Tango Therapeutics(TNGX) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter of 2023 Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Tango Therapeutics, Inc. as of March 31, 2023, and for the three months then ended Condensed Consolidated Balance Sheets Total assets decreased to $403.8 million from $436.5 million, driven by reduced cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $57,252 | $59,968 | | Marketable securities | $276,387 | $306,165 | | Total Assets | $403,773 | $436,470 | | Total current liabilities | $53,672 | $55,545 | | Total Liabilities | $176,509 | $186,994 | | Total Stockholders' Equity | $227,264 | $249,476 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss increased to $28.0 million from $25.2 million, primarily due to higher R&D and G&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Collaboration revenue | $5,766 | $5,758 | | Research and development | $28,039 | $24,330 | | General and administrative | $8,013 | $6,807 | | Loss from operations | ($30,286) | ($25,379) | | Net loss | ($28,008) | ($25,208) | | Net loss per common share | ($0.32) | ($0.29) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $227.3 million from $249.5 million, mainly due to the $28.0 million net loss - The accumulated deficit increased from $(269.5) million at the end of 2022 to $(297.5) million as of March 31, 2023, due to the net loss incurred during the quarter[28] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $34.9 million, while investing activities provided $31.6 million Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($34,907) | ($29,665) | | Net cash provided by (used in) investing activities | $31,551 | ($11,717) | | Net cash provided by financing activities | $73 | $257 | | Net change in cash, cash equivalents and restricted cash | ($3,283) | ($41,125) | Notes to Unaudited Condensed Consolidated Financial Statements Details significant accounting policies, the Gilead collaboration, fair value measurements, and stock-based compensation - Under the Gilead collaboration agreement, the company recognized $5.8 million in revenue for the three months ended March 31, 2023, consistent with the same period in 2022[47][48] - As of March 31, 2023, the company had $118.1 million in deferred revenue related to this collaboration[47][48] Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Research and development | $2,135 | $1,642 | | General and administrative | $2,084 | $1,563 | | Total | $4,219 | $3,205 | - As of March 31, 2023, total unrecognized compensation expense related to stock options was $48.0 million, expected to be recognized over a weighted-average period of 2.9 years[69][71] - Unrecognized expense for RSUs was $3.2 million, to be recognized over 2.8 years[69][71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business overview, financial condition, and operating results for Q1 2023, highlighting clinical progress and liquidity Overview Provides updates on key precision oncology programs, including TNG908, TNG462, TNG260, and TNG348, detailing development progress - The lead program, TNG908, is actively enrolling patients in a Phase 1/2 trial, with initial data showing proof-of-mechanism and additional clinical data expected in 2024[79] - The IND for TNG462, a next-generation PRMT5 inhibitor, was cleared in January 2023, with the first patient expected to be dosed in mid-2023[80] - The IND for TNG260, a CoREST inhibitor for STK11-mutant cancers, was cleared in Q1 2023, with a Phase 1/2 trial planned to start in the second half of 2023[81] - An IND filing for TNG348, a USP1 inhibitor for HRD+ cancers, is expected in mid-2023[83] Financial Overview Funded by equity and Gilead collaboration, the company holds $333.6 million in cash, sufficient to fund operations into 2026 - The company believes its existing cash, cash equivalents, and marketable securities of $333.6 million as of March 31, 2023, will be sufficient to fund operating expenses and capital expenditure requirements at least into 2026[85] - Net loss for the three months ended March 31, 2023, was $28.0 million[85] - The accumulated deficit reached $297.5 million as of the same date[85] Results of Operations Compares Q1 2023 and Q1 2022 operating results, noting stable revenue and increased R&D and G&A expenses Comparison of Results of Operations (in thousands) | Line Item | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $5,766 | $5,758 | $8 | | Research and development | $28,039 | $24,330 | $3,709 | | General and administrative | $8,013 | $6,807 | $1,206 | | Loss from operations | ($30,286) | ($25,379) | ($4,907) | | Net loss | ($28,008) | ($25,208) | ($2,800) | - The $3.7 million increase in R&D expense was primarily due to a $2.4 million increase in personnel-related costs (including share-based compensation and headcount) and a $1.1 million increase in facilities costs[106] - The $1.2 million increase in G&A expense was mainly driven by a $0.8 million increase in personnel-related costs[107] Liquidity and Capital Resources Liquidity primarily from equity and Gilead collaboration, with $333.6 million in cash and equivalents, funding operations into 2026 - As of March 31, 2023, the company had cash, cash equivalents, and marketable securities of $333.6 million, which is expected to fund operations at least into 2026[111][112] Cash Flow Comparison (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($34,907) | ($29,665) | | Net cash provided by (used in) investing activities | $31,551 | ($11,717) | | Net cash provided by financing activities | $73 | $257 | Critical Accounting Policies and Significant Judgments and Estimates Outlines critical accounting policies requiring significant judgment, including revenue recognition, R&D accruals, and stock-based compensation - Revenue recognition for the Gilead collaboration involves significant judgment in identifying performance obligations, determining the transaction price (including constraining variable consideration like milestones), and measuring progress over time using a cost-to-cost input method[122][124][128] - Accrued research and development expenses are estimated based on the level of service performed by vendors, which requires judgment regarding the progress of R&D activities and communication with service providers[132][133] - Stock-based compensation is valued using the Black-Scholes model, which requires estimates for key assumptions such as expected stock price volatility (based on a peer group) and the expected life of the award[134] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate risk on its short-term investments, with no material impact expected from a 1% rate change - The company's main market risk is interest rate risk on its $333.6 million of cash, cash equivalents, and marketable securities[144] - Due to the short-term duration of the portfolio, the impact of a 1% interest rate change is not expected to be material[144] - The company does not have significant exposure to foreign currency exchange risk[145] - While inflation has not had a material effect on operations for the three months ended March 31, 2023, sustained inflation could increase labor, clinical trial, and manufacturing costs[146] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[147] - No changes occurred during the quarter ended March 31, 2023, that materially affected, or were reasonably likely to materially affect, the company's internal control over financial reporting[148] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and other standard disclosures for the reporting period Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings expected to adversely affect its business - The company is not currently a party to any litigation or legal proceedings that are probable to have a material adverse effect on its business[151] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[153] Other Items (Items 2, 3, 4, 5, 6) Covers standard disclosures including no unregistered equity sales, no defaults, and no other material information to report - Item 2: No unregistered sales of equity securities[155] - Item 3: No defaults upon senior securities[156] - Item 5: No other information to report[158]