives are listed below:
1.
Progress clinical program supporting TARA-002 for the treatment of NMIBC
Complete the ongoing Phase
1 expansion ADVANCED-1EXP clinical trial to further assess the safety and tolerability of TARA-002 in patients with high-grade NMIBC, and progress
the Phase 2 ADVANCED-2 clinical trial to assess the safety and anti-tumor activity of TARA-002 in both BCG-unresponsive and BCG-naïve
NMIBC patients with CIS.
2.
Progress the Phase 2 clinical trial of TARA-002 in patients with macrocystic and mixed-cystic LMs
Based on the robust dataset for the originator product OK-432 in LMs
and the full Clinical Study Report, or CSR, of the randomized Phase 2 clinical trial of OK-432 in LMs led by the University of Iowa, we
are encouraged by the potential for TARA-002 to treat patients with LMs. We initiated the STARBORN-1 Phase 2 trial evaluating TARA-002
in pediatric patients with macrocystic and mixed-cystic LMs and expect to progress the initial safety lead-in cohorts of the trial this
year.
3.
Align with the FDA on the path forward for IV Choline Chloride for patients receiving PN
We continue to engage with
the FDA to define a path forward for IV Choline Chloride, including understanding the requirements for registrational clinical data needed
for a potential NDA filing for approval.
5
4.
Explore opportunities to expand our pipeline of uses for TARA-002 alone and in combination with other therapies
We
are exploring the use of TARA-002 in combination with other therapies and are working to identify additional opportunities to develop
TARA-002 in indications beyond NMIBC and LMs. We are conducting non-clinical experiments and modeling to better characterize the potential
benefits of combination therapy with TARA-002, particularly in NMIBC. In addition, our leadership team has a strong track record of licensing,
acquiring and optimizing product candidates and we intend to leverage this skill set to identify potential combination
opportunities for TARA-002, in NMIBC and other oncology indications. The immunological activity of TARA-002’s originator product,
OK-432, has been effectively interrogated in patients in numerous indications. We plan to continue to carefully evaluate the case reports
and the literature and perform non-clinical characterization studies to better understand the mechanism of action of TARA-002 and its
potential activity in indications beyond NMIBC and LMs in which there is unmet need.
Our
Pipeline
TARA-002
TARA-002,
our lead program, is an investigational cell therapy developed from the master cell line of the same genetically distinct Streptococcus
pyogenes (group A, type 3) Su strain as OK-432, a broad immunopotentiator marketed as Picibanil® in Japan and Taiwan by Chugai Pharmaceutical.
We are using the same regulatory starting materials as OK-432 and manufacture TARA-002 using an updated version of the same proprietary
processes used to manufacture OK-432. We have designated this product candidate as TARA-002 in order to differentiate the regulatory
path in the United States and other geographies from that of OK-432 in Japan.
We
entered into an agreement with Chugai Pharmaceutical in June 2019, as amended in July 2020, to support our development of TARA-002.
The agreement provides us with exclusive access to certain materials and documents relating to OK-432 including the master cell bank
of Streptococcus pyogenes used in the manufacturing of OK-432. Additionally, the agreement provides technical support during a
certain period. We have utilized the materials, proprietary manufacturing process and technical support provided by Chugai
Pharmaceutical to produce TARA-002 at a current Good Manufacturing Practices-, or cGMP-, compliant facility in the United States.
Under the agreement with Chugai Pharmaceutical, we have sole responsibility for the development and commercialization of TARA-002
worldwide, excluding Japan and Taiwan. This agreement is exclusive through June 17, 2030, or following any termination of the
agreement by either party.
In
Japan, OK-432 is indicated for: the treatment of lymphangiomas (lymphatic malformations); the prolongation of survival time in patients
with gastric cancer (postoperative cases) or primary lung cancer in combination with chemotherapy; and the reduction of cancerous pleural
effusion or ascites in patients with lung cancer or gastrointestinal cancer respectively, head and neck cancer (maxillary cancer, laryngeal
cancer, pharyngeal cancer, and tongue cancer) and thyroid cancer that are resistant to other drugs.
We
are developing TARA-002 for the treatment of NMIBC and LMs initially in the United States, and plan to also seek approval in Europe and
other regions in the future and may also explore additional indications where its utility as an immunopotentiator has been hypothesized
to be of therapeutic benefit.
TARA-002
in NMIBC
Disease
Overview
Bladder cancer is the sixth
most common cancer in the United States, with NMIBC representing approximately 80% of bladder cancer diagnoses. NMIBC is cancer found
in the tissue that lines the inner surface of the bladder that has not spread into the bladder muscle. There are three subtypes of NMIBC:
Ta (non-invasive papillary carcinoma), Tis (CIS), and T1 (carcinoma invading the lamina propria). Among the types of NMIBC, Ta accounts
for most NMIBC cases (70%), whereas T1 and CIS account for 20% and 10%, respectively.
There
are approximately 65,000 incident cases of NMIBC in the United States every year, and based upon currently available data we believe
that approximately 45% (approximately 30,000) are made up of High-Grade tumor types that are considered higher risk, and therefore candidates
for immunotherapies, such as TARA-002. In addition, NMIBC has one of the highest rates of recurrence with three-year rate estimated at
up to 80%.
6
Treatment
Treatment for NMIBC is typically targeted to reduce unresectable persistence,
recurrence after resection and to prevent disease progression to muscle-invasive bladder cancer. The initial treatment for NMIBC includes
cystoscopy and complete transurethral resection of the bladder tumor, or TURBT, for papillary Ta or T1, or biopsy for CIS. A single postoperative
instillation of intravesical chemotherapy is recommended in patients with low risk of progression, and for patients with intermediate
and high-risk disease, a longer course of intravesical therapy is administered. The most efficacious intravesical agent to date has been
BCG, a live attenuated form of Mycobacterium bovis. BCG has been the subject of multiple supply shortages in the US in the past
decade due to the inability to meet demand to treat the large population of patients with NMIBC. There has been a significant increase
in bladder cancer recurrence and progression with an escalated number of patients who require cystectomy. As such, with the current BCG
shortage and limited effective alternate therapies or dosing strategies, there continues to be a significant unmet need for treatment
options for patients with NMIBC.
Clinical
Development
We
are currently conducting our ADVANCED-1EXP and ADVANCED-2 clinical trials.
ADVANCED-1EXP,
an open-label expansion trial, is evaluating intravesical TARA-002 at the 40KE dose in up to 12 CIS patients, including BCG-naïve,
BCG-unresponsive, and BCG-inadequately treated patients. Dosing is progressing in the trial, and we anticipate having preliminary data
from the trial in the first half of 2024.
ADVANCED-2
is a Phase 2 open-label trial evaluating intravesical TARA-002 in at
least 102 patients with high-grade CIS. Cohort A of the Phase 2 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. Cohort B of the Phase 2 trial
is expected to enroll 75-100 patients with BCG-unresponsive CIS (± Ta/T1). The Company expects to share preliminary results from
a pre-planned risk-benefit analysis of the ongoing Phase 2 open-label ADVANCED-2 trial in the second half of 2024. The analysis is expected
to include approximately 10 patients who are six-month evaluable.
Preclinical
Development
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. In addition, 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.
Regulatory
Interactions
In
October 2021, we announced that the Office of Tissues and Advanced Therapies Division, or the OTAT Division, of the FDA’s Center
for Biologics Evaluation and Research, or CBER, cleared our Investigational New Drug application for TARA-002 in NMIBC. We have
had ongoing dialogue with the FDA to align on trial design of ADVANCED-1 and ADVANCED-2, as well as the potential combination trial we
may pursue with TARA-002 in NMIBC.
Manufacturing
We manufacture TARA-002 using an equivalent, but modernized, proprietary
manufacturing process as is used to produce OK-432 by Chugai Pharmaceutical, starting with a master cell line propagated by us but utilizing
the same genetically distinct strain of Streptococcus pyogenes (A group, type 3) Su strain as OK-432. We have contracted a cGMP-compliant
contract development and manufacturing organization, or CDMO, to manufacture TARA-002.
7
TARA-002
in LMs
Disease
Overview
The International
Society for the Study of Vascular Anomalies classifies LMs as either macrocystic, microcystic, or mixed-cystic. Macrocystic and microcystic
LMs are differentiated by the size of the fluid-containing portion of the malformation. Macrocystic LMs are characteristically large,
fluid-filled cysts with a thin endothelial lining. Macrocystic LMs are composed of cysts greater than 2 cubic centimeters in size and
present as a soft, fluid-filled swelling beneath normal or slightly discolored skin. Macrocystic LMs are usually located in the antero-lateral
cervical region of the neck; however, it is possible for this type of LM to originate in other areas of the body. In contrast, microcystic
LMs have very limited internal space with a thick irregular endothelial lining. Microcystic LMs are comprised of cysts less than 2 cubic
centimeters in size and are often composed of micro-lymphatic channels that integrate and infiltrate normal soft tissue. Microcystic
LMs can involve both superficial and deep aspects including muscle and bone. Microcystic LMs can thicken or swell causing enlargement
of surrounding soft tissue and bones and can be found on any area of the skin or mucous membrane. Mixed-cystic LMs are comprised of varying
degrees of both macrocystic and microcystic LMs.
While
the exact prevalence of LMs is not known, in the United States, the condition is thought to be present in approximately one in every
4,000 live births and we believe there are approximately 1,400-1,800 LM cases per year.
Treatment
There
are no approved pharmacotherapies for LMs, except in Japan and Taiwan where OK-432 is approved. In these countries, OK-432 has been the
standard of care for LMs for over 25 years.
Treatment
of LMs varies depending on the symptoms and complications that present themselves. The standard of care outside Japan and Taiwan for
the treatment of LMs is either a partial or complete surgical excision of the cysts. While surgery is the standard approach to the treatment
of LMs in the head and neck, the region is a difficult area to operate on because of the large number of important anatomical structures
in the area. Major venous and arterial trunks travel through the neck, as do important nerves. Surgery on such malformations frequently
results in high rates of recurrence and complications including life-long chronic conditions, such as damage to nerves and other important
structures of the head and neck.
Clinical
Development
Historical
Data on OK- 432, predecessor therapy to TARA-002
When TARA-002 is administered, it is hypothesized that innate and adaptive
immune cells within the cyst or tumor are activated and produce a strong immune cascade. Neutrophils, monocytes, and lymphocytes infiltrate
the abnormal cells and various cytokines, including interleukins IL-2, IL-6, IL-10, IL-12, interferon, or IFN,-gamma, and tumor necrosis
factor, or TNF,-alpha are secreted by immune cells to induce a strong inflammatory reaction and destroy the abnormal cells. In concert,
these immune activities induce a strong local inflammatory reaction in the cyst wall, resulting in fluid drainage, shrinkage and fibrotic
adhesion of the cyst.
A randomized, Phase 2 clinical trial led by the University of Iowa
studied the use of OK-432 in patients with LM from 1998 to 2005. Most eligible subjects were between 6 months and 18 years of age with
macrocystic or mixed-cystic LMs (with ≥ 50% macrocytic disease) of the head and/or neck. There were three treatment groups: immediate
treatment, or ITG, delayed treatment, or DTG, and open label treatment group. The immediate treatment group received treatment with OK-432
upon diagnosis. The delayed treatment group received OK-432 treatment following a six-month observation period; the cross-over design
was intended to investigate spontaneous resolution. The open-label treatment group included infants younger than six months of age, adults
older than 18 years of age, patients with LMs involving sites other than the head and neck (such as the axilla, thorax, and extremities),
and patients treated on an emergent basis. The open label treatment group were treated immediately with OK-432. Response to therapy was
measured by quantitating change in lesion size. Clinical success was defined as a complete (90% to 100%) or substantial (60% to 89%) response
to treatment based on radiographically confirmed shrinkage in lesions.
Results
presented in this report were based on a retrospective analysis of source verified data that included the full dataset of subjects enrolled
in the Phase 2 randomized clinical trial between January 1998 and August 2005, including data in the published study (Smith et al. 2009)
that included subjects enrolled between January 1998 and November 2004.
8
Overall,
310 subjects were enrolled with intent to treat: 246 subjects were randomized to the immediate (ITG, N=171) and delayed (DTG, N=75) treatment
groups; 64 subjects were nonrandomized and assigned to the open-label group. Analysis of the primary efficacy endpoint (N=150) demonstrated
clinical success (complete and/or substantial response) in 69% of patients in the ITG 6 months after enrollment, while 7.5% of patients
in the DTG experienced spontaneous regression of a LM during this time interval (p < 0.0001)). When the results were analyzed by lesion
type across all treatment groups, a successful outcome was observed in 84% and 60% of patients with macrocystic and mixed-cystic LM,
respectively. None of the patients with microcystic LM demonstrated clinical success with OK-432 therapy. The results of the retrospective
analysis were consistent with the results observed in the original analysis (Smith et al. 2009).
Figure
1: 69% of patients in the immediate treatment group had a complete or substantial response to OK-432, meeting the primary endpoint, while
7.5% of patients in the delayed treatment group had a complete or substantial response after six months of observation and before treatment.
ǂ Clinical Success was defined as complete or substantial response.
9
Figure
2: patients with radiographically confirmed macrocystic lesions had the greatest likelihood of clinical success and in those patients
with mixed lesions, clinical success was also present.
ǂ Clinical Success was defined as complete or substantial response.
** Results were analyzed by lesion type across all treatment groups.
TARA-002
Clinical Development
We have an open investigational new drug application, or IND, for LMs
with the Vaccines and Related Products Division of the FDA, or Vaccines Division. In October 2023, we initiated the STARBORN-1 trial,
a Phase 2 single arm, open-label clinical trial to evaluate the safety and efficacy of TARA-002 in pediatric patients with macrocystic
and mixed-cystic LMs. The trial design includes a safety lead-in phase followed by an expansion phase.
Historical
Safety Profile on OK-432, predecessor therapy to TARA-002
The
most common adverse events with treatment with OK-432 were local injection site reactions, fever, fatigue, and decreased appetite, with
resolution within two weeks. Treatment emergent serious adverse events or SAEs, (treatment emergent SAEs are defined as any SAE occurring
or worsening on or after the first dose of study drug and within 35 days after the last dose of study drug) associated with OK-432 treatment
were reported in 4.1% of patients, with the most severe events being airway obstruction and facial paralysis due to massive swelling
post-injection that required tracheostomy and hospitalization. Both of these events were reported as resolved.
The
safety findings from the sponsor-conducted retrospective analysis are consistent with the original analysis reported in Smith et al.
2009, and with safety data in published studies in approximately 865 patients with LMs after treatment with OK-432.
Historical
Preclinical Development on OK-432, predecessor therapy to TARA-002
A
comprehensive preclinical development program for OK-432, including in vitro and in vivo pharmacology and toxicology studies,
was conducted by Chugai Pharmaceutical to support the filing of a NDA with the Japan Pharmaceuticals and Medical Devices Agency. We believe
these studies may help inform the design of a development plan for TARA-002 in LMs.
10
Regulatory Interactions
In
July 2020, the FDA granted Rare Pediatric Disease designation for TARA-002 for the treatment of LMs. The FDA grants Rare Pediatric Disease
designation for serious diseases that primarily affect children ages 18 years or younger and fewer than 200,000 persons in the United
States. Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, a sponsor who receives an approval of a NDA or
BLA for a product for the prevention or treatment of a rare pediatric disease may be eligible for a voucher, which can be redeemed to
obtain priority review for any subsequent marketing application or may be sold or transferred.
The robust dataset for OK-432 in LMs has informed our development of
TARA-002. At the FDA’s request, we submitted the full CSR of the randomized Phase 2 clinical trial of OK-432 in LMs led by the University
of Iowa to our open IND with the Vaccines Division. We incorporated feedback from the Vaccines Division on the protocol for our ongoing
Phase 2 clinical trial evaluating TARA-002 in LMs.
Manufacturing
We manufacture TARA-002 using an equivalent, but modernized, proprietary
manufacturing process as is used to produce OK-432 by Chugai Pharmaceutical, starting with a master cell line propagated by us but utilizing
the same genetically distinct strain of Streptococcus pyogenes (A group, type 3) Su strain as OK-432. We have contracted a cGMP-compliant
CDMO, to manufacture TARA-002.
IV
Choline Chloride for PN Patients
IV
Choline Chloride is an IV substrate therapy in development for patients receiving PN.
Choline is a known important substrate for phospholipids, a source
of methyl groups needed for many steps in metabolism and plays important roles in modulating gene expression, cell membrane signaling,
lipid transport and metabolism, liver health, brain development and neurotransmission, muscle function and bone health. The only way to
reliably replenish choline is through exogenous consumption. Patients receiving PN cannot sufficiently absorb adequate levels of choline
and available PN components do not contain sufficient amounts of choline to correct this deficit. The use of choline for PN patients is
included in key professional medical society recommendations, including the American Society for Parenteral and Enteral Nutrition, or
ASPEN. IV Choline Chloride has been granted Orphan Drug Designation, or ODD, by the FDA for the prevention of choline deficiency in PN
patients.
We
have entered into a license agreement with Dr. Alan Buchman for exclusive rights to the IND, ODD and other regulatory assets related
to IV Choline Chloride, as well as exclusive rights to the data from previously conducted Phase 1 and Phase 2 clinical trials led by
Dr. Buchman.
The
results of Dr. Buchman’s randomized, controlled, Phase 2 clinical trial demonstrated that treatment with IV Choline Chloride resulted
in normalization of plasma-free choline concentrations, improvement of hepatic steatosis, and statistically significant improvement in
cholestasis in patients dependent on PN.
Disease Overview
PN is a medication used to manage and treat malnourishment and is
indicated when there is impaired gastrointestinal function and contraindications to enteral nutrition. Currently, PN typically consists
of carbohydrate (typically derived from dextrose), fat (lipid emulsion with essential fatty acids), protein (in the form of a balanced
free amino acid solution), electrolytes, trace elements, and most vitamins and essential nutrients known to be required by the human
body, with the notable exception of choline. The American Society for Parenteral and Enteral Nutrition and the Academy of Nutrition and
Dietetics’ Dietitians in Nutrition Support both recommend that choline be required in PN products (Vanek et al., 2012); however,
there are currently no FDA approved intravenous choline chloride products. Humans can produce choline endogenously in the liver, but
the amount that the body naturally synthesizes is not sufficient to meet human needs, making it an essential nutrient. As a result, humans
must obtain choline from their diets. The development of IV Choline Chloride is intended to restore circulating choline to physiologic
concentrations in patients who are dependent on PN.
Clinical
Development
In
Dr. Buchman’s Phase 2 randomized, double-blind, controlled 24-week clinical trial, patients (n=15) receiving nightly PN for >
85% of their nutritional needs (for at least 12 weeks prior to entry) were randomized to receive via IV infusion (10-12 hours) their
usual PN with placebo (n = 8), or PN to which 2g IV Choline Chloride was added (n = 7).
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In
the IV Choline Chloride group, mean choline levels were within or greater than the estimated normal range (i.e., 6.7 to 26.9 nmol/mL)
throughout the 24-week trial and quickly returned to baseline levels when treatment was discontinued.
Preclinical
Development
Table
1. Preclinical Studies Conducted by us for IV Choline Chloride
Study Type Brief Description
Evaluation of Transporter Inhibition by Choline Chloride in Caco-2 Cells
Evaluation of Cytochrome P450 Induction by Choline Chloride in Human Hepatocytes
Evaluation of Transporter Inhibition by Choline Chloride in Caco-2 Cells
Assessment of Choline as a Substrate of Human BSEP Mediated Transport
GLP Combined Single-dose IV Neurobehavioral and Respiratory Study
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Regulatory
Interactions
We continue to engage with the FDA and plan to use both regulatory
feedback and results from the prevalence study to inform next steps for the IV Choline Chloride development program.
Manufacturing
We have contracted a CDMO,
to manufacture IV Choline Chloride. Our end-to-end manufacturing of IV Choline Chloride is conducted in the United States by a cGMP-compliant
CDMO.
Collaborations
and License Agreements
Chugai
Agreement
On June 17, 2019, we entered into an agreement, or the Chugai Agreement,
with Chugai Pharmaceutical, a company organized and existing under the laws of Japan. Chugai Pharmaceutical has developed and commercialized
a therapeutic product, OK-432, or Existing Product, in Japan and Taiwan, or the Chugai Territory, and owns and controls certain materials
and documents related to the Existing Product, or the Chugai Materials. Pursuant to the Chugai Agreement, Chugai Pharmaceutical has provided
us with certain materials and documents relating to the Existing Product and has provided certain technical services to us for our development
and commercialization. This pertains to territories other than the Chugai Territory, or the Protara Territory, of a new therapeutic product,
or the New Product or TARA-002, comparable to the Existing Product. Under the Chugai Agreement, Chugai Pharmaceutical will exclusively
provide the Existing Product and Chugai Materials to us and will not provide the Existing Product or Chugai Materials to any third parties
during the Chugai Service Period, other than for medical, compassionate use and/or non-commercial research purposes. Additionally, beginning
on the effective date of the Chugai Agreement and ending on the fifth anniversary of such date or upon the termination of the Chugai Agreement,
whichever comes earlier, Chugai Pharmaceutical will not provide Chugai Materials or technical support to any third-party for the purpose
of development and commercialization in the Protara Territory of a therapeutic product comparable to the Existing Product. We are responsible,
at our sole cost and expense, for the development and commercialization of the New Product in the Protara Territory.
On July 14, 2020, we and Chugai Pharmaceutical entered into an amendment
of the Chugai Agreement, or the Chugai Amendment, with an effective date as of June 30, 2020. The Chugai Amendment extended the date through
which Chugai will exclusively provide the Existing Product and materials to us from June 30, 2020 to June 30, 2021, extended the date
through which Chugai will not provide materials or technical support to any third-party for the purpose of development and commercialization
in a given area from the fifth anniversary to the eleventh anniversary of the original effective date (extended to June 17, 2030), and
provides for further such extensions on the occurrence of certain events and milestones. The Chugai Amendment also provides that, in addition
to the designated fee payable upon the initial indication approval in the Chugai Agreement described below, we will pay Chugai a designated
fee in the low, single digit millions for each additional indication approval.
As
consideration for Chugai Pharmaceutical’s performance under the Chugai Agreement, we agreed to pay Chugai Pharmaceutical a payment
in the low, single-digit millions, which will be made in two installments with an initial payment made in July 2020, and the remaining
majority of the total amount will be payable upon FDA approval of the New Product.
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We granted Chugai Pharmaceutical a right of first refusal on terms
to be negotiated between the parties for a license related to the New Product-relevant information, data and documentation and inventions
to develop and commercialize the New Product in the Chugai Territory. We will be responsible for manufacturing and supplying, or causing
our CDMO to manufacture and supply, the New Product to Chugai Pharmaceutical.
The
Chugai Agreement will remain in full force and effect until the first anniversary of the date of FDA approval of the New Product, unless
terminated sooner, or the Chugai Term. Following the Chugai Service Period and during the Chugai Term, Chugai Pharmaceutical may terminate
the Chugai Agreement, in whole or in part, without cause, by providing us 90 days prior written notice. Following such termination, we
would maintain exclusive access to Chugai Materials, subject to the termination clauses outlined below. We may terminate the Chugai Agreement,
in whole only, by providing Chugai Pharmaceutical 90 days’ prior written notice if (i) we decide to discontinue the New Product
development; (ii) we decide that the FDA’s requirements for the New Product are not likely to be met; or (iii) the FDA identifies
a safety issue regarding the New Product.
In
addition, either party may terminate the Chugai Agreement, in whole or in part, in the event that the other party materially breaches
the Chugai Agreement and fails to cure the breach within 30 days of written notice. Either party may terminate the Chugai Agreement in
its entirety immediately upon notice to the other party if such other party: (i) is dissolved or liquidated or takes any corporate action
for such purpose; (ii) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due; (iii) files or
has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject to any proceeding under any domestic
or foreign bankruptcy or insolvency laws; (iv) makes or seeks to make a general assignment for the benefit of creditors; or (v) applies
for or has a receiver, trustee, custodian or similar agent appointed by order of any court to take charge of or sell any material portion
of its property or business.
In
the event that we undergo a change of control, Chugai Pharmaceutical may terminate the Chugai Agreement upon 90 days’ written notice
to us, absent a written pledge by the new controlling party of its agreement to fulfill and undertake all obligations of ours and to
be bound by the Chugai Agreement.
Sponsored
Research and License Agreement
On
November 28, 2018, we entered into a sponsored research and license agreement, or the Research Agreement, with The University of Iowa,
or the University, pursuant to which the University will provide access to certain program data related to Chugai Pharmaceutical’s
OK-432 and will assist us in conducting certain clinical studies. As consideration for the University’s performance under the Research
Agreement, we will pay the University $30,000 per year in funding for the project, taking into consideration the time spent by University
employees required for the Project. The parties also agree to discuss in good faith potential additional funding required for completion
of the project pursuant to the Research Agreement as applicable and necessary. In addition, within 45 days of approval of the TARA-002
BLA by the FDA, we will pay a one-time approval milestone to the University, the amount of which depends on the usefulness of the program
data in TARA-002’s BLA filing, and the milestone amount will range from $0 to $1 million. We will also be responsible for certain
tiered royalties on annual net sales of products for the indication, which royalty rates are in the low single digit percentages. These
royalty rates are also subject to a reduction in the event that regulatory authorities determine that the program data is not sufficient
for regulatory approval on its own and additional pediatric efficacy and safety clinical studies are required. In the event that the
annual net sales surpass certain dollar amount thresholds, we will need to make certain additional milestone payments following the close
of the calendar quarter in which each milestone is reached, with the payments ranging from $62,500 to $125,000.
We
may terminate the Research Agreement upon 30 days’ prior written notice to the University. Either party may terminate the project
under the Research Agreement and all commitments and obligations with respect thereto upon 30 days’ prior written notice to the
other party. In the event of any termination of the project under the Research Agreement by the University, (a) the University agrees
to complete certain phases of the project and (b) we will continue to provide annual funding until the completion of the second phase
of the project. Upon termination of the project by us, the Agreement will terminate and we will reassign to the University the IND for
LMs.
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Choline
License Agreement
On
September 27, 2017, we entered into a choline license agreement, or the Choline Agreement, with Alan L. Buchman, M.D., pursuant to which
Dr. Buchman granted us an exclusive, worldwide, non-transferable license in and to certain licensed orphan designations, a certain licensed
IND, certain existing study data and certain licensed know-how to develop, make, use, sell, offer for sale and import the licensed product
during the term of the Choline Agreement. We are solely responsible for all fees and expenses under the Choline Agreement, including
all due diligence obligations, regulatory authority fees, attorney fees and consulting fees. During the term of the Choline Agreement,
Dr. Buchman may not work with any third parties on any product competing with the licensed product. In consideration for the rights and
licenses granted under the Agreement, we made an initial upfront payment of $50,000 to Dr. Buchman.
Certain
milestone and royalty payments may also be payable to Dr. Buchman. Pursuant to the Choline Agreement, we paid Dr. Buchman $50,000 in
October 2019 because we had not received at least $5 million in working capital from any source or in any manner as of October 15, 2019.
We then paid Dr. Buchman a $550,000 milestone in January 2020 following our receipt of at least $5 million in working capital.
Regardless
of whether development or commercialization is undertaken by us under the Choline Agreement, commencing in November 2022 and during the
term of the Choline Agreement, we will pay Dr. Buchman a minimum annual royalty that ranges from $25,000 to $75,000.
We
owe Dr. Buchman sales royalties based on aggregate net sales of IV Choline Chloride in each calendar quarter, with the royalty rates
ranging from 5.0% to 10.5% of net sales. In the event of development or commercialization activity by any sublicensees, we also agreed
to pay Dr. Buchman a royalty in the mid-single digit percentage of (i) net cash receipts, after payment of taxes, received by us from
sublicensees for their sales of licensed products and (ii) any other consideration received by us from such sublicensees; in each case,
including a fair monetary value for any transaction that is not a bona fide arms-length transaction or that is for consideration other
than monetary. Further, in the event of a sale or transfer of a priority review voucher regarding the license product, regardless of
whether any development or commercialization activity is undertaken by us or our sublicensees, we agreed to pay Dr. Buchman a milestone
payment representing the mid-single digit percentage of (i) net cash receipts, after payment of taxes and (ii) any other consideration;
in each case, received by us, our affiliates, or our sublicensees, including a fair monetary value for any transaction that is not a
bona fide arms-length transaction or that is for consideration other than monetary.
We
will also pay Dr. Buchman up to $775,000 in additional milestone payments upon the achievement of various regulatory approval milestones.
The
Choline Agreement will remain in full force and effect until the last sale of the licensed product under the Choline Agreement. After
we received the FDA’s written minutes from the initial FDA meeting concerning the development of the first licensed product for
one or more of the licensed indications, we paid an additional payment of $100,000 to Dr. Buchman and elected not terminate the Choline
Agreement at that time. The Choline Agreement may be terminated by Dr. Buchman if, following regulatory approval of a licensed product,
we have not made our first sale of a licensed product within such country within a specified time period. We may terminate the Choline
Agreement for convenience upon 90 days’ prior written notice to Dr. Buchman. Dr. Buchman may terminate the Choline Agreement for
non-payment of any payment due that has not been cured. Either party may terminate the Choline Agreement if the other party is in material
breach and has not cured such breach within 60 days’ notice. In addition, Dr. Buchman may terminate the Choline Agreement upon
60 days’ prior written notice if (a) we cease or threaten to cease to carry on our business; (b) a petition or resolution for the
making of an administration order or for the bankruptcy, winding-up or dissolution of us is presented or passed; (c) we file a voluntary
petition in bankruptcy or insolvency; (d) a receiver or administrator takes possession of our assets or (e) any similar procedure is
commenced against us in the United States.
License
Agreement
On December 22, 2017, we entered into a license agreement, or the License
Agreement, with The Feinstein Institute for Medical Research, a not-for-profit corporation organized and existing under the laws of New
York, or the Institute. The Institute owns, by assignment, a U.S. patent related to the treatment of fatty liver disease in humans. Pursuant
to the License Agreement, the Institute granted us an exclusive, worldwide license, with the right to grant sublicenses to non-affiliate
third parties, to develop, make, have made, use, sell, offer for sale and import certain products for use in the field of fatty liver
disease in humans receiving total parenteral nutrition, by administering, as monotherapy, a pharmaceutical composition comprising intravenous
choline, wherein the fatty liver disease is selected from intestinal failure-associated liver disease, or IFALD, non-alcoholic fatty liver,
non-alcoholic steatohepatitis, or NASH, NASH-associated liver fibrosis, or non-alcoholic cirrhosis. Notwithstanding the exclusive rights
granted to us, the Institute will retain the right to make, use and practice such patents in its own laboratories solely for non-commercial
scientific purposes and for continued non-commercial research.
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As
consideration for the license grant, we agreed to pay the Institute tiered royalties of between 1.0% and 1.5% of all net sales. In addition,