Protara Therapeutics, Inc. (TARA) Earnings Call Transcript & Summary

Welcome, everyone. My name is [ Tai Pavumi ], and I'm welcoming you to the 44th JPMorgan Healthcare Conference. Our next presenting company is Protara Therapeutics. Protara is a clinical stage biotechnology company that's developing transformative therapies for people with rare cancer diseases. And presenting today is CEO, Jesse Shefferman. Please help me welcoming to the stage.

Thank you. Thanks, [ Tai ]. Thank you to the JPMorgan team for having us. I'm looking forward to talking through the Protara story. Quick forward-looking statements. So as [ Tai ] 1said, Protara is a clinical stage company focused on oncology and in rare disease. In oncology, our primary focus is in non-muscle invasive bladder cancer, where we have 2 programs in late-stage development, 2 registrational studies in BCG-Unresponsive patients and in BCG-Naïve patients. On the rare disease side, we have 2 products in clinical development. IV Choline Chloride is a phospholipid substrate replacement therapy for patients that are on parenteral support. That program is in Phase III with a PK-based endpoint. And we also have our lymphatic malformations program, TARA-002 for macrocystic and macrocystic-dominant mixed cystic lesions. Just gives a sense of our portfolio. For a company of our size, we have a lot of ambition, and this is represented by the various programs that we have in late-stage development. In non-muscle invasive bladder cancer, our ADVANCED-2 study is a single-arm open-label study looking at BCG-Unresponsive patients with carcinoma in situ. There, we are significantly well enrolled in a registrational study that we anticipate will complete enrollment before the end of 2026. We also recently announced an interesting level of agreement with FDA on a BCG-Naïve study where we will be running the first ever RCT as an independent sponsor in the NMIBC setting, looking at patients who can't get, don't tolerate or refuse BCG. And we'll spend a little bit more time talking about that, which is an interesting opportunity for Protara to carve out some white space in the NMIBC setting. I talked about our choline program as well as our lymphatic malformations program, where we're looking at 002 in children with macrocystic lymphatic malformations. So we benefit from, over the years, becoming more familiar to the investing community, and we often get questions about the complexity of our portfolio. We're an ambitious team, and so we've assembled a number of opportunities that introduces a level of complexity. And what I'd like to do today is provide some clarity that might help narrow some of the complexity that you might find in a portfolio as broad as ours. There's a lot of diversification, a lot of opportunity, but there are a number of stories embedded in this portfolio. We get 4 questions from investors pretty regularly. Two of those questions focus on our NMIBC program and 2 of those questions focus on our LMs program. And they're as follows: In our NMIBC BCG-Unresponsive ADVANCED-2 program, we have a pretty important data release coming up in February. And the questions that we get from investors there are what can we expect? And I'm hopefully going to be able to provide some clarity on that in a couple of minutes. In our BCG-Naïve study, we get the question, why bother? Why not do a proof-of-concept study and just use that as an opportunity to demonstrate data in a novel patient category in the NMIBC setting? We actually think that there's benefits from both a clinical perspective, from a market perspective, a market size perspective and a reimbursement perspective. And we'll come back to that in a bit. Finally, lymphatic malformations. We've had a lot of enthusiasm as we've put out data in the past few months that is pretty compelling. We've generated response rates or clinical success rates of 100% in the patients that were evaluable at the 8-week time point. And obviously, the question there is, okay, what is the path to registration? We'll be able to talk about that in a moment. And then finally, what is the market opportunity? In our patients that we released data in November for lymphatic malformations, 80% of those patients achieved clinical success with 2 doses or fewer. That's effectively a functional cure. So what is your market opportunity when you are effectively curing patients that suffer from the disease that you treat. Let's take them in order. For our BCG-Unresponsive ADVANCED-2 study, we will be putting out data in February in 25 6-month evaluable patients. And the question that we get is, what can we expect? At this point, we've treated 90 NMIBC patients with 002 across all conceivable BCG exposures. And what we've learned is that BCG -- prior BCG exposure in the setting of TARA-002 does not matter. What matters is how heavily pretreated patients are. But biologically, we've learned that a BCG experienced patient is no different than a BCG refractory patient in the setting of 002. Matters for BCG, not for 002. So what can you expect? In December, we published data on 31 BCG-Naïve patients with follow-up for many of them up to 12 months. In that data set, we put up a 72.4% CR at any time at the 6-month time point and 50% CR at 12 months. So what does that mean for our BCG-Unresponsive patients? As I said, we do not believe that a BCG-Unresponsive patient is biologically different from a naïve patient in the context of 002. And so if in February, we have a 72% complete response rate at 6 months and a 50% complete response rate at 12 months in our unresponsive patients, we would, a, be unsurprised; and b, be very happy with that because those numbers in the unresponsive setting are clearly through a threshold of relevance from an efficacy perspective, and that allows us to then talk about 002 in the context of what it means as a product. And that's where I think 002 shines in the NMIBC setting. At the end of the day, 80% of patients with NMIBC are treated in the community by doctors who have necessarily made the choice that they're leaving academia to go practice in the community and make a living off of procedures in the urologic setting. And so what matters to those docs, and this is probably pretty well reversed because there are other folks in the NMIBC setting who believe the same, safety and tolerability are of primary importance. 002 has the best-in-class safety and tolerability of any of the novel therapeutics or recently approved therapeutics in the NMIBC setting. On top of that, as I said, we anticipate that we'll be through a threshold of relevance from an efficacy perspective that will allow us to lean into a discussion about what we represent as an adoptable product in the community. And finally, ease of use. 002 has no special handling requirements. It is administrable by catheter. The doctor doesn't have to be in the room. There's no thaw time. It's 3 years stable at 2 to 8 degrees. That's normal refrigeration. Doctors doesn't even have to be in the room. It's a 15-minute procedure. And even better, there's no post-procedure protocol, no urine bleaching, no special bathroom procedures. These patients can get off the table and go home and not worry about their post-administration protocol. When I look at that, that puts 002 at the center of what matters to physicians that are treating patients with NMIBC in the United States and abroad. And as the narrative in NMIBC moves, which it will, moves away from heterogeneous single-arm open-label studies conducted across multiple different patient types by multiple different sponsors, we will eventually move away from that narrative to what are these products in the urology setting. And within that context, we believe 002 will be the therapy to beat in NMIBC. So while I'm here, I've talked about our likely first to approval program, the ADVANCED-2 program in BCG-Unresponsive patients. I'll answer now the question, why go after the naïve setting. So to give -- as a reminder, we recently received feedback from the FDA that we could run a randomized controlled study of 002 against investigators' choice of gemcitabine monotherapy or mitomycin monotherapy in an RCT with a primary endpoint of 6-month landmark response and a key secondary of 12-month response rate. So no RFS, no BCG comparator, no Gem/Doce comparator, right? So we're powering against a chemotherapeutic agent that has roughly a 40% complete response rate at 6 months and a 15% complete response rate at 12 months. I just showed you 72 and 50 for 002. So why run that study? Well, of course, the naïve setting, the frontline setting, patients that are BCG eligible that can't get BCG, that's 5x the size of BCG-Unresponsive carcinoma in situ, the single-arm open-label studies that we've all become increasingly very well familiar with. This is 5x the patient population and no one else is running that study. It's Protara and Protara alone. Down the line, as I said, the narrative for NMIBC is going to move from clinical studies to marketed products. INLEXZO is launching. CG is around the corner. You've got ADSTILADRIN. You've got ANKTIVA. Eventually, there'll be no more clinical studies to cross compare to. And what are these products doing to drive adoption in the urology setting that is, again, 80% comprised of the community. With this RCT, and again, in a patient phenotype that is biologically similar regardless of BCG exposure, we'll be generating the first Level 1 evidence RCT of all the independent sponsors bringing monotherapies into the NMIBC setting. When we start talking about payers and when we start talking about sequencing and guidelines for what gets sequenced, what and when, 002 will have Level 1 evidence in the earliest setting besides some of the checkpoints plus BCG. We'll have preferential treatment and guidelines because of that, and we'll have preferential treatment from payers who will be instituting step edits into this setting, they're already doing. So we want to skate to where the puck is going to be. I hate that analogy, but yet I've used it. Payers are going to be deciding who gets used when and in what sequence, and we want to be the first choice for payers and for physicians that are treating patients with NMIBC, irrespective of patient phenotype. So let's move on to lymphatic malformations. For those of you that just need a quick primer, we treat macrocystic lymphatic malformations. These are large voluminous lesions that are filled with lymphatic fluid. They're driven by somatic mutations in the Akt/PI3K/mTOR pathway. But as opposed to the microcystic setting, which you may be familiar with another sponsor that's doing great work out there in lymphatic malformations in a different phenotype, we treat the ones that are balloon-like and large. Let me show you what that looks like. On the left is a child -- these are both children and 2 kids that we've treated in our STARBORN-1 study, which is currently enrolling patients right now and where we've treated last time again, we put data out was in November, about 10 patients, 80% complete response rate across all patients -- I'm sorry, 80% clinical success across all patients, 100% clinical success in patients that were evaluable at the first time point for evaluation, which is at the 8-week time point. Young man on the left has a 1.7 liter cyst, right? That's like a big giant coke bottle. He's 8 years old and has lived with that lesion for his entire life. Never went to school, never enrolled in school, has been home schooled, and his life was dominated by that lesion on his neck. He received 4 doses of 002. It's the most number -- it's the highest number of doses we've given any of the patients or had to give any of the patients that we treated. And on the right, you can see that, that patient has experienced a complete response, a complete resolution of that lesion and that kids life has changed. And that's why we do what we do at this company. It's great to treat oncology. It's an important and big setting. But when you're changing lives like this, it's a real reason to get up out of bed every morning. And again, the child on the right, that's another macrocystic patient that has had, as you can see, visibly a complete resolution of that lesion. So the question that we get, as I remind you is, what is the regulatory path from here? About 10 days ago, we received Breakthrough Therapy designation, Fast Track designation and invitation into CDRP accelerated review of CMC program that the FDA has recently initiated. And in that correspondence with FDA, the FDA asked us to conduct a multidisciplinary meeting to sort of present the program in its totality. To us, that feels that the FDA recognizes that there's a significant unmet need here, that the effect size is unmistakable and that this is a program by definition of the designations that deserves an expedited review. So my partner in the business, Jackie Zummo, is putting together a briefing package for a meeting with the FDA to tackle the multidisciplinary topics. But primary among that will be what do we need to do with this study to get to registration. We believe that we'll have that clarity sometime in -- towards the end of the second quarter of 2026 because if the FDA is saying, talk to us about the totality of your program, we want to talk about the totality of our program. And we want to present as though we are ready for filing. No promises. No idea what they're going to respond to. But if you've got a setting where in 80% of the patients, you're producing a cure like these or a functional cure like these, with 2 doses supported by decades of experience of this exact same compound standard of care for this disease state in Japan, I think you got a pretty good shot when the FDA is saying, "Hey, talk to us under the auspice of Breakthrough Therapy designation," we got a pretty good shot of having a constructive conversation. So we'll be able to provide that clarity that I think the world needs to see in the second quarter of 2026. Finally, the question that we get on LMs, how big is this market opportunity? Because effectively, it's a functional care model. So let's talk about what we see as the market opportunity. And I am greatly -- I am very grateful that our Chief Commercial Officer, Bill Conkling, has helped us sort of talk through what this looks like. So in the United States, there are about 1,400 to 1,800 live births per year. When you're dealing with a functional cure, you're living in an incident model for the most part. So if there's about 1,400 to 1,800 live births with the diagnosis of lymphatic malformations every year, approximately 2/3 to 70% of that are going to be macrocystic or macrocystic dominant mix. That's -- again, that's the phenotype that we treat. Our view is that, that incident model becomes the start of the discussion in the number of patients that you treat. However, there is a prevalence model. And I will tell you that, that's a really tough number to nail down. These are patients that effectively have come in to the seeking treatment pool, not gotten an effective treatment and then moved out of the seeking treatment pool. So how do you encourage them to come back with a targeted immunotherapy that's going to provide a different option for them than surgery or start a therapy. That's the work of our patient advocacy group to remind these patients to find them where they are in their communities and say, "Hey, by the way, don't give up. There's a new therapy on the market that is producing significant effect size that might be appropriate for you." So from our perspective, you can sort of get a significant chunk of that incident market because you're the only approved product in macrocystic disease and start to chip away at that prevalence population, you're talking about 1,000 patients, maybe more per year, right? That's a pretty good rare disease annual patient treatment number. Obviously, very early to talk about price. But I will say this, there's a competitor out there -- not a competitor. There is another sponsor out there in the lymphatic malformation setting that treats microcystic disease. We do not treat micro, we treat macro. But that other company has presented a range of analogs for where they might come in on pricing. And my guidance to the folks out there that are wondering what does this market look like for Protara, the very, very top end of the range of where they're talking about pricing would be the very, very bottom end of the range about where we're thinking pricing for something that offers this level of clinical benefit, this level of long-term benefit to patients who otherwise would undergo pretty significantly impeded quality of life. We think starting the conversation at that top end of that range, pretty standard rare disease pricing. That's where we want to wind up. So we don't have time to talk about our third program, which is actually in Phase III, our IV Choline Chloride program, where we've got a phospholipid substrate replacement therapy that can treat a patient population that numbers about 40,000 patients in the United States. So as you think about Protara from the perspective of an investor, as you look across this, albeit robust portfolio, perhaps it's a little bit less complex today. There are multiple ways to win. Every single one of our programs is in late-stage development, and we believe that we'll start to be getting drug -- I'm sorry, getting FDA approvals for our programs beginning in '27, likely another in '28, likely another in '29 and likely another in 2030. So thank you for your time, and I'll open it up to Q&A.

Thank you very much, Jesse. We'll start with taking questions from the audience, if anyone has a question.

Could you comment what's the CR rate for BCG? And what would it take for you guys to potentially replace it in the high-risk patients? And would you have to run like a head-to-head trial?

Yes. So it's a great question. The BCG label has a 6-month response rate of about 50% and a 12-month response rate of about 45%. Now There have been studies conducted in the contemporary setting where BCG was used as a comparator against BCG plus checkpoint in the frontline setting. And there, those numbers are pretty good, right? So I think about the Pfizer CREST study where the BCG comparator arm had about an 83% complete response rate at 12 months. We're not going to beat that. We're going to be close. We're not going to beat that. And that was really the fundamental argument that we made with FDA. When we went to the FDA, we said, "look, we've -- we're looking and we're presenting 7 years of claims data from Optum. And in that data set, approximately 35% of BCG eligible, so non-refractory, the diagnostic code for a nonrefractory patient seeking treatment. It's about between 10,000 and 12,000 patients as many as 15,000, just to give you a number. Patients per year fit this category of BCG eligible for whatever reason, doesn't get BCG. And so by showing the FDA that these patients exist and showing that what they get instead, about 50% of that 35 get gemcitabine monotherapy, about 30% get mitomycin monotherapy and about 10% get Gem/Doce. We said, "look, that's the comparator that we want to be because I don't know that I need to replace BCG. It's effective. It's well -- generally well tolerated, but there is this other slice of the population that doesn't get it. So we'll compare to gem, we'll compare to mito, and we don't want to be a BCG replacement. We want a BCG alternative for when BCG is not appropriate. And the FDA signed up for that. I think over time, we're going to have to demonstrate that there is a use case there. But so far, what I can tell you is that in that naïve data set that I showed that we published in December, it's about -- there is about 31 patients. About 85% to 90% of those patients came from sites that had BCG, which is small end, you're not going to hang a hat on that. But it shows that in the real world, our own lived experience is that patients who ostensibly could get BCG for some reason, don't, and there's a choice to be made. And so that, I think, is kind of where we see ourselves slotting in. And again, that alone, the BCG eligible doesn't get BCG is at a minimum about 10,000 patients. So we don't have to run the head-to-head for FDA approval here. But I think over time, someone is probably going to run an IIT. And again, I think if you can't get it, here's a really good immunotherapeutic option. Does that help?

All right. Jesse, there's a question I have for you. So for your upcoming data readout in BCG-Unresponsive NMIBC patients this quarter, how are you setting expectations for that?

Yes. The expectation is we would not be surprised if those responses were in the same ballpark as what we demonstrated back in December with our naïve population, which, again, CR at any time is 72%, CR at 12 months of 50%.

That's compelling data right there. And so how quickly do you think like you'll be able to enroll the ADVANCED-2 trial in BCG-Naïve patients?

Yes. So interestingly, look, there are 2 wholesale bacteria used therapeutically under FDA approval in the United States. Actually, ours is not yet FDA approved. So I'm going to be very sorry. There's BCG and there's 002. There's the only 2 bacteria therapeutics. And so there's a lot of rhyming with BCG. Now we activate pretty significantly different pattern recognition pathways. BCG is a TLR4 activator. We're a NOD2 TLR2 activator, different milieu of cytokine up regulation. But it looks, feels, kind of sounds like BCG. And so our experience is that we enroll 5 naïve patients in the U.S. for every 1 unresponsive patient that we enroll. The end that we agreed to with the FDA for ADVANCED-3, we haven't gotten specific. We'll say publicly that it's fewer than 500, comfortably fewer than 500. And so that, in our mind, if we can replicate the enrollment rate that we experienced in that naïve data set, again, 5 naïves for every 1 unresponsive. Our expectation is that we can enroll that study fairly quickly. And that it would be a fast follower to the ADVANCED-2 study, which, again, that's going to be -- enrollment there is going to be complete in the second half of this year.

Now I want to pivot to IV Choline. I know you didn't say much about that. Now that you've initiated your registrational trial in IV Choline, what can we expect from the interim data update expected in the second half of this year?

Yes. Thanks for giving choline shout-out there. So the choline pivotal study is a seamless Phase IIb/III design where we'll start with a dose confirmation lead-in of 24 patients, 8 patients each at 3 different doses. That dose confirmation lead-in of 24 patients, we'll be measuring all the same endpoints, both primary and secondary, as we will in the Phase III seamless expansion with about another 105 patients. The primary endpoint, just -- it's a unique one, but it was actually the FDA suggestion. Primary endpoint is demonstration of elevations without a numerical value assign of choline in serum after administering choline intravenously. So typically, when you administer something intravenously and then you measure that thing, you're likely to see an increase. And so we'll be able to talk about the primary endpoint in the first 24 patients in the middle of 2026. And then because the secondary endpoints, which are a host of different clinical endpoints relative to liver function, relative to muscle function, bone wasting, muscle wasting, a number of sort of clinical endpoints, those are 24-month endpoints. And so you would be able to talk about those secondary clinical endpoints towards the end of 2026, necessarily if you're talking about the primary endpoint in the middle of the year.

Great. Any questions from the audience?

We can wrap it up early, guys. It's Wednesday of JPMorgan. Cocktails, all that sort of stuff. There's no other questions.

All right. I have one last question for you then. So what are you most excited for in 2026?

I am most excited -- I think kind of zooming out, Protara went public in 2020. And they always say, this is my first company as a founder. My co-founder, Jackie, it's her first sort of co-founding company. Everybody always says it's going to take 3x as long as you think it's going to take. And of course, being the type of people that we are, we're like, "well, that's b*******." Well, no, it's true. It does take 3x as long as you think it's going to take. And as I look at sort of this portfolio slide, every single one of these programs is sort of flipping the card. It's not just do you have an idea. It's your idea seems to be working. And now to what degree is that working. We're going to have that sort of understanding across the entire portfolio. So I know you want me to say which one of my programs are I most excited for, but I'm excited that all of them are nearing the end of the journey in terms of what are they? Do the idea work? Does this crazy thing that we started on a whiteboard and a WeWork, does it work? And it kind of feels like it is. And that's what has me most excited.

All right. I'm excited to. All right. Thank you, everyone. This is the end of the presentation and buh-bye.

Go get them.