Protara Therapeutics, Inc.
For the period ended Sep 30, 2025. Filed Nov 10, 2025.
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Sep 30, 2025 · Filed Nov 10, 2025
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Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Nature of the Business
Overview
Protara Therapeutics, Inc., and its consolidated subsidiaries (“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 twelve 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, 2024, filed with the United States Securities and Exchange Commission, or SEC, on March 5, 2025, or the Annual Report on Form 10-K. Except as reflected below, there were no changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K. Reflected in this note are updates to accounting policies, including the impact of the adoption of new policies.
Stock-Based Compensation
The Company’s stock-based compensation programs include stock options, restricted stock units, or RSUs, and an employee stock purchase program, or ESPP. The Company accounts for stock-based compensation using the fair value method.
The Company measures all stock options and other stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. The Company recognizes forfeitures at the time forfeitures occur.
The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility for the Company’s common stock is determined based on a weighting of its own historical volatility and the historical volatility of a peer-group of similar public companies. The expected term of options granted to employees is calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The simplified method is used as the Company does not have sufficient appropriate exercise data on which to base its own estimate. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free interest rate is based upon the U.S. Treasury yield curve commensurate with the expected term at the time of grant or remeasurement.
The stock-based compensation expense associated with purchase rights under the ESPP is measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period. The Black-Scholes option pricing assumptions are similar to those used for stock options with the exception of the expected term of purchase rights for the ESPP which is based on the duration of an offering period.
The fair values of RSUs are based on the fair market value of the Company’s common stock on the date of the grant.
RSUs were historically granted to directors pursuant to the Company’s equity plan. Settlement for these RSUs is deferred until the earliest to occur of (i) the director’s termination of service, (ii) death, (iii) disability or (iv) a change in control of the Company. In the event of a change in control of the Company, the RSUs will vest in full.
The fair value of all stock-based awards is recognized as stock-based compensation expense on a straight-line basis over the vesting period, which is typically three years for RSUs and one or four years for stock options.
The Company classifies stock-based compensation expense in its statement of operations and comprehensive loss in the same way the payroll costs or service payments are classified for the related stock-based award recipients.
Basis of Presentation
The accompanying condensed consolidated financial statements and the related disclosures as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States, 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 2024 audited consolidated financial statements and notes included in the Annual Report on Form 10-K. The December 31, 2024 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 and nine months ended September 30, 2025 and 2024. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2025 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.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-09 – Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The standard is effective for public companies for annual periods beginning after December 15, 2024. Early adoption is available. The Company has determined that since it only requires additional disclosures, the adoption of ASU 2023-09 will not have a material impact on its consolidated financial statements and disclosures.
In November 2024, 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. 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 Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market.
Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
| ● | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
| ● | Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
| ● | Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. |
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:
| Level 1 · Level 2 · Level 3 · Total | ||||||
|---|---|---|---|---|---|---|
| Cash equivalents: | ||||||
| Money market funds(a) | $12,025 | $ | - | $ | - | $12,025 |
| Restricted cash, non-current: | ||||||
| Money market funds(b) | 745 | - | - | 745 | ||
| Marketable debt securities: | ||||||
| Corporate bonds(c) | - | 88,865 | - | 88,865 | ||
| U.S. Treasury securities(c) | 32,211 | - | - | 32,211 | ||
| Total | $44,981 | $88,865 | $ | - | $133,846 | |
| Level 1 · Level 2 · Level 3 · Total | ||||||
|---|---|---|---|---|---|---|
| Cash equivalents: | ||||||
| Money market funds(a) | $162,297 | $ | - | $ | - | $162,297 |
| Restricted cash, non-current: | ||||||
| Money market funds(b) | 745 | - | - | 745 | ||
| Marketable debt securities: | ||||||
| U.S. Treasury securities(c) | 7,494 | - | - | 7,494 | ||
| Total | $170,536 | $ | - | $ | - | $170,536 |
| (a) | Money market funds 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. |
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| (c) | U.S. Treasury securities and corporate bonds 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 September 30, 2025 and December 31, 2024 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:
| Amortized Cost · Unrealized Gains · Unrealized Losses · Estimated Fair Value | |||||
|---|---|---|---|---|---|
| U.S. Treasury securities - presented in marketable debt securities | $32,141 | $70 | $ | - | $32,211 |
| Corporate bonds - presented in marketable debt securities | 87,839 | 88 | (19) | 87,908 | |
| Corporate bonds - presented in marketable debt securities, non-current | 953 | 4 | - | 957 | |
| Total | $120,933 | $162 | $(19) | $121,076 | |
| Amortized Cost · Unrealized Gains · Unrealized Losses · Estimated Fair Value | |||||
|---|---|---|---|---|---|
| U.S. Treasury securities - presented in marketable debt securities | $7,492 | $2 | $ | - | $7,494 |
| Total | $7,492 | $2 | $ | - | $7,494 |
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 and nine months ended September 30, 2025 and 2024 there wereno realized gains or losses. Gains, if any, would be included in investment income within the condensed consolidated statements of operations and comprehensive loss.
At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. The Company classifies investments in marketable debt securities with remaining maturities when purchased of 90 days or less as cash equivalents. The Company classifies investments in marketable debt securities with remaining maturities when purchased of greater than three months as available-for-sale. Investments with a remaining maturity date greater than one year are classified as non-current. The remaining maturities of all debt securities held at September 30, 2025 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.
As of September 30, 2025, marketable debt securities in a loss position consist of the following:
| 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 | ||||||||
| Corporate bonds – presented in marketable debt securities | $25,526 | $(19) | $ | - | $ | - | $25,526 | $(19) |
| Total | $25,526 | $(19) | $ | - | $ | - | $25,526 | $(19) |
As of December 31, 2024, no securities were held in a loss position. As of September 30, 2025 and December 31, 2024, it was determined that there were no expected credit losses.
Interest and Investment Income
Interest and investment income consists of the following:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Interest income | $1,058 | $659 | $3,836 | $2,468 |
| Accretion of discount (Amortization of premium), net | 437 | 444 | 992 | 519 |
| Dividend income | 7 | 8 | 29 | 28 |
| Total interest and investment income | $1,502 | $1,111 | $4,857 | $3,015 |
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following:
| As of | ||
|---|---|---|
| September 30, 2025 | December 31, 2024 | |
| Prepaid research and development | $1,273 | $853 |
| Accrued interest on marketable debt securities | 1,001 | - |
| Prepaid insurance | 166 | 622 |
| Prepaid software | 85 | 116 |
| Prepaid retention bonuses | - | 80 |
| Other prepaid expenses | 231 | 190 |
| Other current assets | 218 | 2 |
| Total | $2,974 | $1,863 |
6. Other Assets
Other assets consists of the following:
| As of | ||
|---|---|---|
| September 30, 2025 | December 31, 2024 | |
| Prepaid research and development, non-current | $2,989 | $3,245 |
| Other non-current assets | 21 | 27 |
| Total | $3,010 | $3,272 |
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consists of the following:
| As of | ||
|---|---|---|
| September 30, 2025 | December 31, 2024 | |
| Employee costs | $2,244 | $2,533 |
| Research and development costs | 1,612 | 2,740 |
| Other expenses | 329 | 135 |
| Total | $4,185 | $5,408 |
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 nine months ended September 30, 2025 and 2024 was $1,038 and $995, respectively.
Lease expense consists of the following:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Operating lease expense | $338 | $338 | $1,014 | $1,014 |
| Total | $338 | $338 | $1,014 | $1,014 |
Variable lease expenses for the three months ended September 30, 2025 and 2024 were $31 and $26, respectively. Variable lease expenses for the nine months ended September 30, 2025 and 2024 were $93 and $72, respectively.
The weighted-average remaining lease term and the weighted average discount rate for operating leases were:
| Weighted-average discount rate | 7.0% |
|---|---|
| Weighted-average remaining lease term – operating lease (in months) | 34 |
As of September 30, 2025, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
| For the Years Ending December 31, | Operating Lease Payments |
|---|---|
| 2025 (excluding the nine months ended September 30, 2025) | $357 |
| 2026 | 1,429 |
| 2027 | 1,429 |
| 2028 | 718 |
| 2029 | 87 |
| Thereafter | - |
| Total future operating lease payments | 4,020 |
| Less: imputed interest | (364) |
| Present value of future minimum lease payments | $3,656 |
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 September 30, 2025 and December 31, 2024, the Company had 100,000,000 shares of common stock authorized for issuance, $0.001 par value per share, of which 38,587,260 and 35,044,772 shares were issued and outstanding, respectively.
The holders of the Company’s common stock are entitled toone vote per share.
Preferred Stock
As of September 30, 2025 and December 31, 2024, 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 5,615 and 7,991 shares were issued and outstanding as of September 30, 2025 and December 31, 2024, 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.
During the three and nine months ended September 30, 2025,0 and approximately 2,376 shares of Series 1 Convertible Preferred Stock, respectively, were converted into 2,376,244 shares of common stock.
The holders of Series 1 Convertible Preferred Stock are not entitled to vote.
April 2024*** Private Placement***
On April 5, 2024, the Company entered into a subscription agreement with certain purchasers, or the Purchasers, pursuant to which the Company agreed to sell and issue to the Purchasers, in a private placement, or the April 2024 Private Placement, an aggregate of 9,143,380 shares of the Company’s common stock, or the April 2024 Shares, and, for certain purchasers, pre-funded warrants, or the April 2024 Pre-Funded Warrants, to purchase an aggregate of 1,700,000 shares of the Company’s common stock. In each case, the April 2024 Shares or April 2024 Pre-Funded Warrants were issued with warrants, or the April 2024 Common Warrants, to purchase an aggregate of up to 10,843,380 shares of the Company’s common stock. Each April 2024 Share, along with its attached April 2024 Common Warrant, had a purchase price of $4.15, and each April 2024 Pre-Funded Warrant, along with its attached April 2024 Common Warrant, had a purchase price of $4.149. The closing date of the April 2024 Private Placement was April 10, 2024. The April 2024 Private Placement resulted in gross proceeds of approximately $44,998 and net proceeds of approximately $41,964, reflecting approximately $3,034 of placement agent’s fees, legal costs and other expenses connected with the transaction.
The April 2024 Pre-Funded Warrants are exercisable at any time, at an exercise price of $0.001 per share. The April 2024 Common Warrants are exercisable on or prior to the earlier of (i) April 10, 2027 and (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 Bacillus Calmette-Guérin, or BCG,-Unresponsive patients in the ADVANCED-2 (Cohort B) clinical trial, at an exercise price of $5.25 per share.
The April 2024 Pre-Funded Warrants and the April 2024 Common Warrants are exercisable so long as the aggregate number of shares of the Company’s common stock beneficially owned by the holder (together with its affiliates) would not exceed 9.99%, or for certain holders,4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of such April 2024 Pre-Funded Warrant or April 2024 Common Warrant, as applicable. Such percentage may be increased or decreased to any number not in excess of 19.99% at the holder’s election upon notice to the Company, any such increase not to take effect until the sixty-first day after notice to the Company.
Both the April 2024 Pre-Funded Warrants and the April 2024 Common Warrants contain standard adjustments to the exercise price, inclusive of stock splits, stock dividends and pro rata distributions and contain customary terms regarding the treatment of such April 2024 Pre-Funded Warrants or April 2024 Common Warrants in the event of a fundamental transaction, which include but are not limited to a merger or consolidation involving the Company, a sale of all or substantially all of the assets of the Company or a business combination resulting in any person acquiring more than 50% of the outstanding shares of common stock of the Company.
The Company concluded that the April 2024 Pre-Funded Warrants and April 2024 Common Warrants met the requirements to be classified in stockholders’ equity.
The fair market value of the April 2024 Pre-Funded Warrants was estimated as the difference between the share price of our stock on the agreement date and the exercise price of the April 2024 Pre-Funded Warrant.
The fair market value of the April 2024 Common Warrants at their issuance was estimated using the Black-Scholes option-pricing model. The assumed dividend yield was based upon the Company’s expectation of not paying dividends in the foreseeable future. Expected volatility for the Company’s common stock was determined based on the historical volatility of the Company over the full term of the warrant. The risk-free interest rate was based upon the U.S. Treasury yield curve commensurate with the expected term at the time of grant. The expected term of the April 2024 Common Warrants was calculated utilizing the three-year expiration date, taking into consideration the possibility of an accelerated expiration date pursuant to the terms of the April 2024 Common Warrants.
The estimated fair market values of the April 2024 Shares, April 2024 Pre-Funded Warrants and April 2024 Common Warrants have been recorded in additional paid in capital.
As of September 30, 2025,10,118,380 April 2024 Common Warrants were outstanding. During the three and nine months ended September 30, 2025, no April 2024 Common Warrants were exercised or expired.
As of September 30, 2025,1,700,000 April 2024 Pre-Funded Warrants were outstanding. During the three and nine months ended September 30, 2025, no April 2024 Pre-Funded Warrants were exercised or expired.
December 2024*** Public Offering***
On December 9, 2024, the Company entered into an underwriting agreement, or the Underwriting Agreement, with TD Securities (USA) LLC, Cantor Fitzgerald & Co. and LifeSci Capital LLC, as representatives, or the Representatives, of the several underwriters named therein, or collectively, the Underwriters, pursuant to which the Company agreed to sell and issue to the Underwriters an aggregate of 13,690,000 shares, or the December 2024 Shares, of common stock of the Company, par value $0.001 per share and, for certain purchasers, pre-funded warrants, or the December 2024 Pre-Funded Warrants, to purchase an aggregate of 2,325,372 shares of common stock, or the December 2024 Public Offering. The price to the public in the December 2024 Public Offering was $6.25 per December 2024 Share and $6.249 per December 2024 Pre-Funded Warrant, which is the price per share at which the December 2024 Shares were sold to the public in the December 2024 Public Offering, minus the $0.001 exercise price per December 2024 Pre-Funded Warrant. In addition, under the terms of the Underwriting Agreement the Company granted the Underwriters the option, for 30 days, to purchase up to an additional 2,402,305 shares of common stock at the public offering price, less underwriting discounts and commissions, or the Underwriters’ Option.
The December 2024 Public Offering closed on December 11, 2024, resulting in gross proceeds of approximately $100.1 million and net proceeds of approximately $93.4 million, reflecting approximately $6.7 million of underwriters’ fees, legal costs and other expenses connected with the transaction.
The December 2024 Pre-Funded Warrants are exercisable at any time, at an exercise price of $0.001 per share. The December 2024 Pre-Funded Warrants contain standard adjustments to the exercise price, including for stock splits, stock dividends and pro rata distributions and contain customary terms regarding the treatment of such December 2024 Pre-Funded Warrants in the event of a fundamental transaction, which include but are not limited to a merger or consolidation involving the Company, a sale of all or substantially all of the assets of the Company or a business combination resulting in any person acquiring more than 50% of the outstanding shares of common stock of the Company. Additionally, the December 2024 Pre-Funded Warrants include restrictions on exercise in the event the Purchaser’s beneficial ownership of the Company’s common stock would exceed 4.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise.
The Company concluded that the December 2024 Pre-Funded Warrants met the requirements to be classified in stockholders’ equity.
The fair market value of the December 2024 Pre-Funded Warrants has been determined as the spread between the price paid by the Underwriters and the share price of our stock on the agreement date. The estimated fair values of the December 2024 Shares and December 2024 Pre-Funded Warrants have been recorded in additional paid in capital.
On January 8, 2025, the Underwriters notified the Company of their determination to exercise the Underwriters’ Option in part, and purchased an additional 438,738 shares of common stock, at the public offering price less underwriting discounts and commissions. Closing for the partial exercise of the Underwriters’ Option occurred on January 13, 2025. The transaction costs were charged to additional paid in capital in the period the Underwriters’ Option was exercised.
The exercise of the Underwriters’ Option resulted in gross proceeds of approximately $2.7 million and net proceeds of approximately $2.5 million, reflecting approximately $0.2 million of underwriters’ fees, legal costs and other expenses connected with the transaction.
As of September 30, 2025,1,700,272 December 2024 Pre-Funded Warrants were outstanding. During the three and nine months ended September 30, 2025,0 and 625,100 December 2024 Pre-Funded Warrants, respectively, were exercised and none expired.
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. On July 31, 2017, the stockholders approved this amendment. On January 1, 2020, Protara Therapeutics, Inc. amended its Amended and Restated 2014 Plan to increase the number of shares of stock available for issuance under the Amended and Restated 2014 Plan to 1,048,300 shares and made conforming changes and updates pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.
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 Amended and Restated 2014 Plan, as amended, provided that the number of shares reserved and available for issuance would automatically increase each January 1, by four percent of the Company’s common stock on the immediately preceding December 31, adjusted for the number of shares of the Company’s common stock issuable upon conversion of any security that the Company may issue that is convertible into or exchangeable for the Company’s common stock, or such lesser number of shares as determined by the Company’s Board of Directors. Terms of the stock awards, including vesting requirements, are determined by the Board of Directors, subject to the provisions of the Amended and Restated 2014 Plan, as amended. Certain awards provide for accelerated vesting if there is a change in control as defined in the Amended and Restated 2014 Plan, as amended.
On January 1, 2024, pursuant to the annual evergreen feature of the Amended and Restated 2014 Plan, as amended, the number of shares authorized under the Amended and Restated 2014 Plan, as amended, was increased by 911,380 shares to 4,474,683 shares. Following the approval of the Company’s 2024 Equity Incentive Plan, or 2024 EIP, by the stockholders of the Company on June 7, 2024, no additional awards will be made under the Amended and Restated 2014 Plan, as amended.
As of September 30, 2025, there were 3,537,989 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 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 Equity Incentive Plan was 2,000,000 for the issuance of stock options, stock appreciation rights, restricted stock and restricted stock units 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 Equity Incentive Plan.
As of September 30, 2025, there were 134,328 shares of common stock subject to outstanding awards under the 2017 Equity Incentive 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 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 Inducement Plan.
On March 3, 2025, the Compensation Committee approved a Certificate of First Amendment to the 2020 Inducement Plan, or the Amended 2020 Inducement Plan, to increase the number of shares provided for under the Amended 2020 Inducement Plan by 600,000 shares to 1,200,000 shares.
As of September 30, 2025, there were 1,178,300 shares of common stock subject to outstanding awards and 21,700 shares of common stock available for future issuance under the Amended 2020 Inducement Plan.
2024 Equity Incentive Plan
On June 7, 2024, the stockholders approved the 2024 EIP. The 2024 EIP provided for the grant of 1,500,000 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock and cash awards. On June 11, 2025, the stockholders approved an amendment to the 2024 EIP, or the 2024 EIP, as amended, increasing the number of shares available for grant under the 2024 EIP 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 2024 EIP, as amended.
As of September 30, 2025, there were 1,636,819 shares of common stock subject to outstanding awards and 2,663,181 shares of common stock available for future issuance under the 2024 EIP, as amended.
2024 Employee Stock Purchase Plan
On June 7, 2024, the stockholders of the Company approved the 2024 Employee Stock Purchase Plan, or 2024 ESPP. The number of shares authorized under the 2024 ESPP is 1,000,000.
As of September 30, 2025, the number of shares available for issuance under the 2024 ESPP was 1,000,000. During the three and nine months ended September 30, 2025, no shares were issued under the 2024 ESPP.
Restricted Stock Units
The following table summarizes restricted stock unit, or RSU, activity for the nine months ended September 30, 2025:
| Restricted Stock Units | Weighted Average Grant Date Fair Value | |
|---|---|---|
| Non-vested as of December 31, 2024 | 295,914 | $2.69 |
| Granted | 399,431 | 4.11 |
| Forfeited | (9,689) | 3.41 |
| Vested | (130,411) | 3.32 |
| Non-vested as of September 30, 2025 | 555,245 | $3.55 |
The fair value of RSUs is amortized on a straight-line basis over the requisite service period of the respective awards. As of September 30, 2025, the unamortized value of RSUs was $1,501. As of September 30, 2025, the weighted average remaining amortization period was 2.05 years. As of September 30, 2025 and December 31, 2024,289,500 RSUs have vested but have not yet been settled into shares of the Company’s common stock.
During the nine months ended September 30, 2025, the Company issued 94,167 shares of the Company’s common stock from the net settlement of 130,411 RSUs. The Company paid $185 in connection with the net share settlement of these RSUs.
Stock Options
The following table summarizes stock option activity for the nine months ended September 30, 2025:
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value(1) | |
|---|---|---|---|---|
| Outstanding as of December 31, 2024 | 3,855,478 | $7.30 | 7.66 | $6,736 |
| Granted | 1,826,163 | 4.11 | ||
| Exercised | (8,239) | 2.62 | ||
| Forfeited | (24,972) | 3.46 | ||
| Expired | (5,739) | 5.02 | ||
| Outstanding as of September 30, 2025 | 5,642,691 | $6.29 | 7.73 | $5,047 |
| Vested and expected to vest at September 30, 2025 | 5,642,691 | $6.29 | 7.73 | $5,047 |
| Exercisable as of September 30, 2025 | 2,735,677 | 9.25 | 6.50 | 2,318 |
| (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, 2024 and September 30, 2025, respectively. The intrinsic value of options exercised during the nine months ended September 30, 2025 was $7. |
The weighted average grant date fair value per share of the options granted during the nine months ended September 30, 2025 and 2024 was $2.99 and $1.58, respectively. As of September 30, 2025, there was approximately $6,587 of unrecognized stock-based compensation for unvested stock option grants, which is expected to be recognized over a weighted average period of 2.60 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 September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Stock options | $851 | $822 | $2,299 | $2,850 |
| Restricted stock units | 196 | 109 | 484 | 371 |
| Total | $1,047 | $931 | $2,783 | $3,221 |
Stock-based compensation expense was reflected within the condensed consolidated statements of operations and comprehensive loss as:
| For the Three Months ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| General and administrative | $791 | $703 | $2,110 | $2,382 |
| Research and development | 256 | 228 | 673 | 839 |
| Total | $1,047 | $931 | $2,783 | $3,221 |
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 September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Numerator | ||||
| Net income (loss) attributable to common stockholders | $(13,258) | $(11,219) | $(40,132) | $(31,827) |
| Denominator | ||||
| Weighted-average shares of common stock outstanding, basic and diluted | 42,272,104 | 22,329,772 | 41,756,028 | 18,342,566 |
| Net income (loss) per share attributable to common stockholders, basic and diluted | $(0.31) | $(0.50) | $(0.96) | $(1.74) |
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 September 30, | ||
|---|---|---|
| 2025 | 2024 | |
| April 2024 Common Warrants | 10,118,380 | 10,843,380 |
| Series 1 Convertible Preferred Stock | 5,616,973 | 7,993,217 |
| Stock options | 5,642,691 | 3,834,478 |
| Restricted stock units | 555,245 | 585,414 |
| Total potentially dilutive shares | 21,933,289 | 23,256,489 |
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 income statement 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’ssingle reportable segment and the significant expenses reviewed by the CODM, including a reconciliation to consolidated net income (loss):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Research and development expenses: | ||||
| TARA-002 in NMIBC | $3,671 | $3,854 | $12,126 | $8,807 |
| TARA-002 in LMs | 816 | 579 | 1,842 | 2,110 |
| IV Choline Chloride | 1,751 | 827 | 6,118 | 1,624 |
| Other research and development | 3,097 | 2,582 | 8,750 | 8,825 |
| General and administrative expenses | 4,378 | 3,557 | 13,851 | 10,255 |
| Stock-based compensation expense | 1,047 | 931 | 2,783 | 3,221 |
| Income (Loss) from operations | (14,760) | (12,330) | (45,470) | (34,842) |
| Other income (expense), net | 1,502 | 1,111 | 5,338 | 3,015 |
| Segment net income (loss) | (13,258) | (11,219) | (40,132) | (31,827) |
| Adjustments and reconciling items | - | - | - | - |
| Net income (loss) | $(13,258) | $(11,219) | $(40,132) | $(31,827) |
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.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.