Tango Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Amounts below are in U.S. dollars; financial statement amounts are in millions unless noted. The company is a pre-commercial precision oncology biotech and reported no product-sales revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $5.8 | $18.2 | $11.5 | $24.5 |
| Research and development expense | $23.7 | $19.1 | $48.1 | $34.1 |
| General and administrative expense | $7.2 | $3.6 | $14.0 | $7.1 |
| Operating loss | $(25.2) | $(4.6) | $(50.6) | $(16.6) |
| Net loss | $(24.9) | $(4.5) | $(50.1) | $(16.6) |
| Basic and diluted net loss per share | $(0.28) | $(0.09) | $(0.57) | $(0.37) |
- Revenue was entirely collaboration and license revenue from Gilead. Collaboration revenue was $5.8 million in Q2 and $11.5 million for the first half. No license revenue was recognized in 2022; the comparable 2021 periods included an $11.0 million Gilead program license fee.
- Research and development spending rose chiefly with advancement of TNG462 and TNG260, alongside higher personnel costs. General and administrative costs increased with headcount and stock-based compensation.
- Operating margin was negative; operating loss exceeded revenue by $19.4 million in Q2 2022. The filing does not present a conventional gross margin measure.
- Operating cash use was $61.2 million for the first half, versus $21.1 million a year earlier. Capital expenditures were $3.4 million; investing activities provided net cash of $23.8 million, largely reflecting marketable-security maturities net of purchases. Financing activities provided $1.0 million.
- At June 30, cash and cash equivalents were $104.6 million and marketable securities were $311.8 million, totaling $416.4 million. Cash, cash equivalents and restricted cash were $108.6 million. Management said available cash, cash equivalents and marketable securities were expected to fund operations and capital requirements at least into the second half of 2024, subject to assumptions.
- Total liabilities were $149.7 million, including $133.2 million of deferred revenue. The balance sheet reports no borrowings or other debt. Stockholders’ equity was $298.7 million; accumulated deficit was $211.4 million.
Material changes and notable items
- First-half net loss increased by $33.5 million year over year, while revenue declined by $13.0 million. The main revenue comparison was the absence of the prior-year $11.0 million license fee; Gilead collaboration revenue also decreased as collaboration research costs were lower.
- Cash, cash equivalents and marketable securities fell by $68.9 million from December 31, 2021. Marketable securities carried $4.4 million of gross unrealized losses at June 30; management said it did not intend to sell them before recovery and recorded no impairment.
- Accumulated other comprehensive loss was $4.3 million, principally reflecting unrealized losses on marketable securities. First-half stock-based compensation was $6.6 million.
- The company reported $28.2 million of current and $105.0 million of long-term deferred revenue related to Gilead. It expected to recognize the remaining long-term amount over an estimated 5.1 years.
- Property and equipment, net, increased to $8.4 million, including construction in progress for the new Boston office and laboratory. The 201 Brookline Avenue lease was expected to commence in Q3 2022; its $5.1 million annual fixed rent, with 3% annual increases, was not included in June 30 lease liabilities because payments had not begun. The prior Cambridge lease was being terminated, with an amended termination date no earlier than August 31, 2022.
Outlook, programs and risks
- TNG908, the lead PRMT5 inhibitor for MTAP-deleted cancers, had FDA IND clearance and Fast Track designation; patients were enrolling in a Phase 1/2 trial. Management expected initial safety and efficacy data in the first half of 2023. The filing also reports a subsequent Q3 2022 FDA Orphan Drug Designation for TNG908 in malignant peripheral nerve sheath tumors.
- Management planned to file INDs for TNG462 and TNG260 in the first half of 2023, and for its USP1 inhibitor program in 2023. It anticipated declaring a USP1 development candidate in the second half of 2022. These are forward-looking plans, not assured outcomes.
- Management expected research and development spending and operating losses to increase as programs advance, clinical trials begin or expand, and the company builds its organization. It expects to need substantial additional funding and had no committed external funding source.
- The company cautioned that TNG462 could become its lead PRMT5 inhibitor if further evaluation supports it; that choice could delay the lead PRMT5 development timeline by approximately 12–18 months. TNG462 does not cross the blood-brain barrier in preclinical models and is not planned for glioblastoma.
- Key risks include early-stage clinical development and uncertain efficacy or safety; biomarker-based patient identification and enrollment; competition in MTA-cooperative PRMT5 inhibitors; reliance on third-party CROs and single-source drug suppliers; and the need to obtain future financing. The filing cites interruptions to a Ukraine-based CRO and reduced capacity at a Shanghai-based CRO as potential development risks, as well as possible COVID-19-related trial and supply disruptions.
- Management stated disclosure controls and procedures were effective at the reasonable-assurance level as of June 30, 2022; no material change in internal control over financial reporting was identified during the quarter. No material legal proceedings were reported as pending or threatened.
Investor verification points
- Track TNG908 enrollment, safety and efficacy updates, and whether the stated first-half 2023 data timeline was met.
- Verify progress and timing for the TNG462, TNG260 and USP1 IND plans, including any change in which PRMT5 program receives priority.
- Monitor operating cash use against the stated runway into the second half of 2024, and assess whether additional financing or collaboration funding becomes necessary.
- Review Gilead collaboration performance, deferred-revenue recognition and any program extensions, licensing decisions, milestones or related payments.
- Follow CRO and manufacturing capacity, sole-source supply continuity, clinical-trial recruitment, and any resulting timeline or cost changes.
- Confirm commencement and accounting for the 201 Brookline Avenue lease and the final termination terms for the Cambridge facility.