Tango Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited results are compared with the corresponding 2022 periods. Tango is a clinical-stage precision oncology company with no approved products and no product-sales revenue.
Financial results
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Total revenue | $14.6m | $5.8m | $20.4m | $11.5m |
| Research and development expense | $28.7m | $23.7m | $56.7m | $48.1m |
| General and administrative expense | $9.2m | $7.2m | $17.2m | $14.0m |
| Loss from operations | ($23.2m) | ($25.2m) | ($53.5m) | ($50.6m) |
| Net loss | ($20.7m) | ($24.9m) | ($48.7m) | ($50.1m) |
| Net loss per share, basic and diluted | ($0.23) | ($0.28) | ($0.55) | ($0.57) |
Q2 revenue included $9.6m of Gilead collaboration revenue and a $5.0m Gilead program-license fee. For the first half, collaboration revenue was $15.4m and license revenue was $5.0m. Revenue growth reflected higher collaboration revenue recognized and the one-time license fee; the company reported no product-sales revenue. Gross margin is not presented as a meaningful operating measure in the filing.
Other income, net was $2.6m in Q2 and $4.9m for the first half, including higher interest income amid increased interest rates and accretion on investments purchased at a discount. The company continued to report operating and net losses.
Liquidity, cash flow and obligations
- At June 30, 2023, cash and cash equivalents were $66.1m and marketable securities were $244.6m, totaling $310.7m in cash, cash equivalents and marketable securities. Current assets were $320.5m; current liabilities were $53.6m.
- Cash used in operating activities was $59.4m for the first half, compared with $61.2m in 2022. Cash, cash equivalents and restricted cash increased by $5.5m, largely reflecting net cash provided by investment activity as securities matured or were sold.
- The company reported no conventional borrowings in the presented balance sheet. Total liabilities were $166.4m, including $108.5m of deferred revenue and $39.9m of operating lease liabilities.
- Operating lease commitments totaled $58.7m, including $5.6m due within one year. Marketable securities were investment-grade U.S. Treasury bills and government agency bonds; unrealized losses were $1.5m, and the company stated it did not expect to sell them before recovery.
- Management expects existing cash, cash equivalents and marketable securities to fund operating and capital requirements at least into 2026. This estimate is based on assumptions that may prove incorrect.
Changes versus prior comparable periods
- Q2 total revenue rose $8.8m year over year, including the $5.0m program-license fee and a $3.8m increase in collaboration revenue.
- Q2 operating expenses increased $6.9m, primarily from higher R&D personnel and facility costs and higher G&A personnel costs. Despite higher expenses, Q2 net loss narrowed by $4.1m, supported by increased revenue and other income.
- First-half revenue increased $8.8m, while operating expenses increased $11.8m. Net loss narrowed by $1.3m, as higher other income partly offset the larger operating loss.
- Cash and marketable securities decreased from $366.1m at December 31, 2022 to $310.7m at June 30, 2023. Marketable securities declined while cash and cash equivalents increased.
Business outlook, risks and notable items
- Management expects significant expenses and operating losses to continue and anticipates R&D spending will rise as programs advance. Tango will need substantial additional funding over time; additional financing or collaborations may not be available on acceptable terms, or at all.
- TNG908 is in a Phase 1/2 trial, with additional clinical data expected in 2024. The company reported dose-dependent reductions in tumor SDMA in early pharmacodynamic data, while noting that interim data may change as more data become available.
- TNG462 and TNG260 INDs cleared in Q1 2023; the first patients in their Phase 1/2 trials were dosed in July 2023. TNG260 is being evaluated with pembrolizumab in STK11-mutant solid tumors.
- The filing’s MD&A says Tango expected to file an IND for TNG348 in mid-2023; it does not confirm in this filing whether that filing occurred. Development outcomes, timing, safety, efficacy, enrollment, manufacturing, regulatory approval and commercialization remain uncertain.
- The Gilead collaboration had a $199.0m transaction price allocated to its ongoing research performance obligation; $90.5m had been recognized as collaboration revenue through June 30, 2023. Remaining deferred revenue is expected to be recognized over an estimated remaining contractual term of about 4.1 years. Gilead’s $5.0m license fee was recognized separately in Q2.
- No material legal proceedings were reported, and the company said there were no material changes to the risk factors in its 2022 Form 10-K. Disclosure controls were assessed as effective at the reasonable-assurance level; no material change in internal controls was reported for the quarter.
Important facts for investors to verify
- Progress, safety and efficacy evidence from the TNG908, TNG462 and TNG260 trials, including timing and completeness of future data.
- Whether the TNG348 IND was filed and the resulting development timetable.
- Cash use and the assumptions supporting management’s runway estimate into 2026, particularly as clinical and R&D spending increases.
- Reliance on Gilead collaboration revenue and the timing of deferred-revenue recognition, including the distinction between recurring research revenue and one-time license fees.
- Potential dilution from equity financing and stock awards; 17.0m stock options and 0.7m unvested restricted stock units were outstanding at June 30, 2023.
- Clinical, regulatory, manufacturing, third-party supply, intellectual-property and financing risks; the filing cautions that early and interim research or clinical results may not predict later outcomes.