Tango Therapeutics Adds $175M, Deal Turns Partner Gilead Into Investor

Cancer drug developer Tango Therapeutics is adding $175 million more to its coffers in cash and equity, funds the company says will help it get its lead program into the clinic in 18 months.

The money includes $50 million in equity financing, $20 million of that from Gilead Sciences (NASDAQ: [[ticker:GILD]]), plus another $125 million committed by Gilead in the form of an upfront payment.

Cambridge, MA-based Tango has been working with Gilead to advance its cancer research since 2018, and Foster City, CA-based Gilead’s decision to invest comes with an agreement to expand that partnership, which initially kicked off with a $50 million payment to Tango. The updated terms of the deal, which stretches seven years, adds $125 million to the upfront payment in addition to the equity investment.

The approach that is driving interest in Tango’s work leverages a concept called synthetic lethality. For some tumor cells, a mutation, if activated, leads to their destruction. But because the mutation itself is not an easy target, companies are working to develop drugs that can hit another gene that is key to the cells’ survival. Tango uses the gene-editing tool CRISPR to find those genes that, when targeted by a small molecule, prompt synthetic lethality. Doing so is intended to destroy the cancer cells that are vulnerable to that mutation while sparing healthy cells.

Under the expansion announced Monday, Gilead receives the right to option 10 more Tango programs—previously the total was five—intended to reverse the ability of cancer cells to evade the immune system. The company agreed to pay up to $410 million per program, payments tied to opting in and other milestones. That total includes extension fees, which Gilead has the right to pay to have Tango lead activities through early clinical development while Gilead maintains its option rights.

Tango gets the option to co-develop and co-promote the lead products for up to five programs in the US, plus it becomes eligible for royalties on sales from any therapies that make it to market under the collaboration. For any it opts to develop and promote with Gilead, the parties will split development costs, profits, and losses, in the US; for sales outside of the US, Tango will be eligible for milestone payments and royalties.

The partnership, however, does not include Tango’s three lead programs, including the candidate for which the company next year anticipates conducting studies that will lay the groundwork for seeking FDA permission to start testing it in humans. In addition to facilitating the entry of that lead program into the clinic, the new funds will also support Tango’s other wholly owned programs in late-stage drug discovery, the company said.

Gilead’s vote of confidence in the progress Tango has made since the companies initially agreed to work together, plus the advancement of its internal programs, prompted the biotech’s earlier investors to expand their investments at a higher valuation, Tango president and CEO Barbara Weber said in a prepared statement. The round announced Monday was led by Casdin Capital with participation from Boxer Capital of the Tavistock Group and Cormorant Asset Management, which joined the roster of Tango’s backers in April. That month Boxer led Tango’s Series B financing round of $60 million.

Since inception Tango has raised $165 million in outside financing, including $55 million from Third Rock Ventures, which incubated the company.

Image: iStock/JoseASReyes