Protara Therapeutics, Inc.

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.

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:

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:

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 wereno 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 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:

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

6. Other Assets

Other assets consist of the following:

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

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:

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, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:

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 toone 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.

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:

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.

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:

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:

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:

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

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:

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:

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’ssingle reportable segment and the significant expenses reviewed by the CODM, including a reconciliation to consolidated net income (loss):

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.