Protara Therapeutics, Inc. Commitments Disclosure

10. Commitments and Contingencies

 

Employment Agreements

 

Executive Employment Agreements

 

The Company’s executive officers have entered into at-will employment agreements.

 

Collaborations and License Agreements

 

Choline License Agreement

 

On September 27, 2017, the Company entered into a license agreement, or the Choline License Agreement, with Alan L. Buchman, or Dr. Buchman. Pursuant to the Choline License Agreement, the Company received from Dr. Buchman the license rights in and to the “Licensed Orphan Designations”, the “Licensed IND”, “Existing Study Data” and the “Licensed Know-How” for one or more of the licensed indications.

 

Certain milestone and royalty payments may also be payable to Dr. Buchman. Regardless of whether development or commercialization is undertaken by the Company under the Choline License Agreement, during the term of the Choline License Agreement, the Company shall pay Dr. Buchman a minimum annual royalty that ranges from $25 to $75. The Company will also pay Dr. Buchman up to $775 in additional milestone payments upon the achievement of various regulatory approval milestones. Further, the Company has an obligation to pay Dr. Buchman sales royalties based on aggregate net sales of IV Choline Chloride in each calendar quarter, with tiered royalty rates ranging from 5.0% to 10.5% of net sales. In the event of development or commercialization activity by any sublicensees, the Company also agreed to pay Dr. Buchman a royalty in the mid-single digit percentage of: (i) net cash receipts, after payment of taxes, received by the Company from sublicensees for their sales of licensed products and (ii) any other consideration received by the Company from such sublicensees; in each case, including a fair monetary value for any transaction that is not a bona fide arms-length transaction or that is for consideration other than monetary. Further, in the event of a sale or transfer of a priority review voucher regarding the license product, regardless of whether any development or commercialization activity is undertaken by the Company or the Company’s sublicensees, the Company agreed to pay Dr. Buchman a milestone payment representing the mid-single digit percentage of: (i) net cash receipts, after payment of taxes and (ii) any other consideration; in each case, received by the Company, the Company’s affiliates, or the Company’s sublicensees, including a fair monetary value for any transaction that is not a bona fide arms-length transaction or that is for consideration other than monetary.

 

During the years ended December 31, 2025 and 2024, the Company recorded research and development expense of $75 and $52, respectively, in connection with the Choline License Agreement.

  

License Agreement

 

On December 22, 2017, the Company entered into an agreement, or the Feinstein Agreement, with The Feinstein Institute for Medical Research, or the Feinstein Institute, a not-for-profit corporation with 50 research labs and 2,500 clinical research studies. Pursuant to the Feinstein Agreement, the Company acquired an exclusive license relating to treatment of fatty liver diseases in humans for which Choline may be an effective therapeutic. In consideration for the rights and license granted, the Feinstein Institute would receive a royalty of one percent (1%) of the first one hundred million dollars ($100,000) of net sales of IV Choline Chloride and a royalty of one and one-half percent (1.5%) of all net sales thereafter. In addition, the Company would pay the Feinstein Institute twelve and one-half percent (12.5%) of net proceeds resulting from agreements entered within two years from the effective date, and seven and one-half percent (7.5%) of net proceeds resulting from agreements entered into thereafter. Pursuant to the Feinstein Agreement additional payments would be due to the Feinstein Institute for license maintenance payments and for meeting milestone events. Pursuant to the Feinstein Agreement, upon the achievement of certain future NDA milestones, the Company would be obligated to remit an aggregate of $275.

 

During each of the years ended December 31, 2025 and 2024, the Company recorded research and development expense of $15 in connection with the Feinstein Agreement.

Sponsored Research and License Agreement

 

On November 28, 2018, the Company entered into a sponsored research and license agreement, or the Iowa Agreement, with the University of Iowa. Pursuant to the Iowa Agreement, the University of Iowa, which is engaged in clinical research to improve the diagnosis and treatment of lymphangioma using a pharmaceutical product (OK-432), would assist the Company in collecting case reports, forms, source data, and safety data available to the University of Iowa in support of the development of the Company’s proprietary Streptococcus Pyogenes investigational product, TARA-002 for the LMs indication. During the term of the services, the Company would generally pay the University of Iowa thirty thousand dollars ($30) per year to fund the project, plus additional amounts upon the realization of certain milestones. More specifically, upon an approval of TARA-002 by the Food and Drug Administration, or the FDA, the Company would pay up to $1,750 to the University of Iowa for meeting these milestones. Furthermore, the Company would pay the University of Iowa royalties of up to 1.75% for net sales ranging from $0 - $25,000, 2.25% for net sales ranging from $25,000 to $50,000, and 2.50% for net sales in excess of $50,000. Pursuant to the Iowa Agreement, the University of Iowa would be entitled to additional payments for the Company achieving annual net sales of product according to the milestones. For annual net sales of product up to $25,000: $62; for annual net sales of product of up to $50,000: $62; and for annual net sales of product of up to $100,000: $125.

 

There were no research and development expenses recognized, pursuant to the Iowa Agreement, during the years ended December 31, 2025 and 2024.

 

Chugai Agreement

 

On June 17, 2019, the Company entered into an agreement, or the Chugai Pharmaceutical Agreement, with Chugai Pharmaceutical Co., LTD, or Chugai Pharmaceutical, a drug manufacturing firm with offices and operations in Japan. Pursuant to the Chugai Pharmaceutical Agreement, Chugai Pharmaceutical would help the Company in its goals to develop and commercialize a therapeutic product, or the New Product, which is comparable to the Chugai Pharmaceutical existing therapeutic product, or the Existing Product. In addition, the Company would be entitled to the use of Chugai Pharmaceutical materials and technical support as necessary. On July 14, 2020, the Company and Chugai Pharmaceutical entered into an amendment, or the Chugai Amendment, to the Chugai Pharmaceutical Agreement, with an effective date of June 30, 2020. The Chugai Amendment extended the date through which Chugai Pharmaceutical will exclusively provide the Existing Product and materials to the Company from June 30, 2020 to June 30, 2021, extended the date through which Chugai Pharmaceutical will not provide materials or technical support to any third-party for the purpose of development and commercialization in a given area from the fifth anniversary to the eleventh anniversary of the original effective date, and provides for further such extensions on the occurrence of certain events and milestones. The amendment further provides that, in addition to the designated fee provided upon the initial indication approval in the Chugai Pharmaceutical Agreement, the Company will pay Chugai Pharmaceutical a designated fee for each additional indication approval. The Company is obligated to Chugai Pharmaceutical for certain payments upon the completion of agreed upon milestones. As consideration for Chugai Pharmaceutical’s performance under the Chugai Pharmaceutical Agreement, the Company agreed to pay Chugai Pharmaceutical a payment in the low, single-digit millions related to such initial indication approval, which payment will be made in two installments with an initial payment in July 2020, and the remaining majority of the payment payable upon FDA approval of the New Product.

 

There were no research and development expenses recognized, pursuant to the Chugai Pharmaceutical Agreement, during the years ended December 31, 2025 and 2024.

 

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.