What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-11 compared with 2020-03-20 · 489 added, 17 removed, 7 unchanged (99% of the section changed)

Market for Registrant’s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is

traded on the Nasdaq Capital Market under the symbol “ TARA ”.

Holders of Our Common

As of March 10, 2020, there were 5,843,203 shares of common

stock outstanding held by approximately 39 stockholders of record.

The actual number of stockholders is greater than this number

of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and

other nominees.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded

on the Nasdaq Capital Market under the symbol “

TARA ”.

Holders of Our Common Stock

As of March 11, 2021,

there were 11,228,606 shares of common stock outstanding held by approximately 25 stockholders of record.

The actual number of

stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, whose shares

are held in street name by brokers and other nominees.

Dividend Policy

We have never declared

or paid cash dividends on our Common Stock, and we do not expect to pay any cash dividends on our Common Stock in the foreseeable

We have never declared or

paid cash dividends on our Common Stock, and we do not expect to pay any cash dividends on our Common Stock in the foreseeable

Payment of future dividends, if any, on our Common Stock will be at the discretion of our Board of Directors after taking

into account various factors, including our financial condition, operating results, anticipated cash needs, and plans for expansion.

Securities Authorized for Issuance under Equity Compensation

See Item 12 of Part III of this Annual

Report on Form 10-K regarding information about securities authorized for issuance under our equity compensation plans.

Securities Authorized for Issuance under Equity

Compensation Plans

See Item 12 of Part III

of this Annual Report on Form 10-K regarding information about securities authorized for issuance under our equity compensation

Recent Sales of Unregistered Securities

Other than as previously

disclosed in our past Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, the Company did not have any sales of unregistered

disclosed in our past Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, we did not have any sales of unregistered

securities for the period covered by this Annual Report on Form 10-K.

Selected Financial

Selected Financial Data.

Information requested by

this Item is not applicable as we are electing scaled disclosure requirements available to Smaller Reporting Companies with respect

to this Item.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the

following discussion and analysis of our financial condition and results of operations together with our financial statements

and related notes appearing elsewhere in this report.

Some of the information contained in this discussion and analysis or set

forth elsewhere in this report, including information with respect to our plans and strategy for our business and related financing,

includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors

set forth in the “Risk Factors”

section of this document, our actual results could differ materially from the results

described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

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 non-muscle invasive bladder cancer or NMIBC, which is cancer found in the tissue that lines the inner

surface of the bladder that has not spread into the bladder muscle.

Bladder cancer is the sixth most common cancer in the United

States, with NMIBC representing approximately 80% of bladder cancer diagnoses.

Approximately 65,000 patients are diagnosed with

NMIBC in the United States each year.

Very few new therapeutics have been approved 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.

The 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.

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®

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 FDA.

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, or IFALD.

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.

The goal 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

Since inception, we have

incurred significant operating losses.

As of December 31, 2020, we had an accumulated deficit of approximately $46.8 million.

We expect to continue to incur significant expenses and increasing operating losses for at least the next few years as we continue

our development of, and seek marketing approvals for, our product candidates, prepare for and begin the commercialization of any

approved products, and add infrastructure and personnel to support our product development efforts and operations as a public

company in the United States.

As a clinical-stage company,

our expenses and results of operations are likely to fluctuate significantly from quarter to quarter and year to year.

that our period-to-period comparisons of our results of operations should not be relied upon as indicative of our future performance.

As of December 31, 2020,

we had approximately $168.6 million in cash and cash equivalents.

On January 9, 2020, Protara

Therapeutics, Inc.

(formerly ArTara Therapeutics, Inc., formerly Proteon Therapeutics, Inc., the “Company”), completed

its previously announced merger transaction with ArTara Subsidiary, Inc.

(formerly ArTara Therapeutics, Inc., “Private ArTara”)

in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of September 23, 2019, by and among

the Company, REM 1 Acquisition, Inc.

(“Merger Sub”), and Private ArTara (as amended on November, 19, 2019, the “Merger

Agreement”), pursuant to which Merger Sub merged with and into Private ArTara, with Private ArTara surviving as a wholly

owned subsidiary of the Company (the “Merger”).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.

Following the completion of the Merger,

the Company is focused on advancing Private ArTara’s drug development programs.

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 (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,

On May 11, 2020, the Company changed its name to Protara Therapeutics, Inc.

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.

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.

The Company 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”).

The shares of Common Stock

listed on The Nasdaq Capital Market, previously trading through the close of business on Thursday, January 9, 2020 under the ticker

symbol “PRTO,”

commenced trading on The Nasdaq Capital Market, on a post-Reverse Stock Split adjusted basis, under

the ticker symbol “TARA,”

on Friday, January 10, 2020.

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.

Financial Overview

Research and Development Expenses

Research and development

expenses consist primarily of costs incurred for the development of TARA-002 and IV Choline Chloride, which include employee-related

expenses, including salaries, benefits, travel and stock-based compensation expense, expenses incurred under agreements with clinical

research organizations (“CROs”), contract development and manufacturing organizations (“CDMOs”), the cost

of acquiring, developing and manufacturing clinical trial materials, clinical and non-clinical related costs, costs associated

with regulatory operations and facilities, depreciation and other expenses, which include expenses for rent and maintenance of

facilities and other supplies.

General and Administrative Expenses

General and administrative

expenses consist principally of employee-related expenses, including salaries, benefits, travel and stock-based compensation expense,

in executive and other administrative functions.

Other general and administrative expenses also include professional fees for

legal, patent review, consulting and accounting services as well as facility related costs, as well as expenses related to audit,

legal, regulatory and tax-related services associated with maintaining compliance with our NASDAQ listing and SEC requirements,

director and officer liability insurance premiums and investor relations costs associated with being a public company.

Interest Income, Net

Interest income, net, consists

of interest income earned on our cash, cash equivalents and restricted cash, net of interest expense related to our short-term

Critical Accounting Policies and Significant Judgments and Estimates

Management’s discussion

and analysis of our financial position and results of operations is based on our consolidated financial statements, which have

been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

The preparation

of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported

in the financial statements and accompanying notes.

On an ongoing basis, we evaluate estimates, which include estimates related

to clinical trial accruals, valuation of deferred tax assets, fair value of business combinations, fair value of goodwill and

evaluation of impairment, stock stock-based compensation expense, and reported amounts of revenues and expenses during the reported

We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe

to be reasonable under the circumstances.

Actual results may differ materially from those estimates or assumptions.

While our significant accounting

policies are described in more detail in the notes to our consolidated financial statements and related notes appearing elsewhere

in this Annual Report, we believe the following accounting policies to be most critical to the judgments and estimates used in

the preparation of our financial statements.

Goodwill represents the

excess of purchase price over the fair value of identifiable net assets acquired in a business combination.

Goodwill and other

intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead

tested for impairment at least annually.

An entity has the option to first assess qualitative factors to determine whether events

or circumstances lead to a conclusion that is more likely than not that the fair value of a reporting unit is greater than its

carrying amount.

If an entity determines that qualitative factors indicate that it is more likely than not that the fair value

of the entity exceeds the carrying amount, the quantitative evaluation is not necessary.

Under the quantitative impairment test,

the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including

In the event the estimated

fair value of our company is less than the carrying value, we would recognize a goodwill impairment equal to the difference between

the carrying value and its fair value, not to exceed the carrying value of goodwill.

Deferred tax assets and

liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their respective tax basis, operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences

are expected to be recovered or settled.

The measurement of net deferred tax assets is reduced by the amount of any tax benefit

that, based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established.

Tax benefits are recognized

only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

The amount recognized

is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.

for “unrecognized tax benefits”

is recorded for any tax benefits claimed in our tax returns that do not meet these

recognition and measurement standards.

As of December 31, 2020 and 2019, no liability for unrecognized tax benefits was required

to be recorded.

The guidance also discusses the classification of related interest and penalties on income taxes.

Our policy is

to record interest and penalties on uncertain tax positions as a component of income tax expense.

No interest or penalties were

recorded during the years ended December 31, 2020 and 2019.

Business Combinations

For a business combination,

the assets acquired and the liabilities assumed are recognized at the acquisition date, measured at their fair values as of that

In a business combination achieved in stages, the identifiable assets and liabilities are recognized at their fair values.

In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair

value of the consideration transferred plus any non-controlling interest in the acquiree, that excess in fair value is recognized

Deferred tax liabilities

and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of

assets acquired and liabilities assumed in a business combination in accordance with ASC Topic 740-10 “Income Taxes”.

Stock-Based Compensation

We issue stock-based awards

to employees and non-employees.

We account for our stock-based awards in accordance with FASB ASC Topic 718, Compensation—Stock

Compensation, (“ASC 718”).

ASC 718 requires all stock-based payments to employees, including grants of employee stock

options and modifications to existing stock options, to be recognized in the consolidated statements of operations and comprehensive

loss based on their fair values.

We account for stock-based awards to non-employees in accordance with ASC 718, which requires

the fair value of the award to be remeasured at fair value as the award vests.

Our stock-based awards are

subject to service-based vesting conditions.

Compensation expense related to awards to employees and directors with service-based

vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period

of the award, which is generally the vesting term.

Compensation expense related to awards to non-employees with service-based

vesting conditions is recognized on the then-current fair value at each financial reporting date prior to the measurement date

over the associated service period of the award, which is generally the vesting term, using the accelerated attribution method.

Described below is the methodology

we have utilized in measuring stock-based compensation expense.

Following the consummation of the Merger, stock option values

have been determined based on the quoted market price of our common stock.

We estimate the fair value

of our stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requires the input

of highly subjective assumptions, including (i) the expected volatility of our stock, (ii) the expected term of the award, (iii)

the risk-free interest rate and (iv) expected dividends.

We calculate the expected volatility using the historical volatility

for a pool of peer companies over the most recent period equal to the expected term and evaluate the extent to which available

information indicate that future volatility may differ from historical volatility.

For these analyses, we select companies with

comparable characteristics to ours including enterprise value, risk profiles, position within the industry, and with historical

share price information sufficient to meet the expected life of the stock-based awards.

We compute the historical volatility data

using the daily closing prices for the selected companies’

shares during the equivalent period of the calculated expected

term of our stock-based awards.

We account for forfeitures as they occur.

We estimate the expected life of our employee stock

options using the “simplified”

method, whereby, the expected life equals the average of the vesting term and the original

contractual term of the option.

The risk-free interest rates for periods within the expected life of the option were based on

Treasury yield curve in effect during the period the options were granted.

Results of Operations

Comparison of the Years Ended December

31, 2020 and 2019

The following table summarizes

our results of operations for the years ended December 31, 2020 and 2019 (in thousands):

Ended December 31,

Period-to-Period

Operating expenses:

and development

General and administrative

Total operating expenses

Loss from operations

Other income, net:

Interest income,

Total other income,

Research and Development

During the year ended December 31, 2020, our research and development expenses were approximately $12.0 million

which represented an increase of approximately $8.1 million as compared to the year ended December 31, 2019.

This increase was

primarily due to an increase of approximately $3.2 million of non-clinical, clinical, regulatory expenses and outside services

associated with TARA-002, an increase of approximately $2.5 million for manufacturing activities associated with TARA-002, an

increase of approximately $1.5 million in headcount cost due to bonuses earned upon the merger and the hiring of additional employees

and an increase of approximately $0.5 million in stock-based compensation.

General and Administrative

During the year ended December 31, 2020, our general and administrative expenses were approximately $22.5 million

which represented an increase of approximately $18.5 million as compared to the year ended December 31, 2019.

The increase, principally

on account of becoming a public company on January 9, 2020, was primarily due to an increase of approximately $8.8 million in

stock-based compensation, an increase of approximately $2.5 million in insurance, an increase of approximately $2.0 million in

public company costs, an increase of approximately $2.8 million in headcount cost due to bonuses earned upon the merger and the

hiring of additional employees, an increase of approximately $1.2 million in recruiting fees, an increase of approximately $0.3

million in board of director fees, and an increase of approximately $0.2 million in franchise and other taxes.

Interest Income, Net .

During the year ended December 31, 2020, interest income, net was approximately $0.5 million higher as compared to the year ended

December 31, 2019.

The increase was primarily due to us earning interest on the funds received in the Private Placements and Underwritten

Liquidity and Capital Resources

As of December 31,

2020 and 2019, our cash and cash equivalents was approximately $168.6 million and $0.6 million, respectively.

We have not generated

revenues since our inception and have incurred net losses of approximately $34.0 million and $7.8 million for the years ended

December 31, 2020 and 2019, respectively.

As of December 31, 2020, we had working capital of approximately $166.5 million and

stockholder’s equity of approximately $199.2 million.

During the year ended December 31, 2020, cash flows used in operating

activities were approximately $23.4 million, consisting primarily of a net loss of approximately $34.0 million, which includes

non-cash stock-based compensation charges of approximately $9.7 million.

Since inception, we have met our liquidity requirements

principally through the sale of our common stock and preferred stock in private placements and underwritten offerings.

In connection with the Merger,

we consummated the Private Placements, raising gross proceeds of approximately $42.5 million.

Upon the consummation of the Merger

and the Private Placements, the post-merger combined company was expected to have cash of approximately $39.6 million.

Concurrently with the execution

of the Merger Agreement, certain institutional investors (together, the “Investors”) entered into a subscription agreement

(as amended on November 19, 2019, the “Subscription Agreement”) with Protara Therapeutics, Inc.

and Private ArTara,

pursuant to which (A) Protara Therapeutics, Inc.

issued, in a private placement immediately after the Merger (the “Proteon

Private Placement”), (i) 3,879.356 of shares of Protara Therapeutics, Inc.’s Series 1 Convertible Non-Voting Preferred

Stock (“Series 1 Preferred Stock”) at a purchase price of approximately $7,011.47 per share for gross proceeds of

$27.2 million and proceeds, net of issuance costs, of $25.3 million, (ii) 1,896,888 shares of Protara Therapeutics, Inc.’s

Common Stock at a purchase price of approximately $7.01 per share for gross proceeds of $13.3 million and proceeds, net of issuance

costs, of $12.4 million and (B) Private ArTara issued, in a private placement immediately prior to the Merger (the “ArTara

Private Placement”), 284,875 shares of Private ArTara common stock (post-Exchange Ratio (as defined in the Merger Agreement)

basis) at a purchase price of approximately $7.01 per share (post-Exchange Ratio basis) (together with the Proteon Private Placement,

the “Private Placements”) for gross proceeds of $2.0 million and proceeds, net of issuance costs, of $1.9 million.

The shares issued in the Proteon Private Placement were registered for resale on a registration statement on Form S-3 filed and

declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on February 10, 2020.

In connection with the Preferred

Offering on September 22, 2020, we filed a Certificate of Amendment to the Certificate of Designation of Preferences, Rights and

Limitations of Series 1 Convertible Non-Voting Preferred Stock of ours (the “Amendment”) with the Secretary of State

of the State of Delaware to increase the authorized number of shares of our Series 1 Convertible Preferred Stock that may be issued

from 3,880 to 8,028.

On September 24, 2020, pursuant

to an underwriting agreement, dated September 22, 2020, we issued and sold in an underwritten public offering (the “Common

Offering”) an aggregate of 4,600,000 shares of our common stock at an offering price of $16.87 per share, for gross and

net proceeds of approximately $77.6 million and $73.6 million, respectively.

The underwriters were granted an option to purchase

up to 690,000 additional shares of common stock at the public offering price, less the underwriting discount.

This option was

exercisable for a period of 30 days.

On October 6, 2020, the underwriters exercised their overallotment option in full, purchasing

an additional 690,000 shares, resulting in the receipt of gross and net proceeds of approximately $11.6 million and $11.1 million,

respectively.

On September 24, 2020, pursuant

to an underwriting agreement, dated September 22, 2020, we issued and sold in an underwritten public offering (the “Preferred

Offering”) an aggregate of 4,148 shares of our Series 1 Preferred Stock at an offering price of $16,873.54 per share, for

gross and net proceeds of approximately $70.0 million and $66.3 million, respectively.

The Common Offering and

the Preferred Offering were made pursuant to our registration statement on Form S-3, declared effective by the Securities and

Exchange Commission on May 26, 2020 (Registration No.

In December 2020, we filed

a shelf registration statement on Form S-3, or the Shelf Registration Statement, which became effective in December 2020.

Shelf Registration Statement permits:

(i) the offering, issuance and sale by us of up to a maximum aggregate offering price of

$300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination.

No securities have been sold to date under the Shelf Registration Statement.

We are in the business of

developing biopharmaceuticals and have no current or near term revenues.

We have incurred substantial clinical and other costs

in our drug development efforts.

We will need to raise additional capital in order to fully realize management’s plans.

We believe that our current

financial resources, as of the date of the issuance of these condensed consolidated financial statements, are sufficient to satisfy

our estimated liquidity needs for at least twelve months from the issuance of these condensed consolidated financial statements.

As a result of economic

conditions, general global economic uncertainty, political change, global pandemics, and other factors, we do not know whether

additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable

If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty

or other factors, we may need to curtail planned development activities.

Specifically, the COVID-19 pandemic 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.

The following table summarizes

our sources and uses of cash for the years ended December 31, 2020 and 2019 (in thousands):

Years Ended December 31,

Period-to-Period

Net cash used in operating activities

Net cash provided by/(used in) investing activities

Net cash provided by financing activities

Net increase/(decrease) in cash and cash equivalents, and restricted cash

Comparison of the Years Ended December

31, 2020 and 2019

Net cash used in operating

activities was approximately $23.4 million for the year ended December 31, 2020 compared to approximately $5.0 million for the

year ended December 31, 2019.

The increase of approximately $18.4 million in cash used in operating activities was primarily driven

by an increase net loss of approximately $26.1 million and a decrease in accrued expenses of approximately $3.0 million, off-set

by increases of approximately $9.3 million of stock-based compensation and approximately $1.4 million in prepaid expenses and

other current assets.

Net cash provided by investing

activities was approximately $2.8 million for the year ended December 31, 2020 compared to net cash used in investing activities

of approximately $0.5 million in the year ended December 31, 2019.

The increase of approximately $3.3 million was primarily due

to the cash and restricted cash acquired in connection with the Merger with Protara Therapeutics, Inc.

of approximately $3.7 million,

off-set by an increase in purchases of property and equipment of approximately $0.4 million.

Net cash provided by financing

activities was approximately $189.4 million for the year ended December 31, 2020 compared to approximately $0.5 million for the

year ended December 31, 2019.

The increase of approximately $188.9 million was primarily due to proceeds, net of offering costs,

from the Common Offering of approximately $73.6 million, the Preferred Offering of approximately $66.3 million, the issuance of

Series 1 Preferred Stock of approximately $25.3 million, the Proteon Private Placement of approximately $12.4 million, the underwriters

overallotment option of approximately $11.1 million, and the ArTara Private Placement of approximately $1.9 million, offset by

repayments of short-term debt of approximately $1.7 million.

Off-Balance Sheet Arrangements

We did not have, during

the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the applicable regulations

Contractual Obligations

Our future contractual

obligations as of December 31, 2020 are (in thousands):

Payments due by period

Operating Lease Obligations

Quantitative and Qualitative Disclosures About Market Risk

No disclosure required.

Financial Statements and Supplementary Data.

The consolidated financial

statements required pursuant to this item are included in Item 15 of this report and are presented beginning on page 60.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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 5. Market for Registrant’s Common Equity