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ArTara Therapeutics, Inc. Index to Consolidated Financial Statements
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As filed with the Securities and Exchange Commission on November 6, 2019

Registration No. 333-            


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933



Proteon Therapeutics, Inc.
(Exact name of Registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  2836
(Primary Standard Industrial
Classification Code Number)
  20-4580525
(I.R.S. Employer
Identification Number)

200 West Street
Waltham, MA 02451
(781) 890-0102
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

Timothy P. Noyes
President and Chief Executive Officer
Proteon Therapeutics, Inc.
200 West Street
Waltham, MA 02451
(781) 890-0102 x1021
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Please send copies of all communications to:

Julio E. Vega, Esq.
Morgan, Lewis & Bockius LLP
One Federal Street
Boston, MA 02110
(617) 951-8000

 

Jesse Shefferman
President and Chief Executive Officer
ArTara Therapeutics, Inc.
1 Little W. 12th Street
New York, NY 10014
(646) 844-0337

 

Ryan Sansom, Esq.
Karen Deschaine, Esq.
Rama Padmanabhan, Esq.
Cooley LLP
500 Boylston Street, 14th Floor
Boston, MA 02116
(617) 937-2300

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

            If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.    o

            If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

            If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

            Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company ý

Emerging growth company ý

            If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    o

            If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

            Exchange Act Rule 13(e)-4(i) (Cross-Border Issuer Tender Offer)    o

            Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)    o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of
Security Being Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price
Per Share

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Common stock, $0.001 par value per share

  2,853,397   N/A   $20,000,902.98   $2,596.12

 

(1)
Relates to common stock, $0.001 par value per share, of Proteon Therapeutics, Inc., a Delaware corporation ("Proteon"), issuable to holders of common stock, $0.0001 par value per share, of ArTara Therapeutics, Inc., a Delaware corporation ("ArTara"), in the proposed merger of REM 1 Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of Proteon, with and into ArTara (the "Merger"). The amount of Proteon common stock to be registered is based on the estimated number of shares of Proteon common stock that are expected to be issued pursuant to the Merger, after taking into account the effect of a reverse stock split of Proteon common stock, assuming an exchange ratio of 0.191196 shares of Proteon common stock for each outstanding share of ArTara common stock.

(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended, based upon the estimated book value of the ArTara securities to be exchanged in the Merger. ArTara is a private company, and no market exists for its securities.

(3)
This fee has been calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended.



            The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this proxy statement/prospectus/information statement is not complete and may be changed. Proteon may not sell its securities pursuant to the proposed transactions until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus/information statement is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION—DATED NOVEMBER 6, 2019


PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Proteon Therapeutics, Inc. and ArTara Therapeutics, Inc.:

         Proteon Therapeutics, Inc. ("Proteon") and ArTara Therapeutics, Inc. ("ArTara") have entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), pursuant to which a wholly owned subsidiary of Proteon will merge with and into ArTara, with ArTara surviving as a wholly owned subsidiary of Proteon (the "Merger"). The Merger will result in a clinical-stage biopharmaceutical company focused on developing a pipeline of innovative treatments for rare and specialty diseases with significant unmet therapeutic needs, including ArTara's current development programs focused on the treatment of rare diseases in structural and connective tissues as well as rare hepatology and metabolic disorders.

         At the effective time of the Merger (the "Effective Time"), each share of common stock of ArTara, $0.0001 par value ("ArTara common stock"), will be converted into the right to receive                 shares of common stock of Proteon, $0.001 par value ("Proteon common stock"), subject to adjustment for the reverse stock split of Proteon common stock to be implemented prior to the consummation of the Merger as discussed in this proxy statement/prospectus/information statement, and further adjusted based on Proteon's net cash immediately prior to the closing of the Merger. Proteon will assume outstanding and unexercised options to purchase shares of ArTara capital stock, and in connection with the Merger they will be converted into options to purchase shares of Proteon common stock, and any unvested ArTara restricted stock awards, which will be exchanged for shares of Proteon's common stock to be unvested to the same extent as such ArTara restricted stock awards and subject to the same restrictions as such ArTara restricted stock awards. At the Effective Time, Proteon's stockholders will continue to own and hold their then existing shares of Proteon common stock, subject to adjustment for the reverse stock split. As of immediately prior to the Effective Time, all outstanding and unexercised options to purchase shares of Proteon common stock will be cancelled and have no further force and effect. In connection with the Merger, on September 23, 2019, Proteon entered into a subscription agreement (the "Subscription Agreement") with certain institutional investors (the "Investors") pursuant to which, among other things, Proteon agreed to issue to the Investors shares of Proteon Series 1 Convertible Non-Voting Preferrred Stock and/or Proteon common stock immediately following the Merger in a private placement transaction for an aggregate purchase price of approximately $42.5 million (the "Private Placement"). Immediately after the Private Placement, Proteon will convert all outstanding shares of Proteon's Series A Convertible Preferred Stock into shares of Proteon common stock (the "Series A Preferred Automatic Conversion"). Immediately after the Merger, after giving effect to the Private Placement and the Series A Preferred Automatic Conversion, the holders of former ArTara capital stock are expected to hold approximately 28.67% of the Proteon capital stock on a fully diluted basis and the holders of Proteon common stock (pre-Merger) are expected to hold approximately 10.39% of the Proteon capital stock on a fully diluted basis.

         Shares of Proteon's common stock are currently listed on The Nasdaq Stock Market LLC ("Nasdaq") under the symbol "PRTO." Prior to consummation of the Merger, Proteon intends to file an initial listing application with Nasdaq pursuant to Nasdaq's "reverse merger" rules. After completion of the Merger, Proteon will be renamed ArTara Therapeutics, Inc. and expects to trade on Nasdaq under the symbol "TARA." On                    , 2019, the last trading day before the date of this proxy statement/prospectus/information statement, the closing sale price of Proteon's common stock on Nasdaq was $            per share.

         Proteon is holding a special meeting of its stockholders (the "Proteon special meeting") in order to obtain the stockholder approvals necessary to complete the Merger, the Private Placement and related matters. At the Proteon special meeting, which will be held at 9:00 a.m., local time, on                    , 2019 at the offices of Morgan, Lewis & Bockius, LLP located at One Federal Street, Boston, MA 02110, unless postponed or adjourned to a later date, Proteon will ask its common stockholders to, among other things:


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         Please refer to the attached proxy statement/prospectus/information statement for further information with respect to the business to be transacted at the Proteon special meeting. As described in the accompanying proxy statement/prospectus/information statement, certain of ArTara's stockholders who in the aggregate own approximately 99.29% of the shares of ArTara common stock, and certain of Proteon's stockholders who in the aggregate own approximately 17.64% of the shares of Proteon common stock, in each case, outstanding as of the date of the Merger Agreement, are parties to support agreements with Proteon and ArTara, whereby such stockholders have agreed to vote their shares in favor of the adoption or approval, among other things, of the Merger Agreement and the approval of the transactions contemplated therein, including the Merger, the issuance of shares of Proteon common stock to ArTara's stockholders, the change of control resulting from the Merger and an amendment to the Proteon sixth amended and restated certificate of incorporation to effect the Series A Preferred Automatic Conversion, subject to the terms of the support agreements.

         In addition, following the effectiveness of the registration statement on Form S-4 (the "Registration Statement"), of which this proxy statement/prospectus/information statement is a part, and pursuant to the conditions of the Merger Agreement and the support agreements, ArTara's stockholders who are party to the support agreements will each execute an action by written consent of ArTara's stockholders, referred to as the written consent, adopting the Merger Agreement, thereby approving the transactions contemplated thereby, including the Merger. No meeting of ArTara's stockholders will be held; all of ArTara's stockholders will have the opportunity to elect to adopt the Merger Agreement, thereby approving the Merger and related transactions, by signing and returning to ArTara a written consent once this Registration Statement is declared effective by the Securities and Exchange Commission.

         After careful consideration, Proteon's board of directors has unanimously (i) determined that the Merger and all related transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, Proteon and its stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated therein and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its stockholders vote "FOR" Proposal Nos. 1, 2, 3, 4 and 5.

         After careful consideration, ArTara's board of directors has unanimously (i) determined that the Merger and all related transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, ArTara and its stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated therein and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that each ArTara stockholder sign and return the written consent, indicating its (x) adoption of the Merger Agreement and approval of the transactions contemplated thereby, (y) acknowledgement that the approval given is irrevocable and that such stockholder is aware of its rights to demand appraisal for its shares pursuant to Section 262 of the General Corporation Law of the State of Delaware ("DGCL"), and that such stockholder has received and read a copy of Section 262 of the DGCL, and (z) acknowledgement that by its approval of the Merger it is not entitled to appraisal rights with respect to its shares in connection with the Merger and thereby waives any rights to receive payment of the fair value of its capital stock under the DGCL.

         More information about Proteon, ArTara and the proposed transaction is contained in this proxy statement/prospectus/information statement. Proteon and ArTara urge you to read the accompanying proxy statement/prospectus/information statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE 31.

         Proteon and ArTara are excited about the opportunities the Merger brings to Proteon's and ArTara's stockholders, and thank you for your consideration and continued support.


Timothy Noyes
President and Chief Executive Officer
Proteon Therapeutics, Inc.

 

Jesse Shefferman
Chief Executive Officer
ArTara Therapeutics, Inc.

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus/information statement. Any representation to the contrary is a criminal offense.

         The accompanying proxy statement/prospectus/information statement is dated                    , 2019, and is first being mailed to Proteon's and ArTara's stockholders on or about                     , 2019.


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PRELIMINARY—SUBJECT TO COMPLETION—DATED NOVEMBER 6, 2019


Proteon Therapeutics, Inc.
200 West Street
Waltham, MA 02451

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On                    , 2019

Dear Stockholder of Proteon:

        On behalf of the board of directors of Proteon Therapeutics, Inc., a Delaware corporation ("Proteon"), we are pleased to deliver this proxy statement/prospectus/information statement for a special meeting of stockholders of Proteon (the "Proteon special meeting") and for the proposed merger between Proteon and ArTara Therapeutics, Inc., a Delaware corporation ("ArTara"), pursuant to which REM 1 Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of Proteon, will merge with and into ArTara, with ArTara surviving as a wholly owned subsidiary of Proteon (the "Merger"). In connection with the Merger, on September 23, 2019, Proteon entered into a subscription agreement with certain institutional investors (the "Investors"), pursuant to which, among other things, Proteon agreed to issue to the Investors shares of Proteon Series 1 Convertible Non-Voting Preferrred Stock and/or shares of Proteon common stock immediately following the Merger in a private placement transaction for an aggregate purchase price of approximately $42.5 million (the "Private Placement"). The Proteon special meeting will be held on                    , 2019, at 9:00 a.m. local time at the offices of Morgan, Lewis & Bockius, LLP located at One Federal Street, Boston, MA 02210 for the following purposes:

        Please refer to the attached proxy statement/prospectus/information statement for further information with respect to the business to be transacted at the Proteon special meeting. The board of directors of Proteon (the "Proteon Board") has fixed November 12, 2019, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Proteon special meeting and any adjournment or postponement thereof. Only holders of record of shares of Proteon common stock at the close of business on the record date are entitled to notice of, and to vote at, the Proteon special meeting. At the close of business on the record date, Proteon had                shares of common stock outstanding and entitled to vote. A complete list of such stockholders entitled to vote at the Proteon


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special meeting will be available for examination at the Proteon offices in Waltham, Massachusetts during normal business hours for a period of ten days prior to the Proteon special meeting.

        Your vote is important. Approval of Proposal Nos. 1 and 3 requires the affirmative vote of holders of a majority of Proteon common stock outstanding as of the record date for the Proteon special meeting. Approval of Proposal Nos. 2, 4 and 5 requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Proteon special meeting and entitled to vote thereupon. Each of Proposal Nos. 1, 2 and 3 is a condition to the consummation of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3.

        Even if you plan to attend the Proteon special meeting in person, Proteon requests that you sign and return the enclosed proxy card to ensure that your shares will be represented at the Proteon special meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of adoption of each of the proposals.

        THE PROTEON BOARD HAS UNANIMOUSLY DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, PROTEON AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED EACH SUCH PROPOSAL. THE PROTEON BOARD UNANIMOUSLY RECOMMENDS THAT PROTEON'S COMMON STOCKHOLDERS VOTE "FOR" EACH SUCH PROPOSAL.

By Order of the Proteon Board of Directors,

Timothy Noyes
President and Chief Executive Officer
Waltham, Massachusetts
                    , 2019


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REFERENCES TO ADDITIONAL INFORMATION

        This proxy statement/prospectus/information statement incorporates important business and financial information about Proteon that is not included in or delivered with this document. You may obtain this information without charge through the SEC website (www.sec.gov) or upon your written or oral request by contacting Proteon Therapeutics, Inc., Attention Investor Relations, 200 West Street, Waltham, MA 02451 or by calling (781) 890-0102.

        You may also request additional copies from Proteon's proxy solicitor using the following contact information:

Georgeson LLC
1290 Avenue of the Americas, 9th Floor
New York, NY 10104
Stockholders Call Toll-Free: 1-800-868-1390

        To ensure timely delivery of these documents, any request should be made no later than                        , 2019 to receive them before the special meeting.

        For additional details about where you can find information about Proteon, please see the section titled "Where You Can Find More Information" in this proxy statement/prospectus/information statement.



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  Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER

    1  

PROSPECTUS SUMMARY

    11  

SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

    24  

MARKET PRICE AND DIVIDEND INFORMATION

    30  

RISK FACTORS

    31  

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

    89  

THE SPECIAL MEETING OF PROTEON'S STOCKHOLDERS

    91  

THE MERGER

    95  

THE MERGER AGREEMENT

    138  

AGREEMENTS RELATED TO THE MERGER

    163  

MATTERS BEING SUBMITTED TO A VOTE OF PROTEON'S STOCKHOLDERS

    165  

PROPOSAL NO. 1: APPROVAL OF AN AMENDMENT TO THE SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF PROTEON EFFECTING THE REVERSE SPLIT

    165  

PROPOSAL NO. 2: APPROVAL OF (I) THE ISSUANCE OF SHARES OF PROTEON CAPITAL STOCK PURSUANT TO THE MERGER AND THE PRIVATE PLACEMENT, AND (II) THE CHANGE OF CONTROL RESULTING FROM THE MERGER AND THE PRIVATE PLACEMENT

    172  

PROPOSAL NO. 3: APPROVAL OF AN AMENDMENT TO THE SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF PROTEON EFFECTING THE SERIES A PREFERRED AUTOMATIC CONVERSION

    173  

PROPOSAL NO. 4: APPROVAL OF AN AMENDMENT TO THE PROTEON AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

    174  

PROPOSAL NO. 5: APPROVAL OF POSSIBLE ADJOURNMENT OF THE PROTEON SPECIAL MEETING

    183  

DESCRIPTION OF PROTEON'S BUSINESS

    184  

DESCRIPTION OF ARTARA'S BUSINESS

    189  

PROTEON MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    224  

ARTARA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    234  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

    241  

MANAGEMENT FOLLOWING THE MERGER

    242  

EXECUTIVE COMPENSATION OF ARTARA

    248  

RELATED PARTY TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED COMPANY

    253  

DESCRIPTION OF PROTEON CAPITAL STOCK

    256  

COMPARISON OF RIGHTS OF HOLDERS OF ARTARA STOCK AND PROTEON STOCK

    261  

PRINCIPAL STOCKHOLDERS OF PROTEON

    270  

PRINCIPAL STOCKHOLDERS OF ARTARA

    274  

PRINCIPAL STOCKHOLDERS OF THE COMBINED COMPANY

    276  

LEGAL MATTERS

    279  

EXPERTS

    279  

WHERE YOU CAN FIND MORE INFORMATION

    279  

PRO FORMA COMBINED INDEX TO FINANCIAL STATEMENTS

    PF-1  

PROTEON THERAPEUTICS, INC. INDEX TO FINANCIAL STATEMENTS

    PRTO K-1  

i


 
  Page  

ARTARA THERAPEUTICS, INC. INDEX TO FINANCIAL STATEMENTS

    TARA-2  

ANNEX A—AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

    A-1  

ANNEX B—OPTION OF PROTEON'S FINANCIAL ADVISOR DATED SEPTEMBER 22, 2019

    B-1  

ANNEX C—APPRAISAL RIGHTS (SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW)

    C-1  

ANNEX D—AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

    D-1  

ANNEX E—AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN, AS AMENDED

    E-1  

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QUESTIONS AND ANSWERS ABOUT THE MERGER

        Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus/information statement does not give effect to the proposed reverse stock split (the "Reverse Split") of common stock of Proteon Therapeutics, Inc. ("Proteon"), as described in Proposal No. 1 beginning on page 165 in this proxy statement/prospectus/information statement.

        The following section provides answers to frequently asked questions about the proposed merger transaction. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

Q:
What is the Merger?

A:
Proteon, REM 1 Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of Proteon ("Merger Sub"), and ArTara Therapeutics, Inc. ("ArTara") entered into the Agreement and Plan of Merger and Reorganization on September 23, 2019 (the "Merger Agreement"). The Merger Agreement, as it may be amended from time to time, contains the terms and conditions of the proposed merger transaction between Proteon and ArTara. Under the Merger Agreement, Merger Sub will merge with and into ArTara, with ArTara surviving as a wholly owned subsidiary of Proteon. This transaction is referred to as the "Merger."

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Q:
What will happen to Proteon if, for any reason, the Merger does not close?

A:
If, for any reason, the Merger does not close, the Proteon Board may elect to, among other things, attempt to sell or otherwise dispose of the various assets of Proteon, dissolve and liquidate its assets or commence bankruptcy proceedings. Under certain circumstances, Proteon may be obligated to pay ArTara a termination fee of $750,000 or reimburse certain expenses of ArTara up to $350,000, as more fully described in the section titled "The Merger Agreement—Termination and Termination Fees" in this proxy statement/prospectus/information statement. If Proteon decides to dissolve and liquidate its assets, Proteon would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims. There can be no assurances as to the amount or timing of available cash left to distribute to stockholders after paying the debts and other obligations of Proteon and setting aside funds for reserves.

Q:
Why are the two companies proposing to merge?

A:
The Merger will result in a clinical-stage biopharmaceutical company focused on developing a pipeline of innovative treatments for rare and specialty diseases with significant unmet therapeutic needs, including ArTara's current development programs focused on the treatment of rare diseases in structural and connective tissues as well as rare hepatology and metabolic disorders. For a discussion of Proteon's and ArTara's reasons for the Merger, please see the section titled "The Merger—Proteon Reasons for the Merger" and "The Merger—ArTara Reasons for the Merger" in this proxy statement/prospectus/information statement.

Q:
Why am I receiving this proxy statement/prospectus/information statement?

A:
You are receiving this proxy statement/prospectus/information statement because you have been identified as a common stockholder of Proteon as of the record date, or a stockholder of ArTara eligible to execute the ArTara written consent. If you are a common stockholder of Proteon, you are entitled to vote at the special meeting of stockholders of Proteon (the "Proteon special meeting"), which has been called for the purpose of approving the following proposals:

1.
the amendment of Proteon's sixth amended and restated certificate of incorporation to effect, immediately prior to the effectiveness of the Merger, the Reverse Split at a ratio within the range between 1-for-30 and 1-for-50 (with such ratio to be mutually agreed upon by Proteon and ArTara);

2.
(i) the issuance of shares of Proteon capital stock pursuant to the Merger and the Private Placement, which shares collectively will represent (or be convertible into) more than 20% of the shares of Proteon common stock outstanding immediately prior to the Merger, and (ii) the

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Q:
What is required to consummate the Merger?

A:
To consummate the Merger, Proteon's common stockholders must approve the Closing Proteon Stockholder Matters (Proposal Nos. 1, 2 and 3 above) and ArTara's common stockholders must approve the ArTara Stockholder Matters (items (i), (ii), and (iii) above).

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Q:
What proposals will be voted on at the Proteon special meeting, other than the Closing Proteon Stockholder Matters?

A:
At the Proteon special meeting, the holders of Proteon common stock will also be asked to consider the following proposals, along with any other business that may properly come before the Proteon special meeting or any adjournment or postponement thereof.

Proposal No. 4 to approve the EIP Amendment; and

Proposal No. 5 to approve a postponement or adjournment of the Proteon special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4.
Q:
What will ArTara's stockholders and optionholders receive in the Merger?

A:
Proteon will assume outstanding and unexercised options to purchase shares of ArTara capital stock, and in connection with the Merger such options will be converted into options to purchase shares of Proteon's common stock, with the number of Proteon shares subject to such option, and the exercise price, being appropriately adjusted to reflect the Exchange Ratio, and any unvested ArTara restricted stock awards, which will be exchanged for shares of Proteon's common stock to be unvested to the same extent as such ArTara restricted stock awards and subject to the same restrictions as such ArTara restricted stock awards. For a complete description of what ArTara's stockholders and option holders will receive in the Merger, please see the section titled "The Merger Agreement—Merger Consideration" in this proxy statement/prospectus/information statement.

Q:
What will Proteon's stockholders and option holders receive in the Merger?

A:
At the Effective Time, and after giving effect to the Series A Preferred Automatic Conversion, Proteon's stockholders will continue to own and hold their existing shares of Proteon common stock. All outstanding and unexercised options to purchase shares of Proteon's common stock, other than certain options issued to certain consultants of Proteon, will be cancelled for no consideration immediately prior to the Effective Time.

Q:
Who will be the directors of Proteon following the Merger?

A:
At the Effective Time, the combined company is expected to initially have a seven-member board of directors, comprised of (a) Luke Beshar, Scott Braunstein, M.D., Roger Garceau, M.D., Michael Solomon, Ph.D. and an additional member to be added after the filing of this Registration Statement, each as an ArTara designee, (b)                     , as a Proteon designee and (c) Jesse Shefferman as a director and chief executive officer of the combined company, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation

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Q:
Who will be the executive officers of Proteon following the Merger?

A:
Immediately following the Merger, the executive management team of the combined company is expected to be comprised of the following individuals with such additional officers as may be added by ArTara or the combined company:
Name
  Position with the Combined Company   Current Position

Jesse Shefferman

  Chief Executive Officer, President and Director   Chief Executive Officer of ArTara

Jacqueline Zummo, Ph.D.,
MPH, MBA

 

Senior Vice President, Research
Operations

 

Vice President, Research Operations of
ArTara

Julio Casoy, M.D. 

 

Chief Medical Officer

 

Chief Medical Officer of ArTara

Q:
As a stockholder of Proteon, how does the Proteon Board recommend that I vote?

A:
After careful consideration, the Proteon Board unanimously recommends that the Proteon common stockholders vote:

"FOR" Proposal No. 1 to approve an amendment to the sixth amended and restated certificate of incorporation of Proteon to effect the Reverse Split;

"FOR" Proposal No. 2 to approve (i) the issuance of shares of Proteon capital stock pursuant to the Merger and the Private Placement, which shares collectively will represent (or be convertible into) more than 20% of the shares of Proteon common stock outstanding immediately prior to the Merger, and (ii) the change of control resulting from the Merger and the Private Placement, pursuant to Nasdaq Listing Rules 5635(a) and 5635(b), respectively;

"FOR" Proposal No. 3 to approve an amendment to the sixth amended and restated certificate of incorporation of Proteon to effect the Series A Preferred Automatic Conversion immediately following the consummation of the Private Placement;

"FOR" Proposal No. 4 to approve the EIP Amendment; and

"FOR" Proposal No. 5 to adjourn the special meeting, if necessary to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4.
Q:
How many votes are needed to approve each proposal?

A:
Approval of Proposal Nos. 1 and 3 requires the affirmative vote of holders of a majority of Proteon common stock outstanding as of the record date for the Proteon special meeting. Approval of Proposal Nos. 2, 4 and 5 requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Proteon special meeting and entitled to vote thereupon.

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Q:
As a stockholder of ArTara, how does the ArTara Board recommend that I vote?

A:
After careful consideration, the ArTara Board unanimously recommends that the ArTara stockholders execute the written consent indicating their vote in favor of the ArTara Stockholder Matters.

Q:
What risks should I consider in deciding whether to vote in favor of the Proteon Stockholder Matters or to execute and return the written consent, as applicable?

A:
You should carefully review the section of the proxy statement/prospectus/information statement titled "Risk Factors," which sets forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the combined company's business will be subject, and risks and uncertainties to which each of Proteon and ArTara, as an independent company, is subject.

Q:
When do you expect the Merger to be consummated?

A:
We anticipate that the Merger will occur during the fourth quarter of 2019, soon after the Proteon special meeting to be held on                , 2019 but we cannot predict the exact timing. For more information, please see the section titled "The Merger Agreement—Conditions to the Completion of the Merger" in this proxy statement/prospectus/information statement.

Q:
What are the material U.S. federal income tax consequences of the Merger to U.S. Holders of ArTara shares?

A:
Proteon and ArTara intend the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as described in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger" in this proxy statement/prospectus/information statement. Assuming the Merger constitutes a reorganization, subject to the limitations and qualifications described in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger" in this proxy statement/prospectus/information statement, ArTara stockholders generally should not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of Proteon common stock issued in connection with the Merger (other than in respect of cash received in lieu of fractional shares). Each ArTara stockholder who receives cash in lieu of a fractional share of Proteon common stock should generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received in lieu of such fractional share and the stockholder's tax basis allocable to such fractional share.
Q:
What are the material U.S. federal income tax consequences of the Reverse Split to Proteon U.S. Holders?

A:
The Reverse Split should constitute a "recapitalization" for U.S. federal income tax purposes. As a result, a Proteon stockholder who is a U.S. holder (as defined in the section titled "Matters Being

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Q:
What do I need to do now?

A:
Proteon and ArTara urge you to read this proxy statement/prospectus/information statement carefully, including its annexes and information incorporated herein, and to consider how the Merger affects you.
Q:
What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?

A:
If you are a common stockholder of Proteon, the failure to return your proxy card or otherwise provide proxy instructions (a) will have the same effect as voting against each of Proposal Nos. 1 through 5 and (b) your shares will not be counted for purposes of determining whether a quorum is present at the Proteon special meeting.

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Q:
When and where is the special meeting of Proteon's stockholders?

A:
The Proteon special meeting will be held at 9:00 a.m., local time, on                    , 2019 at the offices of Morgan, Lewis & Bockius, LLP located at One Federal Street, Boston, MA 02110, unless postponed or adjourned to a later date. Subject to space availability, all of Proteon's stockholders as of the record date, or their duly appointed proxies, may attend the Proteon special meeting.

Q:
May I vote in person at the special meeting of stockholders of Proteon?

A:
If your shares of Proteon common stock are registered directly in your name with Proteon's transfer agent as of the record date, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by Proteon. If you are a stockholder of record of Proteon, you may attend the Proteon special meeting and vote your shares in person. Even if you plan to attend the Proteon special meeting in person, Proteon requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Proteon special meeting if you become unable to attend. If your shares of Proteon common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in "street name," and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the beneficial owner, you are also invited to attend the Proteon special meeting. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Proteon special meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Proteon special meeting.

Q:
How are votes counted?

A:
Votes will be counted by the inspector of elections appointed for the meeting, who will separately count votes "FOR" and "AGAINST," abstentions and, if applicable, broker non-votes.
Q:
What are "broker non-votes"?

A:
Brokers who hold shares in street name for customers have the authority to vote on "routine" proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to approval of non-routine matters, such as Proposal Nos. 2, 3 and 4, and, as a result, absent specific instructions from the beneficial owner of such shares, brokers are not empowered to vote those shares, referred to generally as "broker non-votes." Broker non-votes, if any, will be treated as shares that are present at the special meeting for purposes of determining whether a quorum exists and will have the same effect as votes against Proposal Nos. 2, 3 and 4.
Q:
May I change my vote after I have submitted a proxy or provided proxy instructions?

A:
Proteon's common stockholders of record, other than those Proteon stockholders who are parties to voting agreements, may change their vote at any time before their proxy is voted at the Proteon special meeting in one of three ways. First, a stockholder of record of Proteon can send a written notice to the Secretary of Proteon stating that it would like to revoke its proxy. Second, a stockholder of record of Proteon can submit new proxy instructions either on a new proxy card or

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Q:
Who is paying for this proxy solicitation?

A:
Proteon and ArTara will share equally the cost of printing and filing of this proxy statement/prospectus/information statement and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Proteon common stock for the forwarding of solicitation materials to the beneficial owners of Proteon common stock. In addition, Proteon has engaged Georgeson LLC, a proxy solicitation firm, to solicit proxies from Proteon's stockholders for a fee of $12,500 plus costs associated with solicitation campaigns. Proteon will also reimburse Georgeson LLC for reasonable out-of-pocket expenses. Proteon will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

Q:
What is the quorum requirement?

A:
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding a majority of the issued and outstanding shares entitled to vote at a meeting are present at such meeting in person or represented by proxy. On the record date, there were                    shares of Proteon common stock outstanding and entitled to vote. Thus, the holders of                    shares of Proteon common stock must be present in person or represented by proxy at the Proteon special meeting to have a quorum.
Q:
Should Proteon's and ArTara's stockholders send in their stock certificates now?

A:
No. After the Merger is consummated, ArTara's stockholders will receive written instructions from the exchange agent for exchanging their certificates representing shares of ArTara capital stock for certificates representing shares of Proteon's common stock. Each ArTara stockholder who otherwise would be entitled to receive a fractional share of Proteon common stock will be entitled to receive an amount in cash, without interest, determined by multiplying such fraction by the volume-weighted average closing trading price of a share of Proteon common stock on Nasdaq for the five consecutive trading days ending five trading days immediately prior to the date upon which the Merger becomes effective.

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Q:
Who can help answer my questions?

A:
If you are a stockholder of Proteon and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the Merger, including the procedures for voting your shares, you should contact Georgeson LLC, Proteon's proxy solicitor, by telephone at 1-800-868-1390.

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PROSPECTUS SUMMARY

        This summary highlights selected information from this proxy statement/prospectus/information statement and may not contain all of the information that is important to you. To better understand the Merger, the proposals being considered at the Proteon special meeting and ArTara's stockholder actions that are the subject of the written consent, you should read this entire proxy statement/prospectus/information statement carefully, including the Merger Agreement attached as Annex A, the fairness opinion of H.C. Wainwright & Co., LLC attached as Annex B and the other annexes to which you are referred herein. For more information, please see the section titled "Where You Can Find More Information" in this proxy statement/prospectus/information statement.

The Companies

Proteon Therapeutics, Inc.

200 West Street
Waltham, MA 02451
(781) 890 0102

        Until recently, Proteon was focused on the development of novel, first-in-class pharmaceuticals to address the medical needs of patients with kidney and vascular disease. On March 28, 2019, Proteon announced that its second Phase 3 trial, PATENCY-2, for its product candidate, vonapanitase, in the treatment of radiocephalic fistulas did not meet its co-primary endpoints of fistula use for hemodialysis (p=0.328) and secondary patency (p=0.932). In April 2019, Proteon started taking steps to reduce operating expenses while Proteon evaluated its strategic alternatives with a goal to enhance stockholder value, including the possibility of a merger or sale of Proteon.

ArTara Therapeutics, Inc.

1 Little West 12th Street
New York, NY 10014
(646) 844-0337

        ArTara Therapeutics, Inc. is a rare and specialty diseases therapeutics company focused on optimizing product candidates for patients suffering from diseases where there is a significant unmet need. Its current development programs focus on the treatment of rare diseases in structural and connective tissues, as well as rare hepatology/gastrointestinal and metabolic disorders with investigational candidate TARA-002 for the potential treatment of lymphatic malformations and IV Choline Chloride for the potential treatment of intenstinal failure-associated liver disease, or IFALD.

The Merger (see page 95)

        On September 23, 2019, Proteon, Merger Sub, and ArTara entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into ArTara, with ArTara surviving as a wholly owned subsidiary of Proteon (the "Merger"). Proteon common stock will be issued to the former ArTara stockholders at the Effective Time. In connection with the closing of the Merger, Proteon will change its name to "ArTara Therapeutics, Inc.," and ArTara is expected to change its name to "ArTara Subsidiary, Inc." References to the combined company in this proxy statement/prospectus/information statement are references to Proteon following the Merger transaction.

        Concurrently with the execution of the Merger Agreement, certain institutional investors (together, the "Investors") entered into a subscription agreement (the "Subscription Agreement") with Proteon, pursuant to which Proteon has agreed to issue in a private placement immediately after the Effective Time (the "Private Placement") (i) up to $27,200,000 of shares of Proteon's Series 1 Convertible Non-Voting Preferred Stock, par value $0.001 per share, at a purchase price equal to 1,000 times the

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Common Stock Purchase Price (as defined below) and (ii) up to $15,300,000 of shares of Proteon common stock, at a purchase price equal to (x) the Aggregate Valuation divided by the (y) the Post-Closing Proteon Shares (each of (x) and (y) as defined in the section titled "The Merger Agreement—Merger Consideration and Exchange Ratio—Exchange Ratio") (the "Common Stock Purchase Price"). The shares of Proteon will be issued pursuant to an exemption from securities laws and as an inducement for the Investors to participate in the Private Placement, Proteon and the Investors also executed a registration rights agreement for the provision of registration rights with respect to the registrable securities issued in the Private Placement, such that, following the Effective Time, the shares of such registrable securities would be registered for resale on a registration statement filed and declared effective by the U.S. Securities and Exchange Commission (the "SEC").

        Proteon and ArTara expect the Merger to be consummated by year end 2019, subject to satisfaction or waiver of certain conditions, including, among other things, receipt of the requisite approval of Proteon's and ArTara's stockholders, including approval by the Proteon common stockholders of (a)(i) the issuance of shares of Proteon capital stock pursuant to the Merger and the Private Placement, which shares collectively will represent (or be convertible into) more than 20% of the shares of Proteon common stock outstanding immediately prior to the Merger, and (ii) the change of control resulting from the Merger and the Private Placement, pursuant to Nasdaq Listing Rules 5635(a) and 5635(b), respectively, and (b) an amendment to Proteon's certificate of incorporation (i) to effect immediately prior to the closing of the Merger the Reverse Split at a ratio anywhere in the range between 1-for-30 and 1-for-50 (with the actual reverse stock split ratio to be mutually agreed upon by Proteon and ArTara prior to the effectiveness of the Merger) and (ii) to effect immediately after the consummation of the Private Placement the Series A Preferred Automatic Conversion. Concurrently with the execution of the Merger Agreement, Proteon delivered to ArTara the written consent of the holders of 92.7% of the shares of Proteon's Series A Preferred Stock outstanding as of September 23, 2019 approving the Series A Preferred Automatic Conversion.

        Immediately following the consummation of the Merger, the holders of ArTara capital stock (including the holders of any outstanding and unexercised options to purchase ArTara capital stock) immediately prior to the Merger are expected to hold approximately 73.39% of the fully diluted shares of Proteon capital stock outstanding immediately following the Merger, and the holders of Proteon common stock immediately prior to the Merger are expected to hold approximately 26.61% of the fully diluted shares of Proteon capital stock outstanding immediately following the Merger, in each case, after giving effect to the Series A Preferred Stock Automatic Conversion but without giving effect to the Private Placement. As currently anticipated and assuming a $42.5 million investment in the Private Placement, after the consummation of the Merger and closing of the Private Placement, the outstanding equity of Proteon on a fully diluted basis will be held approximately as follows: holders of former ArTara capital stock are expected to hold approximately 28.67%; the Investors in the Private Placement are expected to hold approximately 60.93%; and holders of pre-Merger Proteon common stock are expected to hold approximately 10.39%.

Reasons for the Merger (see page 105 and 109)

        The Proteon Board considered various reasons to reach its determination (i) that the Merger, the Series A Preferred Automatic Conversion, the Reverse Split, and the other transactions and actions contemplated by the Merger Agreement (the "Contemplated Transactions") are advisable and fair to, and in the best interests, of Proteon and its stockholders, (ii) to approve and declare advisable the Merger Agreement and the Contemplated Transactions, including the issuance of shares of Proteon common stock to the stockholders of ArTara pursuant to the terms of the Merger Agreement, and (iii) to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that the stockholders of Proteon vote to approve the Proteon Stockholder Matters.

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        The ArTara Board also considered various reasons to reach its determination (i) that the Contemplated Transactions are fair to, advisable for, and in the best interests of, ArTara and its stockholders, (ii) to approve and declare advisable the Merger Agreement and the Contemplated Transactions and (iii) to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its stockholders vote to approve the ArTara Stockholder Matters.

        Following the Merger, the combined company will be a clinical-stage biopharmaceutical company focused on developing a pipeline of innovative treatments for rare and specialty diseases with significant unmet therapeutic needs, including ArTara's current development programs focused on the treatment of rare diseases in structural and connective tissues as well as rare hepatology and metabolic disorders. Among other factors, Proteon and ArTara believe that the combined organization will have the following potential advantages:

    Product Pipeline.  The combined company is expected to build upon and implement ArTara's current plans for developing IV Choline for treatment of IFALD and TARA-002 for treatment of Lymphatic Malformations.

    Management Team.  It is expected that the combined organization will be led by the experienced senior management team from ArTara and a board of directors of seven members with representation from each of Proteon and ArTara.

    Cash Resources.  The combined company is expected to have gross proceeds from the Private Placement of $42.5 million, in addition to the approximately $3.0 million of net cash that Proteon is expected to have immediately prior to the consummation of the Merger, which Proteon and ArTara believe is sufficient to enable ArTara to pursue its near term clinical trials and business plans.

        The Proteon Board considered other reasons for the Merger, including:

    the strategic alternatives to the Merger available to Proteon, including the discussions that Proteon's management and the Proteon Board previously conducted with other potential merger partners;

    the failure of Proteon's second Phase 3 clinical trial, PATENCY-2, for vonapanitase to meet its co-primary endpoints and the unlikelihood that such circumstances would change for the benefit of Proteon's stockholders in the foreseeable future;

    the risk associated with, and uncertain value and costs to Proteon's stockholders of, liquidating Proteon;

    the risks of continuing to operate Proteon on a stand-alone basis, including the need to rebuild infrastructure and management to continue its operations;

    the potential market opportunity for ArTara's products and the expertise of ArTara's scientific team;

    the likelihood that the combined company would possess sufficient financial resources to allow the management team to focus on the continued development and anticipated commercialization of ArTara's development candidates;

    the potential benefits resulting from the combination of Proteon's public company structure with ArTara's business to raise additional funds in the future, if necessary; and

    the opportunity as a result of the Merger for Proteon's stockholders to participate in the potential value of ArTara's product candidate portfolio and the potential growth of the combined company following the Merger.

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        In addition, the ArTara Board approved the Merger based on a number of factors, including the following:

    the potential to provide the current ArTara stockholders with greater liquidity by owning stock in a public company;

    the cash resources of the combined company expected to be available at the closing of the Merger relative to the anticipated burn rate of the combined company;

    the potential for access to public capital markets, including sources of capital from a broader range of investors to support the clinical development of its product candidates than it could otherwise obtain if it continued to operate as a privately-held company;

    the ArTara Board's belief that no alternatives to the Merger were reasonably likely to create greater value for ArTara's stockholders after reviewing the various alternatives that were considered by the ArTara Board and the likelihood of achieving any alternative transaction compared to the likelihood of completing the Merger; and

    the expectation that the Merger will be treated as a reorganization for U.S. federal income tax purposes, with the result that the ArTara stockholders will generally not recognize taxable gain or loss for U.S. federal income tax purposes.

Opinion of the Proteon Financial Advisor (see page 113)

        The Proteon Board engaged H.C. Wainwright & Co., LLC ("Wainwright") on April 8, 2019 to act as the financial advisor to the Proteon Board to assist it in identifying and analyzing potential targets for a potential transaction and, if requested by the Proteon Board, to render an opinion as to the fairness, from a financial point of view, to Proteon of the Exchange Ratio. On September 22, 2019, Wainwright rendered its oral opinion to the Proteon Board (which was subsequently confirmed in writing by delivery of Wainwright's written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described herein, as of September 22, 2019, the Exchange Ratio was fair, from a financial point of view, to Proteon. Wainwright did not express any view on, and its opinion did not address, any other term or aspect of any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with the Merger, including, without limitation, the Private Placement.

        The full text of Wainwright's written opinion is attached to this proxy statement/prospectus/information statement as Annex B and is incorporated into this proxy statement/prospectus/information statement by reference. The description of Wainwright's opinion set forth in this proxy statement/prospectus/information statement is qualified in its entirety by reference to the full text of such opinion. Proteon's stockholders are encouraged to read Wainwright's opinion carefully and in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Wainwright in connection with its opinion.

        Wainwright's opinion was addressed to the Proteon Board and was only one of many factors considered by the Proteon Board in its evaluation of the Merger. Wainwright's opinion was prepared solely for the information of the Proteon Board and only addressed the fairness, from a financial point of view, to Proteon of the Exchange Ratio. Wainwright was not requested to opine as to, and Wainwright's opinion does not address, the relative merits of the Merger or any alternatives to the Merger, Proteon's underlying decision to proceed with or effect the Merger, or any other aspect of the Merger. Wainwright's opinion does not address the fairness of the Merger to the holders of any class of securities, creditors or other constituencies of Proteon and is not a valuation of Proteon or ArTara or their respective assets or any class of their securities. Wainwright did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of the officers, directors or employees, of Proteon, whether or not relative to the Merger. Wainwright also did not

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express an opinion regarding the fairness, from a financial point of view, to Proteon of the Private Placement.

Overview of the Merger Agreement and Agreements Related to the Merger Agreement

    Merger Consideration and Exchange Ratio (see page 138)

        ArTara stockholders will receive shares of Proteon common stock in exchange for shares of ArTara capital stock in an amount equal to the number of shares of ArTara capital stock held by such stockholder multiplied by the Exchange Ratio. No fractional shares of Proteon common stock will be issued in connection with the Merger. Instead, each ArTara stockholder who otherwise would be entitled to receive a fractional share of Proteon common stock (after aggregating all fractional shares of Proteon common stock issuable to such holder after the consummation of the Merger and the Private Placement) will be entitled to receive an amount in cash (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the price per share of Proteon common stock that is equal to (x) Aggregate Valuation, divided by (y) the Post-Closing Proteon Shares (each as defined in the section titled "The Merger Agreement—Merger Consideration and Exchange Ratio—Exchange Ratio"), rounded to six decimal points (the "Proteon Common Stock Purchase Price").

        Immediately following the consummation of the Merger, the holders of ArTara capital stock (including the holders of any outstanding and unexercised options to purchase ArTara capital stock) immediately prior to the Merger shall hold approximately 73.39% of the fully diluted shares of Proteon capital stock outstanding immediately following the Merger, and the holders of Proteon common stock immediately prior to the Merger shall hold approximately 26.61% of the fully diluted shares of Proteon capital stock outstanding immediately following the Merger, in each case, after giving effect to the Series A Preferred Stock Automatic Conversion but without giving effect to the Private Placement. As currently anticipated and assuming a $42.5 million investment in the Private Placement, after the Merger and closing of the Private Placement, the outstanding equity of Proteon on a fully diluted basis will be held approximately as follows: holders of former ArTara capital stock shall hold approximately 28.67%; Private Placement investors shall hold approximately 60.93%; and holders of pre-Merger Proteon common stock shall hold approximately 10.39%.

        The Exchange Ratio formula is derived based upon an ArTara fixed valuation of $20 million and a Proteon base valuation of $7.25 million. The Proteon base valuation is subject to adjustment based upon the Proteon net cash relative to a range between $2,950,000 and $3,550,000, the lower end of which range is subject to further adjustment based upon, among other things, the timing of the filing of this Registration Statement. For a more complete description of the potential divestiture, please see the section titled "The Merger Agreement—Potential Divestiture" beginning on page 149 of this proxy statement/prospectus/information statement.

        For a more complete description of the Exchange Ratio, please see the section titled "The Merger Agreement—Merger Consideration and Exchange Ratio—Exchange Ratio" beginning on page 139 of this proxy statement/prospectus/information statement.

    Treatment of Proteon Stock Options

        Prior to the Closing, the Proteon Board will have adopted appropriate resolutions to provide that each unexpired and unexercised Proteon stock option (other than certain stock options identified in the Merger Agreement), whether vested or unvested, shall be cancelled effective as of immediately prior to the Effective Time in accordance with the Proteon Amended and Restated 2006 Equity Incentive Plan and the Proteon Amended and Restated 2014 Equity Incentive Plan, as applicable.

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    Treatment of ArTara Stock Options and Restricted Stock Awards (see page 143)

        Under the terms of the Merger Agreement, each option to purchase shares of ArTara common stock that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, will be converted into an option to purchase shares of Proteon common stock. Proteon will assume the ArTara 2017 Equity Incentive Plan, as amended, and all rights with respect to each outstanding option to purchase ArTara common stock in accordance with its terms.

        Accordingly, from and after the Effective Time: (i) each outstanding ArTara stock option assumed by Proteon may be exercised solely for shares of Proteon common stock; (ii) the number of shares of Proteon common stock subject to each outstanding option assumed by Proteon will be determined by multiplying (A) the number of shares of ArTara common stock that were subject to such ArTara stock option, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Proteon common stock; (iii) the per share exercise price for the Proteon common stock issuable upon exercise of each outstanding ArTara stock option assumed by Proteon will be determined by dividing (A) the per share exercise price of the ArTara common stock subject to such ArTara stock option, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent; and (iv) any restriction on the exercise of any ArTara stock option assumed by Proteon will continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such ArTara stock option will remain unchanged, subject to certain exceptions.

        Proteon will file with the SEC, reasonably promptly after the Effective Time, a registration statement on Form S-8 relating to the shares of Proteon common stock issuable with respect to the ArTara stock options assumed by Proteon in accordance with the Merger Agreement.

        If any shares of ArTara capital stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option or a risk of forfeiture under any applicable restricted stock purchase agreement or other similar agreement with ArTara (such ArTara capital stock, the "ArTara Restricted Stock Awards"), then the shares of Proteon common stock issued in exchange for such shares of ArTara capital stock will to the same extent be unvested and subject to the same repurchase option or risk of forfeiture, and such shares of Proteon common stock shall accordingly be marked with appropriate legends. ArTara shall take all actions that may be reasonably necessary to ensure that, from and after the Effective Time, Proteon is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement in accordance with its terms.

    Conditions to the Completion of the Merger (see page 144)

        The obligations to consummate the Merger and otherwise consummate the Contemplated Transactions shall be subject to receipt of the Required ArTara Stockholder Vote, the required vote from Proteon stockholders on the Closing Proteon Stockholder Matters and the satisfaction or waiver, on or prior to the Effective Time, of the other conditions set forth in the section titled "The Merger Agreement—Conditions to the Completion of the Merger" of this proxy statement/prospectus/information statement.

    Non-Solicitation (see page 151)

        Both Proteon and ArTara are prohibited by the terms of the Merger Agreement from, directly or indirectly:

    soliciting, initiating or knowingly encouraging, inducing or facilitating the communication, making, submission or announcement of any acquisition proposal or acquisition inquiry or taking

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      any action that could reasonably be expected to lead to an acquisition proposal or acquisition inquiry;

    furnishing any non-public information to any person in connection with or in response to an acquisition proposal or acquisition inquiry;

    engaging in discussions or negotiations with any person with respect to any acquisition proposal or acquisition inquiry;

    approving, endorsing or recommending any acquisition proposal;

    executing or entering into any letter of intent or any contract contemplating or otherwise relating to any acquisition transaction (other than a permitted confidentiality agreement); or

    publicly proposing to do any of the foregoing.

        Either of Proteon or ArTara, as applicable, may provide information to a third party in response to bona fide written acquisition proposal, which its board of directors determines in good faith, after consultation with its outside financial advisors and outside legal counsel, constitutes, or could be reasonably likely to result in, a superior offer if:

    it has not breached the non-solicit provisions of the Merger Agreement in any material respect;

    its board concludes in good faith based on the advice of outside legal counsel, that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of its board under applicable law;

    at least two business days prior to furnishing such nonpublic confidential information to, or entering into discussions with, such person, it gives the other party written notice of the identity of such person and of its intent to furnish nonpublic information to, or enter into discussions with, such person;

    it receives from such person an executed confidentiality agreement containing provisions, in the aggregate, at least as favorable to it as those contained in the confidentiality agreement between Proteon and ArTara and which includes a customary standstill provision (only to the extent if the failure to include such standstill provision is reasonably likely to be inconsistent with the fiduciary duties of its under applicable laws; and

    at least two business days prior to furnishing any such nonpublic information to such person, it furnishes such nonpublic information to the other party (to the extent such information has not been previously furnished).

    Termination and Termination Fees (see page 158)

        The Merger Agreement may be terminated by the parties under certain circumstances, and upon termination of the Merger Agreement under specified circumstances, Proteon may be required to pay to ArTara a termination fee of $750,000 or ArTara may be required to pay to Proteon a termination fee of $750,000, and in other circumstances each party may be required to reimburse the other party's expenses incurred, up to a maximum of $350,000, as set forth in the section titled "The Merger Agreement—Termination and Termination Fees" beginning on page 158 of this proxy statement/prospectus/information statement.

    Support Agreements and Proteon Series A Preferred Stock Written Consent (see page 163)

        Concurrently with the execution of the Merger Agreement, (a) officers, directors and certain stockholders of ArTara (solely in their respective capacities as ArTara stockholders) who collectively beneficially owned or controlled approximately 99.29% of the voting power of ArTara's outstanding

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capital stock as of September 23, 2019, entered into support agreements under which such stockholders agreed to, among other things, vote in favor of the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated by the Merger Agreement and (b) officers, directors and certain stockholders of Proteon (solely in their respective capacities as Proteon stockholders), who collectively beneficially owned or controlled approximately 17.64% of the voting power of Proteon's outstanding capital stock as of September 23, 2019.

        The support agreements will terminate at the earlier of the Effective Time and the termination of the Merger Agreement in accordance with its terms.

        Concurrently with the execution of the Merger Agreement, Proteon delivered the written consent from the holders of 92.7% of the outstanding shares of Proteon Series A Preferred Stock to approve the Series A Preferred Stock Automatic Conversion.

    Lock-Up Agreements (see page 163)

        Concurrently with the execution of the Merger Agreement, one director of Proteon and the officers, directors and certain other stockholders of ArTara expected to own more than 2% of the outstanding Proteon common stock after the Effective Time and consummation of the Private Placement also entered into lock-up agreements, pursuant to which such stockholders have agreed not to, except in limited circumstances, transfer or dispose of, any shares of Proteon common stock or any securities convertible into, or exercisable or exchangeable for, shares of Proteon common stock, including, as applicable, shares received in the Merger and issuable upon exercise of certain warrants and stock options, for a period of 180 days after the closing date of the Merger.

    Private Placement; Subscription Agreement and Registration Rights Agreement (see page 163)

    Subscription Agreement

        Concurrent with the execution of the Merger Agreement, Proteon entered into the Subscription Agreement with the Investors, pursuant to which Proteon has agreed to issue in the Private Placement (i) up to $27,200,000 of shares of Proteon's Series 1 Preferred Stock, at a purchase price equal to 1,000 times the Common Stock Purchase Price and (ii) up to $15,300,000 of shares of Proteon common stock (together with the Series 1 Preferred Stock, the "Private Placement Shares"), at a purchase price equal to the Common Stock Purchase Price.

        Pursuant to the Subscription Agreement, the holders of Series 1 Preferred Stock have preemptive rights to participate pro rata in future equity financings of Proteon, subject to certain exceptions and limitations. In addition, following the issuance of the Private Placement Shares pursuant to the Subscription Agreement, certain of the Investors have rights to nominate directors to the Proteon Board and non-voting board observers. Proteon has also agreed not to take certain actions related to the business without the consent of the lead investor for so long as such lead investor continues to hold a minimum amount of the Private Placement Shares purchased under the Subscription Agreement.

        Prior to the issuance of the Private Placement Shares, Proteon intends to file a Certificate of Designation of Preferences, Rights and Limitations of Series 1 Convertible Non-Voting Preferred Stock with the Delaware Secretary of State. Thereunder, each share of Series 1 Preferred Stock will be convertible into 1,000 shares of Proteon common stock, at a conversion price initially equal to the Common Stock Purchase Price, subject to adjustment for any stock splits, stock dividends and similar events, at any time at the option of the holder, provided that any conversion of Series 1 Preferred Stock by a holder into shares of Proteon common stock would be prohibited if, as a result of such conversion, the holder, together with its affiliates and any other person or entity whose beneficial ownership of the common stock would be aggregated with such holder's for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, would beneficially own more than 9.99% of the

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total number of shares of Proteon's common stock issued and outstanding after giving effect to such conversion. Upon written notice to Proteon, the holder may from time to time increase or decrease such limitation to any other percentage not in excess of 19.99% specified in such notice.

        Each share of Series 1 Preferred Stock will be entitled to a preference of $10.00 per share upon liquidation of Proteon, and thereafter will share ratably in any distributions or payments on an as-converted basis with the holders of Proteon common stock. In addition, upon the occurrence of certain transactions that involve the merger or consolidation of Proteon, an exchange or tender offer, a sale of all or substantially all of the assets of Proteon or a reclassification of its common stock, each share of Series 1 Preferred Stock will be convertible into the kind and amount of securities, cash and/or other property that the holder of a number of shares of Proteon common stock issuable upon conversion of one share of Series 1 Preferred Stock would receive in connection with such transaction.

        The shares of Proteon common stock to be issued in the Private Placement are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act"). Each Investor is either (i) an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities Act.

        The Private Placement is expected to close immediately following the consummation of the Merger. These provisions of the Subscription Agreement are discussed in greater detail in the section titled "Risk Factors" in this Registration Statement.

    Registration Rights Agreement

        Concurrently with the execution of the Subscription Agreement, Proteon entered into a registration rights agreement, dated September 23, 2019, with the Investors (the "Registration Rights Agreement"). Pursuant to the terms of the Registration Rights Agreement, Proteon has agreed to prepare and file a registration statement with the SEC within 60 business days after the closing of the Private Placement for the purposes of registering the resale of the Private Placement Shares. Proteon has also agreed, among other things, to pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to Proteon's obligations under the Registration Rights Agreement, not to exceed $25,000 in the aggregate.

Appraisal Rights (see page 134)

        Proteon stockholders are not entitled to appraisal rights in connection with the Merger. Holders of ArTara common stock are entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL. For more information about such rights, please see the provisions of Section 262 of the DGCL attached as Annex C, and the section titled "The Merger—Appraisal Rights" beginning on page 134 of this proxy statement/prospectus/information statement.

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Management Following the Merger (see page 242)

    Executive Officers of the Combined Company Following the Merger

        Immediately following the Merger, the executive management team of the combined company is expected to be comprised of the following individuals with such additional officers as may be added by ArTara or the combined company:

Name
  Position with the Combined
Company
  Current Position

Jesse Shefferman

  Chief Executive Officer and Director   Chief Executive Officer of ArTara

Jacqueline Zummo, Ph.D., MPH, MBA

 

Senior Vice President, Research Operations

 

Vice President, Research Operations of ArTara

Julio Casoy, M.D. 

 

Chief Medical Officer

 

Chief Medical Officer of ArTara

    Directors of the Combined Company Following the Merger

        At the Effective Time, the combined company is expected to initially have a seven-member board of directors, comprised of (a) Luke Beshar, Scott Braunstein, M.D., Roger Garceau, M.D., Michael Solomon, Ph.D. and an additional member to be added after the filing of this Registration Statement, each as an ArTara designee, (b)             , as the Proteon designee and (c) Jesse Shefferman as a director and chief executive officer of the combined company, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

        The aforementioned board of directors will have an audit committee, a compensation committee and a nominating and corporate governance committee, in accordance with the Nasdaq rules. All of Proteon's current directors are expected to resign from their positions as directors of Proteon, effective as of the Effective Time.

Interests of Certain Directors, Officers and Affiliates of Proteon and ArTara (see pages 124 and 128)

        In considering the recommendation of the Proteon Board with respect to the issuance of common stock of Proteon pursuant to the Merger Agreement and the other matters to be acted upon by Proteon's stockholders at the Proteon special meeting, Proteon's stockholders should be aware that certain members of the Proteon Board and executive officers of Proteon have interests in the Merger that may be different from, or in addition to, interests they have as Proteon's stockholders.

        As of September 30, 2019, Proteon's directors and executive officers (including affiliates) beneficially owned, in the aggregate approximately 25.2% of the outstanding shares of common stock of Proteon. As of September 30, 2019, Proteon's directors and officers beneficially owned, in the aggregate, options to purchase 1,441,677 shares of Proteon common stock, all of which have been cancelled or will be cancelled immediately prior to the closing of the Merger.

        The compensation arrangements with Proteon's officers and directors are discussed in greater detail in the section titled "The Merger—Interests of the Proteon Directors and Executive Officers in the Merger" in this proxy statement/prospectus/information statement.

        In considering the recommendation of the ArTara Board with respect to adopting the Merger Agreement, ArTara's stockholders should be aware that members of the ArTara Board and the executive officers of ArTara may have interests in the Merger that may be different from, or in addition to, the interests of ArTara's stockholders. Each of the Proteon Board and the ArTara Board was aware of these potential conflicts of interest and considered them, among other matters, in reaching their

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respective decisions to approve the Merger Agreement and the Merger, and to recommend, as applicable, that Proteon's stockholders approve the proposals to be presented to Proteon's stockholders for consideration at the Proteon special meeting as contemplated by this proxy statement/prospectus/information statement, and that ArTara's stockholders sign and return the written consent as contemplated by this proxy statement/prospectus/information statement.

        As described elsewhere in this proxy statement/prospectus/information statement, including in the section captioned "Management Following the Merger," ArTara's directors and executive officers are expected to become the directors and executive officers of the combined company upon the closing of the Merger.

        Certain of Proteon's and ArTara's executive officers and directors have also entered into support agreements, pursuant to which certain directors, officers and stockholders of Proteon and ArTara, respectively, have agreed, solely in their capacity as stockholders of Proteon and ArTara, respectively, to vote all of their shares of Proteon common stock or ArTara capital stock in favor of, among other things, the adoption or approval, respectively, of the Merger Agreement and the transactions contemplated therein in connection with the Merger. The support agreements are discussed in greater detail in the section titled "Agreements Related to the Merger" in this proxy statement/prospectus/information statement.

Material U.S. Federal Income Tax Consequences of the Merger (see page 130)

        Proteon and ArTara intend the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as described in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger" in this proxy statement/prospectus/information statement. Assuming the Merger constitutes a reorganization, subject to the limitations and qualifications described in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger" in this proxy statement/prospectus/information statement, ArTara stockholders generally should not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of Proteon common stock issued in connection with the Merger (other than in respect of cash received in lieu of fractional shares). Each ArTara stockholder who receives cash in lieu of a fractional share of Proteon common stock should generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received in lieu of such fractional share and the stockholder's tax basis allocable to such fractional share.

Risk Factors (see page 31)

        Both Proteon and ArTara are subject to various risks associated with their businesses and their industries. In addition, the Merger, including the possibility that the Merger may not be completed, poses a number of risks to each company and its respective stockholders, including the following risks:

    If the proposed merger with ArTara is not consummated, Proteon's business could suffer materially and Proteon's stock price could decline;

    Certain of Proteon executive officers and directors have conflicts of interest that may influence them to support or approve the Merger;

    The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes;

    The market price of the combined company's common stock may decline as a result of the Merger;

    Proteon and ArTara's stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger;

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    During the pendency of the Merger, Proteon and ArTara will be subject to contractual limitations set forth in the Merger Agreement that restrict the parties' ability to enter into business combination transactions with another party;

    Because the lack of a public market for ArTara's common stock makes it difficult to evaluate the fairness of the Merger, ArTara's stockholders may receive consideration in the Merger that is greater than or less than the fair market value of ArTara's common stock;

    The opinion received by the Proteon Board from Wainwright has not been, and is not expected to be, updated to reflect changes in circumstances that may have occurred since the date of the opinion;

    Proteon and ArTara may become involved in securities litigation or stockholder derivative litigation in connection with the Merger, and this could divert the attention of Proteon and ArTara management and harm the combined company's business, and insurance coverage may not be sufficient to cover all related costs and damages;

    The Reverse Split may not increase Proteon's stock price over the long-term;

    The Reverse Split may decrease the liquidity of Proteon's common stock;

    The Reverse Split may lead to a decrease in Proteon's overall market capitalization; and

    If any of the events described in under the section titled "Risk Factors—Risks Related to ArTara" occur, those events could cause the potential benefits of the Merger not to be realized.

        These risks and other risks are discussed in greater detail under the section titled "Risk Factors" in this proxy statement/prospectus/information statement. Proteon encourages you to read and consider all of these risks carefully.

Regulatory Approvals (see page 130)

        In the United States, Proteon must comply with applicable federal and state securities laws and the rules and regulations of Nasdaq in connection with the issuance of shares of Proteon common stock to ArTara's stockholders in connection with the transactions contemplated by the Merger Agreement and shares of Proteon capital stock to the Investors in the Private Placement and the filing of this Registration Statement with the SEC. Proteon does not intend to seek any regulatory approval from antitrust authorities to consummate the transactions.

Nasdaq Capital Market Listing (see page 133)

        Prior to the consummation of the Merger, Proteon intends to file an initial listing application for Proteon common stock on Nasdaq (the "Nasdaq Listing Application"). If such application is accepted, Proteon anticipates that Proteon common stock will be listed on Nasdaq following the closing of the Merger and will trade under a new name, "ArTara Therapeutics, Inc." and new trading symbol, "TARA."

Anticipated Accounting Treatment (see page 134)

        The Merger will be accounted for using acquisition accounting in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Under acquisition accounting, the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of Proteon as of the Effective Time will be recorded at their respective fair values and added to those of ArTara. Any excess of purchase price over the fair values is recorded as goodwill. The consolidated financial statements of ArTara issued after the Merger would reflect these fair values and would not be restated retroactively to reflect the historical condensed

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consolidated financial position or results of operations of Proteon. From the date of the consummation of the Merger, the historical consolidated financial statements of ArTara become the historical consolidated financial statements of the registrant. The pro forma adjustments are described in the accompanying notes presented on the following pages.

Description of Proteon Capital Stock (see page 256)

        Both Proteon and ArTara are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the Merger is completed, ArTara stockholders will become Proteon stockholders, and their rights will be governed by the DGCL, the bylaws of Proteon and the certificate of incorporation of Proteon, as may be amended by Proposal Nos. 1 and 3 if approved by the Proteon stockholders at the Proteon special meeting. The rights of Proteon stockholders contained in Proteon's sixth amended and restated certificate of incorporation, and bylaws, as amended, differ from the rights of ArTara stockholders under ArTara's current certificate of incorporation and bylaws, as more fully described under the section titled "Description of Proteon Capital Stock" of this proxy statement/prospectus/information statement.

Proteon Special Meeting (see page 91)

        The Proteon special meeting will be held at 9:00 a.m., local time, on                , 2019, at the offices of Morgan, Lewis & Bockius LLP located at One Federal Street, Boston, MA 02110, unless postponed or adjourned to a later date. Subject to availability, all of Proteon's stockholders as of the record date, or their duly appointed proxies, may attend the Proteon special meeting. For more information on the Proteon special meeting, see the section entitled "The Special Meeting of Proteon's Stockholders" in this proxy statement/prospectus/information statement.

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SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA

        The following tables present summary historical financial data for Proteon and ArTara, summary unaudited pro forma condensed financial data for Proteon and ArTara, and comparative historical and unaudited pro forma per share data for Proteon and ArTara.

Selected Historical Financial Data of Proteon

        The selected statement of operations data for the years ended December 31, 2018, 2017 and 2016 and the selected balance sheet data as of December 31, 2018 and 2017 are derived from Proteon's audited financial statements prepared using U.S. GAAP, which are included in this proxy statement/prospectus/information statement. The selected statement of operations data for the years ended December 31, 2015 and 2014 and the selected balance sheet data as of December 31, 2016, 2015 and 2014 are derived from Proteon's audited financial statements, which are not included in this proxy statement/prospectus/information statement. The selected financial data for the nine months ended September 30, 2019 and 2018, are derived from Proteon's unaudited condensed financial statements included in this proxy statement/prospectus/information statement. The financial data should be read in conjunction with "Proteon Management's Discussion and Analysis of Financial Condition and Results of Operations" and Proteon's condensed financial statements and related notes appearing elsewhere in this proxy statement/prospectus/information statement. The historical results are not necessarily indicative of results to be expected in any future period.

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Consolidated Statements of Operations and Comprehensive Loss
Proteon Therapeutics, Inc.

 
  Year Ended December 31,   Nine Months Ended
September 30,
 
 
  2018   2017   2016   2015   2014   2019   2018  
 
   
   
   
   
   
  unaudited
 
 
  (in thousands, except share and per share data)
 

Revenue

  $   $   $   $   $ 2,948   $   $  

Operating expenses:

                                           

Research and development

  $ 11,848   $ 21,686   $ 18,869   $ 12,381   $ 6,432   $ 6,374   $ 9,185  

General and administrative

    9,524     8,676     9,836     8,489     4,096     7,240     6,802  

Total operating expenses

    21,372     30,362     28,705     20,870     10,528     13,614     15,987  

Loss from operations

    (21,372 )   (30,362 )   (28,705 )   (20,870 )   (7,580 )   (13,614 )   (15,987 )

Other income (expense):

                                           

Investment income

    436     259     193     144     24     231     311  

Interest expense

                    (857 )          

Other income (expense), net

    207     139     (14 )   (651 )   5,071     1     206  

Total other income (expense)

    643     398     179     (507 )   4,238     232     517  

Net loss

  $ (20,729 ) $ (29,964 ) $ (28,526 ) $ (21,377 ) $ (3,342 ) $ (13,382 ) $ (15,470 )

Foreign currency translation adjustment

  $ (1 ) $ 6   $   $   $   $ (3 ) $ (1 )

Unrealized gain (loss) on available-for-sale investments

    20     (20 )   11     (5 )   (6 )       19  

Comprehensive loss

  $ (20,710 ) $ (29,978 ) $ (28,515 ) $ (21,382 ) $ (3,348 ) $ (13,382 ) $ (15,452 )

Reconciliation of net loss to net loss attributable to common stockholders:

                                           

Net loss

  $ (20,729 ) $ (29,964 ) $ (28,526 ) $ (21,377 ) $ (3,342 ) $ (13,382 ) $ (15,470 )

Accretion of redeemable convertible preferred stock to redemption value

  $   $   $   $   $ (6,353 ) $   $  

Accretion of convertible preferred stock to redemption value

  $   $ (6,747 ) $   $   $   $   $  

Net loss attributable to common stockholders

  $ (20,729 ) $ (36,711 ) $ (28,526 ) $ (21,377 ) $ (9,695 ) $ (13,382 ) $ (15,470 )

Net loss per share attributable to common stockholders—basic and diluted

  $ (1.15 ) $ (2.13 ) $ (1.72 ) $ (1.30 ) $ (3.16 ) $ (0.69 ) $ (0.87 )

Weighted-average common shares outstanding used in net loss per share attributable to common stockholders—basic and diluted

    18,102,219     17,274,326     16,561,799     16,464,123     3,064,507     19,467,487     17,725,095  

 

 
  December 31,    
 
 
  September 30,
2019
 
 
  2018   2017   2016   2015   2014  
 
   
   
   
   
   
  (unaudited)
 
 
  (in thousands)
   
 

Balance Sheet Data:

                                     

Cash, cash equivalents and available-for-sale investments

  $ 21,867   $ 42,141   $ 41,317   $ 65,263   $ 83,595   $ 9,349  

Working capital

    20,158     34,240     37,676     62,475     82,263     8,035  

Total assets

    23,521     43,979     43,520     67,538     84,798     9,648  

Convertible preferred stock

    21,523     21,523                 21,183  

Common stock and additional paid-in-capital

    209,385     202,971     198,218     194,667     192,340     210,702  

Total stockholders' equity

    20,443     34,739     38,441     63,405     82,460     8,035  

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Selected Historical Consolidated Financial Data of ArTara

        The following table summarizes ArTara's financial data as of the date and for each of the periods indicated. The tables below present selected financial data of ArTara prepared in accordance with U.S. GAAP. ArTara's selected statement of operations for the year ended December 31, 2018 and for the period from June 2, 2017 (inception) to December 31, 2017 and balance sheet data as of December 31, 2018 and 2017 are derived from ArTara's audited consolidated financial statements appearing elsewhere in this proxy statement/prospectus/information statement. ArTara's selected statement of operations for the nine months ended September 30, 2019 and 2018 and balance sheet data as of September 30, 2019 are derived from ArTara's unaudited condensed consolidated financial statements appearing elsewhere in this proxy statement/prospectus/information statement. ArTara's historical results are not necessarily indicative of the results to be expected for any other period in the future. The following selected financial data should be read in conjunction with "ArTara Management's Discussion and Analysis Financial Condition and Results of Operations" and the financial statements and notes thereto appearing elsewhere in this proxy statement/prospectus/information statement.

Consolidated Statements of Operations
ArTara Therapeutics, Inc.

 
   
   
  Nine Months Ended
September 30,
 
 
   
  For the period
June 2, 2017
(inception) to
December 31, 2017
 
 
  For the Year Ended
December 31, 2018
 
 
  2019   2018  
 
   
   
  (unaudited)
 

Operating expense:

                         

General & Administrative

  $ 766,780   $ 61,827   $ 2,147,635   $ 468,935  

Research & Development

    3,478,805     645,031     3,163,179     2,369,742  

Total operating expenses

    4,245,585     706,858     5,310,814     2,838,677  

Operating loss

    (4,245,585 )   (706,858 )   (5,310,814 )   (2,838,677 )

Net Loss

    (4,245,585 )   (706,858 )   (5,310,814 )   (2,838,677 )

Weighted Average Shares Outstanding, basic and diluted

    11,203,467     2,270,685     13,422,694     10,894,574  

Net loss per share, basic and diluted

    (0.38 )   (0.31 )   (0.40 )   (0.26 )

Included in operating expenses, above, are the following amounts for non-cash stock-based compensation:

                         

General & Administrative

    37,425         143,287     20,466  

Research & Development

    231,259     540,000     175,197     200,173  

Total

  $ 268,684   $ 540,000   $ 318,484   $ 220,639  

 

 
  December 31,    
 
 
  September 30, 2019  
 
  2018   2017  
 
   
   
  (unaudited)
 

Cash

  $ 5,549,952   $ 4,042,896   $ 1,698,506  

Working Capital (Deficit)

    4,777,239     3,983,142     (144,230 )

Total Assets

    5,590,959     4,042,896     2,223,611  

Exchangeable common stock

    502         538  

Common stock and additional paid-in capital

    9,729,180     4,690,000     10,547,627  

Total stockholders' equity

    4,777,239     3,983,142     284,908  

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Selected Unaudited Pro Forma Condensed Combined Financial Data of Proteon and ArTara

        The following selected unaudited pro forma condensed combined financial data was prepared based on the historical financial results reported by Proteon and ArTara and is intended to show how the Merger might have affected historical financial statements. The following should be read in conjunction with the section titled "Unaudited Pro Forma Condensed Combined Financial Statements" beginning on page PF-1, ArTara's audited historical consolidated financial statements and the notes thereto beginning on page TARA-1, the sections titled "Proteon Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 224 and "ArTara Management's Discussion and Analysis Financial Condition and Results of Operations" beginning on page 234 of this proxy statement/prospectus/information statement, the risk factor titled "The unaudited pro forma financial information included in this proxy statement/prospectus/information statement may not be representative of the combined company's results following the Merger" on page 36, and the other information contained in this proxy statement/prospectus/information statement.

        The unaudited pro forma condensed combined financial statements were prepared in accordance with the regulations of the SEC. The pro forma adjustments reflecting the completion of the Merger are based upon a reverse merger in accordance with GAAP and upon the assumptions set forth in the unaudited pro forma condensed combined financial statements. ArTara will be treated as the accounting acquirer and Proteon will be treated as the acquiree for financial reporting purposes because, among other factors, immediately upon completion of the Merger, the ArTara stockholders prior to the Merger will hold a majority of the voting interest of the combined company, the seven-member board of directors of the combined company will include four of the current members of the ArTara Board, and therefore, members of the current ArTara Board will possess four of the seven seats on the of the board of directors of the combined company and the management team will be solely comprised of members of management from ArTara.

        The unaudited pro forma condensed combined balance sheet as of September 30, 2019 is presented as if the Merger had been completed on that date. The unaudited pro forma condensed combined statements of operations and comprehensive loss for the year ended December 31, 2018 and the nine months ended September 30, 2019 combines the historical statements of operations of Proteon and ArTara and gives pro forma effect to the Merger as if it had been completed on January 1, 2018 and January 1, 2019, respectively.

        The historical financial statements have been adjusted to give pro forma effect to events that are (i) directly attributable to the Merger, (ii) factually supportable, and (iii) with respect to the statement of operations, expected to have a continuing impact on the combined results. These adjustments include estimates for the adjustment of and/or issuance of shares in connection with a reverse stock split for the Proteon shares, the shares issued to ArTara stockholders, the consummation of a private placement, conversion into common stock of the Proteon Series A Preferred Stock. Differences between these preliminary estimates and the final accounting will occur and could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company's future results of operations and financial position. The actual amounts recorded as of the completion of the Merger may differ materially from the information presented in these unaudited pro forma condensed combined financial statements as a result of the timing of completion of the Merger, issuances of common stock, options to purchase common stock and other changes in the Proteon or ArTara net assets that occur prior to the completion of the Merger, which could cause material differences in the information presented below.

        The unaudited pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the entities been combined during the periods presented. In addition, as explained in more detail in the

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accompanying notes to the unaudited pro forma condensed combined financial statements (see the section titled "Unaudited Pro Forma Condensed Combined Financial Statements" beginning on page PF-1), the preliminary acquisition-date fair value of the identifiable assets acquired and liabilities assumed, and the estimated shares of common stock outstanding reflected in the unaudited pro forma condensed combined financial statements is subject to adjustment and may vary from the actual amounts that will be recorded upon completion of the Merger.

 
  Nine Months Ended
September 30, 2019
  Year Ended
December 31, 2018
 

Statement of Operations Data:

             

Loss from operations

  $ (17,809,000 ) $ (26,080,000 )

Net loss

  $ (17,577,000 ) $ (25,437,000 )

Comprehensive Loss

  $ (17,580,000 ) $ (25,418,000 )

Net loss and net loss attributable to common stockholders

  $ (17,577,000 ) $ (25,437,000 )

Net loss per share attributable to common stockholders—basic and diluted

  $ (3.04 ) $ (5.01 )

Weighted Average Common Shares Outstanding used in net loss per share attributable to common stock holders—basic and diluted

    5,781,311     5,077,857  

 

 
  As of
September 30, 2019
 

Balance Sheet Data:

       

Cash, cash equivalents and marketable securities

  $ 41,861,000  

Working capital

    41,218,000  

Total assets

    49,919,000  

Total liabilities

    739,000  

Accumulated deficit

    (10,713,000 )

Total stockholders' equity

  $ 49,180,000  

Comparative Historical and Unaudited Pro Forma Per Share Data

        The following table shows per common share data regarding basic and diluted earnings, cash dividends and book value for (a) Proteon on a historical basis, (b) ArTara on a historical basis, and (c) Proteon and ArTara on a pro forma condensed combined basis.

        The following pro forma information has been derived from and should be read in conjunction with Proteon's and ArTara's respective unaudited condensed consolidated financial statements for the nine months ended September 30, 2019, which, in the case of Proteon's financial statements, are incorporated herein by reference, and in the case of ArTara's financial statements, are included elsewhere in this proxy statement/prospectus/information statement. This information is presented for illustrative purposes only. You should not rely on the pro forma condensed combined amounts, as they are not necessarily indicative of the operating results or financial position that would have occurred if the Merger had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company (see risk factor titled "The unaudited pro forma financial information included in this proxy statement/prospectus/information statement may not be representative of the combined company's results following the Merger" on page 36). The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of potential cost savings, the impact of restructuring and Merger-related costs (except Merger-related costs that are reflected in the unaudited pro forma combined balance sheet included elsewhere herein), or other factors that may result as a consequence of the Merger and, accordingly, does not attempt to predict or suggest future

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results. The information below should be read in conjunction with the section titled "Unaudited Pro Forma Condensed Combined Financial Statements."

 
  Proteon
Historical
  ArTara
Historical
  Pro Forma
Combined
 

For the nine months ended September 30, 2019:

                   

Net loss per share attributable to common stockholders—basic and diluted

  $ (0.69 ) $ (0.40 ) $ (3.04 )

Cash dividends per share(1)

             

Book value per common share as of period end, basic and diluted(2)

  $ 0.44   $ (0.01 ) $ 7.13  

(1)
Although the dividend policy of the combined company will be determined by the board of directors of the combined company following completion of the Merger, it is expected that the combined company will not declare cash dividends for the foreseeable future (see risk factor titled "The combined company does not anticipate paying any dividends in the foreseeable future" on page 77).

(2)
Book value is calculated as total assets less total liabilities as of September 30, 2019.

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MARKET PRICE AND DIVIDEND INFORMATION

        Proteon common stock is currently listed on Nasdaq under the symbol "PRTO." ArTara is a private company and its common stock and preferred stock are not publicly traded.

Proteon common stock

        The closing price of Proteon common stock on September 23, 2019, the full trading day immediately prior to the public announcement of the Merger on September 23, 2019, as reported on Nasdaq, was $0.33 per share. The closing price of Proteon common stock on                        , 2019, as reported on Nasdaq, was $            per share.

        Because the market price of Proteon common stock is subject to fluctuation, the market value of the shares of Proteon common stock that ArTara stockholders will be entitled to receive in the Merger may increase or decrease.

        Assuming successful application for initial listing with Nasdaq, following the consummation of the Merger, Proteon common stock will continue to be listed on Nasdaq and will trade under Proteon's new name "ArTara Therapeutics, Inc." and new trading symbol "TARA."

        As of November 12, 2019, the record date for the Proteon special meeting, there were approximately                holders of record of the Proteon common stock.

Dividends

        Proteon has never declared or paid any cash dividends on the Proteon common stock and does not anticipate paying cash dividends on the Proteon common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Merger will be at the discretion of the combined organization's then-current board of directors and will depend upon a number of factors, including the combined organization's results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.

        ArTara has never declared or paid any cash dividends on shares of its common stock. ArTara anticipates that the combined company will retain all of its future earnings to advance the clinical trials for its products, and does not anticipate paying any cash dividends on shares of its common stock in the foreseeable future. Any future determination to declare cash dividends on shares of the combined company's common stock will be made at the discretion of its board of directors, subject to applicable law and contractual restrictions and will depend on its financial condition, results of operations, capital requirements, general business conditions and other factors that its board of directors may deem relevant.

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RISK FACTORS

        The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement, you should carefully consider the material risks described below before deciding how to vote your shares of Proteon common stock. You should also read and consider the risks associated with the business of Proteon because these risks may also affect the combined company—these risks can be found in the Annual Report on Form 10-K for the year ended December 31, 2018, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on April 12, 2019, and the Quarterly Reports on Form 10-Q filed with the SEC on May 8, 2019, August 7, 2019 and October 31, 2019, and incorporated by reference herein. You should also read and consider the other information in this proxy statement and the other documents incorporated by reference into this proxy statement. Please see the section titled "Where You Can Find More Information" on page 279 of this proxy statement/prospectus/information statement.

Risks Related to the Proposed Merger

If the Merger with ArTara is not consummated, Proteon's business could suffer materially and Proteon's stock price could decline.

        The consummation of the Merger with ArTara is subject to the satisfaction of a number of closing conditions, including the receipt of Proteon stockholder approvals at the Proteon special meeting, Proteon's successful application for initial listing with Nasdaq, the satisfaction of the Proteon Net Cash condition and other closing conditions. For a more detailed discussion of the Proteon Net Cash condition and other closing conditions, see the section titled "The Merger Agreement—Conditions to the Completion of the Merger." Proteon and ArTara are targeting a closing of the Merger by year end 2019.

        If the Merger is not consummated, Proteon may be subject to a number of material risks, and its business and stock price could be adversely affected, as follows:

        In addition, if the Merger Agreement is terminated and the Proteon Board determines to seek another business combination, it may not be able to find a third party willing to provide equivalent or more attractive benefit to Proteon stockholders that is currently expected to be derived from the Merger. Due to the lengthy nature of the strategic process, the further passage of time will diminish cash available. In such circumstances, the Proteon Board may elect to, among other things, divest all or

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a portion of Proteon's business, or take the steps necessary to liquidate all of Proteon's business and assets, and in either such case, the consideration that Proteon receives may be less attractive than the benefit to Proteon stockholders that is currently expected to be derived from the Merger.

Some of Proteon's officers and directors have conflicts of interest that may influence them to support or approve the Merger.

        Officers and directors of Proteon participate in arrangements that provide them with interests in the Merger that are different from Proteon stockholders, including, among others, to the extent applicable, their continued service as a director of the combined company, severance benefits and continued indemnification. These interests, among others, may influence the officers and directors of Proteon to support or approve the Merger. For a more detailed discussion see "The Merger—Interests of the Proteon Directors and Executive Officers in the Merger."

Proteon's separation agreement with Proteon's executive officer requires Proteon to pay severance benefits in the event such executive officer is terminated under specified circumstances, which could harm Proteon's financial condition or results.

        Proteon's executive officer is party to a separation agreement that contains provisions providing for severance payments in the event of a termination of employment under specified circumstances. Based on the terms of the separation agreement, Proteon's executive officer will be entitled to receive an aggregate of up to approximately $0.5 million in severance benefits due to the termination of his employment. The payment of these severance benefits could harm Proteon's financial condition and results and reduce the cash available to the combined company following the Merger.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.

        In general, either party can refuse to complete the Merger if there is a material adverse change affecting the other party following September 23, 2019, the date of the Merger Agreement. However, some types of changes do not permit either party to refuse to complete the Merger, even if such changes would have a material adverse effect on Proteon or ArTara, to the extent they resulted from the following (unless, in some cases, they have a disproportionate effect on Proteon or ArTara, as the case may be):

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        If adverse changes occur but Proteon and ArTara must still complete the Merger, the combined company's stock price may suffer.

The market price of the combined company's common stock may decline as a result of the Merger.

        The market price of the combined company's common stock may decline as a result of the Merger for a number of reasons, including if:

Proteon's stockholders may not realize the benefit currently anticipated to be derived from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

        If the combined company is unable to realize the strategic and financial benefits currently anticipated from the Merger, the current Proteon stockholders will have experienced substantial dilution of their ownership interest without receiving any commensurate benefit currently anticipated to be derived from the Merger. Significant management attention and resources will be required to integrate the two companies. Delays in this process could adversely affect the combined company's business, financial results, financial condition and stock price following the Merger. Even if the combined company is able to integrate the business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, innovation and operational efficiencies that may be possible from this integration and that these benefits will be achieved within a reasonable period of time. The combined company will incur significant transaction costs as a result of the Merger, including investment banking, legal and accounting fees. In addition, the combined company will incur significant consolidation and integration expenses which cannot be accurately estimated at this time. Actual transaction costs may substantially exceed estimates and may have an adverse effect on the combined company's financial condition and operating results.

During the pendency of the Merger, Proteon and ArTara will be subject to contractual limitations set forth in the Merger Agreement that restrict the parties' ability to enter into business combination transactions with another party.

        Covenants in the Merger Agreement impede the ability of Proteon or ArTara to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors. In addition, while the Merger Agreement is in effect and subject to limited exceptions, each party is prohibited from soliciting, initiating, knowingly encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into certain extraordinary transactions with any third party, such as a merger, consolidation, amalgamation, share exchange, business combination, issuance or acquisition of securities, reorganization,

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recapitalization, tender offer, exchange offer, sale, lease, exchange, transfer, license, acquisition or disposition of any business or assets that constitute or account for 20% or more of the consolidated book value or the fair market value of the assets of each party and its respective affiliates, taken as a whole, or other similar transaction (excluding any Divestiture Transaction (as defined in the section titled "The Merger Agreement—Merger Consideration and Exchange Ratio")). Any such transactions could be favorable to such party's stockholders.

Because the lack of a public market for ArTara's common stock makes it difficult to evaluate the fairness of the Merger, ArTara's stockholders may receive consideration in the Merger that is greater than or less than the fair market value of ArTara's common stock.

        The outstanding share capital of ArTara is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of ArTara. It is possible that the value of Proteon's common stock to be issued in connection with the Merger will be greater than the fair market value of ArTara.

Because the Merger will result in an ownership change under Section 382 of the Internal Revenue Code (the "Code") for Proteon, Proteon's pre-merger net operating loss carryforwards and certain other tax attributes will be subject to limitations. The net operating loss carryforwards and other tax attributes of ArTara and of the combined organization may also be subject to limitations as a result of ownership changes.

        If a corporation undergoes an "ownership change" within the meaning of Section 382 of the Code ("Section 382"), the corporation's net operating loss carryforwards and certain other tax attributes arising before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation's equity ownership by certain stockholders that exceeds fifty percentage points over a rolling three-year period. The amount of the annual limitation is determined based on a corporation's value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Similar rules may apply under state tax laws. The Merger will result in an ownership change for Proteon and, accordingly, Proteon's net operating loss carryforwards and certain other tax attributes will be subject to limitations (or disallowance) on their use after the Merger. ArTara's net operating loss carryforwards may also be subject to limitation as a result of prior shifts in equity ownership and/or the Merger. Additional ownership changes in the future could result in additional limitations on Proteon's, ArTara's and the combined organization's net operating loss carryforwards. Consequently, even if the combined organization achieves profitability, it may not be able to utilize a material portion of Proteon's, ArTara's or the combined organization's net operating loss carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.

If the Merger does not qualify as a "reorganization" or contribution and exchange for U.S. federal income tax purposes, U.S. holders of ArTara's common stock will be required to recognize gain or loss for U.S. federal income tax purposes upon the exchange of their ArTara capital stock for Proteon common stock in the merger.

        The U.S. federal income tax consequences of the merger to U.S. holders (as defined in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger" in this proxy statement/prospectus/information statement) will depend on whether the Merger qualifies as a reorganization within the meaning of Section 368(a) of the Code or as a contribution and exchange under Section 351 of the Code. If the Merger fails to qualify as a reorganization within the meaning of Section 368(a) of the Code or as a contribution and exchange under Section 351 of the Code, a U.S. holder of ArTara capital stock may recognize gain or loss for U.S. federal income tax purposes on each share of ArTara capital stock surrendered in the merger for Proteon common stock and any cash received in lieu of a fractional share. For a more complete discussion of the material U.S. federal

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income tax consequences of the merger, please carefully review the information set forth in the section titled "The Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger."

The Exchange Ratio is not adjustable based on the market price of Proteon common stock so the merger consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signed.

        At the Effective Time, outstanding shares of ArTara capital stock will be converted into shares of Proteon common stock. Applying the Exchange Ratio, as of immediately after the closing of the Merger, but prior to the consummation of the Private Placement, the former ArTara equity holders immediately before the Merger are expected to own approximately 73.39% of the outstanding capital stock of Proteon, and the equity holders of Proteon immediately before the Merger are expected to own approximately 26.61% of the outstanding capital stock of Proteon (in each case on a fully diluted basis). After the consummation of the Merger, the Private Placement and the Series A Preferred Automatic Conversion, the Investors participating in the Private Placement are expected to own 60.93% of the outstanding capital stock of Proteon, the former ArTara equity holders immediately before the Merger are expected to own approximately 28.67% of the outstanding capital stock of Proteon, and the equity holders of Proteon immediately before the Merger are expected to own approximately 10.39% of the outstanding capital stock of Proteon (on a fully diluted basis), subject to adjustment based on the Proteon Net Cash balance (as defined in the section titled "The Merger Agreement—Conditions to the Completion of the Merger") prior to the completion of the Merger.

        Any changes in the market price of Proteon common stock before the completion of the Merger will not affect the number of shares ArTara stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger the market price of Proteon common stock declines from the market price on the date of the Merger Agreement, then ArTara securityholders could receive merger consideration with substantially lower value. Similarly, if before the completion of the Merger the market price of Proteon common stock increases from the market price on the date of the Merger Agreement, then ArTara securityholders could receive merger consideration with substantially more value for their shares of ArTara capital stock than the parties had negotiated for in the establishment of the Exchange Ratio. The Merger Agreement does not include a price-based termination right. Because the Exchange Ratio does not adjust as a result of changes in the value of Proteon common stock, for each one percentage point that the market value of Proteon common stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration issued to ArTara securityholders.

The opinion received by the Proteon Board from Wainwright has not been, and is not expected to be, updated to reflect changes in circumstances that may have occurred since the date of the opinion.

        On September 22, 2019, Wainwright rendered its oral opinion to the Proteon Board (which was subsequently confirmed in writing by delivery of Wainwright's written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described herein, as of September 22, 2019, the Exchange Ratio was fair, from a financial point of view, to Proteon. Wainwright did not express any view on, and its opinion did not address, any other term or aspect of any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with the Merger, including, without limitation, the Private Placement.

        Wainwright's opinion was prepared solely for the information of the Proteon Board and only addressed the fairness, from a financial point of view, to Proteon of the Exchange Ratio. Wainwright was not requested to opine as to, and Wainwright's opinion does not address, the relative merits of the Merger or any alternatives to the Merger, Proteon's underlying decision to proceed with or effect the Merger, or any other aspect of the Merger. Wainwright's opinion does not address the fairness of the

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Merger to the holders of any class of securities, creditors or other constituencies of Proteon and is not a valuation of Proteon or ArTara or their respective assets or any class of their securities. Wainwright did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of the officers, directors or employees, of Proteon, whether or not relative to the Merger. Wainwright also did not express an opinion regarding the fairness, from a financial point of view, to Proteon of the Private Placement.

        It should be understood that, although subsequent developments may affect the conclusion reached in the opinion, Wainwright does not have any obligation to update, revise or reaffirm such opinion and has not done so. See the section titled "The Merger—Opinion of the Proteon Financial Advisor" and Appendix B to this proxy statement/prospectus.

Proteon and ArTara may become involved in securities litigation or stockholder derivative litigation in connection with the Merger, and this could divert the attention of Proteon and ArTara management and harm the combined company's business, and insurance coverage may not be sufficient to cover all related costs and damages.

        Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as the sale of a business division or announcement of a business combination transaction. This risk is especially relevant for Proteon, ArTara and the combined company because biotechnology companies, like Proteon and ArTara, have experienced significant stock price volatility in recent years. Proteon and ArTara may become involved in this type of litigation in connection with the Merger, and the combined company may become involved in this type of litigation in the future. Litigation often is expensive and diverts management's attention and resources, which could adversely affect the business of Proteon, ArTara and the combined company, and insurance coverage may not be sufficient to cover all related costs and damages.

If any of the events described in "Risks Related to ArTara" occur, those events could cause the potential benefits of the Merger not to be realized.

        ArTara's business is expected to constitute substantially all of the business of the combined company following the Merger. As a result, the risks described below in the sections titled "Risks Related to ArTara" beginning on page 58 are among the most significant risks to the combined company if the Merger is completed. To the extent any of the events in the risks described in the sections referenced in the previous sentence occur, those events could cause the potential benefits of the Merger not to be realized and the market price of the combined company's common stock to decline.

The unaudited pro forma financial information included in this proxy statement/prospectus/information statement may not be representative of the combined company's results following the Merger.

        The unaudited pro forma financial information included in this proxy statement has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the Merger and related transactions been completed as of the date indicated, nor is it indicative of the combined company's future operating results or financial position. The pro forma financial statements have been derived from the historical financial statements of Proteon and ArTara and adjustments and assumptions have been made regarding the combined company after giving effect to the Merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the Merger. As a result, the actual financial condition of the combined company following the Merger may not be consistent with, or evident from, these pro forma financial statements. The assumptions used in

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preparing the pro forma financial information may not prove to be accurate, and other factors may affect the combined company's financial condition following the Merger and related transactions.

Risks Related to the Proposed Reverse Split

The Reverse Split may not increase the combined company's stock price over the long-term.

        The principal purpose of the Reverse Split is to increase the per-share market price of the combined company's common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of the combined company and the shares of the combined company common stock being issued in the Merger on Nasdaq will be approved. It cannot be assured, however, that the Reverse Split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of the combined company's common stock, it cannot be assured that the Reverse Split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by ArTara and Proteon, or result in any permanent or sustained increase in the market price of the combined company's common stock, which is dependent upon many factors, including the combined company's business and financial performance, general market conditions, and prospects for future success. Thus, while the stock price of the combined company might meet the continued listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

The Reverse Split may decrease the liquidity of the combined company's common stock.

        Although the Proteon Board believes that the anticipated increase in the market price of the combined company's common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the combined company's common stock.

The Reverse Split may lead to a decrease in the combined company's overall market capitalization.

        Should the market price of the combined company's common stock decline after the Reverse Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the Reverse Split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the combined company's overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company's common stock will remain the same after the Reverse Split is effected, or that the Reverse Split will not have an adverse effect on the combined company's stock price due to the reduced number of shares outstanding after the Reverse Split.

Risks Related to Proteon's Historical Business Operations and Financial Condition

Proteon's business to date has been almost entirely dependent on the success of vonapanitase, and Proteon has decided to discontinue further development of vonapanitase and devote significant time and resources to identifying and evaluating strategic alternatives, such as the Merger, which may not be successful.

        To date, Proteon has invested substantially all of its efforts and financial resources in the research and development of Proteon's lead indication for vonapanitase in radiocephalic fistulas, which was Proteon's only product candidate to enter Phase 3 clinical trials. On March 28, 2019, Proteon announced that its second Phase 3 trial, PATENCY-2, did not meet its co-primary endpoints of fistula

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use for hemodialysis (p=0.328) and secondary patency (p=0.932). In April 2019, based on the results of the PATENCY-2 clinical trial, Proteon discontinued research and development activities to reduce operating expenses, including a reduction in Proteon's workforce, to preserve its cash resources while Proteon evaluated its strategic alternatives with a goal to maximize stockholder value, including the possibility of a merger or sale of the company, such as the Merger. Proteon has retained Wainwright to advise and assist Proteon in the strategic review, along with legal advisors. There can be no assurance that the Merger will be consummated. If not consummated, there can be no assurance that Proteon's process to identify and evaluate other potential strategic alternatives would result in any definitive offer to consummate a strategic transaction, or if made that the terms thereof will be acceptable to the Company. If any other definitive offer to consummate a strategic transaction was received, there can be no assurance that a definitive agreement would be executed or that, if a definitive agreement was executed, the transaction would be consummated. In addition, there can be no assurance that any transaction, involving Proteon and/or its assets, that is consummated would enhance stockholder value. There also can be no assurance that Proteon will conduct further drug research or development activities in the future.

Proteon has identified conditions and events that raise substantial doubt about its ability to continue as a going concern.

        As of September 30, 2019, Proteon had approximately $9.3 million in existing cash and cash equivalents. Although Proteon believes that its cash and cash equivalents at September 30, 2019 will be sufficient to fund its operating expenses and capital expenditure requirements into 2020 and enable it to complete the Merger with ArTara, Proteon may not have sufficient cash on hand to fund its current operations for at least the next 12 months from the filing date of this Registration Statement. However, if there is a delay in completing the Merger, Proteon will require additional capital to sustain its operations through such completion or Proteon will need to pursue an immediate dissolution. If Proteon needs additional capital, Proteon would need to raise such capital through debt or equity financings, asset sales or other strategic transactions. However, there can be no assurances that Proteon will be able to complete any such transaction on acceptable terms or otherwise. The failure to obtain sufficient funds on commercially acceptable terms when needed could have a material adverse effect on Proteon's business, results of operations and financial condition and may prevent Proteon from completing the Merger. Accordingly, these factors, among others, raise substantial doubt about Proteon's ability to continue as a going concern.

Proteon has a limited operating history and has incurred significant losses since its inception, and Proteon anticipates that it will continue to incur losses for the foreseeable future.

        Proteon is a biotechnology company, and Proteon has not commercialized any products or generated any revenues from the sale of products. Proteon has historically devoted substantially all of its efforts and financial resources to research and development, including its clinical and preclinical development activities. In April 2019, Proteon discontinued substantially all its research and development activities to reduce operating expenses while it evaluated its strategic alternatives with a goal to enhance stockholder value, including the possibility of a merger or sale of the Company, such as the Merger. To date, Proteon has financed its operations primarily through the sale of equity securities and, prior to its initial public offering, the sale of convertible debt. Proteon has incurred losses from operations in each year since its inception, and Proteon's net losses were $20.7 million and $30.0 million for the years ended December 31, 2018 and 2017, respectively and $13.4 million and $15.5 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, Proteon had an accumulated deficit of $223.9 million. Proteon does not expect to generate any product revenues in the foreseeable future. Proteon does not know whether or when it will generate revenue or become profitable.

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        Proteon expects to continue to incur significant expenses for the foreseeable future. The net losses Proteon incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of Proteon's results of operations may not be a good indication of Proteon's future performance. In any particular quarter or quarters, Proteon's operating results could be below the expectations of securities analysts or investors, which could cause Proteon's stock price to decline.

Risks Related to Proteon's Clinical Development, Regulatory Review and Approval of its Product

Proteon may be subject to certain federal or state "fraud and abuse" laws and other healthcare laws and regulations. If Proteon is found to be in violation of any such laws or regulations, Proteon may be required to pay a penalty and/or be suspended from participation in federal or state healthcare programs, which may adversely affect Proteon's business, financial condition and ability to consummate the Merger or any other strategic transaction.

        Proteon may be subject to various federal and state laws pertaining to healthcare "fraud and abuse," including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal for a prescription drug or biologic manufacturer to solicit, offer, receive or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug or biologic. Other laws that Proteon may be subject to include the civil False Claims Act, criminal False Claims Act, the HIPAA fraud and abuse provisions, the Civil Monetary Penalties statute, Section 1927 of the Social Security Act, the Veterans Health Care Act, the Foreign Corrupt Practices Act, federal and state statutes and regulations pertaining to payments made to physicians and other health care providers, the HIPAA privacy and security provisions, and other analogous state laws. Due to the breadth of the statutory provisions, it is possible that Proteon's practices might be challenged under anti-kickback, healthcare, or other fraud and abuse laws. Moreover, recent healthcare reform legislation has strengthened these laws. For example, the Patient Protection and Affordable Care Act, or ACA, among other things, amends the intent requirement of the federal anti-kickback and certain of the criminal healthcare fraud statutes to clarify that a person or entity does not need to have actual knowledge of this statute or specific intent to violate it. In addition, the ACA clarifies that the government may assert that a claim that includes items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. False claims laws prohibit anyone from knowingly presenting, or causing to be presented for payment, to government third-party payors (including Medicare and Medicaid) claims for reimbursed drugs, or biologics or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Liability may also arise from false certification of compliance with laws and regulations that are conditions of payment. Proteon's activities relating to the sale and marketing of its products may be subject to scrutiny under these laws. Violations of fraud and abuse laws, and other healthcare statutes are punishable by criminal and civil sanctions, including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid) and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies. Proteon may further be subject to such other actions as debarment from government contracts and future orders under existing contracts, refusal to allow Proteon to enter into supply contracts, including government contracts, reputational harm, diminished profits and future earnings and the curtailment or restructuring of Proteon's operations, any of which could adversely affect Proteon's business.

        Given the significant penalties and fines that can be imposed on companies and individuals if convicted or found liable, allegations of violations under fraud and abuse laws often result in settlements even if the company or individual being investigated admits no wrongdoing. Settlements often include significant civil sanctions, including fines and civil monetary penalties, and corporate integrity agreements. If the government were to allege or convict Proteon or its executive officers of

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violating these laws, Proteon's business and ability to consummate the Merger or any other strategic transaction, could be harmed. In addition, private individuals have the ability to bring similar actions under the False Claims Act. Proteon's activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws and the increasing attention being given to them by law enforcement authorities. Further, an increasing number of state laws require manufacturers to make reports to states on pricing and marketing information. Many of these laws contain ambiguities as to what is required to comply with the laws. Given the lack of clarity in laws and their implementation, Proteon's reporting actions could be subject to the penalty provisions of the pertinent state authorities.

        Similar rigid restrictions are imposed on the promotion and marketing of medicinal products in the European Union and other countries. Laws (including those governing promotion, marketing and anti-kickback provisions), industry regulations and professional codes of conduct often are strictly enforced. Even in those countries where Proteon is not directly responsible for the promotion and marketing of its products, inappropriate activity by Proteon's international distribution partners can have adverse implications for Proteon.

Risks Related to Proteon's Intellectual Property

If Proteon's efforts to protect its intellectual property related to vonapanitase or any additional product candidates are not adequate, Proteon may not be able to compete effectively in Proteon's market or consummate any strategic transaction on terms that enhance stockholder value.

        Proteon relies upon a combination of patents, patent applications, know-how and confidentiality agreements to protect the intellectual property related to Proteon's only product candidate, vonapanitase, and will use a similar strategy to protect any additional product candidates. The patent position of biotechnology companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office, or USPTO, and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents. The patent applications that Proteon owns may fail to result in issued patents with claims that cover vonapanitase or any additional product candidates in the United States or in other countries. There is no assurance that all potentially relevant prior art relating to Proteon's patents and patent applications has been found, and prior art that is not before the patent examiners, as well as prior art that is before the patent examiners, could be used by a third party to invalidate a patent or could be relied on to prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if these patents cover vonapanitase or any additional product candidates, third parties may challenge their validity, enforceability or scope, which may result in Proteon's patents being narrowed or invalidated.

        Furthermore, even if they are unchallenged, Proteon's patents and patent applications may not adequately provide exclusivity for vonapanitase or any additional product candidates, prevent others from designing around Proteon's patents with similar products that are outside the scope of Proteon's patents, or prevent others from operating in jurisdictions in which Proteon did not pursue patent protection. Any of these outcomes could impair Proteon's ability to prevent competition from third parties, which may have an adverse impact on Proteon's business.

        If patent applications Proteon holds with respect to vonapanitase or any additional product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for vonapanitase or any additional product candidates, it could dissuade companies from collaborating with Proteon, or from valuing Proteon's intellectual property in a manner that enhances stockholder value in any potential strategic transaction. As of September 30, 2019, Proteon owns 45 issued patents and 9 pending patent applications, most of which cover aspects of vonapanitase or its use. Proteon cannot offer any assurances about which, if any, of the pending patent

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applications will issue as patents, the breadth of any such patents or any of Proteon's currently issued patents, or whether any issued patents will be challenged by third parties or will be found invalid and unenforceable if challenged. Any successful challenge to these patent applications, or patents that may issue from them, or to currently issued patents owned by Proteon, could deprive Proteon of rights necessary for the successful commercialization of vonapanitase or any other product candidate that Proteon may develop. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, Proteon cannot be certain that Proteon was the first to file a patent application relating to any particular aspect of a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by these third parties, or by the USPTO itself, to determine who was the first to invent any of the subject matter covered by the patent claims of Proteon's patents and patent applications.

        In the United States, for patent applications filed prior to March 16, 2013, assuming the other requirements for patentability are met, the first to invent is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. Certain of Proteon's currently pending utility patent applications are examined under the system in place before March 16, 2013. Third parties are allowed to submit prior art prior to the issuance of a patent by the USPTO, and may become involved in reexamination, inter partes review or interference proceedings challenging Proteon's patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, Proteon's patent rights, which could adversely affect Proteon's competitive position with respect to third parties.

        In addition, patents have a limited lifespan. In most countries, the statutory term of a patent is 20 years from the earliest domestic priority date claimed. In the United States, for applications filed after June 7, 1995, the statutory term of a patent is 20 years from earliest non-provisional priority date claimed. Various extensions of patent protection may be available in particular countries; however, in all circumstances, the life of a patent, and the protection it affords, has a limited term. If Proteon encounters delays in obtaining regulatory approvals, the period of time during which Proteon could market a product under patent protection could be reduced. Proteon expects to seek extensions of patent protection where these are available in any countries where Proteon is prosecuting patents. Such possible extensions include those permitted under the Drug Price Competition and Patent Term Restoration Act of 1984 in the United States, which permits Proteon to five years' extension of patent protection and no more than fourteen years following product approval for a single patent that covers an FDA-approved drug or biologic that contains an active ingredient or salt or ester of the active ingredient that has not previously been marketed. The scope of protection available during an extension of a patent claiming a product is limited to the approved product itself for approved uses, and the scope of protection available during an extension of a patent claiming a method of using a product is limited to the uses claimed in the patent and approved for the product. The actual length of the extension is calculated by adding one half of the time between the IND effective date and a company's initial submission of a marketing application, plus the entire time between the submission of the marketing application and the FDA's approval of the application. However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with Proteon's assessment of whether such extensions are available, and may refuse to grant extensions to Proteon's patents, or may grant more limited extensions than Proteon requests. If this occurs, Proteon's competitors may be able to take advantage of Proteon's investment in development and clinical trials by referencing Proteon's clinical and preclinical data, and then may be able to launch their product earlier than might otherwise be the case.

        Any loss of, or failure to obtain, patent protection could have a material adverse impact on Proteon's business. Proteon may be unable to prevent competitors from entering the market with a product that is similar to or the same as Proteon's products.

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Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of proprietary information.

        Proteon seeks to protect its proprietary technology and processes, in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors and contractors. Proteon also seeks to preserve the integrity and confidentiality of Proteon's data and know-how by maintaining physical security of Proteon's premises and physical and electronic security of Proteon's information technology systems. Nonetheless, despite these precautions, agreements or security measures may be breached, and Proteon may not have adequate remedies for any breach. In addition, Proteon's know-how may otherwise become known or be independently discovered by competitors. To the extent that Proteon's consultants, contractors or collaborators use intellectual property owned by others in their work for Proteon, disputes may arise as to the rights in related or resulting know-how and inventions.

        Enforcing a claim that a third party illegally obtained and is using any of Proteon's know-how is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States sometimes are less willing than United States courts to protect know-how. Misappropriation or unauthorized disclosure of Proteon's know-how could impair Proteon's competitive position and may have a material adverse effect on Proteon's business.

Proteon may become involved in lawsuits to protect or enforce Proteon's intellectual property, which could be expensive, time consuming and unsuccessful, and which may lead to a finding that Proteon's patents are invalid and/or unenforceable.

        Competitors may infringe Proteon's patents or misappropriate or otherwise violate Proteon's intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary to enforce or defend Proteon's intellectual property rights, to protect Proteon's know-how and/or to determine the validity and scope of Proteon's own intellectual property rights. Intellectual property litigation can be expensive and time consuming. Many of Proteon's current and potential competitors have the ability to dedicate substantially greater resources to litigate intellectual property rights than Proteon can. Accordingly, despite Proteon's efforts, Proteon may not be able to prevent third parties from infringing or misappropriating Proteon's intellectual property. Litigation could result in substantial costs and diversion of management resources, which could harm Proteon's business and financial results. In addition, in an infringement proceeding, a court may decide that Proteon's patents are invalid or unenforceable, and may refuse to stop the other party from using the technology at issue, including on the grounds that Proteon's patents are invalid or unenforceable or do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of Proteon's patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Proteon's confidential information could be compromised by disclosure during this type of litigation.

If Proteon is unable to adequately protect its proprietary technology, or obtain and maintain issued patents which are sufficient to protect its current product candidate, vonapanitase, or any additional product candidates, others could compete against Proteon more directly, which would have a material adverse impact on its business, financial condition and ability to consummate a strategic transaction.

        Proteon strives to protect and enhance the proprietary technologies that Proteon believes are important to its business, including seeking patents intended to cover Proteon's products and compositions, their methods of use and any other inventions that are important to the development of Proteon's business. Proteon also relies on know-how to protect aspects of Proteon's business that are not amenable to, or that Proteon does not consider appropriate for, patent protection.

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        Proteon's ability to successfully implement Proteon's business strategies will depend significantly on Proteon's ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to Proteon's business, defend and enforce Proteon's current patents and any future patents that may issue, preserve the confidentiality of Proteon's know-how and operate without infringing the valid and enforceable patents and proprietary rights of third parties. Proteon also relies on know-how and in-licensing opportunities to develop, strengthen and maintain the proprietary position of vonapanitase or any additional product candidates.

        Proteon cannot provide any assurances that any of Proteon's pending patent applications will mature into issued patents and, if they do, that such patents or Proteon's currently issued patents will include claims with a scope sufficient to protect vonapanitase or any additional product candidates or otherwise provide any competitive advantage. For example, one of Proteon's patents that may provide coverage for vonapanitase only covers particular formulations. As a result, this patent would not prevent third-party competitors from creating, making and marketing alternative formulations that fall outside the scope of Proteon's patent claims. There can be no assurance that any such alternative formulations will not be equally effective.

        Moreover, other parties have developed technologies that may be related or competitive to Proteon's approach, and may have filed or may file patent applications and may have received or may receive patents that may overlap or conflict with Proteon's patent applications, either by claiming the same methods or formulations or by claiming subject matter that could dominate Proteon's patent position. These third party patent positions may limit or even eliminate Proteon's ability to obtain patent protection for certain inventions.

        The patent positions of biotechnology and pharmaceutical companies, including Proteon's patent position, involve complex legal and factual questions, and, therefore, the issuance, scope, validity and enforceability of any patent claims that Proteon may obtain cannot be predicted with certainty. Patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented. United States patents and patent applications may also be subject to interference proceedings, ex parte reexamination, or inter partes review proceedings, and challenges in district court. Patents may be subjected to opposition, revocation proceedings, or comparable proceedings lodged in various foreign, both national and regional, patent offices. These proceedings could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such proceedings may be costly. Thus, any patents that Proteon may own or exclusively license may not provide any protection against competitors. Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by Proteon, which in turn could affect Proteon's ability to develop, market or otherwise commercialize vonapanitase or any additional product candidates.

        Furthermore, though a patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide Proteon with adequate proprietary protection or competitive advantages against competitors with similar products. Even if a patent issues and is held to be valid and enforceable, competitors may be able to design around Proteon's patents, such as using pre-existing or newly developed technology. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. Proteon may not be able to prevent the unauthorized disclosure or use of Proteon's technical knowledge or know-how by consultants, vendors, former employees and current employees. The laws of some foreign countries do not protect Proteon's proprietary rights to the same extent as the laws of the United States, and Proteon may encounter significant problems in protecting Proteon's proprietary rights in these countries. If these developments were to occur, they could have a material adverse effect on Proteon's sales.

        In addition, proceedings to enforce or defend Proteon's patents, if and when issued, could put Proteon's patents at risk of being invalidated, held unenforceable, or interpreted narrowly. These

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proceedings could also provoke third parties to assert claims against Proteon, including that some or all of the claims in one or more of Proteon's patents are invalid or otherwise unenforceable. If any of Proteon's patents, if and when issued, covering vonapanitase or any additional product candidates, are invalidated or found unenforceable, Proteon's financial position and results of operations would be materially and adversely impacted. In addition, if a court found that valid, enforceable patents held by third parties covered vonapanitase, or any additional product candidates, Proteon's financial position and results of operations would also be materially and adversely impacted.

        The degree of future protection for Proteon's proprietary rights is uncertain, and Proteon cannot ensure that:

        Proteon relies upon unpatented know-how to maintain its competitive position, which it seeks to protect, in part, by confidentiality agreements with Proteon's employees and Proteon's collaborators and consultants. It is possible that technology relevant to Proteon's business will be independently developed by a person that is not a party to such an agreement. Furthermore, if the employees and consultants who are parties to these agreements breach or violate the terms of these agreements, Proteon may not have adequate remedies for any such breach or violation, and Proteon's confidential know-how could become known to others through such breaches or violations. Further, Proteon's know-how could otherwise become known or be independently discovered by Proteon's competitors. Further, the term of confidentiality requirements for current and terminated agreements with some of Proteon's consultants, contract manufacturing or research organizations and other third parties is finite.

Proteon may be subject to claims challenging the inventorship or ownership of Proteon's patents and other intellectual property.

        Proteon enters into confidentiality and intellectual property assignment agreements with its employees, consultants, outside scientific collaborators, sponsored researchers and other advisors. These agreements generally provide that inventions conceived by the party in the course of rendering services to Proteon will be Proteon's exclusive property. However, these agreements may not be honored and

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may not effectively assign intellectual property rights to Proteon. For example, even if Proteon has a consulting agreement in place with an academic advisor pursuant to which the academic advisor is required to assign any inventions developed in connection with providing services to Proteon, the academic advisor may not have the right to assign these inventions to Proteon, as it may conflict with his or her obligations to assign all intellectual property to his or her employing institution.

        Litigation may be necessary to defend against these and other claims challenging inventorship or ownership of inventions. If Proteon is unsuccessful in defending against any of these claims, in addition to paying monetary damages, Proteon may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on Proteon's business. Even if Proteon is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining Proteon's patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Proteon's patent protection could be reduced or eliminated for non-compliance with these requirements.

        The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

Issued patents covering vonapanitase or covering any additional product candidates could be found invalid or unenforceable if challenged in court.

        If Proteon initiated legal proceedings against a third party to enforce a patent, if and when issued, covering vonapanitase or any additional product candidate, the defendant could counterclaim that the patent covering Proteon's product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. These mechanisms include reexamination and inter partes review in the United States and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. These proceedings could result in revocation or amendment of Proteon's patents in such a way that they no longer cover, for example, vonapanitase or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, Proteon cannot be certain that there is no invalidating prior art, including prior art of which Proteon and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, Proteon would lose at least part, and perhaps all, of the patent protection on the applicable product candidate. A loss of patent protection would have a material adverse impact on Proteon's business.

Proteon will not seek to protect Proteon's intellectual property rights in all jurisdictions throughout the world, and Proteon may not be able to adequately enforce Proteon's intellectual property rights even in the jurisdictions where Proteon seeks protection.

        Filing, prosecuting and defending patents on product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and Proteon's intellectual property rights in some countries outside the United States could be less extensive than those in the United States,

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assuming that rights are obtained in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, Proteon may not be able to prevent third parties from practicing Proteon's inventions in all countries outside the United States, or from selling or importing products made using Proteon's inventions in and into the United States or other jurisdictions.

        Competitors may use Proteon's technologies in jurisdictions where Proteon does not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where Proteon has patent protection, but enforcement is not as strong as that in the United States. These products may compete with Proteon's products and Proteon's patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if Proteon pursues and obtains issued patents in particular jurisdictions, Proteon's patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for Proteon to stop the infringement of Proteon's patents or marketing of competing products in violation of Proteon's proprietary rights generally. Proceedings to enforce Proteon's patent rights in foreign jurisdictions could result in substantial costs and divert Proteon's efforts and attention from other aspects of Proteon's business, could put Proteon's patents at risk of being invalidated or interpreted narrowly, could put Proteon's patent applications at risk of not issuing and could provoke third parties to assert claims against Proteon. Proteon may not prevail in any lawsuits that Proteon initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, Proteon's efforts to enforce Proteon's intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Proteon develops or license.

Some of Proteon's intellectual property may have been discovered through government funded programs and thus may be subject to federal regulations such as government "march-in" rights, certain reporting requirements, and a preference for United States industry. Compliance with these regulations may limit Proteon's exclusive rights, subject Proteon to expenditure of resources with respect to reporting requirements, and limit Proteon's ability to contract with foreign manufacturers.

        Some of Proteon's intellectual property rights may have been generated through the use of United States government funding and therefore are subject to certain federal regulations. For example, Proteon's patents relating to some therapeutic uses of vonapanitase and associated systems and kits that include a catheter, which Proteon refers to as the "therapy family," arose from research funded by the United States government. As a result, the United States government has certain rights to this intellectual property pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act. These United States government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the United States government has the right to require Proteon to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations, also referred to as "march-in rights." The United States government also has the right to take title to these inventions if Proteon, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. In addition, the United States government may

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acquire title to these inventions in any country in which a patent application is not filed within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require Proteon or the applicable licensor to expend substantial resources. In addition, the United States government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for United States manufacturers may limit Proteon's ability to contract with foreign product manufacturers for products covered by the applicable intellectual property.

        Proteon currently does not plan to apply for additional United States government funding, but if Proteon does, and Proteon discovers compounds or drug or biological candidates as a result of such funding, intellectual property rights to these discoveries may be subject to the applicable provisions of the Bayh-Dole Act.

If Proteon does not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent protection for vonapanitase, Proteon's business may be materially harmed.

        Depending upon the timing, duration and specifics of the first FDA marketing approval of vonapanitase and, if applicable, any additional product candidates, a United States patent that Proteon owns or license may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit extension of one patent that covers an FDA-approved drug or biologic that contains an active ingredient or salt or ester of the active ingredient that has not previously been marketed for up to five years and no more than fourteen years after product approval for patent term lost during product development and the FDA regulatory review process. The length of the extension is calculated by adding one half of the time between the IND effective date and a company's initial submission of a marketing application, plus the entire time between the submission of the marketing application and the FDA's approval of the application. During this period of extension, the scope of protection is limited to the approved product for approved uses (for patents claiming a product) and any use claimed by the patent and approved for the product (for patents claiming a method of using a product).

        Although Proteon plans to seek patent term restoration for Proteon's products, it may not be granted if, for example, Proteon fails to apply within applicable deadlines, fails to apply prior to expiration of relevant patents or otherwise fails to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than Proteon request. If Proteon is unable to obtain patent term restoration or the term of any such patent restoration is less than Proteon request, Proteon's competitors may be able to enter the market and compete against Proteon sooner than Proteon anticipates, and Proteon's ability to generate revenues could be materially adversely affected.

Changes in United States patent law could diminish the value of patents in general, thereby impairing Proteon's ability to protect Proteon's products.

        As is the case with other biotechnology companies, Proteon's success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the United States has in recent years implemented wide-ranging patent reform legislation, the Leahy-Smith America Invents Act, or America Invents Act. The America Invents Act includes a number of significant changes to United States patent law. These include provisions that

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affect the way patent applications will be prosecuted, provides expanded opportunities for post-grant administrative review of patents before the USPTO, and may also affect patent litigation. The USPTO developed new regulations and procedures to govern administration of the America Invents Act, and many of the substantive changes to patent law associated with the America Invents Act, in particular the first to file provisions, only became effective on March 16, 2013. A third party that files a patent application in the USPTO after that date but before Proteon could therefore be awarded a patent covering an invention of Proteon's even if Proteon had made the invention before it was made by the third party. This requires Proteon to be cognizant of the time from invention to filing of a patent application. Thus, for Proteon's U.S. patent applications containing a priority claim after March 16, 2013, there is a greater level of uncertainty in the patent law. Moreover, some of the patent applications in Proteon's portfolio will be subject to examination under the pre-America Invents Act law and regulations, while other patents applications in Proteon's portfolio will be subject to examination under the law and regulations, as amended by the America Invents Act. This introduces additional complexities and costs into the prosecution and management of Proteon's portfolio.

        The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology. This could make it difficult for Proteon to stop the infringement of Proteon's patents, if obtained, or the misappropriation of Proteon's other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, Proteon may choose not to seek patent protection in certain countries, and Proteon will not have the benefit of patent protection in such countries.

        In addition, the America Invents Act and recent Supreme Court and U.S. Court of Appeals for the Federal Circuit decisions limit where a patentee may file a patent infringement suit, and the America Invents Act provides opportunities for third parties to challenge any issued patent in the USPTO. These provisions apply to all of Proteon's U.S. patents, even those filed before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a federal court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate Proteon's patent claims because it may be easier for them to do so relative to challenging the patent in a federal court action. It is not clear what, if any, impact the America Invents Act will have on the operation of Proteon's business. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Proteon's patent applications and the enforcement or defense of any patents that may issue from Proteon's patent applications, all of which could have a material adverse effect on Proteon's business and financial condition.

        In addition, recent United States Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. The full impact of these decisions is not yet known. For example, on March 20, 2012 in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the Court held that several claims drawn to measuring drug metabolite levels from patient samples and correlating them to drug doses were not patent-eligible subject matter. The decision appears to impact diagnostics patents that merely apply a

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law of nature via a series of routine steps and it has created uncertainty around the ability to obtain patent protection for certain inventions. Additionally, on June 13, 2013 in Association for Molecular Pathology v. Myriad Genetics, Inc., the Court held that claims to isolated genomic DNA are not patent-eligible, but claims to complementary DNA molecules are patent-eligible because they are not a natural product. The effect of the decision on patents for other isolated natural products is uncertain. On June 19, 2014 in Alice Corporation Pty. Ltd. v. CLS Bank International, et al., a case involving patent claims directed to a method for mitigating settlement risk, the Court held that the patent eligibility of claims directed to abstract ideas, products of nature, and laws of nature should be determined using the same framework set forth in Prometheus. The USPTO has issued a series of guidelines setting forth procedures for determining subject matter eligibility of claims directed to abstract ideas, products of nature, and laws of nature in line with the Prometheus, Myriad and Alice decisions. This guidance does not limit the application of Myriad to DNA, but, rather, applies the decision to other natural products. The USPTO's interpretation of the case law and new guidelines for examination may influence, possibly adversely, prosecution and defense of certain types of claims in Proteon's portfolio.

        In addition to increasing uncertainty with regard to Proteon's ability to obtain future patents, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on these and other decisions by the United States Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken Proteon's ability to obtain new patents or to enforce Proteon's current or future patents.

Proteon may be subject to damages resulting from claims that Proteon or Proteon's employees have wrongfully used or disclosed alleged trade secrets of their former employers.

        Proteon's employees have been previously employed at other biotechnology or pharmaceutical companies, including Proteon's competitors or potential competitors, or at universities or academic medical centers. Proteon also engages advisors and consultants who are concurrently employed at universities or who perform services for other entities. Although Proteon is not aware of any claims currently pending against Proteon, Proteon may be subject to claims that Proteon or Proteon's employees, advisors or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third party. Proteon may in the future also be subject to claims that an employee, advisor or consultant performed work for Proteon that conflicts with that person's obligations to a third party, such as an employer, and thus, that the third party has an ownership interest in the intellectual property arising out of work performed for Proteon. Litigation may be necessary to defend against these claims. Even if Proteon is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If Proteon is unsuccessful in defending against such claims, in addition to paying monetary damages, Proteon may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Proteon's ability to commercialize vonapanitase or any additional product candidates, which would materially adversely affect Proteon's commercial development efforts.

Numerous factors may limit any potential competitive advantage provided by Proteon's intellectual property rights.

        The degree of future protection afforded by Proteon's intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect Proteon's business, provide a barrier to entry against Proteon's competitors or potential competitors, or permit Proteon to maintain Proteon's competitive advantage. Moreover, if a third party has intellectual property rights

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that cover the practice of Proteon's technology, Proteon may not be able to exercise or extract value from Proteon's intellectual property rights fully or at all. The following examples are illustrative:

        Should any of these events occur, they could significantly harm Proteon's business and results of operations.

Risks Related to Proteon's Business and Industry

If product liability lawsuits are successfully brought against Proteon, Proteon's insurance may be inadequate and Proteon may incur substantial liability.

        Proteon faces an inherent risk of product liability claims as a result of the clinical testing of vonapanitase or any additional product candidates. Proteon will face an even greater risk if Proteon commercially sells vonapanitase or any additional product candidate that Proteon develops. Proteon maintains primary product liability insurance and excess product liability insurance that cover Proteon's clinical trials, and Proteon plans to maintain insurance against product liability lawsuits for commercial sale of Proteon's potential products. Historically, the potential liability associated with product liability lawsuits for pharmaceutical products has been unpredictable. Although Proteon believes that Proteon's current insurance is a reasonable estimate of Proteon's potential liability and represents a commercially reasonable balancing of the level of coverage as compared to the cost of the insurance, Proteon may be subject to claims in connection with Proteon's clinical trials and, in the future, commercial use of Proteon's potential products, for which Proteon's insurance coverage may not be adequate, and the cost of any product liability litigation or other proceeding, even if resolved in Proteon's favor, could be substantial.

        For example, Proteon may be sued if any product Proteon develops allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Large judgments have been awarded in class action lawsuits based on drugs or biologics that had unanticipated adverse effects. Claims could also be asserted under state consumer protection acts. If Proteon cannot successfully defend itself against product liability claims, Proteon may incur substantial

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liabilities or be required to limit commercialization of vonapanitase or any additional product candidates. Regardless of the merits or eventual outcome, liability claims may result in:

        The product liability insurance Proteon will need to obtain in connection with the commercial sales of vonapanitase or any additional product candidates if and when they receive regulatory approval may be unavailable in meaningful amounts or at a reasonable cost. In addition, insurance coverage is becoming increasingly expensive. If Proteon is unable to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development and commercial production and sale of vonapanitase or any additional product candidates if and when they obtain regulatory approval, which could materially adversely affect Proteon's business, financial condition, results of operations, cash flows and prospects.

        Additionally, Proteon does not carry insurance for all categories of risk that Proteon's business may encounter. Some of the policies Proteon currently maintains include general liability, employment practices liability, property, auto, workers' compensation, products liability and directors' and officers' insurance. Proteon does not know, however, if Proteon will be able to maintain insurance with adequate levels of coverage. Any significant uninsured liability may require Proteon to pay substantial amounts, which would materially adversely affect Proteon's financial position, cash flows and results of operations.

Proteon's business and operations would suffer in the event of system failures or security breaches.

        Despite the implementation of security measures, Proteon's internal computer systems, and those of Proteon's CROs and other third parties on which Proteon relies, are vulnerable to damage from computer viruses, unauthorized access, cyber attacks, natural disasters, terrorism, war and telecommunication and electrical failures. If issues were to arise and cause interruptions in Proteon's operations, it could result in a material disruption of Proteon's drug and biologic development programs or could cause loss of critical data or the unauthorized disclosure, access, acquisition, alteration, or use of personal or other confidential information. For example, the loss of clinical trial data from completed or planned clinical trials could result in delays in Proteon's regulatory approval efforts and significantly increase Proteon's costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to Proteon's data or applications, or inappropriate disclosure of confidential or proprietary information, Proteon could incur liability and the further development of vonapanitase or any additional product candidates could be

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delayed. Proteon may also be vulnerable to cyber attacks by hackers, or other malfeasance. This type of breach of Proteon's cybersecurity may compromise Proteon's confidential information and/or Proteon's financial information and detrimentally impact Proteon's business or result in significant legal and financial exposure and/or reputational harm.

        In addition, while Proteon selects third-party vendors and business partners carefully and routinely evaluate the cybersecurity of Proteon's CROs and other key vendors, Proteon does not control their actions. Any problems caused by these third parties, including those resulting from cyber attacks and security breaches at a vendor, could result in material delays in Proteon's development programs and regulatory approval efforts and adversely affect Proteon's business. Moreover, data security incidents and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above.

        There are also numerous federal, state, and local laws and regulations in the United States and around the world regarding privacy and the collection, processing, storing, sharing, disclosing, using, cross-border transfer, and protecting of personal information and other data, the scope of which are changing, subject to differing interpretations, and which may be costly to comply with, may result in regulatory fines or penalties, and may be inconsistent between countries and jurisdictions or conflict with other requirements. Proteon strives to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy and data protection, to the extent possible. However, it is possible that these obligations may be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or Proteon's practices or that new regulations could be enacted. Several proposals are pending before federal, state, and foreign legislative and regulatory bodies that could affect Proteon's business. Any failure or perceived failure by Proteon to comply with Proteon's privacy-related obligations to third parties, or Proteon's privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against Proteon by advocacy groups or others, and could cause third parties, including clinical sites, regulators or potential partners, to lose trust in Proteon, which could have an adverse effect on Proteon's business.

Proteon's employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading, which could significantly harm Proteon's business.

        Proteon is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with the regulations of the FDA and foreign regulators, provide accurate information to the FDA and foreign regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, and report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Proteon's reputation. Proteon has a Code of Business Conduct and Ethics, but it is not always possible to identify and deter employee misconduct, and the precautions Proteon takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Proteon from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any actions are instituted against Proteon, and Proteon is not successful in defending itself or asserting its rights, those actions could have a significant impact on Proteon's business, including the imposition of significant fines or other sanctions.

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Proteon has broad discretion in its use of its cash and cash equivalents and may not use them effectively.

        Proteon's management has broad discretion to use its cash and cash equivalents to fund its operations and could spend these funds in ways that do not improve Proteon's results of operations or enhance the value of Proteon common stock. The failure of Proteon's management to apply these funds effectively could result in financial losses that could have a material adverse effect on Proteon's business, cause the price of Proteon's common stock to decline and delay the development of Proteon's product candidates. Pending their use to fund Proteon's operations, Proteon may invest its cash and cash equivalents in a manner that does not produce income or that loses value.

Risks Related to Proteon's Common Stock

Proteon's common stock may be delisted from Nasdaq if Proteon is unable to maintain compliance with Nasdaq's continued listing standards.

        Nasdaq imposes, among other requirements, continued listing standards including minimum bid and public float requirements. The price of Proteon common stock must trade at or above $1.00 to comply with Nasdaq's minimum bid requirement for continued listing on Nasdaq.

        On May 10, 2019, Proteon received a deficiency letter from Nasdaq, which indicated that Proteon was not in compliance with the minimum bid price requirement set forth in Nasdaq rules for continued listing on The Nasdaq Global Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), Proteon was granted a grace period of 180 calendar days, or until November 6, 2019, to regain compliance with the minimum bid price requirement. During the compliance period, Proteon common stock continued to be listed and traded on Nasdaq. Because Proteon does not anticipate being able to regain compliance with the minimum bid price requirement during the compliance period, Proteon submitted an application to transfer the listing of the Proteon common stock to The Nasdaq Capital Market, which, according to the Nasdaq Listing Rules, affords Proteon an additional 180-day compliance period to comply with the minimum bid price requirement. The transfer application also requires Proteon to submit a letter stating its intention to effect the Reverse Stock Split during the second compliance period, which Proteon has done. The application to transfer the listing of the Proteon common stock was granted on September 30, 2019, effective October 7, 2019. If Proteon fails to regain compliance with the minimum bid price requirement during the second compliance period, the Proteon common stock could be subject to delisting. Additionally, if Proteon fails to comply with any other continued listing standards of Nasdaq, Proteon common stock will also be subject to delisting. There can be no assurance that Proteon will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria

        Any delisting of Proteon common stock could adversely affect the market liquidity of Proteon common stock and the market price of Proteon common stock could decrease. Furthermore, if Proteon common stock were delisted it could adversely affect Proteon's ability to complete one or more strategic transactions for the company, to obtain financing for the continuation of Proteon's operations and/or result in the loss of confidence by investors, customers, suppliers and employees.

If the proposed Merger is not completed, the market price of Proteon common stock may continue to be volatile and may fluctuate in a way that is disproportionate to Proteon's operating performance.

        Factors affecting the trading price of Proteon common stock may include:

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        Broad market and industry factors may materially harm the market price of Proteon common stock irrespective of Proteon's operating performance. The stock market in general, and Nasdaq and the market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of Proteon's, may not be predictable. A loss of investor confidence in the market for pharmaceutical, biopharmaceutical and biotechnology stocks or the stocks of other companies which investors perceive to be similar to us, or the stock market in general, could depress Proteon's stock price regardless of its business, prospects, financial conditions or results of operations.

The resale of the shares of Proteon common stock issuable upon the conversion of Proteon's Series A Convertible Preferred Stock could adversely affect the prevailing market price of Proteon's common stock and cause stockholders to experience dilution.

        On August 2, 2017, Proteon issued and sold 22,000 shares of its Series A Convertible Preferred Stock, par value $0.001 per share, for a purchase price of $1,000 per share, or an aggregate purchase price of $22.0 million. Each share of Series A Convertible Preferred Stock is convertible into approximately 1,005 shares of Proteon common stock at a conversion price of $0.9949 per share, provided that any conversion of Series A Convertible Preferred Stock by a holder into shares of Common Stock is prohibited if, as a result of such conversion, the holder, together with its affiliates and any other person or entity whose beneficial ownership of Proteon common stock would be aggregated with such holder's for purposes of Section 13(d) of the Exchange Act, would beneficially own more than 9.985% of the total number of shares of Proteon common stock issued and outstanding after giving effect to such conversion (the "Blocker"). Pursuant to the registration statement that Proteon filed with the SEC for the resale by holders of Proteon Series A Preferred Convertible Stock, as selling stockholders, of the aggregate 21,771,032 shares of Proteon common stock that are issuable upon conversion of the Series A Convertible Preferred Stock, the outstanding shares of Series A Convertible Preferred Stock may, at each holder's election, be converted into Proteon common stock, subject to the Blocker. Although Proteon cannot predict if and when the holders of Series A Convertible Preferred Stock may sell such shares in the public market, any converted shares of Proteon common stock will be available for immediate resale and be able to be freely sold in the open market. The conversion of shares of Series A Convertible Preferred Stock into shares of Proteon common stock will result in substantial dilution to holders of Proteon common stock. Further, the sale of a significant amount of these shares of Proteon common stock in the open market or the perception that these sales may occur could adversely affect prevailing market prices of Proteon common stock, including causing the market price of Proteon common stock to decline or become highly volatile.

The concentration of Proteon capital stock ownership with insiders will likely limit your ability to influence corporate matters.

        As of December 31, 2018, Proteon's executive officers, directors, current 5% or greater stockholders, and their respective affiliates together beneficially own or control, in aggregate, more than 50% of the shares of Proteon's outstanding common stock. As a result, these executive officers, directors and principal stockholders, acting together, will have substantial influence over most matters

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that require approval by Proteon's stockholders, including the election of directors, any merger, consolidation or sale of all or substantially all or of Proteon's assets or any other significant corporate transaction. Corporate action might be taken even if other stockholders oppose such action. These stockholders may delay or prevent a change of control or otherwise discourage a potential acquirer from attempting to obtain control of Proteon, even if such change of control would benefit its other stockholders. This concentration of stock ownership may adversely affect investors' perception of Proteon's corporate governance or delay, prevent or cause a change in control of Proteon, any of which could adversely affect the market price of Proteon's common stock.

Proteon will continue to incur substantial costs as a result of operating as a public company, and its management will continue to devote substantial time to new compliance initiatives and corporation governance policies.

        As a public company, Proteon has incurred and will continue to incur significant legal, accounting and other expenses that Proteon did not incur as a private company. In addition, the Sarbanes-Oxley Act, and rules of the SEC and those of Nasdaq impose various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Proteon's management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase Proteon's legal and financial compliance costs and will make some activities more time-consuming and costly.

        The Sarbanes-Oxley Act requires, among other things, that Proteon maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, Proteon must perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of Proteon's internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, Proteon will be required to have Proteon's independent registered public accounting firm attest to the effectiveness of its internal control over financial reporting the later of its second annual report on Form 10-K or the first annual report on Form 10-K following the date on which it is no longer an emerging growth company. Proteon's compliance with Section 404 of the Sarbanes-Oxley Act will require that it incur substantial accounting expense and expend significant management efforts. Proteon currently does not have an internal audit group, and it will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If Proteon is not able to comply with the requirements of Section 404 in a timely manner, or if Proteon or its independent registered public accounting firm identify deficiencies in its internal control over financial reporting that are deemed to be material weaknesses, the market price of its stock could decline and Proteon could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

        Proteon's ability to successfully implement its business plan and comply with Section 404 requires it to be able to prepare timely and accurate financial statements. Proteon expects that it will need to continue to improve existing, and implement new operational and financial systems, procedures and controls to manage its business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause Proteon's operations to suffer and it may be unable to conclude that its internal control over financial reporting is effective and to obtain an unqualified report on internal controls from its auditors as required under Section 404 of the Sarbanes-Oxley Act. This, in turn, could have an adverse impact on trading prices for Proteon common stock, and could adversely affect its ability to access the capital markets.

Proteon does not expect to pay any cash dividends for the foreseeable future.

        You should not rely on an investment in Proteon common stock to provide dividend income. Proteon does not anticipate that it will pay any cash dividends to holders of its common stock in the

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foreseeable future. Instead, Proteon plans to retain any earnings to maintain and expand its operations. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase Proteon common stock.

Provisions in Proteon's certificate of incorporation, its bylaws and Delaware law may have anti-takeover effects that could discourage an acquisition of Proteon by others, even if an acquisition would be beneficial to its stockholders, and may prevent attempts by Proteon stockholders to replace or remove Proteon's current management.

        Proteon's certificate of incorporation, bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of Proteon or changes in Proteon's management. Proteon's certificate of incorporation and bylaws include provisions that:

        These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in Proteon's management.

        In addition, because Proteon is incorporated in the State of Delaware, it are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of Proteon's outstanding voting stock to merge or combine with Proteon.

        Any provision of Proteon's certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for Proteon's stockholders to receive a premium for their shares of Proteon common stock, and could also affect the price that some investors are willing to pay for Proteon common stock.

        Proteon's certificate of incorporation designates the Court of Chancery of the State of Delaware and federal courts within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by Proteon's stockholders, which could limit such stockholders' ability to obtain a favorable judicial forum for disputes with Proteon or its directors, officers or employees.

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        Proteon's certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware and federal courts within the State of Delaware will be exclusive forums for (1) any derivative action or proceeding brought on Proteon's behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of Proteon's directors, officers or other employees to Proteon or Proteon's stockholders, (3) any action asserting a claim against Proteon arising pursuant to any provision of the Delaware General Corporation Law, Proteon's certificate of incorporation or Proteon's bylaws, or (4) any other action asserting a claim against Proteon that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of Proteon's capital stock shall be deemed to have notice of and to have consented to the provisions of its amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with Proteon or its directors, officers or other employees, which may discourage such lawsuits against Proteon and its directors, officers and employees. Alternatively, if a court were to find these provisions of Proteon's certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, Proteon may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect Proteon's business and financial condition.

Risks Related to ArTara

Risks Related to ArTara's Development, Commercialization and Regulatory Approval of ArTara's Investigational Therapies, TARA-002 and IV Choline Chloride

ArTara's business depends on the successful clinical development, regulatory approval and commercialization of TARA-002 and IV Choline Chloride.

        The success of ArTara's business, including its ability to finance itself and generate revenue in the future, primarily depends on the successful development, regulatory approval and commercialization of TARA-002 and IV Choline Chloride. The clinical and commercial success of TARA-002 and IV Choline Chloride depends on a number of factors, including the following:

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        If ArTara does not achieve one or more of these factors, many of which are beyond its control, in a timely manner or at all, ArTara could experience significant delays or an inability to obtain regulatory approvals or commercialize TARA-002 and IV Choline Chloride. Even if regulatory approvals are obtained, ArTara may never be able to successfully commercialize TARA-002 and IV Choline Chloride. Accordingly, ArTara cannot assure you that it will be able to generate sufficient revenue through the sale of TARA-002 and IV Choline Chloride to continue its business.

ArTara has never conducted a clinical trial itself and may be unable to successfully do so for TARA-002 or IV Choline Chloride.

        The conduct of a clinical trials is a long, expensive, complicated and highly regulated process. Although ArTara's employees have conducted successful clinical trials in the past across many therapeutic areas while employed at other companies, ArTara as a company has not conducted any clinical trials, and as a result may require more time and incur greater costs than it anticipates. Failure to commence or complete, or delays in, ArTara's planned clinical trials would prevent it from or delay ArTara in obtaining regulatory approval of and commercializing TARA-002 and IV Choline Chloride, which would adversely impact its financial performance, as well as subjecting it to significant contract liabilities.

TARA-002 is an immunotherapy, the first indication for which ArTara plans to pursue is the treatment of lymphatic malformations, an indication for which there are no FDA-approved therapies. This makes it difficult to predict the timing and costs of clinical development for TARA-002, as well as the regulatory approval path.

        To date, there are no FDA-approved therapies for the treatment of lymphatic malformations and the standard of care is surgery. The regulatory approval process for novel product candidates such as TARA-002 can be more expensive and take longer than for other, better known or extensively studied therapeutic approaches. In addition, the clinical trials conducted on TARA-002 in the United States to date, included a control arm in which treatment was initially delayed. It is unclear whether this trial design could support FDA approval or whether a placebo-control or other randomization will be required by the FDA. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring TARA-002 to market could decrease ArTara's ability to generate sufficient revenue to maintain its business.

The regulatory path to approval of TARA-002 is atypical.

        The proposed regulatory strategy for the TARA-002 program is combination of demonstrating comparability to a product that is not FDA approved. By demonstrating that TARA-002 is, in fact,

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OK-432, ArTara believes that the large volume of data published on OK-432 including the data generated by the University of Iowa led study will then apply to TARA-002. This strategy will rely on some components of a biosimilar pathway, with a significant difference being that the same genetically distinct strain and proprietary manufacturing processes will be used to produce TARA-002 as OK-432. If comparability is demonstrated and accepted by regulatory authorities, ArTara will attempt to rely on existing OK-432 safety and efficacy data to file the Biologics Licensing Application (BLA). There is no example of a biologic product that was approved utilizing this regulatory approach.

Clinical drug development is very expensive, time-consuming and uncertain.

        Clinical development for ArTara's product candidates is very expensive, time-consuming, difficult to design and implement, and the outcomes are inherently uncertain. Most product candidates that commence clinical trials are never approved by regulatory authorities for commercialization and of those that are approved many do not cover their costs of development. In addition, ArTara, any partner with which it may in the future collaborate, the FDA, an institutional review board (IRB), or other regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications to or terminate ArTara's clinical trials at any time.

ArTara's product candidates may cause undesirable side effects or have other unexpected properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in post-approval regulatory action.

        Unforeseen side effects from TARA-002 or IV Choline Chloride could arise either during clinical development or, if approved, after it has been marketed. Undesirable side effects could cause ArTara, any partners with which ArTara may collaborate, or regulatory authorities to interrupt, extend, modify, delay or halt clinical trials and could result in a more restrictive or narrower label or the delay or denial of regulatory approval by the FDA or comparable foreign authorities.

        Results of clinical trials could reveal a high and unacceptable severity and prevalence of side effects. In such an event, trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of a product candidate for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in product liability claims. Any of these occurrences may harm ArTara's business, financial condition, operating results and prospects.

        Additionally, if ArTara or others identify undesirable side effects, or other previously unknown problems, caused by a product after obtaining U.S. or foreign regulatory approval, a number of potentially negative consequences could result, which could prevent ArTara or its potential partners from achieving or maintaining market acceptance of the product and could substantially increase the costs of commercializing such product.

If ArTara or any partners with which ArTara may collaborate are unable to achieve and maintain coverage and adequate levels of reimbursement for TARA-002 or IV Choline Chloride following regulatory approval, their commercial success may be hindered severely.

        If TARA-002 and IV Choline Chloride only becomes available by prescription, successful sales by ArTara or by any partners with which ArTara may collaborate depend on the availability of coverage and adequate reimbursement from third-party payors. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. The availability of coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid in the United States, and private third-party payors is often critical to new product acceptance. Coverage decisions may depend on

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clinical and economic standards that disfavor new drug products when more established or lower-cost therapeutic alternatives are already available or subsequently become available, or may be affected by the budgets and demands on the various entities responsible for providing health insurance to patients who will use TARA-002 and IV Choline Chloride. Even if ArTara obtains coverage for its products, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use a product unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost.

        In addition, the market for ArTara's products will depend significantly on access to third-party payors' drug formularies or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies and there may be time limitations on when a new drug may even apply for formulary inclusion. Also, third-party payors may refuse to include products in their formularies or otherwise restrict patient access to such products when a less costly generic equivalent or other treatment alternative is available in the discretion of the formulary.

        Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the United States, although private third-party payors tend to follow Medicare practices, no uniform or consistent policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor as well as state to state. Consequently, the coverage determination process is often a time-consuming and costly process that must be played out across many jurisdictions and different entities and which will require ArTara to provide scientific, clinical and health economics support for the use of its products compared to current alternatives and do so to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained and in what time frame.

        Further, ArTara believes that future coverage and reimbursement likely will be subject to increased restrictions both in the United States and in international markets. Third-party coverage and reimbursement for ArTara's products may not be available or adequate in either the United States or international markets, which could harm ArTara's business, financial condition, operating results and prospects.

Even if a product candidate obtains regulatory approval, it may fail to achieve the broad degree of physician and patient adoption and use necessary for commercial success.

        The commercial success of both TARA-002 and IV Choline Chloride, if approved, will depend significantly on the broad adoption and use of them by physicians and patients for approved indications, and neither may be commercially successful even though the product is shown to be safe and effective. The degree and rate of physician and patient adoption of a product, if approved, will depend on a number of factors, including but not limited to:

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        If either of TARA-002 or IV Choline Chloride is approved for use but fails to achieve the broad degree of physician and patient adoption necessary for commercial success, ArTara's operating results and financial condition will be adversely affected, which may delay, prevent or limit its ability to generate revenue and continue its business.

ArTara's product candidates, if approved, will face significant competition and their failure to compete effectively may prevent them from achieving significant market penetration.

        The pharmaceutical industry is characterized by rapidly advancing technologies, intense competition, less effective patent terms, and a strong emphasis on developing newer, fast-to-market proprietary therapeutics. Numerous companies are engaged in the development, patenting, manufacturing and marketing of healthcare products competitive with those that ArTara is developing, including TARA-002 and IV Choline Chloride. ArTara will face competition from a number of sources, such as pharmaceutical companies, generic drug companies, biotechnology companies and academic and research institutions, many of which have greater financial resources, marketing capabilities, sales forces, manufacturing capabilities, research and development capabilities, regulatory expertise, clinical trial expertise, intellectual property portfolios, more international reach, experience in obtaining patents and regulatory approvals for product candidates and other resources than ArTara. Some of the companies that offer competing products also have a broad range of other product offerings, large direct sales forces and long-term customer relationships with ArTara's target physicians, which could inhibit ArTara's market penetration efforts. attention within their clinical practices.

        With respect to ArTara's lead product candidate, TARA-002, for the treatment of LMs, the active ingredient in TARA-002 is a genetically distinct strain of Streptococcus pyogenes (group A, type 3) Su strain. TARA-002 is produced through a proprietary manufacturing process. ArTara anticipates that, if approved by the FDA, TARA-002 will be protected by 12 years of biologic exclusivity. In addition, TARA-002 is likely to have seven years of Orphan Drug Designation exclusivity if deemed comparable to OK-432 by the FDA or based on the prevalence of the disease . There are no pharmacotherapies currently available for the treatment of LMs and the current standard of care is a high-risk surgical procedure. There are a handful of drug development companies and academic researchers exploring oral formulations of various agents including macrolides, phosphodiesterase inhibitors, and calcineurin/mTOR inhibitors. These are in early development and earlier experiments in LMs utilizing other compounds utilizing these mechanisms have not produced conclusive evidence of safety or efficacy.

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        There are no treatments currently available for IFALD. With respect to IV Choline Chloride for the treatment of IFALD, IV Choline Chloride is the only sterile injectable form of choline chloride that can be combined with parenteral nutrition. Further, if approved, IV Choline Chloride will be protected by Orphan Drug Designation exclusivity for seven years.

TARA-002 and any future product candidates for which ArTara intends to seek approval as biologic products may face competition sooner than anticipated.

        The Patient Protection and Affordable Care Act, or Affordable Care Act, signed into law on March 23, 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor's own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning are subject to uncertainty. While it is uncertain when such processes are intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for ArTara's biological products.

        ArTara believes that any of its product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider ArTara's product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of ArTara's reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

ArTara expects to rely on third-party CROs and other third parties to conduct and oversee its clinical trials. If these third parties do not meet ArTara's requirements or otherwise conduct the trials as required, ArTara may not be able to satisfy its contractual obligations or obtain regulatory approval for, or commercialize, its product candidates.

        ArTara expects to rely on third-party contract research organizations (CROs) to conduct and oversee its TARA-002 and IV Choline Chloride clinical trials and other aspects of product development. ArTara also expects to rely on various medical institutions, clinical investigators and contract laboratories to conduct its trials in accordance with ArTara's clinical protocols and all applicable regulatory requirements, including the FDA's regulations and good clinical practice (GCP) requirements, which are an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors, and state regulations governing the handling, storage, security and recordkeeping for drug and biologic products. These CROs and other third parties will play a significant role in the conduct of these trials and the subsequent collection and analysis of data from the clinical trials. ArTara will rely heavily on these parties for the execution of its clinical trials and preclinical studies and will control only certain aspects of their activities. ArTara and its CROs and other third-party contractors will be required to comply

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with GCP and good laboratory practice (GLP) requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities. Regulatory authorities enforce these GCP and GLP requirements through periodic inspections of trial sponsors, principal investigators and trial sites. If ArTara or any of these third parties fail to comply with applicable GCP and GLP requirements, or reveal noncompliance from an audit or inspection, the clinical data generated in ArTara's clinical trials may be deemed unreliable and the FDA or other regulatory authorities may require ArTara to perform additional clinical trials before approving ArTara's or ArTara's partners' marketing applications. ArTara cannot assure that upon inspection by a given regulatory authority, such regulatory authority will determine that any of ArTara's clinical or preclinical trials comply with applicable GCP and GLP requirements. In addition, ArTara's clinical trials generally must be conducted with product produced under cGMP regulations. ArTara's failure to comply with these regulations and policies may require it to repeat clinical trials, which would delay the regulatory approval process.

        If any of ArTara's CROs or clinical trial sites terminate their involvement in one of its clinical trials for any reason, it may not be able to enter into arrangements with alternative CROs or clinical trial sites or do so on commercially reasonable terms. In addition, if ArTara's relationship with clinical trial sites is terminated, it may experience the loss of follow-up information on patients enrolled in its ongoing clinical trials unless ArTara is able to transfer the care of those patients to another qualified clinical trial site. In addition, principal investigators for ArTara's clinical trials may serve as scientific advisors or consultants to it from time to time and could receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be questioned by the FDA.

ArTara currently has no marketing capabilities and no sales organization. If ArTara is unable to establish sales and marketing capabilities on its own or through third parties, ArTara will be unable to successfully commercialize its product candidates, if approved, or generate product revenue.

        ArTara currently has no marketing capabilities and no sales organization. To commercialize ArTara's product candidates, if approved, in the United States, Canada, the European Union, Latin America and other jurisdictions it seeks to enter, ArTara must build its marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and ArTara may not be successful in doing so. Although ArTara's employees have experience in the marketing, sale and distribution of pharmaceutical products, and business development activities involving external alliances, from prior employment at other companies, ArTara as a company has no prior experience in the marketing, sale and distribution of pharmaceutical products, and there are significant risks involved in building and managing a sales organization, including its ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of ArTara's internal sales, marketing, distribution and pricing/reimbursement/access capabilities would impact adversely the commercialization of these products.

Risks Related to ArTara's Business

ArTara has a very limited operating history and has never generated any revenues.

        ArTara is an early-stage biotechnology company with a very limited operating history that may make it difficult to evaluate the success of its business to date and to assess its future viability. ArTara was incorporated in 2017 and its operations, to date, have been limited to organizing and staffing the company, business planning, raising capital and in-licensing rights to TARA-002 and IV Choline Chloride, have been limited to business planning, raising capital, developing ArTara's pipeline assets (TARA-002 and IV Choline Chloride), identifying product candidates, and other research and

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development. ArTara has not yet demonstrated an ability to successfully complete any clinical trials and has never completed the development of any product candidate, nor has it ever generated any revenue from product sales or otherwise. Consequently, ArTara has no meaningful operations upon which to evaluate its business, and predictions about its future success or viability may not be as accurate as they could be if it had a longer operating history or a history of successfully developing and commercializing biopharmaceutical products.

Any adverse developments that occur in patients undergoing treatment with OK-432 / Picibanil or in patients participating in clinical trials conducted by third parties may affect ArTara's ability to obtain regulatory approval or commercialize TARA-002.

        Chugai Pharmaceutical Co., Ltd., over which ArTara has no control, has the rights to commercialize TARA-002 and it is currently marketed in Japan and Taiwan, under the name Picibanil for various indications. In addition, clinical trials using Picibanil are currently ongoing in various countries around the world. If serious adverse events occur with patients using Picibanil or during any clinical trials of Picibanil conducted by third parties, the FDA may delay, limit or deny approval of TARA-002 or require ArTara to conduct additional clinical trials as a condition to marketing approval, which would increase its costs. If ArTara receives FDA approval for TARA-002 and a new and serious safety issue is identified in connection with use of Picibanil or in clinical trials of Picibanil conducted by third parties, the FDA may withdraw their approval of the product or otherwise restrict ArTara's ability to market and sell TARA-001. In addition, treating physicians may be less willing to administer TARA-002 due to concerns over such adverse events, which would limit ArTara's ability to commercialize TARA-002.

ArTara has only received the exclusive rights to the materials required to commercialize TARA-002 in territories other than Japan and Taiwan until June 17, 2024, or an earlier date if Chugai terminates the agreement with ArTara for any number of reasons, including for convenience after June 2020, following which such rights become nonexclusive.

        Pursuant to an agreement with Chugai Pharmaceutical Co., Ltd. dated June 17, 2019, Chugai agreed to provide ArTara with exclusive access to the starting material necessary to manufacture TARA-002 as well as technical support necessary for ArTara to develop and commercialize TARA-002 anywhere in the world other than Japan and Taiwan. However, this agreement does not prevent Chugai from providing such materials and support to any third party for medical, compassionate use and/or non-commercial research purposes and this agreement is not exclusive following June 17, 2024 or following any termination of the agreement by either party, which includes a termination by Chugai for convenience, which it has the right to do upon 90 days' notice after June 2020. Once ArTara's rights to the materials and technology necessary to manufacture, develop and commercialize TARA-002 are not exclusive, third parties, including those with greater expertise and greater resources, could obtain such materials and technology and develop a competing therapy, which would adversely affect ArTara's ability to generate revenue and achieve or maintain profitability.

ArTara currently has no products approved for sale, and it may never obtain regulatory approval to commercialize any of its product candidates.

        The research, testing, manufacturing, safety surveillance, efficacy, quality control, recordkeeping, labeling, packaging, storage, approval, sale, marketing, distribution, import, export and reporting of safety and other post-market information related to its biopharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and in foreign countries, and such regulations differ from country to country and frequently are revised.

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        Even after ArTara achieves U.S. regulatory approval for a product candidate, if any, ArTara will be subject to continued regulatory review and compliance obligations. For example, with respect to ArTara's product candidates, the FDA may impose significant restrictions on the approved indicated uses for which the product may be marketed or on the conditions of approval. A product candidate's approval may contain requirements for potentially costly post-approval studies and surveillance, including Phase 4 clinical trials, to monitor the safety and efficacy of the product. ArTara also will be subject to ongoing FDA obligations and continued regulatory review with respect to, among other things, the manufacturing, processing, labeling, packaging, distribution, pharmacovigilance and adverse event reporting, storage, advertising, promotion and recordkeeping for ArTara's product candidates. These requirements include submissions of safety and other post-marketing information and reports, registration, continued compliance with cGMP requirements and with the FDA's GCP requirements and GLP requirements, which are regulations and guidelines enforced by the FDA for all of ArTara's product candidates in clinical and preclinical development, and for any clinical trials that it conducts post-approval, as well as continued compliance with the FDA's laws governing commercialization of the approved product, including but not limited to the FDA's Office of Prescription Drug Promotion (OPDP) regulation of promotional activities, fraud and abuse, product sampling, scientific speaker engagements and activities, formulary interactions as well as interactions with healthcare practitioners. To the extent that a product candidate is approved for sale in other countries, ArTara may be subject to similar or more onerous (i.e., prohibition on direct-to-consumer advertising that does not exist in the United States.) restrictions and requirements imposed by laws and government regulators in those countries.

        In addition, manufacturers of drug and biologic products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. If ArTara or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the manufacturing, processing, distribution or storage facility where, or processes by which, the product is made, a regulatory agency may impose restrictions on that product or ArTara, including requesting that ArTara initiate a product recall, or requiring notice to physicians or the public, withdrawal of the product from the market, or suspension of manufacturing.

        If ArTara, its product candidates or the manufacturing facilities for its product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

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        The regulations, policies or guidance of the FDA and other applicable government agencies may change, and new or additional statutes or government regulations may be enacted, including at the state and local levels, which can differ by geography and could prevent or delay regulatory approval of ArTara's product candidates or further restrict or regulate post-approval activities. ArTara cannot predict the likelihood, nature or extent of adverse government regulations that may arise from future legislation or administrative action, either in the United States or abroad. If ArTara is not able to achieve and maintain regulatory compliance, it may not be permitted to commercialize its product candidates, which would adversely affect its ability to generate revenue and achieve or maintain profitability.

ArTara may in the future conduct clinical trials for its product candidates outside the United States, and the FDA and applicable foreign regulatory authorities may not accept data from such trials.

        ArTara may in the future choose to conduct one or more of its clinical trials outside of the United States. Although the FDA or applicable foreign regulatory authority may accept data from clinical trials conducted outside the United States or the applicable jurisdiction, acceptance of such study data by the FDA or applicable foreign regulatory authority may be subject to certain conditions or exclusion. Where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will not approve the application on the basis of foreign data alone unless such data are applicable to the U.S. population and U.S. medical practice; the studies were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Many foreign regulatory bodies have similar requirements. In addition, such foreign studies would be subject to the applicable local laws of the foreign jurisdictions where the studies are conducted. There can be no assurance the FDA or applicable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable home country. If the FDA or applicable foreign regulatory authority does not accept such data, it would likely result in the need for additional trials, which would be costly and time-consuming and delay aspects of ArTara's business plan.

ArTara may face product liability exposure, and if successful claims are brought against it, ArTara may incur substantial liability if its insurance coverage for those claims is inadequate.

        ArTara faces an inherent risk of product liability or similar causes of action as a result of the clinical testing of its product candidates and will face an even greater risk if ArTara commercializes any products. This risk exists even if a product is approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA or an applicable foreign regulatory authority and notwithstanding ArTara complying with applicable laws on promotional activity. ArTara's products and product candidates are designed to affect important bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with ArTara's product candidates could result in injury to a patient or potentially even death. ArTara cannot offer any assurance that it will not

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face product liability suits in the future, nor can it assure that its insurance coverage will be sufficient to cover its liability under any such cases.

        In addition, a liability claim may be brought against ArTara even if its product candidates merely appear to have caused an injury. Product liability claims may be brought against ArTara by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with its product candidates, among others, and under some circumstances even government agencies. If ArTara cannot successfully defend itself against product liability or similar claims, it will incur substantial liabilities, reputational harm and possibly injunctions and punitive actions. In addition, regardless of merit or eventual outcome, product liability claims may result in:

        ArTara intends to obtain product liability insurance coverage for its clinical trials. Large judgments have been awarded in class action or individual lawsuits based on drugs that had unanticipated side effects. ArTara's insurance coverage may not be sufficient to cover all of its product liability-related expenses or losses and may not cover it for any expenses or losses it may suffer. Moreover, insurance coverage is becoming increasingly expensive, restrictive and narrow, and, in the future, ArTara may not be able to maintain adequate insurance coverage at a reasonable cost, in sufficient amounts or upon adequate terms to protect it against losses due to product liability or other similar legal actions. ArTara will need to increase its product liability coverage if any of its product candidates receive regulatory approval, which will be costly, and it may be unable to obtain this increased product liability insurance on commercially reasonable terms or at all and for all geographies in which ArTara wishes to launch. A successful product liability claim or series of claims brought against ArTara, if judgments exceed its insurance coverage, could decrease its cash and harm its business, financial condition, operating results and future prospects.

ArTara's employees, independent contractors, principal investigators, other clinical trial staff, consultants, vendors, CROs and any partners with whom ArTara may collaborate may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

        ArTara is exposed to the risk that its employees, independent contractors, principal investigators, other clinical trial staff, consultants, vendors, CROs and any partners with which ArTara may collaborate may engage in fraudulent or other illegal activity. Misconduct by these persons could include intentional, reckless, gross or negligent misconduct or unauthorized activity that violates: laws

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or regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA or foreign regulatory authorities; manufacturing standards; federal, state and foreign healthcare fraud and abuse laws and data privacy; anticorruption laws, antikickback and Medicare/Medicaid rules, or laws that require the true, complete and accurate reporting of financial information or data, books and records. If any such or similar actions are instituted against ArTara and ArTara is not successful in defending itself or asserting ArTara's rights, those actions could have a significant impact on ArTara's business, including the imposition of civil, criminal and administrative and punitive penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, debarments, contractual damages, reputational harm, diminished profits and future earnings, injunctions, and curtailment or cessation of ArTara's operations, any of which could adversely affect ArTara's ability to operate ArTara's business and ArTara's operating results.

ArTara may be subject to risks related to off-label use of its product candidates.

        The FDA strictly regulates the advertising and promotion of drug products, and drug products may only be marketed or promoted for their FDA approved uses, consistent with the product's approved labeling. Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the Department of Justice, the Office of Inspector General of the Department of Health and Human Services, state attorneys general, members of Congress and the public. Violations, including promotion of ArTara's products for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil, criminal and/or administrative sanctions by the FDA. Additionally, advertising and promotion of any product candidate that obtains approval outside of the United States will be heavily scrutinized by relevant foreign regulatory authorities.

        Even if ArTara obtains regulatory approval for its product candidates, the FDA or comparable foreign regulatory authorities may require labeling changes or impose significant restrictions on a product's indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

        In the United States, engaging in impermissible promotion of ArTara's product candidates for off-label uses can also subject it to false claims litigation under federal and state statutes, which can lead to civil, criminal and/or administrative penalties and fines and agreements, such as a corporate integrity agreement, that materially restrict the manner in which ArTara promotes or distributes its product candidates. If ArTara does not lawfully promote its products once they have received regulatory approval, ArTara may become subject to such litigation and, if it is not successful in defending against such actions, those actions could have a material adverse effect on its business, financial condition and operating results and even result in having an independent compliance monitor assigned to audit ArTara's ongoing operations for a lengthy period of time.

ArTara's or third party's clinical trials may fail to demonstrate the safety and efficacy of its product candidates, or serious adverse or unacceptable side effects may be identified during their development, which could prevent or delay marketing approval and commercialization, increase ArTara's costs or necessitate the abandonment or limitation of the development of the product candidate.

        Before obtaining marketing approvals for the commercial sale of any product candidate, ArTara must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that such product candidate is both safe and effective for use in the applicable indication, and failures can occur at any stage of testing. Clinical trials often fail to demonstrate safety and are associated with side effects or have characteristics that are unexpected. Based on the safety profile seen in clinical testing, ArTara may need to abandon development or limit development to more narrow uses in which the side effects or other characteristics are less prevalent, less severe or more tolerable from a risk-benefit

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perspective. The FDA or an IRB may also require that ArTara suspend, discontinue, or limit clinical trials based on safety information. Such findings could further result in regulatory authorities failing to provide marketing authorization for the product candidate. Many pharmaceutical candidates that initially showed promise in early stage testing and which were efficacious have later been found to cause side effects that prevented further development of the drug candidate and, in extreme cases, the side effects were not seen until after the drug was marketed, causing regulators to remove the drug from the market post-approval.

        ArTara's regulatory strategy for TARA-002 requires first that it can demonstrate that TARA-002 is the same biologic substance as OK-432, which is currently manufactured in Japan and marketed in Japan and Taiwan by Chugai. In order to demonstrate comparability, ArTara plans to conduct studies using batches of OK-432 from Japan and batches of TARA-002 manufactured in the United States by its CMO. If ArTara can demonstrate comparability, it plans to engage with the FDA to seek its agreement to use OK-432's safety and efficacy data from clinical trials previously conducted by third parties for its BLA filing. There can be no assurances that ArTara's CMO will be able to produce a sufficiently comparable product or that the FDA will find such substances comparable or permit ArTara to use any of the data from prior clinical trials as part of the BLA filing for TARA-002.

ArTara may choose not to continue developing or commercializing any of its product candidates at any time during development or after approval, which would reduce or eliminate its potential return on investment for those product candidates.

        At any time, ArTara may decide to discontinue the development of any of its product candidates for a variety of reasons, including the appearance of new technologies that make its product obsolete, competition from a competing product or changes in or failure to comply with applicable regulatory requirements. If ArTara terminates a program in which it has invested significant resources, ArTara will not receive any return on its investment and it will have missed the opportunity to have allocated those resources to potentially more productive uses.

Healthcare reform measures could hinder or prevent the commercial success of ArTara's product candidates.

        The current presidential administration and certain members of the majority of the U.S. Congress have sought to repeal all or part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, "Affordable Care Act"), and implement a replacement program. For example, the so-called "individual mandate" was repealed as part of tax reform legislation adopted in December 2017, such that the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Code was eliminated beginning in 2019. In addition, litigation may prevent some or all of the Affordable Care Act legislation from taking effect. For example, on December 14, 2018, the U.S. District Court for the Northern District of Texas held that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the tax reform legislation, the remaining provisions of the Affordable Care Act are invalid as well. The impact of this ruling is stayed as it is appealed to the Fifth Circuit Court of Appeals. While the ruling will have no immediate effect, it is unclear how this decision, and subsequent appeals, if any, will impact the law. In 2019 and beyond, ArTara may face additional uncertainties as a result of likely federal and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the Affordable Care Act. There is no assurance that the Affordable Care Act, as amended in the future, will not adversely affect ArTara's business and financial results.

        Additionally, in October 2018, the U.S. President proposed to lower Medicare Part B drug prices, in addition to contemplating other measures to lower prescription drug prices. While this proposal has not yet been enacted, ArTara expects that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will

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pay for healthcare products and services, which could result in reduced demand for its product candidates if approved or additional pricing pressures.

        There are also calls to ban all direct-to-consumer advertising of pharmaceuticals, which would limit ArTara's ability to market its product candidates. The United States is in a minority of jurisdictions that allow this kind of advertising and its removal could limit the potential reach of a marketing campaign.

ArTara may also be subject to stricter healthcare laws, regulation and enforcement, and its failure to comply with those laws could adversely affect its business, operations and financial condition.

        Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients' rights are and will be applicable to ArTara's business. ArTara is subject to regulation by both the federal government and the states in which it or its partners conduct business. The healthcare laws and regulations that may affect ArTara's ability to operate include: the federal Anti-Kickback Statute; federal civil and criminal false claims laws and civil monetary penalty laws; the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act; the Prescription Drug Marketing Act (for sampling of drug product among other things); the federal physician sunshine requirements under the Affordable Care Act; the Foreign Corrupt Practices Act as it applies to activities outside of the United States; the new federal Right-to-Try legislation; and state law equivalents of many of the above federal laws.

        Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of ArTara's business activities could be subject to challenge under one or more of such laws. In addition, recent healthcare reform legislation has strengthened these laws. For example, the recently enacted Affordable Care Act, among other things, amended the intent requirement of the federal Anti-Kickback Statute and certain criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it. In addition, the Affordable Care Act provided that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

        Achieving and sustaining compliance with these laws may prove costly. In addition, any action against ArTara for violation of these laws, even if ArTara successfully defends against it, could cause ArTara to incur significant legal expenses and divert its management's attention from the operation of its business and result in reputational damage. If ArTara's operations are found to be in violation of any of the laws described above or any other governmental laws or regulations that apply to ArTara, it may be subject to penalties, including administrative, civil and criminal penalties, damages, including punitive damages, fines, disgorgement, the exclusion from participation in federal and state healthcare programs, individual imprisonment or the curtailment or restructuring of its operations, and injunctions, any of which could adversely affect ArTara's ability to operate its business and its financial results.

ArTara intends to in-license and acquire product candidates and may engage in other strategic transactions, which could impact its liquidity, increase its expenses and present significant distractions to its management.

        ArTara's strategy is to in-license and acquire product candidates and it may engage in other strategic transactions. Additional potential transactions that ArTara may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require ArTara to incur non-recurring or other charges, may increase its near- and long-term expenditures and may pose significant integration challenges or disrupt its management or business, which could adversely affect its operations and financial results. Accordingly, there can be no assurance that ArTara will undertake or successfully complete any transactions of the nature described above, and any transaction that it does complete could harm its business, financial condition, operating results and prospects. ArTara has no

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current plan, commitment or obligation to enter into any transaction described above, and ArTara is not engaged in discussions related to additional partnerships.

ArTara's failure successfully to in-license, acquire, develop and market additional product candidates or approved products would impair its ability to grow its business.

        ArTara intends to in-license, acquire, develop and market additional products and product candidates. Because ArTara's internal research and development capabilities are limited, it may be dependent on pharmaceutical companies, academic or government scientists and other researchers to sell or license products or technology to it. The success of this strategy depends partly on ArTara's ability to identify and select promising pharmaceutical product candidates and products, negotiate licensing or acquisition agreements with their current owners, and finance these arrangements.

        The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing, sales and other resources, may compete with ArTara for the license or acquisition of product candidates and approved products. ArTara has limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into its current infrastructure. Moreover, ArTara may devote resources to potential acquisitions or licensing opportunities that are never completed, or ArTara may fail to realize the anticipated benefits of such efforts. ArTara may not be able to acquire the rights to additional product candidates on terms that it finds acceptable or at all.

        Further, any product candidate that ArTara acquires may require additional development efforts prior to commercial sale, including preclinical or clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, ArTara cannot provide assurance that any approved products that it acquires will be manufactured or sold profitably or achieve market acceptance.

Risks Related to ArTara's Dependence on Third Parties

ArTara expects to rely on collaborations with third parties for the successful development and commercialization of its product candidates.

        ArTara expects to rely upon the efforts of third parties for the successful development and commercialization of ArTara's current and future product candidates. The clinical and commercial success of ArTara's product candidates may depend upon maintaining successful relationships with third-party partners which are subject to a number of significant risks, including the following:

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        ArTara cannot assure you that it will be able to establish or maintain third-party relationships in order to successfully develop and commercialize its product candidates.

ArTara relies completely on third-party contractors to supply, manufacture and distribute clinical drug supplies for its product candidates, which may include sole-source suppliers and manufacturers; ArTara intends to rely on third parties for commercial supply, manufacturing and distribution if any of its product candidates receive regulatory approval; and ArTara expects to rely on third parties for supply, manufacturing and distribution of preclinical, clinical and commercial supplies of any future product candidates.

        ArTara does not currently have, nor does it plan to acquire, the infrastructure or capability to supply, store, manufacture or distribute preclinical, clinical or commercial quantities of drug substances or products. Additionally, ArTara has not entered into a long-term commercial supply agreement to provide it with such drug substances or products. As a result, ArTara's ability to develop its product candidates is dependent, and ArTara's ability to supply its products commercially will depend, in part, on ArTara's ability to obtain the APIs and other substances and materials used in its product candidates successfully from third parties and to have finished products manufactured by third parties in accordance with regulatory requirements and in sufficient quantities for preclinical and clinical testing and commercialization. If ArTara fails to develop and maintain supply and other technical relationships with these third parties, it may be unable to continue to develop or commercialize its products and product candidates.

        ArTara does not have direct control over whether its contract suppliers and manufacturers will maintain current pricing terms, be willing to continue supplying ArTara with APIs and finished products or maintain adequate capacity and capabilities to serve its needs, including quality control, quality assurance and qualified personnel. ArTara is dependent on its contract suppliers and manufacturers for day-to-day compliance with applicable laws and cGMPs for production of both APIs and finished products. If the safety or quality of any product or product candidate or component is compromised due to a failure to adhere to applicable laws or for other reasons, ArTara may not be able to commercialize or obtain regulatory approval for the affected product or product candidate successfully, and ArTara may be held liable for injuries sustained as a result.

        In order to conduct larger or late-stage clinical trials for its product candidates and supply sufficient commercial quantities of the resulting drug product and its components, if that product candidate is approved for sale, ArTara's contract manufacturers and suppliers will need to produce its drug substances and product candidates in larger quantities, more cost-effectively and, in certain cases, at higher yields than they currently achieve. If ArTara's third-party contractors are unable to scale up the manufacture of any of its product candidates successfully in sufficient quality and quantity and at commercially reasonable prices, or are shut down or put on clinical hold by government regulators, and ArTara is unable to find one or more replacement suppliers or manufacturers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality, and ArTara is unable to transfer the processes successfully on a timely basis, the development of that product candidate and regulatory approval or commercial launch for any resulting products may be delayed, or there may be a shortage in supply, either of which could significantly harm its business, financial condition, operating results and prospects.

        ArTara expects to continue to depend on third-party contract suppliers and manufacturers for the foreseeable future. ArTara's supply and manufacturing agreements, if any, do not guarantee that a contract supplier or manufacturer will provide services adequate for its needs. Additionally, any damage to or destruction of ArTara's third-party manufacturer's or suppliers' facilities or equipment, even by force majeure, may significantly impair its ability to have its products and product candidates

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manufactured on a timely basis. ArTara's reliance on contract manufacturers and suppliers further exposes it to the possibility that they, or third parties with access to their facilities, will have access to and may misappropriate ArTara's trade secrets or other proprietary information. In addition, the manufacturing facilities of certain of ArTara's suppliers may be located outside of the United States. This may give rise to difficulties in importing ArTara's products or product candidates or their components into the United States or other countries.

The manufacture of biologics is complex and ArTara's third-party manufacturers may encounter difficulties in production. If ArTara's CMO encounter such difficulties, the ability to provide supply of TARA-002 for clinical trials, ArTara's ability to obtain marketing approval, or its ability to obtain commercial supply of TARA-002, if approved, could be delayed or stopped.

        ArTara's has no experience in biologic manufacturing and does not own or operate, and it does not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. ArTara is completely dependent on CMOs to fulfill its clinical and commercial supply of TARA-002. The process of manufacturing biologics is complex, highly regulated and subject to multiple risks. Manufacturing biologics is highly susceptible to product loss due to contamination, equipment failure, improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions and higher costs. If microbial, viral or other contaminations are discovered at the facilities of ArTara's manufacturer, such facilities may need to be closed for an extended period of time to investigate and remedy the contamination, which could delay clinical trials, result in higher costs of drug product and adversely harm its business. Moreover, if the FDA determines that ArTara's manufacturer is not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny BLA approval until the deficiencies are corrected or it replaces the manufacturer in its BLA with a manufacturer that is in compliance.

        In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with cGMPs, lot consistency and timely availability of raw materials. Even if ArTara obtains regulatory approval for TARA-002 or any future product candidates, there is no assurance that its manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product or to meet potential future demand. If ArTara's manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on ArTara's business, financial condition, results of operations and growth prospects. Scaling up a biologic manufacturing process is a difficult and uncertain task, and any CMO ArTara contracts may not have the necessary capabilities to complete the implementation and development process of further scaling up production, transferring production to other sites, or managing its production capacity to timely meet product demand.

Risks Related to ArTara's Financial Operations

The audit report of ArTara's independent registered public accounting firm expresses substantial doubt about ArTara's ability to continue as a going concern.

        The audit report from ArTara's independent registered public accounting firm expresses substantial doubt that it can continue as an ongoing business due to uncertainties that ArTara's cash flows generated from its operations will be sufficient to meet its current operating costs and ArTara's future financial statements may include a similar qualification about its ability to continue as a going concern.

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ArTara's audited financial statements were prepared assuming that it will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.

        If ArTara is unable to meet its current operating costs, ArTara would need to seek additional financing or modify its operational plans. If ArTara seeks additional financing to fund its business activities in the future and there remains substantial doubt about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to ArTara on commercially reasonable terms or at all.

ArTara has identified material weaknesses in its internal control over financial reporting. If ArTara's internal control over financial reporting is not effective, it may not be able to accurately report its financial results or file its periodic reports in a timely manner, which may cause adverse effects on ArTara's business and may cause investors to lose confidence in its reported financial information and may lead to a decline in ArTara's stock price.

        Effective internal control over financial reporting is necessary for ArTara to provide reliable financial reports in a timely manner. In connection with the audits of ArTara's financial statements for the quarters ended June 30, 2019 and September 30, 2019, ArTara concluded that there were material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

        If ArTara is unable to successfully remediate its material weaknesses or identify any future significant deficiencies or material weaknesses, the accuracy and timing of ArTara's financial reporting may be adversely affected, a material misstatement in its financial statements could occur, ArTara may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which may adversely affect its business and ArTara's stock price may decline as a result.

        In addition, even if ArTara remediates its material weaknesses, following the completion of this Merger, ArTara will be required to expend significant time and resources to further improve its internal controls over financial reporting, including by further expanding its finance and accounting staff to meet the demands that will be placed upon ArTara as a public company, including the requirements of the Sarbanes-Oxley Act. If ArTara fails to adequately staff its accounting and finance function to remediate its material weaknesses, or fails to maintain adequate internal control over financial reporting, any new or recurring material weaknesses could prevent ArTara's management from concluding its internal control over financial reporting is effective and impair ArTara's ability to prevent material misstatements in its financial statements, which could cause ArTara's business to suffer.

ArTara will need to raise additional financing in the future to fund ArTara's operations, which may not be available to it on favorable terms or at all.

        ArTara will require substantial additional funds to conduct the costly and time-consuming clinical efficacy trials necessary to pursue regulatory approval of each potential product candidate and to continue the development of TARA-002 and IV Choline Chloride in new indications or uses. ArTara's future capital requirements will depend upon a number of factors, including: the number and timing of future product candidates in the pipeline; progress with and results from preclinical testing and clinical trials; the ability to manufacture sufficient drug supplies to complete preclinical and clinical trials; the costs involved in preparing, filing, acquiring, prosecuting, maintaining and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining regulatory approvals and favorable reimbursement or formulary acceptance. Raising additional capital may be costly or difficult to obtain and could significantly dilute stockholders' ownership interests or inhibit ArTara's ability to achieve its business objectives. If ArTara raises additional funds through public or private equity

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offerings, the terms of these securities may include liquidation or other preferences that adversely the rights of its common stockholders. Further, to the extent that ArTara raises additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest in the combined company will be diluted. In addition, any debt financing may subject ArTara to fixed payment obligations and covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If ArTara raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, ArTara may have to relinquish certain valuable intellectual property or other rights to its product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to it. Even if ArTara were to obtain sufficient funding, there can be no assurance that it will be available on terms acceptable to ArTara or its stockholders.

ArTara expects its stock price to be highly volatile.

        The market price of ArTara's shares following the Merger could be subject to significant fluctuations. Market prices for securities of biotechnology and other life sciences companies historically have been particularly volatile subject even to large daily price swings. Some of the factors that may cause the market price of ArTara's shares to fluctuate include, but are not limited to:

        Moreover, the stock markets in general have experienced substantial volatility in our industry that has often been unrelated to the operating performance of individual companies or a certain industry segment. These broad market fluctuations may also adversely affect the trading price of the combined company's shares.

        In the past, following periods of volatility in the market price of a company's securities, shareholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the combined company's profitability and reputation. In addition, such securities litigation often has ensued after a reverse merger or other merger and

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acquisition activity of the type engaged in here by ArTara with Proteon. Such litigation if brought could impact negatively the combined company's business.

The former Proteon stockholders may sell their shares of the combined company.

        Pursuant to the Merger Agreement, the stockholders of Proteon are not required to agree to restrictions on selling their stock. As such, the former Proteon stockholders may sell their stock of the combined company after the Merger, which could lead to a decline in the market value of ArTara's stock and could negatively impact future issuances of the combined company's equity securities.

The combined company will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

        The combined company will incur significant legal, accounting and other expenses that ArTara did not incur as a private company, including costs associated with public company reporting and other SEC requirements. The combined company also will incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as new rules implemented by the SEC and Nasdaq. These rules and regulations are expected to increase the combined company's legal and financial compliance costs and to make some activities more time-consuming and costly. The combined company's executive officers and other personnel will need to devote substantial time to gaining expertise regarding operations as a public company and compliance with applicable laws and regulations. These rules and regulations may also make it expensive for the combined company to operate its business.

The combined company is expected to take advantage of reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in its common stock being less attractive to investors.

        Following the Merger, the combined company is expected to have a public float of less than $250 million and therefore will qualify as a smaller reporting company under the rules of the SEC. As a smaller reporting company, the combined company will be able to take advantage of reduced disclosure requirements, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in its SEC filings. Decreased disclosures in the combined company's SEC filings due to its status as a smaller reporting company may make it harder for investors to analyze its results of operations and financial prospects. We cannot predict if investors will find the combined company's common stock less attractive if it relies on these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may be more volatile. The combined company may take advantage of the reporting exemptions applicable to a smaller reporting company until it is no longer a smaller reporting company, which status would end once it has a public float greater than $250 million. In that event, the combined company could still be a smaller reporting company if its annual revenues were below $100 million and it has a public float of less than $700 million.

The combined company does not anticipate paying any dividends in the foreseeable future.

        The current expectation is that the combined company will retain its future earnings to fund the development and growth of the company's business. As a result, capital appreciation, if any, of the shares of the combined company will be your sole source of gain, if any, for the foreseeable future.

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If the combined company fails to attract and retain management and other key personnel, it may be unable to continue to successfully develop or commercialize its product candidates or otherwise implement its business plan.

        ArTara's ability to compete in the highly competitive pharmaceuticals industry depends on its ability to attract and retain highly qualified managerial, scientific, medical, legal, sales and marketing and other personnel. ArTara is highly dependent on its management and scientific personnel. The loss of the services of any of these individuals could impede, delay or prevent the successful development of ArTara's product pipeline, completion of its planned clinical trials, commercialization of its product candidates or in-licensing or acquisition of new assets and could impact negatively its ability to implement successfully its business plan. If ArTara loses the services of any of these individuals, it might not be able to find suitable replacements on a timely basis or at all, and its business could be harmed as a result. The combined company might not be able to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses.

ArTara's ability to use its net operating loss carry-forwards to offset future taxable income may be subject to certain limitations.

        As of December 31, 2018, for U.S. federal and state income tax reporting purposes, ArTara has approximately $4.1 million of unused net operating losses ("NOLs") available for carry forward to future years. The 2018 federal and New York City NOLs may be carried forward indefinitely, but utilization will be subject to an annual deduction limitation of 80% of taxable income. These 2018 losses will not be allowed to be carried back. The 2018 state NOLs may be carried forward through the year 2037 and may be applied against future taxable income. The 2017 federal and New York City NOLs will begin to expire during the year ended December 31, 2037. It is possible that ArTara will not generate taxable income in time to use these loss carry-forwards before their expiration. ArTara's net operating loss carryforwards may also be subject to limitation as a result of prior shifts in equity ownership and/or the Merger. In addition, ArTara may experience ownership changes in the future as a result of offerings of stock of the combined company or subsequent shifts in its stock ownership, some of which are outside of its control. In that case, the ability to use net operating loss carry-forwards to offset future taxable income will be limited following any such ownership change.

ArTara may be adversely affected by natural disasters and other catastrophic events and by man-made problems such as terrorism that could disrupt its business operations, and its business continuity and disaster recovery plans may not adequately protect it from a serious disaster.

        ArTara's corporate office is located in New York, New York. If a disaster, power outage, computer hacking, or other event occurred that prevented ArTara from using all or a significant portion of an office, that damaged critical infrastructure, such as enterprise financial systems, IT systems, manufacturing resource planning or enterprise quality systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for it to continue its business for a substantial period of time. ArTara's contract manufacturer's and suppliers' facilities are located in multiple locations where other natural disasters or similar events, such as tornadoes, fires, explosions or large-scale accidents or power outages, or IT threats, could severely disrupt ArTara's operations and have a material adverse effect on its business, financial condition, operating results and prospects. In addition, acts of terrorism and other geo-political unrest could cause disruptions in ArTara's business or the businesses of its partners, manufacturers or the economy as a whole. All of the aforementioned risks may be further increased if ArTara does not implement a disaster recovery plan or its partners' or manufacturers' disaster recovery plans prove to be inadequate. To the extent that any of the above should result in delays in the regulatory approval, manufacture, distribution or commercialization of

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TARA-002 or IV Choline Chloride, its business, financial condition, operating results and prospects would suffer.

ArTara's business and operations would suffer in the event of system failures, cyber-attacks or a deficiency in its cyber-security.

        Despite the implementation of security measures, ArTara's internal computer systems and those of its current and future CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. While ArTara has not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in ArTara's operations, it could result in a material disruption of its development programs and its business operations. In addition, since ArTara sponsors clinical trials, any breach that compromises patient data and identities causing a breach of privacy could generate significant reputational damage and legal liabilities and costs to recover and repair, including affecting trust in the company to recruit for future clinical trials. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in ArTara's regulatory approval efforts and significantly increase its costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, ArTara's data or applications or inappropriate disclosure of confidential or proprietary information, ArTara could incur liability and the further development and commercialization of its products and product candidates could be delayed.

Risks Related to ArTara's Intellectual Property

ArTara may not be able to obtain, maintain or enforce global patent rights or other intellectual property rights that cover its product candidates and technologies that are of sufficient breadth to prevent third parties from competing against ArTara.

        ArTara's success with respect to its product candidates will depend, in part, on its ability to obtain and maintain patent protection in both the United States and other countries, to preserve its trade secrets and to prevent third parties from infringing on its proprietary rights. ArTara's ability to protect its product candidates from unauthorized or infringing use by third parties depends in substantial part on its ability to obtain and maintain valid and enforceable patents around the world.

        The patent application process, also known as patent prosecution, is expensive and time-consuming, and ArTara and its current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner in all the countries that are desirable. It is also possible that ArTara or its current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, these and any of ArTara's patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of its business. Moreover, ArTara's competitors independently may develop equivalent knowledge, methods and know-how or discover workarounds to ArTara patents that would not constitute infringement. Any of these outcomes could impair ArTara's ability to enforce the exclusivity of its patents effectively, which may have an adverse impact on its business, financial condition and operating results.

        Due to legal standards relating to patentability, validity, enforceability and claim scope of patents covering pharmaceutical inventions, ArTara's ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions especially across countries. Accordingly, rights under

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any existing patents or any patents ArTara might obtain or license may not cover its product candidates or may not provide ArTara with sufficient protection for its product candidates to afford a sustainable commercial advantage against competitive products or processes, including those from branded, generic and over-the-counter pharmaceutical companies. In addition, ArTara cannot guarantee that any patents or other intellectual property rights will issue from any pending or future patent or other similar applications owned by or licensed to ArTara. Even if patents or other intellectual property rights have issued or will issue, ArTara cannot guarantee that the claims of these patents and other rights are or will be held valid or enforceable by the courts, through injunction or otherwise, or will provide ArTara with any significant protection against competitive products or otherwise be commercially valuable to ArTara in every country of commercial significance that ArTara may target.

        Competitors in the field of immunology and oncology therapeutics have created a substantial amount of prior art, including scientific publications, posters, presentations, patents and patent applications and other public disclosures including on the Internet. ArTara's ability to obtain and maintain valid and enforceable patents depends on whether the differences between its technology and the prior art allow its technology to be patentable over the prior art. ArTara does not have outstanding issued patents covering all of the recent developments in its technology and is unsure of the patent protection that it will be successful in obtaining, if any. Even if the patents do successfully issue, third parties may design around or challenge the validity, enforceability or scope of such issued patents or any other issued patents ArTara owns or licenses, which may result in such patents being narrowed, invalidated or held unenforceable. If the breadth or strength of protection provided by the patents ArTara holds or pursues with respect to its product candidates is challenged, it could dissuade companies from collaborating with ArTara to develop or threaten its ability to commercialize or finance its product candidates.

        The laws of some foreign jurisdictions do not provide intellectual property rights to the same extent or duration as in the United States, and many companies have encountered significant difficulties in acquiring, maintaining, protecting, defending and especially enforcing such rights in foreign jurisdictions. If ArTara encounters such difficulties in protecting or are otherwise precluded from effectively protecting its intellectual property in foreign jurisdictions, its business prospects could be substantially harmed, especially internationally.

        Proprietary trade secrets and unpatented know-how are also very important to ArTara's business. Although ArTara has taken steps to protect its trade secrets and unpatented know-how by entering into confidentiality agreements with third parties, and intellectual property protection agreements with officers, directors, employees, and certain consultants and advisors, there can be no assurance that binding agreements will not be breached or enforced by courts, that ArTara would have adequate remedies for any breach, including injunctive and other equitable relief, or that its trade secrets and unpatented know-how will not otherwise become known, inadvertently disclosed by ArTara or its agents and representatives, or be independently discovered by its competitors. If trade secrets are independently discovered, ArTara would not be able to prevent their use and if ArTara and its agents or representatives inadvertently disclose trade secrets and/or unpatented know-how, ArTara may not be allowed to retrieve this and maintain the exclusivity it previously enjoyed.

ArTara may not be able to protect its intellectual property rights throughout the world.

        Filing, prosecuting and defending patents on ArTara's product candidates does not guarantee exclusivity. The requirements for patentability differ in certain countries, particularly developing countries. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States, especially when it comes to granting use and other kinds of patents and what kind of enforcement rights will be allowed, especially injunctive relief in a civil infringement proceeding. Consequently, ArTara may not be able to prevent third parties from practicing its inventions in all countries outside the United States and even in launching an identical version of

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ArTara's product notwithstanding ArTara has a valid patent in that country. Competitors may use ArTara's technologies in jurisdictions where it has not obtained patent protection to develop their own products, or produce copy products, and, further, may export otherwise infringing products to territories where ArTara has patent protection but enforcement on infringing activities is inadequate or where ArTara has no patents. These products may compete with ArTara's products, and ArTara's patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, and the judicial and government systems are often corrupt, which could make it difficult for ArTara to stop the infringement of its patents or marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce its patent rights in foreign jurisdictions could result in substantial costs and divert its efforts and attention from other aspects of its business, could put its global patents at risk of being invalidated or interpreted narrowly and its global patent applications at risk of not issuing, and could provoke third parties to assert claims against it. ArTara may not prevail in any lawsuits that ArTara initiates or infringement actions brought against ArTara, and the damages or other remedies awarded, if any, may not be commercially meaningful when ArTara is the plaintiff. When ArTara is the defendant it may be required to post large bonds to stay in the market while it defends itself from an infringement action.

        In addition, certain countries in Europe and certain developing countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties, especially if the patent owner does not enforce or use its patents over a protracted period of time. In some cases, the courts will force compulsory licenses on the patent holder even when finding the patent holder's patents are valid if the court believes it is in the best interests of the country to have widespread access to an essential product covered by the patent. In these situations, the royalty the court requires to be paid by the license holder receiving the compulsory license is not calculated at fair market value and can be inconsequential, thereby disaffecting the patentholder's business. In these countries, ArTara may have limited remedies if its patents are infringed or if ArTara is compelled to grant a license to its patents to a third party, which could also materially diminish the value of those patents. This would limit its potential revenue opportunities. Accordingly, ArTara's efforts to enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that ArTara owns or licenses, especially in comparison to what it enjoys from enforcing its intellectual property rights in the Unites States. Finally, the company's ability to protect and enforce its intellectual property rights may be adversely affected by unforeseen changes in both U.S. and foreign intellectual property laws, or changes to the policies in various government agencies in these countries, including but not limited to the patent office issuing patents and the health agency issuing pharmaceutical product approvals For example, in Brazil, pharmaceutical patents require initial approval of the Brazilian health agency (ANVISA). Finally, many countries have large backlogs in patent prosecution, and in some countries in Latin America it can take years, even decades, just to get a pharmaceutical patent application reviewed notwithstanding the merits of the application.

Obtaining and maintaining ArTara's patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and its patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary,

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fee payment and other similar provisions during the patent application process. While an inadvertent lapse can, in many cases, be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction just for failure to know about and/or timely pay a prosecution fee. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees in prescribed time periods, and failure to properly legalize and submit formal documents in the format and style the country requires. If ArTara or its licensors fail to maintain the patents and patent applications covering its product candidates for any reason, the company's competitors might be able to enter the market, which would have an adverse effect on ArTara's business.

If ArTara fails to comply with its obligations under its intellectual property license agreements, it could lose license rights that are important to its business. Additionally, these agreements may be subject to disagreement over contract interpretation, which could narrow the scope of its rights to the relevant intellectual property or technology or increase its financial or other obligations to its licensors.

        ArTara has entered into in-license arrangements with respect to certain of its product candidates. These license agreements impose various diligence, milestone, royalty, insurance and other obligations on ArTara. If ArTara fails to comply with these obligations, the respective licensors may have the right to terminate the license, in which event ArTara may not be able to develop or market the affected product candidate. The loss of such rights could materially adversely affect its business, financial condition, operating results and prospects. For more information about these license arrangements, see "Description of ArTara's Business—Collaborations and License Agreements."

If ArTara is sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay it from developing or commercializing its product candidates.

        ArTara's commercial success depends on its ability to develop, manufacture, market and sell its product candidates and use its proprietary technologies without infringing the proprietary rights of third parties. ArTara cannot assure that marketing and selling such candidates and using such technologies will not infringe existing or future patents. Numerous U.S.- and foreign-issued patents and pending patent applications owned by third parties exist in the fields relating to its product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that others may assert that its product candidates, technologies or methods of delivery or use infringe their patent rights. Moreover, it is not always clear to industry participants, including us, which patents and other intellectual property rights cover various drugs, biologics, drug delivery systems or their methods of use, and which of these patents may be valid and enforceable. Thus, because of the large number of patents issued and patent applications filed in ArTara's fields across many countries, there may be a risk that third parties may allege they have patent rights encompassing ArTara's product candidates, technologies or methods.

        In addition, there may be issued patents of third parties that are infringed or are alleged to be infringed by ArTara's product candidates or proprietary technologies notwithstanding patents ArTara may possess. Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing and because publications in the scientific literature often lag behind actual discoveries, ArTara cannot be certain that others have not filed patent applications for technology covered by its own and in-licensed issued patents or its pending applications. ArTara's competitors may have filed, and may in the future file, patent applications covering ArTara's own product candidates or technology similar to ArTara's technology. Any such patent application may have priority over ArTara's own and in-licensed patent applications or patents,

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which could further require ArTara to obtain rights to issued patents covering such technologies, which may mean paying significant licensing fees or the like. If another party has filed a U.S. patent application on inventions similar to those owned or in-licensed to us, ArTara or, in the case of in-licensed technology, the licensor may have to participate, in the United States, in an interference proceeding to determine priority of invention.

        ArTara may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that its product candidates or proprietary technologies infringe such third parties' intellectual property rights, including litigation resulting from filing under Paragraph IV of the Hatch-Waxman Act or other countries' laws similar to the Hatch-Waxman Act. These lawsuits could claim that there are existing patent rights for such drug, and this type of litigation can be costly and could adversely affect its operating results and divert the attention of managerial and technical personnel, even if ArTara does not infringe such patents or the patents asserted against ArTara is ultimately established as invalid. There is a risk that a court would decide that ArTara is infringing the third party's patents and would order ArTara to stop the activities covered by the patents. In addition, there is a risk that a court will order ArTara to pay the other party significant damages for having violated the other party's patents.

        Because ArTara relies on certain third-party licensors and partners and will continue to do so in the future, if one of its licensors or partners is sued for infringing a third party's intellectual property rights, ArTara's business, financial condition, operating results and prospects could suffer in the same manner as if ArTara were sued directly. In addition to facing litigation risks, ArTara has agreed to indemnify certain third-party licensors and partners against claims of infringement caused by ArTara's proprietary technologies, and ArTara has entered or may enter into cost-sharing agreements with some its licensors and partners that could require ArTara to pay some of the costs of patent litigation brought against those third parties whether or not the alleged infringement is caused by its proprietary technologies. In certain instances, these cost-sharing agreements could also require ArTara to assume greater responsibility for infringement damages than would be assumed just on the basis of its technology.

        The occurrence of any of the foregoing could adversely affect ArTara's business, financial condition or operating results.

ArTara may be subject to claims that its officers, directors, employees, consultants or independent contractors have wrongfully used or disclosed to ArTara alleged trade secrets of their former employers or their former or current customers.

        As is common in the biotechnology and pharmaceutical industries, certain of ArTara's employees were formerly employed by other biotechnology or pharmaceutical companies, including its competitors or potential competitors. Moreover, ArTara engages the services of consultants to assist ArTara in the development of ArTara's products and product candidates, many of whom were previously employed at, or may have previously been or are currently providing consulting services to, other biotechnology or pharmaceutical companies, including its competitors or potential competitors. ArTara may be subject to claims that these employees and consultants or ArTara has inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or their former or current customers. Although ArTara has no knowledge of any such claims being alleged to date, if such claims were to arise, litigation may be necessary to defend against any such claims. Even if ArTara is successful in defending against any such claims, any such litigation could be protracted, expensive, a distraction to its management team, not viewed favorably by investors and other third parties, and may potentially result in an unfavorable outcome.

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Risks Related to Combined Company

        In determining whether you should vote approve the proposals contained in this proxy statement/prospectus/information statement, you should carefully read the following risk factors in addition to the risks described above.

The market price of the combined company's common stock is expected to be volatile, and the market price of the common stock may drop following the Merger.

        The market price of the combined company's common stock following the Merger could be subject to significant fluctuations. Market prices for securities of early-stage pharmaceutical, biotechnology and other life sciences companies have historically been particularly volatile. Some of the factors that may cause the market price of the Proteon common stock to fluctuate include:

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        Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company's common stock.

        In the past, following periods of volatility in the market price of a company's securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the combined company's profitability and reputation.

        Additionally, a decrease in the stock price of the combined company may cause the combined company's common stock to no longer satisfy the continued listing standards of Nasdaq. If the combined company is not able to maintain the requirements for listing on Nasdaq, it could be delisted, which could have a materially adverse effect on its ability to raise additional funds as well as the price and liquidity of its common stock.

The combined company will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

        The combined company will incur significant legal, accounting and other expenses that ArTara did not incur as a private company, including costs associated with public company reporting requirements. The combined company will also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as new implemented by the SEC and Nasdaq. These rules and regulations are expected to increase the combined company's legal and financial compliance costs and to make some activities more time consuming and costly. For example, the combined company's management team will consist of the executive officers of ArTara prior to the Merger, some of whom have not previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise regarding operations as a public company and compliance with applicable laws and regulations. These rules and regulations also may make it difficult and expensive for the combined company to obtain directors' and officers' liability insurance. As a result, it may be more difficult for the combined company to attract and retain qualified individuals to serve on the combined company's board of directors or as executive officers of the combined company, which may adversely affect investor confidence in the combined company and could cause the combined company's business or stock price to suffer.

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Anti-takeover provisions in the combined company's charter documents and under Delaware law could make an acquisition of the combined company more difficult and may prevent attempts by the combined company stockholders to replace or remove the combined company management.

        Provisions in the combined company's certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. In addition, because the combined company will be incorporated in Delaware, it is governed by the provisions of Section 203 of the DGCL, which prohibits stockholders owning in excess of 15% of the outstanding combined company voting stock from merging or combining with the combined company. Although Proteon and ArTara believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with the combined company's board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by the combined company's stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

The certificate of incorporation of the combined company will provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between the combined company and its stockholders, which could limit its stockholders' ability to obtain a favorable judicial forum for disputes with the combined company or its directors, officers or other employees.

        The certificate of incorporation of the combined company will provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on the combined company's behalf, any action asserting a breach of fiduciary duty owed by any of its directors, officers or other employees to the combined company or its stockholders, any action asserting a claim against it arising pursuant to any provisions of the DGCL, its certificate of incorporation or its bylaws, or any action asserting a claim against it that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees, which may discourage such lawsuits against the combined company and its directors, officers and other employees. If a court were to find the choice of forum provision contained in the certificate of incorporation to be inapplicable or unenforceable in an action, the combined company may incur additional costs associated with resolving such action in other jurisdictions.

Proteon and ArTara do not anticipate that the combined company will pay any cash dividends in the foreseeable future.

        The current expectation is that the combined company will retain its future earnings, if any, to fund the development and growth of the combined company's business. As a result, capital appreciation, if any, of the common stock of the combined company will be your sole source of gain, if any, for the foreseeable future.

An active trading market for the combined company's common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

        Prior to the Merger, there had been no public market for ArTara common stock. An active trading market for the combined company's shares of common stock may never develop or be sustained. If an active market for its common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares at an attractive price or at all.

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Future sales of shares by existing stockholders could cause the combined company's stock price to decline.

        If existing stockholders of Proteon and ArTara sell, or indicate an intention to sell, substantial amounts of the combined company's common stock in the public market after legal restrictions on resale discussed in this proxy statement/prospectus/information statement lapse, the trading price of the common stock of the combined company could decline. Neither Proteon nor ArTara is able to predict the effect that sales may have on the prevailing market price of the combined company's common stock.

After completion of the Merger, certain investors in the private placement will have the ability to control or significantly influence certain matters submitted to the combined company's stockholders for approval.

        Upon the completion of the Merger and concurrent Private Placement, pursuant to the terms of the Private Placement, certain investors in the Private Placement will have consent rights over certain significant matters of the combined company's business. These include decisions to effect a merger or other similar transaction, changes to the principal business of the combined company, and the sale or other transfer of TARA-002 or other assets with an aggregate value of more than $2,500,000. As a result, these stockholders, acting together, will have significant influence over certain matters that require approval by the combined company's stockholders.

If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about the combined company, its business or its market, its stock price and trading volume could decline.

        The trading market for the combined company's common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company's common stock after the completion of the Merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts or the content and opinions included in their reports. The price of the combined company's common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The combined company will have broad discretion in the use of proceeds from the Private Placement and may invest or spend the proceeds in ways with which you do not agree and in ways that may not increase the value of your investment.

        The combined company will have broad discretion over the use of proceeds from the Private Placement. You may not agree with the combined company's decisions, and its use of the proceeds may not yield any return on your investment. The combined company's failure to apply the net proceeds of the Private Placement effectively could compromise its ability to pursue its growth strategy and the combined company might not be able to yield a significant return, if any, on its investment of these net proceeds. You will not have the opportunity to influence its decisions on how to use the net proceeds from the Private Placement.

If the combined company fails to maintain proper and effective internal controls, its ability to produce accurate financial statements on a timely basis could be impaired.

        The combined company will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that the combined company maintain effective disclosure controls and procedures and internal control over financial reporting. The combined company must perform system and process

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evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. As a private company, ArTara has never been required to test its internal controls within a specified period. This will require that the combined company incur substantial professional fees and internal costs to expand its accounting and finance functions and that it expend significant management efforts. The combined company may experience difficulty in meeting these reporting requirements in a timely manner.

        The combined company may discover weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. The combined company's internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

        If the combined company is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if it is unable to maintain proper and effective internal controls, the combined company may not be able to produce timely and accurate financial statements. If that were to happen, the market price of its common stock could decline and it could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

        This proxy statement/prospectus/information statement contains statements regarding matters that are not historical facts and that are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future, and, therefore, stockholders are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. We use words such as "anticipates," "believes," "plans," "expects," "projects," "future," "intends," "may," "will," "should," "could," "estimates," "predicts," "potential," "continue," "guidance," and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties and other factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, risks and uncertainties detailed in the section titled "Risk Factors" beginning on page 31. The statements made in this proxy statement/prospectus/information statement regarding the following subject matters are forward-looking by their nature:

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        The preceding list is not intended to be an exhaustive list of all forward-looking statements in this proxy statement/prospectus/information statement. You should read this proxy statement/prospectus/information statement with the understanding that actual future results, levels of activity, performance and achievements may be materially different from what is currently expected. We qualify all of the forward-looking statements by these cautionary statements.

        There can be no assurance that the Merger or any other Contemplated Transaction described in this proxy statement/prospectus/information statement will in fact be completed in the manner described or at all. Any forward-looking statement speaks only as of the date on which it is made, and Proteon, ArTara and the combined company assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

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THE SPECIAL MEETING OF PROTEON'S STOCKHOLDERS

Date, Time and Place

        The Proteon special meeting will be held on                        , 2019, at the offices of Morgan, Lewis & Bockius, LLP located at One Federal Street, Boston, MA 02110 commencing at 9:00 am local time. Proteon is sending this proxy statement/prospectus/information statement to its common stockholders in connection with the solicitation of proxies by the Proteon Board for use at the Proteon special meeting and any adjournments or postponements of the Proteon special meeting. This proxy statement/prospectus/information statement is first being furnished to Proteon's common stockholders on or about                        , 2019.

Purpose of the Proteon Special Meeting

        The purpose of the Proteon special meeting is:

        Proteon will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof. Proposal Nos. 1 through 5 described above are collectively the "Proteon Stockholder Matters," and Proposal Nos. 1 through 3 above are collectively the "Closing Proteon Stockholder Matters."

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Recommendation of the Proteon Board

        The Proteon Board has unanimously determined that the Proteon Stockholder Matters are fair to, advisable for and in the best interests of Proteon and its stockholders. The Proteon Board recommends that Proteon's common stockholders vote "FOR" each of Proposal Nos. 1, 2, 3, 4, and 5.

Record Date and Voting Power

        Only holders of record of Proteon common stock at the close of business on the record date, November 12, 2019, are entitled to notice of, and to vote at, the Proteon special meeting. There were approximately                        holders of record of Proteon common stock at the close of business on the record date. At the close of business on the record date,                        shares of Proteon common stock were issued and outstanding. Each share of Proteon common stock entitles the holder thereof to one vote on each matter submitted for stockholder approval. See the section titled "Principal Stockholders of Proteon" in this proxy statement/prospectus/information statement for information regarding persons known to Proteon's management to be the beneficial owners of more than 5% of the outstanding shares of Proteon common stock.

Voting and Revocation of Proxies

        The proxy accompanying this proxy statement/prospectus/information statement is solicited on behalf of the Proteon Board for use at the Proteon special meeting.

        If you are a stockholder of record of Proteon as of the record date referred to above, you may vote in person at the Proteon special meeting or vote by proxy using the enclosed proxy card. Whether or not you plan to attend the Proteon special meeting, Proteon urges you to vote by proxy to ensure your vote is counted. You may still attend the Proteon special meeting and vote in person if you have already voted by proxy. As a stockholder of record you may vote in any of the following ways:

        If your shares of Proteon common stock are held by your broker as your nominee, that is, in "street name," the enclosed voting instruction card is sent by the institution that holds your shares. Please follow the instructions included on that proxy card regarding how to instruct your broker to vote your shares of Proteon common stock. If you do not give instructions to your broker, your broker can vote your shares of Proteon common stock with respect to "routine" items but not with respect to "non-routine" items such as Proposal Nos. 2, 3 and 4, and, as a result, absent specific instructions from the beneficial owner of such shares, brokers are not empowered to vote those shares. Routine items are proposals considered routine under certain rules applicable to brokers on which your broker may vote shares held in "street name" in the absence of your voting instructions. On non-routine items for which you do not give your broker instructions, your shares of Proteon common stock will be treated as "broker non-votes." Broker non-votes, if any, will be treated as shares that are present at the special

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meeting for purposes of determining whether a quorum exists and will have the same effect as votes against Proposal Nos. 2, 3 and 4.

        All properly executed proxies that are not revoked will be voted at the Proteon special meeting and at any adjournments or postponements of the Proteon special meeting in accordance with the instructions contained in the proxy. If a holder of Proteon common stock executes and returns a proxy and does not specify otherwise, the shares represented by that proxy will be voted "FOR" Proposal No. 1 to approve an amendment to the sixth amended and restated certificate of incorporation of Proteon effecting the Reverse Split; "FOR" Proposal No. 2 to approve the issuance of Proteon capital stock pursuant to the Merger and the Private Placement and the change of control resulting from the Merger and the Private Placement; "FOR" Proposal No. 3 to approve an amendment to the sixth amended and restated certificate of incorporation of Proteon effecting the Series A Preferred Automatic Conversion; "FOR" Proposal No. 4 to approve the EIP Amendment; and "FOR" Proposal No. 5 to approve the postponement or adjournment of the Proteon special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3 or 4 in accordance with the recommendation of the Proteon Board.

        Proteon's common stockholders of record, other than those Proteon stockholders who have executed voting agreements, may change their vote at any time before their proxy is voted at the Proteon special meeting in one of three ways. First, a stockholder of record of Proteon can send a written notice to the Secretary of Proteon stating that the stockholder would like to revoke its proxy. Second, a stockholder of record of Proteon can submit new proxy instructions either on a new proxy card or by telephone or via the Internet. Third, a stockholder of record of Proteon can attend the Proteon special meeting and vote in person. Attendance alone will not revoke a proxy. If a Proteon stockholder who owns shares of Proteon common stock in "street name" has instructed a broker to vote its shares of Proteon common stock, the stockholder must follow directions received from its broker to change those instructions.

Required Vote

        The presence, in person or represented by proxy, at the Proteon special meeting of the holders of a majority of the shares of Proteon common stock outstanding and entitled to vote at the Proteon special meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted towards a quorum. Approval of Proposal Nos. 1 and 3 requires the affirmative vote of holders of a majority of Proteon common stock having voting power outstanding on the record date for the Proteon special meeting. Approval of Proposals Nos. 2, 4 and 5 requires the affirmative vote of a majority of the shares of Proteon common stock present in person or represented by proxy at the Proteon special meeting and entitled to vote thereupon.

        Votes will be counted by the inspector of election appointed for the Proteon special meeting, who will separately count "FOR" and "AGAINST" votes, abstentions and broker non-votes. Abstentions and broker non-votes (if applicable) will be counted towards the vote total and will have the same effect as "AGAINST" votes for all Proposals 1 through 5 and will be used to determine whether a quorum is present at the Proteon special meeting.

        Each of Proposal Nos. 1, 2 and 3 is a condition to the consummation of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3. Proposal No. 4 is not a condition to the consummation of the Merger. Proposal Nos. 1, 2 and 3 are not conditioned on Proposal No. 4 being approved.

        As of September 30, 2019, the directors and executive officers of Proteon and other stockholders who signed voting agreements beneficially owned approximately 17.64% of the outstanding shares of Proteon common stock entitled to vote at the Proteon special meeting. Pursuant to the voting agreements, each such director, executive officer and other signatory stockholder has agreed to be

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present (in person or by proxy) at the Proteon special meeting to vote all shares of Proteon common stock owned by him, her or it as of the record date in favor of Proposal Nos. 1, 2 and 3. Additionally, each such stockholder has agreed, solely in his, her or its capacity as a stockholder of Proteon, to vote against any competing acquisition proposal and any action, proposal or transaction that would reasonably be expected to result in a material breach of the voting agreement. As of September 30, 2019, Proteon is not aware of any affiliate of ArTara owning any shares of Proteon common stock entitled to vote at the Proteon special meeting.

Solicitation of Proxies

        In addition to solicitation by mail, the directors, officers, employees and agents of Proteon may solicit proxies from Proteon's common stockholders by personal interview, telephone, telegram or otherwise. Proteon and ArTara will share equally the costs of printing and filing this proxy statement/prospectus/information statement and proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Proteon common stock for the forwarding of solicitation materials to the beneficial owners of Proteon common stock. In addition, Proteon has engaged Georgeson LLC, a proxy solicitation firm, to solicit proxies from Proteon's common stockholders for a fee of $12,500 plus costs associated with solicitation campaigns. Proteon will also reimburse Georgeson LLC for reasonable out-of-pocket expenses. Proteon will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

Other Matters

        As of the date of this proxy statement/prospectus/information statement, the Proteon Board does not know of any business to be presented at the Proteon special meeting other than as set forth in the notice accompanying this proxy statement/prospectus/information statement. If any other matters should properly come before the Proteon special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

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THE MERGER

        This section and the section titled "The Merger Agreement" in this proxy statement/prospectus/information statement describe the material aspects of the Merger, including the Merger Agreement. While Proteon and ArTara believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus/information statement for a more complete understanding of the Merger and the Merger Agreement, including the Merger Agreement attached as Annex A, the fairness opinion of H.C. Wainwright & Co., LLC ("Wainwright") attached as Annex B, and the other documents to which you are referred herein. See the section titled "Where You Can Find More Information" in this proxy statement/prospectus/information statement.

Background of the Merger

        The terms of the Merger Agreement are the result of extensive arm's-length negotiations between members of the management team of Proteon and the management team of ArTara, along with their respective advisors, and under the guidance of each company's board of directors. Proteon followed a careful process assisted by experienced outside financial and legal advisors to rigorously examine potential transactions and transaction candidates through broad outreach to life sciences companies and a thorough process of evaluation of prospective strategic partners. The following is a summary of the background of the events leading up to the decision by Proteon to engage in a strategic transaction, the process undertaken by Proteon to identify and evaluate prospective merger partners, and the negotiation of the Merger Agreement with ArTara.

        On March 28, 2019, following a rigorous review of the available data, Proteon announced top-line results from PATENCY-2, its Phase 3 clinical trial of investigational vonapanitase in patients with chronic kidney disease, or CKD, undergoing creation of a radiocephalic fistula for hemodialysis. The PATENCY-2 clinical trial had two co-primary endpoints and statistical significance was not achieved on either endpoint. The PATENCY-2 clinical trial was the second of two randomized, double-blind Phase 3 trials, comparing investigational vonapanitase to placebo in which the primary endpoint was not statistically significant. Following this announcement and an extensive review of the available data from the PATENCY-2 Phase 3 clinical trial, Proteon's management and the Proteon Board engaged in discussions relating to potential measures to preserve its cash while maximizing stockholder value.

        On April 4, 2019, the Proteon Board voted to establish the Strategic Advisory Committee, consisting of directors Garen Bohlin, John Freund and Paul Hastings. The purpose of the Strategic Advisory Committee was to provide additional board oversight and assistance to Proteon's management in completing a review of Proteon's strategic options.

        The strategic review would include the evaluation of all reasonable options to maximize value for Proteon's stockholders, including the viability of advancing vonapanitase for the indication of vascular access, the possibility of developing vonapanitase for the treatment of peripheral artery disease, or PAD, based on results from a Phase 1 clinical trial applying vonapanitase as an adjunct to angioplasty in patients suffering from PAD, and on preliminary results from a second Phase 1 clinical trial applying vonapanitase as an adjunct to angioplasty for patients suffering from PAD, the potential sale of Proteon's vonapanitase technology platform, possible business combinations with other life science companies, liquidating Proteon and distributing any remaining cash to stockholders, and a reverse merger with a privately-held healthcare-related company, with Proteon's stock being the consideration in the transaction. The attractiveness of the last potential option based upon the Proteon common stock trading price was supported by the lack of value that the marketplace appeared to assign to Proteon's remaining non-cash assets and the value that Proteon's public listing and cash might have to a high-quality merger candidate seeking to advance its own clinical programs. Further, a reverse merger transaction of this kind could provide Proteon's stockholders with a meaningful stake in a combined

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company possessing both promising clinical prospects and the means to pursue them, establishing the opportunity for long-term value creation for Proteon's stockholders. In parallel to this effort, Proteon continued with a rigorous review of, and performed significant analysis on, the available data from PATENCY-2 Phase 3 clinical trial, including an analysis of the clinical trial logistics that could have impacted the trial's result.

        In addition, at the time, there were many clinical-stage life sciences companies seeking to access the public markets for their securities. As a result, the Strategic Advisory Committee believed that high-quality private life sciences companies could be actively seeking business combinations with a company like Proteon, and that Proteon had an opportunity to deliver value to its stockholders in this manner if it could identify and select a suitable merger partner in a timely manner and manage its cash and other resources accordingly. For these reasons, the Proteon Board focused its efforts on a search to identify such merger partners. Initial search efforts started with suggestions as to potential merger partners from various investment bankers and other sources, and the process evolved into a systematic, thorough review once Proteon formally engaged an investment banking firm to conduct a broad market evaluation, as described below.

        During early April 2019, Proteon's management engaged in discussions with multiple investment banking firms regarding a potential engagement to assist Proteon in conducting a broad strategic review. Such discussions included a review and negotiation of the financial terms proposed by each of the investment banks for the services offered, including, without limitation, the fees for the services being offered, the timing of paying such fees, the timing of providing a fairness opinion, the termination provisions, and the timing of being paid after termination. On April 5, 2019, a summary of management's discussions with certain investment banking firms interested in assisting Proteon was communicated to the Strategic Advisory Committee. On April 8, 2019 and based on these communications with members of the Strategic Advisory Committee and a thorough review of data from the PATENCY-2 Phase 3 clinical trial, Proteon signed the engagement letter with Wainwright in light of their strength of experience with recent reverse merger transactions involving life science companies, as well as the competitiveness of their fee.

        On April 11, 2019, a regularly scheduled, in-person meeting of the Proteon Board was held, which representatives from Proteon's management, and Morgan, Lewis & Bockius LLP, or Morgan Lewis, outside legal counsel to Proteon, attended. The purpose of this meeting was to provide an update on, among other things, the state of Proteon's business, including a further review of the results of the PATENCY-2 Phase 3 clinical trial, Proteon's Phase 1 clinical trial for PAD, a planned amendment to Proteon's Annual Report filed on Form 10-K due to an expected delay in filing Proteon's proxy statement for the 2019 Annual Meeting of Stockholder, Proteon's projected cash runway, and possible reverse merger transaction or liquidation options, and to engage in a discussion as to the optimal composition of the Proteon Board and its committees. Timothy Noyes, Proteon's President and Chief Executive Officer, explained the risks inherent to Proteon's current stand-alone strategy, including a lack of near-term catalysts combined with a need for a significant fundraising in 2019. Mr. Noyes then described and obtained approval of management's proposal for a revised corporate strategy, including cost-cutting measures to preserve cash and the further exploration of strategic alternatives.

        On April 15, 2019, Proteon announced that the Proteon Board had decided to explore all strategic alternatives for Proteon and to reduce its employee headcount and spending on operations in order to preserve its cash resources. In the same press release on April 15, 2019, Proteon also announced it had retained Wainwright as its financial advisor to assist in the strategic review process.

        Wainwright was engaged to provide financial advisory services, including conducting a broad market search to identify and reach out to suitable merger partners. Wainwright recommended a two-step strategic review process, with an initial phase involving Wainwright issuing a process letter to parties to solicit non-binding initial indications of interest, with such indications of interest summarizing

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the proposed merger partner's business plan, proposed ownership split of the combined company, estimated financing needs and other matters. Following the receipt of indications of interest, Proteon's management, with assistance from the Proteon Board, would then review the indications of interest to focus on selecting a subset of candidates to progress to the next round of consideration. This next round would include presentations, in-person when possible, by the management teams of the subset of merger candidates to members of Proteon's management, due diligence reviews of each party's business, and refinement of the indications of interest. Thereafter, the Proteon Board could select a handful of potential finalists with which to negotiate a definitive merger agreement.

        Following the Board meeting on April 11, 2019 and the public announcement on April 15, 2019, Wainwright initiated a process of broad outreach to potential merger candidates, including companies that were believed to be considering going public through an initial public offering, companies that had recently completed financing rounds with known crossover investors, companies that might be considering financing rounds with known crossover investors, and companies that were pursuing the development of product candidates in therapeutic areas garnering significant attention from life science investors. As part of this process, outreach was completed to a total of 49 companies. Wainwright asked that proposals to merge with Proteon be submitted by May 10, 2019.

        On May 8, 2019, Proteon filed its quarterly report for the period ending March 31, 2019 on Form 10-Q and announced that, as part of its strategic review process, Proteon would be terminating by the end of May all but a handful of employees and taking other measures to reduce operating expenses and preserve its cash resources.

        By mid-May 2019, 26 preclinical and clinical companies, including ArTara, had signed a confidential disclosure agreement, which did not contain a standstill provision, with Proteon expressing their interest in learning more about a transaction with Proteon. These companies' preclinical and clinical programs were focused on a variety of indications and markets. Proteon's management, along with representatives from Wainwright, reviewed each of these possible merger partners in detail and evaluated the candidates based on a number of factors, including their profiles and the criteria noted above.

        On May 21, 2019, a telephonic meeting of the Strategic Advisory Committee was held, at which a representative from Wainwright and Proteon management reviewed the proposals that had been received from potential merger partners and discussed the process to date. Representatives of Wainwright discussed the status of outreach efforts, noting Wainwright's outreach to 49 companies, that 26 of these companies had signed confidentiality agreements and that Proteon had received proposals from 15 of these companies. They also discussed the outreach Wainwright had made to other third parties with knowledge of the industry and potential transaction opportunities, such as venture capital firms, institutional investors, consultants, lawyers, bankers and investor relations firms, to determine whether those other third parties could recommend any potential transaction partners for Proteon. The Wainwright representatives discussed the approach that Wainwright and Proteon had followed in evaluating the proposals and proposed selection criteria. Wainwright provided the Proteon Board with a list of the 15 companies that provided proposals to Proteon and identified for the Strategic Advisory Committee the four companies, including ArTara, that had been identified by Proteon management, in consultation with Wainwright, as potential finalists, as well as, one other private biopharmaceutical company ("Company A") that had been identified as an alternate to the finalists. Proteon management, with Wainwright's assistance, summarized the proposals and clinical programs of ArTara, the other three primary companies, each privately-held biopharmaceutical companies (each referred to herein as "Company B", "Company C" and "Company D", respectively), and Company A as an alternate to these four companies, and presented a comparison of each with respect to the financial terms proposed, approximate valuation, estimate of cash on hand, approximate cash burn rate, status of clinical development and lead indication, and next clinical milestone. ArTara, Company A, Company B, Company C and Company D focused on a variety of indications, and their initial proposals offered

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Proteon's stockholders post-closing stock ownership percentages ranging from 4% to 20% in the combined entities. Specifically, ArTara's initial proposal assigned a value of $12 million for Proteon, $60 million for ArTara, and included a $40 million round of financing to be closed concurrent with a merger closing, which resulted in a post-closing ownership percentage of 10.7% for Proteon's current stockholders, 53.6% for ArTara's current stockholders and 35.7% for the investors in the $40 million financing round. Other terms of ArTara's proposal covered the need to complete diligence on Proteon, finalize Board representation by Proteon in the combined company, the timeline to a merger closing, the desire to change the company name from Proteon to ArTara, and other customary conditions. Company A's initial proposal assigned a value of $17.0 million for Proteon and $150.0 million for Company A, but did not include any financing proposal, which resulted in a post-closing ownership percentage of 10.2% for Proteon's current stockholders and 89.8% for Company A's current stockholders. Company B's initial proposal assigned a value of $10.0 million for Proteon and $190.0 million for Company B, included a proposed $40 million financing but without any details or investor names, which resulted in a post-closing ownership percentage of 4.2% for Proteon's current stockholders, 79.2% for Company B's current stockholders and 16.6% for the investors in the $40.0 million financing. Company C's initial proposal assigned a value of $10.0 million for Proteon and $144.0 million for Company C, but did not include any financing proposal, which resulted in a post-closing ownership percentage of 6.0% for Proteon's current stockholders and 94.0% for Company C's current stockholders. Company D's initial proposal did not assign a value for Proteon or for Company D and did not include any financing proposal. However, Company D's proposal assigned a post-closing ownership percentage of 20% for Proteon's current stockholders and 80% for Company D's current stockholders. The Strategic Advisory Committee agreed with management's assessment of the companies that provided proposals to Proteon, including the identification of ArTara, Company B, Company C, and Company D as finalists, with Company A as an alternative to the finalists.

        Later in May and throughout June 2019, Proteon management had discussions with each of ArTara, Company A, Company B, Company C and Company D. These discussions addressed specifics regarding their proposals to Proteon, including proposed valuation, financing plans and relative post-closing and/or post-financing stock ownership percentages for Proteon as well as additional due diligence or other follow-up questions to Proteon management's prior conversations with each company. Additionally, during this time, Company B requested, and was granted, access to Proteon's electronic data room and, in turn, granted Proteon with access to Company B's electronic data room.

        On June 3, 2019, Company C notified Wainwright that it was no longer interested in pursuing this opportunity.

        In June and into July 2019, four additional privately-held biopharmaceutical companies (referred to herein as "Company E", "Company F", "Company G" and "Company H", respectively) were introduced to Proteon as potential merger partners. Given the prospects of the merger candidates' clinical programs and their respective strong management teams, Proteon signed confidentiality agreements, which did not contain standstill provisions, with each of these four additional companies and subsequently received preliminary oral proposals from each later in July 2019. Proteon management, in consultation with Wainwright, determined that each of these four companies would need to close on a financing prior to, or concurrent with, a reverse merger transaction closing.

        On June 13, 2019, Proteon's management held an in-person meeting with the financial advisors for Company G. The meeting covered a range of topics including the status of additional fundraising efforts by Company G, the finalization of all intellectual property to be part of the transaction, and the desire of Company G to merge with a public company that had an existing management team ready to move the combined company forward. At the end of the meeting, it was decided that the financial advisors to Company G would send additional materials to Proteon's management and that both sides

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would think about ways to address some of the issues identified during the discussion and get back in touch in the coming weeks. No written proposal was ever received from Company G.

        On June 26, 2019, a regularly scheduled, in-person meeting of the Proteon Board was held, which representatives from Proteon's management and Morgan Lewis attended. At the meeting, topics discussed included Proteon's projected cash runway, the possible reverse merger candidates, including ArTara, the financial strength of each potential merger partner, the status of and timetable associated with the completion of financing by each of the potential merger partners that Proteon management had determined needed to complete a financing prior to a merger closing, the status of negotiations with each of the potential merger partners concerning a merger agreement and the possible timeline to signing a definitive merger agreement with each of the potential merger partners, and a possible timeline to closing a transaction with each of the potential merger partners. There was consensus on the part of the Proteon Board, and Proteon management, based in part on recommendations given by Wainwright to Proteon management and based on the candidates' potential for securing financing, potential to and timing for closing a merger transaction with Proteon, and potential financial benefit to Proteon's stockholders, that Proteon's stockholders could potentially benefit equally in a merger with ArTara or one of the other two leading candidates. Therefore, the Proteon Board agreed that the first company of the three leading candidates to secure additional funding from respected dedicated healthcare investors should be aggressively pursued to see if an attractive transaction could be structured.

        On July 1, 2019, Proteon informed Company G that the issues identified in the June 13, 2019 meeting were not solvable from Proteon's perspective and that Proteon was no longer considering Company G as a potential merger partner.

        In July, Company E and Company F were given access to Proteon's electronic data room. Proteon did not receive access to either of Company E's or Company F's electronic data rooms at this time as neither company had provided Proteon with a written proposal for a potential transaction.

        On July 25, 2019, Proteon management updated the Proteon Board as to progress made since the June 26, 2019 Proteon Board meeting. The update identified ArTara and two other leading candidates, Company A and Company B, and three alternative candidates, Company E, Company F and Company H, with whom to potentially merge. None of the alternative candidates, Company E, Company F and Company H, had submitted written proposals to Proteon at this time, but had indicated to Proteon management that they might do so in the near future. Additionally, Proteon management updated the Proteon Board that Company D had not submitted a revised proposal and therefore, Proteon management recommended removing Company D from the list of companies actively being considered and the Proteon Board agreed. All six remaining potential merger partners needed additional funding and each management team indicated they were working to secure a term sheet from healthcare investors at which time they would provide a revised and/or written proposal to Proteon.

        Before and after the update to the Proteon Board in late July, Proteon management, together with representatives of Wainwright, engaged, and continued to engage, in extensive discussions regarding the benefits and drawbacks of each of the three leading candidates, ArTara, Company A and Company B, and the additional diligence needed to be gathered with two of the alternative candidates, Company E and Company F.

        On August 1, 2019, a telephonic call was held among Proteon management, Wainwright, Company H, and Company H's investment bank representatives. The purpose of the meeting was for the management team of Company H to present their corporate slide deck to Proteon management. While the research and development efforts ongoing at Company H were very interesting, it was identified in the discussion that Company H required additional funding prior to closing a merger. Proteon and Company H had signed a confidential agreement, which did not contain a standstill provision, on July 22, 2019.

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        On August 7, 2019, Proteon filed its quarterly report for the period ending June 30, 2019 on Form 10-Q. Expenses for the second quarter were less than in the first quarter and headcount had been reduced to three employees at the time of filing its Form 10-Q. In addition, Company H submitted a written proposal to Proteon which included a valuation for Proteon of $13.5 million, a valuation for Company H of $161.5 million and a $20 million round of financing to be invested concurrent with the merger closing. This proposal would result in Proteon's ownership percentage to be equal to 6.9% of the combined company when including the $20 million financing. The proposal also contained warrants to be issued to the investors as well as an adjustment downward in the pre-money valuation for the investors in the $20 million financing should Proteon's stock price be lower at the time of the merger closing or 45 days after the merger closing.

        On August 8, 2019, Proteon spoke with one of the financial advisors to Company H about their prior proposal to merge and the associated financing term sheet for the transaction. During the call, Proteon communicated aspects of the merger terms and associated financing terms that were not optimal, which included the investor's ability to have a downward adjustment in the pre-money valuation. Additionally, during the discussion, Company H's financial advisors indicated how many potential investors had signed confidentiality and non-disclosure agreements and were conducting diligence with access to Company H's electronic data room. The financial advisor to Company H responded to Proteon's questions and indicated that they would speak with their client that day about Proteon's concerns with the financing term sheet. Later that day, Proteon received a revised proposal from Company H that contained a funding term sheet with revisions.

        On August 12, 2019, Proteon received the first revised proposal from ArTara since ArTara's initial proposal in mid-May. This revised proposal assigned a value of $8.7 million for Proteon, $35 million for ArTara, and included a $40 million round of financing to be closed concurrent with a merger closing, which resulted in a post-closing ownership percentage of 10.4% for Proteon's current stockholders, 41.8% for ArTara's current stockholders and 47.8% for the investors in the $40 million financing round. This was a reduction in Proteon's valuation from $12 million down to $8.7 million and a corresponding reduction in pro forma percentage ownership for Proteon from 10.7% down to 10.4%. In addition, this revised proposal for the first time contained a detailed $40 million funding term sheet. The next day a telephonic meeting was held among ArTara management, Proteon management, and representatives from the lead investor. During the telephonic call, questions were asked by Proteon management and Wainwright of the representatives from the lead investor as to the extent of their diligence of ArTara and what diligence remained to be completed by the lead investor. In addition, Proteon management asked questions about the terms of ArTara's proposal and the associated funding term sheet as well as pre-money valuations for ArTara and for Proteon that might be more acceptable to the Proteon Board and ultimately approved by Proteon's stockholders.

        On August 13, 2019, Proteon gave ArTara management team access to its electronic data room and requested access to ArTara's electronic data room. ArTara indicated their data room would be ready soon and Proteon would be granted access.

        On August 16, 2019, Proteon received a revised proposal from ArTara, which included a revised $42.5 million funding term sheet for consideration. The value assigned to Proteon was $7.25 million, down from $8.7 million, and corresponded to a percentage ownership for Proteon of the combined company remaining unchanged at 10.4% when including the higher financing amount. The value for ArTara had dropped to $20 million, which equated to a 28.7% of the combined company post-closing. Additional changes in the proposal included a requirement that Proteon's Series A shares outstanding be converted to common stock concurrent with the merger closing and the allocation between preferred stock and common stock of the $42.5 million of additional funding in Proteon. The same day, Proteon management also received a revised proposal and associated funding term sheet from Company H. Company H revised its proposal to value Proteon at $12.5 million, which resulted in a 6.4% ownership of the combined company after including the $20 million financing. This was down from $13.5 million

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and 6.9% in Company H's initial proposal. The term sheet for the $20 million financing was revised to provide Proteon investors the ability to receive additional shares of Proteon's stock should the valuation of the combined company be below $195 million 45 days after the merger closes. In addition, the revised proposal still included the issuance of warrants to purchase Proteon stock up to five years after the merger closed.

        On August 19, 2019, a telephonic call was held with the Proteon Board, Proteon management and Proteon's law firm, Morgan Lewis, to discuss the proposals submitted by ArTara and Company H. The Proteon Board and Proteon management were in favor of advancing discussions and diligence efforts with ArTara, as well as two other candidates, Company B and Company H. The Proteon Board and Proteon's management designated each of Company A, Company E, and Company F as back-ups, due primarily to their lack of investor financing with their merger proposal, for potential further evaluation if the discussions with ArTara, Company B and Company H did not work out. At this time, Company B did not have a financing commitment from a lead investor and had indicated to Proteon management that it would not update its proposal to Proteon until such time. ArTara was considered to be a highly attractive merger candidate in that it appeared to offer a differentiated approach for treating two orphan diseases, Lymphatic Malformations and Intestinal Failure Associated Liver Disease, or IFALD. In particular, its lead programs were viewed as having promising clinical results, supportive of entering late-stage Phase 2 or Phase 3 clinical trials for indications in each Lymphatic Malformations and for IFALD. The Board noted that important regulatory decisions by FDA were anticipated in the first half of 2020 and that important clinical data readouts were anticipated in 2022 along with a potential regulatory approval by FDA in 2022 for Lymphatic Malformations. These anticipated readouts were further regarded as representing potential opportunities for significant value creation, if the results were positive. In addition, the Board viewed ArTara favorably because it was perceived to have a highly experienced management team that was capable of operating a publicly traded company immediately upon the closing of a transaction, as well as top tier investors who could potentially support additional investment in ArTara to further its programs.

        Company B's lead clinical program also made it a highly attractive merger partner based on its Phase 2 data and ongoing Phase 3 clinical trial in an indication potentially representing a significant opportunity with high unmet, all of which could be favorably received by the public markets. While Company B also was viewed as having the potential to secure a substantial concurrent investment from outside investors, Company B had been promising Proteon management since early June that a signed financing term sheet was likely coming within the next couple weeks. As of August 19, 2019, Company B still did not have a signed financing term sheet. Similarly, Company H controlled assets with the potential for application in several rare dermatological diseases. In particular, one of the assets had previously received regulatory approval but with an inferior formulation, and thus was perceived to have a lower risk in its clinical and regulatory development pathway from an efficacy and safety perspective. Company H was also believed to have a strong, recognizable management team but had an inferior financing term sheet to support Company H's merger proposal.

        On August 26, 2019, Proteon management held a telephonic call with Jesse Shefferman, the Chief Executive Officer of ArTara, to discuss the ongoing negotiations in finalizing a term sheet to exclusively negotiate a merger agreement. Proteon management expressed concern with the 45-day exclusivity period in the term sheet and proposed 10-15 days as more appropriate for exclusivity. In addition, Proteon management asked about the timing of ArTara's 2017 and 2018 audited financial statements, which were expected to be sent to ArTara's auditors shortly and to be complete prior to the end of September, as they would be a gating item to filing a registration statement or proxy statement with the SEC.

        Later on August 26, 2019, Proteon management held a telephonic call with the CEO of Company B regarding the status and timing of a signed funding term sheet to support Company B's

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merger proposal. Proteon management learned that, while close, Company B had still not obtained a financing term sheet to support its proposal.

        That same day, discussions were held by telephone between representatives of Proteon and ArTara regarding the draft of the term sheet, including with regard to the exclusivity period, the value to be applied for Proteon's Nasdaq listing and expected cash to be held by Proteon at the time of a merger closing.

        On August 27, 2019, outside legal counsel to ArTara, Cooley LLP, or Cooley, were granted access to Proteon's electronic data room with additional diligence materials added over the following weeks. By this time, Proteon had access to ArTara's electronic data room.

        On August 28, 2019, Proteon's management circulated a revised draft of the term sheet to ArTara, including clarifications discussed earlier in the week with ArTara. The changes to the term sheet included beneficial adjustments to the calculation of Proteon's net cash for each 15 day delay in filing the S-4 with the SEC after September 30. Additional proposed changes beneficial to Proteon included (a) a shortened exclusivity period from 45 days to a fixed date of September 15, such that until such time neither Proteon nor ArTara would be permitted to negotiate with other companies for a potential transaction, and (b) a change in the notification provision that did not require either company to notify the other if a proposal for a potential alternative transaction was received from a third party. Finally, Proteon's requested that its designated Board member be permitted to serve until the 2022 annual meeting of the combined company.

        On August 30, 2019, a telephonic call was held with the Proteon Board, Proteon management and representatives of Morgan Lewis to discuss the ArTara term sheet for a reverse merger, which included a provision to exclusively negotiate a merger agreement with ArTara until midnight on September 15, 2019. With Company B not having a financing term sheet proposal at this time and Company H not having a revised financing term sheet without downside price protection for the new investors in Company H, the Proteon Board authorized Proteon management to sign the term sheet with ArTara. On the afternoon of August 30, 2019, Proteon and ArTara executed a non-binding term sheet describing a merger between Proteon and ArTara substantially in the form that Proteon had circulated to ArTara on August 28, 2019. Proteon recirculated to ArTara the draft merger agreement previously sent to ArTara management in July.

        On September 3, 2019, following execution of the term sheet, the parties held a conference call, with representatives of Morgan Lewis and Cooley participating, to discuss next steps in the preparation of a definitive merger agreement.

        On September 5, 2019, Cooley provided Morgan Lewis with its initial comments on the draft Merger Agreement. The draft included, among others, revisions to the representations and warranties, interim covenants, the non-solicitation provisions, the stockholder approval provisions, the closing conditions, the termination provisions, and the definitions of Exchange Ratio, net cash and transaction expenses, among other revisions.

        On September 6, 2019, a telephonic call was held with Proteon management and representatives of Morgan Lewis to discuss, in detail, each of the proposed changes to the draft Merger Agreement.

        On September 8, 2019, Proteon management and representatives of Morgan Lewis provided a list of discussion points relating to comments to the Merger Agreement provided by Cooley on September 5, 2019. The list of discussion points included, among others, the material issues that Proteon and Morgan Lewis had with the revisions made by Cooley and ArTara to the draft Merger Agreement and the structure of the proposed financing and its timing was discussed as Proteon management was insistent that the financing and the Merger occur concurrently.

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        On September 9, 2019, Proteon management, ArTara management, representatives of Morgan Lewis, Cooley, Wainwright and ArTara's financial advisors, Ladenburg Thalmann & Co. Inc, or Ladenburg, participated in a face-to-face meeting at the offices of Morgan Lewis in Boston, Massachusetts to discuss and negotiate terms of the Merger Agreement. Each item on the list of discussion points circulated on September 8, 2019 was addressed in detail and almost all of the discussion points were resolved to both parties' verbal satisfaction. The timing to complete ArTara's 2017 and 2018 audited financial statements was also discussed.

        On September 10, 2019, a telephonic call was held between representatives of Morgan Lewis and Cooley to discuss whether the parties would file a registration statement on Form S-4 for the Merger or whether a proxy statement covering the Merger would be sufficient. The representatives determined that, based on a variety of factors, including, without limitation, certain Nasdaq rules, it would be more beneficial to the parties and their respective stockholders to file a registration statement on Form S-4 for the Merger.

        On September 11, 2019, Morgan Lewis provided a revised draft of the Merger Agreement to Cooley. The draft included revisions discussed at the September 9, 2019 meeting, including, among others, revisions to the representations and warranties, the interim covenants, the stockholder approval provisions, the closing conditions, the termination provisions, and the definitions of Exchange Ratio and net cash.

        On September 12, 2019, Cooley provided initial drafts of the PIPE financing documents including the subscription agreement, registration rights agreement, and certificate of designation for the new series of preferred stock contemplated by ArTara's investors.

        On September 12, 2019, a telephonic call was held between Mr. Noyes and Mr. Shefferman regarding the negotiation process, efforts by both parties to meet timelines, ArTara's diligence of Proteon's technology, and the initial draft of the non-binding term sheet provided by ArTara, which contemplated one director would be designated by Proteon.

        On September 14, 2019, Cooley provided a revised draft of the Merger Agreement to Morgan Lewis. The draft included revisions to, among other things, the representations and warranties, certain interim covenants, the stockholder approval provisions, the calculation and definition of net cash.

        On September 15, 2019, Morgan Lewis provided a revised draft of the financing documents. The draft included revisions to the representations and warranties, the covenant regarding future financings, and the closing conditions.

        On September 16, 2019, Proteon management informed the Proteon Board that, while significant progress had been made in negotiating the Merger Agreement with ArTara, additional time was needed to negotiate the Merger Agreement for consideration by the Proteon Board. The Proteon Board authorized Proteon's management to extend the exclusivity period with ArTara until midnight on September 19, 2019 to finalize the draft of the Merger Agreement. Later on September 16, 2019, a telephonic call was held by Cooley and Morgan Lewis to discuss certain of the changes to the draft Merger Agreement as circulated by Cooley on September 14, 2019.

        On September 17, 2019, Morgan Lewis provided a revised draft of the Merger Agreement to Cooley. The draft included revisions to, among other things, certain interim covenants, the stockholder approval provisions and the definitions of the Exchange Ratio and net cash, including how to address third-party interest in Proteon's PAD technology and adjustments to the lower end of the Target Proteon Net Cash Range in the event that the closing of the Merger is delayed into 2020. Later that day, a telephonic call was held among Mr. Shefferman, Mr. Eldridge, Mr. Strupp and representatives from ArTara's financial consulting firm preparing ArTara's financials for audit. It was learned that ArTara's auditors expected to have financial statements ready for filing with the SEC by the end of

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October. Additionally, on September 17, 2019, ArTara provided access to its electronic data room to Morgan Lewis.

        On September 18, 2019, Cooley provided a revised draft of the Merger Agreement to Morgan Lewis. The draft included revisions to, among other things, the calculation of net cash to clarify the net cash adjustment in the event closing of the Merger is delayed into 2020 and the definitions of divestiture assets and divestiture transactions. In addition, with only a handful of substantive business items not yet agreed upon by Proteon and ArTara, Proteon management circulated to Proteon Board the current version of Merger Agreement, the subscription financing agreements and other ancillary documents to be entered into by Proteon and ArTara if the Proteon Board approved a merger between Proteon and ArTara.

        Also on September 18, 2019, Mr. Noyes and Dr. Steven Burke, Proteon's former Chief Medical Officer, talked by phone with Mr. Shefferman and representatives from the lead investor. The discussion included a presentation of Proteon's clinical data in PAD, and the lead investor's interest in retaining the technology in the post-merger company.

        On September 19, 2019, a telephonic call was held by Cooley and Morgan Lewis to discuss open items in the Merger Agreement, including the Exchange Ratio and Proteon net cash definitions and the proposed adjustment to same in the event of a sale of the PAD technology and in the event the closing of the Merger is delayed into 2020, and the status of other outstanding items necessary to finalize the Merger Agreement.

        On September 20, 2019, Cooley provided a revised draft of the PIPE financing documents. The draft included revisions to, among other things, covenants regarding the board rights. Between September 15 and 20, 2019, the parties participated in multiple phone calls to discuss open points in the documents, including with respect to the disclosure schedules to be attached to the Merger Agreement and the ancillary documents.

        On September 21, 2019, Morgan Lewis and Cooley held several telephonic meetings and exchanged drafts of the Merger Agreement, including revisions to, among other things, the definitions of divestiture assets and divestiture transactions and the description of the Reverse Split, including the range for the Reverse Split ratio.

        Early on the morning of September 22, 2019, a revised set of transaction documents, including the Merger Agreement and the financing documents, were circulated to the Proteon Board, summaries of the material terms of the Merger Agreement and the material terms of the financing documents, proposed resolutions for consideration that evening by the Proteon Board, and the materials prepared by Wainwright in connection with Wainwright's presentation to the Proteon Board.

        The evening of September 22, 2019, the Proteon Board held a telephonic meeting for the purpose of reviewing and discussing the final terms of the Merger Agreement, including consideration of Wainwright's presentation with respect to the Exchange Ratio and receiving an update as to timing of the Merger and open items. Participants included all members of the Proteon Board, and representatives from Proteon management, Wainwright, and Morgan Lewis.

        Representatives of Wainwright reviewed with the Proteon Board Wainwright's financial analysis of the consideration provided for in the Merger Agreement. During this presentation, questions from the Proteon Board regarding Wainwright's analysis were addressed. Additionally, the Proteon Board considered the proposed value to be retained by Proteon stockholders compared to the amount of cash each share of Proteon common stock would receive if Proteon pursued a liquidation and distributed the remaining cash to the Proteon stockholders. Proteon's management explained that the amount of cash to be distributed to Proteon's stockholders in the event of a liquidation would be significantly less than the anticipated valuation of the shares of Proteon's stockholders in the combined company after the consummation of the Merger set forth in Wainwright's analysis.

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        At the request of the Proteon Board, Wainwright then delivered to the Proteon Board its oral opinion, (which was subsequently confirmed in writing by delivery of Wainwright's written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion, the Exchange Ratio was fair, from a financial point of view, to Proteon.

        Representatives of Morgan Lewis then provided a detailed review of the material terms of the Merger Agreement and ancillary agreements, including a discussion regarding two changes to the Merger Agreement from the version that had previously been circulated to the Proteon Board earlier that morning. The Proteon Board was supportive of these last two changes. These changes were (i) the finalization of the range for the Reverse Split ratio and (ii) the upper limit for the increase of shares of Proteon common stock available for issuance under the Proteon Amended and Restated 2014 Equity Incentive Plan in the EIP Amendment. Representatives of Morgan Lewis also reviewed with the Proteon Board the final forms of the support agreement and lock-up agreement to be entered into by the directors and officers of ArTara.

        Proteon's management reviewed certain due diligence on ArTara, noting no issues outstanding, but concern around the timing of ArTara's 2017 and 2018 audited financials.

        Representatives of Morgan Lewis also provided a review of the Proteon Board's fiduciary duties and other legal aspects of the transaction. The Proteon Board expressed consensus and satisfaction that a full and complete process had been run and that the appropriate corporate governance steps had been taken. The Proteon Board reiterated its view that the proposed Merger with ArTara was the best opportunity for maximizing Proteon stockholder value, noting the objective merits of both the process that had been engaged in, the ultimate selection of ArTara based on scientific, clinical, and probability-of-success grounds, and the deal terms.

        Following these presentations and discussions, representatives of Morgan Lewis reviewed with the Proteon Board the proposed resolutions that had been provided in advance of the meeting. Following review and discussion among the participants, the Proteon Board unanimously determined that the transactions contemplated by the Merger Agreement, including the Merger and the issuance of shares of Proteon common stock to ArTara's stockholders pursuant to the Merger Agreement, were fair to, advisable and in the best interest of Proteon and Proteon's stockholders, approved and declared advisable the Merger Agreement and the transactions contemplated therein, including the Merger, and determined to recommend, upon the terms and subject to the conditions of the Merger Agreement, that Proteon's stockholders vote to approve the Merger Agreement and the transactions contemplated therein, including the Merger and the issuance of shares of Proteon common stock to ArTara's stockholders pursuant to the Merger Agreement and the Reverse Split. Management was directed to sign the Merger Agreement on Monday, September 23, 2019 after the ArTara Board had met and approved the Merger.

        On the afternoon of September 23, 2019, the Merger Agreement was signed.

        On September 23, 2019, at 4:20 P.M., Proteon and ArTara issued a joint press release publicly announcing the signing of the definitive Merger Agreement.

Structure

        Under the Merger Agreement, Merger Sub, a wholly owned subsidiary of Proteon formed in connection with the Merger, will merge with and into ArTara, with ArTara surviving as a wholly owned subsidiary of Proteon. After completion of the Merger, Proteon will be renamed "ArTara Therapeutics, Inc." and expects to trade on Nasdaq under the symbol "TARA."

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Proteon Reasons for the Merger

        At a meeting held on September 22, 2019, among other things, the Proteon Board unanimously (i) determined that the Contemplated Transactions are advisable and fair to, and in the best interests, of Proteon and its stockholders, (ii) approved and declared advisable the Merger Agreement and the Contemplated Transactions, including the issuance of shares of Proteon common stock to the stockholders of ArTara pursuant to the terms of the Merger Agreement, and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that the stockholders of Proteon vote to approve the Proteon Stockholder Matters.

        The Proteon Board considered the following factors in reaching its conclusion to approve the Merger Agreement and the Merger, all of which the Proteon Board viewed as supporting its decision to approve the business combination with ArTara:

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        The Proteon Board also reviewed various factors impacting the financial condition, results of operations and prospects of Proteon, including:

        The Proteon Board also reviewed the terms and conditions of the Merger Agreement and related transactions, as well as the safeguards and protective provisions included therein intended to mitigate risks, including:

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        In the course of its deliberations, the Proteon Board also considered a variety of risks and other countervailing factors related to entering into the Merger, including:

        The foregoing information and factors considered by the Proteon Board are not intended to be exhaustive but are believed to include all of the material factors considered by the Proteon Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the Proteon Board did not find it useful to attempt, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the Proteon Board may have given different weight to different factors. The Proteon Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, Proteon's management team, the legal and financial advisors of Proteon, and considered the factors overall to be favorable to, and to support, its determination.

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ArTara Reasons for the Merger

        At a meeting held on September 23, 2019, among other things, the ArTara Board unanimously (i) determined that the Contemplated Transactions are fair to, advisable for, and in the best interests of, ArTara and its stockholders, (ii) approved and declared advisable the Merger Agreement and the Contemplated Transactions and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its stockholders approve the ArTara Stockholder Matters.

        In the course of reaching its decision to approve the merger, the ArTara Board consulted with ArTara's management, financial and tax advisors and legal counsel, reviewed a significant amount of information and considered a number of factors, including, among others:

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        The ArTara Board also considered a number of uncertainties and risks in its deliberations concerning the merger and the other transactions contemplated by the Merger Agreement, including the following:

        The foregoing information and factors considered by the ArTara Board are not intended to be exhaustive but are believed to include all of the material factors considered by the ArTara Board. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the ArTara Board did not find it useful to attempt, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the ArTara Board may have given different weight to different factors. The ArTara Board conducted an overall analysis of the factors described above, including thorough

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discussions with, and questioning of, ArTara's management team, the legal and financial advisors of ArTara, and considered the factors overall to be favorable to, and to support, its determination.

Certain Unaudited ArTara Financial Projections

        As a matter of course, Proteon does not publicly disclose long-term projections of future financial results due to the inherent unpredictability and subjectivity of underlying assumptions and estimates. However, in connection with its evaluation of the Merger, the Proteon Board considered certain financial projections with respect to ArTara. On September 5, 2019, ArTara management provided to Wainwright and the Proteon Board unaudited, non-public financial projections with respect to ArTara for each of the calendar years ending December 31, 2020 through 2035 (the "ArTara financial projections"). The ArTara financial projections were prepared by ArTara as part of ArTara's ongoing strategic planning processes. A summary of the ArTara financial projections is set forth below.

        The inclusion of the ArTara financial projections should not be deemed an admission or representation by Proteon, Wainwright, ArTara or any of their respective officers, directors, affiliates, advisors, or other representatives with respect to such ArTara financial projections. The ArTara financial projections are not included to influence your views on the Merger but solely to provide stockholders access to certain non-public information provided to the Proteon Board in connection with its evaluation of the Merger and to Proteon's financial advisor, Wainwright, to assist with its financial analyses as described in the section titled "The Merger—Opinion of the Proteon Financial Advisor." The information from the ArTara financial projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Proteon and ArTara in this proxy statement/prospectus/information statement.

        The ArTara financial projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or U.S. GAAP. Neither the independent registered public accounting firm of Proteon nor ArTara nor any other independent accountant has audited, reviewed, compiled, examined or performed any procedures with respect to the accompanying unaudited prospective financial information for the purpose of its inclusion herein, and accordingly, neither the independent registered public accounting firm of Proteon nor ArTara nor any other independent accountant expresses an opinion or provides any form of assurance with respect thereto for the purpose of this proxy statement/prospectus/information statement.

        The ArTara financial projections were prepared solely for internal use as part of ArTara's ongoing strategic planning processes and are subjective in many respects. As a result, the ArTara financial projections are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Although ArTara believes its respective assumptions to be reasonable, all financial projections are inherently uncertain, and ArTara expects that differences will exist between actual and projected results. Although presented with numerical specificity, the ArTara financial projections reflect numerous variables, estimates, and assumptions made by ArTara's management at the time such projections were prepared, and also reflect general business, economic, market, and financial conditions and other matters, all of which are difficult to predict and many of which are beyond ArTara's control. In addition, the ArTara financial projections cover multiple years, and this information by its nature becomes subject to greater uncertainty with each successive year. Accordingly, there can be no assurance that the estimates and assumptions made in preparing the ArTara financial projections will prove accurate or that any of the ArTara financial projections will be realized.

        The ArTara financial projections included certain assumptions relating to, among others things, ArTara's expectations, which may not prove to be accurate, relating to the business, earnings, cash flow, assets, liabilities and prospects of ArTara.

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        ArTara derived net revenue for its lead program, TARA-002 assuming a 50% cumulative probability of success and estimated future royalty expenditures for the TARA-002 program based on the terms of the license agreement and ArTara's projections for each of the calendar years ending December 31, 2021 through 2035. ArTara also derived net revenue for its IV Choline Chloride program assuming a 65% cumulative probability of success and estimated future royalty expenditures for the IV Choline Chloride program based on the terms of the license agreement and ArTara's projections for each of the calendar years ending December 31, 2027 through 2035.

        ArTara management estimated gross income for each of the calendar years ending December 31, 2020 through 2035, based on combined net revenue of the TARA-002 and IV Choline Chloride programs, less cost of goods sold, and EBIT for the same time period, based on gross income, less royalty obligations, less research and development expenditures, less sales and marketing expenditures, and less general and administrative costs, each as estimated by ArTara management.

        The ArTara financial projections are subject to many risks and uncertainties and you are urged to review the section titled "Risk Factors" beginning on page 31 of this proxy statement/prospectus/information statement for a description of risk factors relating to the merger and ArTara's business. You should also read the section titled "Cautionary Note Regarding Forward-Looking Statements" beginning on page 89 of this proxy statement/prospectus/information statement for additional information regarding the risks inherent in forward-looking information such as the ArTara financial projections.

        The inclusion of the ArTara financial projections herein should not be regarded as an indication that ArTara, Proteon, Wainwright or any of their respective affiliates or representatives considered or consider the ArTara financial projections to be necessarily indicative of actual future events, and the ArTara financial projections should not be relied upon as such. The ArTara financial projections do not take into account any circumstances or events occurring after the date they were prepared. Proteon and the combined company do not intend to, and disclaim any obligation to, update, correct, or otherwise revise the ArTara financial projections to reflect circumstances existing or arising after the date the ArTara financial projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions or other information underlying the ArTara financial projections are shown to be in error. Furthermore, the ArTara financial projections do not take into account the effect of any failure of the Merger to be consummated and should not be viewed as accurate or continuing in that context.

        The statements set forth in the foregoing five paragraphs are referred to as "financial projection statements."

        In light of the foregoing factors and the uncertainties inherent in financial projections, stockholders are cautioned not to place undue reliance, if any, on the ArTara financial projections.

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        The following table, which is subject to the financial projection statements above, presents a selected summary of the unadjusted ArTara financial projections that were made available to Wainwright and the Proteon Board.

Year
  FY2020   FY2021   FY2022   FY2023   FY2024   FY2025   FY2026   FY2027  

IV Choline Chloride

                              $ 16.0  

TARA-002

      $ 4.2   $ 8.8   $ 23.2   $ 37.1   $ 51.5   $ 111.7   $ 132.7  

Net Revenues

      $ 4.2   $ 8.8   $ 23.2   $ 37.1   $ 51.5   $ 111.7   $ 148.7  

COGS

  $ 0.4   $ 0.0   $ 0.0   $ 0.0   $ 0.0   $ 0.0   $ 0.1   $ 0.4  

Gross Income

  $ (0.4 ) $ 4.2   $ 8.8   $ 23.2   $ 37.1   $ 51.5   $ 111.6   $ 148.3  

Royalties

      $ 0.1   $ 0.2   $ 0.5   $ 0.7   $ 1.0   $ 2.2   $ 3.5  

R&D

  $ 12.8   $ 5.7   $ 33.3   $ 33.2   $ 62.5   $ 64.6   $ 66.9   $ 34.4  

S&M

  $ 2.3   $ 3.4   $ 3.1   $ 3.0   $ 2.8   $ 4.5   $ 8.3   $ 10.3  

G&A

  $ 5.0   $ 6.5   $ 6.2   $ 6.3   $ 6.5   $ 6.6   $ 6.8   $ 4.7  

EBIT

  $ (20.6 ) $ (11.5 ) $ (34.0 ) $ (19.7 ) $ (35.3 ) $ (25.3 ) $ 27.4   $ 95.5  

 

Year
  FY2028   FY2029   FY2030   FY2031   FY2032   FY2033   FY2034   FY2035  

IV Choline Chloride

  $ 69.0   $ 103.6   $ 136.7   $ 171.8   $ 227.0   $ 266.7   $ 270.3   $ 274.2  

TARA-002

  $ 150.9   $ 188.5   $ 215.7   $ 248.7   $ 288.8   $ 337.7   $ 397.4   $ 470.5  

Net Revenues

  $ 219.9   $ 292.0   $ 352.4   $ 420.5   $ 515.8   $ 604.4   $ 667.7   $ 744.7  

COGS

  $ 6.5   $ 5.4   $ 5.9   $ 6.1   $ 6.9   $ 7.5   $ 7.3   $ 0.3  

Gross Income

  $ 213.3   $ 286.6   $ 346.5   $ 414.4   $ 509.0   $ 596.9   $ 660.5   $ 744.4  

Royalties

  $ 6.7   $ 8.1   $ 10.1   $ 12.4   $ 15.7   $ 18.4   $ 19.8   $ 21.4  

R&D

  $ 12.7   $ 11.6   $ 9.8   $ 10.0   $ 10.2   $ 10.4   $ 10.6   $ 10.8  

S&M

  $ 10.6   $ 11.4   $ 12.0   $ 12.2   $ 12.5   $ 12.8   $ 13.2   $ 13.5  

G&A

  $ 4.8   $ 4.9   $ 5.0   $ 5.1   $ 5.2   $ 5.3   $ 5.4   $ 5.5  

EBIT

  $ 178.5   $ 250.6   $ 309.5   $ 374.6   $ 465.4   $ 550.0   $ 611.5   $ 693.2  

Opinion of the Proteon Financial Advisor

        The Proteon Board engaged Wainwright on April 8, 2019 to act as the financial advisor to the Proteon Board to assist it in identifying and analyzing potential targets for a potential transaction and, if requested by the Proteon Board, to render an opinion as to the fairness, from a financial point of view, to Proteon of the Exchange Ratio.

        On September 22, 2019, Wainwright rendered its oral opinion to the Proteon Board (which was subsequently confirmed in writing by delivery of Wainwright's written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described herein, as of September 22, 2019, the Exchange Ratio was fair, from a financial point of view, to Proteon.

        Wainwright's opinion was prepared solely for the information of the Proteon Board and only addressed the fairness, from a financial point of view, to Proteon of the Exchange Ratio. Wainwright was not requested to opine as to, and Wainwright's opinion does not address, the relative merits of the Merger or any alternatives to the Merger, Proteon's underlying decision to proceed with or effect the Merger, or any other aspect of the Merger. Wainwright's opinion does not address the fairness of the Merger to the holders of any class of securities, creditors or other constituencies of Proteon and is not a valuation of Proteon or ArTara or their respective assets or any class of their securities. Wainwright did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of the officers, directors or employees, of Proteon, whether or not relative to the

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Merger. Wainwright also did not express an opinion regarding the fairness, from a financial point of view, to Proteon of the Private Placement.

        The summary of Wainwright's opinion in this proxy statement/prospectus/information statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement/prospectus/information statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Wainwright in preparing its opinion. Wainwright's opinion was prepared solely for the information of the Proteon Board for its use in connection with its consideration of the Merger. Neither Wainwright's written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus/information statement are intended to be, and they do not constitute, a recommendation to any stockholder as to how such stockholder should act or vote with respect to any matter relating to the Merger or any other matter.

        The terms of the Merger, the consideration to be paid in the Merger, and the related transactions were determined through arm's length negotiations between Proteon and ArTara and were approved unanimously by the Proteon Board. Wainwright did not determine the consideration to be paid by Proteon in connection with the Merger.

        In connection with rendering the opinion described above and performing its related financial analyses, Wainwright, among other things:

        For a more detailed discussion of ArTara's financial projections that were furnished to Wainwright, please see the section titled "Certain Unaudited Proteon Management Projections of ArTara" in this proxy statement/prospectus/information statement. For purposes of its opinion, with the approval of the Proteon Board and without independent verification, Wainwright assumed that:

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        In arriving at its opinion, Wainwright assumed and relied upon, without verifying independently, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to Wainwright, or discussed with or reviewed by or for Wainwright for the purposes of preparing its opinion, and further assumed that the financial information provided to Wainwright had been prepared by the respective managements of Proteon and ArTara on a reasonable basis in accordance with industry practice, and that the managements of Proteon and ArTara were not aware of any information or facts that would make any information provided to Wainwright incomplete or misleading.

        With respect to the financial forecasts, estimates and other forward-looking information reviewed by Wainwright, Wainwright assumed that such information had been reasonably prepared by the respective managements of Proteon and ArTara based on assumptions reflecting their best currently available estimates and judgments as to the expected future results of operations and financial condition of Proteon and ArTara, respectively. Wainwright was not engaged to assess the achievability of any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based, and Wainwright expressed no opinion as to such information or assumptions. In addition, Wainwright did not assume any responsibility for, and did not perform, any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of Proteon or ArTara, nor was Wainwright furnished or provided with any such appraisals or valuations. Without limiting the generality of the foregoing, Wainwright was not engaged to, and did not undertake, any independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Proteon, ArTara or any of their respective affiliates is a party or may be subject, and at the direction of the Proteon Board and with its consent, Wainwright's opinion made no assumption concerning, and did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

        Wainwright relied upon and assumed, without independent verification, that the representations and warranties of all parties set forth in the Merger Agreement and all related documents and instruments that are referred to therein are true and correct, that each party to the Merger Agreement will fully and timely perform all of the covenants and agreements required to be performed by such party, that the Merger will be consummated pursuant to the terms of the Merger Agreement, without amendment thereto, and that all conditions to the consummation of the Merger will be satisfied without waiver by any party of any conditions or obligations thereunder. Wainwright further assumed that the Merger Agreement was in all material respects identical to the draft of the Merger Agreement provided to Wainwright. Finally, Wainwright also assumed that all the necessary regulatory approvals and consents required for the Merger, including the approval of the stockholders of Proteon, will be obtained in a manner that will not adversely affect Proteon or the contemplated benefits of the Merger.

        In connection with its opinion, Wainwright assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it. Wainwright's opinion does not address any legal, tax, accounting or regulatory matters. Wainwright's fairness opinion was approved by its fairness opinion committee prior to delivering it to the Proteon Board.

        Wainwright's opinion is necessarily based upon the information available to Wainwright and facts and circumstances as they existed and were subject to evaluation as of September 22, 2019, which is the

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date of the Wainwright opinion. Although events occurring after the date of the Wainwright opinion could materially affect the assumptions used in preparing the opinion, Wainwright does not have any obligation to update, revise or reaffirm its opinion and Wainwright expressly disclaims any responsibility to do so. Wainwright did not express any opinion as to the value of the shares of Proteon's common stock to be issued in the Merger or the prices at which shares of Proteon's common stock may trade following announcement of the Merger or at any future time.

        The terms of the Merger, the consideration to be paid in the Merger, and the related transactions were determined through arm's length negotiations between Proteon and ArTara and were approved unanimously by the Proteon Board. Wainwright did not determine the consideration to be paid by Proteon in connection with the Merger. Wainwright's opinion and its presentation to the Proteon Board was one of many factors taken into consideration by the Proteon Board in deciding to approve, adopt and authorize the Merger Agreement. Consequently, the analyses as described herein should not be viewed as determinative of the opinion of the Proteon Board with respect to the consideration to be paid by Proteon in the Merger or of whether the Proteon Board would have been willing to agree to different consideration.

        The following is a summary of the material financial analyses performed by Wainwright in connection with the preparation of its fairness opinion, which opinion was rendered orally to the Proteon Board (and subsequently confirmed in writing by delivery of Wainwright's written opinion dated the same date) on September 22, 2019. The preparation of analyses and a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to summary description and this summary does not purport to be a complete description of the analyses performed by Wainwright or the delivery of Wainwright's opinion to the Proteon Board. This summary includes information presented in tabular format. In order to fully understand the financial analyses presented by Wainwright, the tables must be read together with the text of each analysis summary and considered as a whole. The tables alone do not constitute a complete summary of the financial analyses. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Wainwright's opinion.

        In furnishing its opinion, Wainwright did not attempt to combine the analyses described herein into one composite valuation range, nor did Wainwright assign any quantitative weight to any of the analyses or the other factors considered. Furthermore, in arriving at its opinion, Wainwright did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor in light of one another. Accordingly, Wainwright has stated that it believes that its analyses must be considered as a whole and that considering any portion of its analyses, without considering all of the analyses, could create a misleading or incomplete view of the process underlying its opinion or the conclusions to be drawn therefrom.

        In conducting the analysis as to the fairness, from a financial point of view, to Proteon of the Exchange Ratio, Wainwright evaluated the stand-alone valuations of Proteon and ArTara. Wainwright then evaluated the potential valuation of the combined company and compared it to the pro forma ownership of the combined company by the stockholders of Proteon immediately prior to the Merger pursuant to the terms of the Merger Agreement.

        The results of the application by Wainwright of each of the valuation methodologies utilized in connection with its fairness opinion are summarized below.

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Consideration to be paid in the Merger

        As specified in the Merger Agreement, the parties attributed an enterprise value of $7.3 million to Proteon and an enterprise value of $20.0 million to ArTara. As noted above, for purposes of its opinion, with the approval of the Proteon Board and without independent verification, Wainwright made the following assumptions:

        Based on these assumptions, Wainwright determined that Proteon would issue approximately 2.9 million shares of Proteon's common stock at $7.00 per share to ArTara stockholders and an additional approximately 5.7 million shares of Proteon's common stock to new investors in the Private Placement at $7.00 per share.

        In analyzing the fairness, from a financial point of view, to Proteon of the Exchange Ratio, Wainwright evaluated the implied valuation of Proteon on a standalone basis and compared that implied valuation to the potential value of the combined company resulting from the Merger after giving effect to the Private Placement.

Proteon Implied Valuation

        Using the last reported sale price of Proteon's common stock on September 18, 2019 and Proteon management's estimate of expected closing cash, Wainwright determined that Proteon had an implied enterprise value of $12.1 million on a fully diluted basis.

Potential Valuation of the Combined Company

        Wainwright evaluated the potential value of the combined company using the following valuation methodologies:

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Potential Valuation of the Combined Company

        Based on the analyses described below, Wainwright estimated that the enterprise value of the combined company ranged between $148.6 million and $355.4 million. Based on the 10.8% of the combined company that would be owned by existing Proteon stockholders, Wainwright calculated that existing Proteon stockholders would hold stock in the combined company having an implied value of between $16.0 million and $38.4 million, compared to the $12.1 million implied enterprise value of Proteon on a stand-alone basis.

Comparable Public Company Analysis

        Wainwright reviewed the total enterprise values of selected publicly traded rare-disease focused companies that were currently in Phase 2 or Phase 3 stages of clinical development. The selected comparable public companies shown in the table below had an enterprise valuation range of between $121.8 million (25th percentile) and $487.9 million (75th percentile), compared to the $141.7 million minimum valuation for the combined company that would result in the 10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

GRAPHIC


Sources: Factset Research Systems and Company filings as of September 16, 2019

(1)
Adjusted for a $55M follow-on offering in July 2019

(2)
Excluded from summary metrics

ArTara IPO Step-Up Valuation—Implied Valuation of the Combined Company

        Wainwright noted that ArTara will complete a $40.0 million Private Placement concurrent with the closing of the Merger at a pre-money valuation of $27.3 million for a post-money valuation of $67.3 million. Wainwright then applied step-up multiples from comparable IPO transactions shown in the table below ranging from 1.13x to 1.56x to that enterprise value and determined an enterprise valuation range of $76.0 million (25th percentile) to $105.0 million (75th percentile), compared to the $141.7 million minimum valuation for the combined company that would result in the 10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at

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least $12.1 million. Wainwright noted that this valuation range is lower than those obtained from its other analyses and believed this range was less relevant because the $20.0 specified million valuation for ArTara was based on negotiations with the investors in the Private Placement.

GRAPHIC


Sources: Research Systems and Company filings as of September 16, 2019

IPO Comparables—Rare Diseases

        Wainwright reviewed initial public offerings of rare disease companies in Phase 2 or Phase 3 clinical development from June 28, 2013 to July 18, 2019. Selected comparable initial public offerings shown in the table below indicated a range of enterprise values between $187.7 million (25th percentile) and $285.0 million (75th percentile), compared to the $141.7 million minimum valuation for the

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combined company that would result in the 10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

GRAPHIC


Source: Factset Research Systems as of September 16, 2019

IPO Comparables—Recent Life Sciences Companies

        Wainwright reviewed initial public offerings of biotechnology companies in Phase 2 or Phase 3 clinical development over the last twelve months from September 30, 2018 to September 13, 2019. Selected comparable initial public offerings shown in the table below indicated a range of enterprise values between $116.6 million (25th percentile) and $385.2 million (75th percentile), compared to the $141.7 million minimum valuation for the combined company that would result in the 10.8% of the

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combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

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Source: Factset Research Systems as of September 16, 2019

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Precedent Reverse Merger Transactions

        Wainwright reviewed reverse merger transactions in the healthcare industry where the resulting entity had at least $20.0 million in cash upon closing. The surviving entity of the selected transactions shown in the table below had enterprise values of between $64.0 million (25th percentile) and $111.0 million (75th percentile), compared to the $141.7 million minimum valuation for the combined company that would result in the 10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

GRAPHIC


Sources: Research Systems and Company filings as of September 16, 2019

(1)
Limited to transactions that involved the combined company having at least $20 million in cash at closing, including proceeds from private placements

Precedent M&A Transactions

        The precedent M&A analysis uses data based on the values acquirers have previously placed on comparable companies in a merger or acquisition to develop a measure of current value for the combined company. Wainwright examined precedent transactions, from October 27, 2014 through August 12, 2019, involving rare disease companies in Phase 2 or Phase 3 clinical development at the time of acquisition. The selected rare disease M&A transactions shown in the table below had enterprise values ranging between $261.8 million (25th percentile) and $804.6 million (75th percentile), compared to the $141.7 million minimum valuation for the combined company that would result in the

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10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

GRAPHIC


Sources: Company Filings, SEC Filings, Company Press Releases & Factset Research System

Discounted Cash Flow Analysis

        The discounted cash flow analysis is a "forward looking" methodology and is based on projected future cash flows expected to be generated by ArTara which are then discounted back to the present. For a discussion of the ArTara projections, please see the section titled "Certain Unaudited ArTara Financial Projections." This methodology has three primary components: (1) the present value of projected unlevered cash flows for a determined period; (2) the present value of the terminal value of cash flows (representing firm value beyond the time horizon on the projections) or a perpetuity growth calculation based on terminal free cash flow; and (3) the weighted average cost of capital (WACC) used to discount such future cash flows and terminal value or perpetuity value back to the present. The future cash flows plus the terminal value or perpetual value of such cash flows are discounted by the company's risk-adjusted cost of capital, the WACC, to derive a present value.

        Wainwright applied a 23% tax rate to the projected cash flows contained in the ArTara financial projections (described above in the section titled "Certain Unaudited ArTara Financial Projections") to calculate ArTara's estimated net operating profit after taxes, or NOPAT, for each period covered by the projections to estimate the Present Value of Artara's Free Cash Flows used in both the Perpetuity and Terminal Value Discounted Cash Flow calculations. Wainwright estimated the present value of ArTara's Terminal Value using an assumed terminal valuation range of 4x and 12x EBIT which was added to the estimated Present Value of Artara's Free Cash Flows to calculate the Terminal Value Discounted Cash Flow. Wainwright used an assumed perpetuity growth rate of between 1% and 3% to estimate the Perpetuity Growth Free cash flow, the Present Value of which was added to the Present Value of Artara's Free Cash Flows to calculate the Perpetuity Growth Discounted Cash Flow. In each case, Wainwright applied a 20.0% to 30.0% discount rate based on a WACC analysis. Based on these inputs, Wainwright calculated an enterprise value range between $214.1 million and $403.8 million using the terminal multiple methodology and between $103.6 million and $422.7 million using the perpetuity growth methodology. $308.8 million and $211.0 million reflect the midpoint of the estimated discounted cash flow ranges using the terminal multiple and perpetuity growth rate methodologies, respectively, compared to the $141.7 million minimum valuation for the combined company that would result in the

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10.8% of the combined company to be owned by existing Proteon stockholders having an implied valuation of at least $12.1 million.

General

        Wainwright is a nationally recognized investment banking firm that provides financial advisory services and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The Proteon Board retained Wainwright to render an opinion as to the fairness, from a financial point of view, to Proteon of the Exchange Ratio based upon the foregoing qualifications, experience and expertise.

        Proteon paid Wainwright a fee of $75,000 at the time of its engagement and a fee of $250,000 for rendering its fairness opinion delivered in connection with the Merger. An additional transaction fee of $1,200,000 (inclusive of the retainer) is contingent on the consummation of the Merger. The $250,000 opinion fee was not contingent in whole or in part on the success of the Merger, or on the results of Wainwright's evaluation and analysis or upon the conclusions reached in Wainwright's opinion. In addition, Proteon agreed to reimburse Wainwright up to $50,000 for its reasonable, documented, out-of-pocket expenses, including reasonable documented fees and disbursements of its counsel. Proteon has also agreed to indemnify Wainwright against certain liabilities and other items that may arise out of the Proteon's engagement of Wainwright. The Proteon Board did not limit Wainwright in any way in the investigations it made or the procedures it followed in rendering its opinion.

        Wainwright has not had a material relationship with, nor otherwise received fees from Proteon or ArTara during the two years preceding the date of Wainwright's opinion. In the future, Wainwright may provide financial advisory and investment banking services to Proteon, ArTara or their respective affiliates for which Wainwright would expect to receive compensation.

        Consistent with applicable legal and regulatory requirements, Wainwright has adopted policies and procedures to establish and maintain the independence of its research departments and personnel. As a result, Wainwright's research analysts may hold views, make statements or investment recommendations and/or publish research reports with respect to Proteon, ArTara and/or the Merger that differ from the views of its investment banking personnel.

Interests of the Proteon Directors and Executive Officers in the Merger

        In considering the recommendation of the Proteon Board with respect to the approval of the Merger Agreement, the Merger and the issuance of shares of Proteon common stock as contemplated by the Merger Agreement, and the Proteon Stockholder Matters, Proteon's stockholders should be aware that certain members of the Proteon Board and current and former executive officers of Proteon have interests in the Merger that may be different from, or in addition to, the interests of Proteon's stockholders. These interests relate to or arise from, among other things, severance benefits to which George Eldridge, Proteon's Senior Vice President, Chief Financial Officer, Treasurer and Secretary, would become entitled in the event of termination of his employment under certain circumstances, including the payment of Mr. Eldridge's annual incentive bonu