We have received numerous questions regarding the performance, or lack thereof, of Protara Therapeutics’ (Nasdaq: TARA) stock following their recent release of updated six- and twelve-month response data from the ongoing ADVANCED-2 study with TARA-002 in patients with BCG-unresponsive non-muscle invasive bladder cancer (NMIBC). Despite the stock’s poor performance, we believe these data were very good, albeit early. Although we were surprised by the market’s reaction to these incrementally positive data, we have some ideas that may explain the stock’s decline and possibly provide reassurance on why we continue to view Protara as an attractive investment.
Facts
Much like the company’s first data release from ADVANCED-2 late last year, this week’s data are very positive, although based on a small sample size. As a reminder, at last December’s Society of Urologic Oncology (SUO) 2024 meeting, Protara announced that TARA-002 had an 80% complete response (CR) rate at any time (4/5 responders) and a 100% CR rate at six months (4/4 responders) in BCG-unresponsive NMIBC patients. In our December 8th note, we wrote, “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%.”
This week’s data, presented at the American Urological Association (AUA) 2025 meeting, were incrementally validating for both any-time and six-month CR rates, while also demonstrating encouraging durability data for TARA-002 out to twelve months. Protara announced that TARA-002 achieved a 100% CR rate at any time (5/5 responders) and a 100% CR rate at six months (5/5 responders). The company also announced that TARA-002 had a 67% CR rate at 12 months (2/3 responders). At this stage, across all CR metrics up to 12 months, TARA-002 has the strongest data among its notable NMIBC peers.
Explanation: Small Sample Size
The clear vulnerability of Protara’s data is the small sample size. The 100% CR rates are undeniably highly encouraging but also unsustainable across a larger sample. Regardless, investors shouldn’t have been surprised that this week’s AUA data would come from a limited number of patients, given that the company only had four patients evaluable at six months in their December SUO data release. With SUO 2024 just 4.5 months ago, the number of patients evaluable at 12 months was always going to be four or fewer. Perhaps investors anticipated more six-month evaluable patients to be available in this week’s release. Still, the company consistently stated that it expected enrollment wouldn’t start meaningfully ramping until early this year. With 17 BCG-unresponsive patients now enrolled, and the company remaining committed to having 25 BCG-unresponsive patients six-month evaluable before year-end (we assume at SUO 2025 in early December), enrollment appears to be ramping as expected. At this pace, approximately six to seven patients per month, the company should reach complete enrollment of around 100 patients by 2Q2025, making top-line data a distinct possibility by the end of 2026, likely at SUO 2026.
Explanation: CIS-only
The primary reason the 100% any-time and six-month CR rates are unsustainable is that these early results were derived from patients with carcinoma in situ (CIS). Simplistically speaking, NMIBC patients can be categorized into two groups: those with CIS and those with CIS and papillary disease (referred to as CIS +Ta/T1). Patients with papillary disease are often more challenging to treat; consequently, response rates tend to be lower in this population. Similar to its peers, Protara anticipates enrolling 20-25% papillary patients in its BCG-unresponsive NMIBC study; however, among the initial five patients reported to date, all have been CIS-only. Again, the fact that the data presented this week at AUA pertains only to CIS patients shouldn’t surprise investors, given that the SUO 2024 data was also exclusively CIS-only.
Some Reassurance Before Our Final Explanation
Let’s speculate on how the data might evolve once papillary patients are enrolled. ADVANCED-2 will enroll approximately 100 patients with BCG-unresponsive NMIBC. Based on Protara’s guidance, we can estimate that around 25 patients will have papillary disease and 75 will have CIS-only. If we examine the papillary population from the BCG-naive group treated with TARA-002 in ADVANCED-2, the any-time CR rate was 60%, which, if extrapolated to the BCG-unresponsive population, translates to 15 CRs out of the 25 papillary patients.
***BCG-naive data from Protara’s AUA 2025 slide deck
Examining the CIS-only population, TARA-002 already has 5 CRs “in the bank” from the data presented at AUA, leaving approximately 70 CIS-only patients for us to estimate. If we use the BCG-naive data to inform us (rather than 100% from the BCG-unresponsive population), akin to how we approached the papillary population, we would apply a 90% CR rate to the remaining 70 patients, resulting in 63 any-time CRs. Based on our rudimentary calculations, TARA-002 achieves a CR rate of 83% at any time in ADVANCED-2. If our rough math is even close to being correct, then Protara has a potentially “best-in-disease” (stealing this terminology from CG) drug in its portfolio. Even if we are off by 5-10% and TARA-002 settles into the mid-70s for any-time CRs, it would still be a highly competitive drug, with distinct ease-of-use and safety advantages, that should lead to broad adoption.
Explanation: CG Stole The Mic
Although we have considered sample size and CIS-only as possible explanations for Protara’s swoon after this week’s data release, the most likely cause is CG Oncology (Nasdaq: CGON) and their drug, cretostimogene, whose data was also presented at the AUA 2025 conference. Ever since its successful 2024 IPO, CG has been the darling of both the sellside and buyside in the NMIBC space. The street may love CG, but from a clinical perspective, Johnson & Johnson’s (NYSE: JNJ) TAR-200 has been leading the data race among development-stage NMIBC companies. Affectionately referred to as the “pretzel”, appropriate given its complexity, this drug-device combination has been setting the efficacy bar that other NMIBC development-stage companies aspire to achieve. That was until AUA, when CG released its updated long-term data, showing slightly superior 12-month CR rates compared to TAR-200. These updated data caused CG’s stock to surge, adding $10/share before settling down to an approximate $6/share gain, which still added approximately $500 million in market cap. As the CG press release this week stated, at this stage, cretostimogene appears to have best-in-disease durability and, given its safety and ease-of-use advantages versus TAR-200, arguably has taken the mantle as the leading development-stage asset for the management of BCG-unresponsive NMIBC from J&J.
CG announcing data on 110 NMIBC patients at AUA 2025 on the same day that Protara announces data on five NMIBC patients, only serves to highlight the development gap between the two companies. This is something we have extensively covered in previous notes. Protara is approximately two years behind J&J and CG and is unlikely to close this development gap in a meaningful way. However, in our opinion, this development gap is more than reflected in the valuation gap between Protara’s $150 million cap and CG’s $2 billion cap.
Sparing Bladders = Multiple Winners
The early indications suggest that TARA-002 is a highly effective drug. At this stage, it could be argued that it has best-in-disease potential. However, patience will be required; TARA-002 is approximately two years behind CG’s cretostimogene and J&J’s TAR-200. One or both of these drugs may have entrenched themselves as first or second-line post-BCG by the time TARA-002 could become commercially available. Nonetheless, we remind investors that NMIBC patients will likely cycle through multiple therapies post-BCG, assuming no disease metastasis, to avoid having their bladders removed. Our regular readers will recognize this quote we have used before from a well-respected sellside analyst when discussing Protara and the NMIBC market, “The critical point to re-emphasize is that these patients generally are not rapidly progressive to metastatic disease, which means they will likely cycle through multiple lines of therapy – creating significant TAMs in 2L (post-BCG) and 3L and even 4L NMIBC….we expect blockbuster product opportunities well into the 4L setting – so plenty of room for all these emerging NMIBC players.”
Although we don’t have a perfect explanation for Protara’s decline following its AUA update, we continue to believe that Protara’s TARA-002 has a good chance of being one of the winners in the NMIBC arms race.
Another Late Year Data Readout to Watch
One of the better-performing micro/small cap biotechs in 2024, Rezolute, Inc. (Nasdaq: RZLT), like many of its peers, has encountered a challenging start in 2025. However, last week, the company made two news announcements that should position it for a healthy rebound as it approaches a significant data readout later this year.
Last week, Rezolute announced an interim futility analysis from its ongoing Phase 3 sunRIZE study with ersodetug for the treatment of congenital hyperinsulinism (cHI). The study’s Data Monitoring Committee (DMC) recommended that the study continue as planned without any need to increase the sample size. This recommendation from the DMC allows the company to maintain its guidance for top-line data by year-end. Rezolute also announced a $97 million follow-on offering last week at $3.25 per share. This deal eliminates a financing overhang that was weighing on the stock and provides the company with a healthy cash runway after top-line data is released later this year.
We suspect Rezolute will be a highly topical name as it approaches top-line data. It possesses many attributes that investors find appealing: a rare disease company with a Phase 3 readout that should offer an opportunity for significant asymmetric returns if successful. Investors interested in learning more about Rezolute can read our September 2024 note, which goes into detail about ersodetug and cHI. As we wrote in that note, “Owning Rezolute in 2025 for the cHI readout will not be easy money. It will come with clinical risk. However, it does have an appealing asymmetric setup, where Phase 3 success could see Rezolute trade at a multiple of its current valuation, potentially repeating its stellar 2024 performance of >300%. We regret missing it in 2024; we don’t want to repeat that in 2025.”