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Business Combination
9 Months Ended
Sep. 30, 2021
Business Combinations [Abstract]  
Business Combination

3. Business Combination

On August 10, 2021 (the "Closing Date"), BCTG, a Delaware corporation and now predecessor of the Company, consummated the Business Combination, pursuant to the Merger Agreement, by and among BCTG, BCTG Merger Sub Inc., a Delaware corporation ("BCTG Merger Sub"), and Old Tango. Prior to consummation of the Business Combination, Old Tango changed its name from “Tango Therapeutics, Inc.” to “Tango Therapeutics Sub, Inc.” and in connection with the Business Combination, BCTG changed its name to “Tango Therapeutics, Inc.” (the former name of Old Tango). Pursuant to the Merger Agreement, on the Closing Date, BCTG Merger Sub merged with and into Old Tango, or the Merger, with Old Tango surviving the Merger as a wholly-owned subsidiary of BCTG, and BCTG changed its name to “Tango Therapeutics, Inc.”, or New Tango.

Pursuant to the terms and conditions of the Merger Agreement, the aggregate consideration paid to Old Tango equity holders upon the closing of the Merger was 55,000,000 shares of New Tango common stock. Subsequent to the closing of the Business Combination, New Tango entered into subscription agreements with certain investors ("PIPE Investors") pursuant to which the PIPE Investors purchased 18,610,000 shares of New Tango common stock at $10.00 per share, for aggregate gross proceeds of $186.1 million, under the PIPE Financing.

The following table summarizes the elements of the net proceeds from the Business Combination and PIPE Financing transaction as of September 30, 2021 (in thousands):

 

 

Recapitalization

 

Cash - BCTG's Trust Account and cash (net of redemptions)

 

$

156,013

 

Cash - PIPE Financing

 

 

186,100

 

Less transaction costs and advisory fees paid

 

 

(15,615

)

Net cash proceeds from the Business Combination and PIPE Financing

 

 

326,498

 

Add: non-cash net assets assumed from BCTG

 

 

3

 

Net contributions from Business Combination and PIPE Financing

 

$

326,501

 

The following table summarizes the number of shares of common stock outstanding immediately following the consummation of the Business Combination and PIPE Financing transaction:

 

 

Number of Shares

 

BCTG common shares outstanding prior to the Business Combination

 

 

21,377,250

 

Less redemption of BCTG shares

 

 

(1,106,814

)

Common shares of BCTG outstanding as of the Business Combination

 

 

20,270,436

 

Shares issued pursuant to the PIPE Financing

 

 

18,610,000

 

Business Combination and PIPE Financing shares

 

 

38,880,436

 

Old Tango common shares (after preferred shares were converted 1-for-1 for common shares)

 

 

48,593,803

 

Total shares of Common Stock immediately after Business Combination consummation

 

 

87,474,239

 

The merger consideration of 55,000,0000 shares of New Tango common stock issued to Old Tango equity holders consists of 48,593,803 shares issued in exchange for Old Tango common and preferred shares outstanding, included in the table above, as well as 6,406,197 shares issued in exchange for the Old Tango unvested restricted stock awards and unexercised stock options outstanding immediately prior to the effective time of the Business Combination.

Retroactive Application of Recapitalization

As discussed above, the Business Combination with BCTG, which was consummated on August 10, 2021, is accounted for as a reverse recapitalization of equity structure. Under the reverse recapitalization model, the Business Combination was treated as Old Tango issuing equity for the net assets of BCTG, with no goodwill or intangible assets recorded. Under this method of accounting, BCTG was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the fact that subsequent to the Business Combination, Old Tango’s stockholders possess a majority of the voting power of the combined company, the Company comprises all of the ongoing operations of Old Tango, the Company comprises a majority of the governing body of Old Tango, and the Company’s senior management comprises all of the senior management of Old Tango.

These unaudited condensed consolidated financial statements contain recasted stockholders' equity balances resulting from the retroactive application of reverse recapitalization accounting in accordance with U.S. GAAP.

Retroactive Application of Recapitalization to Unaudited Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Pursuant to the terms of the Merger Agreement, upon the closing of the Business Combination on August 10, 2021 (the “Effective Time”), each share of Old Tango’s redeemable convertible preferred stock (the “Preferred Stock”) issued and outstanding immediately prior to the Effective Time was converted into a share of the Company’s common stock using the exchange ratio of 0.34 as follows:

Date

 

Description

 

Redeemable Convertible Preferred Stock

 

 

Preferred to Common Exchange Ratio

 

 

Common Stock Shares

 

 

8/10/2021 Merger Recapitalization Exchange Ratio

 

 

Recapitalization Common Stock

 

12/31/2019

 

Series A

 

 

55,700,000

 

 

 

1.00

 

 

 

55,700,000

 

 

 

0.34

 

 

 

18,922,317

 

4/7/2020

 

Series B (tranche 1)

 

 

22,686,025

 

 

 

1.00

 

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,861

 

8/17/2020

 

Series B-1

 

 

27,152,255

 

 

 

1.00

 

 

 

27,152,255

 

 

 

0.34

 

 

 

9,224,122

 

3/18/2021

 

Series B (tranche 2)

 

 

22,686,025

 

 

 

1.00

 

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,861

 

 

All common shares, as well as previously issued share options and restricted stock awards (“RSAs”), presented in the accompanying unaudited recasted condensed consolidated statements of redeemable convertible preferred stock and stockholders' equity (deficit) and/or in the related notes are presented on an as-converted basis, converted at the ratio of 0.34.

Retroactive Application of Recapitalization to Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

In accordance with the retroactive application of recapitalization to the accompanying unaudited condensed consolidated statements of redeemable convertible preferred stock and stockholders' equity (deficit), the basic and diluted weighted-average shares of common stock outstanding for the three and nine month periods ended September 30, 2021 and 2020 have been retroactively converted using the exchange ratio of 0.34.

The following table summarizes the weighted-average common shares, basic and diluted, for the three months ended September 30, 2020:

 

Date

 

Description

 

As previously recorded

 

 

8/10/2021 Merger Exchange Ratio

 

 

Recapitalized Common Stock

 

 

Days Outstanding in 2020

 

% of weighting

 

Weighted average common shares

 

9/30/2020

 

Weighted-average shares,
basic and diluted

 

 

11,723,528

 

 

 

0.34

 

 

 

3,982,482

 

 

 

 

100%

 

 

3,982,482

 

12/31/2019

 

Series A shares

 

 

55,700,000

 

 

 

0.34

 

 

 

18,921,290

 

 

91

 

100%

 

 

18,921,290

 

4/7/2020

 

Series B shares

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,443

 

 

91

 

100%

 

 

7,706,443

 

8/17/2020

 

Series B-1 shares

 

 

27,152,255

 

 

 

0.34

 

 

 

9,223,621

 

 

44

 

48%

 

 

4,459,773

 

Weighted average number of common shares outstanding – basic and diluted for the three months ended September 30, 2020

 

 

35,069,988

 

The following table summarizes the weighted-average common shares, basic and diluted, for the nine months ended September 30, 2020:

 

Date

 

Description

 

As previously recorded

 

 

8/10/2021 Merger Exchange Ratio

 

 

Recapitalized Common Stock

 

 

Days Outstanding in 2020

 

% of weighting

 

Weighted average common shares

 

9/30/2020

 

Weighted-average shares,
basic and diluted

 

 

11,186,180

 

 

 

0.34

 

 

 

3,799,945

 

 

 

 

100%

 

 

3,799,945

 

12/31/2019

 

Series A shares

 

 

55,700,000

 

 

 

0.34

 

 

 

18,921,290

 

 

273

 

100%

 

 

18,921,290

 

4/7/2020

 

Series B shares

 

 

22,686,025

 

 

 

0.34

 

 

 

7,706,443

 

 

176

 

64%

 

 

4,968,256

 

8/17/2020

 

Series B-1 shares

 

 

27,152,255

 

 

 

0.34

 

 

 

9,223,621

 

 

44

 

16%

 

 

1,486,591

 

Weighted average number of common shares outstanding – basic and diluted for the nine months ended September 30, 2020

 

 

29,176,082

 

Retroactive Application of Recapitalization to Unaudited Condensed Consolidated Balance Sheets

To conform to the retroactive application of recapitalization to the accompanying unaudited condensed consolidated statements of redeemable convertible preferred stock and stockholders' equity (deficit), historical proceeds from the issuance of preferred stock, less the par value of the historical preferred shares that were converted into common shares using the 0.34 ratio at the Effective Time, have been reclassified to additional paid in capital for the periods ended September 30, 2021 and 2020, respectively.