TNGX - Tango Therapeutics: Upcoming Proof Of Concept Data Is A Major Catalyst

Summary

• Tango Therapeutics' SPAC entry to the market and Gilead deal has put a large dollar figure besides its name.
• Tango has an upcoming proof of concept data readout that should validate its platform.
• The science is interesting, they have solid cash, so Tango Therapeutics may be worth a try.

Tango Therapeutics, Inc. ( TNGX ) is an oncology company with no clinical data and a $600mn valuation, which makes it interesting. The company describes itself as a precision oncology company "leveraging synthetic lethality." As a 2017 Nature report notes:

A synthetic lethal interaction occurs between two genes when the perturbation of either gene alone is viable but the perturbation of both genes simultaneously results in the loss of viability. Key to exploiting synthetic lethality in cancer treatment are the identification and the mechanistic characterization of robust synthetic lethal genetic interactions. Advances in next-generation sequencing technologies are enabling the identification of hundreds of tumor-specific mutations and alterations in gene expression that could be targeted by a synthetic lethality approach.

Tango's platform is directed at tumor suppressor gene loss in specific patient populations. Their lead product candidate is TNG908, which is a small molecule synthetic lethal inhibitor of PRMT5 or protein arginine methyltransferase 5. PRMT5 and MTAP are the targeted synthetic lethal pair. According to a 2016 research paper :

The discovery of cancer dependencies has the potential to inform therapeutic strategies and to identify putative drug targets. Integrating data from comprehensive genomic profiling of cancer cell lines and from functional characterization of cancer cell dependencies, we discovered that loss of the enzyme methylthioadenosine phosphorylase ((MTAP)) confers a selective dependence on protein arginine methyltransferase 5 (PRMT5) and its binding partner WDR77. MTAP is frequently lost due to its proximity to the commonly deleted tumor suppressor gene, CDKN2A. We observed increased intracellular concentrations of methylthioadenosine (MTA; the metabolite cleaved by MTAP) in cells harboring MTAP deletions. Furthermore, MTA specifically inhibited PRMT5 enzymatic activity. Administration of either MTA or a small molecule PRMT5 inhibitor showed a modest preferential impairment of cell viability for MTAP-null cancer cell lines compared to isogenic MTAP-expressing counterparts. Together, our findings reveal PRMT5 as a potential vulnerability across multiple cancer lineages augmented by a common "passenger" genomic alteration.

How TNG908 works is this: cancer cells where MTAP is deleted have accumulated MTA. MTA itself binds to and inhibits PRMT5. An additional PRMT5 inhibitor that works as an add-on to MTA (MTA-cooperative) can bind to the PRMT5-MTA complex. This can cause complete inhibition of MTAP-deleted cancer cells while sparing normal cells.

TNG908 is designed to work only in cancer cells with MTAP deletion, which occurs in 10-15% of all human tumors, including "40% of glioblastomas; 25% of melanomas, urothelial carcinomas, and pancreatic adenocarcinomas; and 15% of non-small cell lung carcinomas ((NSCLC))." Preclinical studies have shown that TNG908 has a 15-fold greater potency in MTAP-deleted cancer cells versus normal cells, which results in high selectivity. The company began a phase 1 study last year and plans to have data by mid-2023. In vitro data has also shown TNG908's ability to cross the blood brain barrier, so the company plans to study it in GBM as well.

Other programs are in IND-enabling stage:

• IND cleared for TNG462 January 2023 - a next-generation synthetic lethal PRMT5 inhibitor.

• IND filing for TNG260 1H 2023 - a novel CoREST inhibitor targeting immune evasion caused by STK11 mutations.

• IND filing for TNG348 mid-2023 - a novel USP1 inhibitor for BRCA1/2 mutant cancers.

Gilead Sciences, Inc. (GILD) has a major partnership with Tango. By the terms of the agreement, TNGX received $175mn in upfront payment, $20mn in equity, and may receive up to "$110M to clinical POC, $410M per program and up to $6 billion in milestones." This is a very large deal for such an early-stage company, and is the major source whence the stock derives its value. The deal makes Gilead eligible to license 15 validated immune evasion targets. Gilead has already licensed two of them, and two more have been optioned so far. Tango's job is to discover and validate, while Gilead will lead post-POC development and commercialization. Tango has an option to co-develop and co-promote up to five programs, for which the two companies will share US profit/loss at 50/50. For other programs, TNGX will get low double-digit royalties.

So, all eyes are on TNG908's clinical proof of concept data that it set to appear in 1H 2023. This will be a major catalytic event for this company. Tango is not widely followed, and trades in very low volumes. Solid data should change that lack of interest.

A second PRMT5 inhibitor small molecule, TNG462, has shown a 45x specificity to MTAP deletion. An IND has been cleared, and a phase 1/2 trial will begin in mid-2023. This molecule could become the best-in-class PRMT5 inhibitor, given its higher selectivity.

Financials

Tango Therapeutics has a market cap of $604mn and a cash balance of $394mn. Research and development expenses were $28.7 million for the three months ended September 30, 2022, while general and administrative expenses were $8.1 million. That gives them a cash runway of 10-11 quarters, or up to 2025, as the company claims.

One reason for the company's high valuation is because it entered the market through a SPAC, Boxer Capital's BCTG Acquisition Corp. Two years ago, under an all-stock deal, Tango received $167 million from the SPAC, and another $186 million through a private placement.

Bottom Line

Tango Therapeutics, Inc.'s current value lies in its assets and Gilead's interest. If TNG908 can get its POC data right, this will be a major upside. Given the preclinical data, there's more probability of the molecule doing well, than not. A cautiously optimistic outlook, coupled with a small pilot at these prices, may be in order for Tango Therapeutics, Inc.

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