Tenax Therapeutics, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Although the request refers to 2022 Q4, this is an annual report; the provided filing text does not give standalone fourth-quarter financial results. Share and per-share figures reflect the company’s 1-for-20 reverse split effective January 4, 2023.
Business context
Tenax is a clinical-stage biotechnology company with no approved products and no product revenue. Its principal programs are levosimendan for pulmonary hypertension associated with heart failure with preserved ejection fraction (PH-HFpEF) and modified-release imatinib for pulmonary arterial hypertension (PAH). The company announced a strategic review in September 2022 and subsequently prioritized levosimendan Phase 3 development; imatinib Phase 3 timing was deferred, subject to funding and strategic decisions.
Financial performance and position
| Metric | FY 2022 / Dec. 31, 2022 | FY 2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | No product revenue reported | No product revenue reported |
| General and administrative expense | $5.68 million | $7.58 million |
| Research and development expense | $5.38 million | $25.15 million |
| Total operating expenses | $11.05 million | $32.73 million |
| Net loss | $11.05 million | $32.47 million |
| Basic and diluted loss per share | $7.51 | $31.56 |
| Net cash used in operating activities | $12.01 million | $10.86 million |
| Cash and cash equivalents | $2.12 million | $5.58 million |
| Working capital | Approximately $1.4 million | Approximately $4.1 million |
| Total liabilities | $1.91 million | $1.75 million |
Margins are not meaningful because the company reported no product revenue. Year-over-year losses narrowed mainly because 2021 included approximately $21.7 million of acquired in-process research and development expense related to the PHPrecisionMed acquisition. R&D expense excluding that prior-year item was higher in 2022, including increased imatinib clinical and development costs. Operating cash use increased despite the lower reported net loss.
At year-end, current liabilities included a $624,302 note payable under an insurance-premium financing agreement bearing 7.39% interest and payable through December 2023. The company also reported $183,589 in lease liabilities. The filing states that recurring losses and negative operating cash flows raise substantial doubt about its ability to continue as a going concern; the audited statements were prepared on a going-concern basis and include no adjustments for that uncertainty.
Material changes and subsequent events
- In May 2022, Tenax raised approximately $7.9 million net through a private placement of units comprising pre-funded warrants and warrants. FY 2022 financing cash inflow was $8.55 million, including warrant exercises and the insurance-premium financing.
- On February 7, 2023, after year-end, the company closed a registered offering that generated approximately $14.1 million in estimated net proceeds. It included common shares, pre-funded warrants for approximately 1.71 million shares, and warrants to purchase up to approximately 17.33 million shares.
- Management reported approximately $14.6 million of cash at March 28, 2023 and expected available capital to fund planned operations through the first quarter of 2024. Additional funding would be needed beyond that period.
- The prior office lease was terminated in February 2023 for a payment of approximately $170,000, ending further rent obligations under that lease.
- Tenax received a U.S. patent in March 2023 covering IV levosimendan use in PH-HFpEF. It also reported an earlier patent for subcutaneous levosimendan, with two patent applications still pending.
- The company initially regained Nasdaq’s minimum-bid-price compliance after the reverse split, but Nasdaq notified it on March 29, 2023 that it again failed the $1.00 minimum bid-price requirement. The disclosed compliance deadline was September 25, 2023.
Outlook, risks and unusual items
Management planned to commence a levosimendan Phase 3 study in 2023, subject to available resources and execution. FDA discussions had identified potential Phase 3 designs, but approval remains contingent on trial results and regulatory review. Imatinib Phase 3 development was likely outside the 2023 timeframe and depended on fundraising and strategic considerations. The company is also evaluating options that may include capital raises, licensing or co-development, a sale, merger, or other transaction; it cautioned that no transaction is assured and that liquidation could be considered if necessary alternatives fail.
Key risks include the going-concern uncertainty and reliance on additional financing; clinical and regulatory failure or delays; substantial potential dilution; Nasdaq delisting risk; dependence on Orion as the sole current source for oral levosimendan; reliance on external manufacturers and clinical research organizations; limited staff and no sales organization; and competition, intellectual-property, reimbursement, and product-liability risks. The Phase 2 HELP study’s primary exercise PCWP endpoint was not statistically significant, although the filing reports positive secondary and combined-measure findings, including a 29-meter improvement in six-minute walk distance versus placebo. Those findings do not establish Phase 3 success.
The independent auditor issued an unmodified opinion on the financial statements but included a going-concern explanatory paragraph. Management reported disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether the levosimendan Phase 3 study was initiated, its final protocol and funding needs, and how its endpoints and safety requirements align with FDA feedback.
- Actual cash runway and spending relative to management’s first-quarter 2024 estimate, including the impact of the February 2023 offering and subsequent operating costs.
- The full dilution and exercise terms of the February 2023 offering securities and outstanding warrants, including reverse-split-adjusted share counts.
- Nasdaq listing status and compliance with both minimum bid-price and stockholders’ equity requirements after the disclosed notices.
- Progress and remaining financing needs for imatinib, strategic alternatives, and the pending levosimendan patent applications.
- Final clinical data from the HELP open-label extension and any Phase 3 results; preliminary or prior-study findings may not predict approval or commercial adoption.