Tango Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Filed November 10, 2022. Tango is a pre-revenue precision oncology company developing therapies for genetically defined cancers; it has no products approved for sale.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $6.9 million | $6.8 million | $18.4 million | $20.3 million |
| Total revenue | $6.9 million | $6.8 million | $18.4 million | $31.3 million |
| Research and development expense | $28.7 million | $21.9 million | $76.8 million | $56.0 million |
| General and administrative expense | $8.1 million | $4.4 million | $22.1 million | $11.5 million |
| Net loss | $29.1 million | $19.6 million | $79.1 million | $36.2 million |
| Net loss per share | $0.33 | $0.28 | $0.90 | $0.68 |
Operating expenses substantially exceeded revenue in both periods; Tango reported operating losses of $29.9 million for Q3 and $80.5 million for the nine months. No product-sales revenue was reported. The filing does not present a gross margin measure applicable to its operations.
- Cash and investments: Cash and cash equivalents of $100.3 million plus marketable securities of $293.0 million, totaling $393.3 million at September 30, 2022, down from $485.3 million at December 31, 2021. Cash, cash equivalents and restricted cash totaled $104.3 million.
- Cash flow: Operating cash used was $80.8 million for the nine months, versus $42.6 million in 2021. Investing activities provided $39.0 million, principally reflecting net security sales and maturities; financing provided $1.1 million. Cash, cash equivalents and restricted cash declined $40.7 million.
- Liquidity: Current assets were $401.7 million and current liabilities $51.3 million. Management estimates existing cash, cash equivalents and marketable securities will fund operations and capital needs at least into 2025; it cautions that this estimate depends on assumptions.
- Debt and commitments: No debt balance is presented. Operating lease commitments totaled $61.4 million, primarily for the Boston office and laboratory lease. The balance sheet includes $39.9 million of non-current lease liabilities.
Material changes from comparable periods
- Q3 net loss widened by $9.5 million year over year as operating expenses rose $10.5 million; R&D increased $6.8 million, mainly with advancement of TNG462 and TNG260, and G&A increased $3.7 million, including higher personnel costs and stock compensation.
- Nine-month net loss widened by $42.9 million. Operating expenses increased $31.4 million, while total revenue fell $12.9 million. The revenue comparison reflects an $11.0 million Gilead license fee recognized in 2021, with no comparable license revenue in 2022, as well as $1.9 million lower collaboration revenue.
- Marketable securities had $4.9 million of unrealized losses at September 30, 2022, versus $0.8 million at year-end 2021. The company said it did not intend to sell the securities before recovery and recorded no impairment or credit-loss reserve.
- A new 10-year lease commenced for 201 Brookline Avenue in August 2022 for accounting purposes. Tango recorded a $37.9 million lease liability and a $48.0 million right-of-use asset.
Outlook, programs and principal risks
- Management expects significant, increasing R&D spending and continued operating losses. It expects to need substantial additional funding; the company had not drawn on its $100 million at-the-market offering program during the nine months ended September 30, 2022.
- TNG908 was in an actively enrolling Phase 1/2 trial. Management expected initial safety and efficacy data in the first half of 2023. The FDA had granted Fast Track designation and, in Q3 2022, Orphan Drug Designation for malignant peripheral nerve sheath tumors. A French trial application was approved in Q4 2022.
- Management planned to file INDs for TNG462 and TNG260 in the first half of 2023, and for TNG348 in 2023. These are forward-looking plans, not reported outcomes for the quarter. Management noted that choosing TNG462 as the lead PRMT5 inhibitor could delay the lead program timeline by approximately 12 to 18 months.
- Collaboration revenue is from Gilead. The Gilead arrangement had a $199.0 million transaction price allocated to research services; deferred revenue was $28.5 million current and $99.8 million long-term. The remaining long-term amount was expected to be recognized over approximately 4.9 years.
- Key risks include early-stage clinical and preclinical uncertainty, patient enrollment and safety, competition in MTA-cooperative PRMT5 inhibitors, reliance on third-party CROs and single-source drug suppliers, potential development delays, intellectual-property challenges, and the need for future financing. The filing cites interruptions at a Ukraine-based CRO and reduced capacity at a Shanghai CRO as potential sources of delay.
- No material legal proceedings were reported. Management concluded disclosure controls were effective as of September 30, 2022, and reported no material quarterly change in internal control over financial reporting.
Investor verification priorities
- Check the assumptions underlying the projected cash runway into 2025 against ongoing cash burn, planned trial costs and any future financing.
- Verify TNG908 enrollment, trial progress and subsequent data; distinguish preliminary results from confirmed, final data.
- Track whether planned IND filings and clinical timelines for TNG462, TNG260 and TNG348 were achieved, and any effect of prioritizing TNG462 on TNG908.
- Review Gilead collaboration performance, deferred-revenue recognition and the timing or conditions of remaining research-extension payments.
- Monitor any ATM share sales and resulting dilution, as well as marketable-security valuations and clinical supply or CRO disruptions.