Tenax Therapeutics, Inc. — Q3 2023 Form 10-Q
Business context and period. This unaudited quarterly report covers the three and nine months ended September 30, 2023. Tenax is a clinical-stage biotechnology company developing levosimendan for pulmonary hypertension and heart failure with preserved ejection fraction (PH-HFpEF), and imatinib for pulmonary arterial hypertension (PAH). The company prioritized levosimendan and its planned Phase 3 LEVEL trial; it reported no product revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | No product revenue reported | No product revenue reported | No product revenue reported | No product revenue reported |
| Operating expenses | $2.12 million | $2.92 million | $4.89 million | $8.50 million |
| Net loss | $1.97 million | $2.92 million | $4.49 million | $8.50 million |
| Net loss per share | $0.08 | $2.22 | $0.24 | $6.64 |
| Operating cash used | Not presented for quarter | Not presented for quarter | $4.73 million | $9.70 million |
Margins: Not meaningful because the filing reports no product revenue. Q3 general and administrative expenses were $1.05 million and research and development expenses were $1.07 million. Interest income was $151,000 for the quarter and $367,000 for the nine-month period.
Liquidity and debt: At September 30, 2023, cash and cash equivalents were $11.14 million, working capital was approximately $11.3 million, and total liabilities were $602,000. The remaining balance on the 7.39% insurance premium finance note was $174,000, due in installments through December 2023. Cash increased from $2.12 million at December 31, 2022, mainly reflecting financing proceeds.
Cash flows and financing: Nine-month financing cash flow was $13.74 million, including approximately $14.19 million in net proceeds from stock, warrants and pre-funded warrants, partly offset by note payments. The February 2023 registered offering generated approximately $13.6–$13.7 million net proceeds, and substantial warrant exercises occurred during the period. Common shares outstanding rose from 2.29 million at year-end 2022 to 23.86 million at September 30, 2023. A 1-for-20 reverse stock split took effect in January 2023.
Changes versus comparable periods
- For the first nine months, operating expenses fell 42% and net loss fell to $4.49 million from $8.50 million. Management attributed the lower spending mainly to paused imatinib development, reduced personnel and professional costs, and lower facility costs.
- Q3 operating expenses declined 27% year over year. R&D included LEVEL trial start-up work; management said these costs increased in Q3 as site outreach and trial preparation advanced, while remaining below the prior-year quarter’s development spending.
- Cash provided by financing was higher than in the prior-year period, and operating cash use was lower. The financing also materially increased shares outstanding and may dilute existing holders.
Outlook, risks and notable items
- Management expected available resources to fund planned operations through the first quarter of 2024. Additional substantial financing is needed thereafter, including to complete the LEVEL trial. The filing states that substantial doubt exists about the company’s ability to continue as a going concern.
- Tenax continued LEVEL trial site qualification and selection, reported FDA input on the oral levosimendan protocol and development program, and planned to begin initiating sites in Q4 2023 and enroll patients early in 2024. These are forward-looking plans, not reported completed milestones.
- Imatinib development is lower priority; a Phase 3 trial start was outside the 2023 timeframe and remained subject to strategic considerations. The company was exploring financing and strategic alternatives, including a sale, merger, licensing or co-development transaction; no outcome was assured.
- Tenax reported two U.S. patents issued in 2023 covering IV and oral levosimendan use in PH-HFpEF; the oral patent provides stated exclusivity through December 2040.
- The company terminated its former office lease in February 2023 for a payment of approximately $170,000 and reported a lease-related loss of approximately $140,000 in its nine-month discussion. It had no material pending legal proceedings and reported no subsequent events.
- Clinical-trial execution, patient enrollment, regulatory outcomes, access to capital, possible dilution or restrictive debt terms, and potential disruption from COVID-19 or similar events remain risks. The filing said risk factors had not materially changed from its 2022 Form 10-K.
Important facts for investors to verify
- Whether Tenax obtained financing or a strategic transaction sufficient to fund operations beyond Q1 2024, and the resulting dilution or terms.
- Whether LEVEL sites were initiated and enrollment began on the stated timeline, and the trial’s expected cost, duration and funding.
- Updates to the going-concern assessment, cash runway and operating cash burn in subsequent filings.
- The status of the levosimendan license, patent coverage and regulatory path, and any material changes to imatinib plans.
- Share count and warrant exercises after September 30, 2023; the filing reported 23,862,434 common shares outstanding as of November 8, 2023.