What changed in this filing

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Item 1. Business

2021-03-11 compared with 2020-03-20 · 1210 added, 1226 removed, 340 unchanged (88% of the section changed)

Merger of Proteon

Therapeutics, Inc.

and ArTara Therapeutics, Inc.

On January 9, 2020,

ArTara Therapeutics, Inc.

(formerly Proteon Therapeutics, Inc., the “Company”), and privately-held ArTara Subsidiary,

(“Private ArTara”), completed the merger and reorganization, or the Merger, in accordance with the terms of the

Agreement and Plan of Merger and Reorganization, dated September 23, 2019, or the Merger Agreement, by and among the Company, Private

ArTara and REM 1 Acquisition, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), whereby Merger Sub merged

with and into Private ArTara, with Private ArTara surviving as a wholly owned subsidiary of the Company.

The Merger was structured

as a reverse merger and Private ArTara was determined to be the accounting acquirer based on the terms of the Merger and other

On January 9, 2020,

in connection with, and prior to the completion of, the Merger, the Company effected a 1-for-40 reverse stock split of its common

stock, or the Reverse Stock Split, Private ArTara changed its name from “ArTara Therapeutics, Inc.” to “ArTara

Subsidiary, Inc.”, and the Company changed its name from “Proteon Therapeutics, Inc.” to “ArTara Therapeutics,

Inc.” All share and per share amounts presented in this annual report on Form 10-K have been adjusted to reflect the Reverse

In addition, immediately following the closing of the Private Placement (defined below), all of the outstanding shares

of the Company’s Series A Preferred Stock were converted into shares of the Company’s common stock.

Shares of the Company’s

common stock commenced trading on The Nasdaq Capital Market under the new name and ticker symbol “TARA” as of market

open on January 10, 2020.

Unless otherwise noted, all references to share amounts in this Annual Report, including references

to shares or options issued in connection with the Merger and the Financing (as defined below), reflect the Reverse Stock Split.

Under the terms of

the Merger Agreement, the Company issued shares of its common stock (“Common Stock”) to Private ArTara’s stockholders,

at an exchange ratio of 0.190756 shares of Common Stock, after taking into account the Reverse Stock Split, for each share of Private

ArTara common stock outstanding immediately prior to the Merger.

ArTara assumed all of the outstanding and unexercised stock options

of Private ArTara, with such stock options now representing the right to purchase a number of shares of Common Stock equal to 0.190756

multiplied by the number of shares of Private ArTara common stock previously represented by such Private ArTara stock options.

The Company also assumed all of the unvested Private ArTara restricted stock awards, which were exchanged for a number of shares

of Common Stock equal to 0.190756 multiplied by the number of shares of Private ArTara common stock previously represented by such

Private ArTara restricted stock awards and unvested to the same extent as such Private ArTara restricted stock awards and subject

to the same restrictions as such Private ArTara restricted stock awards.

The shares of Common

Stock issued to the former stockholders of Private ArTara were registered with the U.S.

Securities and Exchange Commission (the

“SEC”) on a Registration Statement on Form S-4 (Reg.

333-234549) (the “Registration Statement”).

Prior to the Merger,

we entered into a Subscription Agreement (the “Subscription Agreement”) on September 23, 2019 with certain institutional

investors (the “Purchasers”) which agreement was amended on November 19, 2019.

Pursuant to the Subscription Agreement,

as amended, the Company agreed to sell and issue shares of Common Stock and shares of the Company’s newly designated Series

1 Convertible Non-Voting Preferred Stock, par value $0.001 per share (the “Series 1 Preferred Stock”), in a private

placement transaction (the “Private Placement”), as previously disclosed in the Company’s Current Report on Form

8-K filed with the SEC on September 24, 2019.

The closing of the Private Placement was completed on January 9, 2020.

At the closing, the

Company sold and issued to the Purchasers 1,896,888 shares of Common Stock at a purchase price of approximately $7.01 per share

(the “Common Stock Purchase Price”), and 3,879.356 shares of Series 1 Preferred Stock at a purchase price of $7,011.47

per share, for an aggregate purchase price of approximately $40.5 million.

At the special meeting

of the Company’s stockholders held on January 9, 2020 (the “Special Meeting”), the Company’s stockholders

approved (1) an amendment to the sixth amended and restated certificate of incorporation of the Company (the “Stock Split

Amendment”) to effect the Reverse Stock Split of the Common Stock and to change the Company’s name from “Proteon

Therapeutics, Inc.” to “ArTara Therapeutics, Inc.” (the “Name Change”);

and (2) an amendment to the

sixth amended and restated certificate of incorporation of the Company (together with the Stock Split Amendment, the “Pre-Effective

Time Charter Amendment”) to effect the conversion of all of the outstanding shares of the Company’s Series A Convertible

Preferred Stock into shares of Common Stock (the “Series A Preferred Automatic Conversion”).

On January 9, 2020,

immediately prior to the closing of the Merger, the Company filed the Pre-Effective Time Charter Amendment with the Secretary of

State of the State of Delaware to effect the Reverse Stock Split and the Name Change.

As a result of the Reverse Stock Split, the

number of issued and outstanding shares of Common Stock immediately prior to the Reverse Stock Split was reduced to a smaller number

of shares, such that every 40 shares of Common Stock held by a stockholder immediately prior to the Reverse Stock Split were combined

and reclassified into one share of the Company’s common stock.

Immediately following the Reverse Stock Split, there were

approximately 557,631 million shares of Common Stock outstanding.

No fractional shares

were issued in connection with the Reverse Stock Split.

Any fractional shares resulting from the Reverse Stock Split were rounded

down to the nearest whole number, and each stockholder who would otherwise be entitled to a fraction of a share of Common Stock

upon the Reverse Stock Split (after aggregating all fractions of a share to which such stockholder would otherwise be entitled)

is, in lieu thereof, entitled to receive a cash payment determined by multiplying the fraction of a share of Common Stock to which

each stockholder would otherwise be entitled by the closing price of the Common Stock on the Nasdaq Capital Market on the date

immediately prior to the date on which the Reverse Stock Split is affected.

On January 9, 2020,

immediately following the closing of the Private Placement, the Series A Preferred Automatic Conversion became effective pursuant

to the Pre-Effective Time Charter Amendment.

As a result of the Series A Preferred Automatic Conversion, the 18,954 outstanding

shares of the Company’s Series A Convertible Preferred Stock were converted into 476,276 shares of Common Stock (on a post-Reverse

Stock Split basis).

On January 9, 2020,

the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series 1 Convertible Non-Voting Preferred

Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware.

The Certificate of Designation

establishes and designates the Series 1 Preferred Stock, and the rights, preferences and privileges thereof.

Each share of Series

1 Preferred Stock is convertible into 1,000 shares of Common Stock, at a conversion price initially equal to the Common Stock Purchase

Price, subject to adjustment for any stock splits, stock dividends and similar events, at any time at the option of the holder,

provided that any conversion of Series 1 Preferred Stock by a holder into shares of Common Stock would be prohibited if, as a result

of such conversion, the holder, together with its affiliates and any other person or entity whose beneficial ownership of the common

stock would be aggregated with such holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended,

would beneficially own more than 9.99% of the total number of shares Common Stock issued and outstanding after giving effect to

such conversion.

Upon written notice to the Company, the holder may from time to time increase or decrease such limitation to any

other percentage not in excess of 19.99% specified in such notice.

Each share of Series 1 Preferred Stock is entitled to a preference

of $10.00 per share upon liquidation of the Company, and thereafter will share ratably in any distributions or payments on an as-converted

basis with the holders of Common Stock.

In addition, upon the occurrence of certain transactions that involve the merger or consolidation

of the Company, an exchange or tender offer, a sale of all or substantially all of the assets of the Company or a reclassification

of its common stock, each share of Series 1 Preferred Stock will be convertible into the kind and amount of securities, cash and/or

other property that the holder of a number of shares of Common Stock issuable upon conversion of one share of Series 1 Preferred

Stock would receive in connection with such transaction.

The Company was originally

incorporated in Delaware in March 2006, and at that time, acquired Proteon Therapeutics, LLC, the predecessor of ArTara, which

was formed in June 2001.

Unless the context

requires otherwise, references in this Annual Report to “ArTara”, “TARA”, “we”, “us”,

the “Company” and “our” refer to ArTara Therapeutics, Inc.

(formerly Proteon Therapeutics, Inc.).

Our principal executive

offices are located at 1 Little West 12th Street, New York, New York 10014, our telephone number is (646) 844-0337 and our website

address is www.artaratx.com.

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments

to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act,

will be made available free of charge on our website as soon as reasonably practicable after we electronically file such material

with, or furnish it to, the Securities and Exchange Commission, or SEC.

The contents of our website are not incorporated into this

Annual Report and our reference to the URL for our website is intended to be an inactive textual reference only.

The information

contained on, or that can be accessed through, our website is not a part of this document.

Company Overview

Prior to the Merger,

we were a late-stage biopharmaceutical company focused on the development of novel, first-in-class pharmaceuticals to address the

needs of patients with renal and vascular disease.

After the Merger, we became a company that is committed to identifying and advancing

transformative therapies for people with rare and specialty diseases.

The Company prioritizes creativity, diverse perspectives

and tenacity to expedite our goal of bringing life-changing therapies to people with limited treatment options, including our current

development programs focused on the treatment of rare diseases in structural disorders as well as rare hepatology/gastrointestinal

and metabolic disorders.

development-stage, clinical biopharmaceutical company focused on bringing life-saving therapies to patients who suffer from

rare and specialty diseases.

The company’s core strategy is to identify and acquire or license overlooked or

undervalued products or product candidates and modernize or optimize development programs for these assets.

current development programs focus on therapeutics for rare structural disorders as well as rare hepatology/gastrointestinal

and metabolic disorders.

We are a New York City

based clinical-stage biopharmaceutical company committed to identifying and advancing transformative therapies for the treatment

of cancer and rare diseases with significant unmet needs.

We prioritize creativity, diverse perspectives, integrity and tenacity

to expedite our goal of bringing life-changing therapies to people with limited treatment options.

Our portfolio includes

two development programs utilizing TARA-002, an investigational cell therapy based on the broad immunopotentiator, OK-432, which

was originally granted marketing approval by the Japanese Ministry of Health and Welfare as an immunopotentiating cancer therapeutic

This cell therapy is currently approved in Japan for lymphatic malformations, or LMs, and multiple oncologic indications.

It has never been approved outside Japan and we have secured worldwide rights to the asset excluding Japan and Taiwan and have

begun to explore its use in rare and oncology indications.

We are developing TARA-002 in non-muscle invasive bladder cancer, or

NMIBC, and in LMs.

TARA-002’s

lead oncology program is in NMIBC, which is cancer found in the tissue that lines the inner surface of the bladder that has not

spread into the bladder muscle.

Bladder cancer is the sixth most common cancer in the United States, with NMIBC representing approximately

80% of bladder cancer diagnoses.

Approximately 65,000 patients are diagnosed with NMIBC in the United States each year.

new therapeutics have been approved in NMIBC since the 1990s and the current standard of care for NMIBC includes intravesical

Bacillus Calmette-Guerin, or BCG,.

The mechanism of TARA-002 is similar to BCG.

Both TARA-002 and BCG are intravesically administered

and elicit a type Th1 type immune response and locally activated generally similar array of cytokines and immune cells.

In August of 2020,

we announced constructive feedback following a pre-Investigational New Drug (pre-IND) interaction with the Office of Tissues and

Advanced Therapies division of the Center for Biologics Evaluation and Research, or CBER, at the FDA on a development plan for

TARA-002 in NMIBC.

Building on existing data from OK-432, and subject to the completion of non-clinical studies as well as acceptance

of the IND application, we plan to commence a Phase 1 clinical trial in late 2021 to assess the safety and tolerability of TARA-002

in patients with high grade NMIBC.

Our most advanced

clinical program is for LMs, which are rare, non-malignant cysts of the lymphatic vascular system that primarily form in the head

and neck region of children before the age of two.

In July 2020, the U.S.

Food and Drug Administration, or FDA, granted Rare Pediatric

Disease designation for TARA-002 for the treatment of LMs.

OK-432, the originator compound to TARA-002, has been the standard of

care in LMs in Japan for over 20 years.

In addition to the clinical experience in Japan, we have secured the rights to a dataset

from one of the largest ever conducted Phase 2 studies in lymphatic malformations, in which OK-432 was administered via a compassionate

use program led by the University of Iowa to over 400 pediatric and adult patients.

We have updated the initial IND that was submitted

by the University of Iowa and submitted the update and accompanying clarifying questions to the FDA Division of Vaccines and Related

Products Applications, or the Division, in connection with the IND for TARA-002 in LMs.

We plan to utilize the robust dataset for

OK-432 in LMs to support the potential filing of a Biological License Application (BLA) for TARA-002 in lymphatic LMs.

We are encouraged

by the progress to date and, at the FDA’s request, have submitted the full Clinical Study Report (CSR) of the randomized

Phase 2 study of OK-432 in LMs led by the University of Iowa.

We continue to prepare for a potential BLA filing in the second half

of 2021, or to initiate additional clinical work as required by FDA.

TARA-002 was developed

from the same master cell bank of genetically distinct group A Streptococcus pyogenes as OK-432 (marketed as Picibanil ®

Japan and Taiwan by Chugai Pharmaceutical Co., Ltd., or Chugai Pharmaceutical).

Following a pre-IND interaction with the Office

of Tissues and Advanced Therapies Division of the Center for Biologics Evaluation and Research, or CBER, the FDA agreed that we

have successfully demonstrated initial manufacturing comparability between TARA-002 and OK-432.

This initial comparability will

be confirmed by GMP scale batches, which are currently underway using the same release tests that have already been approved by

The third development

program in our portfolio is intravenous, or IV, Choline Chloride, an investigational phospholipid substrate replacement therapy

initially in development for patients receiving parenteral nutrition, or PN, who have intestinal failure associated liver disease,

IV Choline Chloride has been granted Orphan Drug Designation by the FDA for this indication and has also been granted

Fast Track Designation for the treatment of IFALD.

Following a positive end of Phase 2 meeting with the FDA, we received feedback

on the design of the studies necessary to complete the registration package for IV Choline Chloride for the treatment of IFALD,

including a Phase 1 pharmacokinetic study followed by Phase 3 trial.

Prior to initiating these clinical studies, we are currently

undertaking a prevalence study in partnership with a large home health organization in the United States to enhance understanding

of the PN patient population and we plan to use this information to determine the next steps for the development program.

of the study is to understand the presence/incidence of liver disease in this patient population.

Our fourth program, vonapanitase,

is a recombinant human elastase.

We are reviewing the research and preclinical and clinical data of vonapanitase and have not yet

determined whether to pursue further development of this product candidate in the future.

We have devoted substantial

efforts to the development of these programs and do not have any approved products and have not generated any revenue from product

TARA-002 is in later stage development for LMs and has not yet been approved for use for treatment of LMs, NMIBC or any

other indications.

We do not expect to generate revenues prior to 2022, if ever.

To finance our current strategic plans, including

the conduct of ongoing and future clinical trials and further research and development costs, we will need to raise additional

Our Product Candidate Pipeline

The following chart summarizes

the current status of our product candidate pipeline:

* TARA-002 Granted Rare Pediatric Disease Designation for

the treatment of LMs.

OK-432 Granted Orphan Drug Designation by the U.S.

FDA for the treatment of LMs, which we believe is applicable

under established comparability.

** Granted Orphan Drug and Fast Track Designations by the

Phase 1 PK study to be conducted prior to commencing Phase

Our Corporate Strategy:

We are an oncology and

rare disease company focused on identifying and acquiring or licensing de-risked assets and optimizing and/or accelerating their

Leveraging the drug development and commercialization experience of our management team, our goal is to build a leading

biopharmaceutical company focused on bringing life-saving therapies to patients with significant unmet needs.

Establish comparability of OK-432

Utilizing the same genetically

distinct Streptococcus pyogenes strain and proprietary manufacturing process used by Chugai Pharmaceutical to manufacture

OK-432 (marketed as Picibanil®

in Japan and Taiwan), we have produced development batches of TARA-002 and conducted comparability

studies using commercial OK-432 manufactured in Japan as a reference.

Following a pre-IND interaction with the Office of Tissues

and Advanced Therapies division of the Center for Biologics Evaluation and Research, or CBER, the FDA agreed that we had successfully

demonstrated initial manufacturing comparability between TARA-002 and OK-432.

This initial comparability will be confirmed by GMP

scale batches, which are currently underway using the same release tests that have already been accepted by the FDA.

Seek FDA approval for

the use of TARA-002 in Lymphatic Malformations

We plan to utilize the robust dataset for OK-432 in LMs to support

the potential filing of a Biological License Application (BLA) for TARA-002 in lymphatic LMs.

We are encouraged by the progress

to date and, at the FDA’s request, have submitted the full Clinical Study Report (CSR) of the randomized Phase 2 study of

OK-432 in LMs led by the University of Iowa.

We continue to prepare for a potential BLA filing in the second half of 2021, or to

initiate additional clinical work as required by FDA.

Pursue development of TARA-002 for

the treatment of non-muscle invasive bladder cancer (NMIBC).

Complete toxicology and MOA characterization & immunogenicity

studies in order to file an IND and initiate P1 study

We are developing TARA-002

for the treatment of non-muscle invasive bladder cancer, or NMIBC.

Building on existing safety and efficacy data from OK-432, and

subject to the completion of non-clinical studies, including toxicology and MOA characterization & immunogenicity studies,

which are currently underway, as well as acceptance of an Investigational New Drug, or IND, application, we plan to commence a

Phase 1 clinical trial in 2021 to assess the safety and tolerability of TARA-002 in patients with high grade NMIBC.

Further characterize the patient population

of IFALD to determine the appropriate strategy/path for IV Choline Chloride as a potential treatment option

Following a positive end

of Phase 2 meeting with the FDA, we received feedback on the design of the studies necessary to complete the registration package

for IV Choline Chloride for the treatment of IFALD, including a Phase 1 pharmacokinetic study followed by Phase 3 trial.

to initiating these clinical studies, we are currently undertaking a prevalence study in partnership with a very large home health

organization in the United States to enhance understanding of the PN patient population and plan to use this information to inform

the next steps for the development program.

Explore opportunities to expand our

The immunological activity

of TARA-002’s reference product, OK-432, has been effectively interrogated in patients in a long list of indications.

plan to carefully evaluate the case reports and the literature and perform initial in vitro characterization studies to

better understand the mechanism of action of TARA-002 and its potential activity in indications beyond LMs and NMIBC.

to engage with regulatory authorities outside of the US to explore the potential opportunities to bring TARA-002 to other geographies.

In addition, our leadership

team has a strong track record of licensing, acquiring and optimizing product candidates and we intend to leverage this skill to

identify opportunities for potential combination opportunities for TARA-002, particularly in NMIBC

TARA-002 / OK-432

TARA-002, ArTara’s lead program, is a follow-on biologic of the

immunotherapy OK-432 (marketed as Picibanil®

in Japan and Taiwan by Chugai Pharmaceutical Co., Ltd.

TARA-002, our lead program,

is an investigational cell therapy developed from the master cell line of the same genetically distinct Streptococcus pyogenes

(group A, type 3) Su strain as OK-432, a the broad immunopotentiator (marketed as Picibanil®

in Japan and Taiwan by Chugai

Pharmaceutical Co., Ltd.

(Chugai Pharmaceutical)).

ArTara expects to utilize the same regulatory starting materials as OK-432 and manufacture TARA-002 using an updated version of

the same proprietary processes used to manufacture OK-432.

Functionally, ArTara’s lead product is OK-432.

ArTara has designated

this product as TARA-002 in order to differentiate the regulatory path in the United States and other geographies from that of

OK-432 in Japan.

TARA-002 is a cell therapy developed from the master cell line of the

same genetically distinct Streptococcus pyogenes (group A, type 3) Su strain as OK-432 and will be manufactured in a similar

manner following Good Manufacturing Practices (GMP).

ArTara believes that these two factors will result in a product that is comparable

to OK-432 such that for the development and regulatory applications of TARA-002, it can use the historic data and literature amassed

for OK-432 in the four decades since it was first approved in Japan.

ArTara entered into

an agreement with Chugai Pharmaceutical in June 2019 to support ArTara’s development of TARA-002.

The agreement provides

ArTara with exclusive access, for a limited period, to certain materials and documents relating to OK-432 including the master

cell bank of Streptococcus pyogenes used in the manufacture of OK-432.

Additionally, the agreement provides technical support

during a certain period.

ArTara plans to utilize the materials, proprietary manufacturing process and technical support provided

by Chugai Pharmaceutical to produce TARA-002 at a GMP-compliant facility in the United States.

Under the agreement with Chugai

Pharmaceutical, ArTara will have sole responsibility for the development and commercialization of TARA-002 worldwide, excluding Japan and Taiwan.

In Japan, OK-432

is indicated for:

We expect to utilize the same regulatory starting materials as OK-432 and manufacture

TARA-002 using an updated version of the same proprietary processes used to manufacture OK-432.

Functionally, our lead product

We have designated this product as TARA-002 in order to differentiate the regulatory path in the U.S.

and other geographies

from that of OK-432 in Japan.

We entered into an agreement

with Chugai Pharmaceutical in June 2019 to support our development of TARA-002.

The agreement provides us with exclusive access

to certain materials and documents relating to OK-432 including the master cell bank of Streptococcus pyogenes used in the

manufacture of OK-432.

Additionally, the agreement provides technical support during a certain period.

We have utilized the materials,

proprietary manufacturing process and technical support provided by Chugai Pharmaceutical to produce TARA-002 at a GMP-compliant

facility in the United States.

Under the agreement with Chugai Pharmaceutical, we will have sole responsibility for the development

and commercialization of TARA-002 worldwide, excluding Japan and Taiwan.

On July 14, 2020, we entered into an amendment with Chugai

to the Chugai Pharmaceutical agreement.

This agreement is exclusive through June 17, 2030 or following any termination of the agreement

by either party.

In Japan, OK-432 is indicated

the treatment of lymphangiomas (lymphatic malformations);

1 unchanged sentence

(postoperative cases) or primary lung cancer in combination with chemotherapy;

and the reduction of cancerous pleural

effusion or ascites in patients with lung cancer or gastrointestinal cancer respectively, head and neck cancer (maxillary

cancer, laryngeal cancer, pharyngeal cancer, and tongue cancer) and thyroid cancer that are resistant to other drugs.

ArTara plans to pursue

development of TARA-002 for the treatment of lymphatic malformations (LMs).

ArTara also plans to explore the potential of TARA-002

in other indications where its utility as a sclerosant (an injectable irritant) or as an immunostimulant has been hypothesized

to be of therapeutic benefit.

Lymphatic Malformations

ArTara intends

to initially seek approval of TARA-002 for the treatment of LMs.

Lymphatic malformations are rare, non-malignant cysts of the

lymphatic vascular system that primarily form in the head and neck region of children before the age of two.

International Society for the Study of Vascular Anomalies categorizes LMs as macrocystic, microcystic, or mixed.

LMs are characteristically large, fluid-filled cysts with a thin endothelial lining.

Microcystic LMs have very limited

internal space with a thick, irregular endothelial lining.

Mixed LMs are comprised of varying degrees of both macrocystic and

and the reduction of cancerous pleural effusion

or ascites in patients with lung cancer or gastrointestinal cancer respectively, head and neck cancer (maxillary cancer, laryngeal

cancer, pharyngeal cancer, and tongue cancer) and thyroid cancer that are resistant to other drugs.

We plan to pursue development

of TARA-002 for the treatment of lymphatic malformations (LMs) and non-muscle invasive bladder cancer (NMIBC) initially in the

and plan to also seek approval in Europe and other regions in the future, and may also explore additional indications where

its utility as an immunostimulant has been hypothesized to be of therapeutic benefit.

TARA-002 in NMIBC

Disease Overview:

Bladder cancer is the

sixth most common cancer in the United States, with NMIBC representing approximately 80% of bladder cancer diagnoses.

cancer found in the tissue that lines the inner surface of the bladder that has not spread into the bladder muscle.

subtypes of NMIBC:

Ta (non-invasive papillary carcinoma), Tis (carcinoma in situ or CIS), and T1 (carcinoma invading the lamina

Among the types of NMIBC, Ta accounts for most NMIBC cases (70%), whereas T1 and CIS account for 20% and 10%, respectively.

Based on currently available

treatment data, we believe that there are approximately 30,000 incident cases of High-Grade NMIBC per year that would be appropriate

for treatment with TARA-002 in the U.S.

There are 65,000 incident cases of NMIBC in the U.S.

every year, of these, approximately

45% (~30,000) are made up of High-Grade tumor types that are considered higher risk, and therefore candidates for immunotherapies,

such as TARA-002).

In addition, NMIBC has one of the highest rates of recurrence with 3-year rate estimated at up to 80%.

Treatment for NMIBC is

typically targeted to reduce unresectable persistence, recurrence after resection, and to prevent disease progression to muscle-invasive

bladder cancer.

The initial treatment for NMIBC includes cystoscopy and complete transurethral resection of the bladder tumor (TURBT)

for papillary Ta or T1, or biopsy for CIS.

A single postoperative instillation of intravesical chemotherapy is recommended in patients

with low risk of progression, and for patients with intermediate and high-risk disease, a longer course of intravesical therapy

is administered.

The most efficacious intravesical agent is Bacillus Calmette-Guerin (BCG), a live attenuated form of Mycobacterium

BCG has been the subject of multiple supply shortages in the past decade due to the inability to meet demand to treat

the large population of patients with NMIBC resulting in strategies to conserve the use of the therapy.

There has been a significant

increase in bladder cancer recurrence and progression and an escalated number of patients who needed to be treated by cystectomy

have been reported.

As such, with the current BCG shortage and limited effective alternate therapies or dosing strategies, there

continues to be a significant unmet need for treatment options for patients with NMIBC.

Manufacturing:

TARA-002 will be manufactured

using an equivalent, but modernized, proprietary manufacturing process as is used to produce OK-432 by Chugai Pharmaceutical, starting

with a master cell line propagated by us but utilizing the same genetically distinct strain of Streptococcus pyogenes (A

group, type 3) Su strain as OK-432.

We have contracted a contract development and manufacturing organization (CDMO), to manufacture

TARA-002 has received initial comparability to OK-432 from the FDA.

We are currently conducting confirmatory large scale

GMP manufacturing comparability, which are scheduled to be completed in 2021.

TARA-002 for the Treatment of Lymphatic

Malformations

Disease Overview:

We are pursuing regulatory

approval for TARA-002 for the treatment of lymphatic malformations.

Lymphatic malformations are rare, non-malignant cystic masses

that primarily form in the head and neck region of children before the age of two.

The International Society for the Study of Vascular

Anomalies classifies LMs as either macrocystic, microcystic, or mixed.

Macrocystic and microcystic LMs are differentiated by the

size of the fluid-containing portion of the malformation.

Macrocystic LMs are characteristically large, fluid-filled cysts with

a thin endothelial lining.

Macrocystic LMs are composed of cysts greater than 2 cm3 in size and present as a soft, fluid-filled

swelling beneath normal or slightly discolored skin.

Macrocystic LMs are usually located in the antero-lateral cervical region

however, it is possible for this type of LM to originate in other areas of the body.

In contrast, microcystic LMs

have very limited internal space with a thick irregular endothelial lining.

Microcystic LMs are comprised of cysts less than 2

cm3 in size and are often composed of micro-lymphatic channels that integrate and infiltrate normal soft tissue.

Microcystic LMs

In the United States, LMs are present in approximately one in every 4,000 live births.

of Japan and Taiwan, the standard of care for LMs is surgical excision, which is associated with high rates of recurrence and complications.

There are no pharmacotherapies currently approved for LMs except in Japan and Taiwan, where OK-432 is marketed.

In these countries,

OK-432 has been the standard of care for LMs for almost 25 years.

When OK-432 is administered locally for LMs, it is hypothesized

that innate immune cells within the cyst are activated and produce a strong immune cascade.

Neutrophils and monocytes infiltrate

the cyst and various cytokines, including interleukins IL-6, IL-8, IL-12, interferon (IFN)-gamma, tumor necrosis factor (TNF)-alpha,

and vascular endothelial growth factor (VEGF) are secreted by immune cells within the cyst in response to the presence of OK-432.

In concert, these immune activities induce a strong local inflammatory reaction in the cyst wall, resulting in fluid drainage,

shrinkage and fibrotic adhesion of the cyst.

The University of

Iowa led a multi-year study in LMs beginning in the late 1990s that included three separate studies including a randomized, controlled

safety and efficacy study.

In this phase 2 clinical trial, 151 patients with LMs (>90% pediatric) were treated with OK-432.

A clinically successful outcome was demonstrated in 94% (74/79) of patients with macrocystic LMs and 63% (25/40) of patients with

mixed LMs who completed treatment per protocol.

Following these results, an additional 500 pediatric patients were treated with

OK-432 in the United States at 27 different pediatric referral centers.

ArTara has entered into an exclusive license agreement

with the University of Iowa for the data from these clinical trials and is currently analyzing such data.

ArTara plans to request

a meeting with the U.S.

Food and Drug Administration (FDA) in 2020 to determine if additional clinical data are needed to support

the submission of a Biologics License Application (BLA) for TARA-002 for the treatment of LMs.

IV Choline Chloride

is an intravenous (IV) substrate replacement therapy initially in development for patients receiving parenteral (typically intravenous)

nutrition (PN) who have intestinal failure associated liver disease (IFALD).

Choline is a known

important substrate for phospholipids that are critical for healthy liver function.

Because PN patients cannot sufficiently absorb

adequate levels of choline and no available PN components contain sufficient amounts of choline to correct this deficit, PN patients

often experience a prolonged progression to hepatic failure and death, with the only known intervention being a dual small bowel

/ liver transplant.

If approved, IV Choline Chloride would be the first approved therapy for IFALD.

It has been granted Orphan

Drug Designations (ODDs) by the FDA for the treatment of IFALD and the prevention of choline deficiency in PN patients.

ArTara entered into

a license agreement with Dr.

Alan Buchman for exclusive rights to the IND, ODDs and other regulatory assets related to IV Choline

Chloride, as well as exclusive rights to the data from previously conducted phase 1 and phase 2 clinical trials led by Dr.

Intestinal Failure

Associated Liver Disease

IFALD is associated

with significant morbidity in patients who rely on PN for long-term survival.

It is believed that there are multiple contributing

factors to the development of IFALD with a substantial body of literature pointing to choline deficiency as a key cause.

IFALD is uniquely

characterized by the presence of both steatosis (toxic fat accumulation in liver cells) and cholestasis (damage to the biliary

system in the liver) in patients who are chronic (greater than six months) PN users.

The results of a randomized,

controlled, phase 2 clinical trial demonstrated that treatment with IV Choline Chloride resulted in normalization of plasma-free

choline concentrations, improvement of hepatic steatosis, and a clinically meaningful and statistically significant improvement

in cholestasis in patients dependent on PN.

ArTara had an end of phase 2 meeting with the FDA in November 2018 and received the

FDA’s support for the design of studies necessary to complete the registration package for IV Choline Chloride for the treatment

Our Corporate Strategy:

Leveraging the drug

development and commercialization experience of ArTara’s management team, ArTara’s objective is to build a leading

biopharmaceutical company focused on bringing life-saving therapies to patients who suffer from rare and specialty diseases.

core strategy is to identify and acquire or license overlooked or undervalued products or product candidates and modernize or optimize

development programs for these assets.

ArTara’s current development programs focus on therapeutics for rare structural disorders,

as well as rare hepatology/gastrointestinal and metabolic disorders.

Establish comparability

of OK-432 and TARA-002 and rapidly seek approval for use in Lymphatic Malformations

Utilizing the same genetically distinct Streptococcus-pyogenes strain and proprietary

manufacturing process used by Chugai Pharmaceutical to manufacture OK-432, ArTara plans to produce development batches of TARA-002

and conduct comparability studies using commercial OK-432 (Picibanil®) manufactured in Japan as a reference.

ArTara plans to

engage with the FDA in 2020 to seek their agreement on the comparability of the two products.

In addition, ArTara plans to discuss

with the FDA whether OK-432’s efficacy and safety database from the clinical trials of more than 600 patients conducted in

the US and led by the University of Iowa, as well as the more than 25 year safety database in LM’s are sufficient for a BLA

submission for TARA-002.

Pursue development

and approval of IV Choline Chloride for IFALD

ArTara is in ongoing

discussions with the FDA regarding the development plan for IV Choline Chloride for the treatment of IFALD.

ArTara has reached

agreement with FDA on a number of key aspects of the overall clinical program necessary for registration.

ArTara plans to start

implementing certain facets of the development plan in 2020.

Explore product

expansion opportunities from existing pipeline

The immunological

activity of TARA-002’s reference product, OK-432, has been effectively interrogated in patients in a long list of indications.

We plan to carefully evaluate the case reports and the literature and perform initial in vitro characterization studies

to better understand the mechanism of action of TARA-002 and its potential activity in indications beyond LMs.

Continue to leverage

expertise in business development

ArTara’s leadership

team has a strong track record of licensing, acquiring and optimizing product candidates for the treatment of patients with diseases

with limited or no treatment options.

ArTara plans on building its therapeutic portfolio by strategically pursuing products and

product candidates that allow it to utilize this expertise to expand the existing pipeline.

TARA-002 for the Treatment

of Lymphatic Malformations

ArTara will initially

develop TARA-002 for the treatment of lymphatic malformations.

Lymphatic malformations are rare, non-malignant masses that primarily

form in the head and neck region of children before the age of two.

While the exact prevalence of LMs is not known, in the United

States, the condition is thought to be present in approximately one in every 4,000 live births.

Outside of Japan and Taiwan, the

standard of care is surgical excision, which is associated with high rates of recurrence and complications.

can involve both superficial and deep aspects including muscle and bone.

Microcystic LMs can thicken or swell causing enlargement

of surrounding soft tissue and bones and can be found on any area of the skin or mucous membrane.

Mixed LMs are comprised of varying

degrees of both macrocystic and microcystic LMs.

While the exact prevalence

of LMs is not known, in the United States, the condition is thought to be present in approximately one in every 4,000 live births

and we believe there are approximately 1,400-1,800 LM cases per year.

Outside of Japan and Taiwan,

the standard of care is surgical excision, which is associated with high rates of recurrence and complications.

There are no approved

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of care for LMs for over 25 years.

Disease Overview

The exact cause of

LMs is not completely understood;

however, there are studies suggesting that somatic genetic mutations may cause the lymphatic

One study described the association between observed mutations in the PI3K/AKT1/mTOR pathway and the development of

This pathway is known to regulate the formation of endothelial cells that line the lymphatic channels.

In patients with LMs,

there is a relatively frequent observation of somatic gain of function mutations in the PIK3CA gene.

Additionally, five different

point mutations in DNA analyzed from LM tissue have been identified.

It remains unclear whether these mutations alone are what

Lymphatic malformations

are rare, non-malignant cystic masses that primarily form in the head and neck region of children before the age of two.

The International

Society for the Study of Vascular Anomalies classifies LMs as either macrocystic, microcystic, or mixed.

Macrocystic and microcystic

LMs are differentiated by the size of the fluid-containing portion of the malformation.

Macrocystic LMs are characteristically

large, fluid-filled cysts with a thin endothelial lining.

Macrocystic LMs are composed of cysts greater than 2 cm3 in size and

present as a soft, fluid-filled swelling beneath normal or slightly discolored skin.

Macrocystic LMs are usually located in the

antero-lateral cervical region of the neck;

however, it is possible for this type of LM to originate in other areas of the body.

In contrast, microcystic LMs have very limited internal space with a thick irregular endothelial lining.

Microcystic LMs are comprised

of cysts less than 2 cm3 in size and are often composed of micro-lymphatic channels that integrate and infiltrate normal soft tissue.

Microcystic LMs can involve both superficial and deep aspects including muscle and bone.

Microcystic LMs can thicken or swell causing

enlargement of surrounding soft tissue and bones and can be found on any area of the skin or mucous membrane.

Mixed LMs are comprised

of varying degrees of both macrocystic and microcystic LMs.

The standard of care

for LMs varies depending on the symptoms and complications that present themselves.

One of the most common procedures used to reduce

the size of lymphatic growth is a percutaneous drainage of the lymphatic fluid.

This procedure results in significant discomfort

to the pediatric patients and is only a short-term solution that often results in recurrence of the lymphatic fluid.

of care outside Japan and Taiwan for the treatment of LMs is either a partial or complete surgical excision of the cysts.

surgery is the standard approach to the treatment of LMs in the head and neck, the region is a difficult area to operate in because

of the large number of important anatomical structures in the area.

Major venous and arterial trunks travel through the neck, as

do important nerves.

Surgery on such malformations frequently results in high rates of recurrence and complications including life-long

chronic conditions, such as damage to nerves and other important structures of the head and neck.

Treatment of LMs varies

depending on the symptoms and complications that present themselves.

The standard of care outside Japan and Taiwan for the treatment

of LMs is either a partial or complete surgical excision of the cysts.

While surgery is the standard approach to the treatment

of LMs in the head and neck, the region is a difficult area to operate in because of the large number of important anatomical structures

Major venous and arterial trunks travel through the neck, as do important nerves.

Surgery on such malformations frequently

results in high rates of recurrence and complications including life-long chronic conditions, such as damage to nerves and other

important structures of the head and neck.

Clinical Development

A randomized, phase

2 clinical trial led by the University of Iowa studied the use of OK-432 in 182 patients with lymphatic malformations (>90%

pediatric) from 1998 to 2004.

This trial included patients with macrocystic, microcystic and mixed lymphatic malformations.

were three treatment groups:

immediate treatment, delayed treatment, and open label.

The immediate treatment group received treatment

with OK-432 upon diagnosis.

The delayed treatment group received OK-432 treatment following a six-month observation period because

at the time of this trial, there was some belief that LMs could spontaneously resolve.

The open-label treatment group included infants

younger than six months of age, adults older than 18 years of age, patients with LMs involving sites other than the head and neck

(such as the axilla, thorax, and extremities), and patients treated on an emergent basis.

Response to therapy was measured by quantitating

change in lesion size.

Clinical success was defined as a complete (90% to 100%) or substantial (60% to 89%) response to treatment

based on radiographically confirmed shrinkage in lesions.

Consort Diagram of Patients included

in the Iowa trial

Intent-to-Treat:

Six Months After Enrollment

Figure 2 demonstrates that the primary

endpoint was met showing that 68% of patients in the immediate treatment group had a complete or substantial response to OK-432

while 0% of patients in the delayed treatment group had a complete or substantial response after six months of observation and

before treatment.

Clinical Success of OK-432

Figure 3 illustrates that a large majority

of patients in all three cohorts of the trial experienced a complete or substantial response once they completed treatment with

Clinical Success of OK-432 Based

Figure 4 illustrates the compelling response

to OK-432 demonstrating the overall clinical success of the treatment by radiographically confirmed lesion type.

The most common after effects with treatment

When OK-432 is administered

locally for LMs, it is hypothesized that innate immune cells within the cyst are activated and produce a strong immune cascade.

Neutrophils and monocytes infiltrate the cyst and various cytokines, including interleukins IL-6, IL-8, IL-12, interferon (IFN)-gamma,

tumor necrosis factor (TNF)-alpha, and vascular endothelial growth factor (VEGF) are secreted by immune cells within the cyst in

response to the presence of OK-432.

In concert, these immune activities induce a strong local inflammatory reaction in the cyst

wall, resulting in fluid drainage, shrinkage and fibrotic adhesion of the cyst.

randomized, phase 2 clinical trial led by the University of Iowa studied the use of OK-432 in patients with LM from 1998 to 2005.

Most eligible subjects were between 6 months and 18 years of age with macrocystic or mixed macrocystic-microcystic LMs (with ≥

50% macrocytic disease) of the head and/or neck.

There were three treatment groups:

immediate treatment (ITG), delayed treatment

(DTG), and open label treatment group.

The immediate treatment group received treatment with

OK-432 upon diagnosis.

The delayed treatment group received OK-432 treatment following a six-month observation period;

the cross-over

design was intended to investigate spontaneous resolution.

The open-label treatment group included infants younger than six months

of age, adults older than 18 years of age, patients with LMs involving sites other than the head and neck (such as the axilla,

thorax, and extremities), and patients treated on an emergent basis.

The open label treatment group were treated immediately with

Response to therapy was measured by quantitating change in lesion size.

Clinical success was defined as a complete (90%

to 100%) or substantial (60% to 89%) response to treatment based on radiographically confirmed shrinkage in lesions.

Results presented in this

report were based on a retrospective analysis of source verified data that included the full dataset of subjects enrolled in the

P2 randomized study between January 1998 and August 2005, including data in the published study (Smith et al.

2009) which included

subjects enrolled between January 1998 and November 2004.

Overall, 310 subjects

were enrolled with intent to treat:

246 subjects were randomized to the immediate (ITG, N=171) and delayed (DTG, N=75) treatment

64 subjects were nonrandomized and assigned to the open-label group.

Analysis of the primary efficacy endpoint (N=150)

demonstrated clinical success (complete and/or substantial response) in 69% of patients in the ITG 6 months after enrollment, while

7.5% of patients in the DTG experienced spontaneous regression of a LM during this time interval (p < 0.0001)).

When the results

were analyzed by lesion type across all treatment groups, a successful outcome was observed in 84% and 60% of patients with macrocystic

and mixed macrocystic-microcystic LM, respectively.

None of the patients with microcystic LM demonstrated clinical success to OK-432

The results of the retrospective analysis were consistent with the results observed in the original analysis (Smith et

demonstrates that the primary endpoint

was met showing that 69% of patients in the immediate treatment group had a complete or substantial response to OK-432 while 7.5%

of patients in the delayed treatment group had a complete or substantial response after six months of observation and before treatment.

ǂ Clinical Success was defined as complete or substantial

** Results were analyzed by lesion type across all treatment

illustrates that patients with

radiographically confirmed macrocystic lesions had the greatest likelihood of clinical success and in those patients with mixed

legions, clinical success was also achieved.

Success was defined as complete or substantial response

data prior to dosing with OK-432.

After dosing, the clinical success rate was 66%, which was not statistically different from

the Immediate Treatment Group

were analyzed by lesion type across all treatment groups

Safety Profile

The most common adverse events with treatment

were local injection site reactions, fever, fatigue, decreased appetite, with resolution within a few days.

Serious adverse events

associated with OK-432 treatment included re-hospitalization for injection (n=3), severe edema (n=3), airway obstruction necessitating

tracheostomy tube replace (n=4), and submental intra-cystic hemorrhage necessitating surgical excision.

Following the results

with OK-432 treatment in this trial, an additional 500 patients were enrolled in an open-label study of OK-432 in the United States

from 2005 to 2017.

ArTara has entered into an exclusive license agreement with the University of Iowa for the data from these trials

and is currently analyzing such data.

Once ArTara can demonstrate

that it is manufacturing a drug product that is comparable to OK-432, it plans to meet with the FDA to determine if additional

clinical data are needed to support the submission of a BLA for TARA-002 for the treatment of lymphatic malformations.

Treatment emergent

serious adverse events (defined as any SAE occurring or worsening on or after the first dose of study drug and within 35 days after

the last dose of study drug) associated with OK-432 treatment were reported in 4.1% of patients, with the most severe events being

airway obstruction and facial paralysis due to massive swelling post-injection that required tracheostomy and hospitalization.

Both of these events were reported as resolved

The safety findings from the Sponsor-conducted

retrospective analysis are consistent with the original analysis reported in Smith et al.

2009, and with safety data in published

studies in approximately 865 patients with LMs after treatment with OK-432.

Preclinical Development:

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by Chugai Pharmaceutical to support the filing of a new drug application with the Japan Pharmaceuticals and Medical Devices Agency.

ArTara plans to discuss with the FDA the ability to rely on these studies for the submission of a BLA for TARA-002.

Clinical Development

ArTara plans to engage

the FDA in 2020 to determine the requirements for a BLA submission, including agreement on requirements to demonstrate the comparability

of the two products.

ArTara plans to discuss with the FDA whether OK-432’s more than 25-year safety database in LMs, as well

as the efficacy and safety database from the clinical trials of more than 600 patients conducted in the US and led by the University

of Iowa are sufficient for a BLA submission for TARA-002.

Based on the guidance from the FDA, ArTara plans to conduct additional

clinical trials as required.

We plan to discuss with the FDA the ability to rely on these studies for the submission of a BLA for TARA-002.

Regulatory Interactions:

In July 2020, the U.S.

Food and Drug Administration, or FDA, granted Rare Pediatric Disease designation for TARA-002 for the treatment of LMs.

grants Rare Pediatric Disease designation for serious diseases that primarily affect children ages 18 years or younger and fewer

than 200,000 persons in the United States.

Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, a sponsor who

receives an approval of a new drug application or biologics license application for a product for the prevention or treatment of

a rare pediatric disease may be eligible for a voucher, which can be redeemed to obtain priority review for any subsequent marketing

application or may be sold or transferred.

We plan to utilize

the robust dataset for OK-432 in LMs to support the potential filing of a Biological License Application (BLA) for TARA-002 in

lymphatic LMs.

We are encouraged by the progress to date and, at the FDA’s request, have submitted the full Clinical Study

Report (CSR) of the randomized Phase 2 study of OK-432 in LMs led by the University of Iowa.

We continue to prepare for a potential

BLA filing in the second half of 2021, or to initiate additional clinical work as required by FDA.

Manufacturing Plans:

TARA-002 will be

manufactured using an equivalent, but modernized, proprietary manufacturing process as is used to produce OK-432 by Chugai

Pharmaceutical.

Starting with a master cell line propagated by ArTara but utilizing the same genetically distinct strain of Streptococcus

pyogenes (A group, type 3) Su strain as OK-432, TARA-002 will be manufactured by a CMO in a facility located in the

United States.

TARA-002 will be compared against OK-432 in formal comparability studies to establish the potency of

ArTara plans to discuss the planned manufacturing program with the FDA as soon as it has demonstrated comparability

in the planned research-scale manufacturing batches which is expected to occur in 2020.

IV Choline Chloride

for the treatment of Intestinal Failure Associated Liver Disease

IFALD is a rare hepatic/metabolic

IFALD, which occurs in patients dependent upon PN, is characterized by choline deficiency, hepatic steatosis, cholestasis,

and rapid progression of liver disease through to hepatic failure and death, in the absence of intestine-liver transplant.

carries a relatively poor prognosis, with a 15-34% death rate within one to four years.

When IFALD presents in children, mortality

is even higher, with studies reporting death rates of 23-40% within 18 months.

TARA-002 will be manufactured

using an equivalent, but modernized, proprietary manufacturing process as is used to produce OK-432 by Chugai Pharmaceutical.

Starting with a master cell line propagated by us but utilizing the same genetically distinct strain of Streptococcus pyogenes

(A group, type 3) Su strain as OK-432.

We have contracted a contract development and manufacturing organization (CDMO), to

manufacture TARA-002.

TARA-002 has received initial comparability to OK-432 from the FDA.

We are currently conducting confirmatory

large scale GMP manufacturing comparability, which are scheduled to be completed in 2021.

IV Choline Chloride for the treatment of Intestinal

Failure Associated Liver Disease

IV Choline Chloride is

an intravenous (IV) substrate replacement therapy initially in development for patients receiving parenteral (typically intravenous)

nutrition (PN) who have intestinal failure associated liver disease (IFALD).

Choline is a known important

substrate for phospholipids that are critical for healthy liver function.

Because patients receiving PN cannot sufficiently absorb

adequate levels of choline and no available PN components contain sufficient amounts of choline to correct this deficit, they often

experience a prolonged progression to hepatic failure and death, with the only known intervention being a dual small bowel / liver

If approved, IV Choline Chloride would be the first approved therapy for IFALD.

It has been granted Orphan Drug Designations

(ODDs) by the FDA for the treatment of IFALD and the prevention of choline deficiency in PN patients.

We are currently undertaking

a prevalence study in partnership with a very large home health organization in the United States to enhance understanding of the

PN patient population.

We have entered into a

license agreement with Dr.

Alan Buchman for exclusive rights to the IND, ODDs and other regulatory assets related to IV Choline

Chloride, as well as exclusive rights to the data from previously conducted phase 1 and phase 2 clinical trials led by Dr.

The results of a randomized,

controlled, phase 2 clinical trial demonstrated that treatment with IV Choline Chloride resulted in normalization of plasma-free

choline concentrations, improvement of hepatic steatosis, and a clinically meaningful and statistically significant improvement

in cholestasis in patients dependent on PN.

We had an end of phase 2 meeting with the FDA

in November 2018 and received the FDA’s support for the design of studies necessary to complete the registration package

for IV Choline Chloride for the treatment of IFALD, including a Phase 1 pharmacokinetic study followed by Phase 3 trial.

Disease Overview:

Intestinal Failure Associated

Liver Disease or IFALD is a rare hepatic/metabolic disease.

IFALD, which occurs in patients dependent upon PN, is characterized

by choline deficiency, hepatic steatosis, cholestasis, and rapid progression of liver disease through to hepatic failure and death,

in the absence of intestine-liver transplant.

IFALD carries a relatively poor prognosis, with a 15-34% death rate within one to

When IFALD presents in children, mortality is even higher, with studies reporting death rates of 23-40% within 18 months.

A patient is considered to have IFALD if she/he:

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has evidence of steatosis, determined by imaging techniques or histologic assessments;

• has evidence of cholestasis (e.g., elevated alkaline phosphatase (ALP), elevated bilirubin and/or

• may have evidence of ongoing, progressive liver injury on the basis of multiple abnormal liver

function tests, in conjunction with findings of fibrosis, cirrhosis, and/or end-stage liver disease (ESLD).

It is well established

that IFALD prevalence increases with duration of PN use;

however, the duration that PN is used varies.

Based on Medicare data,

there are approximately 220,000 PN patients per year (>12 years old) in the United States, the majority of whom tend to be short-term.

However, approximately 7% of all patients are on PN for longer than three months and therefore at high risk for developing IFALD.

When taking into consideration IFALD available prevalence data and known distribution of PN duration, it is estimated that there

are several thousand patients aged 12 and older with IFALD in the United States.

has evidence of cholestasis (e.g., elevated alkaline phosphatase (ALP), elevated bilirubin and/or histology);

may have evidence of ongoing, progressive liver injury on the basis of multiple abnormal liver function tests, in conjunction with findings of fibrosis, cirrhosis, and/or end-stage liver disease (ESLD).

According to recent Medicare diagnosis data, we estimate that

there are about 5,000 IFALD patients in the U.S.

Many patients receiving

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The American Society for Parenteral and Enteral Nutrition and the Academy

of Nutrition and Dietetics’ Dietitians in Nutrition Support both recommend that choline be required in PN products;

of Nutrition and Dietetics’

Dietitians in Nutrition Support both recommend that choline be required in PN products;

there are currently no FDA-approved choline chloride PN products.

Choline is an essential

dietary nutrient in humans.

It is a component of the predominant phospholipids in cell membranes (phosphatidylcholine and sphingomyelin)

and a precursor for the neurotransmitter acetylcholine and phospholipid biosynthesis.

Choline also plays an important role in the

synthesis of methyl groups needed to make the primary methyl donor, S-adenosylmethionine.

The normal range of physiologic concentrations

of free choline is broad, ranging from 6.7 to 26.9 nmol/mL, due in part to effects of variations in diet, differences in absorption,

and genetic polymorphisms related to choline metabolism.

Patients are considered to be choline deficient if concentrations of plasma

free choline are less than 7 nmol/mL.

PN-dependent patients

develop choline deficiency, with 80-85% of long-term PN patients exhibiting decreased concentrations of plasma free choline below

Choline deficiency causes impaired triglyceride export from the liver due to reduced very low-density lipoprotein (VLDL)

synthesis, leading to fatty accumulation, abnormal bile composition, and progressive hepatocellular injury.

Choline deficient patients

dependent on PN present with signs of hepatic injury, neuropsychological impairment (including memory abnormalities), and muscle

damage, as well as thrombotic abnormalities.

Cholestasis (when bile from the liver stops or slows) in IFALD may be mediated by

altered and potentially toxic bile salt composition due to deficient phosphatidylcholine, a major component of normal bile.

Dependence on PN and

resulting choline deficiency often leads to IFALD, which is the most common adverse outcome in chronic PN adult patients that is

associated with death.

Low free choline plasma concentrations are associated with alanine aminotransferase (“ALT”),

aspartate aminotransferase (“AST”), and alkaline phosphatase (“ALP”) elevations as well as steatosis (fatty

liver), all indicators of ongoing liver damage.

As plasma free choline concentrations decline in PN patients, serum concentrations

of liver enzymes, ALT and AST, ALP, and/or bilirubin become abnormally high, which is associated with hepatic steatosis, cholestasis,

and liver damage.

Choline Synthesis Pathway

Figure 6 depicts the

metabolic pathway in which choline is normally synthesized.

Throughout the

body, phosphatidylcholine (PC) is synthesized almost exclusively through external choline consumption.

Intra-hepatically,

the phosphatidylethanolamine N-methyltransferase (“PEMT”) pathway can provide 30% of the liver’s needs.

Dependence on PN and resulting

choline deficiency often leads to IFALD, which is the most common adverse outcome in chronic PN adult patients that is associated

Low free choline plasma concentrations are associated with alanine aminotransferase (“ALT”), aspartate

aminotransferase (“AST”), and alkaline phosphatase (“ALP”) elevations as well as steatosis (fatty liver)

and Cholestasis (when bile from the liver stops or slows), all indicators of ongoing liver damage.

Clinical History:

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or PN to which 2g IV Choline Chloride was added (n = 7).

In the IV Choline

Chloride group, mean choline levels were within or greater than the estimated normal range (i.e., 6.7 to 26.9 nmol/mL) throughout

the 24-week trial and quickly returned to baseline levels when treatment was discontinued.

Upon conversion of the quantification of computed tomography (CT)

values to magnetic resonance imaging proton density fat fraction (MRI-PDFF), significant differences in the least square (LS) mean

change from baseline in estimated MRI-PDFF were observed in the IV Choline Chloride group in comparison to placebo group at Week

4 through Week 24, demonstrating a clinically meaningful and statistically significant reduction in steatosis.

When LS mean percent

changes from baseline in MRI-PDFF were compared between treatment groups, significant differences in LS mean changes (range, 31.7%

to 53.6%) were observed from Weeks 4 to 24 with p-values of 0.0009 to 0.0297 favoring the IV Choline Chloride group.

of CT to MRI-PDFF I

CT to MRI-PDFF Conversion Equation:

MRI-PDFF (%) = –0.572*Liver CT(HU) + 37.264

model for repeated measurement (“MMRM”) method used for imputation

placebo subject was excluded from all analyses due to likely IV contrast-induced imaging abnormalities, confirmed by independent

radiologist in subsequent re-analysis.

In the IV Choline Chloride

group, mean choline levels were within or greater than the estimated normal range (i.e., 6.7 to 26.9 nmol/mL) throughout the 24-week

trial and quickly returned to baseline levels when treatment was discontinued.

Upon conversion of the

quantification of computed tomography (CT) values to magnetic resonance imaging proton density fat fraction (MRI-PDFF), significant

differences in the least square (LS) mean change from baseline in estimated MRI-PDFF were observed in the IV Choline Chloride group

in comparison to placebo group at Week 4 through Week 24, demonstrating a clinically meaningful and statistically significant reduction

in steatosis.

When LS mean percent changes from baseline in MRI-PDFF were compared between treatment groups, significant differences

in LS mean changes (range, 31.7% to 53.6%) were observed from Weeks 4 to 24 with p-values of 0.0009 to 0.0297 favoring the IV Choline

Chloride group.

Liver CT Images:

Before and After

Treatment with IV Choline Chloride

Before and After Treatment with

IV Choline Chloride

Alkaline Phosphatase:

At baseline, LS mean

ALP concentration was 239.3 ±

At baseline, LS mean ALP

concentration was 239.3 ±

118.93 in the IV Choline Chloride group and 148.1 ±

100.2 in the placebo group.

MMRM analyses demonstrated statistically significant decreases in ALP concentrations at Week 12 (p = 0.008), Week 16 (p = 0.005),

Week 20 (p = 0.007), and Week 24 (p = 0.005) for the IV Choline Chloride group, demonstrating a reduction in cholestasis.

towards significance was observed at Week 4 (p = 0.076) and Week 6 (p = 0.056).

At Week 34, 10 weeks after discontinuation of IV

Choline Chloride treatment, LS mean change from baseline in ALP concentrations still demonstrated statistically significant decreases

(p = 0.002), demonstrating a significant improvement in cholestasis with treatment with IV Choline Chloride (Figure 9).

In the subgroup of subjects with ALP concentration > 1.5x upper

limit of normal (ULN) at baseline, (n=7), mean values at baseline were comparable between the IV Choline Chloride and placebo groups

(294.20 ±

analyses demonstrated statistically significant decreases in ALP concentrations at Week 12 (p = 0.008), Week 16 (p = 0.005), Week

20 (p = 0.007), and Week 24 (p = 0.005) for the IV Choline Chloride group, demonstrating a reduction in cholestasis.

A trend towards

significance was observed at Week 4 (p = 0.076) and Week 6 (p = 0.056).

At Week 34, 10 weeks after discontinuation of IV Choline

Chloride treatment, LS mean change from baseline in ALP concentrations still demonstrated statistically significant decreases (p

= 0.002), demonstrating a significant improvement in cholestasis with treatment with IV Choline Chloride (Figure 4).

In the subgroup of subjects with ALP concentration

> 1.5x upper limit of normal (ULN) at baseline, (n=7), mean values at baseline were comparable between the IV Choline Chloride

and placebo groups (294.20 ±

87.947 versus 277.00 ±

128.693, respectively).

In the sub-group analysis, improvement in ALP was consistent

and substantial, with 20-30% improvement over 12-24 weeks of treatment (Figure 10).

Improvement in Cholestasis I :

model for repeated measurement (“MMRM”) method used for imputation

placebo subject was excluded from all analyses due to likely IV contrast-induced imaging abnormalities, confirmed by independent

radiologist in subsequent re-analysis.

Improvement in CholestasisI:

Patients with 1.5x ULN (ITT Population) I

method used for imputation

placebo subject was excluded from all analyses due to likely IV contrast-induced imaging abnormalities, confirmed by independent

radiologist in subsequent re-analysis.

In the sub-group analysis, improvement

in ALP was consistent and substantial, with 20-30% improvement over 12-24 weeks of treatment.

Improvement in Cholestasis 1 :

1 Protara Therapeutics re-analysis of patient CRF’s, data

* mixed model for repeated

measurement (“MMRM”) method used for imputation

placebo subject was excluded from all analyses due to likely IV contrast-induced imaging

abnormalities, confirmed by independent radiologist in subsequent re-analysis.

Preclinical Development:

Preclinical Studies Conducted

by ArTara for IV Choline Chloride

Preclinical Studies Conducted by us

for IV Choline Chloride

Brief Description

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GLP Combined Single-dose IV Neurobehavioral and Respiratory Study

Clinical Development

Discussions are ongoing

with the FDA regarding the development plan for IV Choline Chloride for the treatment of IFALD.

ArTara has reached agreement with

FDA on a number of key aspects of the overall clinical program necessary for registration.

ArTara plans to start implementing certain facets of the development plan in 2020.

Clinical Development Plan:

We have reached

agreement with FDA on a number of key aspects of the overall clinical program necessary for registration, including a Phase 1

pharmacokinetic study and a Phase 3 study.

We are currently undertaking a prevalence study in partnership with a large home

health organization in the United States to enhance understanding of the PN patient population, and plans to use this

information to determine the appropriate next steps for the development program.

Manufacturing Plans:

ArTara has manufactured

sufficient amounts of GMP drug substance and drug product to initiate the planned clinical trials.

Scale up for commercial demand

is ready and will commence when appropriate.

ArTara’s end-to-end manufacturing of IV Choline Chloride is conducted in the

United States by a GMP-compliant CDMO.

As a result of the

Merger, ArTara acquired the product candidate, vonapanitase, a recombinant human elastase that the Company previously pursued development

for the improvement of vascular access outcomes in patients with chronic kidney disease, undergoing or preparing for hemodialysis,

and as a treatment for patients with symptomatic peripheral artery disease.

ArTara is reviewing the research, preclinical and clinical

data of vonapanitase and has not yet determined whether to pursue any further development of this product candidate in the future.

Sales and Marketing

ArTara aims to become

a fully integrated biopharmaceutical company pursuing its mission of supporting and improving the lives of patients suffering from

rare diseases.

If approved by the

FDA, ArTara plans to commercialize both of its current product candidates in the United States first and then move to other geographies.

As ArTara advances IV Choline Chloride and TARA-002 through its respective clinical development programs, ArTara plans to grow

its commercial organization in support of anticipated product launches.

Collaborations

and License Agreements

We have manufactured sufficient

amounts of GMP drug substance and drug product to initiate the planned clinical trials.

Scale up for commercial demand is ready

and will commence when appropriate.

Our end-to-end manufacturing of IV Choline Chloride is conducted in the United States by a

GMP-compliant CDMO.

As a result of the Merger,

we acquired the product candidate, vonapanitase, a recombinant human elastase that we previously pursued development for the improvement

of vascular access outcomes in patients with chronic kidney disease, undergoing or preparing for hemodialysis, and as a treatment

for patients with symptomatic peripheral artery disease.

We are reviewing the research, preclinical and clinical data of vonapanitase

and has not yet determined whether to pursue any further development of this product candidate in the future.

Collaborations and License Agreements

Chugai Agreement

On June 17, 2019,

ArTara entered into an agreement (the “Chugai Agreement”) with Chugai Pharmaceutical, a company organized and existing

under the laws of Japan.

Chugai Pharmaceutical has developed and commercialized a therapeutic product, OK-432 (Existing Product),

in Japan and Taiwan (the “Chugai Territory”), and owns and controls certain materials and documents related to the

Existing Product (the “Chugai Materials”).

Pursuant to the Chugai Agreement, Chugai Pharmaceutical will provide ArTara

with certain materials and documents relating to the Existing Product and will provide certain technical services to ArTara for

ArTara’s development and commercialization in territories other than the Chugai Territory (the “ArTara Territory”)

of a new therapeutic product (the “New Product” or “TARA-002”) comparable to the Existing Product.

on the effective date of the Chugai Agreement and ending on June 30, 2020, or any other date to be agreed to by the parties (the

“Chugai Service Period”), Chugai Pharmaceutical will exclusively provide the Existing Product and Chugai Materials

to ArTara and will not provide the Existing Product or Chugai Materials to any third parties during the Chugai Service Period,

other than for medical, compassionate use and/or non-commercial research purposes.

Additionally, beginning on the effective date

of the Chugai Agreement and ending on the fifth anniversary of such date or upon the termination of the Chugai Agreement, whichever

comes earlier, Chugai Pharmaceutical shall not provide Chugai Materials or technical support to any third party for the purpose

of development and commercialization in the ArTara Territory of a therapeutic product comparable to the Existing Product.

is responsible, at its sole cost and expense, for the development and commercialization of the New Product in the ArTara Territory.

As consideration for

Chugai Pharmaceutical’s performance under the Chugai Agreement, ArTara has agreed to pay Chugai Pharmaceutical a payment

in the low, single-digit millions, which payments shall be made in two installments with an initial payment in July 2020, and the

remaining majority of the payment payable upon FDA approval of the New Product.

ArTara granted Chugai

Pharmaceutical a right of first refusal on terms to be negotiated between the parties for a license related to the New Product-relevant

information, data and documentation and inventions to develop and commercialize the New Product in the Chugai Territory.

will be responsible for manufacturing and supplying or causing its CMO to manufacture and supply the New Product to Chugai Pharmaceutical.

The Chugai Agreement

shall remain in full force and effect until the first anniversary of the date of FDA approval of the New Product, unless terminated

sooner (the “Chugai Term”).

Following the Chugai Service Period and during the Chugai Term, Chugai Pharmaceutical may

terminate the Chugai Agreement, in whole or in part, without cause, by providing ArTara 90 days prior written notice.

terminate the Chugai Agreement, in whole only, by providing Chugai Pharmaceutical 90 days prior written notice if (i) ArTara decides

to discontinue the New Product development;

(ii) ArTara decides that the FDA’s requirements for the New Product are not likely

or (iii) the FDA identifies a safety issue regarding the New Product.

In addition, either

party may terminate the Chugai Agreement, in whole or in part, in the event that the other party materially breaches the Chugai

Agreement and fails to cure the breach within 30 days of written notice.

Either party may terminate the Chugai Agreement in its

entirety immediately upon notice to the other party if such other party:

(i) is dissolved or liquidated or takes any corporate

action for such purpose;

On June 17, 2019, we entered

into an agreement (the “Chugai Agreement”) with Chugai Pharmaceutical, a company organized and existing under the laws

Chugai Pharmaceutical has developed and commercialized a therapeutic product, OK-432 (Existing Product), in Japan and

Taiwan (the “Chugai Territory”), and owns and controls certain materials and documents related to the Existing Product

(the “Chugai Materials”).

Pursuant to the Chugai Agreement, Chugai Pharmaceutical will provide us with certain materials

and documents relating to the Existing Product and will provide certain technical services to us for our development and commercialization

in territories other than the Chugai Territory (the “Protara Territory”) of a new therapeutic product (the “New

Product”

or “TARA-002”) comparable to the Existing Product beginning on the effective date of the Chugai Agreement

and ending on June 30, 2020, or any other date to be agreed to by the parties (the “Chugai Service Period”), Chugai

Pharmaceutical will exclusively provide the Existing Product and Chugai Materials to us and will not provide the Existing Product

or Chugai Materials to any third parties during the Chugai Service Period, other than for medical, compassionate use and/or non-commercial

research purposes.

Additionally, beginning on the effective date of the Chugai Agreement and ending on the fifth anniversary of

such date or upon the termination of the Chugai Agreement, whichever comes earlier, Chugai Pharmaceutical shall not provide Chugai

Materials or technical support to any third party for the purpose of development and commercialization in the Protara Territory

of a therapeutic product comparable to the Existing Product.

We are responsible, at our sole cost and expense, for the development

and commercialization of the New Product in the Protara Territory.

On July 14, 2020, we entered

into an amended agreement with Chugai Pharmaceutical (the “Amended Chugai Agreement”) with an effective date as of

June 30, 2020.

The Chugai Amendment extended the date through which Chugai will exclusively provide the Existing Product and materials

to us from June 30, 2020 to June 30, 2021, extended the date through which Chugai will not provide materials or technical support

to any third party for the purpose of development and commercialization in a given area from the fifth anniversary to the eleventh

anniversary of the original effective date (extended to June 17, 2030) and provides that, in addition to the designated fee provided

upon the initial indication approval in the Chugai Pharmaceutical Agreement, we will pay Chugai a designated fee for each additional

indication approval.

As consideration for Chugai

Pharmaceutical’s performance under the Chugai Agreement, we agreed to pay Chugai Pharmaceutical a payment in the low, single-digit

millions, which payments shall be made in two installments with an initial payment in July 2020, and the remaining majority of

the payment payable upon FDA approval of the New Product.

We granted Chugai Pharmaceutical

a right of first refusal on terms to be negotiated between the parties for a license related to the New Product-relevant information,

data and documentation and inventions to develop and commercialize the New Product in the Chugai Territory.

We will be responsible

for manufacturing and supplying or causing our CDMO to manufacture and supply the New Product to Chugai Pharmaceutical.

The Chugai Agreement shall

remain in full force and effect until the first anniversary of the date of FDA approval of the New Product, unless terminated sooner

(the “Chugai Term”).

Following the Chugai Service Period and during the Chugai Term, Chugai Pharmaceutical may terminate

the Chugai Agreement, in whole or in part, without cause, by providing us 90 days prior written notice.

Following such termination,

we would maintain exclusive access to Chugai Materials, subject to the termination clauses outlined below.

We may terminate the

Chugai Agreement, in whole only, by providing Chugai Pharmaceutical 90 days prior written notice if (i) we decide to discontinue

the New Product development;

(ii) we decide that the FDA’s requirements for the New Product are not likely to be met;

(iii) the FDA identifies a safety issue regarding the New Product.

In addition, either party

may terminate the Chugai Agreement, in whole or in part, in the event that the other party materially breaches the Chugai Agreement

and fails to cure the breach within 30 days of written notice.

Either party may terminate the Chugai Agreement in its entirety

immediately upon notice to the other party if such other party:

(i) is dissolved or liquidated or takes any corporate action for

such purpose;

(ii) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due;

files or has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject to any proceeding

under any domestic or foreign bankruptcy or insolvency laws;

(iv) makes or seeks to make a general assignment for the benefit of

or (v) applies for or has a receiver, trustee, custodian or similar agent appointed by order of any court to take charge

of or sell any material portion of its property or business.

In the event that

ArTara undergoes a change of control, Chugai Pharmaceutical may terminate the Chugai Agreement upon 90 days written notice to ArTara,

absent a written pledge by the new controlling party of its agreement to fulfill and undertake all obligations of ArTara and to

be bound by the Chugai Agreement.

Sponsored Research

and License Agreement

or has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject to any proceeding under

any domestic or foreign bankruptcy or insolvency laws;

(iv) makes or seeks to make a general assignment for the benefit of creditors;

or (v) applies for or has a receiver, trustee, custodian or similar agent appointed by order of any court to take charge of or

sell any material portion of its property or business.

In the event that we undergo

a change of control, Chugai Pharmaceutical may terminate the Chugai Agreement upon 90 days written notice to us, absent a written

pledge by the new controlling party of its agreement to fulfill and undertake all obligations of ours and to be bound by the Chugai

Sponsored Research and License Agreement

On November 28, 2018,

ArTara entered into a sponsored research and license agreement (the “Research Agreement”) with The University of Iowa

(the “University”), pursuant to which the University will provide access to certain program data related to Chugai

Pharmaceutical’s OK-432 and will assist ArTara in conducting certain clinical studies.

As consideration for the University’s

performance under the Research Agreement, ArTara will pay the University $30,000 per year in funding for the project.

also agree to discuss in good faith potential additional funding required for completion of the project pursuant to the Research

Agreement as applicable and necessary.

In addition, within 45 days of approval of the TARA-002 BLA by the FDA, ArTara will pay

a one-time approval milestone to the University, the amount of which depends on the usefulness of the program data in TARA-002’s

BLA filing, and the milestone amount will range from $0 to $1 million.

ArTara will also be responsible for certain tiered royalties

on annual net sales of products for the indication, which royalty rates are in the low single digit percentages.

These royalty

rates are also subject to a reduction in the event that regulatory authorities determine that the program data is not sufficient

for regulatory approval on its own and additional pediatric efficacy and safety clinical studies are required.

In the event that

the annual net sales surpass certain dollar amount thresholds, ArTara will need to make certain additional milestone payments following

the close of the calendar quarter in which each milestone is reached, with the payments ranging from $62,500 to $125,000.

ArTara may terminate

the Research Agreement upon 30 days prior written notice to the University.

Either party may terminate the project under the Research

Agreement and all commitments and obligations with respect thereto upon 30 days prior written notice to the other party.

event of any termination of the project under the Research Agreement by the University, (a) the University agrees to complete certain

phases of the project and (b) ArTara will continue to provide annual funding until the completion of the second phase of the project.

Upon termination of the project by ArTara, the Agreement will terminate and ArTara will reassign to the University the IND.

we entered into a sponsored research and license agreement (the “Research Agreement”) with The University of Iowa (the

“University”), pursuant to which the University will provide access to certain program data related to Chugai Pharmaceutical’s

OK-432 and will assist us in conducting certain clinical studies.

As consideration for the University’s performance under

the Research Agreement, we will pay the University $30,000 per year in funding for the project, taking into consideration the time

spent by University employees required for the Project.

The parties also agree to discuss in good faith potential additional funding

required for completion of the project pursuant to the Research Agreement as applicable and necessary.

In addition, within 45 days

of approval of the TARA-002 BLA by the FDA, we will pay a one-time approval milestone to the University, the amount of which depends

on the usefulness of the program data in TARA-002’s BLA filing, and the milestone amount will range from $0 to $1 million.

We will also be responsible for certain tiered royalties on annual net sales of products for the indication, which royalty rates

are in the low single digit percentages.

These royalty rates are also subject to a reduction in the event that regulatory authorities

determine that the program data is not sufficient for regulatory approval on its own and additional pediatric efficacy and safety

clinical studies are required.

In the event that the annual net sales surpass certain dollar amount thresholds, we will need to

make certain additional milestone payments following the close of the calendar quarter in which each milestone is reached, with

the payments ranging from $62,500 to $125,000.

We may terminate the Research

Agreement upon 30 days prior written notice to the University.

Either party may terminate the project under the Research Agreement

and all commitments and obligations with respect thereto upon 30 days prior written notice to the other party.

In the event of

any termination of the project under the Research Agreement by the University, (a) the University agrees to complete certain phases

of the project and (b) we will continue to provide annual funding until the completion of the second phase of the project.

termination of the project by us, the Agreement will terminate and we will reassign to the University the IND.

Choline License Agreement

On September 27, 2017,

ArTara entered into a choline license agreement (the “Choline Agreement”) with Alan L.

we entered into a choline license agreement (the “Choline Agreement”) with Alan L.

Buchman, M.D., pursuant to which

Buchman granted ArTara an exclusive, worldwide, non-transferable license in and to certain licensed orphan designations, certain

Buchman granted us an exclusive, worldwide, non-transferable license in and to certain licensed orphan designations, certain

licensed IND, certain existing study data and to certain licensed know-how to develop, make, use, sell, offer for sale and import

the licensed product during the term of the Choline Agreement.

ArTara is solely responsible for all fees and expenses related to

the undertaking of the Choline Agreement, including all due diligence obligations, regulatory authority fees, attorney fees and

consulting fees.

We are solely responsible for all fees and expenses related to the

undertaking of the Choline Agreement, including all due diligence obligations, regulatory authority fees, attorney fees and consulting

During the term of the Choline Agreement, Dr.

Buchman may not work with any third parties on any product competing

with the licensed product.

In consideration for the rights and licenses granted under the Agreement, ArTara made an initial upfront

payment of $50,000 payable to Dr.

ArTara will also owe

Buchman may not work with any third parties on any product competing with the

licensed product.

In consideration for the rights and licenses granted under the Agreement, we made an initial upfront payment

of $50,000 payable to Dr.

will also owe Dr.

Buchman certain milestone and royalty payments .

ArTara paid Dr.

Buchman $50,000 in October 2019 because ArTara had not received

at least $5 million in working capital from any source or in any manner as of October 15, 2019.

ArTara paid Dr.

Buchman an additional

$550,000 upon the closing of the Private Placements following the consummation of the Merger because ArTara received at least $5

million in working capital.

Pursuant to the Choline

Agreement, we paid Dr.

Buchman $50,000 in October 2019 because we had not received at least $5 million in working capital from

any source or in any manner as of October 15, 2019.

Also, we paid Dr.

Buchman an additional $550,000 upon the closing of the Private

Placements following the consummation of the Merger because we received at least $5 million in working capital.

Regardless of whether

development or commercialization is undertaken by ArTara under the Choline Agreement, commencing on November 21, 2022 and during

the term of the Choline Agreement, ArTara shall pay Dr.

development or commercialization is undertaken by us under the Choline Agreement, commencing on November 21, 2022 and during the

term of the Choline Agreement, we shall pay Dr.

Buchman a minimum annual royalty that ranges between $25,000 and $75,000.

ArTara owes Dr.

Buchman sales royalties based on aggregate net sales of IV Choline Chloride in each calendar quarter, with the royalty rates

ranging from 5.0% to 10.5% based on the amount of net sales.

ArTara also agreed to pay Dr.

Buchman sales royalties based on aggregate net sales

of IV Choline Chloride in each calendar quarter, with the royalty rates ranging from 5.0% to 10.5% based on the amount of net sales.

In the event of development or commercialization activity by any sublicensees, we also agreed to pay Dr.

Buchman a royalty in the

mid-single digit percentage of (i) net cash receipts after payment of taxes and (ii) any other consideration received by

ArTara from its sale or transfer of a priority review voucher, including a fair monetary value for any transaction that is

not a bona fide arms-length transaction or that is consideration other than money.

ArTara shall also

Buchman up to an aggregate of up to $775,000 in additional milestone payments upon the achievement of various regulatory

approval milestones.

ArTara issued Dr.

Buchman 150,000 shares of ArTara’s common stock as of September 27, 2017 and granted

Buchman an option to purchase 43,038 shares of ArTara’s common stock as of September 13, 2018, both in consideration

for the rights and licenses granted pursuant to the Choline Agreement.

Buchman also provides

advisory services to ArTara related to regulatory and clinical strategy for IV Choline Chloride.

In consideration for such services,

ArTara issued Dr.

Buchman 100,000 shares of ArTara’s common stock as of September 27, 2017 and granted Dr.

Buchman an option

to purchase 28,692 shares of ArTara’s common stock as of September 13, 2018.

mid-single digit percentage of (i) net cash receipts after payment of taxes received by us from sublicensees for their sales of

licensed products and (ii) any other consideration received by us from such sublicensees;

in each case, including a fair monetary

value for any transaction that is not a bona fide arms-length transaction or that is for consideration other than monetary.

in the event of a sale or transfer of a priority review voucher regarding the license product, regardless of whether any development

or commercialization activity is undertaken by us or our sublicensees, we agreed to pay Dr.

Buchman a milestone payment representing

the mid-single digit percentage of (i) net cash receipts after payment of taxes and (ii) any other consideration;

in each case,

received by us, our affiliates, or our sublicensees, including a fair monetary value for any transaction that is not a bona fide

arms-length transaction or that is for consideration other than monetary.

We shall also pay Dr.

Buchman up to an aggregate of up to $775,000 in additional milestone payments upon the achievement of various regulatory approval

The Choline Agreement

will remain in full force and effect until the last sale of the licensed product under the Choline Agreement.

After ArTara received

the FDA’s written minutes regarding its initial FDA meeting concerning the development of the first licensed product for

one or more of the licensed indications, ArTara paid an additional payment of $100,000 to Dr.

Buchman and elected not terminate

the Choline Agreement.

After we received

the FDA’s written minutes regarding its initial FDA meeting concerning the development of the first licensed product for

one or more of the licensed indications, we paid an additional payment of $100,000 to Dr.

Buchman and elected not terminate the

Choline Agreement.

The Choline Agreement may be terminated by Dr.

Buchman if, following regulatory approval of a licensed product,

ArTara has not made its first sale of a licensed product within such country within a specified time period.

ArTara may terminate

the Choline Agreement for convenience upon 90 days prior written notice to Dr.

we have not made our first sale of a licensed product within such country within a specified time period.

We may terminate the

Choline Agreement for convenience upon 90 days prior written notice to Dr.

Buchman may terminate the Choline Agreement

1 unchanged sentence

Either party may terminate the Choline Agreement

effective immediately if the other party is in material breach and has not cured such breach within 60 days’ notice.

Buchman may terminate the Choline Agreement effective immediately upon 60 days prior written notice if (a) ArTara ceases or

threatens to cease to carry on its business;

(b) a petition or resolution for the making of an administration order or for the

bankruptcy, winding-up or dissolution of ArTara is presented or passed;

(d) a receiver or administrator takes possession of ArTara’s assets or (e) any similar procedure is commenced

against ArTara in the United States.

effective immediately if the other party is in material breach and has not cured such breach within 60 days’

Buchman may terminate the Choline Agreement effective immediately upon 60 days prior written notice if (a) we cease or threaten

to cease to carry on its business;

(b) a petition or resolution for the making of an administration order or for the bankruptcy,

winding-up or dissolution of us is presented or passed;

(d) a receiver

or administrator takes possession of our assets or (e) any similar procedure is commenced against us in the United States.

License Agreement

On December 22, 2017,

ArTara entered into a license agreement (the “License Agreement”) with The Feinstein Institute for Medical Research,

a not-for-profit corporation organized and existing under the laws of New York (the “Institute”).

we entered into a license agreement (the “License Agreement”) with The Feinstein Institute for Medical Research, a

not-for-profit corporation organized and existing under the laws of New York (the “Institute”).

The Institute owns,

2 unchanged sentences

Pursuant to the License Agreement, the

Institute granted ArTara an exclusive, worldwide license, with the right to grant sublicenses to non-affiliate third parties, to

develop, make, have made, use, sell, offer for sale and import certain products for use in the field of fatty liver disease in

humans receiving total parenteral nutrition, by administering, as monotherapy, a pharmaceutical composition comprising intravenous

choline, wherein the fatty liver disease is selected from IFALD, non-alcoholic fatty liver, non-alcoholic steatohepatitis (“NASH”),

Institute granted us an exclusive, worldwide license, with the right to grant sublicenses to non-affiliate third parties, to develop,

make, have made, use, sell, offer for sale and import certain products for use in the field of fatty liver disease in humans receiving

total parenteral nutrition, by administering, as monotherapy, a pharmaceutical composition comprising intravenous choline, wherein

the fatty liver disease is selected from IFALD, non-alcoholic fatty liver, non-alcoholic steatohepatitis (“NASH”),

NASH-associated liver fibrosis, or non-alcoholic cirrhosis.

Notwithstanding the exclusive rights granted to ArTara, the Institute

shall retain the right to make, use and practice such patents in its own laboratories solely for non-commercial scientific purposes

and for continued non-commercial research.

As consideration for

the license grant, ArTara agreed to pay the Institute tiered royalties of between 1.0% and 1.5% of all net sales.

ArTara agreed to pay the Institute a low double digit percentage of net proceeds resulting from agreements entered into within

two years from the effective date of the License Agreement and a mid single digit percentage of net proceeds resulting from agreements

entered into thereafter.

ArTara also agreed to make certain license maintenance payments of $15,000 beginning on the second anniversary

of the effective date of the License Agreement and continuing upon every anniversary thereafter until the first commercial sale

of a licensed product.

Notwithstanding the exclusive rights granted to us, the Institute shall

retain the right to make, use and practice such patents in its own laboratories solely for non-commercial scientific purposes and

for continued non-commercial research.

As consideration for the

license grant, we agreed to pay the Institute tiered royalties of between 1.0% and 1.5% of all net sales.

In addition, we agreed

to pay the Institute a low double digit percentage of net proceeds resulting from agreements entered into within two years from

the effective date of the License Agreement and a mid-single digit percentage of net proceeds resulting from agreements entered

into thereafter.

We also agreed to make certain license maintenance payments of $15,000 beginning on the second anniversary of

the effective date of the License Agreement and continuing upon every anniversary thereafter until the first commercial sale of

a licensed product.

Beginning on the first anniversary of the effective date of the License Agreement after the first commercial

sale of a licensed product and every anniversary of the effective date of the License Agreement thereafter, ArTara shall pay the

Institute $30,000 as a license maintenance fee.

Such license maintenance fees are non-refundable but are creditable against future

royalty payments due to the Institute during the 12-month period following each such anniversary.

ArTara agreed to make

certain one-time milestone payments in the aggregate amount of $375,000 upon the achievement of certain regulatory approval milestones,

of which $100,000 was paid on January 28, 2020 upon ArTara having consummated the Private Placements.

Unless terminated

earlier, the License Agreement will expire upon the expiration of the last to expire patent under the License Agreement.

may terminate the License Agreement by giving the Institute 60 days prior notice.

Either party may terminate the License Agreement

in the event of a default or breach by the other party that has not been cured within 60 days of such notice.

If ArTara (i) makes

an assignment for the benefit of creditors or if proceedings for a voluntary bankruptcy are instituted on behalf of ArTara;

is declared bankrupt or insolvent or (iii) is convicted of a felony relating to the manufacture, use or sale of the licensed products

or a felony relating to moral turpitude, the Institute may terminate the License Agreement.

The process for commercialization

of new drugs is very competitive, and ArTara could potentially face worldwide competition from other pharmaceutical companies,

biotechnology companies and ultimately generic products.

ArTara’s potential competitors may develop or market therapies that

are more clinically effective, safer or less expensive than any therapeutic products ArTara develops.

With respect to ArTara’s

lead product candidate, TARA-002, for the treatment of Lymphatic Malformations, TARA-002 is a genetically distinct strain of Streptococcus

pyogenes (group A, type 3) Su.

TARA-002 is produced through a proprietary manufacturing process.

ArTara anticipates that, if

approved by the FDA, TARA-002 will be protected by 12 years of biologic exclusivity.

There are no pharmacotherapies currently available

for the treatment of LMs and the current standard of care is a high-risk surgical procedure.

There are a handful

of drug development companies and academic researchers exploring oral formulations of various agents including macrolides, phosphodiesterase

inhibitors, and calcineurin/mTOR inhibitors.

These are in early development and earlier experiments in LM’s utilizing other

compounds utilizing these mechanisms have not produced conclusive evidence of efficacy.

There are no treatments

currently available for IFALD.

With respect to IV Choline Chloride for the treatment of IFALD, IV Choline Chloride is the only

sterile injectable form of choline chloride that can be combined with parenteral nutrition.

Progression of IFALD to liver failure

occurs over time and leads to the need for a dual bowel and liver transplant.

If approved, IV Choline Chloride may be protected

by orphan Drug Designation exclusivity for seven years.

sale of a licensed product and every anniversary of the effective date of the License Agreement thereafter, we shall pay the Institute

$30,000 as a license maintenance fee.

Such license maintenance fees are non-refundable but are creditable against future royalty

payments due to the Institute during the 12-month period following each such anniversary.

We agreed to make certain

one-time milestone payments in the aggregate amount of $375,000 upon the achievement of certain regulatory approval milestones,

of which $100,000 was paid on January 28, 2020 upon us having consummated the Private Placements.

Unless terminated earlier,

the License Agreement will expire upon the expiration of the last to expire patent under the License Agreement.

We may terminate

the License Agreement by giving the Institute 60 days prior notice.

Either party may terminate the License Agreement in the event

of a default or breach by the other party that has not been cured within 60 days of such notice.

If we (i) make an assignment for

the benefit of creditors or if proceedings for a voluntary bankruptcy are instituted on behalf of us;

(ii) is declared bankrupt

or insolvent or (iii) is convicted of a felony relating to the manufacture, use or sale of the licensed products or a felony relating

to moral turpitude, the Institute may terminate the License Agreement.

Intellectual Property

ArTara’s intellectual

property is critical to its business and ArTara strives to protect it, including by obtaining and maintaining patent protection

in the United States and internationally for its product candidates, novel biological discoveries, epitopes, new therapeutic approaches

and potential indications, and other inventions that are important to our business.

Throughout the development of ArTara’s

product candidates, it will seek to identify additional means of obtaining patent protection that would potentially enhance commercial

The patent positions

of biotechnology companies like ArTara’s are generally uncertain and involve complex legal, scientific and factual questions.

ArTara recognizes that the ability to obtain patent protection and the degree of such protection depends on a number of factors,

including the extent of the prior art, the novelty and non-obviousness of the invention, and the ability to satisfy the enablement

requirement of the patent laws.

In addition, the coverage claimed in a patent application can be significantly reduced before the

patent is issued, and its scope can be reinterpreted after issuance.

Consequently, ArTara may not obtain or maintain adequate patent

protection for any of its product candidates.

Any patents that ArTara holds may be challenged, circumvented or invalidated by third

ArTara’s commercial

success will also depend in part on not infringing the proprietary rights of third parties.

In addition, ArTara has licensed rights

under proprietary technologies of third parties to develop, manufacture and commercialize specific aspects of our products and

It is uncertain whether the issuance of any third-party patent would require ArTara to alter its development or commercial

strategies, alter its processes, obtain licenses or cease certain activities.

The expiration of patents or patent applications

licensed from third parties or ArTara’s breach of any license agreements or failure to obtain a license to proprietary rights

that it may require to develop or commercialize its future technology may have a material adverse impact on it.

If third parties

prepare and file patent applications in the United States that also claim technology to which ArTara has rights, ArTara may have

to participate in interference proceedings in the United States Patent and Trademark Office (the “USPTO”) to determine

priority of invention.

For a more comprehensive discussion of the risks related to ArTara’s intellectual property, please

see “ Risk Factors—Risks Related to ArTara’s Intellectual Property.

Our intellectual property

is critical to our business and we strive to protect it, including by obtaining and maintaining patent protection in the U.S.

internationally for our product candidates, novel biological discoveries, epitopes, new therapeutic approaches and potential indications,

and other inventions that are important to our business.

Throughout the development of our product candidates, we will seek to

identify additional means of obtaining patent protection that would potentially enhance commercial success.

The patent positions of

biotechnology companies like us are generally uncertain and involve complex legal, scientific and factual questions.

that the ability to obtain patent protection and the degree of such protection depends on a number of factors, including the extent

of the prior art, the novelty and non-obviousness of the invention, and the ability to satisfy the enablement requirement of the

In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued,

and its scope can be reinterpreted after issuance.

Consequently, we may not obtain or maintain adequate patent protection for any

of our product candidates.

Any patents that we hold may be challenged, circumvented or invalidated by third parties.

Our commercial success

will also depend in part on not infringing the proprietary rights of third parties.

In addition, we have licensed rights under

proprietary technologies of third parties to develop, manufacture and commercialize specific aspects of our products and services.

It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies,

alter our processes, obtain licenses or cease certain activities.

The expiration of patents or patent applications licensed from

third parties or our breach of any license agreements or failure to obtain a license to proprietary rights that it may require

to develop or commercialize our future technology may have a material adverse impact on it.

If third parties prepare and file patent

applications in the United States that also claim technology to which we have rights, we may have to participate in interference

proceedings in the United States Patent and Trademark Office (the “USPTO”) to determine priority of invention.

a more comprehensive discussion of the risks related to our intellectual property, please see “

Risk Factors—Risks

Related to Our Intellectual Property.

TARA-002 is a genetically

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TARA-002 is produced through a proprietary manufacturing

ArTara believes a significant barrier to entry exists, as it believes only Chugai Pharmaceutical and ArTara have the specific

strain and possess the know-how to manufacture the product.

ArTara anticipates that, if approved by the FDA, TARA-002 will be protected

by 12 years of biologic exclusivity.

We believe a significant barrier to entry exists, as it believes only Chugai Pharmaceutical and us have the specific strain

and possess the know-how to manufacture the product.

We anticipate that, if approved by the FDA, TARA-002 will be protected by

12 years of biologic exclusivity.

IV Choline Chloride:

With respect to IV

Choline Chloride, ArTara has acquired an exclusive, worldwide license to U.S.

Patent 8,865,641 B2 from the Feinstein Institute

for Medical Research providing protection in the United States until 2035.

The patent applies to a method of treating a fatty liver

disease in a subject.

In particular, the method comprises administering to the subject an effective amount of a cholinergic pathway

stimulating agent, wherein the fatty liver disease is selected from non-alcoholic fatty liver (NAFL), alcoholic fatty liver (AFL),

non-alcoholic steatohepatitis (NASH), alcoholic steatohepatitis (ASH), NASH-associated liver fibrosis, ASH-associated liver fibrosis,

non-alcoholic cirrhosis and alcoholic cirrhosis.

With respect to IV Choline

Chloride, we have acquired an exclusive, worldwide license to U.S.

Patent 8,865,641 B2 from the Feinstein Institute for Medical

Research providing protection in the United States until 2035.

The patent applies to a method of treating a fatty liver disease

in a subject.

In particular, the method comprises administering to the subject an effective amount of a cholinergic pathway stimulating

agent, wherein the fatty liver disease is selected from non-alcoholic fatty liver (NAFL), alcoholic fatty liver (AFL), non-alcoholic

steatohepatitis (NASH), alcoholic steatohepatitis (ASH), NASH-associated liver fibrosis, ASH-associated liver fibrosis, non-alcoholic

cirrhosis and alcoholic cirrhosis.

The term of individual

patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries in which ArTara

may file, the patent term is 20 years from the earliest date of filing a non- provisional patent application related to the patent.

In most countries in which we may

file, the patent term is 20 years from the earliest date of filing a non-provisional patent application related to the patent.

patent also may be accorded a patent term adjustment under certain circumstances to compensate for delays in obtaining the

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provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

In the future, if and when ArTara’s products receive FDA approval, ArTara expect to apply for patent term extensions on patents

covering certain of those products, when applicable.

ArTara also relies

on trade secrets relating to product candidates and seeks to protect and maintain the confidentiality of proprietary information

to protect aspects of its business that are not amenable to, or that it does not consider appropriate for, patent protection.

ArTara takes steps to protect its proprietary information and trade secrets, including through contractual means with its employees

and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise

gain access to ArTara’s trade secrets, including through breaches of such agreements with its employees and consultants.

Thus, ArTara may not be able to meaningfully protect its trade secrets.

It is ArTara’s policy to require its employees, consultants,

outside scientific partners, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement

of employment or consulting relationships with ArTara.

These agreements provide that all confidential information concerning ArTara’s

business or financial affairs developed or made known to the individual during the course of the individual’s relationship

with ArTara is to be kept confidential and not disclosed to third parties except in specific circumstances.

ArTara’s agreements

with employees also provide that all inventions conceived by the employee in the course of employment with ArTara or from the employee’s

use of ArTara’s confidential information are ArTara’s exclusive property.

In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering

certain of those products, when applicable.

We also rely on trade

secrets relating to product candidates and seek to protect and maintain the confidentiality of proprietary information to protect

aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

Although we take

steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants,

third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access

to our trade secrets, including through breaches of such agreements with our employees and consultants.

Thus, we may not be able

to meaningfully protect our trade secrets.

It is our policy to require our employees, consultants, outside scientific partners,

sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting

relationships with us.

These agreements provide that all confidential information concerning our business or financial affairs

developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential

and not disclosed to third parties except in specific circumstances.

Our agreements with employees also provide that all inventions

conceived by the employee in the course of employment with us or from the employee’s use of our confidential information

are our exclusive property.

Manufacturing

ArTara relies on contract

manufacturing organizations (“CMOs”) to produce its drug candidates in accordance with current Good Manufacturing Practices

(“cGMP”), regulations for use in clinical trials and commercial product.

The manufacture of pharmaceuticals is subject

to extensive cGMP regulations, which impose various procedural and documentation requirements and govern all areas of record keeping,

production processes and controls, personnel and quality control.

The CMOs that ArTara partners with have the capability to produce

clinical supply required for clinical trials, as well as support commercial scale up activities for both products.

Both TARA-002 and

Choline Chloride will be produced in the United States.

The starting materials for TARA-002 were provided to ArTara pursuant to

an agreement with Chugai Pharmaceutical.

We rely on contract development

and manufacturing organizations (“CDMOs”) to produce our drug candidates in accordance with current Good Manufacturing

Practices (“cGMP”), regulations for use in clinical trials and commercial product.

The manufacture of pharmaceuticals

is subject to extensive cGMP regulations, which impose various procedural and documentation requirements and govern all areas of

record keeping, production processes and controls, personnel and quality control.

The CDMOs that we partner

with have the capability to produce clinical supply required for clinical trials, as well as support commercial scale up activities

for both products.

Both TARA-002 and Choline

Chloride will be produced in the United States.

The starting materials for TARA-002 were provided to us pursuant to an agreement

with Chugai Pharmaceutical.

The regulatory starting materials for Choline Chloride are available commercially.

Government Regulation

and Product Approval

The FDA and other

regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other

things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging,

storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval

reporting of drugs and biologics such as those we are developing.

ArTara, along with third-party contractors, will be required

to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the

countries in which ArTara wishes to conduct studies or seek approval or licensure of its product candidates.

Sales and Marketing

We plan to become a

fully integrated biopharmaceutical company pursuing our mission of supporting and improving the lives of patients suffering

from cancer and rare diseases.

If approved by the FDA,

we plan to commercialize both of our current product candidates in the U.S.

first and then move to other geographies.

As we advance

TARA-002 and IV Choline Chloride through our respective clinical development programs, we plan to grow our commercial organization

in support of anticipated product launches.

The process for commercialization

of new drugs is very competitive, and we could potentially face worldwide competition from other pharmaceutical companies, biotechnology

companies and ultimately generic products.

Our potential competitors may develop or market therapies that are more clinically effective,

safer or less expensive than any therapeutic products we develop.

Government Regulation and Product Approval

The FDA and other regulatory

authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the

research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage,

distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting

of drugs and biologics such as those we are developing.

We, along with third-party contractors, will be required to navigate the

various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which

we wish to conduct studies or seek approval or licensure of our product candidates.

In the United States,

the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (“FDCA”) and biologics additionally under the

Public Health Services Act (“PHSA”) as well as their respective implementing regulations.

the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (“FDCA”) and biologics additionally under the

Public Health Services Act (“PHSA”) as well as their respective implementing regulations.

The process required by the

FDA before biopharmaceutical product candidates may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests and animal studies performed in accordance with the

FDA’s current Good Laboratory Practices (“GLP”) regulations;

• submission to the FDA of an IND, which must become effective before clinical trials may begin and

must be updated annually or when significant changes are made;

• approval by an independent Institutional Review Board (“IRB”) or ethics committee at

each clinical site before the trial is commenced;

• performance of adequate and well-controlled human clinical trials to establish the safety and efficacy

of a drug product candidate and the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

• preparation of and submission to the FDA of an NDA or BLA after completion of all pivotal clinical

trials that includes substantial evidence of safety, purity and potency or efficacy from results of nonclinical testing and clinical

completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices (“GLP”) regulations;

submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made;

approval by an independent Institutional Review Board (“IRB”) or ethics committee at each clinical site before the trial is commenced;

performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of a drug product candidate and the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

preparation of and submission to the FDA of an NDA or BLA after completion of all pivotal clinical trials that includes substantial evidence of safety, purity and potency or efficacy from results of nonclinical testing and clinical trials;

a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review;

satisfactory completion of an FDA Advisory Committee review, if applicable;

• a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities

at which the proposed product is produced to assess compliance with cGMP, and of selected clinical investigation sites to assess

compliance with Good Clinical Practices (“GCP”);

• FDA review and approval, or licensure, of the NDA or BLA to permit commercial marketing of the

product for particular indications for use in the United States.

Preclinical and

Clinical Development

Prior to beginning

the first clinical trial with a product candidate, ArTara must submit an IND to the FDA.

An IND is a request for authorization

from the FDA to administer an investigational new drug product to humans.

The central focus of an IND submission is on the general

investigational plan and the protocol(s) for clinical trials.

The IND also includes results of animal and in vitro studies

assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product candidate;

manufacturing, and controls information;

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP, and of selected clinical investigation sites to assess compliance with Good Clinical Practices (“GCP”);

FDA review and approval, or licensure, of the NDA or BLA to permit commercial marketing of the product for particular indications for use in the United States.

Preclinical and Clinical Development

Prior to beginning the

first clinical trial with a product candidate, we must submit an IND to the FDA.

An IND is a request for authorization from the

FDA to administer an investigational new drug product to humans.

The central focus of an IND submission is on the general investigational

plan and the protocol(s) for clinical trials.

The IND also includes results of animal and in vitro studies assessing the

toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product candidate;

chemistry, manufacturing,

and controls information;

and any available human data or literature to support the use of the investigational product.

An IND must become effective before human clinical trials may begin.

The IND automatically becomes effective 30 days after receipt

by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.

must become effective before human clinical trials may begin.

The IND automatically becomes effective 30 days after receipt by

the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.

In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or

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are typically conducted in three sequential phases that may overlap.

• Phase 1—The investigational product is initially introduced into healthy human subjects or

patients with the target disease or condition.

These trials are designed to test the safety, dosage tolerance, absorption, metabolism,

distribution and elimination of the investigational product in humans, the side effects associated with increasing doses, and,

if possible, to gain early evidence on effectiveness.

• Phase 2—The investigational product is administered to a limited patient population with

a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible

adverse side effects and safety risks.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning

larger and more expensive Phase 3 clinical trials.

• Phase 3—The investigational product is administered to an expanded patient population to

further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally

at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit

ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the

FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information

Phase 1—The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition.

These trials are designed to test the safety, dosage tolerance, absorption, metabolism, distribution and elimination of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

Phase 2—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

Phase 3—The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the FDA

may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information

about the product.

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must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Application Submission,

Review and Approval

Assuming successful

completion of all required testing in accordance with all applicable regulatory requirements, the results of product development,

nonclinical studies and clinical trials are submitted to the FDA as part of an NDA or BLA requesting approval to market the product

for one or more indications.

The NDA or BLA must include all relevant data available from pertinent preclinical and clinical trials,

including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s

Application Submission, Review and Approval

Assuming successful completion

of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical

studies and clinical trials are submitted to the FDA as part of an NDA or BLA requesting approval to market the product for one

or more indications.

The NDA or BLA must include all relevant data available from pertinent preclinical and clinical trials, including

negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s

chemistry, manufacturing, controls, and proposed labeling, among other things.

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of a substantial application user fee to FDA, unless a waiver or exemption applies.

Once an NDA or BLA

has been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application

for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.

In both standard and priority reviews, the review process is often significantly extended by FDA requests for additional information

or clarification.

The FDA reviews the application to determine, among other things, whether a product is safe, pure and potent

and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s

continued safety, purity and potency.

The FDA may convene an advisory committee to provide clinical insight on application review

Once an NDA or BLA has

been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application for

filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.

standard and priority reviews, the review process is often significantly extended by FDA requests for additional information or

clarification.

The FDA reviews the application to determine, among other things, whether a product is safe, pure and potent and

the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued

safety, purity and potency.

The FDA may convene an advisory committee to provide clinical insight on application review questions.

Before approving an NDA or BLA, the FDA will typically inspect the facility or facilities where the product is manufactured.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance

with cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally,

before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the

deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any

requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for

The FDA may issue

an approval letter or a Complete Response letter.

An approval letter authorizes commercial marketing of the product with specific

prescribing information for specific indications.

A Complete Response letter will describe all of the deficiencies that the FDA

has identified in the NDA or BLA.

In issuing the Complete Response letter, the FDA may recommend actions that the applicant might

take to place the application in condition for approval, including requests for additional information or clarification.

may delay or refuse approval of an application if applicable regulatory criteria are not satisfied, require additional testing

or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with

cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally, before

approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

If the FDA determines

that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in

the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional

information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

The FDA may issue an approval

letter or a Complete Response letter.

An approval letter authorizes commercial marketing of the product with specific prescribing

information for specific indications.

A Complete Response letter will describe all of the deficiencies that the FDA has identified

in the NDA or BLA.

In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place

the application in condition for approval, including requests for additional information or clarification.

The FDA may delay or

refuse approval of an application if applicable regulatory criteria are not satisfied, require additional testing or information

and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval

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with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace.

FDA may require one or more Phase 4 post-market trials and surveillance to further assess and monitor the product’s safety

and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing

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in, or shorten the duration of, the regulatory review or approval process.

If a product that

has orphan designation subsequently receives the first FDA approval for the disease for which it has such designation, the product

If a product that has

orphan designation subsequently receives the first FDA approval for the disease for which it has such designation, the product

is entitled to orphan exclusivity, which means that the FDA may not approve any other applications, including a full NDA or BLA,

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benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application fee.

A designated orphan

product may not receive orphan exclusivity if it is approved for a use that is broader than the indication for which it received

orphan designation.

In addition, exclusive marketing rights in the United States 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.

A designated orphan product

may not receive orphan exclusivity if it is approved for a use that is broader than the indication for which it received orphan

In addition, exclusive marketing rights in the United States 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.

The FDA incentivizes the

development of drugs and biologics that meet the definition of a “rare pediatric disease,”

defined to mean a serious

or life-threatening disease in which the serious of life-threatening manifestations primarily affect individuals aged from birth

to 18 years and the disease affects fewer than 200,000 individuals in the United States or affects 200,000 or more in the United

States and for which there is no reasonable expectation that the cost of developing and making in the United States a drug for

such disease or condition will be received from sales in the United States of such drug.

The sponsor of a product candidate for

a rare pediatric disease may be eligible for a voucher that can be used to obtain a priority review for a subsequent human drug

or biologic application after the date of approval of the rare pediatric disease drug product, referred to as a priority review

voucher, or PRV.

A rare pediatric disease designation does not guarantee that a sponsor will receive a PRV upon approval of its

If a PRV is received, it may be sold or transferred an unlimited number of times.

Congress has extended the PRV program

until September 30, 2024, with the potential for PRVs to be granted until September 30, 2026.

Post-Approval Requirements

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in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

The FDA may withdraw

approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or

frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved

labeling to add new safety information;

The FDA may withdraw approval

if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency,

or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling

to add new safety information;

imposition of post-market studies or clinical trials to assess new safety risks;

or imposition

of distribution restrictions or other restrictions under a REMS program.

or imposition of

distribution restrictions or other restrictions under a REMS program.

Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of a product, mandated modification of promotional

materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare

Provider letters, press releases or other communications containing warnings or other safety information about the product, or

complete withdrawal of the product from the market or product recalls;

restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls;

fines, warning or untitled letters or holds on post-approval clinical trials;

• refusal of the FDA to approve pending applications or supplements to approved applications, or

suspension or revocation of existing product approvals;

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals;

product seizure or detention, or refusal of the FDA to permit the import or export of products;

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Physicians may prescribe legally available products for uses that are not described

in the product’s labeling and that differ from those approved by the FDA.

Such off-label uses are common across medical specialties.

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not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, restrict manufacturer’s communications

on the subject of off-label use of their products.

Biosimilars and

Reference Product Exclusivity

Biosimilars and Reference Product Exclusivity

The Patient Protection

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several guidance documents outlining its approach to the review and approval of biosimilars.

Biosimilarity, which

requires that there be no clinically meaningful differences between the biological product and the reference product in terms of

safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or trials.

Biosimilarity, which requires

that there be no clinically meaningful differences between the biological product and the reference product in terms of safety,

purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or trials.

Interchangeability

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are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out

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

that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety,

purity and potency of its product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily

substituted by pharmacies, which are governed by state pharmacy law.

The BPCIA is complex

and continues to be interpreted and implemented by the FDA.

In addition, recent government proposals have sought to reduce the

12-year reference product exclusivity period.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions,

have also been the subject of recent litigation.

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 that applicant’s

own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture,

it is unclear whether products deemed “interchangeable”

by the FDA will, in fact, be readily substituted by pharmacies,

which are governed by state pharmacy law.

The BPCIA is complex and

continues to be interpreted and implemented by the FDA.

In addition, recent government proposals have sought to reduce the 12-year

reference product exclusivity period.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have

also been the subject of recent litigation.

As a result, the ultimate impact, implementation, and impact of the BPCIA is subject

to significant uncertainty.

Laws and Compliance Requirements

Healthcare Laws and Compliance

In the United States,

ArTara’s current and future operations are subject to regulation by various federal, state and local authorities in addition

to the FDA, including but not limited to, the Centers for Medicare and Medicaid Services (“CMS”), other divisions of

Department of Health and Human Services (“HHS”) (such as the Office of Inspector General, Office for Civil

our current and future operations are subject to regulation by various federal, state and local authorities in addition to the

FDA, including but not limited to, the Centers for Medicare &Medicaid Services (“CMS”), other divisions of

Department of Health and Human Services (“HHS”) (such as the Office of Inspector General, Office for Civil

Rights and the Health Resources and Service Administration), the U.S.

Department of Justice (“DOJ”) and individual

Attorney offices within the DOJ, and state and local governments.

For example, ArTara’s clinical research, sales, marketing

and scientific/educational grant programs will need to comply with the anti-fraud and abuse provisions of the Social Security Act,

the false claims laws, the privacy and security provisions of the Health Insurance Portability and Accountability Act (“HIPAA”),

For example, our clinical research, sales, marketing and

scientific/educational grant programs will need to comply with the anti-fraud and abuse provisions of the Social Security Act,

the false claims laws, the privacy and security provisions of the Health Insurance Portability and Accountability Act (“HIPAA”),

and similar state laws, each as amended, as applicable.

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of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.

ArTara’s practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory

Additionally, the

intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act, as amended by the

Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) to a stricter standard such that a

person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed

Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.

Additionally, the intent

standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act, as amended by the Health

Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) to a stricter standard such that a person

or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a

In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation

of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act (the

“FCA”) (discussed below).

The federal false

claims, including the FCA, and civil monetary penalty laws, which imposes significant penalties and can be enforced by private

citizens through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing

to be presented, a false or fraudulent claim for payment to, or approval by, the federal government, including federal healthcare

programs, such as Medicare and Medicaid, knowingly making, using, or causing to be made or used a false record or statement material

to a false or fraudulent claim to the federal government, or knowingly making a false statement to improperly avoid, decrease or

conceal an obligation to pay money to the federal government.

A claim includes “any request or demand” for money or

property presented to the U.S.

For instance, historically, pharmaceutical and other healthcare companies have been

prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill

federal programs for the product.

Other companies have been prosecuted for causing false claims to be submitted because of the

companies’ marketing of the product for unapproved, off-label, and thus generally non-reimbursable, uses.

“FCA”) (discussed below).

The federal false claims,

including the FCA, and civil monetary penalty laws, which imposes significant penalties and can be enforced by private citizens

through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented,

a false or fraudulent claim for payment to, or approval by, the federal government, including federal healthcare programs, such

as Medicare and Medicaid, knowingly making, using, or causing to be made or used a false record or statement material to a false

or fraudulent claim to the federal government, or knowingly making a false statement to improperly avoid, decrease or conceal an

obligation to pay money to the federal government.

A claim includes “any request or demand”

for money or property presented

For instance, historically, pharmaceutical and other healthcare companies have been prosecuted under these

laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for

Other companies have been prosecuted for causing false claims to be submitted because of the companies’

of the product for unapproved, off-label, and thus generally non-reimbursable, uses.

HIPAA created additional

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of the statute or specific intent to violate it in order to have committed a violation.

Also, many states

have similar, and typically more prohibitive, fraud and abuse statutes or regulations that apply to items and services reimbursed

under Medicaid and other state programs, or, in several states, apply regardless of the payor.

ArTara may be subject

to data privacy and security regulations by both the federal government and the states in which it conducts business.

amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and its implementing regulations, imposes

requirements relating to the privacy, security and transmission of individually identifiable health information.

Among other things,

HITECH makes HIPAA’s privacy and security standards directly applicable to business associates, independent contractors,

or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf

of a covered entity.

HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties

directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or

injunctions in federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil

In addition, many state laws govern the privacy and security of health information in specified circumstances, many of

which differ from each other in significant ways, are often not pre-empted by HIPAA, and may have a more prohibitive effect than

HIPAA, thus complicating compliance efforts.

ArTara may develop

Also, many states have

similar, and typically more prohibitive, fraud and abuse statutes or regulations that apply to items and services reimbursed under

Medicaid and other state programs, or, in several states, apply regardless of the payor.

We may be subject to data

privacy and security regulations by both the federal government and the states in which it conducts business.

HIPAA, as amended

by the Health Information Technology for Economic and Clinical Health Act (HITECH) and its implementing regulations, imposes requirements

on “covered entities,”

including certain healthcare providers, health plans, and healthcare clearinghouses, as well

as their respective “business associates”

that create, receive, maintain or transmit individually identifiable health

information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security and

transmission of individually identifiable health information.

Among other things, HITECH makes HIPAA’s privacy and security

standards directly applicable to business associates, independent contractors, or agents of covered entities that receive or obtain

protected health information in connection with providing a service on behalf of a covered entity.

HITECH also created four new

tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates,

and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA

and seek attorneys’

fees and costs associated with pursuing federal civil actions.

In addition, many state laws govern the

privacy and security of health information in specified circumstances, many of which differ from each other in significant ways,

are often not pre-empted by HIPAA, and may have a more prohibitive effect than HIPAA, thus complicating compliance efforts.

We may develop

products that, once approved, may be administered by a physician.

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covers outpatient services and supplies, including certain biopharmaceutical products, that are medically necessary to treat a

beneficiary’s health condition.

As a condition of receiving Medicare Part B reimbursement for a manufacturer’s eligible

beneficiary’s health condition.

As a condition of receiving Medicare Part B reimbursement for a manufacturer’s eligible

drugs, the manufacturer is required to participate in other government healthcare programs, including the Medicaid Drug Rebate

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and have in effect a national rebate agreement with the Secretary of HHS as a condition for states to receive federal matching

funds for the manufacturer’s outpatient drugs furnished to Medicaid patients.

Under the 340B Drug Pricing Program, the manufacturer

must extend discounts to entities that participate in the program.

In addition, many

pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales

price (“ASP”) and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and

Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs

or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be

sold at lower prices than in the United States.

It is difficult to predict how Medicare coverage and reimbursement policies will

be applied to ArTara’s products in the future and coverage and reimbursement under different federal healthcare programs

are not always consistent.

Medicare reimbursement rates may also reflect budgetary constraints placed on the Medicare program.

Additionally, the

federal Physician Payments Sunshine Act (the “Sunshine Act”), within the Affordable Care Act, and its implementing

regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available

under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information

related to certain payments or other transfers of value made or distributed to physicians, as defined by such law, and teaching

hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and

to report annually certain ownership and investment interests held by physicians and their immediate family members.

report accurately could result in penalties.

In addition, many states also govern the reporting of payments or other transfers

of value, many of which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect

than the Sunshine Act, thus further complicating compliance efforts.

In addition, many pharmaceutical

manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price (“ASP”)

and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Further, these prices

for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by

any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than

in the United States.

It is difficult to predict how Medicare coverage and reimbursement policies will be applied to our products

in the future and coverage and reimbursement under different federal healthcare programs are not always consistent.

Medicare reimbursement

rates may also reflect budgetary constraints placed on the Medicare program.

Additionally, the federal

Physician Payments Sunshine Act (the “Sunshine Act”), within the Affordable Care Act, and its implementing regulations,

require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare,

Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related

to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists,

podiatrists and chiropractors) and teaching hospitals, or to entities or individuals at the request of, or designated on behalf

of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians

and their immediate family members.

Beginning in 2022, applicable manufacturers also will be required to report such information

regarding its relationships with physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants,

certified registered nurse anesthetists and certified nurse midwives during the previous year.

Failure to report accurately could

result in penalties.

In addition, many states also govern the reporting of payments or other transfers of value, many of which

differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine

Act, thus further complicating compliance efforts.

In order to distribute

products commercially, ArTara must comply with state laws that require the registration of manufacturers and wholesale distributors

products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors

of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into

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sales and marketing, and to prohibit certain other sales and marketing practices.

All of ArTara’s activities are potentially

subject to federal and state consumer protection and unfair competition laws.

Ensuring business

arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor.

operations are found to be in violation of any of the federal and state healthcare laws described above or any other current or

future governmental regulations that apply to it, it may be subject to penalties, including without limitation, significant civil,

criminal and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government

programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers

in the name of the government, or refusal to allow it to enter into government contracts, contractual damages, reputational harm,

administrative burdens, diminished profits and future earnings, additional reporting obligations and oversight if ArTara becomes

subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the

curtailment or restructuring of its operations, any of which could adversely affect ArTara’s ability to operate its business

and its results of operations.

Coverage, Pricing

and Reimbursement

All of our activities are potentially subject

to federal and state consumer protection and unfair competition laws.

Ensuring business arrangements

with third parties comply with applicable healthcare laws and regulations is a costly endeavor.

If our operations are found to

be in violation of any of the federal and state healthcare laws described above or any other current or future governmental regulations

that apply to it, it may be subject to penalties, including without limitation, significant civil, criminal and/or administrative

penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government programs, such as Medicare and

Medicaid, injunctions, private “qui tam”

actions brought by individual whistleblowers in the name of the government,

or refusal to allow it to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished

profits and future earnings, additional reporting obligations and oversight if we become subject to a corporate integrity agreement

or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of its operations,

any of which could adversely affect our ability to operate our business and our results of operations.

Coverage, Pricing and Reimbursement

Significant uncertainty

exists as to the coverage and reimbursement status of any product candidates for which ArTara may obtain regulatory approval.

the United States and in foreign markets, sales of any products for which ArTara receives regulatory approval for commercial sale

will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for

such products.

In the United States, third-party payors include federal and state healthcare programs, private managed care providers,

health insurers and other organizations.

Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare

and Medicaid in the United States, and commercial payors are critical to new product acceptance.

ArTara’s ability

to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these

products and related treatments will be available from government health administration authorities, private health insurers and

other organizations.

Government authorities and other third-party payors, such as private health insurers and health maintenance

organizations, decide which therapeutics they will pay for and establish reimbursement levels.

Coverage and reimbursement by a

third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic

exists as to the coverage and reimbursement status of any product candidates for which we may obtain regulatory approval.

United States and in foreign markets, sales of any products for which we receive regulatory approval for commercial sale will depend,

in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such products.

In the United States, third-party payors include federal and state healthcare programs, private managed care providers, health

insurers and other organizations.

Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and

Medicaid in the United States, and commercial payors are critical to new product acceptance.

Our ability to commercialize

any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related

treatments will be available from government health administration authorities, private health insurers and other organizations.

Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide

which therapeutics they will pay for and establish reimbursement levels.

Coverage and reimbursement by a third-party payor may

depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is:

a covered benefit under its health plan;

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neither experimental nor investigational.

ArTara cannot be sure

that reimbursement will be available for any product that it commercializes and, if coverage and reimbursement are available, what

the level of reimbursement will be.

Coverage may also be more limited than the purposes for which the product is approved by the

FDA or comparable foreign regulatory authorities.

Reimbursement may impact the demand for, or the price of, any product for which

ArTara obtains regulatory approval.

Third-party payors

are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness of medical products,

We cannot be sure that

reimbursement will be available for any product that it commercializes and, if coverage and reimbursement are available, what the

level of reimbursement will be.

Coverage may also be more limited than the purposes for which the product is approved by the FDA

or comparable foreign regulatory authorities.

Reimbursement may impact the demand for, or the price of, any product for which we

obtain regulatory approval.

Third-party payors are

increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness of medical products,

therapies and services, in addition to questioning their safety and efficacy.

Obtaining reimbursement for ArTara’s products

may be particularly difficult because of the higher prices often associated with branded drugs and drugs administered under the

supervision of a physician.

ArTara may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity

and cost-effectiveness of its products, in addition to the costs required to obtain FDA approvals.

ArTara’s product candidates

may not be considered medically necessary or cost-effective.

Obtaining coverage and reimbursement approval of a product from a

government or other third-party payor is a time-consuming and costly process that could require ArTara to provide to each payor

supporting scientific, clinical and cost-effectiveness data for the use of its product on a payor-by-payor basis, with no assurance

that coverage and adequate reimbursement will be obtained.

A payor’s decision to provide coverage for a product does not

imply that an adequate reimbursement rate will be approved.

Further, one payor’s determination to provide coverage for a

product does not assure that other payors will also provide coverage for the product.

Adequate third-party reimbursement may not

be available to enable ArTara to maintain price levels sufficient to realize an appropriate return on ArTara’s investment

in product development.

If reimbursement is not available or is available only at limited levels, ArTara may not be able to successfully

commercialize any product candidate that it successfully develops.

Different pricing

and reimbursement schemes exist in other countries.

In the European Union, governments influence the price of biopharmaceutical

products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the

cost of those products to consumers.

Some jurisdictions operate positive and negative list systems under which products may only

be marketed once a reimbursement price has been agreed.

To obtain reimbursement or pricing approval, some of these countries may

require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available

Obtaining reimbursement for our products may be particularly

difficult because of the higher prices often associated with branded drugs and drugs administered under the supervision of a physician.

We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness

of our products, in addition to the costs required to obtain FDA approvals.

Our product candidates may not be considered medically

necessary or cost-effective.

Obtaining coverage and reimbursement approval of a product from a government or other third-party

payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and

cost-effectiveness data for the use of our product on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement

will be obtained.

A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate

will be approved.

Further, one payor’s determination to provide coverage for a product does not assure that other payors

will also provide coverage for the product.

Adequate third-party reimbursement may not be available to enable us to maintain price

levels sufficient to realize an appropriate return on our investment in product development.

If reimbursement is not available

or is available only at limited levels, we may not be able to successfully commercialize any product candidate that it successfully

Different pricing and

reimbursement schemes exist in other countries.

In the European Union, governments influence the price of biopharmaceutical products

through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of

those products to consumers.

Some jurisdictions operate positive and negative list systems under which products may only be marketed

once a reimbursement price has been agreed.

To obtain reimbursement or pricing approval, some of these countries may require the

completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

Other member states allow companies to fix their own prices for medicines but monitor and control company profits.

downward pressure on health care costs has become intense.

As a result, increasingly high barriers are being erected to the entry

of new products.

In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing

within a country.

The marketability

of any product candidates for which ArTara receives regulatory approval for commercial sale may suffer if the government and third-party

payors fail to provide adequate coverage and reimbursement.

In addition, emphasis on managed care, the increasing influence of

health maintenance organizations, and additional legislative changes in the United States has increased, and ArTara expects will

continue to increase, the pressure on healthcare pricing.

The downward pressure on the rise in healthcare costs in general, particularly

prescription medicines, medical devices and surgical procedures and other treatments, has become very intense.

Coverage policies

and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for

one or more products for which ArTara receives regulatory approval, less favorable coverage policies and reimbursement rates may

be implemented in the future.

pressure on health care costs has become intense.

As a result, increasingly high barriers are being erected to the entry of new

In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within

The marketability of any

product candidates for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors

fail to provide adequate coverage and reimbursement.

In addition, emphasis on managed care, the increasing influence of health

maintenance organizations, and additional legislative changes in the United States has increased, and we expect will continue to

increase, the pressure on healthcare pricing.

The downward pressure on the rise in healthcare costs in general, particularly prescription

medicines, medical devices and surgical procedures and other treatments, has become very intense.

Coverage policies and third-party

reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for one or more products

for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Healthcare Reform

In the United States

and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes

In the United States and

some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes

regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval

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above, are the following:

• an annual, nondeductible fee on any entity that manufactures or imports certain specified branded

prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare

• an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate

Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively, and capped the total

rebate amount for innovator drugs at 100% of the Average Manufacturer Price (the “AMP”);

• a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer

70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap

period, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D;

• extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals

who are enrolled in Medicaid managed care organizations;

• expansion of eligibility criteria for Medicaid programs by, among other things, allowing states

to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income

at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively, and capped the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price (the “AMP”);

a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’

outpatient drugs to be covered under Medicare Part D;

extension of manufacturers’

Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’

Medicaid rebate liability;

expansion of the entities eligible for discounts under the 340B Drug Discount Program;

• a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct

comparative clinical effectiveness research, along with funding for such research;

• expansion of healthcare fraud and abuse laws, including the FCA and the Anti-Kickback Statute,

new government investigative powers, and enhanced penalties for noncompliance;

• a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program

are calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

expansion of healthcare fraud and abuse laws, including the FCA and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

requirements to report certain financial arrangements with physicians and teaching hospitals;

• a requirement to annually report certain information regarding drug samples that manufacturers

and distributors provide to physicians;

• establishment of a Center for Medicare and Medicaid Innovation at CMS to test innovative payment

and service delivery models to lower Medicare and Medicaid spending;

a requirement to annually report certain information regarding drug samples that manufacturers and distributors provide to physicians;

establishment of a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending;

a licensure framework for follow on biologic products.

There remain legal

and political challenges to certain aspects of the Affordable Care Act.

Since January 2017, President Trump has signed two executive

orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the Affordable Care Act.

In December 2017, Congress repealed the tax penalty for an individual’s failure to maintain Affordable Care Act-mandated

There remain legal and

political challenges to certain aspects of the Affordable Care Act.

Since January 2017, the Trump administration signed several

executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the Affordable

In December 2017, Congress repealed the tax penalty for an individual’s failure to maintain Affordable Care Act-mandated

health insurance as part of a tax reform bill.

Further, the 2020 federal spending package permanently eliminated, effective January

1, 2020, the Affordable Care Act-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical

device tax and, effective January 1, 2021, also eliminates the health insurer tax.

Moreover, the Bipartisan Budget Act of 2018

(BBA), among other things, amends the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare

drug plans, commonly referred to as the “donut hole.” In December 2018, CMS published a new final rule permitting further

collections and payments to and from certain qualified health plans and health insurance issuers under the Affordable Care Act

risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine

this risk adjustment.

1, 2020, the Affordable Care Act-mandated “Cadillac”

tax on high-cost employer-sponsored health coverage and medical

device tax and, effective January 1, 2021, also eliminated the health insurer tax.

On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas ruled that the individual

mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the

tax reform bill, the remaining provisions of the Affordable Care Act are invalid as well.

Additionally, on December 18, 2019, the

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and

remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid

It is unclear how this decision, future decisions, subsequent appeals, if any, and other efforts to repeal and replace

the Affordable Care Act will impact the Affordable Care Act.

Congress is continuing to consider legislation that would alter other

aspects of the Affordable Care Act.

The ultimate content, timing or effect of any healthcare reform legislation on the U.S.

industry is unclear.

ArTara anticipates

that the Affordable Care Act, if substantially maintained in its current form, will continue to result in additional downward pressure

on coverage and the price that ArTara receives for any approved product, and could seriously harm its business.

Any reduction in

reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors.

implementation of cost containment measures or other healthcare reforms may prevent ArTara from being able to generate revenue,

attain profitability, or commercialize ArTara’s products.

Such reforms could have an adverse effect on anticipated revenue

from product candidates that ArTara may successfully develop and for which ArTara may obtain regulatory approval and may affect

its overall financial condition and ability to develop product candidates.

Further legislation

or regulation could be passed that could harm ArTara’s business, financial condition and results of operations.

Other legislative

changes have been proposed and adopted since the Affordable Care Act was enacted.

For example, in August 2011, President Obama

signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction

to recommend to Congress proposals in spending reductions.

The Joint Select Committee on Deficit Reduction did not achieve a targeted

deficit reduction of at least $1.2 trillion for fiscal years 2012 through 2021, triggering the legislation’s automatic reduction

District Court

Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the Affordable

Care Act, and therefore, because it was repealed as part of the tax reform bill, the remaining provisions of the Affordable Care

Act are invalid as well.

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District

Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether

the remaining provisions of the Affordable Care Act are invalid as well.

Supreme Court is currently reviewing this case,

although it is unclear when a decision will be made.

Although the U.S.

Supreme Court has yet ruled on the constitutionality of

the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15,

2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit

access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work

requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or

the Affordable Care Act.

It is unclear how the Supreme Court ruling, other such litigation, and the healthcare reform measures

of the Biden administration will impact the ACA and our business.

We anticipate that the

Affordable Care Act, if substantially maintained in its current form, will continue to result in additional downward pressure on

coverage and the price that we receive for any approved product, and could seriously harm our business.

Any reduction in reimbursement

from Medicare and other government programs may result in a similar reduction in payments from private payors.

The implementation

of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability,

or commercialize our products.

Such reforms could have an adverse effect on anticipated revenue from product candidates that we

may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability

to develop product candidates.

Further legislation or

regulation could be passed that could harm our business, financial condition and results of operations.

Other legislative changes

have been proposed and adopted since the Affordable Care Act was enacted.

For example, in August 2011, President Obama signed into

law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend

to Congress proposals in spending reductions.

The Joint Select Committee on Deficit Reduction did not achieve a targeted deficit

reduction of at least $1.2 trillion for fiscal years 2012 through 2021, triggering the legislation’s automatic reduction

to several government programs.

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which went into effect beginning on April 1, 2013 and will stay in effect through 2030 unless additional Congressional action is

However, COVID-19 pandemic relief legislation has suspended the 2% Medicare sequester from May 1, 2020 through March 31,

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced

1 unchanged sentence

the statute of limitations period for the government to recover overpayments to providers from three to five years.

Additionally, there

has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

Specifically, there have been several recent U.S.

Congressional inquiries and proposed federal legislation designed to, among other

things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship

between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

federal level, the Trump administration’s budget proposal for fiscal year 2 021 includes

a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket

drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs .

Further, the Trump administration

previously released a “Blueprint , ” or plan, to lower drug prices and reduce out of pocket costs of drugs

that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal

healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of

drug products paid by consumers.

HHS has solicited feedback on some of these measures and has implemented others under its existing

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy

for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

While some proposed measures will require additional authorization to become effective, Congress and the Trump administration have

each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

Individual states

in the United States have also become increasingly active in passing legislation and implementing regulations designed to control

biopharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product

access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other

countries and bulk purchasing.

The Foreign Corrupt

Practices Act

The Foreign Corrupt

Practices Act (the “FCPA”), prohibits any U.S.

individual or business from paying, offering, or authorizing payment

or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose

of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions

requiring ArTara to maintain books and records that accurately and fairly reflect all transactions of the corporation, including

international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Additionally, there has

been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

Specifically,

there have been several recent U.S.

Congressional inquiries and proposed federal legislation designed to, among other things, bring

more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing

and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

At the federal level, the

Trump administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals

seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to

lower-cost generic and biosimilar drugs.

Further, the Trump administration previously released a “Blueprint , ”

or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer

competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list

price of their products, and reduce the out of pocket costs of drug products paid by consumers.

Several final rules have been recently

promulgated that seek to implement several of the Trump administration’s proposals.

However, it is unclear whether the Biden

administration will work to reverse these measures or pursue similar policy initiatives.

Individual states in the United States

have also become increasingly active in passing legislation and implementing regulations designed to control biopharmaceutical

product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing

cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk

Further, it is possible that additional government action is taken in response to the COVID-19 pandemic.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices

Act (the “FCPA”), prohibits any U.S.

individual or business from paying, offering, or authorizing payment or offering

of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing

any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us

to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries,

and to devise and maintain an adequate system of internal accounting controls for international operations.

Additional Regulation

In addition to the

foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety

and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect ArTara’s business.

These and other laws govern ArTara’s use, handling and disposal of various biological, chemical and radioactive substances

used in, and wastes generated by, ArTara’s operations.

If ArTara’s operations result in contamination of the environment

or expose individuals to hazardous substances, ArTara could be liable for damages and governmental fines.

ArTara believes that

it is in material compliance with applicable environmental laws and that continued compliance therewith will not have a material

adverse effect on its business.

ArTara cannot predict, however, how changes in these laws may affect its future operations.

In addition to the foregoing,

state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health

Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.

These and other laws

govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated

by, our operations.

If our operations result in contamination of the environment or expose individuals to hazardous substances,

we could be liable for damages and governmental fines.

We believe that we are in material compliance with applicable environmental

laws and that continued compliance therewith will not have a material adverse effect on our business.

We cannot predict, however,

how changes in these laws may affect our future operations.

Other Regulations

ArTara is also subject

to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental

We are also subject to

numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental

protection, fire hazard control, and disposal of hazardous or potentially hazardous substances.

ArTara may incur significant costs

We may incur significant costs

to comply with such laws and regulations now or in the future.

As of March 11, 2021,

we had twelve employees, eight of whom were full-time employees, one of whom was a part-time employee, and three of whom were contract

As of March 10, 2020, four of ArTara’s employees were engaged in research and development activities and eight

of its employees were engaged in business development, finance, information systems, facilities, human resources or administrative

As of March 10, 2020, all of ArTara’s employees were located in the U.S.

None of ArTara’s U.S.

employees are

represented by any collective bargaining agreements.

ArTara believes that it maintains good relations with its employees.

we had twenty-nine employees, twenty-seven of whom were full-time employees and two of whom were contract employees.

11, 2021, twelve of our employees were engaged in research and development activities and seventeen of our employees were engaged

in business development, finance, commercial, information systems, facilities, human resources or administrative support.

March 11, 2021, all of our employees were located in the U.S.

None of our U.S.

employees are represented by any collective bargaining

We believe that we maintain good relations with our employees.

The ultimate impact of

the current COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We have experienced delays,

but may experience additional future delays that impact our business, our research and development activities, healthcare systems

and the global economy as a whole.

However, we will continue to monitor the COVID-19 situation closely should the effects have

a material impact on our operations, liquidity and capital resources.

In response to public

health directives and orders, we have implemented work-from-home policies for our employees and temporarily modified our operations

to comply with applicable social distancing recommendations.

Similar health directives and orders are affecting third parties with

whom we do business, including the third parties that we have contracted with to conduct studies for TARA-002.

The effects of the

orders and our related adjustments in our business are likely to negatively impact productivity, disrupt our business and delay

our timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations

on our ability to conduct our business in the ordinary course.

Severe and/or long-term

disruptions in our operations will negatively impact our business, operating results and financial condition in other ways, as

Specifically, we anticipate that the stress of COVID-19 on healthcare systems around the globe will negatively impact our

ability to conduct clinical trials in the near term due primarily to the lack of resources at clinical trial sites and the resulting

inability to enroll patients in the trials.

We also anticipate that the global impact of COVID-19 will negatively impact our ability

to conduct nonclinical studies due primarily to laboratory closures and limited availability of personnel.

In addition, while the

potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has significantly

disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our

A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the

value of our common stock.

Corporate Information

On January 9, 2020, Protara

Therapeutics, Inc.

(formerly ArTara Therapeutics, Inc., formerly Proteon Therapeutics, Inc.

the “Company”

or “Protara”),

and privately-held ArTara Subsidiary, Inc.

(“Private ArTara”), completed the merger and reorganization, or the Merger,

in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated September 23, 2019, or the Merger Agreement,

by and among the Company, Private ArTara and REM 1 Acquisition, Inc., a wholly owned subsidiary of the Company (“Merger Sub”),

whereby Merger Sub merged with and into Private ArTara, with Private ArTara surviving as a wholly owned subsidiary of the Company.

The Merger was structured as a reverse merger and Private ArTara was determined to be the accounting acquirer based on the terms

of the Merger and other factors.

Refer to Note 3, Reverse

Merger with Protara and Recapitalization, to our financial statements appearing elsewhere in this Annual Report on Form 10-K for

additional information.

We were originally incorporated

in Delaware in March 2006, and at that time, acquired Proteon Therapeutics, LLC, the predecessor of Protara, which was formed in

Our principal executive

offices are located at 345 Park Avenue South, 3 rd Floor, New York, New York 10010, our telephone number is (646) 844-0337

and our website address is www.protaratx.com.

Unless the context requires

otherwise, references in this Annual Report to “Protara”, “TARA”, “we”, “us”, the

“Company”

and “our”

refer to Protara Therapeutics, Inc.

(formerly ArTara Therapeutics, Inc., formerly Proteon

Therapeutics, Inc.) and our subsidiaries.

Available Information

Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and

15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, will be made available free of charge on our website

as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange

Commission, or SEC.

The contents of our website are not incorporated into this Annual Report and our reference to the URL for our

website is intended to be an inactive textual reference only.

The information contained on, or that can be accessed through, our

website is not a part of this document.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business