TENAX THERAPEUTICS INC

Previous wording

In January 2021, we acquired 100% of the equity of PHPrecisionMed Inc., a Delaware corporation (“PHPM”), with PHPM surviving as our wholly-owned subsidiary. As a result of the merger, pending the outcome of our strategic process, we plan to commercialize pharmaceutical products containing imatinib for the treatment of pulmonary arterial hypertension (“PAH”).

Current wording

In January 2021, we acquired 100% of the equity of PHPrecisionMed Inc., a Delaware corporation (“PHPM”), with PHPM surviving as our wholly-owned subsidiary. As a result of the merger, we have rights to commercialize pharmaceutical products containing imatinib for the treatment of pulmonary arterial hypertension (“PAH”).

Previous wording

Having carefully considered alternatives within the ongoing strategic process announced in September 2022, and having raised capital expected to fund the Company through calendar year 2024, the Company has elected to prioritize its LEVEL trial (Phase 3 testing of oral levosimendan), ahead of imatinib. Activity to initiate the LEVEL trial continued in the fourth quarter of 2023, and site qualification, selection, and initiation processes are ongoing, the Company having received U.S. Food and Drug Administration (“FDA”) input into the oral levosimendan protocol and clinical development program in the third quarter of 2023. The Company began initiating sites in the fourth quarter of 2023 and commenced enrolling patients early in 2024. Additional funding will be needed to complete the LEVEL trial, which includes an open label extension phase following the completion of the randomized phase. The Company will complete efficacy and safety analyses of levosimendan versus placebo at the end of the randomized treatment phase, but many patients will continue to be treated under the protocol on open label levosimendan, beyond the completion of these analyses. Supporting this strategic decision to prioritize levosimendan development and commence Phase 3 trial work were two U.S. Patents issued in March and July 2023, covering the use of IV and oral levosimendan in patients with PH-HFpEF. These patents are the second and third levosimendan patents granted to us since the start of 2022. An additional new patent was issued in early 2024 which provides protections covering all therapeutic doses of all three formulations of the product in patients with PH-HFpEF. Given our prioritization of the Phase 3 testing of levosimendan, we have suspended plans to launch an imatinib Phase 3 trial.

Current wording

Having raised capital expected to fund the Company through the end of calendar year 2027, the Company plans to accelerate its Phase 3 program. Site selection and initiation processes, and enrollment of participants, are ongoing in the Phase 3 LEVEL study, the Company having received U.S. Food and Drug Administration (“FDA”) input into this oral levosimendan protocol and clinical development program in the third quarter of 2023. The Company began initiating LEVEL sites in the fourth quarter of 2023 and continues to enroll patients. The Company also plans an open label extension phase following the completion of the randomized phase. The Company will complete efficacy and safety analyses of levosimendan versus placebo at the end of the randomized treatment phase, but many patients will continue, beyond the completion of these statistical analyses, to be treated under the protocol on open label levosimendan, allowing for additional weeks of safety observation that will contribute to the overall body of safety data on oral levosimendan. With the net proceeds of the 2024 Private Placement, the Company also expects to fund the initiation of a second Phase 3 study planned for 2025.

Previous wording

Pending the outcome of our ongoing strategic process, the key elements of our business strategy are outlined below.

Current wording

The key elements of our business strategy are outlined below.

Previous wording

Efficiently conduct clinical development to establish clinical proof of principle in new indications, refine formulation, and commence Phase 3 testing of our current product candidates.

Current wording

Efficiently conduct clinical development to establish clinical proof of principle in new indications, refine dosage levels and dosing strategies, conduct other required clinical and nonclinical testing as FDA and other regulators may require, and continue Phase 3 testing of oral levosimendan, as our prioritized product candidate.

Previous wording

Levosimendan has shown promise in multiple disease areas in the more than two decades following its approval. Our own Phase 2 study and open-label extension has demonstrated that levosimendan’s property of relaxing the venous circulation, a formerly under-appreciated mechanism of action of levosimendan, brings durable improvements in exercise capacity and quality of life, as well as other clinical assessments, in patients with PH-HFpEF. We believe this patient population today has no pharmaceutical therapies available and we are committed to exploring potential clinical indications where our therapies may achieve best-in-class profile, and where we can address significant unmet medical needs.

Current wording

Levosimendan has shown promise in multiple disease areas in the more than two decades following its approval. Our own Phase 2 study and open-label extension has demonstrated that levosimendan’s property of relaxing the venous circulation, a formerly under-appreciated mechanism of action of levosimendan, brings durable improvements in exercise capacity and quality of life, as well as other clinical assessments, in patients with PH-HFpEF. The FDA has not approved a therapy for this disease. We are committed to exploring potential clinical indications where our therapies may achieve best-in-class profile, and where we can address significant unmet medical needs.

Previous wording

As we focus on our strategic process, we also continue to position ourselves to execute upon licensing and other partnering opportunities. To do so, we need to continue to maintain our strategic direction, manage and deploy our available cash efficiently, and strengthen our collaborative research development and partner relationships.

Current wording

We also continue to position ourselves to execute upon licensing and other partnering opportunities. To do so, we need to continue to maintain our strategic direction, manage and deploy our available cash efficiently, and strengthen our collaborative research development and partner relationships.

Previous wording

General and administrative expenses were $1.2 million for the three months ended March 31, 2024, compared to $1.3 million for the same period in 2023. General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, and other professional and consulting services. General and administrative expenses and percentage changes for the three months ended March 31, 2024 and 2023, respectively, are as follows:

Current wording

General and administrative expenses were $1.3 million for the three months ended June 30, 2024, compared to $1.0 million for the same period in 2023. General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, and other professional and consulting services. General and administrative expenses and percentage changes for the three months ended June 30, 2024 and 2023, respectively, are as follows:

Previous wording

Legal and professional fees increased approximately $5,000 for the three months ended March 31, 2024, compared to the same period in the prior year. Professional fees consist of the costs incurred for accounting fees, capital market expenses, consulting fees and investor relations services, as well as fees paid to the members of our Board of Directors.

Current wording

Legal and professional fees increased approximately $158,000 for the three months ended June 30, 2024, compared to the same period in the prior year. Professional fees consist of the costs incurred for accounting fees, capital market expenses, consulting fees and investor relations services, as well as fees paid to the members of our Board of Directors.

Previous wording

Legal fees increased approximately $31,000 for the three months ended March 31, 2024, compared to the same period in the prior year. The change was primarily due to increased legal fees associated with general corporate matters, fundraising activities and IP costs compared to the same period in the prior year.

Current wording

Legal fees increased approximately $8,000 for the three months ended June 30, 2024, compared to the same period in the prior year. The change was primarily due to increased legal fees associated with general corporate matters, fundraising activities and IP costs compared to the same period in the prior year.

Previous wording

Professional fees decreased approximately $26,000 for the three months ended March 31, 2024, compared to the same period in the prior year. The change was primarily attributable to decreased capital market expenses, consulting expenses and accounting expenses.

Current wording

Professional fees increased approximately $150,000 for the three months ended June 30, 2024, compared to the same period in the prior year. The change was primarily attributable to increased capital market expenses, consulting expenses and accounting expenses.

Previous wording

Other costs increased approximately $18,000 for the three months ended March 31, 2024, compared to the same period in 2023. Other costs include expenses incurred for franchise and other taxes, travel, supplies, insurance, depreciation, and other miscellaneous charges. The change was primarily attributable to increases in franchise tax fees offset by lower costs for insurance and general office supplies.

Current wording

Other costs increased approximately $17,000 for the three months ended June 30, 2024, compared to the same period in 2023. Other costs include expenses incurred for franchise and other taxes, travel, supplies, insurance, depreciation, and other miscellaneous charges. The change was primarily attributable to increases in franchise tax fees offset by lower costs for insurance and general office supplies.

Previous wording

Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina. Facilities costs decreased approximately $15,000 for the three months ended March 31, 2024, compared to the same period in 2023. The decrease is the result of the Company’s relocation to new shared office space resulting in lower rent costs.

Current wording

Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina. Facilities costs decreased approximately $1,000 for the three months ended June 30, 2024, compared to the same period in 2023. The decrease is the result of the Company’s relocation to new shared office space resulting in lower rent and utility costs.

Previous wording

Research and development expenses were approximately $2.6 million for the three months ended March 31, 2024, compared to $0.3 million for the same period in the prior year. Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with contract research organizations and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, and other supplies. All research and development expenses are expensed as incurred. Research and development expenses and percentage changes for the three months ended March 31, 2024, and 2023, respectively, are as follows:

Current wording

Research and development expenses were approximately $2.3 million for the three months ended June 30, 2024, compared to $0.2 million for the same period in the prior year. Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with contract research organizations and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, and other supplies. All research and development expenses are expensed as incurred. Research and development expenses and percentage changes for the three months ended June 30, 2024, and 2023, respectively, are as follows:

Previous wording

Clinical and preclinical development costs increased approximately $2.3 million for the three months ended March 31, 2024, compared to the same period in the prior year. Clinical and preclinical development costs for the three months ended March 31, 2024, consist of expenses associated with our Phase 2 HELP Open Label Extension Study and Phase 3 LEVEL trial for oral levosimendan, compared with costs for the three months ended March 31, 2023 associated with our imatinib Phase 1 Pharmacokinetics Study, imatinib Phase 3 IMPROVE Study, and development costs associated with the formulation for imatinib. The increase is primarily attributable to the receipt of refunded costs associated with formulation development and Phase 1 and Phase 3 costs for imatinib in the prior year period as a result of the Company pausing its clinical development activities to focus on its strategic process.

Current wording

Clinical and preclinical development costs increased approximately $2.1 million for the three months ended June 30, 2024, compared to the same period in the prior year. Clinical and preclinical development costs for the three months ended June 30, 2024, consist of expenses associated with our Phase 2 HELP Open Label Extension Study and Phase 3 LEVEL trial for oral levosimendan, compared with costs for the three months ended June 30, 2023 associated with our Phase 2 HELP Open Label Extension Study for levosimendan.

Previous wording

Other costs decreased approximately $1,800 for the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to decreased regulatory consulting costs.

Current wording

Other costs decreased approximately $24,000 for the three months ended June 30, 2024, compared to the same period in the prior year, primarily due to decreased regulatory consulting costs.

Previous wording

Personnel costs increased approximately $94,000 for the three months ended March 31, 2024, compared to the same period in the prior year, primarily attributable to vesting of options associated with the commencement of the Phase 3 LEVEL trial for oral levosimendan.

Current wording

Personnel costs increased approximately $190,000 for the six months ended June 30, 2024, compared to the same period in the prior year, primarily attributable to vesting of options associated with the commencement of the Phase 3 LEVEL trial for oral levosimendan and additional performance-based compensation plan expense.

Previous wording

Other income and expenses include non-operating income and expense items not otherwise recorded in our consolidated statement of comprehensive loss. These items include but are not limited to interest income earned and fixed asset disposals. Interest expenses were approximately $8,000 and $7,400 for the three months ended March 31, 2024, and 2023, respectively. The change is due primarily to an increase in the interest rate associated with the premium finance note agreement (the “Note”) with Premium Funding Associates, Inc. Other income decreased approximately $23,000 primarily related to higher licensing fees earned in the prior year offset by the interest income on cash deposits as a result of the February 2024 offering.

Current wording

Other income and expenses include non-operating income and expense items not otherwise recorded in our consolidated statement of comprehensive loss. These items include but are not limited to interest income earned and fixed asset disposals. Interest expenses were approximately $17,000 and $16,500 for the six months ended June 30, 2024, and 2023, respectively. The change is due primarily to an increase in the interest rate associated with the premium finance note agreement with Premium Funding Associates, Inc. Other income decreased approximately $56,000 primarily related to higher licensing fees earned in the prior year offset by the interest income on cash deposits as a result of the February 2024 offering.

Previous wording

We have incurred losses since our inception and, as of March 31, 2024, we had an accumulated deficit of approximately $301.1 million. We will continue to incur losses until we generate sufficient revenue to offset our expenses, and we anticipate that we will continue to incur net losses for at least the next several years. We expect to incur additional expenses related to our development and potential commercialization of levosimendan in the LEVEL trial and, over the long term, imatinib for PAH, and other potential indications, as well as identifying and developing other potential product candidates, and as a result, we will need to generate significant net product sales, royalty and other revenues to achieve profitability.

Current wording

We have incurred losses since our inception and, as of June 30, 2024, we had an accumulated deficit of approximately $304.6 million. We will continue to incur losses until we generate sufficient revenue to offset our expenses, and we anticipate that we will continue to incur net losses for at least the next several years. We expect to incur additional expenses related to our development and potential commercialization of levosimendan and, over the long term, imatinib for PAH, and other potential indications, as well as identifying and developing other potential product candidates, and as a result, we will need to generate significant net product sales, royalty and other revenues to achieve profitability.

Previous wording

The process of conducting preclinical studies and clinical trials necessary to obtain approval from the FDA is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among other things, the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties discussed above, uncertainty associated with clinical trial enrollment and risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. Development timelines, probability of success and development costs vary widely. We are currently focused on developing our two product candidates, levosimendan and imatinib, and have prioritized levosimendan in the short-term; however, we will need substantial additional capital in the future in order to complete the development and potential commercialization of levosimendan and imatinib, and to continue with the development of other potential product candidates.

Current wording

The process of conducting preclinical studies and clinical trials necessary to obtain approval from the FDA is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among other things, the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties discussed above, uncertainty associated with clinical trial enrollment and risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. Development timelines, probability of success and development costs vary widely. We are currently focused on developing our two product candidates, levosimendan and imatinib, and have prioritized levosimendan; however, we will need substantial additional capital in the future in order to finalize the development of levosimendan, commence its commercialization, potentially develop imatinib, and to continue with the development of other potential product candidates.

Previous wording

We have financed our operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. We had total current assets of approximately $14.5 million and $11.7 million and working capital of approximately $12.4 million and $8.1 million as of March 31, 2024 and December 31, 2023, respectively. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds.

Current wording

We have financed our operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. We had total current assets of approximately $10.6 million and $11.7 million and working capital of approximately $8.9 million and $8.1 million as of June 30, 2024 and December 31, 2023, respectively. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds.

Previous wording

We are currently conducting the LEVEL trial and intend to recruit patients throughout 2024 and into at least the first half of 2025. Our ability to continue to pursue development of our products, including completing the LEVEL trial, beyond 2024 will depend on obtaining license income or outside financial resources. There is no assurance that we will obtain any license agreement or outside financing or that we will otherwise succeed in obtaining any necessary resources.

Current wording

We are currently conducting the LEVEL trial and intend to recruit patients throughout 2024 and into at least the first half of 2025. Our ability to continue to pursue development of our products, including completion of a second Phase 3 oral levosimendan trial, beyond 2027, will depend on obtaining license income or outside financial resources. There is no assurance that we will obtain any license agreement or outside financing or that we will otherwise succeed in obtaining any necessary resources.

Previous wording

Net cash used in operating activities. Net cash used in operating activities was approximately $5.2 million for the three months ended March 31, 2024, compared to approximately $1.7 million for the three months ended March 31, 2023. The increase in cash used for operating activities was primarily due to higher study expense activity in the current period as compared to the prior year.

Current wording

Net cash used in operating activities. Net cash used in operating activities was approximately $8.2 million for the six months ended June 30, 2024, compared to approximately $2.6 million for the six months ended June 30, 2023. The increase in cash used for operating activities was primarily due to higher study expense activity in the current period as compared to the prior year.

Previous wording

Net cash provided by investing activities. There was no net cash provided or consumed by investing activities for the three months ended March 31, 2024, compared to net cash provided by investing activities of approximately $1,200 in the three months ended March 31, 2023. The decrease in cash provided by investing activities was primarily due to the sale of all remaining office furniture related to the Company’s headquarters in the prior year.

Current wording

Net cash provided by investing activities. There was no net cash provided or consumed by investing activities for the three months ended June 30, 2024, compared to net cash provided by investing activities of approximately $2,800 in the six months ended June 30, 2023. The decrease in cash provided by investing activities was primarily due to the sale of all remaining office furniture related to the Company’s headquarters in the prior year.

Previous wording

Net cash provided by financing activities. Net cash provided by financing activities was approximately $7.9 million for the three months ended March 31, 2024, compared to approximately $14.0 million in the three months ended March 31, 2023. The decrease in cash provided by financing activities was due to lower net proceeds received from the February 8, 2024 sale of common stock and warrants compared to the February 3, 2023 sale of common stock and warrants and the exercise of warrants.

Current wording

Net cash provided by financing activities. Net cash provided by financing activities was approximately $7.8 million for the six months ended June 30, 2024, compared to approximately $14.0 million in the six months ended June 30, 2023. The decrease in cash provided by financing activities was due to lower net proceeds received from the February 8, 2024, sale of common stock and warrants compared to the February 3, 2023 sale of common stock and warrants and the exercise of warrants.

Previous wording

Based on our working capital on March 31, 2024, we believe we have sufficient capital on hand to continue to fund operations through the remainder of the 2024 calendar year.

Current wording

Based on our working capital on June 30, 2024 and the approximately $100 million in gross proceeds from the 2024 Private Placement, we believe we have sufficient capital on hand to continue to fund operations through the end of the 2027 calendar year.