Tenax Therapeutics, Inc 10-Q for FY2024 Q2
Tenax Therapeutics, Inc. (TENX)
About this 10-Q
Tenax Therapeutics, Inc filed this 10-Q on August 13, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $3.58M
- up 223.2% from net income of $1.11M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number
(Exact name of registrant as specified in its charter) |
| ||
(State of incorporation) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes
As of August 10, 2024, the registrant had outstanding
TABLE OF CONTENTS
| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TENAX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
|
| (Unaudited) |
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Other current assets |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
Other assets |
|
|
|
|
|
| ||
Total assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
Accrued liabilities |
|
|
|
|
|
| ||
Note Payable |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
Total liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and contingencies; see Note 6 |
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock, undesignated, authorized |
|
|
|
|
|
|
|
|
Series A Preferred stock, par value $ |
|
|
|
|
|
| ||
Common stock, par value $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total stockholders’ equity |
|
|
|
|
|
| ||
Total liabilities and stockholders' equity |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
| 3 |
| Table of Contents |
TENAX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Other expense (income), net |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Net loss |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average number of common shares outstanding, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
| 4 |
| Table of Contents |
TENAX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
|
| Preferred Stock |
|
| Common Stock |
|
| Additional |
|
| Total |
| ||||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| paid-in capital |
|
| Accumulated deficit |
|
| stockholders' equity |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at December 31. 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Public offering sale of common stock and prefunded warrants |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Offering costs |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Exercise of pre-funded warrants for cash |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Exercise of pre-funded warrants, cashless |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Exercise of warrants, cashless |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||
Stock split and fractional shares issued |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Compensation on options issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at March 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Exercise of warrants, cashless |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
| ||||
Compensation on options issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at June 30, 2023 |
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31. 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Public offering sale of common stock and prefunded warrants, net |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Exercise of pre-funded warrants for cash |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Exercise of pre-funded warrants, cashless |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||
Stock split and fractional shares issued |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Compensation on options issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at March 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Compensation on options issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at June 30, 2024 |
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
| 5 |
| Table of Contents |
TENAX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| Six months ended June 30 |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net Loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
| ||
Interest on debt instrument |
|
|
|
|
|
| ||
Gain on sale of equipment |
|
|
|
|
|
| ||
Issuance and vesting of compensatory stock options and warrants |
|
|
|
|
|
| ||
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable, prepaid expenses and other assets |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
|
| ( | ) |
|
| ( | ) |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from sale of property and equipment |
|
|
|
|
|
| ||
Net cash provided by investing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock, warrants and pre-funded warrants |
|
|
|
|
|
| ||
Offering cost |
|
| ( | ) |
|
| ( | ) |
Proceeds from the exercise of warrants |
|
|
|
|
|
| ||
Payments on short-term note |
|
| ( | ) |
|
| ( | ) |
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| ( | ) |
|
|
| |
Cash and cash equivalents, beginning of period |
|
|
|
|
|
| ||
Cash and cash equivalents, end of period |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
| 6 |
| Table of Contents |
TENAX THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS
Tenax Therapeutics, Inc. (the “Company” or “Tenax”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Synthetic Blood International formed Oxygen Biotherapeutics on April 17, 2008 to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted into one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc.
On November 13, 2013, the Company, through its wholly-owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life NewCo”), acquired certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”) pursuant to an Asset Purchase Agreement dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius. Among these assets was a license with Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”) for the exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. On October 9, 2020 and January 25, 2022, the Company entered into an amendment to the license to include in the scope of the license two new oral product formulations containing levosimendan, in capsule and solid dosage form (TNX-103) and a subcutaneously administered dosage form (TNX-102), subject to specified limitations (together, the “Product”).
In February 2024, the Company entered into an additional amendment to the license (as amended, the “License”), providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of pulmonary hypertension in heart failure with preserved ejection fraction (“PH-HFpEF”), revising the royalty structure, lowering the royalty rates, modifying milestones associated with certain regulatory and commercial achievements, and excluding from the Company’s right of first refusal the right to commercialize new applications of levosimendan for neurological diseases and disorders developed by Orion. Pursuant to the License, the Company and Orion will agree to a new trademark when commercializing levosimendan in either of these forms. The term of the License has been extended until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. In the event that no regulatory approval for the Product has been granted in the United States on or before September 20, 2030, however, either party will have the right to terminate the License with immediate effect. The Company intends to conduct two upcoming Phase 3 studies in pulmonary hypertension patients utilizing one of these oral formulations. See “Note 6 - Commitments and Contingencies” below for a further discussion of the License.
On January 15, 2021, the Company, Life Newco II, Inc., a Delaware corporation and a wholly-owned, subsidiary of the Company (“Life Newco II”), PHPrecisionMed Inc., a Delaware corporation (“PHPM”) and Dr. Stuart Rich, solely in his capacity as holders’ representative, entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company acquired all of the equity of PHPM, a company developing pharmaceutical products containing imatinib for the treatment of pulmonary arterial hypertension (“PAH”) in the United States and the rest of the world. Under the terms of the Merger Agreement, Life Newco II merged with and into PHPM, with PHPM surviving as a wholly-owned subsidiary of the Company.
Going Concern
Management believes the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of approximately $
On August 8, 2024, the Company closed a private placement financing (the “2024 Private Placement”), generating gross proceeds of approximately $
In view of the matters described above, the Company has determined that there is no longer substantial doubt about its ability to continue as a
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.
| 7 |
| Table of Contents |
The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 28, 2024, from which the Company derived the balance sheet data at December 31, 2023.
Use of Estimates
The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts and transactions of Tenax, Life Newco, Inc. and PHPM. All material intercompany transactions and balances have been eliminated in consolidation.
Reverse Stock Splits
The Company has adjusted the financial statements to reflect that on January 2, 2024, we effected a 1-for-80 reverse stock split (the “Reverse Stock Split”). The Company has also adjusted the financial statements to reflect that on January 4, 2023, we effected a 1-for-20 reverse stock split (the “Prior Reverse Stock Split”, together with the Reverse Stock Split, the “Reverse Stock Splits”). The Reverse Stock Splits did not change the number of authorized shares of capital stock or cause an adjustment to the par value of our capital stock. Pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under our outstanding stock options and warrants. The number of shares authorized for issuance pursuant to our equity incentive plans has also been adjusted proportionately to reflect the Reverse Stock Splits.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents.
Cash Concentration Risk
The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $
Liquidity and Capital Resources
The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of approximately $
The Company’s cash resources were approximately $
The Company expects to continue to incur expenses related to the development of levosimendan for PH-HFpEF and other potential indications and, over the long term, imatinib for PAH, as well as identifying and developing other potential product candidates. Based on its resources on June 30, 2024 in addition to the approximately $100 million in gross proceeds from the 2024 Private Placement referenced in Note 8, Subsequent Events, the Company believes that it has sufficient capital to fund its planned operations through the end of calendar year 2027.
| 8 |
| Table of Contents |
To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to restrictive covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all the foregoing may have a material adverse effect on the Company’s business and financial performance.
Stock-Based Compensation
The Company accounts for stock-based awards to employees in accordance with Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of equity securities are determined by management based predominantly on the trading price of the Company’s common stock. The values of these awards are based upon their grant-date fair value. That cost is recognized over the period during which the employee is required to provide service in exchange for the reward.
Equity-Based Payments to Non-Employees
The Company accounts for equity instruments issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.
Warrants for Common Shares and Derivative Financial Instruments
Warrants for our shares of common stock and other derivative financial instruments are classified as equity if the contracts: (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Contracts are classified as equity or liabilities if the contracts: (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions that do not qualify for the scope exception. The Company assesses classification of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.
Loss Per Share
Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants.
The following outstanding options, restricted stock grants, convertible preferred shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.
|
| Six months ended June 30 |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Warrants to purchase common stock |
|
|
|
|
|
| ||
Options to purchase common stock |
|
|
|
|
|
| ||
Convertible preferred shares outstanding |
|
|
|
|
|
| ||
| 9 |
| Table of Contents |
NOTE 3. BALANCE SHEET COMPONENTS
Property and equipment, net
Property and equipment primarily consist of office furniture and fixtures.
The Company had no depreciation expense and depreciation expense of $
Accrued liabilities
Accrued liabilities consists of the following:
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
Operating costs |
| $ |
|
| $ |
| ||
Employee related |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
NOTE 4. NOTE PAYABLE
Premium Finance Agreement
On December 31, 2023, the Company executed a premium finance note agreement (the “Note”) with Premium Funding Associates, Inc. The Note financed the Company’s Directors and Officers Insurance Policy as well as the Errors and Omissions policy. The total amount financed was $
NOTE 5. LEASE
In January 2011, the Company entered into a lease (the “Lease”) with Concourse Associates, LLC (the “Landlord”) for its headquarters located at ONE Copley Parkway, Suite 490, Morrisville, North Carolina (the “Premises”).
The Company performed an evaluation of its other contracts with customers and suppliers in accordance with ASC 842, Leases, and determined that, except for the Lease described above, none of the Company’s contracts contain a lease.
The Company owns no real property. Beginning November 1, 2022, we maintain a membership providing dedicated office space, as well as shared services and shared space for meetings, catering, and other business activities, at our principal executive office relocated to 101 Glen Lennox Drive, Suite 300, Chapel Hill, North Carolina 27517.
The current rent is approximately $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Simdax license agreement
On November 13, 2013, the Company, through its wholly-owned subsidiary, Life Newco, Inc., acquired certain assets of Phyxius pursuant to the Asset Purchase Agreement by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius. Among these assets was a license with Orion for the exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. On October 9, 2020 and January 25, 2022, the Company entered into an amendment to the license to include in the scope of the license two new oral Product formulations containing levosimendan, in capsule and solid dosage form (TNX-103) and a subcutaneously administered dosage form (TNX-102), subject to specified limitations.
On February 19, 2024, the Company entered into an additional amendment to the License providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of PH-HFpEF. The amendment also reduced the tiered royalties based on worldwide net sales of the product by the Company and its sublicensees, increased the License’s existing milestone payment due to Orion upon the grant of United States Food and Drug Administration approval of a levosimendan-based product to $
The term of the License extends until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. In the event that no regulatory approval for the Product has been granted in the United States on or before September 20, 2030, however, either party will have the right to terminate the License with immediate effect.
| 10 |
| Table of Contents |
The License also grants the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication but, pursuant to the February 2024 amendment, excluding new applications of levosimendan for neurological diseases and disorders developed by Orion.
As of June 30, 2024, the Company has not met any of the developmental milestones under the License and, accordingly, has not recorded any liability for the contingent payments due to Orion.
Litigation
The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements.
NOTE 7. STOCKHOLDERS’ EQUITY
Under the Company’s Certificate of Incorporation, the Board is authorized, without further stockholder action, to provide for the issuance of up to
Series A Stock
On December 11, 2018, the Company closed its underwritten offering of
As of June 30, 2024, there were 210 shares of Series A Stock outstanding convertible in the aggregate into one share of common stock.
Common Stock and Pre-Funded Warrants
The Company’s Certificate of Incorporation authorizes it to issue
The Company has adjusted all share amounts and references to stock prices in this Quarterly Report on Form 10-Q, as well as our financial statements, to reflect the Reverse Stock Splits. The Reverse Stock Splits did not change the number of authorized shares of capital stock or cause an adjustment to the par value of our capital stock. Pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under our outstanding stock options and warrants. The number of shares authorized for issuance pursuant to our equity incentive plans have also been adjusted proportionately to reflect the Reverse Stock Splits.
February 2024 Registered Public Offering (the “February 2024 Offering”)
On February 8, 2024, the Company entered into a securities purchase agreement with certain purchasers for the purchase and sale, in a registered public offering by the Company of (i) an aggregate of
February 2023 Registered Public Offering (the “February 2023 Offering”)
On February 3, 2023, the Company entered into a securities purchase agreement with certain purchasers for the purchase and sale, in a registered public offering by the Company of (i) an aggregate of
May 2022 Private Placement (the “May 2022 Offering”)
On May 17, 2022, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which the Company agreed to sell and issue to the investor
Also, on May 17, 2022 and in connection with the May 2022 Offering, the Company entered into a registration rights agreement (the “May 2022 Registration Rights Agreement”) with the investor, pursuant to which the Company agreed to register for resale the shares of common stock issuable upon exercise of the 2022 Warrants within 120 days following the effective date of the May 2022 Registration Rights Agreement. Pursuant to the May 2022 Registration Rights Agreement, on May 25, 2022, the Company filed a resale registration statement on Form S-3 with the SEC, which went effective on June 3, 2022.
| 11 |
| Table of Contents |
Additionally, in connection with the May 2022 Offering, the Company entered into a warrant amendment agreement (the “Warrant Amendment Agreement”) with the investor, in consideration for the investor’s purchase of units in the May 2022 Offering, pursuant to which the Company agreed to amend certain previously issued warrants held by the investor. The terms of the amended and restated warrants are described further below under “Note 7—Stockholders Equity—Warrants”.
Warrants
As of June 30, 2024, the Company has
|
| Warrants |
|
| Weighted Average Exercise Price |
| ||
Outstanding at December 31, 2023 |
|
|
|
| $ |
| ||
Issued |
|
|
|
|
|
| ||
Exercised |
|
|
|
|
| - |
| |
Outstanding at June 30, 2024 |
|
|
|
| $ |
| ||
February 2024 Warrants
As described above, as a part of the February 2024 Offering, the Company issued registered warrants to purchase
Remaining contractual term |
|
| ||
Risk free interest rate |
|
| % | |
Expected dividends |
|
|
| |
Expected Volatility |
|
| % | |
February 2023 Warrants
As described above, as a part of the February 2023 Offering, the Company issued registered warrants to purchase
Remaining contractual term |
|
| ||
Risk free interest rate |
|
| % | |
Expected dividends |
|
|
| |
Expected Volatility |
|
| % | |
May 2022 Warrants
As described above, as a part of the May 2022 Offering, the Company issued unregistered warrants to purchase
Stock Options
2022 Stock Incentive Plan, as Amended
In June 2022, the Company adopted the 2022 Stock Incentive Plan, as amended on June 7, 2024 (the “2022 Plan”). Under the 2022 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. The Company’s stockholders have approved a total of
| 12 |
| Table of Contents |
The following table summarizes the shares available for grant under the 2022 Plan for the six months ended June 30, 2024.
|
| Shares Available for Grant |
| |
Balances at December 31, 2023 |
|
|
| |
Additional Shares reserved |
|
|
| |
Options cancelled/forfeited |
|
| - |
|
Options granted |
|
| ( | ) |
Balances at June 30, 2024 |
|
|
| |
2022 Plan Stock Options
Stock options granted under the 2022 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the 2022 Plan may be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over one to four years.
The following table summarizes the outstanding stock options under the 2022 Plan for the six months ended June 30, 2024.
|
| Outstanding Options |
| |||||
|
| Number of Shares |
|
| Weighted Average Exercise Price |
| ||
Balances at December 31, 2023 |
|
|
|
| $ |
| ||
Options cancelled/forfeited |
|
| - |
|
|
|
| |
Options granted |
|
|
|
|
|
| ||
Balances at June 30, 2024 |
|
|
|
| $ |
| ||
The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.
The Company recorded compensation expense for stock option grants of $
As of June 30, 2024, there were unrecognized compensation costs of approximately $
| 13 |
| Table of Contents |
2016 Stock Incentive Plan
In June 2016, the Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”). Under the 2016 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. On June 16, 2016, the Company’s stockholders approved the 2016 Plan and authorized for issuance under the 2016 Plan a total of
2016 Plan Stock Options
Stock options granted under the 2016 Plan could be either ISOs or NSOs. ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 2016 Plan could be granted with a term of up to ten years and at prices no less than fair market value at the time of grant.
The following table summarizes the outstanding stock options under the 2016 Plan for the six months ended June 30, 2024.
|
| Outstanding Options |
| |||||
|
| Number of Shares |
|
| Weighted Average Exercise Price |
| ||
Balances at December 31, 2023 |
|
|
|
| $ |
| ||
Options cancelled/forfeited |
|
| - |
|
|
|
| |
Balances at June 30, 2024 |
|
|
|
| $ |
| ||
The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes option pricing model to calculate the grant date fair value.
The Company recorded no compensation expense for these stock option grants for the three and six months ended June 30, 2024 and $
As of June 30, 2024, there were no unrecognized compensation costs related to non-vested stock option awards under the 2016 Plan.
1999 Stock Plan, as Amended and Restated
In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “1999 Plan”). Under the 1999 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company could grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On March 13, 2014, the Company’s stockholders approved an amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of
| 14 |
| Table of Contents |
1999 Plan Stock Options
Stock options granted under the 1999 Plan may be ISOs or NSOs. ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 1999 Plan could be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years.
The following table summarizes the outstanding stock options under the 1999 Plan for the six months ended June 30, 2024:
|
| Outstanding Options |
| |||||
|
| Number of Shares |
|
| Weighted Average Exercise Price |
| ||
Balances at December 31, 2023 |
|
|
|
| $ |
| ||
Options cancelled/forfeited |
|
| - |
|
|
|
| |
Balances at June 30, 2024 |
|
|
|
| $ |
| ||
The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes option pricing model to calculate the grant date fair value.
The Company recorded no compensation expense for these stock option grants for the three and six months ended June 30, 2024 and 2023, respectively.
As of June 30, 2024, there were no unrecognized compensation costs related to non-vested stock option awards under the 1999 Plan.
Inducement Stock Options
The Company granted two employment inducement stock option awards, one for 63 shares of common stock and the other for
The employment inducement stock option for
The employment inducement stock option award for
| 15 |
| Table of Contents |
The estimated fair value of this inducement stock option award was $
The Company granted an employment inducement stock option award for
Inducement stock option compensation expense totaled $
NOTE 8. SUBSEQUENT EVENTS
On August 8, 2024 (the “Closing Date”), the Company closed the 2024 Private Placement and sold to multiple accredited investors, including certain members of the Company’s Board of Directors (the “Purchasers”), an aggregate of
The Pre-Funded Warrants are exercisable at any time after their original issuance and do not expire. The Warrants can be exercised at any time after their original issuance for shares of the Company’s common stock, or in lieu thereof, additional Pre-Funded Warrants. The Warrants expire at the earlier of (i) 30 trading days following the date of the Company’s initial public announcement of topline data from its Phase 3 LEVEL trial (the “Topline Data Announcement”), (ii) immediately upon the exercise of the Pre-Funded Warrants if such exercise is prior to the Topline Data Announcement, provided that if the Pre- Funded Warrant is not exercised in full, the Warrant expires proportionally to the extent the Pre-Funded Warrant is exercised, and (iii) August 8, 2029. The Warrants and Pre-Funded Warrants include beneficial ownership limitations such that each Purchaser, together with its affiliates, will not own more than 4.99% (or, at the election of the Purchaser, not more than 19.99%) of the Company’s outstanding common stock immediately following the consummation of the 2024 Private Placement.
In connection with the 2024 Private Placement, the Company also entered into a registration rights agreement with the Purchasers and agreed to file a registration statement registering for resale the shares of the Company’s common stock and the shares of the Company’s common stock underlying the Pre-Funded Warrants and Warrants issued pursuant to the Purchase Agreement within 30 days of the Closing Date.
Following closing of the 2024 Private Placement, the Company had a total of
| 16 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited condensed consolidated financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2023. All references in this Quarterly Report to “Tenax Therapeutics,” “we,” “our” and “us” means Tenax Therapeutics, Inc.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to them. In some cases, you can identify forward-looking statements by words such as “might,” “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors that could cause actual results and the timing of events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K filed with the SEC. Furthermore, such forward-looking statements speak only as of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
The Company was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. Effective June 30, 2008, we changed the domiciliary state of the corporation to Delaware and changed the Company name to Oxygen Biotherapeutics, Inc. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc.
In November 2013, we acquired a license with Orion Corporation (“Orion”) granting our wholly-owned subsidiary an exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. In October 2020 and January 2022, we entered into an amendment to the license agreement between the Company and Orion to include in the scope of the license two new oral product formulations containing levosimendan, in capsule and solid dosage form (TNX-103) and a subcutaneously administered dosage form (TNX-102), subject to specified limitations. In February 2024, we entered into an additional amendment to the license, providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of pulmonary hypertension in heart failure with preserved ejection fraction (“PH-HFpEF”), revising the royalty structure, lowering the royalty rates, modifying milestones associated with certain regulatory and commercial achievements, and excluding from our right of first refusal the right to commercialize new applications of levosimendan for neurological diseases and disorders developed by Orion.
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”).
In August 2024, we closed a private placement financing (the “2024 Private Placement”) in which we sold to multiple accredited investors, including certain members of the Company’s Board of Directors, an aggregate of 1,450,661 shares of the Company’s common stock, and pre-funded warrants (“Pre-Funded Warrants”) to purchase an aggregate of 31,882,671 shares of the Company’s common stock, along with accompanying warrants (“Warrants”) to purchase an aggregate of 16,666,666 shares of the Company’s common stock (or, in lieu thereof, additional Pre-Funded Warrants) for gross process of approximately $100 million, before deducting placement agent fees and estimated offering expenses payable by the Company. We intend to use the net proceeds from the 2024 Private Placement to complete our ongoing Phase 3 LEVEL trial, to initiate all sites and advance enrollment in a second planned Phase 3 trial of oral levosimendan, and for working capital, capital expenditures, and other general corporate purposes. The approximately $100 million in gross proceeds from the 2024 Private Placement, combined with the Company’s current cash and cash equivalents, are expected to fund the Company’s operations through the end of calendar year 2027.
Business Strategy
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.
The Company has two U.S. Patents issued in March and July 2023, covering the use of IV and oral levosimendan in patients with PH-HFpEF. 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.
| 17 |
| Table of Contents |
The key elements of our business strategy are outlined below.
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.
Levosimendan and imatinib have been approved and prescribed in countries around the world for more than 20 years, but we believe their mechanisms of action have not been fully exploited, despite promising evidence they may significantly improve the lives of patients with pulmonary hypertension. We are conducting clinical development with the intent to establish proof of beneficial activity in cardiopulmonary diseases in which these therapeutics would be expected to have benefit for patients with diseases for which either no pharmaceutical therapies are approved at all, or in the case of pulmonary arterial hypertension (“PAH”), where numerous, expensive therapies generally offer a modest reduction of symptoms. Our focus is primarily on designing and executing formulation improvements, protecting these innovations with patents and other forms of exclusivity, and employing innovative clinical trial science to establish a robust foundation for subsequent development, product approval, and commercialization. We intend to submit marketing authorization applications following two Phase 3 trials of levosimendan and, when appropriate, a single Phase 3 trial of imatinib. Our trials are designed to incorporate and reflect advanced clinical trial design science and the regulatory and advisory experience of our team. We intend to continue partnering with innovative companies, renowned biostatisticians and trialists, medical leaders, formulation and regulatory experts, and premier clinical testing organizations to help expedite development, and continue expanding into complementary areas when opportunities arise through our development, research, and discoveries. We also intend to continue outsourcing to CROs, and seeking and acting upon the advice of preeminent scientists focused on cardiovascular and pulmonary drug development, when designing and executing our research.
Efficiently explore new high-potential therapeutic applications, in particular where expedited regulatory pathways are available, leveraging third-party research collaborations and our results from related areas.
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.
We believe these factors will support approval by the FDA of this product candidate based on positive Phase 3 data. Through our agreement with our licensor, Orion, the originator of levosimendan for acute decompensated heart failure, we have access to a library of ongoing and completed trials and research projects, including certain documentation, which we believe, in combination with positive Phase 3 data we hope to generate in at least one indication, will support FDA approval of levosimendan. Likewise, the regulatory pathway for approval of imatinib for the treatment of PAH, as formulated by us at the dose shown to be effective in a prior Phase 3 trial conducted by Novartis, allows us to build on the dossier of research results already reviewed by the FDA. In order to achieve our objective of developing these medicines for new groups of patients, we have established collaborative research relationships with investigators from leading research and clinical institutions, and our strategic partners. These collaborative relationships have enabled us to explore where our product candidates may have therapeutic relevance, gain the advice and support of key opinion leaders in medicine and clinical trial science, and invest in development efforts to exploit opportunities to advance beyond current clinical care.
Continue to expand our intellectual property portfolio.
Our intellectual property and the confidentiality of all our Company information is important to our business and we take significant steps to help protect its value. Our research and development efforts, both through internal activities and through collaborative research activities with others, aim to develop new intellectual property and enable us to file patent applications that cover new uses of our existing technologies, alone or in combination with existing therapies, as well as other product candidates.
| 18 |
| Table of Contents |
Notice of Allowance and Patents
On February 1, 2023, the Company announced it was granted a Notice of Allowance from the United States Patent and Trademark Office (“USPTO”) for its patent application with claims covering the use of IV levosimendan (TNX-101) in the treatment of PH-HFpEF. This patent (U.S. Patent No. 11,607,412) was issued on March 21, 2023. On July 19, 2023, the Company announced USPTO issuance of another patent, this one including claims covering the use of oral levosimendan (TNX-103) in patients with PH-HFpEF. This issued patent (U.S. Patent No. 11,701,355) provides exclusivity through December 2040. On February 6, 2024, the Company announced it was granted a Notice of Allowance from the USPTO for its patent application broadening IP protection for oral, I.V., and subcutaneous use of levosimendan and its active metabolites in PH-HFpEF, at all therapeutic doses and in combination with various cardiovascular drugs. At present, the Company has other patent applications pending, with additional decisions expected in the future. Patents pending in Europe may lead to intellectual property protections on the use of levosimendan in patients with PH-HFpEF in 2024.
Enter into licensing or product co-development arrangements.
In addition to our internal development efforts, an important part of our product development strategy is to work with collaborators and partners to accelerate product development, maintain our low development and business operations costs, and broaden our commercialization capabilities globally. We believe this strategy will help us develop a portfolio of high-quality product development opportunities, enhance our clinical development and commercialization capabilities, and increase our ability to generate value from our proprietary technologies.
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.
Historically, we have financed our operations principally through equity and debt offerings, including private placements such as the 2024 Private Placement and loans from our stockholders. Based on its current operating plan, the Company has determined that there is no longer substantial doubt about its ability to continue as a going concern given its resources on June 30, 2024 in addition to the approximately $100 million in gross proceeds from the 2024 Private Placement, which the Company believes is sufficient for it to continue its operations over at least the next 12 months.
Financial Overview – Three Months Ended June 30, 2024
Operating Expenses
|
| Three months ended June 30, |
|
| Increase/ Decrease |
|
| % Increase/ Decrease |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
| $ | 1,344,389 |
|
| $ | 1,038,257 |
|
|
| 306,132 |
|
|
| 29 | % |
Research and development |
|
| 2,327,632 |
|
|
| 197,903 |
|
|
| 2,129,729 |
|
|
| 1076 | % |
Total operating expenses |
|
| 3,672,021 |
|
|
| 1,236,160 |
|
|
| 2,435,861 |
|
|
| 197 | % |
| 19 |
| Table of Contents |
General and Administrative Expenses
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:
|
| Three months ended June 30 |
|
| Increase/ (Decrease) |
|
| % Increase/ (Decrease) |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
| ||||||
Personnel costs |
| $ | 538,232 |
|
| $ | 406,871 |
|
| $ | 131,361 |
|
|
| 32 | % |
Legal and professional fees |
|
| 613,571 |
|
|
| 455,178 |
|
|
| 158,393 |
|
|
| 35 | % |
Other costs |
|
| 188,770 |
|
|
| 171,785 |
|
|
| 16,985 |
|
|
| 10 | % |
Facilities |
|
| 3,816 |
|
|
| 4,423 |
|
|
| (607 | ) |
|
| (14 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses |
| $ | 1,344,389 |
|
| $ | 1,038,257 |
|
| $ | 306,132 |
|
|
| 29 | % |
Personnel costs increased approximately $131,000 for the three months ended June 30, 2024, compared to the same period in 2023. The change was primarily attributable to higher performance-based compensation expense.
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.
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.
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.
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.
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.
| 20 |
| Table of Contents |
Research and Development Expenses
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:
|
| Three months ended June 30 |
|
| Increase/ (Decrease) |
|
| % Increase/ (Decrease) |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
|
|
| ||||
Clinical and preclinical development |
| $ | 2,114,453 |
|
| $ | 57,120 |
|
| $ | 2,057,333 |
|
|
| 3602 | % |
Personnel costs |
|
| 194,063 |
|
|
| 97,360 |
|
|
| 96,703 |
|
|
| 99 | % |
Other costs |
|
| 19,116 |
|
|
| 43,423 |
|
|
| (24,307 | ) |
|
| (56 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses |
| $ | 2,327,632 |
|
| $ | 197,903 |
|
| $ | 2,129,729 |
|
|
| 1076 | % |
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.
Personnel costs increased approximately $97,000 for the three months ended June 30, 2024, compared to the same period in the prior year, primarily attributable to higher salaries and additional performance-based compensation expense.
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.
Other Income and Expense
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 was approximately $9,000 for each of the three months ended June 30, 2024, and 2023. Other income decreased approximately $34,000 primarily related to lower interest income on cash deposits.
Financial Overview – Six Months Ended June 30, 2024
Operating Expenses
|
| Six months ended June 30, |
|
| Increase/ (Decrease) |
|
| % Increase/ (Decrease) |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
| ||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
| $ | 2,577,063 |
|
| $ | 2,311,987 |
|
| $ | 265,076 |
|
|
| 11 | % |
Research and development |
|
| 5,003,284 |
|
|
| 463,637 |
|
|
| 4,539,647 |
|
|
| 979 | % |
Total operating expenses |
| $ | 7,580,347 |
|
| $ | 2,775,624 |
|
| $ | 4,804,723 |
|
|
| 173 | % |
| 21 |
| Table of Contents |
General and Administrative Expenses
General and administrative expenses were $2.6 million for the six months ended June 30, 2024, compared to $2.3 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 six months ended June 30, 2024 and 2023, are as follows:
|
| Six months ended June 30, |
|
| Increase/ (Decrease) |
|
| % Increase/ (Decrease) |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
| ||||||
Personnel costs |
| $ | 1,089,568 |
|
| $ | 1,006,927 |
|
| $ | 82,641 |
|
|
| 8 | % |
Legal and professional fees |
|
| 1,050,057 |
|
|
| 886,900 |
|
|
| 163,157 |
|
|
| 18 | % |
Other costs |
|
| 429,879 |
|
|
| 395,354 |
|
|
| 34,525 |
|
|
| 9 | % |
Facilities |
|
| 7,559 |
|
|
| 22,806 |
|
|
| (15,247 | ) |
|
| (67 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses |
| $ | 2,577,063 |
|
| $ | 2,311,987 |
|
| $ | 265,076 |
|
|
| 11 | % |
Personnel costs increased approximately $83,000 for the six months ended June 30, 2024, compared to the same period in 2023. The change was primarily attributable to higher performance-based compensation plan expense.
Legal and professional fees increased approximately $163,000 for the six 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.
Legal fees increased approximately $14,000 for the six 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.
Professional fees increased approximately $149,000 for the six months ended June 30, 2024, compared to the same period in the prior year. The change was primarily attributable to increased consulting and accounting expenses, offset by decreased capital market expenses.
Other costs increased approximately $34,000 for the six 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.
Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina. Facilities costs decreased approximately $15,000 for the six 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.
| 22 |
| Table of Contents |
Research and Development Expenses
Research and development expenses were approximately $5.0 million for the six months ended June 30, 2024, compared to $0.5 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 six months ended June 30, 2024, and 2023, respectively, are as follows:
|
| Six months ended June 30, |
|
| Increase/ (Decrease) |
|
| % Increase/ (Decrease) |
| |||||||
|
| 2024 |
|
| 2023 |
|
|
|
|
|
|
| ||||
Clinical and preclinical development |
| $ | 4,516,679 |
|
| $ | 141,152 |
|
| $ | 4,375,527 |
|
|
| 3100 | % |
Personnel costs |
|
| 458,980 |
|
|
| 268,727 |
|
|
| 190,253 |
|
|
| 71 | % |
Other costs |
|
| 27,625 |
|
|
| 53,758 |
|
|
| (26,133 | ) |
|
| (49 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses |
| $ | 5,003,284 |
|
| $ | 463,637 |
|
| $ | 4,539,647 |
|
|
| 979 | % |
Clinical and preclinical development costs increased approximately $4.4 million for the six 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, consists 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.
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.
Other costs decreased approximately $26,000 for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to decreased regulatory consulting costs.
Other Income and Expense
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.
Liquidity, Capital Resources and Plan of Operation
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.
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.
| 23 |
| Table of Contents |
Liquidity
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.
Clinical and Preclinical Product Development
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.
Financings
On August 8, 2024, we sold in the 2024 Private Placement an aggregate of 1,450,661 shares of our common stock, and Pre-Funded Warrants to purchase an aggregate of up to 31,882,671 shares of our common stock, along with accompanying Warrants to purchase an aggregate of up to 16,666,666 shares of our common stock (or, in lieu thereof, additional Pre-Funded Warrants). The purchase price for each share and accompanying Warrant is $3.00, with the accompanying Warrant having an exercise price of $4.50 (provided, the purchase price for each Pre-Funded Warrant and accompanying Warrant is $2.99, with the Pre-Funded Warrants having an exercise price of $0.01). Gross proceeds of the 2024 Private Placement are approximately $100 million, before deducting the placement agent fees and estimated offering expenses payable by the Company.
On February 8, 2024, we sold in a registered public offering (i) an aggregate of 421,260 shares of our common stock and pre-funded warrants to purchase an aggregate of 1,178,740 shares of our common stock and (ii) accompanying warrants to purchase up to an aggregate of 3,200,000 shares of our common stock at a combined offering price of $5.65 per share of common stock and associated warrant, or $5.649 per pre-funded warrant and associated warrant, resulting in gross proceeds to the Company of approximately $9.0 million. Net proceeds of the offering were approximately $8.0 million, after deducting the placement agent fees and offering expenses payable by the Company.
As retrospectively adjusted for the Reverse Stock Split, on February 3, 2023, we sold in a registered public offering (i) an aggregate of 86,994 shares of our common stock and pre-funded warrants to purchase an aggregate of 21,341 shares of our common stock and (ii) accompanying warrants to purchase up to an aggregate of 216,667 shares of our common stock at a combined offering price of $144.00 per share of common stock and associated warrant, or $143.92 per pre-funded warrant and associated warrant, resulting in gross proceeds to the Company of approximately $15.6 million. Net proceeds of the offering were approximately $14.1 million, after deducting the placement agent fees and offering expenses payable by the Company.
As retrospectively adjusted for the Reverse Stock Splits, on May 17, 2022, we sold 6,623 units in a private placement at a purchase price of $1,240.00 per unit for net proceeds of approximately $7.9 million. Each unit consisted of one unregistered pre-funded warrant to purchase one share of our common stock and one unregistered warrant to purchase one share of common stock.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated:
|
| Six months ended June 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
Net cash (used in) operating activities |
| $ | (8,196,669 | ) |
| $ | (2,647,838 | ) |
Net cash provided by investing activities |
|
| - |
|
|
| 2,843 |
|
Net cash provided by financing activities |
|
| 7,788,554 |
|
|
| 13,914,886 |
|
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.
| 24 |
| Table of Contents |
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.
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.
Operating Capital and Capital Expenditure Requirements
Our future capital requirements will depend on many factors that include, but are not limited to the following:
| · | the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates; |
|
|
|
| · | the outcome, timing and cost of regulatory approvals and the regulatory approval process; |
|
|
|
| · | delays that may be caused by changing regulatory requirements; |
|
|
|
| · | the number of product candidates we pursue; |
|
|
|
| · | the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; |
|
|
|
| · | the timing and terms of future collaboration, licensing, consulting or other arrangements that we may enter into; |
|
|
|
| · | the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities; |
|
|
|
| · | the cost of procuring clinical and commercial supplies of our product candidates; |
|
|
|
| · | the extent to which we acquire or invest in businesses, products or technologies; |
|
|
|
| · | delays that may be caused by another outbreak of an infectious disease or other global societal disruptions; and |
|
|
|
| · | the possible costs of litigation. |
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.
Critical Accounting Policies and Significant Judgments and Estimates
Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions. For information regarding our critical accounting policies and estimates, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Policies” contained in our Annual Report on Form 10-K for the year ended December 31, 2023 and Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.
| 25 |
| Table of Contents |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Smaller reporting companies are not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Interim Chief Financial Officer, we conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e).
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on their evaluation, our President and Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q, in that they provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC and is accumulated and communicated to our management, including our President and Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We routinely review our internal controls over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal controls over financial reporting on an ongoing basis and will take action as appropriate.
During the most recently completed fiscal quarter, management reviewed all work generated in support of the financial statements and corresponding footnotes in order to determine areas which may be susceptible to human error. The review focused on limiting manual inputs into work papers wherever possible and tying inputs to external source documents. In addition, management also enhanced its work paper review to compare figures to prior year amounts or source documents and increased the number of calculations in the work papers that are reviewed and re-performed.
| 26 |
| Table of Contents |
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which we are a party or to which any of our property is subject.
ITEM 1A. RISK FACTORS
The risks we face have not materially changed from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 6. EXHIBITS
The following exhibits are being filed or furnished as part of this Quarterly Report on Form 10-Q and are numbered in accordance with Item 601 of Regulation S-K:
Exhibit Number |
| Description |
|
|
|
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
101* |
| Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. |
104* |
| Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
* Filed herewith
** Furnished herewith
+ Management contract or compensatory plan.
| 27 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 13, 2024
| TENAX THERAPEUTICS, INC. | ||
|
|
|
|
By: | /s/Lawrence R. Hoffman | ||
|
| Lawrence R. Hoffman |
|
|
| Interim Chief Financial Officer |
|
|
| (On behalf of the Registrant and as Principal Financial Officer and Accounting Officer) |
|
| 28 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher T. Giordano, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Tenax Therapeutics, Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 13, 2024
|
|
| /s/ Christopher T. Giordano |
|
|
|
| Christopher T. Giordano |
|
|
|
| President and Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lawrence R. Hoffman, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Tenax Therapeutics, Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 13, 2024
|
|
| /s/ Lawrence R. Hoffman |
|
|
|
| Lawrence R. Hoffman |
|
|
|
| Interim Chief Financial Officer (Principal Financial Officer and Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tenax Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher T. Giordano, President and Chief Executive Officer (Principal Executive Officer) of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
|
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods covered by the Report. |
Date: August 13, 2024
|
|
| /s/ Christopher T. Giordano |
|
|
|
| Christopher T. Giordano |
|
|
|
| President and Chief Executive Officer (Principal Executive Officer) |
|
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tenax Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lawrence R. Hoffman, Interim Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
|
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
|
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods covered by the Report. |
Date: August 13, 2024
|
|
| /s/ Lawrence R. Hoffman |
|
|
|
| Lawrence R. Hoffman |
|
|
|
| Interim Chief Financial Officer (Principal Financial Officer and Accounting Officer) |
|
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350 , as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.