Tenax Therapeutics, Inc. — Q1 2024 Form 10-Q
Business context and period. Clinical-stage biopharmaceutical company developing levosimendan, prioritized for pulmonary hypertension associated with heart failure with preserved ejection fraction (PH-HFpEF), and imatinib for pulmonary arterial hypertension (PAH). This unaudited report covers the three months ended March 31, 2024; comparisons are with Q1 2023 unless noted. The company reported no revenue.
Key financial metrics
| Metric | Q1 2024 / March 31, 2024 | Prior comparable / December 31, 2023 |
|---|---|---|
| Revenue | None reported | None reported |
| Operating expenses | $3.91 million | $1.54 million |
| Research and development | $2.68 million | $0.27 million |
| General and administrative | $1.23 million | $1.27 million |
| Net loss | $3.80 million; $3.12 per share | $1.41 million; $12.10 per share |
| Cash used in operating activities | $5.17 million | $1.72 million |
| Cash and cash equivalents | $12.55 million | $9.79 million |
| Working capital | $12.43 million | $8.10 million |
| Total liabilities / note payable | $2.03 million / $413,174 | $3.59 million / $500,903 |
| Accumulated deficit | $301.05 million | $297.25 million |
Operating margins are not meaningful for this pre-revenue company. Q1 financing activities provided $7.92 million, including approximately $8.0 million in net proceeds from the February 2024 offering and proceeds from warrant exercises. The February offering generated approximately $9.0 million gross and included common shares, pre-funded warrants and warrants.
Material changes and management commentary
- Net loss increased about 170% year over year as operating expenses rose 154%. R&D increased roughly $2.41 million, mainly reflecting activity for the Phase 3 LEVEL trial and the HELP open-label extension study; the company said prior-year costs were affected by refunded imatinib development expenses.
- Operating cash use rose to $5.17 million, principally due to higher study spending. Cash increased during the quarter after equity financing and warrant exercises.
- The company completed a 1-for-80 reverse stock split on January 2, 2024. Common shares outstanding were 1,958,245 at March 31, versus 298,281 at December 31, 2023; the filing reports 3,219,694 warrants outstanding at quarter-end. Share and per-share comparisons reflect reverse-split adjustments.
- Management says available resources are expected to fund planned operations through calendar 2024, but substantial additional financing will be needed beyond then and to complete the LEVEL trial. The filing identifies substantial doubt about the company’s ability to continue as a going concern.
Outlook, risks, and contingencies
- The LEVEL Phase 3 trial of oral levosimendan began enrolling patients early in 2024. Recruitment is expected to continue through 2024 and at least the first half of 2025. Additional funding is needed to complete the trial, including its open-label extension. No financial guidance was provided.
- Tenax has prioritized levosimendan and suspended plans to initiate an imatinib Phase 3 trial. Management is pursuing financing and strategic alternatives, including potential licensing, collaboration, sale or merger; there is no assurance these efforts will succeed.
- A February 2024 amendment to the Orion license provides global rights for oral and subcutaneous levosimendan for PH-HFpEF and lowers royalty rates. It also provides for contingent payments, including a $10 million U.S. approval milestone, a $5 million Japan approval milestone and up to $45 million in sales-based commercialization milestones. No developmental milestones had been met and no contingent liability was recorded as of March 31, 2024.
- Key risks include clinical-trial execution and enrollment, regulatory approval, the need for additional capital, potential shareholder dilution or restrictive debt terms, and the possibility of reducing or delaying development if financing is unavailable. Management reported no material change in risk factors from its 2023 Form 10-K.
- The company reported no material pending legal proceedings and no subsequent events. Disclosure controls were assessed as effective as of March 31, 2024.
Important facts for investors to verify
- Whether the company secures financing sufficient to support operations beyond 2024 and complete the LEVEL trial.
- LEVEL trial enrollment progress, timing, costs, and eventual efficacy and safety results.
- Potential dilution from outstanding warrants and future equity financing, considering the reverse split and sharp increase in reported shares outstanding.
- The full economic and supply terms of the amended Orion license, including future royalties, milestones, and any supply agreement.
- Whether management’s funding and strategic alternatives address the substantial-doubt going-concern disclosure.