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.
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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
our plans 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.
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 our company 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.
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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 federal tax
law, net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility
of such net operating losses arising in tax years beginning after December 31, 2020 is limited to 80% of taxable income. Not all states
and localities fully 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 to offset such income,
which could potentially result in increased future cash tax liability to us and adversely affect our future cash flows.
The April 2024
Common Warrants are speculative in nature.
The
April 2024 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 April 2024 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 CR 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 April 2024
Common Warrants and consequently, whether it will ever be profitable for holders of the April 2024 Common Warrants to exercise the warrants.
The
exercise of some or all of the April 2024 Common Warrants will dilute the ownership interests of existing stockholders and increase the
number of shares of common stock eligible for resale in the public market. Any sales in the public market of the shares of common stock
issuable upon such exercise of the April 2024 Common Warrants, or the anticipation of such exercises and sales, could adversely affect
the prevailing market prices of our common stock. Additionally, the existence of the April 2024 Common Warrants may encourage short selling
by market participants because the exercise of the April 2024 Common Warrants could be used to satisfy short positions, or because the
anticipated exercise of the April 2024 Common Warrants for shares of common stock could depress the price of our common stock.
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Further,
if the outstanding April 2024 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 April 2024 Common Warrants before they expire, we would not be entitled to these proceeds,
and we may be required to pursue additional financing alternatives.
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;
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● 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.
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 extend 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 new initiatives under the current U.S. Presidential Administration
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 extend the time necessary for new products to be reviewed and/or approved, which would
adversely affect our business. For example, starting in January 2025, the current U.S. Presidential Administration has reduced the number
of federal employees, including at the FDA, by establishing voluntary termination programs, by position eliminations and by involuntary
terminations. 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 may also occur as a result of a significant shutdown of the federal government. For example, over the last several years,
and most recently in late 2025, the U.S. government has 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,
or if the volume of applications to the FDA for new product candidates increases materially, 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.
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In addition, FDA-regulated
industries, such as ours, face substantial uncertainty in regard to the regulatory environment we face as we proceed with research and
development efforts following the inauguration of the current U.S. Presidential Administration in January 2025. Some of these
efforts have manifested to date as efforts to reduce the size of the federal government, including large-scale reductions in force at
the FDA. The loss of key personnel at the FDA, including those in leadership positions, is likely to impact operations at the FDA, which
could result in, among other things, delays or limitations on our ability to obtain guidance from the FDA on our product candidates in
development, longer review times, and delays in obtaining the requisite regulatory approvals of our product candidates. Moreover, the
current U.S. Presidential Administration has paused payments by, reduced the budget of, and terminated grants provided by the National
Institutes of Health, or NIH, as related to its funding for medical research, which has decreased, and may continue to 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.
Some of these actions have been challenged in court and there remains general uncertainty regarding future activities. The current 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
current 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;
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● proper administration;
● the prevalence and severity of any side effects;
● any FDA requirement to undertake a REMS;
● 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 involves
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 current or 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.
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. For example, in 2026, we released interim data from our clinical trials and expect
to continue to release interim data from such trials in advance of releasing final, fully-evaluated data. The results and related findings
and conclusions of any interim or preliminary data, including from our 2026 data release, 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 U.S., 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 U.S. and we may in the future choose
to conduct one or more of our full clinical trials outside of the U.S. For example, our ongoing Phase 2 ADVANCED-2 clinical trial of TARA-002
in NMIBC is being conducted in the U.S., and in a number of other countries. Although the FDA or applicable foreign regulatory authority
may accept data from clinical trials conducted outside the U.S. 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 U.S., 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 U.S. 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 incidence of LMs in the U.S. 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 certain patients who enroll
in our clinical trials may have complete resolution of their LM and never require additional treatment on a commercial basis.
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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.
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 FTD to
IV Choline Chloride as a source of choline when oral or enteral nutrition is not possible, insufficient, or contraindicated and TARA-002
for the treatment of pediatric patients with macrocystic and mixed cystic LMs. We may seek FTD for other potential indications for IV
Choline Chloride or TARA-002 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 FTD.
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 FTD, 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 TARA-002 for pediatric patients with macrocystic and mixed cystic LMs or any other indication.
The FDA may withdraw FTD if it believes that the designation is no longer supported by data from our clinical development program.
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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 ODD 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 Medicinal Product Designation from the European Commission for TARA-002 for the
treatment of LMs. We may seek ODD for future product candidates or other indications, and we may be unsuccessful in those efforts.
Regulatory authorities in some jurisdictions, including the U.S. 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 U.S., or a patient population greater than 200,000 in the U.S. where there is no reasonable expectation
that the cost of developing the drug will be recovered from sales in the U.S. In the U.S., ODD 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
ODD 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
ODD 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 ODD 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
U.S. 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. ODD 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.
A Breakthrough Therapy Designation by the
FDA may not lead to a faster development or regulatory review or approval process.
The FDA has granted BTD for
TARA-002 for the treatment of pediatric patients with macrocystic and mixed cystic LMs. We may seek BTD for TARA-002 for other indications
or for our other product candidates. 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 available 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.
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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 BTD for
a drug may not necessarily 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 PRV.
RPDD 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. Under current law, after September 30,
2029, the FDA may not award any RPDD PRVs, although the FDA’s authority to do so could be extended by Congress in the future.
If TARA-002 is approved,
it may not be approved by September 30, 2029, 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 PRV at the time the application is approved, including
the requirement that the NDA or BLA was granted priority review. Finally, a RPDD 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.
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 SAEs 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 AEs, which would limit our ability to commercialize TARA-002.
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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 ODD exclusivity for the treatment
of LMs. Further, the USPTO issued to us Patent No. 12,551,514 claiming a method of treating non-muscle invasive bladder cancer with a
combination of non-viable cells of streptococcus pyogenes and an immune checkpoint inhibitor, with a term expiring in 2044.
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.
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, Ferring
B.V.’s Adstiladrin, ImmunityBio, Inc.’s VesAnktiva in combination with BCG and Janssen’s Inlexzo. 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 TAR-200
plus 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.
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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 PN. 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 U.S., 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 its
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 its 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 eligible for reference product exclusivity, 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.
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.
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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, limitations on the approved indication or additional warnings, or, if we fail to
comply with regulatory requirements, other penalties.
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 AE 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 AEs of unanticipated severity or frequency, or problems with the manufacturing, processing, distribution or storage facility where,