Tenax Therapeutics, Inc. — Q2 2022 Form 10-Q
Business context and period. The unaudited report covers the quarter and six months ended June 30, 2022. Tenax is a clinical-stage biotechnology company developing levosimendan for pulmonary hypertension and imatinib for pulmonary arterial hypertension (PAH). The filing reports no revenue.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | 2022: $1.52 million; 2021: $0.69 million | 2022: $2.70 million; 2021: $23.07 million |
| General and administrative expense | 2022: $1.34 million; 2021: $1.27 million | 2022: $2.88 million; 2021: $2.64 million |
| Net loss | 2022: $2.86 million; 2021: $1.72 million | 2022: $5.58 million; 2021: $25.47 million |
| Net loss per share, basic and diluted | 2022: $0.11; 2021: $0.10 | 2022: $0.22; 2021: $1.60 |
Margins are not meaningful because the company reported no revenue. Operating cash use was $6.37 million in the first half, versus $5.07 million in the prior-year period. Investing cash use was $6,323; financing provided $8.02 million, mainly from the May 2022 offering. Cash and cash equivalents were $7.23 million at June 30, 2022, compared with $5.58 million at year-end 2021.
Current assets were $8.10 million and current liabilities $1.45 million, yielding working capital of approximately $6.66 million. Total liabilities were $1.57 million. These included a $91,875 short-term insurance-premium note payable and $239,039 in operating lease liabilities. Stockholders’ equity was $6.78 million; accumulated deficit was $284.08 million.
Material changes versus prior comparable periods
- Second-quarter net loss increased to $2.86 million from $1.72 million, principally alongside higher R&D spending, including imatinib formulation and Phase 3-related costs.
- First-half net loss fell substantially from $25.47 million to $5.58 million. The prior-year period included a $21.73 million in-process R&D charge related to the PHPrecisionMed acquisition; there was no comparable charge in 2022. Excluding this unusual prior-year item, the headline reduction in loss is not a like-for-like operating improvement.
- First-half operating cash use increased by about $1.30 million. The company raised approximately $7.9 million net in a May private placement of pre-funded warrants and warrants.
- In connection with that financing, certain previously issued warrants were repriced to $0.63 per share and their terms extended, increasing potential dilution.
Outlook, risks, and unusual items
- Management said June 30 resources were expected to fund planned operations through Q4 2022. Substantial additional financing is needed beyond that period; management warned funding may not be available on acceptable terms or at all.
- The filing states that substantial doubt exists about the company’s ability to continue as a going concern. Management may need to curtail or delay R&D if it cannot obtain capital. Equity financing could dilute shareholders; debt could add interest and restrictive covenants; partnerships could require giving up product rights.
- The company expects continued losses for at least several years and cannot determine the duration or cost of clinical development or when, if ever, product revenue may begin.
- Development programs include levosimendan studies and imatinib clinical development, including the Phase 3 IMPROVE study described in the filing. Clinical outcomes, trial enrollment, regulatory review, manufacturing, and financing remain material uncertainties.
- Management cited possible COVID-19 effects on trial enrollment, site operations, supply chains, and regulatory timelines. The company reported no material change in risk factors from its 2021 Form 10-K.
- No material pending legal proceedings or subsequent events were reported. Disclosure controls were judged effective at June 30, 2022; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether new financing or partnering arrangements extend the stated runway beyond Q4 2022, and how the going-concern risk evolves.
- Current enrollment, timing, costs, and milestones for the imatinib and levosimendan clinical programs, including the status of the Phase 3 IMPROVE study.
- The actual cash burn relative to the $6.37 million first-half operating cash use and management’s planned spending.
- Potential dilution: 25.21 million common shares were outstanding at June 30, while 31.52 million warrants and 20.63 million pre-funded warrants were outstanding; options and other awards add further potential shares.
- The terms and remaining obligations of the May 2022 financing and amended warrants, and any future licensing or collaboration arrangements.