Protara Therapeutics (Nasdaq: TARA) is expected to deliver interim data for TARA-002 from their ADVANCE-2 trial before year-end (likely at the Society of Urological Oncology annual meeting, December 2-5). These six-month data will include a minimum of ten non-muscle invasive bladder cancer (NMIBC) patients pooled from the study’s two cohorts, BCG-naive and BCG-unresponsive. We have written previously about Protara, highlighting it as an affordable, off-the-radar company that is too often absent when investors and analysts discuss NMIBC. Protara, trading around cash, remains affordable, and these impending data, if strong, could finally insert Protara into the NMIBC discussion. More importantly, these data could be the catalyst to finally close the “gap” between Protara and its larger NMIBC peers.
The Development Gap
NMIBC is a very competitive space, and Protara, based on its stage of development, is currently running fifth in a five-horse race. This race includes an FDA-approved asset from Immunity Bio (Nasdaq: IBRX) and development-stage assets from Johnson & Johnson (NYSE: JNJ), CG Oncology (Nasdaq: CGON), and EnGene Holdings (Nasdaq: ENGN). Although Protara is enrolling in a pivotal BCG-unresponsive study, it is approximately nine to twelve months behind its closest development-stage peer (EnGene). We remind investors that being first doesn’t necessarily mean being best (Mevacor, Zocor, Pravachol, and Lescol were all approved before Lipitor). TARA-002 has several differentiating features that could make it a more appealing commercial product than its more advanced (and complicated) peers.
***Source: Protara’s November Corp Presentation
To further emphasize that the development gap isn’t as crucial as some investors may think, we highlight (again) a comment from a recent sell-side note discussing how NMIBC patients are likely to cycle through several lines of treatment, “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.”
The Data Gap
In April, Protara presented three-month data from their Phase 1 study with TARA-002 showing a 43% complete response (CR) rate in a small number of BCG-unresponsive NMIBC patients. Once again, a 43% CR rate put Protara last, but this time in the data race with its NMIBC peers, where CR rates have ranged from Engene’s 47% on the low end to J&J’s 83% on the high end. However, this isn’t exactly an apples-to-apples comparison because Protara’s data were at three months, and their peers’ data were at six months. That’s what makes Protara’s data release later this quarter so interesting. It will be investors’ first look at six-month data for TARA-002 and allow for a proper comparison versus their peers. It’s important to highlight that Protara’s anticipated data will again come from a small sample size and include several BCG-naive patients. Nonetheless, if Protara can report a ≥50% CR rate at six months with TARA-002 in BCG-unresponsive NMIBC patients, they will have narrowed the data gap with their peers.
The Valuation Gap
Protara, with its $80mm market cap, is again pulling up the rear, but this time, it is in the valuation race with its NMIBC peers. Although J&J is a player in NMIBC, it is clearly not a relevant peer. Immunity Bio and its $3.5b valuation may also be a stretch to call a relevant peer, given the depth of its pipeline beyond NMIBC. CG Oncology is a pure-play NMIBC company with an impressive $2.3b valuation. After its highly successful 2023 IPO, CG remains the “shiny new toy” that has captured investor attention in the NMIBC space. CG is arguably a relevant peer for Protara, but realistically, the valuation gap at this juncture makes the comparison a stretch. That leaves EnGene, a pure-play NMIBC company with a $430mm market cap and less than a year ahead of Protara in development. If Protara can deliver a ≥50% CR rate at six months, data that are arguably equivalent and maybe superior to EnGene’s, should it not carry a market cap in the same range as EnGene?
Extra Reading
We highly recommend that investors interested in Protara spend a few minutes reading Jason Napodano’s excellent piece on the company. Readers will see many parallels in our thinking about Protara. As they say, great minds think alike.
Change is Coming
Most people we speak with feel the outcome of the U.S. election should be net positive for the markets, while the impact on the life sciences is less certain. Our writing is apolitical, so we will refrain from opining on the potential pros and cons of the incoming administration. Nevertheless, change is coming, which could profoundly impact how the FDA operates and how investors look at specific life science sectors.
Forecasting “Sunshine” for Psychedelics
After years of storm clouds, the forecast for psychedelics might be finally improving. As RFK Jr’s comment above demonstrates, the incoming administration in the U.S. could be favorable for the psychedelic sector. Still, there is something more fundamental that could improve the outlook for psychedelics – clinical data. Over the coming 18 months, Phase 3 data will be coming from Mindmed (Nasdaq: MNMD) in generalized anxiety disorder (GAD), Compass Pathways (Nasdaq: CMPS) in treatment-resistant depression (TRD), and Cybin (Nasdaq: CYBN) in major depressive disorder (MDD). However, before any of these pivotal readouts, the first data investors will see under this new, more optimistic climate for psychedelics will be Cybin’s 12-month results from their Phase 2 study with CYB003 (deuterated psilocybin analog) in moderate to severe MDD patients. The company announced it will release the 12-month data and host a webcast on Monday, November 18th. Cybin is unlikely to pre-announce the timing of the data unless they feel they have something compelling to share. So, these data could be the first test to determine whether investors are buying into the improved climate for psychedelics.