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Cancer biotech Tango to go public through $350M SPAC deal

May 11, 2021
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Dive Brief:

  • Tango Therapeutics plans to become a publicly traded company through a merger with a “blank check” acquisition company that will infuse Tango with about $353 million to develop its pipeline of experimental cancer drugs.
  • BCTG Acquisition Corp., the special purpose acquisition company, or SPAC, will enter the deal with $167 million in its trust account. Institutional investors pledged another $186 million through a private investment in public equity, or PIPE, the companies said Wednesday.
  • Current Tango investors will see their equity converted to common stock. Investors who participated in the PIPE are paying $10 per share to hold part of the new company, which will trade under the symbol TNGX. The companies expect the deal to close in the third quarter.

Dive Insight:

Tango needs the cash to advance a promising cancer drug pipeline from preclinical testing into human trials. The company said its goal is to file applications for clinical studies every 12 to 18 months, including three in the period through 2023.

First up will be Tango’s lead product, dubbed TNG908, that’s designed to attack tumor cells while sparing normal cells. The company plans to file an investigational new drug, or IND, application for TNG908 in the fourth quarter. Tango expects to file an IND for its USP1 inhibitor for breast, ovarian and prostate cancer in 2022 and another one for an undisclosed target in 2023 for a form of lung cancer.

Investors in the PIPE for the new combined company include Gilead, which already holds a stake in Tango and has been working with the biotech since 2018 on cancer drug development. Last year, Gilead expanded an earlier deal for five potential oncology targets to add 10 more.

BCTG, which is sponsored by Boxer Capital, said its acquisition search focused on finding a company with a unique approach to treating cancer. The new combined company will be led by Tango’s current CEO, Barbara Weber.

The biotech industry is likely to see many more SPAC deals after a what Deloitte calls a record-breaking year for SPAC initial public offerings in 2020. Just in the last couple of months, the DNA-testing giant 23andMe, proteomics company SomaLogic and the health intelligence company Sema4 have all agreed to SPAC acquisitions.

SPACs allow companies and investors to side-step the traditional IPO process, moving quickly to get a hefty return on their investment if everything goes right. The sponsor of a SPAC puts some upfront money at risk in case a deal doesn’t happen, but then gets to claim a large chunk of the new company.

Even as SPACs have drawn interest in biotech and other sectors, IPOs among drug companies are booming. But with SPACs increasingly entering the mix, there may be more competition for deals. SPACs generally have two years to find a target, and there are a lot of blank check companies currently active.

The Securities and Exchange Commission, meanwhile, is taking a close look at the surge of SPACs, according to John Coates, acting director of the division of corporate finance. In a speech last week, Coates noted that shareholder advocates have raised concerns about fees, conflicts and sponsor compensation.