Last week, Protara Therapeutics (Nasdaq: TARA) reported interim data from their ongoing ADVANCE-2 study with TARA-002 in patients with non-muscle invasive bladder cancer (NMIBC). As we have written extensively about in the past (dating back to December 2023), these data were critically important for Protara to finally insert itself into the NMIBC discussion amongst investors and close the data and valuation gap with its larger NMIBC peers. Protara didn’t disappoint, with last week’s data demonstrating a compelling 70% (14/20) anytime complete response (CR) rate across BCG-naive and BCG-unresponsive NMIBC patients. Importantly, the BCG-unresponsive patients, where most investors are focused, had an 80% (4/5) any-time CR rate. These data, albeit from a small sample size, are highly competitive with Protara’s larger NMIBC peers. Yet, even after the stock moved >75% off the data, the company, with its approximate $200mm cap, continues to trade at a deep discount to its peers.
Inserting Themselves Into the Discussion
Investors following the NMIBC space can be forgiven if they hadn’t heard of Protara before last week (although this wouldn’t have happened if they had read our notes). Protara has been largely ignored by the sell-side, and the corporate presentations for other development-stage NMIBC companies, such as CG Oncology (Nasdaq: CGON) and enGene (Nasdaq: ENGN), completely omit TARA-002 when they discuss the competitive landscape.
***enGene November corporate deck
TARA-002’s 80% any-time CR rate puts it squarely in the conversation with the top development and commercial stage assets for BCG-unresponsive patients. Furthermore, while again fully acknowledging the small sample size, TARA-002’s 100% CR rate at six months is arguably even more impressive than the anytime CR rate when considering the next best six-month CR rate among competitive products is CG Oncology’s cretostimogene with 65%.
***Protara December 4th Corporate Deck
Despite the quality of the data, it is unlikely that Protara’s NMIBC peers will suddenly insert TARA-002 into their discussion around competition, but the sell-side and even some media seemed interested in broadening their discussion. On last week’s Biotech Hangout on X, Josh Schimmer of Cantor, when discussing the market’s reaction to CG Oncology’s BOND-003 data, juxtaposed it with investors’ reaction to Protara’s “evolving and looking competitive” data (41:00 min mark). This piece below by Madeleine Armstrong in ApexOnco is also a good read.
What’s Next?
These early, competitive data must be replicated in a larger sample size. That means Protara needs to push the pace of enrolment. On their conference call last week, Protara management said they will have over 25 sites active in the U.S. by the end of the year and 50 sites active globally by the end of 2025 to meet their target enrolment of approximately 100 NMIBC patients in their registrational BCG-unresponsive arm. Activating ex-U.S. sites will be critical to pushing the pace of enrolment because many countries outside the U.S. use alternative strains of BCG, making BCG more available than in the U.S. (recall the U.S. has been in a chronic BCG shortage for years), resulting in more BCG-unresponsive patients eligible to be enrolled.
The next NMIBC data investors will see from Protara will be mid-2025, when the company will report 12-month data. This interim look should include a minimum of 18 patients (14 BCG-naive and 4 BCG-unresponsive) evaluable at 12 months and likely a few more six-month evaluable BCG-unresponsive patients. The bigger data reveal will come in late 2025 when the company has guided it will report six-month results from 25 BCG-unresponsive NMIBC patients.
BCG & TARA-002 – Kissing Cousins
BCG is the gold standard treatment for high-risk NMIBC. It is effective and, importantly, cheap. Urological oncologists (UOs) are familiar with and comfortable using BCG. However, as mentioned above, BCG has been in chronic short supply for years. Merck, the sole supplier of BCG (TICE strain) in the U.S., is building a new manufacturing facility to ramp up its BCG supply, but its impact may not be felt for several years. During the supply shortage, UOs have had to get creative in treating their high-risk NMIBC patients while managing their BCG supply. It is common to see UOs use a full dose of BCG during the six-week induction phase of a patient’s treatment but reduce the BCG dose or duration for the maintenance phase (supposed to be three years).
TARA-002, of all the new products in development for NMIBC (high risk, high grade), is the most BCG-like. It has a simple instillation process, similar to BCG, and, like BCG, it has the potential to be used systemically (also known as priming). Last week’s BCG-naive data suggest that TARA-002 has an efficacy (67% CR rate) and safety profile similar to BCG.
During last week’s conference call, Protara’s CEO Jesse Shefferman said they plan to meet with FDA to discuss their BCG-naive program. We don’t know the company’s motives for such a meeting, but they are clearly contemplating a path forward in the naive setting (BCG induction, TARA-002 maintenance?). In the meantime, the company has guided that they will complete enrolment in their BCG naive arm of ADVANCE-2 in early 2025, which means investors will likely see those data in the company’s scheduled midyear update.
Rare Disease Company?
Lost in all of the recent noise around NMIBC is Protara’s rare disease pipeline. As we have written previously, TARA-002 is biosimilar to Japanese pharma giant Chugai Pharmaceutical’s OK-432. In Japan, OK-432 is approved for the rare pediatric disease, lymphatic malformations (LM). Protara is currently running a Phase 2 study in macrocystic and mixed-cystic LM. The company has already released data from the study’s first cohort, where two of three patients treated with TARA-002 achieved a complete response. Additional data from this study are expected in 1H2025. TARA-002 has been granted rare pediatric drug designation by FDA, making it eligible for a priority review voucher if approved.
Something we have highlighted in a previous note but warrants repeating is the anticipated RTO transaction between Palvella Therapeutics, whose lead program is also in LM, and Pieris Pharmaceuticals (Nasdaq: PIRS). Palvella is focused on microcystic malformations, an even smaller population than the macrocystic malformations that Protara is studying. Palvella is enrolling a Phase 3 study, whereas Protara is in Phase 2. The merger is expected to be completed this month, and Palvella’s post-merger valuation is expected to be >$200mm. Just saying….
Protara is also expected to initiate a pivotal study for their IV Choline program in patients dependent on parenteral support (PS) in early 2025. The company announced earlier this year that FDA agreed to a PK-based endpoint (change in plasma choline levels at week eight) for the pivotal study. Based on an earlier study run by an independent academic institution, the company has data demonstrating that IV choline had a statistically significant improvement in plasma-free choline vs placebo.
IV Choline appears to be a low-risk program, but we question how it fits into Protara’s pipeline, given the increased emphasis that will be placed on NMIBC. Therefore, we wouldn’t be surprised if Protara monetized this program sometime in 2025.
Final Thoughts
We concluded our first note (December 2023) on Protara by saying, “We are hesitant to call any micro-cap development-stage biotech a good value, but it’s a label that seems to fit Protara.” At the time, Protara had a market cap of approximately $35mm. With strong NMIBC data in hand today, Protara, trading at $200mm, is still only valued at 50% of its closest NMIBC peer. It has a pipeline with two appealing, relatively de-risked, rare disease programs and a healthy cadence of clinical news expected throughout 2025. We would argue that Protara remains a good value today.