Business Combination

6 Months Ended

Jun. 30, 2022

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 (as noted above) 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 (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		(15,844	)
Net cash proceeds from the Business Combination and PIPE Financing		326,269
Add: non-cash net assets assumed from BCTG		3
Net contributions from Business Combination and PIPE Financing	$	326,272

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 55,000,000 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 combined company comprises all of the ongoing operations of Old Tango, the combined company comprises a majority of the

governing body of Old Tango, and the combined 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.

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.

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 and/or in the related notes are presented on an as-converted basis, converted at the ratio of 0.34. The basic and diluted weighted-average shares of common stock outstanding for the three and six months ended June 30, 2021 has been retroactively converted using the exchange ratio of 0.34. The 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 three and six months ended June 30, 2021.

Date

Description

Redeemable Convertible Preferred Stock

Preferred to Common Exchange Ratio

Common Stock Shares

8/10/2021 Merger Recapitalization Exchange Ratio

Recapitalization Common Stock

3/18/2021

Series B (tranche 2)

22,686,025

1.00

22,686,025

0.34

7,706,861

The following table summarizes the weighted-average common shares, basic and diluted, for the three months ended June 30, 2021:


Date	Description	As previously recorded		8/10/2021 Merger Exchange Ratio		Recapitalized Common Stock		Days Outstanding in Q2 2021	% of weighting	Weighted average common shares
6/30/2021	Weighted-average shares, basic and diluted		14,485,746		0.34		4,965,270	91	100%		4,965,270
12/31/2019	Series A shares		55,700,000		0.34		18,922,317	91	100%		18,922,317
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	91	100%		9,223,621
3/18/2021	Series B shares (tranche 2)		22,686,025		0.34		7,706,861	91	100%		7,706,861
Weighted average number of common shares outstanding – basic and diluted for the three months ended June 30, 2021											48,524,511

The following table summarizes the weighted-average common shares, basic and diluted, for the six months ended June 30, 2021:


Date	Description	As previously recorded		8/10/2021 Merger Exchange Ratio		Recapitalized Common Stock		Days Outstanding in 2021	% of weighting	Weighted average common shares
6/30/2021	Weighted-average shares, basic and diluted		14,214,543		0.34		4,807,132	181	100%		4,807,132
12/31/2019	Series A shares		55,700,000		0.34		18,922,317	181	100%		18,922,317
4/7/2020	Series B shares		22,686,025		0.34		7,706,443	181	100%		7,706,443
8/17/2020	Series B-1 shares		27,152,255		0.34		9,223,621	181	100%		9,223,621
3/18/2021	Series B shares (tranche 2)		22,686,025		0.34		7,706,861	105	57%		4,428,922
Weighted average number of common shares outstanding – basic and diluted for the six months ended June 30, 2021											45,088,434