UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2025

☐ 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^rdFloor

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 November 6, 2025 there were 38,587,260 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 September 30, 2025 and December 31, 2024 (unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months ended September 30, 2025 and 2024 (unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II – OTHER INFORMATION		28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

EXHIBIT INDEX		29

SIGNATURES		30

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which 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. In some cases, you can 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. These forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these 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;

●

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 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, regulatory, political or public health conditions.

All forward-looking statements in this Quarterly Report on Form 10-Q are made as of the date of this document and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, the risk factors set forth below in Part II, Item 1A, Risk Factors, and elsewhere in this Quarterly Report on Form 10-Q or in our other filings with the United States Securities and Exchange Commission, or the SEC. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	As of
	September 30, 2025			December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	12,551		$	162,798
Marketable debt securities		120,119			7,494
Prepaid expenses and other current assets		2,974			1,863
Total current assets		135,644			172,155
Restricted cash, non-current		745			745
Marketable debt securities, non-current		957			-
Property and equipment, net		828			1,027
Operating lease right-of-use asset		3,452			4,255
Other assets		3,010			3,272
Total assets	$	144,636		$	181,454

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,504		$	4,429
Accrued expenses and other current liabilities		4,185			5,408
Operating lease liability		1,220			1,124
Total current liabilities		9,909			10,961
Operating lease liability, non-current		2,436			3,359
Total liabilities		12,345			14,320
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 September 30, 2025 and December 31, 2024, 5,615 and 7,991 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		-			-
Common stock, $0.001 par value, authorized 100,000,000 shares:
Common stock, 38,587,260 and 35,044,772 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		39			35
Additional paid-in capital		417,221			412,077
Accumulated deficit		(285,112	)		(244,980	)
Accumulated other comprehensive income (loss)		143			2
Total stockholders’ equity		132,291			167,134
Total liabilities and stockholders’ equity	$	144,636		$	181,454

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

PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024

Operating expenses:
Research and development	$	9,591		$	8,070		$	29,509		$	22,205
General and administrative		5,169			4,260			15,961			12,637
Total operating expenses		14,760			12,330			45,470			34,842
Income (Loss) from operations		(14,760	)		(12,330	)		(45,470	)		(34,842	)
Other income (expense), net:
Interest and investment income (expense)		1,502			1,111			4,857			3,015
Other income (expense)		-			-			481			-
Other income (expense), net		1,502			1,111			5,338			3,015
Net income (loss)	$	(13,258	)	$	(11,219	)	$	(40,132	)	$	(31,827	)
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable debt securities		66			29			141			60
Other comprehensive income (loss):		66			29			141			60
Comprehensive income (loss)	$	(13,192	)	$	(11,190	)	$	(39,991	)	$	(31,767	)

Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.31	)	$	(0.50	)	$	(0.96	)	$	(1.74	)
Weighted-average shares outstanding, basic and diluted		42,272,104			22,329,772			41,756,028			18,342,566

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

PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(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, 2023		7,991		$	-		11,364,903	$	11	$	268,725		$	(200,384	)	$	(31	)	$	68,321

Issuance of common stock upon settlement of restricted stock units		-			-		68,934		-		(76	)		-			-			(76	)
Stock-based compensation - restricted stock units		-			-		-		-		151			-			-			151
Stock-based compensation - stock options		-			-		-		-		1,075			-			-			1,075
Unrealized gain (loss) on marketable debt securities		-			-		-		-		-			-			30			30
Net income (loss)		-			-		-		-		-			(11,095	)		-			(11,095	)

Balance at March 31, 2024		7,991		$	-		11,433,837	$	11	$	269,875		$	(211,479	)	$	(1	)	$	58,406

Issuance of common stock, pre-funded warrants and warrants from private placement, net of offering costs of $3,034		-			-		9,143,380		10		41,954			-			-			41,964
Issuance of common stock upon settlement of restricted stock units		-			-		4,975		-		(7	)		-			-			(7	)
Issuance of common stock upon exercise of stock options		-			-		47,580		-		135			-			-			135
Stock-based compensation - restricted stock units		-			-		-		-		111			-			-			111
Stock-based compensation - stock options		-			-		-		-		953			-			-			953
Unrealized gain (loss) on marketable debt securities		-			-		-		-		-			-			1			1
Net income (loss)		-			-		-		-		-			(9,513	)		-			(9,513	)

Balance at June 30, 2024		7,991		$	-		20,629,772	$	21	$	313,021		$	(220,992	)	$	-		$	92,050

Stock-based compensation - restricted stock units		-			-		-		-		109			-			-			109
Stock-based compensation - stock options		-			-		-				822			-			-			822
Unrealized gain (loss) on marketable debt securities		-			-		-		-		-			-			29			29
Net income (loss)		-			-		-		-		-			(11,219	)		-			(11,219	)

Balance at September 30, 2024		7,991		$	-		20,629,772	$	21	$	313,952		$	(232,211	)	$	29		$	81,791

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 upon exercise of Underwriters’ Option in connection with 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

Issuance of common stock upon settlement of restricted stock units		-			-		1,208		-		-			-			-			-
Issuance of common stock upon exercise of stock options		-			-		2,842		-		8			-			-			8
Stock-based compensation - restricted stock units		-			-		-		-		167			-			-			167
Stock-based compensation - stock options		-			-		-		-		736			-			-			736
Unrealized gain (loss) on marketable debt securities		-			-		-		-		-			-			(12	)		(12	)
Net income (loss)		-			-		-		-		-			(14,960	)		-			(14,960	)

Balance at June 30, 2025		5,615		$	-		38,581,863	$	39	$	416,161		$	(271,854	)	$	77		$	144,423

Issuance of common stock upon settlement of restricted stock units		-			-		-		-		-			-			-			-
Issuance of common stock upon exercise of stock options		-			-		5,397		-		13			-			-			13
Stock-based compensation – restricted stock units		-			-		-		-		196			-			-			196
Stock-based compensation – stock options		-			-		-		-		851			-			-			851
Unrealized gain (loss) on marketable debt securities		-			-		-		-		-			-			66			66
Net income (loss)		-			-		-		-		-			(13,258	)		-			(13,258	)

Balance at September 30, 2025		5,615		$	-		38,587,260	$	39	$	417,221		$	(285,112	)	$	143		$	132,291

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

PROTARA THERAPEUTICS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	For the Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	(40,132	)	$	(31,827	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		2,783			3,221
Operating lease right-of-use asset		803			750
Depreciation		269			250
Amortization of premium (Accretion of discount) on marketable debt securities		(928	)		(406	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,111	)		(458	)
Other assets		262			304
Accounts payable		689			(139	)
Accrued expenses and other current liabilities		(1,223	)		2,536
Operating lease liabilities		(827	)		(731	)
Net cash provided by (used in) operating activities		(39,415	)		(26,500	)

Cash flows from investing activities:
Purchase of marketable debt securities		(141,923	)		(29,382	)
Proceeds from maturity and redemption of marketable debt securities		29,410			26,100
Purchase of property and equipment		(70	)		(63	)
Net cash provided by (used in) investing activities		(112,583	)		(3,345	)

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 the December 2024 public offering		(614	)		-
Proceeds from exercise of pre-funded warrants		1			-
Taxes paid related to net share settlement of restricted stock units		(185	)		(83	)
Proceeds from private placement, net of offering costs of $3,034		-			41,964
Proceeds from exercise of stock options		21			135
Net cash provided by (used in) financing activities		1,751			42,016

Net increase (decrease) in cash and cash equivalents and restricted cash		(150,247	)		12,171
Cash and cash equivalents and restricted cash - beginning of period		163,543			40,331
Cash and cash equivalents and restricted cash - end of period	$	13,296		$	52,502

Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	12,551		$	51,757
Restricted cash, non-current		745			745
Cash and cash equivalents and restricted cash	$	13,296		$	52,502

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

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 (“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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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:

	As of September 30, 2025
	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

	As of December 31, 2024
	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.

(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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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:

	As of September 30, 2025
	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

	As of December 31, 2024
	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 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.

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

As of September 30, 2025, marketable debt securities in a loss position consist of the following:

	As of September 30, 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
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

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 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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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

	As of September 30, 2025
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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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 to one 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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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.

Protara Therapeutics, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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’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 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.

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.

Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.

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 in 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.

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

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 United States, with NMIBC representing approximately 80% of bladder cancer diagnoses. Approximately 65,000 patients are diagnosed with NMIBC in the United States each year. Very few new therapeutics have been approved for NMIBC since the 1990s and the current standard of care for NMIBC includes intravesical Bacillus Calmette-Guérin, or BCG.

Following the completion of Phase 1a and 1b clinical trials 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 has completed enrollment and enrolled 31 patients with CIS (± Ta/T1 with Ta defined as non-invasive papillary carcinoma and T1 as defined as carcinoma invading the lamina propria), BCG-Naïve or BCG-Exposed, 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 expected to be registrational based on the Food and Drug Administrations, or FDA’s, August 2024 Draft Guidance on BCG-Unresponsive Nonmuscle Invasive Bladder Cancer: Developing Drugs and Biological Products for Treatment.

We presented interim data from the ADVANCED-2 trial at the American Urology Association annual conference in April 2025 via a poster presentation with an April 16, 2025 data cutoff. The BCG-Unresponsive dataset included a total of five patients, all of whom were six- and nine-month evaluable, and three of whom were evaluable at 12 months. The complete response, or CR, rate at any time in BCG-Unresponsive patients was 100% (5/5). The CR rate in BCG-Unresponsive patients was 100% (5/5) at six months, 80% (4/5) at nine months, and 67% (2/3) at 12 months.

The BCG-Naïve dataset included a total of 21 patients, including 16 evaluable at six months, eight at nine months, and seven at 12 months. The CR rate at any time in BCG-Naïve patients was 76% (16/21). The CR rate in BCG-Naïve patients was 63% (10/16) at six months, 63% (5/8) at nine months, and 43% (3/7) at 12 months.

The majority of adverse events were Grade 1 and transient with no Grade 3 or greater treatment-related adverse events, or TRAEs, as assessed by study investigators. No patients discontinued treatment due to TRAEs. The most common adverse events were in line with typical responses to bacterial immunopotentiation, such as flu-like symptoms. The most common urinary symptoms reflect urinary tract instrumentation effects, such as bladder spasm, burning sensation, and urinary tract infection. Most bladder irritations resolved shortly after administration or within a few hours to a few days.

We expect to present an interim analysis from approximately 25 six-month evaluable patients in Cohort B (BCG-Unresponsive) of the ongoing ADVANCED-2 trial in the first quarter of 2026. We expect to provide an update on ongoing discussions with the FDA related to the BCG-Naïve clinical program in the fourth quarter of 2025.

In addition to the ADVANCED-2 trial, 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 Parenteral Support

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 by the FDA for the prevention and/or treatment of choline deficiency in patients on long-term PN. 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 for 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 at the ESPEN Congress. 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.

We plan to advance the development of IV Choline Chloride as a source of choline for adult and adolescent patients on long-term PS and intend to dose our first patient in THRIVE-3, a registrational Phase 3 clinical trial, by the end of 2025. In July 2025, the European Union Clinical Trials Regulation, or EU-CTR, approved a THRIVE-3 clinical trial in the European Union. 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. The FDA has also granted IV Choline Chloride Fast Track Designation as a source of choline when oral or enteral nutrition is not possible, insufficient, or contraindicated.

TARA-002 in LMs

We are also pursuing TARA-002 in LMs, which are rare, non-malignant cysts of the lymphatic vascular system that primarily form in the head and neck region of children before the age of two. In July 2020, the FDA granted Rare Pediatric Disease Designation for TARA-002 for the treatment of LMs and in May 2022 the European Commission granted Orphan Drug Designation to TARA-002 for the treatment of LMs. 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. We have an open investigational new drug application, or IND, for TARA-002 in LMs with the Vaccines and Related Products Division of the FDA, or Vaccines Division.

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 September 2024, we announced interim data from the first safety cohort in the STARBORN-1 trial. Of three patients treated in the first cohort, which enrolled individuals six years to less than 18 years of age, two patients treated with TARA-002 achieved a CR after receiving one injection of TARA-002; the responses were seen in a patient with a macrocystic LM and a patient with a maxillofacial cyst called a ranula. The tolerability observed in this cohort was consistent with patients’ historical experience with OK-432 and included treatment emergent adverse events, or TEAEs, of pain, swelling, fatigue and body temperature increases. All TEAEs were mild to moderate and resolved. We expect to provide an interim update from our STARBORN-1 trial in the fourth quarter of 2025.

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

We have devoted substantial efforts to the development of our programs and do not have any approved products and have not generated any revenue from product sales. 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 “—Liquidity and Capital Resources” for additional information about our liquidity and capital resource needs.

Since inception, we have incurred significant operating losses. As of September 30, 2025, we had an accumulated deficit of approximately $285.1 million. We expect to continue to incur significant and increasing expenses and 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 September 30, 2025, we had approximately $133.6 million in unrestricted cash and cash equivalents and marketable debt securities.

Financial Overview

Research and Development

Research and development expenses consist primarily of costs incurred for the development of TARA-002 and IV Choline Chloride, which include 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, costs associated with regulatory operations and facilities, depreciation and other expenses, which include expenses for rent and maintenance of facilities and other supplies.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits, travel and stock-based compensation expense, in executive and other administrative functions. Other general and administrative expenses also include professional fees for business and market development, legal, intellectual property matters, consulting and accounting services, facility related costs, as well as expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with our Nasdaq Global Market, or Nasdaq, listing and Securities and Exchange Commission, or SEC, requirements, director and officer liability insurance premiums and investor relations costs associated with being a public company.

Other Income (Expense), net

Other Income (Expense), net consists of interest and investment income and other income. Interest and investment income 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.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying 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, 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 5, 2025.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations (in thousands) for the three months ended September 30, 2025 and 2024:

	For The Three Months Ended September 30,						Period-to- Period
	2025			2024			Change
Operating expenses:
Research and development	$	9,591		$	8,070		$	1,521
General and administrative		5,169			4,260			909
Total operating expenses		14,760			12,330			2,430
Loss from operations		(14,760	)		(12,330	)		(2,430	)
Other income (expense), net:
Interest and investment income		1,502			1,111			391
Other income (expense), net		1,502			1,111			391
Net income (loss)	$	(13,258	)	$	(11,219	)	$	(2,039	)

Research and development expenses

The following table summarizes our research and development expenses (in thousands) for the three months ended September 30, 2025 and 2024:

	For the Three Months Ended September 30,				Period -to- Period
	2025		2024		Change
Direct expenses by product candidate:
TARA-002 in NMIBC	$	3,671	$	3,854	$	(183	)
TARA-002 in LM		816		579		237
IV Choline Chloride		1,751		827		924
Total direct expenses by product candidate		6,238		5,260		978
Indirect research and development expenses		3,353		2,810		543
Total research and development expenses	$	9,591	$	8,070	$	1,521

Research and development expenses were $9.6 million for the three months ended September 30, 2025, which represented an increase of approximately $1.5 million as compared to the three months ended September 30, 2024. This increase was primarily due to a $1.0 million increase in direct expenses for our product candidates. The increase in direct expenses was driven by startup costs for our IV Choline Chloride THRIVE-3 clinical trial. The $0.5 million increase in indirect expenses was primarily due to a $1.0 million increase in personnel-related expenses partially offset by a $0.4 million decrease in other research and development expenses not directly attributable to a single product candidate.

General and administrative expenses

General and administrative expenses were $5.2 million for the three months ended September 30, 2025, which represented an increase of approximately $0.9 million as compared to the three months ended September 30, 2024. This increase was primarily due to an increase of $0.7 million in personnel-related expenses.

Other income (expense), net

Other income (expense), net was $1.5 million for the three months ended September 30, 2025, which represented an increase of approximately $0.4 million as compared to the three months ended September 30, 2024, due primarily to returns on a higher invested balance of unrestricted cash and cash equivalents and marketable debt securities.

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):

	For The Nine Months Ended September 30,						Period-to- Period
	2025			2024			Change
Operating expenses:
Research and development	$	29,509		$	22,205		$	7,304
General and administrative		15,961			12,637			3,324
Total operating expenses		45,470			34,842			10,628
Loss from operations		(45,470	)		(34,842	)		(10,628	)
Other income (expense), net:
Interest and investment income		4,857			3,015			1,842
Other income		481			-			481
Other income (expense), net		5,338			3,015			2,323
Net income (loss)	$	(40,132	)	$	(31,827	)	$	(8,305	)

Research and development expenses.

The following table summarizes our research and development expenses (in thousands) for the nine months ended September 30, 2025 and 2024:

	For the Nine Months Ended September 30,				Period-to- Period
	2025		2024		Change
Direct expenses by product candidate:
TARA-002 in NMIBC	$	12,126	$	8,807	$	3,319
TARA-002 in LM		1,842		2,110		(268	)
IV Choline Chloride		6,118		1,624		4,494
Total direct expenses by product candidate		20,086		12,541		7,545
Indirect research and development expenses		9,423		9,664		(241	)
Total research and development expenses	$	29,509	$	22,205	$	7,304

Research and development expenses were $29.5 million for the nine months ended September 30, 2025, which represented an increase of approximately $7.3 million as compared to the nine months ended September 30, 2024. This increase was primarily due to a $7.5 million increase in direct expenses for our product candidates. The increase in direct expenses was driven by continued site expansion in our NMIBC ADVANCED-2 clinical trial, as well as startup costs for our IV Choline Chloride THRIVE-3 clinical trial. The $0.2 million decrease in indirect expenses was primarily due to a $1.4 million decrease in other research and development expenses not directly attributable to a single product candidate, partially offset by an increase in personnel-related expenses of $1.2 million.

General and administrative expenses.

During the nine months ended September 30, 2025, our general and administrative expenses were approximately $16.0 million, which represented an increase of approximately $3.3 million as compared to the nine months ended September 30, 2024. This increase was primarily due to an increase of $1.7 million in personnel-related expenses, as well as increases of $0.9 million in expenses related to market development and patient advocacy, and other professional, consulting, and legal expenses aggregating to $0.4 million.

Other income (expense), net.

During the nine months ended September 30, 2025, our other income (expense), net was approximately $5.3 million, which represented an increase of approximately $2.3 million as compared to the nine months ended September 30, 2024, due primarily to returns on a higher invested balance of unrestricted cash and cash equivalents and marketable debt securities as well as a $0.5 million increase in other income.

Liquidity and Capital Resources

Overview

As of September 30, 2025 and December 31, 2024, our unrestricted cash and cash equivalents and marketable debt securities were $133.6 million and $170.3 million, respectively. We have not generated revenues since our inception and have incurred net losses of $40.1 million and $31.8 million for the nine months ended September 30, 2025 and 2024, respectively, and $13.3 million and $11.2 million for the three months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had working capital of $125.7 million and stockholder’s equity of $132.3 million. During the nine months ended September 30, 2025, net cash flows used in operating activities were $39.4 million, consisting primarily of a net loss of $40.1 million including non-cash expenses of $2.9 million, as well as cash used for changes in operating assets and liabilities of $2.2 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, including those described in Note 10 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (which descriptions are summaries only, do not purport to be complete and are qualified in their entirety by reference to the documents referenced therein and included as an exhibit to this Quarterly Report on Form 10-Q and/or the Annual Report on Form 10-K). In addition, we may receive additional proceeds upon the exercise of the common warrants issued in the April 2024 Private Placement.

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

We believe that our current financial resources, as of the date of the issuance of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, are sufficient to satisfy our estimated liquidity needs for at least twelve months from the date of filing this Quarterly Report on Form 10-Q.

As a result of volatility in the capital markets, economic conditions, general global economic uncertainty, political and regulatory change and uncertainty, global pandemics, tariffs and governmental trade policies, as well as 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 continued inflation could materially affect our business and the value of our common stock.

Cash Flows

The following table summarizes our sources and uses of cash (in thousands) for the nine months ended September 30, 2025 and 2024:

	For The Nine Months Ended September 30,						Period-to- Period
	2025			2024			Change

Net cash provided by (used in) operating activities	$	(39,415	)	$	(26,500	)	$	(12,915	)
Net cash provided by (used in) investing activities		(112,583	)		(3,345	)		(109,238	)
Net cash provided by (used in) financing activities		1,751			42,016			(40,265	)
Net increase (decrease) in cash and cash equivalents, and restricted cash	$	(150,247	)	$	12,171		$	(162,418	)

Comparison of the Nine Months Ended September 30, 2025 and 2024

Net cash provided by (used in) operating activities was approximately $(39.4) million for the nine months ended September 30, 2025 compared to approximately $(26.5) million for the nine months ended September 30, 2024. The increase of approximately $12.9 million in cash used in operating activities was primarily driven by an increase in net loss of $8.3 million, an increase in cash used for changes in operating assets and liabilities of $3.7 million, primarily related to changes in prepaid expenses and other current assets, accounts payable, and accrued expenses resulting from the timing of payments to our service providers, as well as a $0.9 million decrease in non-cash items, consisting principally of stock-based compensation expense and accretion of discount on marketable debt securities.

Net cash provided by (used in) investing activities was approximately $(112.6) million for the nine months ended September 30, 2025 compared to approximately $(3.3) million for the nine months ended September 30, 2024. The change in cash provided by (used in) investing activities of $109.2 million resulted primarily from an increase of $112.5 million in marketable debt securities purchased offset slightly by an increase of $3.3 million in proceeds from maturity of marketable debt securities.

Net cash provided by (used in) financing activities was $1.8 million for the nine months ended September 30, 2025 compared to $42.0 million for the nine months ended September 30, 2024. The cash provided during the nine months ended September 30, 2025 consisted principally of the proceeds of $2.5 million from the exercise of the Underwriters’ Option from the December 2024 Public Offering net of offering costs offset by $0.6 million in offering costs paid in the first quarter of 2025 related to the December 2024 Public Offering. The cash provided during the nine months ended September 30, 2024, consisted principally of $42.0 million from 2024 April Private Placement proceeds net of offering costs.

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.

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. Qualitative and Quantitative 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, or 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 September 30, 2025, 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 September 30, 2025, 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 September 30, 2025, 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.

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 II, Item 1A—Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 5, 2025.

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

During the three months ended September 30, 2025, no 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.

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

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.

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: November 10, 2025	By:	/s/ Jesse Shefferman
		Jesse Shefferman
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 10, 2025	By:	/s/ Patrick Fabbio
		Patrick Fabbio
		Chief Financial Officer
		(Principal Financial Officer)

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Protara Therapeutics, Inc. 10-Q