10-Q
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ROC

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-39485

 

TANGO THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-1195036

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

100 Binney St., Suite 700

Cambridge, MA

02142

(Address of principal executive offices)

(Zip Code)

(857) 320-4900

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.001 per share

 

TNGX

 

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

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 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 5, 2021, the registrant had 87,546,430 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

 

 

 

PART II.

OTHER INFORMATION

31

 

 

 

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

77

Item 4.

Mine Safety Disclosures

77

Item 5.

Other Information

77

Item 6.

Exhibits

78

Signatures

79

 

 

i


 

 

Summary of Material Risks Associated with Our Business

 

Our business is subject to numerous material and other risks that you should be aware of before making an investment decision. These risks are described more fully in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.” These risks include, among others, the following:

 

 

 

We are a precision oncology company with a limited operating history. We have no products approved for commercial sale, have not generated any revenue from product sales and may never become profitable.

 

 

 

We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.

 

 

 

We will need to raise substantial additional funding. If we are unable to raise capital when needed or on terms acceptable to us, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.

 

 

 

We have never successfully completed any clinical trials and we may be unable to do so for any product candidates we develop. Certain of our programs are still in preclinical development and may never advance to clinical development.

 

 

 

Our programs are focused on the development of oncology therapeutics for patients with genetically defined or biomarker-driven cancers, which is a rapidly evolving area of science, and the approach we are taking to discover and develop drugs is novel and may never lead to approved or marketable products.

 

 

 

If we are unable to successfully validate, develop and obtain regulatory approval for companion diagnostic tests for our product candidates that require or would commercially benefit from such tests, or experience significant delays in doing so, we may not realize the full commercial potential of these product candidates.

 

 

 

Clinical product development involves a lengthy and expensive process, with an uncertain outcome.

 

 

 

Interim, top-line, and preliminary data from our future clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to confirmation, audit and verification procedures that could result in material changes in the final data.

 

 

 

Results from early preclinical studies of our programs and product candidates are not necessarily predictive of the results of later preclinical studies and clinical trials of our programs and product candidates. If we cannot replicate the results from our earlier preclinical studies of our programs and product candidates in our later preclinical studies and clinical trials, we may be unable to successfully develop, obtain regulatory approval for and commercialize our product candidates.

 

 

 

If we experience delays or difficulties in the initiation or enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

 

 

 

Our future clinical trials or those of our current or future collaborators may reveal significant adverse events not seen in our preclinical or nonclinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.

 

 

 

Some of our product candidates modulate pathways for which there are currently no approved or effective therapies, and utilize novel binding locations, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects.

 

 

 

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

 

 

 

The COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our product candidates.

 

ii


 

 

 

 

We expect to rely on third parties to conduct our future clinical trials, as well as investigator-sponsored clinical trials of our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

 

 

 

We contract with third parties for the manufacture of our product candidates for preclinical development and expect to continue to do so for clinical testing and commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

 

 

 

The third parties upon whom we rely for the supply of the active pharmaceutical ingredients and drug product to be used in our product candidates are our sole source of supply, and the loss of any of these suppliers could significantly harm our business.

 

 

 

Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Words such as “anticipates,” "continue," "could," "may," "forecasts," “expects,” “intends,” “plans,” "potentially," “believes,” “seeks,” “estimates,” "predict," "target," and variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such statements. Such forward-looking statements are based on current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by our management, and may include, but are not limited to, statements regarding:

 

 

 

the initiation, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

 

 

 

our ability to discover and develop product candidates efficiently;

 

 

 

our ability and the potential to manufacture our drug substances and product candidates successfully for preclinical use, for clinical trials and on a larger scale for commercial use, if approved;

 

 

 

the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;

 

 

 

our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates (and that existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements at least into the second half of 2024);

 

 

 

our ability to obtain and maintain regulatory approval of our product candidates;

 

 

 

our ability to commercialize our products, if approved;

 

 

 

the pricing and reimbursement of our product candidates, if approved;

 

 

 

the implementation of our business model, and strategic plans for our business and product candidates;

 

 

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

 

 

 

estimates of our future expenses, capital requirements, and our need for additional financing;

 

iii


 

 

 

 

the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;

 

 

 

future agreements with third parties in connection with the commercialization of product candidates and any other approved products;

 

 

 

the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

 

 

 

our financial performance, including the expectation that we will continue to incur operating losses and negative cash flow;

 

 

 

the rate and degree of market acceptance of our product candidates;

 

 

 

regulatory developments in the United States and foreign countries;

 

 

 

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

 

 

 

our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;

 

 

 

the success of competing therapies that are or may become available;

 

 

 

our ability to attract and retain key scientific or management personnel;

 

 

 

the impact of laws and regulations;

 

 

 

developments relating to our competitors and its industry;

 

 

 

the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and clinical trials and any future studies or trials; and

 

 

 

other risks and uncertainties, including those listed under the section titled “Risk Factors.”

 

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

Corporate Website

 

The company intends to use its website http://www.tangotx.com as a means of disclosing material non-public information and for complying with its disclosure obligations under the Securities and Exchange Commission ("SEC") Regulation FD. Such disclosures will be included on the company’s website under the heading “Investors.” Accordingly, investors should monitor such portions of the company’s website, in addition to following the company’s press releases, SEC filings and public conference calls and webcasts.

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

TANGO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

204,974

 

 

$

28,381

 

Marketable securities

 

 

298,831

 

 

 

161,939

 

Accounts receivable

 

 

8,000

 

 

 

2,000

 

Prepaid expenses and other current assets

 

 

4,534

 

 

 

1,312

 

Total current assets

 

 

516,339

 

 

 

193,632

 

Property and equipment, net

 

 

4,706

 

 

 

3,823

 

Operating lease right-of-use assets

 

 

6,732

 

 

 

7,480

 

Restricted cash

 

 

2,279

 

 

 

2,279

 

Other assets

 

 

81

 

 

 

38

 

Total assets

 

$

530,137

 

 

$

207,252

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,109

 

 

$

1,841

 

Accrued expenses and other current liabilities

 

 

9,978

 

 

 

6,140

 

Operating lease liabilities

 

 

1,092

 

 

 

959

 

Deferred revenue

 

 

27,807

 

 

 

31,977

 

Total current liabilities

 

 

41,986

 

 

 

40,917

 

Operating lease liabilities, net of current portion

 

 

6,089

 

 

 

6,925

 

Deferred revenue, net of current portion

 

 

116,649

 

 

 

120,805

 

Other long-term liabilities

 

 

-

 

 

 

5

 

Total liabilities

 

 

164,724

 

 

 

168,652

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and
outstanding as of September 30, 2021 and December 31, 2020

 

 

-

 

 

 

-

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 and 56,393,261 shares authorized at
  September 30, 2021 and December 31, 2020;
87,544,002 and 40,372,133 shares
  issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

88

 

 

 

40

 

Additional paid-in capital

 

 

504,625

 

 

 

141,644

 

Accumulated other comprehensive (loss) income

 

 

(10

)

 

 

17

 

Accumulated deficit

 

 

(139,290

)

 

 

(103,101

)

Total stockholders’ equity

 

 

365,413

 

 

 

38,600

 

Total liabilities and stockholders’ equity

 

$

530,137

 

 

$

207,252

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1


 

TANGO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

6,787

 

 

$

(11,275

)

 

$

20,326

 

 

$

(2,169

)

License revenue

 

 

-

 

 

 

14

 

 

 

11,000

 

 

 

683

 

Total revenue

 

 

6,787

 

 

 

(11,261

)

 

 

31,326

 

 

 

(1,486

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

21,923

 

 

 

12,977

 

 

 

56,002

 

 

 

34,928

 

General and administrative

 

 

4,433

 

 

 

2,518

 

 

 

11,530

 

 

 

6,849

 

Total operating expenses

 

 

26,356

 

 

 

15,495

 

 

 

67,532

 

 

 

41,777

 

Loss from operations

 

 

(19,569

)

 

 

(26,756

)

 

 

(36,206

)

 

 

(43,263

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense)

 

 

91

 

 

 

(50

)

 

 

299

 

 

 

37

 

Other (expense) income, net

 

 

(50

)

 

 

4

 

 

 

(167

)

 

 

118

 

Total other income (expense), net

 

 

41

 

 

 

(46

)

 

 

132

 

 

 

155

 

Loss before income taxes

 

 

(19,528

)

 

 

(26,802

)

 

 

(36,074

)

 

 

(43,108

)

Provision for income taxes

 

 

(62

)

 

 

-

 

 

 

(115

)

 

 

-

 

Net loss

 

$

(19,590

)

 

$

(26,802

)

 

$

(36,189

)

 

$

(43,108

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share – basic and diluted

 

$

(0.28

)

 

$

(0.76

)

 

$

(0.68

)

 

$

(1.48

)

Weighted average number of common shares outstanding
   – basic and diluted

 

 

70,160,663

 

 

 

35,069,988

 

 

 

53,397,557

 

 

 

29,176,082

 

Net loss

 

 

(19,590

)

 

 

(26,802

)

 

 

(36,189

)

 

 

(43,108

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(12

)

 

 

15

 

 

 

(27

)

 

 

16

 

Comprehensive loss

 

$

(19,602

)

 

$

(26,787

)

 

$

(36,216

)

 

$

(43,092

)

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

2


 

TANGO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED

STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

(Unaudited)

 

 

 

Redeemable Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

Series A

 

 

Series B

 

 

Series B-1

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2020

 

 

55,700,000

 

 

$

55,700

 

 

 

22,686,025

 

 

$

29,761

 

 

 

27,152,255

 

 

$

51,083

 

 

 

 

4,518,833

 

 

$

4

 

 

$

5,136

 

 

$

17

 

 

$

(103,101

)

 

$

(97,944

)

Retroactive application of recapitalization

 

 

(55,700,000

)

 

 

(55,700

)

 

 

(22,686,025

)

 

 

(29,761

)

 

 

(27,152,255

)

 

 

(51,083

)

 

 

 

35,853,300

 

 

 

36

 

 

 

136,508

 

 

 

 

 

 

 

 

 

136,544

 

Recasted balance as of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,372,133

 

 

 

40

 

 

 

141,644

 

 

 

17

 

 

 

(103,101

)

 

 

38,600

 

Issuance of Series B
   redeemable convertible
   preferred stock, net of
   issuance costs of less
   than $
0.1 million

 

 

 

 

 

 

 

 

22,686,026

 

 

 

29,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retroactive application of recapitalization

 

 

 

 

 

 

 

 

(22,686,026

)

 

 

(29,990

)

 

 

 

 

 

 

 

 

 

7,706,861

 

 

 

8

 

 

 

29,982

 

 

 

 

 

 

 

 

 

29,990

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

304,080

 

 

 

1

 

 

 

439

 

 

 

 

 

 

 

 

 

440

 

Vesting of restricted
   common stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Stock based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

950

 

 

 

 

 

 

 

 

 

950

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,106

)

 

 

(12,106

)

Balance at March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48,383,074

 

 

$

49

 

 

$

173,017

 

 

$

32

 

 

$

(115,207

)

 

$

57,891

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

210,748

 

 

 

 

 

 

324

 

 

 

 

 

 

 

 

 

324

 

Vesting of restricted
   common stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Stock based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,196

 

 

 

 

 

 

 

 

 

1,196

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30

)

 

 

 

 

 

(30

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,493

)

 

 

(4,493

)

Balance at June 30, 2021

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

48,593,822

 

 

 

49

 

 

 

174,540

 

 

 

2

 

 

 

(119,700

)

 

 

54,891

 

Shares issued in Business Combination and PIPE
    Financing, net of issuance costs of $
15.6 million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,880,436

 

 

 

39

 

 

 

326,462

 

 

 

 

 

 

 

 

 

326,501

 

Exercise of stock options