Item 1A. Risk Factors.
You should consider carefully
the following information about the risks described below, together with the other information contained in this Annual Report on Form
10-K and in our other public filings, in evaluating our business. If any of the following risks actually occurs, our business, financial
condition, results of operations, and future growth prospects would likely be materially and adversely affected. In these circumstances,
the market price of our common stock would likely decline.
Risks Related to Our Financial Condition
We have a limited operating history and
have never generated any revenues.
We are a clinical stage biopharmaceutical company with a limited operating
history that may make it difficult to evaluate the success of our business to date and to assess our future viability. Our operations
have been limited to organizing and staffing the Company, business planning, raising capital, developing our pipeline assets (TARA-002
and IV Choline Chloride), identifying product candidates, and other research and development. We have no products approved for commercial
sale and have not generated any revenue from commercial product sales. Although our employees have made regulatory submissions and conducted
successful clinical trials in the past across many therapeutic areas while employed at other companies, we have not yet demonstrated an
ability to successfully complete registrational clinical trials and have never completed the development or commercialization of any product
candidate, nor have we ever generated any revenue from product sales or otherwise. Consequently, we have no meaningful operations upon
which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had
a longer operating history or a history of successfully developing and commercializing biopharmaceutical products.
We expect to incur significant expenses
and significant losses for the foreseeable future and may never generate revenue or achieve or maintain profitability.
Investment in biopharmaceutical
product development is highly speculative because it entails substantial upfront capital and significant risk that a product candidate
will fail to gain regulatory approval or become commercially viable. We have never generated any revenues, and cannot estimate with precision
the extent of our future losses. We expect to incur increasing levels of operating losses for the foreseeable future as we execute on
the plan to continue research and development activities, including the ongoing and planned clinical development of our product candidates,
potentially acquire new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved product
candidates, hire additional personnel, protect our intellectual property, and incur the additional costs of operating as a public company.
We expect to continue to incur significant and increasing operating losses and negative cash flows for the foreseeable future. These losses
have had and will continue to have an adverse effect on our financial position and working capital.
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To become and remain profitable,
we must develop or acquire and eventually commercialize a product with significant market potential. This will require us to be successful
in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval, manufacturing,
marketing and selling any product candidate for which we obtain marketing approval, and satisfying post-marketing requirements, if any.
We may never succeed in these activities and, even if we succeed in obtaining approval for and commercializing one or more products, we
may never generate revenues that are significant enough to achieve profitability. In addition, as a young business, we may encounter unforeseen
expenses, difficulties, complications, delays and other known and unknown challenges. Furthermore, because of the numerous risks and uncertainties
associated with biopharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses
or when, or if, we will be able to achieve profitability. If we achieve profitability, we may not be able to sustain or increase profitability
on a quarterly or annual basis and may continue to incur substantial research and development and other expenditures to develop and market
additional product candidates. Our failure to become and remain profitable would decrease the value of us and could impair our ability
to raise capital, maintain our research and development efforts, expand the business or continue operations. A decline in our value could
also cause you to lose all or part of your investment.
We will need to
raise additional financing in the future to fund our operations, which may not be available to us on favorable terms or at all.
We
will require substantial additional funds to conduct the costly and time-consuming preclinical studies and clinical trials necessary to
pursue regulatory approval of each current and future product candidate and to continue the development of TARA-002 and IV Choline Chloride,
including in new indications or uses. Our future capital requirements will depend upon a number of factors, including: the number and
timing of current and future product candidates in the pipeline; progress with and results from preclinical testing and clinical trials;
the ability to manufacture sufficient drug supplies to complete preclinical and clinical trials; the costs involved in preparing, filing,
acquiring, prosecuting, maintaining and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining
regulatory approvals and favorable reimbursement or formulary acceptance. Raising additional capital may be costly or difficult to obtain
and could significantly dilute stockholders’ ownership interests and divert our management’s focus on achieving our business
objectives. As a result of economic conditions, general global economic uncertainty, U.S. and foreign political conditions, and other
factors, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional
capital on reasonable terms. Further, in recent years, rising inflation, in part, caused a disruption in the capital markets and an increase
in interest rates. Despite recent declines in interest rates, further inflation and/or the continuation of elevated interest rates may
lead to a recession or market correction that could impact our access to capital, increase the cost of capital, and could in the future
negatively affect our liquidity. A recession or market correction, inflation and/or increases in interest rates could materially affect
our business and the value of our common stock.
In
April 2024, we entered into a Subscription Agreement to sell (i) 9,143,380 shares of common stock, (ii) pre-funded warrants to purchase
1,700,000 shares of common stock, or the April 2024 Pre-Funded Warrants, and (iii) warrants to purchase an aggregate of 10,843,380 shares
of common stock, or the Common Warrants. The April 2024 Pre-Funded Warrants are immediately exercisable upon issuance at an exercise price
of $0.001 per share and do not expire. The Common Warrants are exercisable upon issuance at an exercise price of $5.25 per share and may
be exercised at any time on or prior to the earlier of (i) April 10, 2027 and (ii) the date that is 90 days after the public announcement
that the Company has demonstrated a six-month complete response rate of minimum 42% from at least 25 BCG-Unresponsive patients in the
ADVANCED-2 (Cohort B) clinical trial.
In
December 2024, we entered into an underwriting agreement, or the Underwriting Agreement, to sell (i) 13,690,000 shares of common stock,
and (ii) pre-funded warrants to purchase 2,325,372 shares of common stock, or the December 2024 Pre-Funded Warrants and together with
the April 2024 Pre-Funded Warrants, the Pre-Funded Warrants. In January 2025, the underwriters partially exercised their option to purchase
a portion of the 2,402,305 additional shares of common stock pursuant to the Underwriting Agreement. The December 2024 Pre-Funded Warrants
are immediately exercisable upon issuance at an exercise price of $0.001 per share and do not expire.
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If
we raise additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences
that adversely affect the rights of our common stockholders. Further, to the extent that we raise additional capital through the sale
of common stock or securities convertible or exchangeable into common stock, the ownership interests of our common stockholders will be
diluted. In addition, any debt financing may subject us to fixed payment obligations and covenants limiting or restricting our ability
to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional
capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third
parties, we may have to relinquish certain valuable intellectual property or other rights to our product candidates, technologies, future
revenue streams or research programs or grant licenses on terms that may not be favorable to us. Even if we were to obtain sufficient
funding, there can be no assurance that it will be available on terms acceptable to us or our stockholders.
Our ability to use our net operating loss
carryforwards and certain other tax attributes to offset future taxable income or taxes may be limited.
Under current law, federal
net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility
of such federal net operating losses in tax years beginning after December 31, 2020 is limited to 80% of taxable income. It is uncertain
if and to what extent various states and localities will conform to federal tax laws. In addition, under Sections 382 and 383 of the Internal
Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change”
which is generally defined as a greater than 50% change in its equity ownership value over a three-year period, the corporation’s
ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post- change income or
taxes may be limited. We have experienced ownership changes in the past and we may also experience additional ownership changes in the
future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs
and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively
increasing our future tax obligations. In addition, at the state level, there may be periods during which the use of net operating loss
carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, if we earn
net taxable income, we may be unable to use all or a material portion of our net operating loss carryforwards and other tax attributes,
which could potentially result in increased future tax liability to us and adversely affect our future cash flows.
The Common Warrants
are speculative in nature.
The
Common Warrants do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends,
but rather merely represent the right to acquire shares of common stock at a fixed price for a limited period of time. Specifically, the
Common Warrants are exercisable upon issuance at an exercise price of $5.25 per share and may be exercised at any time on or prior to
the earlier of (i) April 10, 2027 and (ii) the date that is 90 days after the public announcement that the Company has demonstrated a
six-month complete response rate of minimum 42% from at least 25 BCG-Unresponsive patients in the ADVANCED-2 (Cohort B) clinical trial.
There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the Common Warrants
and consequently, whether it will ever be profitable for holders of the Common Warrants to exercise the warrants.
Further,
if the outstanding Common Warrants are exercised in full, we would be entitled to receive the cash exercise price of $5.25 per warrant.
We would be able to use these additional proceeds to fund our operations. To the extent the market price of our common stock does not
equal or exceed the exercise price of the Common Warrants before they expire, we would not be entitled to these proceeds, and we may be
required to pursue additional financing alternatives.
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Risks Related to Drug/Biologics Development and Commercialization
Our business depends on the successful
preclinical and clinical development, regulatory approval and commercialization of our product candidates, including TARA-002 and IV
Choline Chloride.
The success of our business, including our ability to finance our operations
and generate revenue in the future, primarily depends on the successful development, regulatory approval and commercialization of our
product candidates, including of TARA-002 and IV Choline Chloride. The clinical and commercial success of our product candidates, including
TARA-002 and IV Choline Chloride depend on a number of factors, including the following:
● receipt of marketing approvals from applicable regulatory authorities;
● effective competition with other therapies;
If any one of these factors
is not present, many of which are beyond our control, we could experience significant delays or an inability to obtain regulatory approval
of our product candidates, including TARA-002 or IV Choline Chloride.
Our clinical trials may take longer to enroll than anticipated
due to competing clinical trials or otherwise or may fail to demonstrate the safety and efficacy of our product candidates, or serious
adverse or unacceptable side effects may be identified during their development, which could increase our costs or necessitate the abandonment
or limitation of the development of the product candidate.
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We have never completed a registrational
clinical trial or made a BLA or NDA submission and may be unable to successfully do so for TARA-002 or IV Choline Chloride.
The conduct of a clinical trial
is a long, expensive, complicated and highly regulated process. Although our employees have conducted successful clinical trials and made
regulatory submissions in the past across many therapeutic areas while employed at other companies, we, as a company, have not completed
any registrational clinical trials, or submitted a BLA or NDA and as a result may require more time and incur greater costs than we anticipate.
Failure to commence or complete, or delays in registrational clinical trials or planned regulatory submissions would prevent us from,
or delay us, in obtaining potential regulatory approval of and commercializing TARA-002 or IV Choline Chloride, which would adversely
impact our financial performance.
Disruptions at the FDA or other comparable
foreign regulatory authorities may also slow the time necessary for new products to be reviewed and/or approved, which would adversely
affect our business. In addition, there is substantial uncertainty regarding the new U.S. Presidential Administration’s initiatives
and how these might impact the FDA, its implementation of laws, regulations, policies and guidance and its personnel. Similar initiatives
may also be directed towards other agencies. These initiatives could prevent, limit or delay development and regulatory approval of our
product candidates, which would adversely affect our business.
Disruptions at the FDA or other
comparable foreign regulatory authorities may also slow the time necessary for new products to be reviewed and/or approved, which would
adversely affect our business. Changes in FDA staffing could result in delays in the FDA’s responsiveness or in its ability to review
submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at
all. Similar consequences would also result in the event of another significant shutdown of the federal government. For example, in 2024,
the U.S. government was on the verge of a shutdown and has previously shut down several times, and certain regulatory agencies, such as
the FDA, had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, or if geopolitical
or global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other
regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process
our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns or delays
could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
If the FDA is constrained in its ability to engage in oversight and implementation activities in the normal course, our business may be
negatively impacted.
In addition, FDA-regulated
industries, such as ours, face substantial uncertainty in regard to the regulatory environment we will face as we proceed with research
and development efforts following the inauguration of President Trump in January 2025. Some of these efforts have manifested to date in
the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays
or limitations on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory
approvals in the future. Moreover, the new U.S. Presidential Administration has proposed action to freeze or reduce the budget of the
National Institutes of Health, or NIH, as related to its funding for medical research, which could decrease the ability of facilities
that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials. There remains
general uncertainty regarding future activities. The new U.S. Presidential Administration could issue or promulgate executive orders,
regulations, policies or guidance that adversely affect us or create a more challenging or costly environment to pursue the development
of new therapeutic products. Alternatively, state governments may attempt to address or react to changes at the federal level with changes
to their own regulatory frameworks in a manner that is adverse to our operations. If we become negatively impacted by future governmental
orders, regulations, policies or guidance as a result of the new U.S. Presidential Administration, there could be a material adverse effect
on us and our business.
Even if a product candidate
obtains regulatory approval, it may fail to achieve the broad degree of adoption and use necessary for commercial success.
The commercial success of both
TARA-002 and IV Choline Chloride, if approved, will depend significantly on the broad adoption and use of them by physicians and patients
for approved indications, and neither may be commercially successful even though the product is shown to be safe and effective. The degree
and rate of physician and patient adoption of a product, if approved, and successful commercialization will depend on a number of factors,
including but not limited to:
● the willingness of the target population to try new therapies;
38
● proper administration;
● the prevalence and severity of any side effects;
● any FDA requirement to undertake a Risk Evaluation and Mitigation Strategy;
● potential product liability claims or other product-related litigation.
If either TARA-002 or IV Choline
Chloride is approved for use but fails to achieve the broad degree of market acceptance by physicians, patients, third-party payors and
others in the medical community necessary for commercial success, our operating results and financial condition will be adversely affected,
which may delay, prevent or limit our ability to generate revenue and continue our business.
Further, even if regulatory
approvals are obtained, we may never be able to successfully commercialize TARA-002 or IV Choline Chloride, or the FDA or comparable foreign
regulatory authorities may require labeling changes or impose significant restrictions on a product’s indicated uses or marketing
or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. Accordingly, we cannot assure
you that we will be able to generate sufficient revenue through the sale of TARA-002 or IV Choline Chloride to continue our business.
Preclinical and clinical development involve
lengthy and expensive processes with uncertain outcomes. We may incur additional expenses or experience delays in completing, or ultimately
be unable to complete, the development of our current product candidates or any future product candidates.
All of our current product candidates are in clinical development
and their risk of failure is high. It is impossible to predict when or if any of our product candidates will receive regulatory approval.
To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive non-clinical
studies and lengthy, complex and expensive clinical trials that our product candidates are safe and effective in humans. Clinical testing
can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial
process. The results of non-clinical studies and early clinical trials or early cohorts of our clinical trials of our product candidates
may not be predictive of the results of later-stage clinical trials or later cohorts of our clinical trials. Moreover, a clinical trial
can fail at any stage of testing. Differences in clinical trial design between early-stage clinical trials and later-stage clinical trials
make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. Additionally, clinical data are often
susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily
in clinical trials have nonetheless failed to obtain marketing approval of their products. A number of companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or to unfavorable safety profiles, notwithstanding
promising results in earlier clinical trials. There is typically a high rate of failure of product candidates proceeding through clinical
trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of
our future clinical trials will ultimately be successful or support clinical development of our current or any of our future product candidates.
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Patient enrollment, a significant factor in the timing of clinical
trials, is affected by many factors including: the size and nature of the patient population; the number and location of clinical sites
we enroll; the proximity of patients to clinical sites; the eligibility and exclusion criteria for the clinical trial; the design of the
clinical trial; the inability to obtain and maintain patient consents; the risk that enrolled participants will drop out before completion;
and competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate
being studied in relation to other available therapies, including any new drugs or therapeutic biologics that may be approved for the
indications being investigated by us. Furthermore, we expect to rely on our collaborators, contract research organizations, or CROs, and
clinical trial sites to ensure the proper and timely conduct of our future clinical trials, including the patient enrollment process,
and we have limited influence over their performance. These factors could increase our costs or necessitate the abandonment or limitation
of the development of our product candidates.
We could also encounter delays if a clinical trial is suspended
or terminated by us, the IRBs of the institutions in which such clinical trials are being conducted, or the FDA or other regulatory authorities,
or if a clinical trial is recommended for suspension or termination by the independent data monitoring committee for such clinical trial.
A suspension or termination may be imposed due to a number of factors, including: failure to conduct the clinical trial in accordance
with regulatory requirements or our clinical protocols; inspection of the clinical trial operations or clinical trial site by the FDA
or other regulatory authorities resulting in the imposition of a clinical hold; unforeseen safety issues or adverse side effects; failure
to demonstrate a benefit from using a product or treatment; failure to establish or achieve clinically meaningful clinical trial endpoints;
changes in governmental regulations or administrative actions; or lack of adequate funding to continue the clinical trial. Clinical studies
may also be delayed or terminated as a result of ambiguous or negative interim results. Many of the factors that cause, or lead to, a
delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product
candidates. Further, the FDA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data
from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical
trials.
Our product development expenses
will increase if we experience delays in clinical testing or regulatory approvals. We do not know whether any of our clinical trials will
begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could
shorten any periods during which we may have the exclusive right to commercialize our product candidates and may allow our competitors
to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming
our business and results of operations. Any delays in our clinical development programs may harm our business, financial condition and
results of operations significantly.
We rely, and expect to continue to rely,
on third-party CROs and other third parties to conduct and oversee our clinical trials. If these third parties do not meet our requirements
or otherwise conduct the clinical trials as required, we may not be able to satisfy our contractual obligations or obtain regulatory
approval for, or commercialize, our product candidates.
We rely, and expect to continue to rely, on third-party CROs to
conduct and oversee our TARA-002 and IV Choline Chloride clinical trials and studies and other aspects of product development. We also
rely on various medical institutions, clinical investigators and contract laboratories to conduct our clinical trials in accordance with
our clinical protocols and all applicable regulatory requirements, including the FDA’s regulations and cGCP, requirements, which
are an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators
and monitors, and state regulations governing the handling, storage, security and record-keeping for drug and biologic products. These
CROs and other third parties have and will continue to play a significant role in the conduct of these clinical trials and the subsequent
collection and analysis of data from the clinical trials. We will rely heavily on these parties for the execution of our clinical trials,
preclinical and non-clinical studies and will control only certain aspects of their activities. We and our CROs and other third-party
contractors will be required to comply with cGCP and cGLP, requirements, which are regulations and guidelines enforced by the FDA and
comparable foreign regulatory authorities. Regulatory authorities enforce these cGCP and cGLP requirements through periodic inspections
of clinical trial sponsors, principal investigators and clinical trial sites. If we or any of these third parties fail to comply with
applicable cGCP and cGLP requirements, or reveal non-compliance from an audit or inspection, the clinical data generated in our clinical
trials may be deemed unreliable and the FDA or other regulatory authorities may require us to perform additional clinical trials before
approving our or our partners’ marketing applications. We cannot assure that upon inspection by a given regulatory authority, such
regulatory authority will determine that any of our clinical trials or preclinical studies comply with applicable cGCP and cGLP requirements.
In addition, our clinical trials generally must be conducted with product candidate produced under cGMP regulations. Our failure to comply
with these regulations and policies may require us to repeat clinical trials, which would delay the regulatory approval process.
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If any of our CROs or clinical
trial sites fail to comply with their contractual commitments or terminate their involvement in one of our clinical trials for any reason,
we may not be able to enter into arrangements with alternative CROs or clinical trial sites or do so on commercially reasonable terms.
In addition, if our relationship with clinical trial sites is terminated, we may experience the loss of follow-up information on patients
enrolled in our clinical trials unless we are able to transfer the care of those patients to another qualified clinical trial site. In
addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and
could receive cash or equity compensation in connection with such services. If these relationships and any related compensation result
in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be questioned
by the FDA.
Interim, topline and preliminary data from
our clinical trials may change as more patient data become available, and are subject to audit and verification procedures that could
result in material changes in the final data.
In 2024, we released preliminary data from our clinical trials.
From time to time, we may publicly disclose further preliminary, interim or topline data from our preclinical, non-clinical studies and
clinical trials, which is based on a preliminary analysis of then-available data. The results and related findings and conclusions of
any interim or preliminary data, including from our 2024 data releases, as well as any future releases of any interim or preliminary data
are subject to change as patient enrollment and treatment continues and more patient data become available. Adverse differences between
previous preliminary or interim data and future interim or final data could significantly harm our business prospects. We may also announce
topline data following the completion of a preclinical study or clinical trial, which may be subject to change following a more comprehensive
review of the data related to the particular study or clinical trial. We also make assumptions, estimations, calculations and conclusions
as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result,
the interim, topline or preliminary results that we report may differ from future results of the same studies, or different conclusions
or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary, interim, or topline
data also remain subject to audit and verification procedures that may result in the final data being materially different from the data
we previously published. Accordingly, preliminary, interim, and topline data should be viewed with caution until the final data are available.
Further, others, including
regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or
weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization
of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose
regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with
what we determine to be material or otherwise appropriate information to include in our disclosure.
The clinical development of our product
candidates has included and may continue to include clinical trial sites outside the United States, and the FDA and applicable foreign
regulatory authorities may not accept data from such sites.
The clinical development of our product candidates has included
and may continue to include clinical trial sites outside the United States and we may in the future choose to conduct one or more of our
full clinical trials outside of the United States. For example, our ongoing Phase 2 ADVANCED-2 clinical trial of TARA-002 in NMIBC is
being conducted in the U.S., Canada, Argentina and Ukraine. Although the FDA or applicable foreign regulatory authority may accept data
from clinical trials conducted outside the United States or the applicable jurisdiction, acceptance of such study data by the FDA or applicable
foreign regulatory authorities may be subject to certain conditions or exclusions. Where data from foreign clinical trials or clinical
trial sites are intended to serve as the basis for marketing approval in the United States, the FDA will not approve the application on
the basis of foreign data alone unless such data are applicable to the U.S. population and U.S. medical practice; the studies were performed
by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the
FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or
other appropriate means. Many foreign regulatory bodies have similar requirements. In addition, such foreign studies would be subject
to the applicable local laws of the foreign jurisdictions where the studies are conducted. There can be no assurance the FDA or applicable
foreign regulatory authority will accept data from clinical trials conducted outside of the United States or the applicable home country.
If the FDA or applicable foreign regulatory authority does not accept such data, it would likely result in the need for additional clinical
trials, which would be costly and time-consuming and delay aspects of our business plan.
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TARA-002 is an immunopotentiator, and one
indication that we are pursuing is the treatment of LMs. There are no FDA-approved therapies for the treatment of LMs and it is difficult
to predict the timing and costs of clinical development for TARA-002 for LMs.
To date, there are no FDA-approved
therapies for the treatment of LMs. The regulatory approval process for novel product candidates such as TARA-002 can be more expensive
and take longer than for other, better known or extensively studied therapeutic approaches or diseases. Delay or failure to obtain, or
unexpected costs in obtaining, the regulatory approval necessary to bring TARA-002 to market in LMs could decrease our ability to generate
sufficient revenue to maintain our business.
Certain disorders we seek to treat have
low incidence and prevalence, and it may be difficult to identify patients with these disorders, which may lead to delays in enrollment
for our clinical trials or slower commercial revenue if approved.
Our current product candidates are targeting certain disorders
that have low incidence and prevalence. For example, we estimate the prevalence of LMs in the United States is approximately 1,400-1,800
cases per year. This could be a significant obstacle to the timely recruitment and enrollment of a sufficient number of eligible patients
into our clinical trial. Further, we expect to rely in part on our relationships with patient advocacy groups to assist in identifying
eligible patients, and any deterioration of those relationships could impede our ability to successfully enroll patients. Patient enrollment
may be affected by other factors including:
● the severity of the disease under investigation;
● design of the study protocol;
● the eligibility criteria for the clinical trial;
● our efforts to facilitate timely enrollment in clinical trials;
● the patient referral practices of physicians; and
Our inability to enroll a
sufficient number of patients with these diseases for our planned clinical trials, including LMs, would result in significant delays and
could require us to not initiate or abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result
in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability
to obtain additional financing.
Additionally, our projections of the number of people who have these
disorders, including LMs, are based on estimates, including third-party analyses commissioned by us. The total addressable market opportunity
for our product candidates will ultimately depend upon, among other things, the final approved product labeling for each of our product
candidates, if our product candidates are approved for sale in our target indications, acceptance by the medical community and patient
access, drug pricing and reimbursement. The number of patients globally may turn out to be lower than expected, patients may not be otherwise
amenable to treatment with our products, or new patients may become increasingly difficult to identify or gain access to, all of which
would adversely affect our results of operations and our business. Our products may potentially be dosed on a one-time basis, which means
that patients who enroll in our clinical trials may not be eligible to receive our products on a commercial basis if they are
Our product candidates may cause undesirable
or unforeseen side effects or have other unexpected properties that could delay or prevent their regulatory approval, limit the commercial
profile of an approved label, or result in post-approval regulatory action.
Undesirable or unforeseen
side effects from our product candidates, including TARA-002 or IV Choline Chloride could arise either during clinical development or,
if approved, after the product has been marketed. Undesirable side effects could cause us, any partners with which we may collaborate,
or regulatory authorities to interrupt, extend, modify, delay or halt clinical trials and could result in a more restrictive or narrower
label or the delay or denial of regulatory approval by the FDA or comparable foreign authorities.
Results of clinical trials could reveal a high and unacceptable
severity and prevalence of side effects. In such an event, clinical trials could be suspended or terminated, and the FDA or comparable
foreign regulatory authorities could order us to cease further development of or deny approval of a product candidate for any or all targeted
indications. Any side effects could affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result
in product liability claims. Any of these occurrences may harm our business, financial condition, operating results and prospects.
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Additionally, if we or others
identify undesirable side effects, or other previously unknown problems, in connection with a product after obtaining U.S. or foreign
regulatory approval, a number of potentially negative consequences could result, including:
● regulatory authorities may require additional warnings in the labeling;
● we could be sued and held liable for harm caused to patients; and
● our reputation may suffer.
Any of these occurrences
could prevent us or our potential partners from achieving or maintaining market acceptance of the product and could substantially increase
the costs of commercializing such product.
A Fast Track Designation by the FDA may
not lead to a faster development or regulatory review or approval process.
The FDA has granted Fast Track Designation to IV Choline Chloride
as a source of choline when oral or enteral nutrition is not possible, insufficient, or contraindicated. We may seek Fast Track Designation
for other potential indications for IV Choline Chloride or for our other product candidates. If a drug is intended for the treatment of
a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the
drug sponsor may apply for Fast Track designation. The FDA has broad discretion whether or not to grant this designation, so even if we
believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even
if we receive Fast Track Designation, we may not experience a faster development process, review or approval, including for IV Choline
Chloride as a source of choline when oral or enteral nutrition is not possible, insufficient, or contraindicated or any other indication.
The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development
program.
An Orphan Drug Designation by the FDA or European Commission
does not increase the likelihood that our product candidates will receive marketing exclusivity.
We have obtained Orphan Drug
Designation from the FDA for TARA-002 for the treatment of LMs and for IV Choline Chloride for the prevention and/or treatment of choline
deficiency in patients on long-term PN. We have also obtained Orphan Drug Designation from the European Commission for TARA-002 for the
treatment of LMs. We may seek Orphan Drug Designation for future product candidates or other indications, and we may be unsuccessful.
Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient
populations as orphan drugs and provide them with marketing exclusivity upon approval. Under the Orphan Drug Act, the FDA may designate
a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population
of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there
is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the United States,
Orphan Drug Designation entitles a party to financial incentives such as tax advantages and user-fee waivers. Opportunities for grant
funding toward clinical trial costs may also be available for clinical trials of drugs for rare diseases, regardless of whether the drugs
are designated for the orphan use. In addition, if a product that has Orphan Drug Designation subsequently receives the first FDA approval
for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not
approve any other applications to market the same product for the same indication for seven years, except in limited circumstances.
Although we have obtained Orphan Drug Designation for TARA-002 for
the treatment of LMs and IV Choline Chloride for the prevention and/or treatment of choline deficiency in patients on long-term PN, and
even if we obtain Orphan Drug Designation for additional product candidates or other indications, we may not be the first to obtain marketing
approval of these product candidates for the orphan-designated indication due to the uncertainties associated with developing pharmaceutical
products. If a competitor with a product that is determined by the FDA to be the same as one of our product candidates obtains marketing
approval before us for the same indication we are pursuing and obtains orphan drug exclusivity, our product candidate may not be approved
until the period of exclusivity ends unless we are able to demonstrate that our product candidate is clinically superior. Even after obtaining
approval, we may be limited in our ability to market our product. In addition, exclusive marketing rights in the United States may be
limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines
that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product
to meet the needs of patients with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that
exclusivity may not effectively protect the product from competition because different drugs with different principal molecular structural
features can be approved for the same condition. Even after a product is approved with orphan drug exclusivity, the FDA can subsequently
approve the same drug for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution
to patient care. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug
any advantage in the regulatory review or approval process.
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A Breakthrough Therapy Designation by the
FDA may not lead to a faster development or regulatory review or approval process.
We may seek a Breakthrough Therapy Designation for TARA-002 for
the treatment of NMIBC. A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or
more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug
may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment
effects observed early in clinical development. For drugs that have been designated as breakthrough therapies, interaction and communication
between the FDA and the sponsor of the clinical trial can help to identify the most efficient path for clinical development while minimizing
the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA are also eligible
for priority review if supported by clinical data at the time of the submission of the marketing application.
Designation as a breakthrough
therapy is at the discretion of the FDA. Accordingly, even if we believe that a product candidate meets the criteria for designation as
a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough
Therapy Designation for a drug may not result in a faster development process, review, or approval compared to drugs considered for approval
under conventional FDA procedures and it would not assure ultimate approval by the FDA. In addition, even if the product candidate qualifies
as a breakthrough therapy, the FDA may later decide that the product candidate no longer meets the conditions for qualification or that
the time period for FDA review.
Although the FDA has granted Rare Pediatric
Disease Designation for TARA-002 for the treatment of LMs, a BLA for TARA-002, if approved, may not meet the eligibility criteria for
a priority review voucher.
Rare Pediatric Disease Designation has been granted by the FDA for
TARA-002 for the treatment of LMs. In 2012, Congress authorized the FDA to award PRVs to sponsors of certain rare pediatric disease product
applications. This provision is designed to encourage development of new drug and biological products for prevention and treatment of
certain rare pediatric diseases. Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare
pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application
for a different product. The sponsor of a rare pediatric disease drug product receiving a PRV may transfer (including by sale) the voucher
to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making
the transfer has not yet submitted the application. The FDA may also revoke any PRV if the rare pediatric disease drug for which the voucher
was awarded is not marketed in the U.S. within one year following the date of approval.
For the purposes of this program, a “rare
pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily
affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents; and (b)
rare disease or conditions within the meaning of the Orphan Drug Act. As of December 20, 2024, and unless the law is extended, the FDA
may no longer award any PRVs under the Rare Pediatric Disease Priority Review Voucher program, unless the rare pediatric disease product
application (a) is for a drug that, not later than December 20, 2024, is designated as a drug for a rare pediatric disease and (b) is,
not later than September 30, 2026, approved under section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the
Public Health Service Act. We understand that the FDA has continued to grant Rare Pediatric Disease Designations after December 20, 2024;
however, unless the program is extended by Congress, a product that was designated after December 20, 2024 may not be awarded a PRV upon
approval, even if approved prior to September 30, 2026.
TARA-002 for the treatment of LMs may not be approved by that date,
or at all, and, therefore, we may not be in a position to obtain a PRV prior to expiration of the program, unless Congress further reauthorizes
the program. Additionally, designation of a drug for a rare pediatric disease does not guarantee that an NDA or BLA will meet the eligibility
criteria for a rare pediatric disease priority review voucher at the time the application is approved. Finally, a Rare Pediatric Disease
Designation does not lead to faster development or regulatory review of the product or increase the likelihood that it will receive marketing
approval. We may or may not realize any benefit from receiving a designation.
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Any adverse developments that occur in patients
undergoing treatment with OK-432 / Picibanil or in patients participating in clinical trials conducted by third parties may affect our
ability to obtain regulatory approval or commercialize TARA-002.
Chugai Pharmaceutical, over
which we have no control, has the rights to commercialize TARA-002 and the originator therapy to TARA-002, OK-432, which is currently
marketed under the name Picibanil, in Japan for various indications. In addition, clinical trials using Picibanil are currently ongoing
in various countries around the world. If serious adverse events occur with patients using Picibanil or during any clinical trials of
Picibanil conducted by third parties, the FDA may delay, limit or deny approval of TARA-002 or require us to conduct additional clinical
trials as a condition to marketing approval, which would increase our costs. If we receive FDA approval for TARA-002 and a new and serious
safety issue is identified in connection with use of Picibanil or in clinical trials of Picibanil conducted by third parties, the FDA
may withdraw the approval of the product or otherwise restrict our ability to market and sell TARA-002. In addition, treating physicians
may be less willing to administer TARA-002 due to concerns over such adverse events, which would limit our ability to commercialize TARA-002.
We may choose to delay or discontinue developing
or commercializing any of our product candidates at any time during development or after approval, which would reduce or eliminate the
potential return on investment for those product candidates.
At any time, we may decide to delay or discontinue the development
of any of our product candidates for a variety of reasons, including the appearance of new technologies that make our product candidates
obsolete, competition from a competing product or changes in or failure to comply with applicable regulatory requirements.
If we terminate a program
in which we have invested significant resources, we will not receive any return on our investment and we will have missed the opportunity
to have allocated those resources to potentially more productive uses.
Other Risks Related to Our Business
Our product candidates,
if approved, will face significant competition and their failure to compete effectively may prevent them from achieving significant market
penetration.
The pharmaceutical industry
is characterized by rapidly advancing technologies, intense competition, uncertain and complex patent terms, and a strong emphasis on
developing newer, fast-to-market proprietary therapeutics. Numerous companies are engaged in the development, patenting, manufacturing
and marketing of healthcare products competitive with those that we are developing, including TARA-002 and IV Choline Chloride. We will
face competition from a number of sources, such as pharmaceutical companies, biotechnology companies, generic drug companies, consumer
products companies and academic and research institutions, many of which have greater financial resources, marketing capabilities, sales
forces, manufacturing capabilities, research and development capabilities, regulatory expertise, clinical trial expertise, intellectual
property portfolios, international reach, experience in obtaining patents and regulatory approvals for product candidates and other resources
than we have. Some of the companies that offer competing products also have a broad range of other product offerings, large direct sales
forces and long-term customer relationships with our target physicians, which could inhibit our market penetration efforts.
With respect to our lead product candidate, TARA-002, for the treatment
of NMIBC and LMs, the active ingredient in TARA-002 is a genetically distinct strain of Streptococcus pyogenes (group A, type 3) Su strain,
which is inactivated during the manufacturing process. TARA-002 is produced through a proprietary manufacturing process. We anticipate
that, if approved by the FDA, TARA-002 will be protected by 12 years of biologic exclusivity. In addition, based on the prevalence of
the disease, TARA-002 is likely to have seven years of concurrent Orphan Drug Designation exclusivity for the treatment of LMs.
There are no approved pharmacotherapies
currently available for the treatment of LMs and the current treatment options include a high-risk surgical procedure and off-label use
of sclerosants, including doxycycline, bleomycin, ethanol and sodium tetradecyl sulfate. There are a number of drug development companies
and academic researchers exploring oral and topical formulations of various agents for the treatment of LMs including macrolides, phosphodiesterase
inhibitors, and calcineurin/mTOR inhibitors. These are in early development.
45
TARA-002, if approved for
the treatment of NMIBC, would be subject to competition from existing treatment methods of surgery, chemotherapy and immunomodulatory
therapy. For example, the current standard of care for NMIBC includes intravesical BCG TICE (manufactured by Merck & Co., Inc.). Other
products approved for the treatment of NMIBC include Merck & Co., Inc.’s Keytruda, Endo International plc’s Valstar, and
Ferring B.V.’s Adstiladrin and ImmunityBio, Inc.’s VesAnktiva in combination with BCG. Additional product candidates in development
include but may not be limited to Japanese BCG Laboratory’s BCG Tokyo, Pfizer Inc.’s Sasanlimab in combination with BCG, CG
Oncology Inc.’s CG0070, enGene Inc.’s, EG-70, Pfizer Inc’s PADCEV, Janssen’s TAR200 combined with gemcitabine
plus or minus Cetrelimab, Urogen Pharma Ltd.’s Jelmyto, Theralase Technologies Inc.’s Ruvidar, and Auro BioSciences, Inc.’s
Aura-0011. Additional pharmaceutical and biotechnology companies with product candidates in development for the treatment of NMIBC include
but may not be limited to Verity, AstraZeneca PLC, Bristol-Myers Squibb Company, Roche Group, Asieris Pharmaceuticals, BeiGene, Ltd, NanOlogy,
LLC, Linton Pharm Co., Ltd., Lindis Biotech GmbH, Taizhou Hanzhong biomedical co. Ltd., Shionogi & Co. Ltd., Rapamycin Holdings, Inc.,
Vaxiion Therapeutics Inc., Incyte Corporation, LiPac Oncology, Inc., Anika Therapeutics Inc., Surge Pharmaceuticals Pvt. Ltd., and Istari
Oncology, Inc.
There are no treatments currently
available for patients on PS who are choline-deficient. IV Choline Chloride is the only sterile injectable form of choline chloride that
can be combined with parenteral nutrition. Further, the USPTO, issued to us Patent No. US 11,311,503 claiming a sterile aqueous choline
salt composition, and Patent No. US 12,083,081 claiming a method of treating choline deficiency with a choline composition, each with
a term expiring in 2041.
We currently have limited marketing capabilities
and no sales organization. If we are unable to grow our sales and marketing capabilities on our own or through third parties, we will
be unable to successfully commercialize our product candidates, if approved, or generate product revenue.
We currently have limited
marketing capabilities and no sales organization. To commercialize our product candidates, if approved, in the United States, Canada,
the European Union, Latin America and other jurisdictions we may seek to enter, we must build our marketing, sales, distribution, managerial
and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in
doing so. Although our employees have experience in the marketing, sale and distribution of pharmaceutical products, and business development
activities involving external alliances, from prior employment at other companies, we, as a company, have no prior experience in the marketing,
sale and distribution of pharmaceutical products, and there are significant risks involved in building and managing a sales organization,
including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training
to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in
the development of our internal sales, marketing, distribution and pricing/reimbursement/access capabilities would impact adversely the
commercialization of these products.
TARA-002 and any future product candidates
for which we intend to seek approval as biologic products may face competition sooner than anticipated.
The BPCIA, created an abbreviated approval pathway for biological products
that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar
product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.
In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference
product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference
product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate
and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The law is complex and is still being
interpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning are subject to uncertainty.
We believe that any of our product candidates approved as a biological
product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that the FDA will not consider our
product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner
than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of
litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a
way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace
and regulatory factors that are still developing.
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We have only received the exclusive rights
to the materials required to commercialize TARA-002 in territories other than Japan and Taiwan until June 17, 2030, or an earlier date
if Chugai Pharmaceutical terminates the agreement with us for any number of reasons, following which such rights become non-exclusive.
Pursuant to an agreement with Chugai Pharmaceutical dated June 17,
2019, as amended on July 14, 2020 (effective as of June 30, 2020), Chugai Pharmaceutical agreed to provide us with exclusive access to
the starting material necessary to manufacture TARA-002 as well as technical support necessary for us to develop and commercialize TARA-002
anywhere in the world other than Japan and Taiwan. However, this agreement does not prevent Chugai Pharmaceutical from providing such
materials and support to any third-party for medical, compassionate use and/or non-commercial research purposes and this agreement is
exclusive only through June 17, 2030 or, the earlier termination of the agreement by either party. Once our rights to the materials and
technology necessary to manufacture, develop and commercialize TARA-002 are not exclusive, third parties, including those with greater
expertise and greater resources, could obtain such materials and technology and develop a competing therapy, which would adversely affect
our ability to generate revenue and achieve or maintain profitability.
Even if we obtain regulatory approval to
begin commercializing any of our products, we would remain subject to ongoing regulatory review, which could subsequently result in a
suspension or termination of sale of these products or other penalties if we fail to comply with regulatory requirements.
Even after we achieve U.S. regulatory approval for a product candidate,
if any, we will be subject to continued regulatory review and compliance obligations. For example, with respect to our product candidates,
the FDA may impose significant restrictions on the approved indicated uses for which the product may be marketed or on the conditions
of approval. A product candidate’s approval may contain requirements for potentially costly post-approval studies and surveillance
to monitor the safety and efficacy of the product. We will also be subject to ongoing FDA obligations and continued regulatory review
with respect to, among other things, the manufacturing, processing, labeling, packaging, distribution, pharmacovigilance and adverse event
reporting, storage, advertising, promotion and recordkeeping for our product candidates. In addition, manufacturers of drug and biologic
products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for
compliance with cGMP regulations. If we or a regulatory agency discovers previously unknown problems with a product, such as adverse events
of unanticipated severity or frequency, or problems with the manufacturing, processing, distribution or storage facility where, or processes
by which, the product is made, a regulatory agency may impose restrictions on that product or us, including:
● restrictions on the labeling or marketing of a product;
● restrictions on product distribution or use;
● requirements to conduct post-marketing studies or clinical trials;
● warning or untitled letters;
● withdrawal of any approved product from the market;
● recall of product candidates;