TARA filing — read by section

UNITED STATES 
 
 SECURITIES AND EXCHANGE COMMISSION 
 
 Washington, D.C. 20549 
 
 FORM 10-Q 
 
 (Mark One) 
 
 ☒ QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
 
 For the quarterly period ended March 31, 2026 
 
 or 
 
 ☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
 
 For the transition period from 
to 
 
 Commission File Number: 001-36694 
 
 Protara Therapeutics, Inc. 
 
 (Exact name of registrant as specified in its
charter) 
 
 Delaware 20-4580525 
 (State or other jurisdiction of

incorporation or organization) (I.R.S. Employer

Identification No.) 
 
 345 Park Avenue South 
 
 3 rd Floor 
 
 New York , NY 
 
 (Address of principal executive offices) 
 
 10010 
 
 (Zip Code) 
 
 (646) 844-0337 
 
 (Registrant’s telephone number, including
area code) 
 
 Securities registered pursuant to Section 12(b)
of the Act:
 
 Title of each class Trading Symbol(s) Name of each exchange on which registered 
 Common Stock, $0.001 par value per share TARA The Nasdaq Global Market 
 
 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
 
 Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes 
☒ No ☐
 
 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer ☐ Accelerated filer ☐ 
 Non-accelerated filer ☒ Smaller reporting company ☒ 
 Emerging growth company ☐ 
 
 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 
 
 As of May 8, 2026 there were 56,204,237 shares
of the registrant’s common stock, par value $0.001 per share, outstanding.
 
 TABLE OF CONTENTS 
 
 Page 

 PART I – FINANCIAL INFORMATION 
 1 

 Item 1. 
 Condensed Consolidated Financial Statements 
 1 

 Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited) 
 1 

 Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months ended March 31, 2026 and 2025 (unaudited) 
 2 

 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited) 
 3 

 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited) 
 4 

 Notes to Unaudited Condensed Consolidated Financial Statements 
 5 

 Item 2. 
 Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 17 

 Item 3. 
 Quantitative and Qualitative Disclosures About Market Risk 
 25 

 Item 4. 
 Controls and Procedures 
 25 

 PART II – OTHER INFORMATION 
 26 

 Item 1. 
 Legal Proceedings 
 26 

 Item 1A. 
 Risk Factors 
 26 

 Item 2. 
 Unregistered Sales of Equity Securities and Use of Proceeds 
 26 

 Item 3. 
 Defaults Upon Senior Securities 
 26 

 Item 4. 
 Mine Safety Disclosures 
 26 

 Item 5. 
 Other Information 
 26 

 Item 6. 
 Exhibits 
 27 

 EXHIBIT INDEX 
 27 

 SIGNATURES 
 28 

 i 

 CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS 
 
 This Quarterly Report on
Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the Securities Act,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby
under the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views with respect to, among
other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly
Report on Form 10-Q are forward-looking statements. You can generally identify these forward-looking statements by terminology such as
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “seek,” “approximately,” “predict,” “intend,” “plans,”
“estimates,” “anticipates” or the negative version of these terms or other comparable terminology. Forward-looking
statements inherently involve many risks and uncertainties that could cause actual results to differ from those expressed in forward-looking
statements. Forward-looking statements are based on management’s current plans and expectations, expressed in good faith and believed
to have a reasonable basis. However, we can give no assurance that any expectation or belief will result or will be achieved or accomplished.
Investors therefore should not place undue reliance on forward-looking statements.
 
 These forward-looking statements include,
but are not limited to, statements about:
 
 ● 
 estimates regarding our financial performance, including future revenue, expenses and capital requirements; 

 ● 
 our expected cash position and ability to obtain financing in the future on satisfactory terms or at all; 

 ● 
 expectations regarding our plans to research, develop and commercialize our current and future product candidates, including TARA-002, and Intravenous, or IV, Choline Chloride; 

 ● 
 expectations regarding the safety and efficacy of our product candidates; 

 ● 
 expectations regarding the timing, costs and outcomes of our clinical trials; 

 ● 
 expectations regarding potential market size; 

 ● 
 expectations regarding the timing of the availability of data from our clinical trials; 

 ● 
 expectations regarding the clinical utility, potential benefits and market acceptance of our product candidates; 

 ● 
 expectations regarding our commercialization, marketing and manufacturing capabilities and strategy; 

 ● 
 the implementation of our business model, strategic plans for our business, product candidates and technology; 

 ● 
 expectations regarding our ability to identify additional products or product candidates with significant commercial potential; 

 ii 

 ● 
 developments and projections relating to our competitors and industry; 

 ● 
 our ability to acquire, license and invest in businesses, technologies, product candidates and products; 

 ● 
 our ability to remain listed on the Nasdaq Global Market, or Nasdaq; 

 ● 
 the impact of and changes or developments in government laws and regulations, including any executive orders or tariffs; 

 ● 
 costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation; 

 ● 
 our ability to attract and retain key personnel to manage our business effectively; 

 ● 
 our ability to prevent system failures, data breaches or violations of data protection laws; 

 ● 
 the timing or likelihood of regulatory filings and approvals; 

 ● 
 our ability to protect our intellectual property position; and 

 ● 
 the impact of general U.S., foreign and global economic, industry, market, trade, regulatory, political or public health conditions. 

 More information on factors
that could cause our actual results to differ from those expressed in forward-looking statements is included from time to time in our
reports filed with the Securities and Exchange Commission, including in our Annual Report on Form
10-K for the year ended December 31, 2025, particularly under Part I, Item 1A, “Risk Factors.” Investors should
understand that it is not possible to predict or identify all such factors and should not consider the risks described above and under
Part I, Item 1A, “Risk Factors” of our Annual Report on Form
10-K to be a complete statement of all potential risks and uncertainties. All forward-looking statements in this Quarterly Report
on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary
statements included in or incorporated by reference into this Quarterly Report on Form 10-Q. Except as required by law, we expressly disclaim
any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this Quarterly Report
on Form 10-Q.
 
 This Quarterly Report on
Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain
medical conditions, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical
conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject
to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information.
Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies
and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data
and similar sources.
 
 iii 

 PART I – FINANCIAL INFORMATION 
 
 Item 1. Financial Statements 
 
 PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES 
 
 Condensed Consolidated Balance Sheets (Unaudited) 
 
 (in thousands, except share and per share data) 
 
 As of 

 March 31,
 2026 
 December 31, 
 2025 

 Assets 
 
 Current assets: 
 
 Cash and cash equivalents 
 $ 14,737 
 $ 49,657 

 Marketable debt securities 
 121,049 
 105,897 

 Prepaid expenses and other current assets 
 4,211 
 3,950 

 Total current assets 
 139,997 
 159,504 

 Restricted cash, non-current 
 745 
 745 

 Marketable debt securities, non-current 
 41,641 
 42,336 

 Property and equipment, net 
 669 
 759 

 Operating lease right-of-use asset 
 2,891 
 3,174 

 Other assets 
 5,980 
 2,950 

 Total assets 
 $ 191,923 
 $ 209,468 

 Liabilities and Stockholders’ Equity 
 
 Current liabilities: 
 
 Accounts payable 
 $ 4,031 
 $ 3,468 

 Accrued expenses and other current liabilities 
 3,627 
 6,229 

 Operating lease liability 
 1,264 
 1,242 

 Total current liabilities 
 8,922 
 10,939 

 Operating lease liability, non-current 
 1,793 
 2,117 

 Total liabilities 
 10,715 
 13,056 

 Commitments and contingencies (Note 9) 
 
 Stockholders’ Equity: 
 
 Preferred stock, $ 0.001 par value, authorized 10,000,000 shares: 
 
 Series 1 Convertible Preferred Stock, 8,028 shares authorized at March 31, 2026 and December 31, 2025, 4,644 and 5,615 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively 
 -
 
 -
 
 Common stock, $ 0.001 par value, authorized 100,000,000 shares: 
 
 Common stock, 55,055,582 and 53,587,260 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively 
 55 
 54 

 Additional paid-in capital 
 501,718 
 498,687 

 Accumulated deficit 
 ( 320,201 ) 
 ( 302,419 ) 

 Accumulated other comprehensive income (loss) 
 ( 364 ) 
 90 

 Total stockholders’ equity 
 181,208 
 196,412 

 Total liabilities and stockholders’ equity 
 $ 191,923 
 $ 209,468 

 The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
 
 1 

 PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES 
 
 Condensed Consolidated Statements of Operations
and Comprehensive Loss (Unaudited) 
 
 (in thousands, except share and per share data) 
 
 For the Three Months Ended March 31, 

 2026 
 2025 

 Operating expenses: 
 
 Research and development 
 $ 13,562 
 $ 9,148 

 General and administrative 
 6,067 
 4,976 

 Total operating expenses 
 19,629 
 14,124 

 Income (Loss) from operations 
 ( 19,629 ) 
 ( 14,124 ) 

 Other income (expense), net: 
 
 Interest and investment income (expense) 
 1,847 
 1,729 

 Other income (expense) 
 -
 
 481 

 Other income (expense), net 
 1,847 
 2,210 

 Net income (loss) 
 $ ( 17,782 ) 
 $ ( 11,914 ) 

 Other comprehensive income (loss): 
 
 Net unrealized gain (loss) on marketable debt securities 
 ( 454 ) 
 87 

 Other comprehensive income (loss) 
 ( 454 ) 
 87 

 Comprehensive income (loss) 
 $ ( 18,236 ) 
 $ ( 11,827 ) 

 Net income (loss) per share attributable to common stockholders, basic and diluted 
 $ ( 0.31 ) 
 $ ( 0.29 ) 

 Weighted-average shares outstanding, basic and diluted 
 57,538,833 
 40,707,937 

 The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
 
 2 

 PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES 
 
 Condensed Consolidated Statements of Changes
in Stockholders’ Equity (Unaudited) 
 
 (in thousands, except share and per share data) 
 
 Series 1
 Convertible
 Preferred Stock 
 Common Stock 
 Additional 
 Paid-in 
 Accumulated 
 Accumulated 
 Other
 Comprehensive 
 Total 
 Stockholders’ 

 Shares 
 Amount 
 Shares 
 Amount 
 Capital 
 Deficit 
 Income (Loss) 
 Equity 

 Balance at December 31, 2024 
 7,991 
 $ -
 
 35,044,772 
 $ 35 
 $ 412,077 
 $ ( 244,980 ) 
 $ 2 
 $ 167,134 

 Issuance of common stock upon conversion of Series 1 Preferred Stock 
 ( 2,376 ) 
 -
 
 2,376,244 
 2 
 ( 2 ) 
 -
 
 -
 
 -
 
 Issuance of common stock upon exercise of pre-funded warrants 
 - 
 -
 
 625,100 
 1 
 -
 
 -
 
 -
 
 1 

 Issuance of common stock from December 2024 Public Offering, net of offering costs of $ 214 
 - 
 -
 
 438,738 
 1 
 2,527 
 -
 
 -
 
 2,528 

 Issuance of common stock upon settlement of restricted stock units 
 - 
 -
 
 92,959 
 -
 
 ( 185 ) 
 -
 
 -
 
 ( 185 ) 

 Stock-based compensation - restricted stock units 
 - 
 -
 
 - 
 -
 
 121 
 -
 
 -
 
 121 

 Stock-based compensation - stock options 
 - 
 -
 
 - 
 -
 
 712 
 -
 
 -
 
 712 

 Unrealized gain (loss) on marketable debt securities 
 - 
 -
 
 - 
 -
 
 -
 
 -
 
 87 
 87 

 Net income (loss) 
 - 
 -
 
 - 
 -
 
 -
 
 ( 11,914 ) 
 -
 
 ( 11,914 ) 

 Balance at March 31, 2025 
 5,615 
 $ -
 
 38,577,813 
 $ 39 
 $ 415,250 
 $ ( 256,894 ) 
 $ 89 
 $ 158,484 

 Balance at December 31, 2025 
 5,615 
 $ -
 
 53,587,260 
 $ 54 
 $ 498,687 
 $ ( 302,419 ) 
 $ 90 
 $ 196,412 

 Issuance of common stock upon conversion of Series 1 Preferred Stock 
 ( 971 ) 
 -
 
 971,204 
 1 
 ( 1 ) 
 -
 
 -
 
 -
 
 Issuance of common stock upon exercise of common warrants 
 - 
 -
 
 370,000 
 -
 
 1,942 
 -
 
 -
 
 1,942 

 Issuance of common stock upon settlement of restricted stock units 
 - 
 -
 
 127,118 
 -
 
 ( 272 ) 
 -
 
 -
 
 ( 272 ) 

 Stock-based compensation - restricted stock units 
 - 
 -
 
 - 
 -
 
 317 
 -
 
 -
 
 317 

 Stock-based compensation - stock options 
 - 
 -
 
 - 
 -
 
 1,045 
 -
 
 -
 
 1,045 

 Unrealized gain (loss) on marketable debt securities 
 - 
 -
 
 - 
 -
 
 -
 
 -
 
 ( 454 ) 
 ( 454 ) 

 Net income (loss) 
 - 
 -
 
 - 
 -
 
 -
 
 ( 17,782 ) 
 -
 
 ( 17,782 ) 

 Balance at March 31, 2026 
 4,644 
 $ - 
 55,055,582 
 $ 55 
 $ 501,718 
 $ ( 320,201 ) 
 $ ( 364 ) 
 $ 181,208 

 The accompanying notes are
an integral part of these unaudited condensed consolidated financial statements.
 
 3 

 PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES 
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited) 
 
 (in thousands) 
 
 For the Three Months Ended
 March 31, 

 2026 
 2025 

 Cash flows from operating activities: 
 
 Net income (loss) 
 $ ( 17,782 ) 
 $ ( 11,914 ) 

 Adjustments to reconcile net income (loss) to net cash used in operating activities: 
 
 Stock-based compensation 
 1,362 
 833 

 Operating lease right-of-use asset 
 283 
 263 

 Depreciation 
 90 
 83 

 Amortization of premium (Accretion of discount) on marketable debt securities 
 ( 190 ) 
 ( 166 ) 

 Changes in operating assets and liabilities: 
 
 Prepaid expenses and other current assets 
 ( 261 ) 
 ( 306 ) 

 Other assets 
 ( 3,030 ) 
 124 

 Accounts payable 
 1,089 
 ( 1,504 ) 

 Accrued expenses and other current liabilities 
 ( 2,602 ) 
 ( 1,870 ) 

 Operating lease liabilities 
 ( 302 ) 
 ( 256 ) 

 Net cash provided by (used in) operating activities 
 ( 21,343 ) 
 ( 14,713 ) 

 Cash flows from investing activities: 
 
 Purchase of marketable debt securities 
 ( 43,857 ) 
 ( 65,810 ) 

 Proceeds from maturity and redemption of marketable debt securities 
 29,136 
 7,500 

 Purchase of property and equipment 
 -
 
 ( 44 ) 

 Net cash provided by (used in) investing activities 
 ( 14,721 ) 
 ( 58,354 ) 

 Cash flows from financing activities: 
 
 Proceeds from exercise of Underwriters’ Option in December 2024 Public Offering, net of offering costs of $ 214 
 
 -
 
 2,528 

 Offering costs paid in connection with public offerings 
 ( 526 ) 
 ( 614 ) 

 Proceeds from exercise of pre-funded warrants 
 -
 
 1 

 Proceeds from exercise of common warrants 
 1,942 
 -
 
 Taxes paid related to net share settlement of restricted stock units 
 ( 272 ) 
 ( 185 ) 

 Net cash provided by (used in) financing activities 
 1,144 
 1,730 

 Net increase (decrease) in cash and cash equivalents and restricted cash 
 ( 34,920 ) 
 ( 71,337 ) 

 Cash and cash equivalents and restricted cash - beginning of period 
 50,402 
 163,543 

 Cash and cash equivalents and restricted cash - end of period 
 $ 15,482 
 $ 92,206 

 Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: 
 
 Cash and cash equivalents 
 $ 14,737 
 $ 91,461 

 Restricted cash, non-current 
 745 
 745 

 Cash and cash equivalents and restricted cash 
 $ 15,482 
 $ 92,206 

 The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
 
 4 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 1. Organization and Nature of the Business 

 Overview 

 Protara Therapeutics, Inc.,
and its consolidated subsidiaries, or Protara or the Company, is a clinical-stage biopharmaceutical company committed to advancing transformative
therapies for the treatment of cancer and rare diseases. Protara’s portfolio includes two development programs utilizing TARA-002,
an investigational cell therapy in development for the treatment of non-muscle invasive bladder cancer, or NMIBC, and lymphatic malformations,
or LMs. Additionally, the Company’s portfolio includes Intravenous, or IV, Choline Chloride, an investigational phospholipid substrate
replacement therapy in development for patients receiving parenteral support, or PS.

 Liquidity and Capital Resources 

 The Company is in the business
of developing biopharmaceuticals and has no current or near-term revenues. The Company has incurred substantial clinical and other costs
in its drug development efforts. The Company will need to raise additional capital in order to fully realize management’s plans.

 The Company believes that
its current financial resources are sufficient to satisfy the Company’s estimated liquidity needs for at least 12 months from the
date of issuance of these unaudited condensed consolidated financial statements.
 
 2. Summary of Significant Accounting Policies 

 The Company’s significant accounting policies are disclosed in
the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2025, filed with the United States Securities and Exchange Commission, or SEC, on March 10, 2026, or the Annual Report on
Form 10-K. There were no changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K.

 Basis of Presentation 
 
 The accompanying condensed
consolidated financial statements and the related disclosures as of March 31, 2026 and for the three months ended March 31, 2026 and 2025
are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP,
and the rules and regulations of the SEC, for interim financial statements. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read
in conjunction with the 2025 audited consolidated financial statements and notes included in the Annual Report on Form 10-K. The December
31, 2025 consolidated balance sheet included herein was derived from the audited financial statements as of that date but does not include
all disclosures including notes required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated
financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the
Company’s financial position and results of operations for the three months ended March 31, 2026 and 2025. The results of operations
for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or any other
interim period or future year or period.
 
 Principles of Consolidation 
 
 The condensed consolidated
financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions
have been eliminated in the accompanying condensed consolidated financial statements.
 
 5 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 Recent Accounting Pronouncements Not Yet Adopted 
 
 In November 2024, the Financial
Accounting Standards Board, or the FASB, issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income –
Expense Disaggregation Disclosures , which enhances the disclosures for various types of expenses. The standard is effective for public
companies for annual periods beginning after December 15, 2026. Early adoption is available. The Company is still evaluating the full
extent of the potential impact of the adoption of ASU 2024-03.
 
 Subsequent Events 
 
 The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued.
Other than as described in Note 10, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.
 
 3. Fair Value of Financial Instruments 

 The following tables present
the Company’s financial assets and liabilities that are measured and carried at fair value and indicate the level within the fair
value hierarchy of valuation techniques it utilizes to determine such fair value. The accounting policies of fair value measurements are
the same as those described in Part II, Item 8, “Financial Statements and Supplementary Data—Summary of Significant Accounting
Policies” in the Company’s Annual Report on Form 10-K: 

 As of March 31, 2026 

 Level 1 
 Level 2 
 Level 3 
 Total 

 Cash and cash equivalents: 
 
 Money market funds (a) 
 $ 14,278 
 $ -
 
 $ -
 
 $ 14,278 

 Restricted cash, non-current: 
 
 Money market funds (b) 
 745 
 -
 
 -
 
 745 

 Marketable debt securities: 
 
 Corporate bonds (c) 
 -
 
 147,667 
 -
 
 147,667 

 U.S. Treasury securities (c) 
 15,023 
 -
 
 -
 
 15,023 

 Total 
 $ 30,046 
 $ 147,667 
 $ -
 
 $ 177,713 

 6 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 As of December 31, 2025 

 Level 1 
 Level 2 
 Level 3 
 Total 

 Cash and cash equivalents: 
 
 Money market funds (a) 
 $ 45,355 
 $ -
 
 $ -
 
 $ 45,355 

 Corporate bonds (a) 
 -
 
 3,704 
 -
 
 3,704 

 Restricted cash, non-current: 
 
 Money market funds (b) 
 745 
 -
 
 -
 
 745 

 Marketable debt securities: 
 
 Corporate bonds (c) 
 -
 
 125,682 
 -
 
 125,682 

 U.S. Treasury securities (c) 
 22,551 
 -
 
 -
 
 22,551 

 Total 
 $ 68,651 
 $ 129,386 
 $ -
 
 $ 198,037 

 (a) Money market funds and corporate bonds with original maturities of 90 days or less are included within cash and cash equivalents in the condensed consolidated balance sheets. 
 
 (b) Restricted money market funds are included within restricted cash, non-current in the condensed consolidated balance sheets. 
 
 (c) Corporate bonds and U.S. Treasury securities with original maturities greater than 90 days are included within marketable debt securities in the condensed consolidated balance sheets and classified as current or non-current based upon whether the maturity of the financial asset is less than or greater than 12 months. 
 
 Money market funds and U.S.
Treasury securities are classified as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active
markets. Corporate bonds classified as Level 2 within the fair value hierarchy are valued on the basis of prices from an orderly
transaction between market participants provided by reputable dealers or pricing services. Prices of these securities are obtained through
independent, third-party pricing services and include market quotations that may include both observable and unobservable inputs. In determining
the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations
from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. There
were no transfers of financial instruments among Level 1, Level 2, and Level 3 during the period presented.

 Cash and cash equivalents,
prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities at March 31, 2026 and December
31, 2025 are carried at amounts that approximate fair value due to their short-term maturities.
 
 4. Marketable Debt Securities 

 Marketable debt securities,
all of which were classified as available-for-sale, consist of the following:

 As of March 31, 2026 

 Amortized
 Cost 
 Unrealized
 Gains 
 Unrealized
 Losses 
 Estimated 
 Fair Value 

 Marketable debt securities: 
 
 Corporate bonds 
 $ 106,182 
 $ 10 
 $ ( 166 ) 
 $ 106,026 

 U.S. Treasury securities 
 15,006 
 17 
 -
 
 15,023 

 Marketable debt securities, non-current: 
 
 Corporate bonds 
 41,866 
 -
 
 ( 225 ) 
 41,641 

 Total 
 $ 163,054 
 $ 27 
 $ ( 391 ) 
 $ 162,690 

 7 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 As of December 31, 2025 

 Amortized
 Cost 
 Unrealized
 Gains 
 Unrealized
 Losses 
 Estimated 
 Fair Value 

 Marketable debt securities: 
 
 Corporate bonds 
 $ 83,291 
 $ 77 
 $ ( 22 ) 
 $ 83,346 

 U.S. Treasury securities 
 22,493 
 58 
 -
 
 22,551 

 Marketable debt securities, non-current: 
 
 Corporate bonds 
 42,359 
 11 
 ( 34 ) 
 42,336 

 Total 
 $ 148,143 
 $ 146 
 $ ( 56 ) 
 $ 148,233 

 The Company has recorded
the securities at fair value in its condensed consolidated balance sheets and unrealized gains and losses are reported as a component
of accumulated other comprehensive income (loss). For the three months ended March 31, 2026 and 2025 there were no realized gains or losses.
Gains, if any, would be included in investment income within the condensed consolidated statements of operations and comprehensive loss.

 The remaining maturities
of all debt securities held at March 31, 2026 was less than five years. There were no sales of securities in the periods presented.

 Credit Losses 

 Securities with an amortized
cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit
losses. 

 Marketable debt securities
in a loss position consist of the following:

 As of March 31, 2026 

 In Continuous 
 Loss Position
 Less Than 12 Months 
 In Continuous 
 Loss Position
 Greater Than 12 Months 
 Total 

 Estimated
 Fair Value 
 Unrealized
 Losses 
 Estimated
 Fair Value 
 Unrealized
 Losses 
 Estimated
 Fair Value 
 Unrealized
 Losses 

 Marketable debt securities: 
 
 Corporate bonds 
 $ 86,638 
 $ ( 166 ) 
 $ -
 
 $ -
 
 $ 86,638 
 $ ( 166 ) 

 Marketable debt securities, non-current: 
 
 Corporate bonds 
 41,136 
 ( 225 ) 
 -
 
 -
 
 41,136 
 ( 225 ) 

 Total 
 $ 127,774 
 $ ( 391 ) 
 $ -
 
 $ -
 
 $ 127,774 
 $ ( 391 ) 

 8 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 As of December 31, 2025 

 In Continuous 
 Loss Position
 Less Than 12 Months 
 In Continuous 
 Loss Position
 Greater Than 12 Months 
 Total 

 Estimated
 Fair Value 
 Unrealized
 Losses 
 Estimated
 Fair Value 
 Unrealized
 Losses 
 Estimated
 Fair Value 
 Unrealized
 Losses 

 Marketable debt securities: 
 
 Corporate bonds 
 $ 24,034 
 $ ( 22 ) 
 $ -
 
 $ -
 
 $ 24,034 
 $ ( 22 ) 

 Marketable debt securities, non-current: 
 
 Corporate bonds 
 29,824 
 ( 34 ) 
 -
 
 -
 
 29,824 
 ( 34 ) 

 Total 
 $ 53,858 
 $ ( 56 ) 
 $ -
 
 $ -
 
 $ 53,858 
 $ ( 56 ) 

 As of March 31, 2026 and
December 31, 2025, it was determined that there were no expected credit losses.

 Interest and Investment
Income (Expense) 

 Interest and investment income (expense) consist
of the following:

 For the Three Months Ended
 March 31, 

 2026 
 2025 

 Interest income 
 $ 1,656 
 $ 1,555 

 Accretion of discount (Amortization of premium), net 
 183 
 166 

 Dividend income 
 8 
 8 

 Total 
 $ 1,847 
 $ 1,729 

 5. Prepaid Expenses and Other Current Assets 

 Prepaid expenses and other
current assets consist of the following:

 As of 

 March 31,
 2026 
 December 31, 
 2025 

 Prepaid research and development 
 $ 2,040 
 $ 1,926 

 Accrued interest on marketable debt securities 
 1,517 
 1,257 

 Prepaid insurance 
 266 
 355 

 Prepaid software 
 158 
 115 

 Other prepaid expenses 
 213 
 232 

 Other current assets 
 17 
 65 

 Total 
 $ 4,211 
 $ 3,950 

 9 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 6. Other Assets 

 Other assets consist of the following:

 As of 

 March 31,
 2026 
 December 31,
 2025 

 Prepaid research and development, non-current 
 $ 5,904 
 $ 2,930 

 Other non-current assets 
 76 
 20 

 Total 
 $ 5,980 
 $ 2,950 

 7. Accrued Expenses and Other Current Liabilities 

 Accrued expenses and other
current liabilities consist of the following:

 As of 

 March 31,
 2026 
 December 31, 
 2025 

 Research and development 
 $ 2,364 
 $ 2,683 

 Employee costs 
 1,087 
 3,267 

 Other expenses 
 176 
 279 

 Total 
 $ 3,627 
 $ 6,229 

 8. Leases 

 Operating leases 

 Leases classified as operating
leases are included in operating lease right-of-use, or ROU, assets, operating lease liabilities and operating lease liabilities, non-current,
in the Company’s condensed consolidated balance sheets. Cash paid for operating lease liabilities during the three months ended
March 31, 2026 and 2025 was $ 357 and $ 332 , respectively.

 Lease expense consists of the following:

 For the Three Months Ended
 March 31, 

 2026 
 2025 

 Operating lease expense 
 $ 338 
 $ 338 

 Total 
 $ 338 
 $ 338 

 Variable lease expense for the three months ended March 31, 2026 and
2025 was $ 32 and $ 31 , respectively. 

 The weighted average discount
rate and weighted-average remaining lease term for operating leases were:

 As of
 March 31,
 2026 
 Weighted-average discount rate 7.0 % 
 Weighted-average remaining lease term – operating lease (in months) 28 
 
 10 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 As of March 31, 2026, the
expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:

 For the year ending December 31: 
 Operating
 Lease
 Payments 

 2026 (excluding the three months ended March 31, 2026) 
 $ 1,072 

 2027 
 1,429 

 2028 
 718 

 2029 
 87 

 Thereafter 
 -
 
 Total future operating lease payments 
 3,306 

 Less: imputed interest 
 ( 249 ) 

 Present value of future minimum lease payments 
 $ 3,057 

 9. Commitments and Contingencies 

 Commitments 

 The Company has commitments
under certain license and collaboration agreements, lease agreements and employment agreements. Commitments under certain license agreements
primarily include annual payments, payments upon the achievement of certain milestones and royalty payments based on net sales of licensed
products. Commitments under lease agreements consist of future minimum lease payments for operating leases which are further described
in Note 8 of this Quarterly Report on Form 10-Q.

 Contingencies 

 From time to time, the Company
may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. Management is of
the opinion that the ultimate outcome of these matters would not have a material adverse impact on the financial position of the Company
or the results of its operations.

 In the normal course of business,
the Company enters into contracts in which it makes representations and warranties regarding the performance of its services and that
its services will not infringe on third-party intellectual rights. There have been no significant events related to such representations
and warranties in which the Company believes the outcome could result in losses or penalties in the future. 
 
 10 . Stockholders’ Equity 

 Common Stock 

 As of March 31, 2026 and
December 31, 2025, the Company had 100,000,000 shares of common stock authorized for issuance, $ 0.001 par value per share, of which 55,055,582 
and 53,587,260 shares were issued and outstanding, respectively.

 The holders of the Company’s
common stock are entitled to one vote per share.

 Preferred Stock 

 As of March 31, 2026 and
December 31, 2025, the Company had 10,000,000 shares of preferred stock authorized for issuance, $ 0.001 par value per share, of which
 8,028 shares of Series 1 Convertible Preferred Stock were authorized for issuance and 4,644 and 5,615 shares were issued and outstanding
as of March 31, 2026 and December 31, 2025, respectively. Each share of Series 1 Convertible Preferred Stock is convertible into approximately
 1,000 shares of common stock, at a conversion price initially equal to approximately $ 7.01 per common share, subject to certain adjustments
as described in the certificate of designation of preferences, rights and limitations of Series 1 Convertible Preferred Stock.
 
 11 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 During the three months ended
March 31, 2026 and 2025, approximately 971 and 2,376 shares of Series 1 Convertible Preferred Stock were converted into 971,204 and 2,376,244 
shares of common stock, respectively.

 Subsequent to March 31, 2026, approximately 3,772 shares of Series
1 Convertible Preferred Stock were converted into 3,773,586 shares of common stock.

 The holders of Series 1 Convertible
Preferred Stock are not entitled to vote.

 Warrants 

 In connection with the April
2024 private placement, or the April 2024 Private Placement, the Company issued common warrants, or the April 2024 Common Warrants, to
purchase an aggregate of up to 10,843,380 shares of the Company’s common stock. Pursuant to the terms of issuance, the April 2024
Common Warrants are exercisable on or prior to the earlier of: (i) April 10, 2027 or (ii) 90 days after the public announcement that the
Company has demonstrated a six-month complete response rate of minimum 42% from at least 25 BCG-Unresponsive (where BCG is defined as
Bacillus Calmette-Guérin) patients in the ADVANCED-2 (Cohort B) clinical trial, at an exercise price of $ 5.25 per share. On March
30, 2026, the Company publicly announced that it had satisfied the condition set forth for fixing the termination date for exercise of
the April 2024 Common Warrants, and as such, the April 2024 Common Warrants may be exercised at any time on or prior to June 29, 2026.

 In connection with the April 2024 Private Placement, for certain purchasers,
the Company issued pre-funded warrants, or the April 2024 Pre-Funded Warrants, to purchase an aggregate of up to 1,700,000 shares of the
Company’s common stock. The April 2024 Pre-Funded Warrants are exercisable at any time.

 In connection with the December 2024 public offering, or the December
2024 Public Offering, for certain purchasers, the Company issued pre-funded warrants, or the December 2024 Pre-Funded Warrants, to purchase
an aggregate of up to 2,325,372 shares of the Company’s common stock. The December 2024 Pre-Funded Warrants are exercisable at any
time.

 The following is a summary of the activity of the Company's warrants
to acquire shares of common stock for the three months ended March 31, 2026:

 Equity Instrument 
 Outstanding, December 31, 2025 
 Granted 
 Exercised 
 Expired 
 Outstanding, March 31, 2026 
 Exercise Price per Share 

 April 2024 Common Warrants 
 10,118,380 
 -
 
 370,000 
 -
 
 9,748,380 
 $ 5.250 

 April 2024 Pre-Funded Warrants 
 1,700,000 
 -
 
 -
 
 -
 
 1,700,000 
 $ 0.001 

 December 2024 Pre-Funded Warrants 
 1,700,272 
 -
 
 -
 
 -
 
 1,700,272 
 $ 0.001 

 Total 
 13,518,652 
 -
 
 370,000 
 -
 
 13,148,652 
 
 12 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 11 . Stock-Based Compensation 

 2014 Equity Incentive Plan 

 On October 3, 2014, the stockholders
approved the 2014 Equity Incentive Plan. On June 20, 2017, the Company’s Board of Directors amended the 2014 Equity Incentive Plan,
or the Amended and Restated 2014 Plan.

 The Amended and Restated
2014 Plan, as amended, provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock
and stock unit awards, performance units, stock grants and qualified performance-based awards. The total number of shares authorized was
 4,474,683 shares. As of June 7, 2024, in connection with the creation of the 2024 Equity Incentive Plan, or the 2024 Plan, no additional
awards will be made under the Amended and Restated 2014 Plan, as amended.

 As of March 31, 2026, there
were 3,437,207 shares of common stock subject to outstanding awards under the Amended and Restated 2014 Plan, as amended. 

 2017 Equity Incentive Plan 

 On August 10, 2017,
ArTara Subsidiary, Inc. (a predecessor of the Company), or Private ArTara, along with its Board of Directors and its stockholders
approved the ArTara Therapeutics, Inc. 2017 Equity Incentive Plan, or the 2017 Plan, to enable Private ArTara and its affiliates to
recruit and retain highly qualified personnel and to incentivize personnel for productivity and growth.

 The total number of shares
authorized under the 2017 Plan was 2,000,000 for the issuance of stock options, stock appreciation rights, restricted stock and restricted
stock units, or RSUs, to among others, members of the Board of Directors, employees, consultants and service providers to the Company
and its affiliates. As of January 9, 2020 no additional awards will be made under the 2017 Plan.

 As of March 31, 2026, there
were 134,328 shares of common stock subject to outstanding awards under the 2017 Plan.

 2020 Inducement Plan 

 On March 26, 2020, the
Compensation Committee of the Board of Directors, or the Compensation Committee, approved the 2020 Inducement Plan, or the 2020
Plan, in order to award non-statutory stock options, restricted stock awards, restricted stock unit awards and other stock-based
awards to persons not previously an employee or director of the Company, or following a bona fide period of non-employment, as an
inducement material to such persons entering into employment with the Company. The Compensation Committee also adopted a form of
stock option grant notice and stock option agreement and forms of restricted stock unit grant notice and restricted stock unit
agreement for use with the 2020 Plan.

 The 2020 Plan provided for
a total of 600,000 shares for the issuance of the Company’s common stock. On March 3, 2025, the Compensation Committee approved
a Certificate of First Amendment to the 2020 Plan, or the Amended 2020 Plan, to increase the number of shares provided for under the Amended
2020 Plan by 600,000 shares to 1,200,000 shares.

 As of March 31, 2026,
there were 1,193,000 shares of common stock subject to outstanding awards and 7,000 shares of common stock available for future issuance
under the Amended 2020 Plan. 

 2024 Equity Incentive
Plan 

 On June 7, 2024, the stockholders
approved the 2024 Plan. The 2024 Plan provided for the grant of 1,500,000 shares of common stock for stock options, stock appreciation
rights, restricted stock, RSUs, performance units, performance shares and other stock and cash awards. On June 11, 2025, the stockholders
approved an amendment to the 2024 Plan, or the Amended 2024 Plan, increasing the number of shares available for grant under the Amended
2024 Plan by 2,800,000 shares to 4,300,000 shares.

 Terms of the stock awards,
including vesting requirements, are determined by the Board of Directors, or the Compensation Committee thereof, subject to the provisions
of the Amended 2024 Plan.

 As of March 31, 2026, there
were 3,939,754 shares of common stock subject to outstanding awards and 288,641 shares of common stock available for future issuance under
the Amended 2024 Plan.
 
 13 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 2024 Employee Stock
Purchase Plan 

 On June 7, 2024, the
stockholders of the Company approved the 2024 Employee Stock Purchase Plan, or the 2024 ESPP. The number of shares authorized under
the 2024 ESPP is 1,000,000 .

 As of March 31, 2026, the
number of shares available for issuance under the 2024 ESPP was 1,000,000 . During the three months ended March 31, 2026, no shares were
issued under the 2024 ESPP. 

 Restricted Stock Units 

 The following table summarizes
restricted stock unit activity for the three months ended March 31, 2026:

 Restricted
 Stock 
 Units 
 Weighted
 Average
 Grant
 Date Fair
 Value 

 Non-vested as of December 31, 2025 
 571,145 
 $ 3.57 

 Granted 
 418,980 
 5.02 

 Forfeited 
 -
 
 -
 
 Vested 
 ( 172,387 ) 
 3.26 

 Non-vested as of March 31, 2026 
 817,738 
 $ 4.38 

 The fair value of RSUs is amortized
on a straight-line basis over the requisite service period of the respective awards. As of March 31, 2026, the unamortized value of RSUs
was $ 3,157 . As of March 31, 2026, the weighted average remaining amortization period was 2.33 years. As of March 31, 2026 and December
31, 2025, 289,500 RSUs have vested but have not yet been settled into shares of the Company’s common stock.

 During the three months ended
March 31, 2026, the Company issued 127,118 shares of the Company’s common stock from the net settlement of 172,387 RSUs. The Company
paid $ 272 in connection with the net share settlement of these RSUs.

 Stock Options 

 The following table summarizes
stock option activity for the three months ended March 31, 2026:

 Options Weighted
 Average
 Exercise
 Price Weighted
 Average
 Remaining
 Contractual
 Term
 (years) Aggregate
 Intrinsic
 Value (1) 
 Outstanding as of December 31, 2025 5,693,891 $ 6.30 7.51 $ 8,982 
 Granted 1,903,160 5.03 
 Exercised -
 -
 
 Forfeited -
 -
 
 Expired -
 -
 
 Outstanding as of March 31, 2026 7,597,051 $ 5.98 7.90 $ 8,842 
 
 Vested and expected to vest at March 31, 2026 7,597,051 $ 5.98 7.90 $ 8,842 
 Exercisable as of March 31, 2026 3,358,267 8.23 6.38 4,471 
 
 (1) Aggregate
intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on
December 31, 2025 and March 31, 2026, respectively. 

 14 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 The weighted average grant
date fair value per share of the options granted during the three months ended March 31, 2026 and 2025 was $ 3.58 and $ 3.61 , respectively.
As of March 31, 2026, there was approximately $ 11,641 of unrecognized stock-based compensation for unvested stock option grants, which
is expected to be recognized over a weighted average period of 2.88 years. The total unrecognized stock-based compensation cost will be
adjusted for actual forfeitures as they occur.

 Summary of Stock-Based Compensation Expense 

 The following tables summarize
total stock-based compensation costs recognized:

 For the Three Months Ended 
 March 31, 

 2026 
 2025 

 Stock Options 
 $ 1,045 
 $ 712 

 RSUs 
 317 
 121 

 Total 
 $ 1,362 
 $ 833 

 Stock-based compensation
expense was reflected within the condensed consolidated statements of operations and comprehensive loss as:

 For the Three Months Ended 
 March 31, 

 2026 
 2025 

 General and administrative 
 $ 950 
 $ 641 

 Research and development 
 412 
 192 

 Total 
 $ 1,362 
 $ 833 

 12. Net Income (Loss) per Common Share 

 The following table sets
forth the computation of the net income (loss) per share attributable to common stockholders, basic and diluted:

 For the Three Months Ended 
 March 31, 

 2026 
 2025 

 Numerator: 
 
 Net income (loss) attributable to common stockholders 
 $ ( 17,782 ) 
 $ ( 11,914 ) 

 Denominator: 
 
 Weighted-average shares of common stock outstanding, basic and diluted 
 57,538,833 
 40,707,937 

 Net income (loss) per share attributable to common stockholders, basic and diluted 
 $ ( 0.31 ) 
 $ ( 0.29 ) 

 15 

 Protara Therapeutics, Inc. and Subsidiaries 
 
 Notes to Unaudited Condensed Consolidated Financial
Statements 
 
 (amounts in thousands, except share and per
share data) 
 
 The weighted-average number
of shares of common stock outstanding during the period includes any contingently issuable shares for which there is no circumstance under
which those shares would not be issued and shares issuable upon the exercise of warrants to purchase common stock for no or nominal consideration.
This includes 289,500 RSUs that have vested but that have not yet been settled into shares of the Company’s common stock, 1,700,000 
April 2024 Pre-Funded Warrants and 1,700,272 December 2024 Pre-Funded Warrants.

 Since the Company was in
a net loss position for all periods presented, net income (loss) per share attributable to common stockholders was the same, on a basic
and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive. The Company excluded
the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted
net income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive
effect: 

 As of March 31, 

 2026 
 2025 

 April 2024 Common Warrants 
 9,748,380 
 10,118,380 

 Stock options 
 7,597,051 
 4,913,283 

 Series 1 Convertible Preferred Stock 
 4,645,769 
 5,616,973 

 Restricted stock units 
 817,738 
 384,593 

 Total potentially dilutive shares 
 22,808,938 
 21,033,229 

 13. Segment Information 

 The Company’s Chief
Executive Officer is the chief operating decision maker, or CODM. The CODM allocates resources and assesses performance of the Company’s
single reportable segment by regularly reviewing the segment net income (loss) that also is reported on the condensed consolidated statements
of operations and comprehensive loss as consolidated net income (loss). The measure of segment assets is reported on the balance sheet
as total consolidated assets. 

 The following table sets
forth information about the Company’s single reportable segment and the significant expenses reviewed by the CODM, including a reconciliation
to consolidated net income (loss):

 For the Three Months Ended
 March 31, 

 2026 
 2025 

 Research and development expenses: 
 
 TARA-002 in NMIBC 
 $ 5,838 
 $ 3,557 

 TARA-002 in LMs 
 808 
 549 

 IV Choline Chloride 
 2,220 
 2,515 

 Other research and development 
 4,284 
 2,335 

 General and administrative expenses 
 5,117 
 4,335 

 Stock-based compensation expense 
 1,362 
 833 

 Income (loss) from operations 
 ( 19,629 ) 
 ( 14,124 ) 

 Other income (expense), net 
 1,847 
 2,210 

 Segment net income (loss) 
 ( 17,782 ) 
 ( 11,914 ) 

 Adjustments and reconciling items 
 -
 
 -
 
 Net income (loss) 
 $ ( 17,782 ) 
 $ ( 11,914 ) 

 Other research and development
expenses consist of personnel-related expenses as well as other external research and development expenses that are not directly attributable
to a specific program.
 
 16 

 Item 2. 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 the unaudited condensed consolidated financial
statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion
and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, 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 “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, 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. 
 
 Overview 
 
 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, 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. This cell
therapy is currently approved in Japan and Taiwan for lymphatic malformations, or 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 by Chugai Pharmaceutical Co., Ltd., or Chugai Pharmaceutical). We are currently developing TARA-002 in non-muscle invasive bladder
cancer, or NMIBC, and LMs. We are also pursuing Intravenous, or IV, Choline Chloride, an investigational phospholipid substrate replacement
therapy, for patients receiving parenteral support, or PS, which includes both nutrition and fluids.
 
 We have devoted substantial
efforts to the development of our programs and do not have any approved products and, to date, have not generated any revenues from product
sales. Neither TARA-002 nor IV Choline Chloride have been approved by the U.S. Food and Drug Administration, or FDA, or other comparable
regulatory authorities 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. See “Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for additional information
about our liquidity and capital resource needs.
 
 Since inception, we have
incurred significant operating losses. As of March 31, 2026, we had an accumulated deficit of approximately $320.2 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. 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 March 31, 2026, we
had approximately $177.4 million in unrestricted cash and cash equivalents and marketable debt securities.
 
 TARA-002 in NMIBC 
 
 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
muscle. Bladder cancer is the sixth most common cancer in the U.S., with NMIBC representing approximately 80% of bladder cancer diagnoses.
Approximately 65,000 patients are diagnosed with NMIBC in the U.S. 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, or BCG.
 
 17 

 Following the completion of our Phase 1a ADVANCED-1 and Phase 1b ADVANCED-1EXP
trials in October 2024 and September 2024, respectively, to evaluate safety, preliminary efficacy and the dosing of TARA-002, at the 40KE
(Klinische Einheit, or KE, is a German term indicating a specified weight of dried cells in vial) dose level, we initiated and are currently
conducting our ADVANCED-2 clinical trial. ADVANCED-2 is a Phase 2 open-label clinical trial evaluating intravesical TARA-002 in patients
with high-grade carcinoma in situ, or CIS. Cohort A of the Phase 2 trial has completed enrollment and enrolled 31 patients with CIS (±
Ta/T1, with Ta defined as non-invasive papillary carcinoma and T1 defined as carcinoma invading the lamina propria) who are either BCG-Naïve
or BCG-Exposed and 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 to 100 patients with BCG-Unresponsive CIS (± Ta/T1) and is designed to be registrational based on the
FDA’s August 2024 Draft Guidance for Industry on BCG-Unresponsive Nonmuscle Invasive Bladder Cancer: Developing Drugs and Biological
Products for Treatment. Trial subjects in ADVANCED-2 receive an induction course, with or without a reinduction, of six weekly intravesical
instillations of TARA-002, followed by a maintenance course of three weekly instillations every three months.
 
 In February 2026, we presented updated interim data from our ongoing
Phase 2 open-label ADVANCED-2 trial reporting results that continue to support TARA-002’s potential as a new therapy in the NMIBC
treatment landscape and demonstrating meaningful and durable activity in BCG-Unresponsive and BCG-Naïve NMIBC patients.
 
 The dataset includes 43 BCG-Unresponsive patients and 31 BCG-Naïve
patients who received at least one dose of TARA-002; 35 BCG-Unresponsive patients and 29 BCG-Naïve patients completed at least one
response assessment and were evaluable for efficacy as of a January 28, 2026 data cutoff. Complete response, or CR, rates at the six months
and 12 months landmark time points include all participants who were either evaluable at that time point or had experienced disease progression
or treatment failure prior to the scheduled visit.
 
 For the BCG-Unresponsive cohort, the CR rate at any time was 65.7%
(23/35). The CR rate was 68.2% (15/22) at six months and 33.3% (5/15) at 12 months. Among responders, the Kaplan-Meier, or KM, estimated
probability of maintaining a CR for six months was 71.1% (95% confidence interval, or CI: 46.7, 95.5), and 100% (5/5) maintained their
CR from nine to 12 months. Re-induction therapy successfully converted 61.5% (8/13) non-responders to a CR at six months.
 
 For the BCG-Naïve cohort, the CR rate at any time was 72.4% (21/29).
The CR rate was 66.7% (18/27) at six months and 57.9% (11/19) at 12 months. Among responders, the KM estimated probability of maintaining
a CR for six months was 73.1% (95% CI: 52.9, 93.4), and 100% (11/11) maintained their CR from nine to 12 months. Re-induction therapy
successfully converted 66.7% (4/6) non-responders to a CR at six months.
 
 The majority of treatment-related
adverse events, or TRAEs, were Grade 1 and transient with no Grade 3 or greater TRAEs and no related serious adverse events, or SAEs,
as assessed by study investigators. No patients discontinued treatment due to TRAEs. The most commonly occurring TRAEs were dysuria (14%),
bladder spasm (9%), fatigue (7%) and micturition urgency (5%).
 
 In March 2026, we announced
that we have received confirmation on the six-month CR rate of the 25th BCG-Unresponsive patient in our ongoing Phase 2 open-label ADVANCED-2
trial of TARA-002 in patients with CIS (± Ta/T1) NMIBC. The average six-month CR rate in the 25 BCG-Unresponsive patients is 68.0%,
which is consistent with the 68.2% CR rate at six months that was announced by us in February 2026, and is meaningfully above 41.9%.
 
 We expect to complete enrollment
of the BCG-Unresponsive registrational cohort of the ADVANCED-2 trial in the second half of 2026. Enrollment is complete in the BCG-Naïve
cohort of the ADVANCED-2 trial with 31 patients. We are planning a proposed registrational trial in BCG-Naïve and potentially BCG-Exposed
patients. The FDA has agreed that BCG is not required as a comparator and that intravesical chemotherapy is an acceptable comparator to
TARA-002 in BCG-Naïve patients. We are continuing to engage with the FDA on aspects of the analysis plan, and we intend to initiate
the ADVANCED-3 trial in the second half of 2026.
 
 18 

 In addition to our existing
clinical trials in NMIBC, we plan to continue to explore the anti-tumor activity related to the administration of TARA-002 via systemic
administration. We continue to believe that combination therapy may play a meaningful role in the NMIBC treatment paradigm and intend
to evaluate TARA-002 in combination with other therapies. Given what we have observed to date of TARA-002’s mechanism of action
and safety profile, we believe it has strong potential as a combination agent, and we continue to evaluate potential combination therapy
options for our clinical program. We also continue to conduct non-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, and 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.
 
 IV Choline Chloride for
Patients on PS 
 
 We are also pursuing IV Choline
Chloride, an investigational phospholipid substrate replacement therapy, for patients receiving PS which includes both nutrition and fluids.
Choline is a known important substrate for phospholipids that are critical for healthy liver function and also plays an important role
in modulating gene expression, cell membrane signaling, brain development, neurotransmission, muscle function and bone health. PS patients
are unable to synthesize choline from enteral nutrition sources, and there are currently no available PS formulations containing choline.
Every year in the U.S. there are approximately 90,000 people who require PS at home and of those approximately 30,000 are on long-term
PS. IV Choline Chloride has the potential to become the first FDA-approved IV choline formulation for PS patients.
 
 An IV formulation of choline is recommended for patients on parenteral
nutrition, or PN, by the American Society for Parenteral and Enteral Nutrition, or ASPEN, in their Recommendations for Changes in Commercially
Available Parenteral Multivitamin and Multi–Trace Element Products, as well as by the European Society for Clinical Nutrition and
Metabolism, or ESPEN, in their Guideline on Home Parenteral Nutrition. IV Choline Chloride has been granted Orphan Drug Designation, or
ODD, by the FDA for the prevention and/or treatment of choline deficiency in patients on long-term PN. The FDA has also granted IV Choline
Chloride Fast Track Designation, or FTD, as a source of choline when oral or enteral nutrition is not possible, insufficient, or contraindicated. The
U.S. Patent and Trademark Office, or USPTO, has issued us a U.S. patent claiming a choline composition and a U.S. patent claiming a method
of treating choline deficiency with a choline composition, each with a term expiring in 2041.
 
 In April 2024, we announced
alignment with the FDA on a registrational path forward for IV Choline Chloride. Previously, we had been pursuing an indication in intestinal
failure-associated liver disease, or IFALD, and following feedback from the FDA, are pursuing a broader indication as a source of choline
when oral or enteral nutrition is not possible, insufficient, or contraindicated. Feedback from the FDA on our IV Choline Chloride program
indicated that a single study with an endpoint of restoring choline levels in PS patients could serve as the basis for a regulatory submission
for IV Choline Chloride.
 
 In September 2024, we presented
the results of THRIVE-1, a prospective, observational study evaluating the prevalence of choline deficiency and liver injury in patients
dependent on PS in the U.S., U.K. and Europe. The study found that 78% of patients who are dependent on PS were choline deficient, and
that 63% of choline deficient participants had liver dysfunction, including steatosis, cholestasis and hepatobiliary injury, underscoring
the need for IV Choline supplementation in this patient population.
 
 In January 2026, we advanced
the development of IV Choline Chloride as a source of choline for adult and adolescent patients on long-term PS and initiated THRIVE-3,
a registrational Phase 3 clinical trial. THRIVE-3 is a seamless Phase 2b/3 trial with a dose confirmation portion (n=24) followed by a
double-blinded, randomized, placebo-controlled portion to assess the efficacy and safety of IV Choline Chloride over 24 weeks in adolescents
and adults on long-term PS when oral or enteral nutrition is not possible, insufficient, or contraindicated (n=100). The primary endpoint
of the clinical trial is a pharmacokinetic, or PK, endpoint measuring the change from baseline in plasma choline concentration. We also
plan to include a number of secondary endpoints related to liver, bone and memory. We anticipate reporting interim results from the dose-confirmation
portion of the trial in the second half of 2026.
 
 19 

 TARA-002 in LMs 
 
 We are also pursuing TARA-002
in macrocystic and mixed-cystic 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 addition to the clinical experience in Japan, we have secured the rights to a dataset
from one of the largest ever conducted Phase 2 trials in LMs, in which OK-432 was administered via a compassionate use program led by
the University of Iowa to over 500 pediatric and adult patients. In July 2020, the FDA granted Rare Pediatric Disease Designation, or
RPDD, for TARA-002 for the treatment of LMs and in May 2022 the European Commission granted Orphan Medicinal Product Designation to TARA-002
for the treatment of LMs. In December 2025, the FDA granted both FDA Breakthrough Therapy Designation, or BTD, and FTD for TARA-002 for
the treatment of macrocystic and mixed cystic LMs in pediatric patients. In April 2026, the FDA granted ODD to TARA-002 for the treatment
of macrocystic LMs and mixed cystic LMs. We have an open investigational new drug application, or IND, for TARA-002 in LMs and the review
of TARA-002 has been moved from the Office of Vaccines Research and Review to the Office of Therapeutic Products, or OTP, which has significant
experience in pediatric rare disease and is the review division for TARA-002 in NMIBC.
 
 In October 2023, we initiated
STARBORN-1, which 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 in the U.S. Including an age de-escalation safety lead-in, the clinical trial will enroll approximately 30 patients who
will receive up to four injections of TARA-002 spaced approximately six weeks apart. The primary endpoint of the clinical trial is the
proportion of participants with macrocystic LMs and mixed-cystic LMs who demonstrated clinical success, defined as having either a CR
(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.
 
 In November 2025, we announced
interim results from our ongoing Phase 2 STARBORN-1 trial evaluating TARA-002 in pediatric patients with macrocystic and mixed cystic
LMs. As of the data cutoff date of November 12, 2025, 12 patients had received at least one dose of TARA-002. Of the eight patients who
were evaluable at the eight-week post-treatment assessment, 100% achieved clinical success. 88% of patients achieved clinical success
with just one or two doses of TARA-002. Among macrocystic patients, 83% (5/6) achieved a CR, and the only mixed cystic patient treated
also achieved a CR. Two patients who reached the 32-week post-treatment assessment remain disease-free.
 
 The safety profile of TARA-002
in this trial has been favorable, with the majority of adverse events, or AEs, being mild to moderate in severity. No SAEs were reported.
The most common AEs were swelling and fatigue, and only one patient discontinued treatment due to a Grade 2 AE of fatigue.
 
 These results underscore
the potential of TARA-002 to address an unmet need for pediatric patients with LMs, for whom there are currently no approved therapies.
Many patients currently rely on invasive surgical procedures or off-label use of chemotherapies and chemicals, which can be associated
with high complication rates and challenging side effects, particularly in pediatric populations.
 
 Based on engagement with
the FDA, we intend to submit a Biologics License Application for TARA-002 in LMs based on the results of the pivotal STARBORN-1 trial
in the second half of 2027 and will continue to submit safety and efficacy data from the trial on an ongoing basis to support the FDA’s
evaluation of the risks and benefits of TARA-002 in LMs.
 
 Other Potential Opportunities 
 
 We believe TARA-002 may also
have the potential to be used to treat other maxillofacial cysts based on the historical literature from the TARA-002 predecessor, OK-432,
as well as recent data from the STARBORN-1 trial in which the one pediatric patient with a ranula achieved a CR after a single 1KE injection
of TARA-002. While completing STARBORN-1 in LMs is our priority, we believe there may be an opportunity in the future to explore the potential
of TARA-002 to treat different types of maxillofacial cysts.
 
 Financial Overview 
 
 Research
and Development 
 
 Research and development
expenses consist primarily of costs incurred for the development of our current and potential future product candidates, which include
personnel-related expenses, including salaries, benefits, travel and stock-based compensation expense, external expenses incurred under
agreements with contract research organizations, or CROs, contract development and manufacturing organizations, or CDMOs, the cost of
acquiring, developing and manufacturing clinical trial materials, clinical and non-clinical related costs and costs associated with regulatory
operations and facilities, which includes depreciation and other expenses such as rent, maintenance and other supplies.
 
 20 

 General and Administrative 
 
 General and administrative
expenses consist primarily of personnel-related costs, including salaries, benefits, travel expenses and stock-based compensation, for
executive management and other administrative personnel. General and administrative expenses also include professional fees for legal,
investor relations, consulting, auditing and accounting services, business and market development activities, as well as costs related
to human resources, information technology and facilities. In addition, these expenses include costs associated with operating as a public
company, such as expenses related to our Nasdaq Global Market, or Nasdaq, listing and the United States Securities and Exchange Commission,
or SEC, compliance and director and officer liability insurance premiums.
 
 Other Income
(Expense), net 
 
 Other income (expense), net
consists of interest and investment income (expense) and other income (expense). Interest and investment income (expense) consists of
interest and dividend income on our cash and cash equivalents and marketable debt securities and amortization of premiums and/or accretion
of discounts. Other income (expense) may also include non-operating items, such as refundable tax credits and other miscellaneous income
not related to our core operating activities.
 
 Critical Accounting Policies and Significant Judgments and Estimates 
 
 Our management’s discussion
and analysis of our financial condition and results of operations is based on our condensed 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
our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the
amounts reported in the condensed consolidated 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.
 
 Our critical accounting policy
is the accounting for accrued research and development expenses. We record accruals for estimated costs of research, preclinical, non-clinical,
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.
 
 It is important that the
discussion of our operating results that follow be read in conjunction with our accounting policies which have been disclosed in our Annual
Report on Form 10-K filed with the SEC on March 10, 2026.
 
 Results of Operations 
 
 Comparison of the Three Months Ended March
31, 2026 and 2025 
 
 The following table summarizes
our results of operations (in thousands):
 
 For the Three Months Ended
 March 31, 
 Period -to-
 Period 

 2026 
 2025 
 Change 

 Operating expenses: 
 
 Research and development 
 $ 13,562 
 $ 9,148 
 $ 4,414 

 General and administrative 
 6,067 
 4,976 
 1,091 

 Total operating expenses 
 19,629 
 14,124 
 5,505 

 Income (Loss) from operations 
 (19,629 ) 
 (14,124 ) 
 (5,505 ) 

 Other income (expense), net: 
 
 Interest and investment income (expense) 
 1,847 
 1,729 
 118 

 Other income (expense) 
 - 
 481 
 (481 ) 

 Other income (expense), net 
 1,847 
 2,210 
 (363 ) 

 Net income (loss) 
 $ (17,782 ) 
 $ (11,914 ) 
 $ (5,868 ) 

 21 

 Research and development
expenses 
 
 The following table summarizes
our research and development expenses (in thousands):
 
 For the Three Months Ended
 March 31, 
 Period -to-
 Period 

 2026 
 2025 
 Change 

 Direct expenses by product candidate: 
 
 TARA-002 in NMIBC 
 $ 5,838 
 $ 3,557 
 $ 2,281 

 TARA-002 in LMs 
 808 
 549 
 259 

 IV Choline Chloride 
 2,220 
 2,515 
 (295 ) 

 Total direct expenses by product candidate 
 8,866 
 6,621 
 2,245 

 Indirect research and development expenses 
 4,696 
 2,527 
 2,169 

 Total 
 $ 13,562 
 $ 9,148 
 $ 4,414 

 Research and development
expenses were $13.6 million for the three months ended March 31, 2026, which represented an increase of approximately $4.4 million as
compared to the three months ended March 31, 2025. This increase was primarily due to a $2.2 million increase in direct expenses for our
product candidates and a $2.2 million increase in indirect expenses. The increase in direct expenses was primarily due to higher ongoing
costs associated with the ADVANCED-2 trial for NMIBC as well as start-up costs related to the ADVANCED-3 trial for NMIBC. The increase
in indirect expenses was primarily due to a $1.5 million increase in personnel-related expenses and a $0.7 million increase in research
and development expenses not directly attributable to one specific product candidate.
 
 General and administrative
expenses 
 
 The following table summarizes
our general and administrative expenses (in thousands):
 
 For the Three Months Ended
 March 31, 
 Period -to-
 Period 

 2026 
 2025 
 Change 

 Personnel-related expenses, including stock-based compensation 
 $ 3,467 
 $ 2,584 
 $ 883 

 Other general and administrative expenses 
 2,600 
 2,392 
 208 

 Total 
 $ 6,067 
 $ 4,976 
 $ 1,091 

 General and administrative
expenses were $6.1 million for the three months ended March 31, 2026, which represented an increase of approximately $1.1 million as compared
to the three months ended March 31, 2025. This increase was primarily due to an increase of $0.9 million in personnel-related expenses,
as well as an increase of $0.2 million in other general and administrative expenses.
 
 Other income (expense),
net 
 
 Other income (expense), net
was $1.8 million for the three months ended March 31, 2026, which represented a decrease of approximately $0.4 million as compared to
the three months ended March 31, 2025. The decrease was driven by a $0.5 million decrease in other income (expense) due to nonrecurring
refundable tax credits received in the three months ended March 31, 2025.
 
 22 

 Liquidity and Capital Resources 
 
 Overview 
 
 As of March 31, 2026 and
December 31, 2025, our unrestricted cash and cash equivalents, and marketable debt securities were $177.4 million and $197.9 million,
respectively. We have not generated revenues since our inception and have incurred net losses of $17.8 million and $11.9 million for the
three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had working capital of $131.1 million and stockholder’s
equity of $181.2 million. During the three months ended March 31, 2026, net cash flows used in operating activities were $21.3 million,
consisting primarily of a net loss of $17.8 million including non-cash expenses of $1.5 million, as well as cash used for changes in operating
assets and liabilities of $5.1 million. Since inception, we have met our liquidity requirements principally through the sale of our common
stock, preferred stock and pre-funded warrants in private placements and public offerings. In addition, we may receive additional proceeds
upon the exercise of the common warrants issued in the April 2024 Private Placement.
 
 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 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. In December
2024, we sold and issued approximately $102.8 million in gross proceeds of common stock and pre-funded warrants in a public offering
under the Shelf Registration Statement. The net proceeds were approximately $95.9 million. In December 2025, we sold and issued
approximately $86.3 million in gross proceeds of common stock in a public offering under the Shelf Registration Statement. The net
proceeds were approximately $80.4 million.
 
 As part of the April 2024 Private Placement, purchasers were offered
common warrants. Common warrants exercised as of March 31, 2026 have resulted in $5.7 million in proceeds and, if exercised, proceeds
from the remaining common warrants as of March 31, 2026 could result in an additional $51.2 million. The common warrants outstanding are
set to expire on June 29, 2026.
 
 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 are sufficient to satisfy our estimated liquidity needs for at least 12 months from the date of issuance of our condensed
consolidated financial statements included elsewhere in this Quarterly Report on this Form 10-Q. 
 
 As a result of volatility
in the capital markets, economic conditions, general global economic uncertainty, political and regulatory 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 volatile global financial markets, general
economic uncertainty or other factors, we may need to curtail planned development activities. Despite recent moderation, 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 biotech industry and those that have no current or near-term revenue. Further, a recession or market
correction, supply chain disruptions and/or inflation could materially affect our business and the value of our common stock.
 
 23 

 Cash Flows 
 
 The following table summarizes
our sources and uses of cash (in thousands):
 
 For the Three Months Ended
 March 31, 
 Period-to-
 Period 

 2026 
 2025 
 Change 

 Net cash provided by (used in) operating activities 
 $ (21,343 ) 
 $ (14,713 ) 
 $ (6,630 ) 

 Net cash provided by (used in) investing activities 
 (14,721 ) 
 (58,354 ) 
 43,633 

 Net cash provided by (used in) financing activities 
 1,144 
 1,730 
 (586 ) 

 Net increase (decrease) in cash and cash equivalents, and restricted cash 
 $ (34,920 ) 
 $ (71,337 ) 
 $ 36,417 

 Comparison of the Three Months Ended March
31, 2026 and 2025 
 
 Net cash provided by (used
in) operating activities was approximately $(21.3) million for the three months ended March 31, 2026 compared to approximately $(14.7)
million for the three months ended March 31, 2025. The increase of approximately $6.6 million in cash used in operating activities was
primarily driven by an increase in net loss of $5.9 million, an increase in cash used for operating assets and liabilities, primarily
related to changes in other assets, accrued expenses and other current liabilities, offset by a decrease in accounts payable, resulting
principally from the timing of payments to our service providers of $1.3 million, and by an increase in non-cash items, consisting principally
of accretion of discount on marketable debt securities and stock-based compensation expense of $0.5 million.
 
 Net cash provided by (used in) investing activities was approximately
$(14.7) million for the three months ended March 31, 2026 compared to approximately $(58.4) million for the three months ended March 31,
2025. The decrease in cash used of $43.6 million resulted primarily from a decrease in purchases of marketable debt securities of $22.0
million as well as an increase in proceeds from marketable debt securities matured and redeemed of $21.6 million.
 
 Net cash provided by (used
in) financing activities was $1.1 million for the three months ended March 31, 2026 compared to $1.7 million for the three months ended
March 31, 2025. The $0.6 million decrease was primarily driven by proceeds received in the prior-year period of $2.5 million from the
net proceeds of the underwriters’ overallotment option exercised in connection with the December 2024 Public Offering, as compared
to, proceeds received during the current period of $1.9 million from the exercise of common warrants.
 
 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 condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. 
 
 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 condensed consolidated balance sheet for the periods presented.
 
 We enter into contracts in
the normal course of business with CROs, CDMOs 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.
 
 24 

 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 9 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 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 condensed consolidated balance sheet for the periods presented because the achievement and timing of these milestones is not fixed
and determinable.
 
 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 of the
SEC.
 
 Item 3. Quantitative and Qualitative Disclosures
About Market Risk 
 
 Not applicable.
 
 Item 4. Controls and Procedures 
 
 Management’s Evaluation of our Disclosure
Controls and Procedures 
 
 We maintain disclosure controls
and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act)
that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is
(1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated
and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure.
 
 As of March 31, 2026, our
management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Our management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives,
and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal
executive and principal financial officer have concluded based upon the evaluation described above that, as of March 31, 2026, our disclosure
controls and procedures were effective at the reasonable assurance level.
 
 We continue to review and
document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from
time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
 
 Changes in Internal Control Over Financial
Reporting 
 
 There were no changes in
our internal control over financial reporting during the quarter ended March 31, 2026, as such term is defined in Rules 13a-15(f) and
15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
 
 25 

 PART II – OTHER INFORMATION 
 
 Item 1. Legal Proceedings 
 
 From time to time, we may
be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. We are not currently
a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business.
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources
and other factors.
 
 Item 1A. Risk Factors 
 
 There
were no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report
on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 10, 2026.
 
 Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds 
 
 None.
 
 Item 3. Defaults Upon Senior Securities 
 
 None.
 
 Item 4. Mine Safety Disclosures 
 
 Not applicable. 
 
 Item 5. Other Information 
 
 The following table provides
information concerning Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K under the Exchange Act) adopted, modified,
or terminated in the three months ended March 31, 2026 by any director or any executive officer who is subject to the filing requirements
of Section 16 of the Exchange Act. These trading arrangements are intended to satisfy the affirmative defense of Rule 10b5-1(c). These
trading arrangements permit transactions through and including the earlier to occur of (a) the completion of all purchases or sales or
(b) the date listed in the table below. These trading arrangements, identified as “Rule 10b5-1 Trading Arrangements”, only
permit transactions upon expiration of the applicable mandatory cooling-off period under Rule 10b5-1.
 
 Name (Title) Action Taken
 (Date of Action) Nature of
 Trading
 Arrangement Type of 

Trading
 Arrangement Duration of 

Trading
 Arrangement Aggregate Number
 of Securities 
 Jesse Shefferman ( President, Chief Executive Officer and Director ) Termination 
 ( March 17, 2026 ) Sale Rule 10b5-1 trading arrangement March 25, 2026 – September 24, 2026 69,448 
 Jesse Shefferman ( President, Chief Executive Officer and Director ) Adoption 
 ( March 17, 2026 ) Sale Rule 10b5-1 trading arrangement June 16, 2026 – April 28, 2028 754,054 
 
 No other director or officer of the Company adopted
or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined
in Item 408(a) of Regulation S-K, during the three months ended March 31, 2026.
 
 26 

 Item 6. Exhibits 
 
 The exhibits filed as part
of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.
 
 EXHIBIT INDEX 
 
 Exhibit No. 
 
 Description 

 3.1 
 
 Sixth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 27, 2014). 

 3.2 
 
 Certificate of Amendment to the Sixth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 10, 2020). 

 3.3 
 
 Second Certificate of Amendment to the Sixth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2020). 

 3.4 
 
 Certificate of Designation of Preferences, Rights and Limitations of Series 1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 10, 2020). 

 3.5 
 
 Certificate of Amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series 1 Convertible Non-Voting Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 23, 2020). 

 3.6 
 
 Composite Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.6 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 8, 2023). 

 3.7 
 
 Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on August 3, 2017). 

 10.1*† 
 
 Non-Employee Director Compensation Policy 

 31.1* 
 
 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 

 31.2* 
 
 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 

 32.1** 
 
 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 

 101.INS* 
 
 Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”) 

 101.SCH* 
 
 Inline XBRL Taxonomy Extension Schema Document 

 101.CAL* 
 
 Inline XBRL Taxonomy Extension Calculation Linkbase Document 

 101.DEF* 
 
 Inline XBRL Taxonomy Extension Definition Linkbase Document 

 101.LAB* 
 
 Inline XBRL Taxonomy Extension Label Linkbase Document 

 101.PRE* 
 
 Inline XBRL Taxonomy Extension Presentation Linkbase Document 

 104 
 
 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) 

 * 
 Exhibits filed herewith. 

 ** 
 Exhibits furnished herewith. 

 † 
 Indicates management contract or compensatory plan or arrangement. 

 27 

 SIGNATURES 
 
 Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 PROTARA THERAPEUTICS, INC. 

 Date: May 13, 2026 
 By: 
 /s/ Jesse Shefferman 

 Jesse Shefferman 

 Chief Executive Officer 

 (Principal Executive Officer) 

 Date: May 13, 2026 
 By: 
 /s/ Patrick Fabbio 

 Patrick Fabbio 

 Chief Financial Officer 

 (Principal Financial Officer) 

 28
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Protara Therapeutics, Inc. 10-Q
