On Tuesday, H.C. Wainwright adjusted its financial outlook for Tango Therapeutics Inc. (NASDAQ:TNGX) shares, reducing the price target to $13 from the previous $16, while maintaining a Buy rating on the company's stock.
The revision follows Tango Therapeutics' announcement last week regarding the cessation of development for one of its key drug candidates, TNG348.
Tango Therapeutics had been testing TNG348, an allosteric inhibitor of the deubiquitinating enzyme USP1, in a Phase 1/2 trial. The study was exploring the drug's efficacy both as a standalone treatment and in combination with Lynparza (olaparib), a poly-(ADP-ribose) polymerase (PARP) inhibitor, for patients with BRCA1/2-mutant or other HRD+ cancers.
However, the development was halted due to observed Grade 3/4 liver function abnormalities in patients who were on the study for longer than eight weeks.
The discontinuation of TNG348 has extended Tango's cash runway, now projected to last into 2027, which is a shift from the previous estimate of late 2026. Despite this setback, H.C. Wainwright's analyst noted that the decision to stop TNG348's development was not seen as a "massive blow."
The drug had shown promising results in early assessments, demonstrating potency, selectivity, and synergistic activity when used with PARP inhibition.
With the removal of TNG348 from the company's discounted cash flow (DCF)-based valuation, the firm reiterated its Buy rating but recognized the necessity to adjust the 12-month price target to reflect the recent developments.
Tango Therapeutics' strategic shift away from TNG348 marks a pivot in their drug development pipeline as they continue to explore other therapeutic opportunities.
InvestingPro Insights
In light of recent events surrounding Tango Therapeutics Inc. (NASDAQ:TNGX), InvestingPro data offers a nuanced picture of the company's financial standing. Tango Therapeutics currently holds a market cap of approximately $738.31 million, with a notable revenue growth of 49.72% in the last twelve months as of Q1 2024. This suggests a strong capacity for generating sales, which is critical for a biotech company navigating the costly drug development process. Moreover, despite the challenges, Tango's liquid assets exceed its short-term obligations, providing some financial flexibility in the near term.
However, two InvestingPro Tips highlight areas of concern: Tango Therapeutics is rapidly burning through its cash reserves, and analysts have revised their earnings downwards for the upcoming period, signaling caution for potential investors. Additionally, the company is not expected to be profitable this year, with weak gross profit margins further compounding the issue. On a more positive note, Tango has been recognized for a high return over the last year, indicating that despite recent hurdles, the company has experienced periods of favorable investor sentiment.
Investors seeking a more comprehensive analysis can find additional insights on Tango Therapeutics, including more InvestingPro Tips, by visiting https://www.investing.com/pro/TNGX. For those considering an in-depth subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of financial data and expert analysis.
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