424B3

 

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-259448

Prospectus Supplement No. 1

(to Prospectus dated March 28, 2022)

 

https://cdn.kscope.io/465a474689487986999196044ee1d839-img154810525_0.jpg 

Up to 68,175,412 Shares of Common Stock


 

This prospectus supplement updates and supplements the prospectus dated March 28, 2022 (the “Prospectus”), which forms a part of our Registration Statement on Form S-1, as amended (Registration No. 333-259448). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 11, 2022 (the “Quarterly Report on Form 10-Q”). Accordingly, we have attached the Quarterly Report on Form 10-Q to this prospectus supplement.
 

The Prospectus and this prospectus supplement relate to the offer and sale, from time to time, by the selling securityholders named in the Prospectus, or the Selling Securityholders, or any of their pledgees, donees, assignees and successors-in-interest, or collectively, the permitted transferees, of (i) up to 18,610,000 shares of our common stock that were issued to certain investors, or collectively, the PIPE Investors, in a private placement in connection with the closing of the Business Combination (as defined below) and (ii) up to 49,565,412 shares of our common stock that were issued to certain former shareholders of Tango Therapeutics Sub, Inc. at the closing of the Business Combination.
 

This prospectus supplement should be read in conjunction with the Prospectus. This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. If there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
 

Our common stock is listed on the Nasdaq Global Market under the symbol “TNGX”. On May 10, 2022, the closing price of our common stock was $5.02 per share.
 

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 12 of the Prospectus and under similar headings in any further amendments or supplements to the Prospectus.
 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
 

The date of this prospectus supplement is May 11, 2022.

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 March 31, 2022

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 May 2, 2022, the registrant had 87,897,475 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

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

 

 

 

PART II.

OTHER INFORMATION

28

 

 

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

29

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

77

Signatures

78

 

 

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. Further, our current and potential future collaborations may not realize the anticipated benefits.

 

 

 

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, the announcement of clinical trial results and our receipt of necessary regulatory approvals (if any) could be delayed or prevented.

 

 

 

Our 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.

 

ii


 

 

 

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 and the initiation and completion of clinical trials.

 

 

 

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.

 

 

 

If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired.

 

 

 

We may be subject to damages or settlement costs resulting from claims that we or our employees have violated the intellectual property rights of third parties, or are in breach of our agreements.

 

 

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 clinical trials and related preparatory work, the period during which the results of the clinical trials will become available, and our research and development programs;

 

 

 

our ability to discover and develop product candidates efficiently (including the advancement of development candidates on the timelines identified);

 

 

 

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, if approved, maintain regulatory approval of our product candidates;

 

iii


 

 

 

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;

 

 

 

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 (if approved) 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 industry;

 

 

 

the effect of the on-going 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 in this Quarterly Report on Form 10-Q 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” in Part II, Item 1A of this Quarterly Report on Form 10-Q. 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

iv


 

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 Information and Corporate Website

 

We were formerly known as BCTG Acquisition Corp. (“BCTG”) and were incorporated in Delaware May 2020 as a special purpose acquisition company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business. On August 10, 2021, we consummated the merger pursuant to the Agreement and Plan of Merger, dated as of April 13, 2021, by and among BCTG, BCTG Merger Sub Inc. and Tango Therapeutics Sub, Inc. Upon the consummation of the merger, we changed our name to “Tango Therapeutics, Inc.”

 

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available through the “Investors” portion of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). We also make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons. 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 (if any). Information on our website is not to be deemed to be incorporated by reference in, and is not part of, this Quarterly Report on Form 10-Q or any of our other securities filings, unless specifically incorporated herein by reference, and should not be relied upon in making a decision as to whether or not to purchase our common stock. Our filings with the SEC may be accessed through the SEC’s Interactive Data Electronic Applications system at http://www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

 

Further, 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 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.. The information contained on, or that may be accessed through, the website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q.

 

Our principal executive office is located at 100 Binney Street, Suite 700, Cambridge, Massachusetts.

 

v


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

TANGO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,909

 

 

$

142,745

 

Marketable securities

 

 

349,976

 

 

 

342,510

 

Accounts receivable

 

 

2,000

 

 

 

2,000

 

Restricted cash

 

 

567

 

 

 

567

 

Prepaid expenses and other current assets

 

 

8,202

 

 

 

4,516

 

Total current assets

 

 

460,654

 

 

 

492,338

 

Property and equipment, net

 

 

6,538

 

 

 

4,832

 

Operating lease right-of-use assets

 

 

894

 

 

 

1,254

 

Restricted cash, net of current portion

 

 

3,423

 

 

 

1,712

 

Other assets

 

 

16

 

 

 

19

 

Total assets

 

$

471,525

 

 

$

500,155

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,367

 

 

$

3,226

 

Accrued expenses and other current liabilities

 

 

9,693

 

 

 

9,887

 

Operating lease liabilities

 

 

1,075

 

 

 

1,503

 

Deferred revenue

 

 

25,024

 

 

 

26,022

 

Income tax payable

 

 

52

 

 

 

52

 

Total current liabilities

 

 

39,211

 

 

 

40,690

 

Operating lease liabilities, net of current portion

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

111,958

 

 

 

114,718

 

Other long-term liabilities

 

 

 

 

 

 

Total liabilities

 

 

151,169

 

 

 

155,408

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued
   and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares
   authorized at March 31, 2022 and December 31, 2021;
   87,709,499 and 87,598,184 shares issued and outstanding as of
   March 31, 2022 and December 31, 2021, respectively

 

 

88

 

 

 

88

 

Additional paid-in capital

 

 

510,222

 

 

 

506,760

 

Accumulated other comprehensive loss

 

 

(3,410

)

 

 

(765

)

Accumulated deficit

 

 

(186,544

)

 

 

(161,336

)

Total stockholders’ equity

 

 

320,356

 

 

 

344,747

 

Total liabilities and stockholders’ equity

 

$

471,525

 

 

$

500,155

 

 

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 March 31,

 

 

 

2022

 

 

2021

 

Collaboration revenue

 

$

5,758

 

 

$

6,386

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

24,330

 

 

 

15,000

 

General and administrative

 

 

6,807

 

 

 

3,467

 

Total operating expenses

 

 

31,137

 

 

 

18,467

 

Loss from operations

 

 

(25,379

)

 

 

(12,081

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

218

 

 

 

104

 

Other expense, net

 

 

(47

)

 

 

(55

)

Total other income, net

 

 

171

 

 

 

49

 

Loss before income taxes

 

 

(25,208

)

 

 

(12,032

)

Provision for income taxes

 

 

-

 

 

 

(74

)

Net loss

 

$

(25,208

)

 

$

(12,106

)

 

 

 

 

 

 

 

Net loss per common share – basic and diluted

 

$

(0.29

)

 

$

(0.29

)

Weighted average number of common shares outstanding
   – basic and diluted

 

 

87,670,653

 

 

 

41,575,143

 

 

 

 

 

 

 

 

Net loss

 

 

(25,208

)

 

 

(12,106

)

Other comprehensive (loss) income:

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(2,645

)

 

 

15

 

Comprehensive loss

 

$

(27,853

)

 

$

(12,091

)

 

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

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

87,598,184

 

 

$

88

 

 

$

506,760

 

 

$

(765

)

 

$

(161,336

)

 

$

344,747

 

Exercise of stock options

 

 

111,315

 

 

 

 

 

 

265

 

 

 

 

 

 

 

 

 

265

 

Stock based compensation expense

 

 

 

 

 

 

 

 

3,205

 

 

 

 

 

 

 

 

 

3,205

 

Business combination and PIPE financing, issuance costs

 

 

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

(8

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(2,645

)

 

 

 

 

 

(2,645

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,208

)

 

 

(25,208

)

Balance at March 31, 2022

 

 

87,709,499

 

 

$

88

 

 

$

510,222

 

 

$

(3,410

)

 

$

(186,544

)

 

$

320,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

Series B

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance at 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 $0.1 million

 

 

22,686,025

 

 

 

29,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retroactive application of recapitalization

 

 

(22,686,025

)

 

 

(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

 

 

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

3


 

TANGO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(25,208

)

 

$

(12,106

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

309

 

 

 

204

 

Noncash operating lease expense

 

 

361

 

 

 

242

 

Stock-based compensation

 

 

3,205

 

 

 

950

 

Other, net

 

 

54

 

 

 

58

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(3,687

)

 

 

(132

)

Other long-term assets

 

 

4

 

 

 

8

 

Accounts payable

 

 

(359

)

 

 

2,557

 

Accrued expenses and other liabilities

 

 

(157

)

 

 

(636

)

Operating lease liabilities

 

 

(429

)

 

 

(372

)

Deferred revenue

 

 

(3,758

)

 

 

(4,386

)

Net cash used in operating activities

 

 

(29,665

)

 

 

(13,613

)

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,561

)

 

 

(165

)

Sales and maturities of marketable securities

 

 

44,415

 

 

 

40,645

 

Purchases of marketable securities

 

 

(54,571

)

 

 

(19,868

)

Net cash (used in) provided by investing activities

 

 

(11,717

)

 

 

20,612

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of preferred stock, net of issuance costs

 

 

-

 

 

 

29,998

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

265

 

 

 

439

 

Payment of Business Combination and PIPE Financing transaction costs

 

 

(8

)

 

 

(26

)

Net cash provided by financing activities

 

 

257

 

 

 

30,411

 

Net change in cash, cash equivalents and restricted cash

 

 

(41,125

)

 

 

37,410

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

145,024

 

 

 

30,660

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, end of period

 

$

103,899

 

 

$

68,070

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for leases

 

$

465

 

 

$

452

 

Supplemental disclosure of noncash investing and financing activity:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

500

 

 

$

81

 

Preferred stock issuance costs included in accounts payable and accrued expenses

 

$

-

 

 

$

8

 

Merger with BCTG and PIPE financing deferred offering costs included in accounts payable and accrued expenses

 

$

-

 

 

$

347

 

 

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

4


 

TANGO THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.
Nature of the Business and Basis of Presentation

Tango Therapeutics, Inc. (“Tango” or the “Company”) is a precision oncology company committed to the discovery and development of novel drugs in defined patient populations with high unmet medical need.

Tango Therapeutics, Inc. (together with its consolidated subsidiaries, “Tango” or the “Company”) was incorporated in Delaware on May 21, 2020. On April 13, 2021, the Company, BCTG Merger Sub Inc., a Delaware corporation, and Tango Therapeutics, Inc. (now known as Tango Therapeutics Sub, Inc. or “Old Tango”) signed a definitive merger agreement (the "Merger Agreement"). Pursuant to the Merger Agreement, the business combination ("Business Combination") was approved on August 9, 2021 by shareholders of BCTG Acquisition Corp. ("BCTG"), resulting in BCTG acquiring 100% of Old Tango's issued and outstanding equity securities on August 10, 2021. As a result of the Business Combination, BCTG was renamed Tango Therapeutics, Inc.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements reflect the operations of Tango and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.

In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the results for the year ending December 31, 2022, any other interim periods, or any future year or period. The unaudited condensed consolidated financial statements for the three months ended March 31, 2022 and 2021 have been prepared on the same basis as and should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 28, 2022.

2.
Summary of Significant Accounting Policies

There have been no significant changes from the significant accounting policies disclosed in Note 2, Summary of Significant Accounting Policies, of the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates

The preparation of consolidated financial statements requires that the Company make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates and assumptions made in the consolidated financial statements include, but are not limited to, the revenue recognized from collaboration agreements, the valuation of stock-based awards and the accrual for research and development expenses. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. As of the date of issuance of these consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements.

5


 

3. Business Combination

On August 10, 2021 (the "Closing Date"), BCTG, a Delaware corporation and now predecessor of the Company, consummated the Business Combination, pursuant to the Merger Agreement, by and among BCTG, BCTG Merger Sub Inc., a Delaware corporation ("BCTG Merger Sub"), and Old Tango. Prior to consummation of the Business Combination, Old Tango changed its name from “Tango Therapeutics, Inc.” to “Tango Therapeutics Sub, Inc.” and in connection with the Business Combination, BCTG changed its name to “Tango Therapeutics, Inc.” (the former name of Old Tango). Pursuant to the Merger Agreement, on the Closing Date, BCTG Merger Sub merged with and into Old Tango, or the Merger, with Old Tango surviving the Merger as a wholly-owned subsidiary of BCTG, and BCTG changed its name to “Tango Therapeutics, Inc.”, or New Tango.

Pursuant to the terms and conditions of the Merger Agreement, the aggregate consideration paid to Old Tango equity holders upon the closing of the Merger was 55,000,000 shares of New Tango common stock. Subsequent to the closing of the Business Combination, New Tango entered into subscription agreements with certain investors ("PIPE Investors") pursuant to which the PIPE Investors purchased 18,610,000 shares of New Tango common stock at $10.00 per share, for aggregate gross proceeds of $186.1 million, under the PIPE Financing.

The following table summarizes the elements of the net proceeds from the Business Combination and PIPE Financing transaction (in thousands):

 

 

Recapitalization

 

Cash - BCTG's Trust Account and cash (net of redemptions)

 

$

156,013

 

Cash - PIPE Financing

 

 

186,100

 

Less transaction costs and advisory fees paid

 

 

(15,844

)

Net cash proceeds from the Business Combination and PIPE Financing

 

 

326,269

 

Add: non-cash net assets assumed from BCTG

 

 

3

 

Net contributions from Business Combination and PIPE Financing

 

$

326,272

 

The following table summarizes the number of shares of common stock outstanding immediately following the consummation of the Business Combination and PIPE Financing transaction:

 

 

Number of Shares

 

BCTG common shares outstanding prior to the Business Combination

 

 

21,377,250

 

Less redemption of BCTG shares

 

 

(1,106,814

)

Common shares of BCTG outstanding as of the Business Combination

 

 

20,270,436

 

Shares issued pursuant to the PIPE Financing

 

 

18,610,000

 

Business Combination and PIPE Financing shares

 

 

38,880,436

 

Old Tango common shares (after preferred shares were converted 1-for-1 for common shares)

 

 

48,593,803

 

Total shares of Common Stock immediately after Business Combination consummation

 

 

87,474,239

 

The merger consideration of 55,000,000 shares of New Tango common stock issued to Old Tango equity holders consists of 48,593,803 shares issued in exchange for Old Tango common and preferred shares outstanding, included in the table above, as well as 6,406,197 shares issued in exchange for the Old Tango unvested restricted stock awards and unexercised stock options outstanding immediately prior to the effective time of the Business Combination.

Retroactive Application of Recapitalization

As discussed above, the Business Combination with BCTG, which was consummated on August 10, 2021, is accounted for as a reverse recapitalization of equity structure. Under the reverse recapitalization model, the Business Combination was treated as Old Tango issuing equity for the net assets of BCTG, with no goodwill or intangible assets recorded. Under this method of accounting, BCTG was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the fact that subsequent to the Business Combination, Old Tango’s stockholders possess a majority of the voting power of the combined company, the combined company comprises all of the ongoing operations of Old Tango, the combined company comprises a majority of the

6


 

governing body of Old Tango, and the combined company’s senior management comprises all of the senior management of Old Tango.

These unaudited condensed consolidated financial statements contain recasted stockholders' equity balances resulting from the retroactive application of reverse recapitalization accounting in accordance with U.S. GAAP.

Pursuant to the terms of the Merger Agreement, upon the closing of the Business Combination on August 10, 2021 (the “Effective Time”), each share of Old Tango’s redeemable convertible preferred stock (the “Preferred Stock”) issued and outstanding immediately prior to the Effective Time was converted into a share of the Company’s common stock using the exchange ratio of 0.34.

All common shares, as well as previously issued share options and restricted stock awards (“RSAs”), presented in the accompanying unaudited recasted condensed consolidated statements of redeemable convertible preferred stock and stockholders' equity and/or in the related notes are presented on an as-converted basis, converted at the ratio of 0.34. The basic and diluted weighted-average shares of common stock outstanding for the three month period ended March 31, 2021 has been retroactively converted using the exchange ratio of 0.34. The historical proceeds from the issuance of preferred stock, less the par value of the historical preferred shares that were converted into common shares using the 0.34 ratio at the Effective Time, have been reclassified to additional paid in capital for the three month period ended March 31, 2021.

Date

 

Description

 

Redeemable Convertible Preferred Stock

 

 

Preferred to Common Exchange Ratio

 

 

Common Stock Shares

 

 

8/10/2021 Merger Recapitalization Exchange Ratio

 

 

Recapitalization Common Stock

 

3/18/2021

 

Series B (tranche 2)

 

 

22,686,025

 

 

 

1.00

 

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,861

 

The following table summarizes the weighted-average common shares, basic and diluted, for the three months ended March 31, 2021:

Date

 

Description

 

As previously recorded

 

 

8/10/2021 Merger Exchange Ratio

 

 

Recapitalized Common Stock

 

 

Days Outstanding in 2021

 

% of weighting

 

Weighted average common shares

 

3/31/2021

 

Weighted-average shares,
basic and diluted

 

 

13,731,583

 

 

 

0.34

 

 

 

4,643,802

 

 

89

 

100%

 

 

4,643,802

 

12/31/2019

 

Series A shares

 

 

55,700,000

 

 

 

0.34

 

 

 

18,922,317

 

 

89

 

100%

 

 

18,922,317

 

4/7/2020

 

Series B shares

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,443

 

 

89

 

100%

 

 

7,706,443

 

8/17/2020

 

Series B-1 shares

 

 

27,152,255

 

 

 

0.34

 

 

 

9,223,621

 

 

89

 

100%

 

 

9,223,621

 

3/18/2021

 

Series B shares (tranche 2)

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,861

 

 

13

 

14%

 

 

1,078,960

 

Weighted average number of common shares outstanding – basic and diluted for the three months ended March 31, 2021

 

 

41,575,143

 

 

4.
Collaboration Agreements

2018 Gilead Agreement

In October 2018, the Company entered into a Research Collaboration and License Agreement (the “2018 Gilead Agreement”) with Gilead Sciences, Inc. (“Gilead”). Pursuant to the 2018 Gilead Agreement, the Company performed target discovery and validation activities in accordance with an agreed-upon multi-year research plan. During the initial three-year research term, Gilead had the option to obtain exclusive, worldwide licenses to develop and commercialize up to five validated programs (“Gilead Program License”).

In 2018, Gilead paid the Company a $50.0 million non-refundable upfront payment upon the execution of the 2018 Gilead Agreement. The Company was eligible to receive milestone payments of up to $1.7 billion across all programs and royalties on future sales of commercialized products, if any. For up to two programs licensed by Gilead, the Company had the option to co-develop and co-promote certain programs licensed by Gilead in the U.S. and was eligible to receive royalties on ex-U.S. sales.

The Company assessed this arrangement in accordance with ASC 606, Revenue from Contracts with Customers, and concluded that the contract counterparty, Gilead, was a customer. The Company identified a single performance obligation under the arrangement consisting of the combination of participating on the joint steering committee and the research and development services provided during the research term. The identified promises were determined to not be individually distinct due to the specialized nature of the early-stage research services to be provided by the Company and the interdependent relationship between the promises. The Company determined that the option for Gilead to extend the term of the arrangement was not priced at a discount, and therefore did not provide Gilead with a material right. This option will be excluded from the transaction price until exercised. At the inception

7


 

of the 2018 Gilead Agreement, the Company also determined that the Gilead program license options provided to Gilead did not include a material right.

The total transaction price, subject to variable consideration constraints, was allocated to the combined single performance obligation. The Company determined that the single combined performance obligation is satisfied over time as the customer is simultaneously receiving and consuming the benefit of the Company’s performance. The future milestone payments represent variable consideration that is fully constrained at inception of the arrangement as the achievement of the milestone events are highly uncertain.

Amended Gilead Agreement

In August 2020, Gilead made an equity investment of $20.0 million into the Company as a participant in the Company’s Series B-1 preferred stock offering. At the time of the original investment, as well as of the March 31, 2022 balance sheet date, Gilead maintains an ownership of less than 10% of the Company's common stock and is thus not considered to be a related party to the Company.

In August 2020, the Company and Gilead also entered into an Amended Research Collaboration and License Agreement (the “Gilead Agreement”), which superseded and replaced the 2018 Gilead Agreement. The Gilead Agreement represents a continuation of the initial target discovery and validation research and development efforts begun under the 2018 Gilead Agreement. Under the Gilead Agreement:

The Company received upfront, non-refundable consideration of $125.0 million from Gilead upon execution of the Gilead Agreement in 2020;
The term of the 2018 Gilead Agreement ended on the date the Gilead Agreement was executed. The Gilead Agreement has a research term of seven years;
Gilead expanded its option to license up to 15 programs for which Gilead may obtain exclusive, worldwide licenses to develop and commercialize therapies, subject to applicable license fees;
Prior to exercising its option to license a program, Gilead may “extend” such program, in which case Gilead will pay research extension fees and the Company will continue to collaborate with Gilead to discover and develop programs, potentially through early clinical development;
Gilead has the option to “reserve” a target during which Gilead may: (i) license the target, (ii) “extend” the target, or (iii) decline the target, during the designated reserve target period. If, during the reserve target period Tango elects to work on the reserved target, Tango will retain full rights to the target program and Gilead receives a right of first negotiation in connection with any future partnering or licensing of such target by Tango, if any; and
For up to five programs licensed by Gilead, the Company has the option to co-develop and co-promote the lead product in the U.S., subject to certain exceptions, and is eligible to receive tiered royalties in the first decile on ex-U.S. sales.

The Company is eligible to receive up to $410.0 million per program in license, research extension, and clinical, regulatory, and commercial milestones and royalties on future sales of commercialized products, if any.

The Gilead Agreement was accounted for as a modification of the 2018 Gilead Agreement under ASC 606 as both the scope and price of the contract were changed under the Gilead Agreement. The additional goods and services to be provided under the Gilead Agreement are not distinct from the combined performance obligation identified under the 2018 Gilead Agreement which was only partially satisfied at the date of contract modification. As such, the Company identified a single combined performance obligation under the Gilead Agreement consisting of the research services and continued participation on the joint steering committee during the research term. As a result, the Company’s progress towards completing its research services to Gilead over the seven-year term of the Amended Gilead Agreement was lower than its progress under the three-year term of the 2018 Gilead Agreement and a cumulative catch-up adjustment was recorded during the third quarter of 2020 resulting in a charge of $11.3 million against revenue previously recognized through the date of the Gilead Agreement.

In December 2020 and in September 2021, Gilead elected to extend two programs for a research extension fee of $12.0 million each. The Company determined that the additional goods and services relating to the continued research services were not distinct from the early-stage research services already promised to Gilead under the on-going research plan. Consideration pertaining to each of the research extensions is paid to the Company in equal quarterly installment payments over an agreed upon payment schedule. Although future research installment payments are not payable in the event of scientific failure, the Company determined that the variable consideration of $12.0 million for each of the extensions should not be constrained as the potential for a significant reversal of

8


 

cumulative revenue recognized at the contract level is remote, and therefore the research extension consideration was added to the transaction price under the Gilead Agreement.

In April 2021, Gilead licensed a program for an $11.0 million license fee. The $11.0 million license fee was received and recognized as revenue in the second quarter of 2021 since Tango has no continued involvement in the advancement of the program, Gilead can benefit from the license on its own and the license is separately identifiable from the research services.

Gilead Revenue Recognized

The total transaction price allocated to the combined performance obligation under the Gilead Agreement was $199.0 million at March 31, 2022. The total transaction price was comprised of the $50.0 million upfront payment pursuant to the 2018 Gilead Agreement, the $125.0 million upfront payment pursuant to the Gilead Agreement, the $12.0 million payment pursuant to the research extension fee in December 2020, and the $12.0 million payment pursuant to the research extension fee in September 2021. During the three months ended March 31, 2022 and 2021, the Company recognized $5.8 million and $6.4 million, respectively, of collaboration revenue associated with the Gilead Agreements based on performance completed during each period.

The Company reevaluates the transaction price and the total estimated costs expected to be incurred to satisfy the performance obligations at the end of each reporting period and as uncertain events, such as changes to the expected timing and cost of certain research and development activities that the Company is responsible for, are resolved or other changes in circumstances occur. As of March 31, 2022 and December 31, 2021, the Company had short-term deferred revenue of $25.0 million and $26.0 million, respectively, and long-term deferred revenue of $112.0 million and $114.7 million, respectively, related to the Gilead collaboration. The remaining long-term revenue is expected to be recognized proportionally to the completed obligations over an expected remaining contractual term of approximately 5.4 years.

Amounts due to the Company that have not yet been received are recorded as accounts receivable and amounts received that have not yet been recognized as revenue are recorded as deferred revenue on the Company’s unaudited condensed consolidated balance sheets. As of March 31, 2022, $4.0 million of the ongoing research extension fee total of $12.0 million had been received, $2.0 million had been recorded as accounts receivable and the remaining $6.0 million was determined to be conditional upon the satisfaction of additional research obligations, and thus a contract asset. The contract asset balance is presented net of the deferred revenue contract liability.

Costs incurred pursuant to the Gilead Agreements are recorded as research and development expense.

5.
Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis:

 

 

 

Fair Market Value Measurements
as of March 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

13,861

 

 

$

 

 

$

 

 

$

13,861

 

U.S. Treasury bills

 

 

 

 

 

38,797

 

 

 

 

 

 

38,797

 

Marketable debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury bills

 

 

 

 

 

290,201

 

 

 

 

 

 

290,201

 

U.S. government agency bonds

 

 

 

 

 

59,775

 

 

 

 

 

 

59,775

 

Total assets

 

$

13,861

 

 

$

388,773

 

 

$