XBI - Circling Bank On Tango Therapeutics

2023-10-23 18:26:00 ET

Summary

• We are circling back on clinical stage developmental concern Tango Therapeutics, Inc. for the first time since November 2022.
• The company recently raised capital to fund all operations well into 2027, and a beneficial owner/director just added just over $2.4 million of new shares to their stake.
• An updated analysis on Tango Therapeutics follows in the paragraphs below.

Our ability to adapt is amazing. Our ability to change isn't quite as spectacular. ”? Lisa Lutz.

It has been almost a year since our first look at a small developmental company called Tango Therapeutics, Inc. ( TNGX ) . Over that time, the stock has given its shareholders a wild ride. However, the stock is trading at exactly the same levels as the time of our initial article on the company. An insider also recently purchased additional shares in the stock. Therefore, it seems a good time to circle back on Tango Therapeutics. An updated analysis follows below.

Company Overview:

Tango Therapeutics is based out of Boston, MA. This clinical stage biotech concern is focused on developing new drugs for the treatment of cancer. The stock currently trades around $7.50 a share and sports an approximate market capitalization of $750 million.

The company development platform and approach lie in leveraging the genetic principle of synthetic lethality and the power of our state-of-the-art CRISPR-based target discovery engine. Synthetic lethality is a type of genetic interaction where the combination of two genetic events results in cell death or death of an organism. The company also has a collaboration deal with Gilead Sciences ( GILD ) that was originally signed in 2018 and expanded in 2020. However, the company's three lead programs are outside of that developmental arrangement, so will not be germane to this analysis.

As you can see above, Tango Therapeutics has an early-stage pipeline with multiple candidates in development. Two of these, TNG908 and TNG462, are potent synthetic lethal inhibitors of PRMT5, which is an essential gene required for cell survival. The vision for these candidates is kill cancer cells without causing significant negative effects, primarily unacceptable bone marrow suppression.

Both of the candidates are in the early stages of being evaluated to treat MTAP-deleted tumors. MTAP deletions occur in approximately 10%-15% of all human cancers and are higher in certain cancers, including 40% of glioblastoma ((GBM)) patients. At the time of the company's last earnings release of August 7th, both TNG908 and TNG462 were in the dose escalation parts of separate Phase 1/2 studies.

Several other companies such as Amgen ( AMGN ) and Mirati Therapeutics ( MRTX ) are also developing PRMT5 inhibitors. Mirati was also bought out by Bristol-Myers Squibb Company ( BMY ) earlier this month.

The company is also developing TNG260, a first-in-class, highly selective CoREST (Co-repressor of Repressor Element-1 Silencing Transcription) complex inhibitor. TNG260 has been designed to address the unmet medical need of immunotherapy-resistant STK11-mutant cancers.

STK11 (serine-threonine kinase 11) loss-of-function mutations are present in approximately 15% of non-squamous lung and cervical cancers and a lower percent amount in carcinomas, breast and pancreatic cancers. Earlier this year, TNG260, in combination with an anti-PD-1 antibody for the treatment of patients with previously treated advanced NSCLC with STK11-mutations, won Fast Track Designation for this indication from the FDA.

Recently, the first patient was dosed in a Phase 1/2 study evaluating TNG260 in combination with pembrolizumab, with a one cycle single agent run-in phase. The goal of this trial to evaluate the safety and pharmacokinetics of TNG260 in patients with locally advanced or metastatic solid tumors with an STK11 loss-of-function mutation.

Finally, the company is a developing TNG348 which the company classifies as a novel allosteric inhibitor of USP1 for treatment of HRD+ cancers, including of BRCA1 and BRCA2-mutations. The company expects to file its first IND application around TNG348 by the end of this year.

It should be noted the stock of Tango is down sharply since early-stage data for Amgen’s drug candidate AMG193 was released last week. AMG193 is also a PRMT5 inhibitor. Only 5 of the 31 patients in this Phase 1 study demonstrated a partial response.

Analyst Commentary & Balance Sheet:

The analyst community is mostly upbeat about Tango's longer-term prospects. Since May, Barclays ($18 price target), Leerink Partners, Goldman Sachs and H.C. Wainwright have all reissued Buy ratings on the stock.

Nearly 13% of the outstanding float in the shares are currently held short. A beneficial owner that has a director position, "Boxer Capital" bought nearly 900,000 worth of shares earlier this month. The company ended the first half of this year with approximately $310 million worth of cash and marketable securities on the balance sheet . Management stated at the time that this was " sufficient to fund operations into 2026 ." However, a few days later, the company executed a private placement that raised approximately $80 million of additional capital. The company has no long-term debt, it should be noted.

Verdict:

Unprofitable biotech companies where potential commercialization is years and years off in the future have not exactly be " en vogue" in the current market as interest rates have marched relentlessly higher in recent months. Investors have been in " risk off" mode when it comes to small biotech names for considerably longer, as one can see by the chart of the SPDR® S&P Biotech ETF ( XBI ) below.

Tango has relatively few milestones on the near-term horizon, the only one management listed on its last earnings press release was data from the current TNG908 study in 2024. Therefore, outside a buyout like Mirati, the stock is likely to move with the overall sentiment on the small biotech sector. The company is well-funded to continue to advance development. However, until Tango Therapeutics, Inc.'s pipeline moves into late-stage development and/or sentiment on the biotech space improves markedly, I have no current investment recommendation on Tango at this time despite recent insider buying.

Words are like eggs dropped from great heights; you can no more call them back than ignore the mess they leave when they fall .”? Jodi Picoult.

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