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Item 7. Management’s Discussion and Analysis

2024-03-13 compared with 2023-03-08 · 296 added, 323 removed, 51 unchanged (92% of the section changed)

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 Annual Report on Form 10-K.

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

elsewhere in this Annual Report on Form 10-K, 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 advancing transformative therapies for the treatment of cancer and rare diseases.

We were founded on the principle of applying modern scientific, regulatory or manufacturing advancements to established mechanisms in

order to create new development opportunities.

We prioritize creativity, diverse perspectives, integrity and tenacity to expedite our

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

Our portfolio includes two

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

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

therapy is currently approved in Japan and Taiwan for LMs and multiple oncologic indications.

We have secured worldwide rights to the

asset excluding Japan and Taiwan and are exploring its use in oncology and rare disease indications.

TARA-002 was developed from the

same master cell bank of genetically distinct group A Streptococcus pyogenes as OK-432 (marketed as Picibanil® in Japan and

Taiwan by Chugai Pharmaceutical).

We are currently developing TARA-002 in non-muscle invasive bladder cancer, or NMIBC, and in LMs.

Our lead oncology program

is TARA-002 in NMIBC, which is cancer found in the tissue that lines the inner surface of the bladder that has not spread into the bladder

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

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

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 Annual Report on Form 10-K.

Some of the information contained in this discussion and analysis

or set forth elsewhere in this Annual Report on Form 10-K, 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.

are a New York City based clinical-stage biopharmaceutical company committed to advancing transformative therapies for the treatment

of cancer and rare diseases.

We were founded on the principle of applying modern scientific, regulatory or manufacturing advancements

to established mechanisms in order to create new development opportunities.

We prioritize creativity, diverse perspectives, integrity

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

portfolio includes two development programs utilizing TARA-002, an investigational cell therapy based on the broad immunopotentiator,

OK-432, which was originally granted marketing approval by the Japanese Ministry of Health and Welfare as an immunopotentiating cancer

therapeutic agent.

This cell therapy is currently approved in Japan and Taiwan for LMs and multiple oncologic indications.

We have secured

worldwide rights to the asset excluding Japan and Taiwan and are exploring its use in oncology and rare disease indications.

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

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

We are currently developing TARA-002 in non-muscle

invasive bladder cancer, or NMIBC, and in LMs.

lead oncology program is TARA-002 in NMIBC, which is cancer found in the tissue that lines the inner surface of the bladder that has

not spread into the bladder muscle.

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

80% of bladder cancer diagnoses.

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

Very few new therapeutics have been

approved for NMIBC since the 1990s and the current standard of care for NMIBC includes intravesical Bacillus Calmette–Guérin,

The mechanism of action of TARA-002 is similar to that of BCG.

TARA-002 and BCG are both intravesically administered, elicit

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

therapeutics have been approved for NMIBC since the 1990s and the current standard of care for NMIBC includes intravesical Bacillus Calmette–Guérin,

The mechanism of action of TARA-002 is similar in some ways to that of BCG.

TARA-002 and BCG are both intravesically administered,

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

We are conducting a Phase

1 dose-finding, open-label clinical trial to evaluate TARA-002 in treatment-naïve and treatment-experienced NMIBC patients with carcinoma

in situ, or CIS and high-grade papillary tumors (Ta), known as the ADVANCED-1 trial.

In the initial dose escalation phase, or Phase 1a

portion of the trial, patients receive six weekly intravesical doses of TARA-002.

The primary objective of the trial is to evaluate the

safety, tolerability and preliminary signs of anti-tumor activity of TARA-002, with the goal of establishing a recommended dose for a

future Phase 2 clinical trial.

The trial is ongoing and we expect data from the Phase 1a portion of the trial in the second quarter of

In addition, we continue to conduct pre-clinical studies on TARA-002 to better characterize the mechanism of action to help us understand

1 open-label clinical trial to evaluate TARA-002 in treatment-naïve and treatment-experienced NMIBC patients with carcinoma in situ,

or CIS, and high-grade papillary tumors, or Ta, known as the ADVANCED-1 trial.

In the initial dose escalation phase of the trial, patients

received six weekly intravesical doses of TARA-002, evaluating the 10KE, 20KE and 40KE doses (Klinische Einheit, or KE, is a German term

indicating a specified weight of dried cells in vial).

The primary objective of the trial is to evaluate the safety, tolerability and

preliminary signs of anti-tumor activity of TARA-002, with the goal of establishing a recommended Phase 2 dose.

In April 2023, we announced

positive preliminary data from the Phase 1a dose escalation component of the ongoing ADVANCED-1 trial through the 40KE dose, in which

TARA-002 indicated favorable tolerability and anti-tumor activity in NMIBC patients.

A maximum tolerated dose was not determined,

and dose escalation remains ongoing in exploratory cohorts.

Preliminary data from the

ADVANCED-1 trial suggested that intravesical TARA-002 was generally well tolerated at the three dose levels evaluated in the initial phase

of the trial, and no dose limiting toxicities were observed.

The Company has selected the 40KE dose for use in subsequent clinical trials.

The majority of reported adverse events were Grades 1 and 2 across all dose levels, and treatment-related adverse events, as assessed

by study investigators, were in line with typical responses to bacterial immunopotentiation and included fatigue, headache, fever and

The most common urinary symptoms were urinary urgency, urinary frequency, urinary tract pain/burning, incomplete emptying, and

bladder spasm.

Most bladder irritations resolved soon after administration, or in a few hours to a few days.

A total of nine patients

were enrolled in the dose escalation portion of the study through the 40KE dose.

Of those, three patients with CIS,

one of whom was a heavily pre-treated BCG-unresponsive patient, achieved a complete response at the 20KE dose, and tumor regression

was observed in the other two patients.

Results from six patients with high-grade, non-invasive papillary, or HGTa, tumors showed five

of six patients with high-grade recurrence free survival, or HGRFS, at week 12.

The patient who did not achieve HGRFS was dosed at 10KE,

the lowest dose of TARA-002 offered in the trial.

The ongoing open-label expansion

trial, or ADVANCED-1EXP, is evaluating intravesical TARA-002 at the 40KE dose in up to 12 CIS patients, including BCG-naïve, BCG-unresponsive,

and BCG-inadequately treated patients.

Dosing is progressing in the trial, and we anticipate having preliminary data from this trial in

the first half of 2024.

Based on the preliminary

results of ADVANCED-1, we are proceeding with the clinical development of TARA-002 for the treatment of NMIBC.

In September 2023, we initiated

ADVANCED-2, a Phase 2 open-label trial evaluating intravesical TARA-002 in at least 102 patients with high-grade CIS.

Cohort A of the

Phase 2 trial is expected to enroll 27 patients with CIS (± Ta/T1), BCG-Naïve or BCG-experienced, who have not received intravesical

BCG for at least 24 months prior to CIS diagnosis.

Cohort B of the Phase 2 trial is expected to enroll 75-100 patients with BCG-unresponsive

CIS (± Ta/T1).

The Company expects to share preliminary results from a pre-planned risk-benefit analysis of the ongoing Phase 2

open-label ADVANCED-2 trial in the second half of 2024.

The analysis is expected to include approximately 10 patients who are six-month

addition, we continue to conduct pre-clinical studies on TARA-002 to better characterize the mechanism of action to help us understand

how TARA-002 may perform in potential combinations with other agents used to treat NMIBC.

We use pre-clinical data to help us define other

cancer targets for TARA-002 both within the urothelial cancer space and other types of cancer affecting different parts of the body.

We use pre-clinical data to help us define

other cancer targets for TARA-002, both within urothelial cancer and other types of cancer affecting different parts of the body.

We are also pursuing TARA-002

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via a compassionate use program led by the University of Iowa to over 500 pediatric and adult patients.

We have an IND for LMs with the

Vaccines and Related Products Division of the FDA, or Vaccines Division.

The FDA continues to provide us with guidance regarding a development

path for TARA-002 in LMs.

We received feedback from the Vaccines Division on the protocol for our proposed Phase 2 clinical trial evaluating

TARA-002 in LMs.

In the second half of 2023 we expect to initiate this Phase 2 single arm, open-label clinical trial to evaluate the safety

and efficacy of TARA-002 in pediatric patients with macrocystic and mixed-cystic LMs.

The trial design includes a safety lead-in phase

followed by an expansion phase.

We are conducting trial preparation activities and have identified multiple trial sites.

We have an investigational new

drug application for LMs with the Vaccines and Related Products Division of the FDA, or Vaccines Division.

In October 2023, we

initiated STARBORN-1 is a Phase 2 single-arm, open-label,

prospective clinical trial to evaluate the safety and efficacy of intracystic injection of TARA-002 for the treatment of macrocystic

and mixed-cystic LMs (≥ 50% macrocystic disease) in participants six months to less than 18 years of age.

Including an age

de-escalation safety lead-in, the trial will enroll approximately 30 patients who will receive up to four injections of TARA-002

spaced approximately six weeks apart.

primary endpoint of the trial is the proportion of participants with macrocystic LMs and mixed-cystic LMs who demonstrated clinical success,

defined as having either a complete response (90% to 100% reduction from baseline in total LM volume) or substantial response (60% to

less than 90% reduction in total LM volume) as measured by axial imaging.

The third development program

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

Following a positive end of Phase 2 meeting with the FDA, we received feedback on the design of the studies necessary to complete

a registration package for IV Choline Chloride for the treatment of IFALD, including a Phase 1 pharmacokinetic, or PK, trial and a Phase

3 clinical trial.

Prior to initiating these clinical trials, we are conducting a prevalence study to enhance understanding of the PN patient

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

In September 2021, we reported

results of the retrospective part of the prevalence study, which supported the significant unmet medical need in patients dependent on

PN who have IFALD.

We are currently conducting the prospective part of the prevalence study, which is a multi-center, cross-sectional

observational study to assess the prevalence of choline deficiency, as well as cholestasis and steatosis, in patients dependent on PN.

We expect to have results of the study in the third quarter of 2023.

In April 2022, the USPTO issued to us Patent No.

US 11,311,503 claiming

a sterile aqueous choline salt composition with a term expiring in 2041.

We have devoted substantial

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

TARA-002 has not yet been approved for use for treatment of NMIBC, LMs or any other indications.

We do not expect to generate revenues

in the near-term, 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 capital.

Since inception, we have

incurred significant operating losses.

As of December 31, 2022, we had an accumulated deficit of approximately $130.5 million.

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.

We believe 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, 2022,

we had approximately $102.3 million in cash, cash equivalents, and marketable debt securities.

COVID-19 and Related Macroeconomic Conditions

The COVID-19 pandemic and

related macroeconomic conditions, such as supply chain shortages, inflation and economic volatility have, and may continue to have, an

impact on our results of operations.

We will continue to monitor whether such conditions would have a material impact on our operations,

liquidity and capital resources.

Further, rising inflation has, in part, caused a disruption in the capital markets, which may lead to

a recession or market correction that could impact our access to capital, and could in the future negatively affect our liquidity.

recession or market correction, continued supply chain disruptions and/or inflation could materially affect our business and the value

of our common stock.

Financial Overview

Research and Development

Research and development

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

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

receiving parenteral nutrition, or PN.

The FDA has granted IV Choline Chloride Orphan Drug Designation for the prevention of choline deficiency

in PN patients.

We have conducted a two-part prevalence study to enhance our understanding of the PN patient population.

The first, or

retrospective, part of the prevalence study was completed in September 2021, when we reported results that supported that there was a

significant unmet medical need in patients dependent on PN.

We have concluded the second, or prospective part, of the prevalence study,

which is a multi-center, cross-sectional observational study that assessed the prevalence of choline deficiency in patients dependent

We shared these results with the FDA to inform our discussion on next steps for the IV Choline Chloride program.

There are currently

no IV formulations of choline available or in development for PN patients.

We have devoted

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

from product sales.

Neither TARA-002 nor IV Choline Chloride have been approved for use for any indications.

We do not expect to generate revenues in the near-term,

and it is possible we may never generate revenues in the future.

To finance our current strategic plans, including the conduct of

ongoing and future clinical trials and further research and development costs, we will need to raise additional capital.

“—Liquidity and Capital Resources” for additional information about our liquidity and capital resource needs.

inception, we have incurred significant operating losses.

As of December 31, 2023, we had an accumulated deficit of approximately $200.4

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

a clinical-stage company, our expenses and results of operations are likely to fluctuate significantly from quarter-to-quarter and year-to-year.

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

of December 31, 2023, we had approximately $65.6 million in cash, cash equivalents, and marketable debt securities.

and Development

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

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

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depreciation and other expenses, which include expenses for rent and maintenance of facilities and other supplies.

General and Administrative

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,

intellectual property matters, consulting and accounting services, 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.

Other Income (Expense), net

Interest and investment

income consists of interest income on our cash, cash equivalents and marketable debt securities and amortization of investment premiums.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion

and analysis of our financial position and results of operations is based on our 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

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

under the circumstances.

and Administrative

and administrative expenses consist principally of personnel-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, intellectual property matters, consulting and accounting services, 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.

Income (Expense), net

and investment income consists of interest and dividend income on our cash, cash equivalents and marketable debt securities and amortization

of premiums and/or accretion of discounts.

Accounting Policies and Significant Judgments and Estimates

management’s discussion and analysis of our financial position and results of operations is based on our 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.

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 on 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the

preparation of our financial statements.

On January 9, 2020, in connection

with the Merger, we separately valued the assets and liabilities acquired, and then determined goodwill as the residual of the purchase

price less identified net assets.

The carrying value of goodwill was $0.0 million and $29.5 million at December 31, 2022 and 2021,

respectively.

Goodwill represents the

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

Goodwill has an indefinite

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 on 10-K, we believe the following accounting policies to be most critical to the judgments

and estimates used in the preparation of our financial statements.

Our critical accounting policy is the accounting for accrued research

and development expenses.

During the year ended December 31, 2022, goodwill was also considered a critical accounting estimate.

and Development Accruals

record accruals for estimated costs of research, preclinical, clinical and manufacturing development within accrued expenses which are

significant components of research and development expenses.

A substantial portion of our ongoing research and development activities

are conducted by third-party service providers.

We accrue costs incurred under these third-party arrangements based on estimates of actual

work completed in accordance with the respective agreements.

We determine the estimated costs to accrue through discussions with internal

personnel and our external service providers as to the percentage of completion of the services and the agreed-upon fees to be paid for

such services.

Payments made to third parties under these arrangements in advance of performance of the related services are recorded

as prepaid expenses until the services are rendered.

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

an indefinite useful life.

Goodwill is assessed annually for impairment as of December 31, or more frequently if an event occurs or circumstances

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Otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined.

Goodwill is evaluated for

impairment at the reporting unit level, which is defined as an operating segment, or one level below an operating segment.

We have determined

that we operate as one reporting unit and have selected December 31 as the date to perform our annual impairment test.

As of December

31, 2022, we elected to forego the qualitative screen and performed a quantitative annual goodwill impairment test for our single reporting

As of December 31,

2022, our stock price and market capitalization declined approximately 60% from December 31, 2021.

Although we believe this decline reflects

the overall performance of similar life science companies with less than $250 million in market capitalizations, or microcap companies,

we do not believe it reflects the progress made in advancing our product candidate pipeline.

The life sciences sector, which includes

pre-commercialization and therefore net operating loss generating companies, relies heavily on the capital markets to finance their operations

and fund pre-clinical and clinical trials for their existing development programs.

As a result of a shift in risk appetite in the overall

financial markets, the availability of capital for life science companies decreased significantly in 2022.

Industry reports highlight

a decline of more than 50 percent in both the number of healthcare follow-on financings as well as the amount of capital raised in 2022

compared to 2021.

These challenging financing conditions had a significantly negative impact on stock prices and respective market capitalizations,

particularly for microcap companies.

We consider the heightened financing risk that impacted the life sciences sector during 2022 to be

one of the key macroeconomic factors that led to a sustained decrease in our stock price and market capitalization leading up to our annual

goodwill impairment assessment date in late 2022.

The fair value of our reporting

unit was determined using an income approach based on discounted cash flows, or DCF, as we elected to forgo the qualitative screen.

fair value using a DCF analysis requires the exercise of significant judgment with respect to several assumptions and estimates, including

the amount and timing of expected future cash flows and appropriate discount rate to be applied.

The expected cash flows used in the DCF

analyses are based on our most recent internal long-range forecast and budget and, for years beyond the budget, our estimates, which are

based, in part, on industry benchmarks and forecasted growth rates.

The discount rate used in

the DCF analysis is intended to reflect the risks inherent in the expected future cash flows of the respective programs within our portfolio.

Assumptions used in the DCF analysis, including the discount rate, are assessed based on our current results and forecasted future performance,

as well as macroeconomic and industry specific factors, including the aforementioned market factors influenced by financing risk discussed

We determined the estimated

fair value of our single reporting unit by utilizing a discount rate of 36%, which reflects these market factors.

Based upon this discount

rate, the fair value of our single reporting unit was below its carrying value by an amount greater than the carrying value of goodwill,

and we recorded an impairment charge of $29.5 million in the fourth quarter of 2022 to fully write off the 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.

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.

A liability 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, 2022 and 2021, no liability for unrecognized tax benefits was required to be recorded.

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, 2022 and 2021.

Results of Operations

Comparison of the Years Ended December

31, 2022 and 2021

The following table summarizes

our results of operations for the years ended December 31, 2022 and 2021(in thousands):

was evaluated for impairment at the reporting unit level, which is defined as an operating segment, or one level below an operating segment.

We have determined that we operate as one reporting unit and had selected December 31 as the date to perform our annual impairment test.

As of December 31, 2022, we elected to forego the qualitative screen and performed a quantitative annual goodwill impairment test for

our single reporting unit.

of December 31, 2022, our stock price and market capitalization declined approximately 60% from December 31, 2021.

Although we believed

this decline reflects the overall performance of similar life science companies with less than $250 million in market capitalizations,

or microcap companies, we do not believe it reflects the progress made in advancing our product candidate pipeline.

The life sciences

sector, which includes pre-commercialization and therefore net operating loss generating companies, relies heavily on the capital markets

to finance their operations and fund pre-clinical and clinical trials for their existing development programs.

As a result of a shift

in risk appetite in the overall financial markets, the availability of capital for life science companies decreased significantly in

Industry reports highlighted a decline of more than 50 percent in both the number of healthcare follow-on financings as well as

the amount of capital raised in 2022 compared to 2021.

These challenging financing conditions had a significantly negative impact on

stock prices and respective market capitalizations, particularly for microcap companies.

We considered the heightened financing risk

that impacted the life sciences sector during 2022 to be one of the key macroeconomic factors that led to a sustained decrease in our

stock price and market capitalization leading up to our annual goodwill impairment assessment date in late 2022.

fair value of our reporting unit was determined using an income approach based on discounted cash flows, or DCF, as we elected to forgo

the qualitative screen.

Determining fair value using a DCF analysis required the exercise of significant judgment with respect to several

assumptions and estimates, including the amount and timing of expected future cash flows and appropriate discount rate to be applied.

The expected cash flows used in the DCF analyses are based on our most recent internal long-range forecast and budget and, for years

beyond the budget, our estimates, which are based, in part, on industry benchmarks and forecasted growth rates.

discount rate used in the DCF analysis was intended to reflect the risks inherent in the expected future cash flows of the respective

programs within our portfolio.

Assumptions used in the DCF analysis, including the discount rate, were assessed based on our current

results and forecasted future performance, as well as macroeconomic and industry specific factors, including the aforementioned market

factors influenced by financing risk discussed above.

determined the estimated fair value of our single reporting unit by utilizing a discount rate of 36%, which reflects these market factors.

Based upon this discount rate, the fair value of our single reporting unit was below its carrying value by an amount greater than the

carrying value of goodwill, and we recorded an impairment charge of $29.5 million in the fourth quarter of 2022 to fully write off the

of Operations

of the Years Ended December 31, 2023 and 2022

following table summarizes our results of operations for the years ended December 31, 2023 and 2022 (in thousands):

Year Ended December 31,

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During the year ended December 31, 2023, our research and development expenses were approximately $25.0 million, which represented

a decrease of approximately $4.3 million as compared to the year ended December 31, 2021.

This decrease was primarily due to a decrease

of $2.3 million for clinical manufacturing activities associated with TARA-002 due to higher production costs in 2021 as we were preparing

for clinical trials, a decrease of $1.5 million of non-clinical and regulatory expenses associated with TARA-002, and a decrease of $1.4

million in clinical manufacturing expenses associated with the prospective IV Choline Chloride study.

This was partially offset by an

increase of $1.2 million of clinical expenses associated with TARA-002.

an increase of approximately $8.2 million as compared to the year ended December 31, 2022.

This was primarily due to an increase in expenses

related to clinical trial and non-clinical activities for TARA-002 of $7.3 million as well as an increase of $0.8 million in personnel-related

General and administrative

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represented a decrease of approximately $2.1 million as compared to the year ended December 31, 2022.

The decrease was primarily due to

a decrease of $3.8 million in stock-based compensation and a decrease of $1.8 million in expenses related to a reduction in market development

Loss on impairment of

During the year ended December 31, 2022, we recorded a non-cash impairment charge of $29.5 million.

There was no impairment

charge during the year ended December 31, 2021.

This decrease was primarily due

to a reduction of $1.6 million in personnel-related expenses (inclusive of $0.7 million of stock-based compensation) and lower premiums

of $1.2 million for directors and officers liability insurance.

These cost reductions were partially offset by an increase of $0.8 related

to legal and market development activities.

on impairment of goodwill.

During the year ended December 31, 2022, we recorded a non-cash impairment charge of $29.5 million to

fully impair goodwill.

There was no impairment charge during the year ended December 31, 2023.

Other income (expense),

During the year ended December 31, 2022, interest and investment income was approximately $1.1 million which represented an

increase of approximately $0.9 million as compared to the year ended December 31, 2021.

The increase was due to an increase of $0.9 in

interest earned on investments in marketable debt securities.

Liquidity and Capital Resources

As of December 31, 2022 and

2021, our cash, cash equivalents, and marketable debt securities were $102.3 million and $130.7 million, respectively.

We have not generated

revenues since our inception and have incurred net losses of approximately $66.0 million and $47.3 million for the years ended December

31, 2022 and 2021, respectively.

As of December 31, 2022, we had working capital of approximately $80.4 million and stockholder’s

equity of approximately $102.1 million.

During the year ended December 31, 2022, cash flows used in operating activities were approximately

$26.5 million, consisting primarily of a net loss of approximately $66.0 million, which includes non-cash activities such as approximately

$29.5 million in impairment loss on goodwill and $6.7 million in stock-based compensation charges.

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 December 2020, we filed

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

During the year ended December 31, 2023, our other income (expense), net was approximately $3.2 million, which represented an

increase of approximately $2.1 million as compared to the year ended December 31, 2022, due primarily to higher market interest rates

obtained from money market funds and corporate debt securities held as marketable securities.

and Capital Resources

of December 31, 2023 and 2022, our cash, cash equivalents, and marketable debt securities were $65.6 million and $102.3 million, respectively.

We have not generated revenues since our inception and have incurred net losses of approximately $40.4 million and $66.0 million for

the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, we had working capital of approximately $62.6 million

and stockholder’s equity of approximately $68.3 million.

During the year ended December 31, 2023, cash flows used in operating

activities were approximately $37.6 million, consisting primarily of a net loss of approximately $40.4 million, which includes non-cash

activities of approximately $7.0 million, inclusive of $6.1 million in stock-based compensation charges, as well as working capital adjustments

of $4.1 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.

On November 3, 2023, we filed

a shelf registration statement on Form S-3, or the Shelf Registration Statement, which became effective in November 2023.

The 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 our consolidated financial statements included elsewhere in this Annual Report

on Form 10-K, are sufficient to satisfy our estimated liquidity needs for at least twelve months.

Statement permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $300 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.

For so long as the public float of our common stock held by non-affiliates is below $75 million, our

ability to use the Shelf Registration Statement will be limited by “baby shelf” rules, which limit us to sales in an amount

not to exceed one-third of such public float.

Such amounts may not be adequate for meeting our capital needs.

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

believe that our current financial resources, as of the date of the issuance of our consolidated financial statements included elsewhere

in this Annual Report on Form 10-K, are sufficient to satisfy our estimated liquidity needs for at least 12 months.

As a result of volatility

in the capital markets, 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 terms.

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, rising inflation, which is in part,

tied to the impacts of the COVID-19 pandemic and resulting supply chain disruptions, has, in part, caused a disruption in the capital

markets, which may lead to a recession or market correction that could impact our access to capital, and could in the future negatively

affect our liquidity.

A recession or market correction, continued supply chain disruptions and/or inflation could materially affect our

business and the value of our common stock.

Further, recent rises in interest rates have had and may continue to have a negative effect

on market prices for common stock of pharmaceutical companies that have no current or near-term revenue.

Further increases in interest

rates, which have been implemented and may be further implemented to counteract inflationary pressures, may continue to exacerbate this

The following table summarizes

our sources and uses of cash for the years ended December 31, 2022 and 2021 (in thousands):

we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital

on reasonable terms.

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

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

The sustained elevated interest rates in recent years have had,

and may continue to have, a negative effect on market prices for common stock of public companies, especially those in the pharmaceutical

industry and those that have no current or near-term revenue.

Further, a recession or market correction, supply chain disruptions and/or

continued inflation could materially affect our business and the value of our common stock.

following table summarizes our sources and uses of cash for the years ended December 31, 2023 and 2022 (in thousands):

Years Ended December 31,

Net cash used in operating activities

Net cash provided by/(used in) operating activities

Net cash provided by/(used in) investing activities

1 unchanged sentence

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

Comparison of the Years Ended December

31, 2022 and 2021

of the Years Ended December 31, 2023 and 2022

Net cash used in operating

1 unchanged sentence

December 31, 2022.

The decrease in cash used in operating activities of approximately $8.0 million was primarily driven by a decrease

in net loss of approximately $18.7 million, which was partially offset by a $3.8 million decrease in non-cash items including stock-based

compensation, right-of-use asset, and amortization of premium on marketable debt securities.

There was an increase in working capital

of $1.1 million, primarily related to changes in prepaid expenses and other current assets, accounts payable, and accrued expenses resulting

from the timing of payments to our service providers.

Net cash provided by investing

activities was approximately $15.0 million for the year ended December 31, 2022 compared to net cash used in investing activities of

approximately $98.2 million for the year ended December 31, 2021.

The change of $113.1 million resulted primarily from purchase of marketable

debt securities of $43.6 million for the year ended December 31, 2022 as compared to $124.7 million for the year ended December 31, 2021

and from proceeds from maturity and redemption of marketable debt securities of $58.6 million for the year ended December 31, 2022 as

compared to $27.2 million for the year ended December 31, 2021.

Net cash used in financing

activities was approximately $0.1 million for the year ended December 31, 2022 compared to net cash provided by financing activities

of $0.2 million for the year ended December 31, 2021.

The decrease of approximately $0.1 million was driven by the reduction in stock

price of the shares repurchased in connection with the settlement of restricted stock units for the year ended December 31, 2022.

Contractual and Other Obligations

Operating lease obligations

Our operating lease obligations

primarily consist of lease payments on our corporate headquarters in New York, New York, as well as lease payments for our development

laboratory, a manufacturing facility and an additional manufacturing space, all located in North America which are described in further

detail in Note 8 of our consolidated financial statements included in this Annual Report on Form 10-K.

Future contractual payments on

operating lease obligations due within one year of December 31, 2022 are $1.3 million, and future contractual payments on operating lease

obligations due greater than one year from December 31, 2022 are $6.4 million.

Other obligations

From time to time, we enter

into certain types of contracts that contingently require us to indemnify parties against third-party claims, supply agreements, and

agreements with directors and officers.

The terms of such obligations vary by contract and in most instances a maximum dollar amount

is not explicitly stated therein.

Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted,

thus no liabilities have been recorded for these obligations on our consolidated balance sheet for the periods presented.

We enter into contracts

in the normal course of business with CROs and clinical sites for the conduct of clinical trials, non-clinical research studies, professional

consultants for expert advice and other vendors for clinical supply manufacturing or other services.

These contracts generally provide

for termination on notice, and therefore are cancelable contracts.

Certain of these agreements

require us to pay milestones to such third parties upon achievement of certain development, regulatory or commercial milestones as further

described in Note 8 of our consolidated financial statements included in this Annual Report on Form 10-K.

Amounts related to contingent

milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development,

regulatory approval and commercial milestones, which may not be achieved.

We also have obligations

to make future payments to third parties that become due and payable on the achievement of certain milestones, including future payments

to third parties with whom we have entered into research, development and commercialization agreements.

We have not included these commitments

on our consolidated balance sheet for the periods presented because the achievement and timing of these milestones is not fixed and determinable.

Quantitative and Qualitative Disclosures About Market

The increase of approximately $11.1 million in cash used in operating activities was primarily driven by a decrease

in net loss of $25.5 million which includes a $32.0 million decrease in non-cash items including goodwill, stock-based compensation, operating

lease right-of-use asset, depreciation, and amortization of premium on marketable debt securities and a $4.7 million increase in working

capital adjustments, primarily related to changes in prepaid expenses and other current assets, accounts payable, and accrued expenses

resulting from the timing of payments to our service providers.

cash provided by investing activities was approximately $53.1 million for the year ended December 31, 2023 compared to net cash provided

by investing activities of approximately $15.0 million for the year ended December 31, 2022.

The increase of $38.2 million resulted primarily

from maturities and redemptions of marketable debt securities of $65.3 million for the year ended December 31, 2023 as compared to $58.6

million for the year ended December 31, 2022 and the purchase of marketable debt securities of $12.2 million for the year ended December

31, 2023 as compared to $43.6 million for the year ended December 31, 2022.

cash used in financing activities was approximately $0.1 million for the years ended December 31, 2023 and 2022.

and Other Obligations

lease obligations

operating lease obligations primarily consist of lease payments on our corporate headquarters in New York, New York, as well as lease

payments for our development laboratory, a manufacturing facility and an additional manufacturing space, all located in North America

which are described in further detail in Note 9 of our consolidated financial statements included in this Annual Report on Form 10-K.

Future contractual payments on operating lease obligations due within one year of December 31, 2023 are $1.3 million, and future contractual

payments on operating lease obligations due greater than one year from December 31, 2023 are $5.1 million.

time to time, we enter into certain types of contracts that contingently require us to indemnify parties against third-party claims,

supply agreements, and agreements with directors and officers.

The terms of such obligations vary by contract and in most instances a

maximum dollar amount is not explicitly stated therein.

Generally, amounts under these contracts cannot be reasonably estimated until

a specific claim is asserted, thus no liabilities have been recorded for these obligations on our consolidated balance sheet for the

periods presented.

enter into contracts in the normal course of business with CROs and clinical sites for the conduct of clinical trials, non-clinical research

studies, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services.

These contracts

generally provide for termination on notice, and therefore are cancelable contracts.

of these agreements require us to pay milestones to such third parties upon achievement of certain development, regulatory or commercial

milestones as further described in Note 10 of our consolidated financial statements included in this Annual Report on Form 10-K.

related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement

of certain development, regulatory approval and commercial milestones, which may not be achieved.

also have obligations to make future payments to third parties that become due and payable on the achievement of certain milestones,

including future payments to third parties with whom we have entered into research, development and commercialization agreements.

have not included these commitments on our consolidated balance sheet for the periods presented because the achievement and timing of

these milestones is not fixed and determinable.

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 Annual Report on Form 10-K and are presented beginning on page

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 7. Management’s Discussion and Analysis