Tenax Therapeutics, Inc. (NASDAQ:TENX) reported 2022 results on March 31, 2023 via its filing of Form 10-K with the SEC. Despite the slow pace of advancement, we are impressed with the clinical data for both of Tenax’s PAH assets: levosimendan and imatinib. We see tremendous upside if dilution concerns can be addressed and a dramatic quality of life improvement for patients. Levosimendan is an especially remarkable opportunity in pulmonary hypertension in patients with heart failure and preserved ejection fraction (PH-HFpEF) which offers no other approved therapies.
Based on the confidence inspired by the recent patent issuance for intravenous (IV) levosimendan in PH-HFpEF, Tenax plans to pursue a Phase III study of oral levosimendan in PH-HFpEF patients. The US Patent Office set a precedent by recognizing PH-HFpEF as a condition separate from heart failure. This provides support for later approval of a patent for an oral version of levosimendan in a follow-on patent application that is being reviewed by the agency.
➢ $8 million PIPE offered at the market – May 2022
➢ Pharmacokinetic (PK) study completion for TNX-201 – May 2022
➢ KOL event examining imatinib for treatment of PAH – May 2022
➢ Issuance of IV levosimendan patent in PH-HFpEF – March 2022
Tenax produced no revenues in 2022 and incurred operating expenses of $11.1 million resulting in net loss of ($11.1) million, or ($8.57) per share.
For the year ending December 31, 2022 versus the same prior year period:
➢ General and administrative expenses fell 25% to $5.7 million primarily due to the absence of severance costs in 2022, and lower facilities fees partially offset by increases in professional and legal fees and higher costs for insurance, and administrative expense;
➢ Research and development expenses fell almost 80% to $5.4 million from $25.1 million with the majority of the change due to the recognition of $21.7 million of in process R&D (IPR&D) expensing related to the acquisition of PH PrecisionMed in 1Q:21. Ignoring the IPR&D charge, R&D increased 28% on higher clinical and preclinical development costs related to the ongoing open label extension study for levosimendan. Other expenses fell on a year over year period, including decreased costs related to the imatinib program and lower personnel costs;
➢ Net loss was ($11.1) million versus ($32.5) million, or ($8.57) and ($31.56) per share, respectively.
At the end of 2022, cash and equivalents totaled $2.1 million, compared to $5.6 million twelve months earlier. During 2022, Tenax announced an $8 million raise from the sale of 10.6 million units of pre-funded and other warrants and received proceeds of $0.6 million from the issuance of a note payable related to corporate insurance policies. These amounts offset cash burn of ($14.3) million reducing cash by $3.5 million over the year. Following the end of the reporting period, Tenax conducted a registered offering which raised gross proceeds of $15.6 million. The amount will support the start of a Phase III clinical trial in oral levosimendan for PH-HFpEF expected to begin later this year.
Update on Tenax
Tenax has been navigating rough waters over the last few months as the need for capital to advance their Phase III clinical trials in pulmonary arterial hypertension (PAH) intensified. This issue was largely resolved with the February 2023 capital raise which provides a gross $15.6 million to advance the pipeline. Other favorable news was also released over the last several months including positive data presented at the HFSA Annual Meeting and the grant of new patents.
Capital Raise
On February 3, 2023, Tenax announced that it had priced the sale of 8.67 million shares or pre-funded warrant with associated warrants at $1.80 per unit. Two warrants with an exercise price of $2.25 per share were issued for each underlying equity share or pre-funded warrant. Proceeds will support the clinical development of levosimendan for pulmonary hypertension with left side heart failure and preserved ejection fraction (PH-HFpEF).
Tenax had engaged Roth Capital Partners as a financial advisor in September 2022. The goal was exploration of a diverse range of strategic options including a sale, merger or other strategic transaction which ultimately culminated in the announced equity raise.
Patent Application Granted Notice of Allowance
On February 1st, Tenax announced it had received a notice of allowance from the US Patent and Trademark Office (USPTO) for patent number 11,607,412 entitled Levosimendan for Treating Pulmonary Hypertension With Heart Failure With Preserved Ejection Fraction (PH-HFpEF). A notice of allowance is issued when an examiner determines that a patent application satisfies the requirements for patentability. On March 22nd, Tenax reported that the patent was issued. The patent is expected to provide protection until December 2040 and addresses the subcutaneous use of levosimendan. Intravenous levosimendan has been available generically for many years in Europe as the patent expired in 2015; however, the drug was not approved in the US in any form. With the additional protection that is expected to be granted in this patent, the value of levosimendan in PH-HFpEF is increased. Tenax asserts that the USPTO’s decision to grant a patent for the use of IV levosimendan for the specific indication of PH-HFpEF confirms the proprietary nature of the work Tenax is doing and provides precedent for action in the pending U.S. patent application that covers the oral formulation (TNX-103) in the same patients.
Reverse Stock Split
Following the beginning of the new year, Tenax executed a 1:20 reverse stock split that became effective on the close of business as of January 4, 2023. The number of shares was reduced from 45,836,215 to 2,291,811. Fractional shares were rounded up. The reverse split enabled Tenax to comply with the NASDAQ’s minimum bid price requirement.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
