TARA US Equity☆

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

(Mark

One)

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the fiscal year ended December 31, 2023

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the transition period from to

Commission

File Number: 001-36694

Protara

Therapeutics, Inc.

(Exact

name of registrant as specified in its charter)

345

Park Avenue South

3rd

Floor

New

York, NY

(Address

of Principal Executive Offices)

10010

(Zip Code)

(646)844-0337

(Registrant’s

telephone number, including area code)

Securities

registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

common stock, par value $0.001 per share TARA The Nasdaq Capital Market

Securities

registered pursuant to Section 12(g) of the Act: None

Indicate

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files). Yes ☒ No ☐

Indicate

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller

reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

If

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered

public accounting firm that prepared or issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As

of June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market

value of the registrant’s common stock held by non-affiliates of the registrant was approximately $18.0 million, based on the closing

price of the registrant’s common stock on the Nasdaq Capital Market on June 30, 2023 of $2.39 per share.

As

of March 8, 2024, 11,433,837 shares of the registrant’s common stock, $0.001 par value, were outstanding.

DOCUMENTS

INCORPORATED BY REFERENCE

Portions

of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission by April 29, 2024 are incorporated

by reference into Part III of this report.

PROTARA

THERAPEUTICS, INC.

TABLE

OF CONTENTS

FORM

10-K

For

the Year Ended December 31, 2023

Page

PART I

Item 1. Business 3

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).

11

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

12

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.

13

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