Tango Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Amounts below are in millions of U.S. dollars unless otherwise noted.
Business context
Tango is a clinical-stage precision oncology company developing therapies for genetically defined cancer populations. It has no approved products and has generated no product-sales revenue. Its reported revenue comes from its Gilead collaboration and license fees.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $10.7 | $6.9 | $31.1 | $18.4 |
| Operating expenses | $36.4 | $36.8 | $110.3 | $99.0 |
| Operating loss | $(25.6) | $(29.9) | $(79.2) | $(80.5) |
| Net loss | $(22.3) | $(29.1) | $(71.0) | $(79.1) |
| Basic and diluted loss per share | $(0.23) | $(0.33) | $(0.78) | $(0.90) |
- Nine-month revenue included $26.1 million of Gilead collaboration revenue and a $5.0 million Gilead license fee recognized in Q2. Collaboration revenue increased as higher research costs were incurred under the agreement; it should not be interpreted as product-sales growth.
- Research and development expense rose 9% to $83.9 million for the first nine months, mainly reflecting personnel and facility costs, partly offset by lower manufacturing and other program costs. General and administrative expense increased 19% to $26.4 million.
- Cash, cash equivalents and marketable securities totaled $359.9 million at September 30, 2023, versus $366.1 million at December 31, 2022. Management said this was expected to fund operating expenses and capital requirements at least into 2026, based on assumptions that may prove incorrect.
- Operating cash use was $90.5 million for the first nine months, compared with $80.8 million a year earlier. Financing provided $80.9 million, principally from the August private placement; cash, cash equivalents and restricted cash decreased $2.0 million.
- No borrowings are identified in the presented balance sheet. The company had $56.9 million of operating lease commitments, including $5.1 million due within one year. Deferred revenue was $97.8 million, including $27.1 million current.
- As a development-stage company without product sales, conventional product gross margins are not reported and are not meaningful at this stage.
Material changes and financing
In August 2023, Tango raised $80.0 million gross, or $79.8 million net, through a private placement of 13.2 million common shares and pre-funded warrants for 2.34 million additional shares. The warrants are immediately exercisable at $0.0001 per share. Common shares outstanding increased to 101.8 million at quarter-end from 88.2 million at year-end 2022; the offering and outstanding equity awards create dilution exposure.
Net loss improved year over year for both the quarter and nine-month period, while nine-month operating expenses and operating cash use increased. Higher Gilead revenue and investment income contributed to the lower net loss. Interest income rose with higher rates; other income included accretion on investments purchased at a discount.
Outlook, programs and risks
- Management expects significant expenses and operating losses to continue and anticipates increasing research and development spending as programs advance. The company expects no product-sales revenue for several years, if ever, and says it will need substantial additional funding.
- TNG908 and TNG462 are in Phase 1/2 trials for MTAP-deleted cancers; initial TNG908 clinical data were expected in 2024. TNG260 is being studied with pembrolizumab in STK11-mutated solid tumors. The FDA cleared the TNG348 IND in Q3; management expected to begin its clinical trial in the first half of 2024. These are forward-looking expectations, not assured outcomes.
- Key risks include uncertain clinical safety and efficacy, trial enrollment and timing, regulatory approval, reliance on third-party manufacturers and trial vendors, competition, intellectual-property protection, and the need to raise capital. The company cautions that trial data may change as more information becomes available.
- Management reported no material litigation and no material changes to the risk factors in its 2022 Form 10-K. Indemnification provisions may expose the company to potentially unlimited payments, although management estimated their fair value as minimal and reported no material related costs to date.
- The company reported effective disclosure controls as of September 30, 2023 and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the stated runway into 2026 remains supportable as trial, manufacturing and operating costs evolve, and whether additional financing will be needed.
- Upcoming clinical data and timelines for TNG908, TNG462, TNG260 and TNG348, including safety, efficacy and enrollment progress.
- Gilead collaboration economics, remaining deferred revenue and the timing of its recognition; assess the distinction between collaboration revenue and recurring product revenue.
- Potential dilution from the pre-funded warrants, stock options and other equity awards.
- Lease obligations and the assumptions underlying cash-burn estimates and the projected runway.