Tenax Therapeutics, Inc 10-K for FY2023

Tenax Therapeutics, Inc. (TENX)

10-K 2024-03-28 For: 2023-12-31

Added on April 11, 2026

About this 10-K

Tenax Therapeutics, Inc filed this 10-K on March 28, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net income: $7.71M; down 30.2% from net income of $11.05M a year earlier

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Delaware		26-2593535
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	TENX	The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

PART I		3
ITEM 1—BUSINESS		7
ITEM 1A—RISK FACTORS		16
ITEM 1B—UNRESOLVED STAFF COMMENTS		36
ITEM 1C--CYBERSECURITY		36
ITEM 2—PROPERTIES		36
ITEM 3—LEGAL PROCEEDINGS		36
ITEM 4— MINE SAFETY DISCLOSURES		36
PART II		37
ITEM 5—MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		37
ITEM 6—RESERVED		37
ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		37
ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		46
ITEM 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		46
ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		46
ITEM 9A—CONTROLS AND PROCEDURES		46
ITEM 9B—OTHER INFORMATION		47
ITEM 9C— DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.		47
PART III		48
ITEM 10—DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		48
ITEM 11—EXECUTIVE COMPENSATION		52
ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		58
ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		61
ITEM 14—PRINCIPAL ACCOUNTANT FEES AND SERVICES		61
PART IV		62
ITEM 15—EXHIBIT AND FINANCIAL STATEMENT SCHEDULES		62
ITEM 16—FORM 10-K SUMMARY		67

·	our ability to raise additional money to fund our operations for at least the next 12 months as a going concern;
·	our ongoing evaluation of strategic alternatives;
·	our ability to develop our current product candidates, and any product candidate which we may develop or in-license in the future;
·	our ability, our partners’ abilities, and third parties’ abilities to protect and assert intellectual property rights;
·	delays in the commencement, enrollment and completion of clinical testing, as well as the analysis and reporting of results from such clinical testing;
·	the success of clinical trials of our product candidates;
·	the need to obtain regulatory approval of our product candidates;
·	potential risks related to any collaborations we may enter into for our product candidates;
·	any delays in regulatory review and approval of product candidates in development;
·	our ability to establish an effective sales and marketing infrastructure;
·	our estimates regarding the potential market opportunity for our product candidates;
·	competition from existing products or new products that may emerge;
·	the ability to receive regulatory approval or commercialize our products;
·	potential side effects of our product candidates that could delay or prevent commercialization;
·	potential product liability claims and adverse events;
·	potential liabilities associated with hazardous materials;
·	our ability to maintain adequate insurance policies;
·	our dependence on third-party manufacturers and clinical research organizations (“CROs”);
·	our ability to establish or maintain collaborations, licensing or other arrangements;
·	costs related to and outcomes of potential litigation;
·	compliance with obligations under intellectual property licenses with third parties;
·	our ability to adequately support future growth;
·	our ability to attract and retain personnel, including our executive team, advisors and members of our Board of Directors; and
·	geopolitical uncertainties, including in the Middle East and the Russian invasion of and war against the country of Ukraine

	•	Our independent registered public accounting firm’s report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
	•	We will require substantial additional funding to further develop our product candidates, including to complete the LEVEL trial, which includes an open label extension phase, to complete a subsequent Phase 3 trial of TNX-103, and to initiate or complete the imatinib Phase 3 trial. Failure to obtain this necessary capital when needed on acceptable terms, or at all, or execute on alternative strategic paths, could force us to delay, limit, reduce or terminate our clinical trials, product development efforts and business operations.
	•	Our ongoing exploration of alternative strategic paths may not result in entering into or completing transactions, and the process of reviewing alternative strategic paths or their conclusion could adversely affect our stock price.
	•	If we do not successfully complete strategic transactions, should this be deemed necessary, our Board of Directors may decide to pursue a dissolution and liquidation of our Company.
	•	Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock.
	•	We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.
	•	We have incurred losses since our inception, expect to continue to incur losses in the foreseeable future, and may never become profitable.

	•	We are limited in the number of products we can simultaneously pursue and therefore our survival depends on our success with a small number of product opportunities.
	•	A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, or another coronavirus or similar disrupting illness, may materially and adversely affect our business and our financial results.
	•	If we fail to attract and retain personnel, we may be unable to successfully develop and commercialize our product candidates.

	•	We currently have no approved drug products for sale, and we cannot guarantee that we will ever have marketable drug products.
	•	We are required to conduct additional clinical trials, including the LEVEL trial for oral levosimendan, which are expensive and time consuming, and the outcomes of the clinical trials are uncertain.
	•	The market may not accept our products.
	•	Nonfinal results from our clinical trials announced or published from time to time on an interim, preliminary, or “top-line” basis, may differ from results reported as more patient data become available, and these results are subject to audit and verification procedures that could result in material changes in the final data.
	•	Any collaboration we enter with third parties to develop and commercialize any future product candidates may place the development of our product candidates outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.
	•	Delays in the enrollment and completion of clinical testing could result in increased costs to us and delay or limit our ability to obtain regulatory approval of our product candidates.

	•	Intense competition might render our product candidates noncompetitive or obsolete.
	•	Our activities are, and will continue to be, subject to extensive government regulation, which is expensive and time consuming, and we will not be able to sell our products without regulatory approval.

	•	We may not receive all of the anticipated market exclusivity benefits of imatinib’s orphan drug designation, if we prioritize imatinib’s development in the future.
	•	Even after products are commercialized, we would expect to spend considerable time and money complying with federal and state laws and regulations governing their sale, and, if we are unable to fully comply with such laws and regulations, we could face substantial penalties.
	•	We are subject to uncertainty relating to healthcare reform measures and reimbursement policies that, if not favorable to our products, could hinder or prevent our products’ commercial success, if any of our product candidates are approved.
	•	Governments outside the United States tend to impose strict price controls and reimbursement approval policies, which may adversely affect our prospects for generating revenue outside the United States.
	•	Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop.
	•	Our business and operations would suffer in the event of computer system failures, cyber-attacks or deficiencies in our cybersecurity.

	•	We have historically and we will continue to rely significantly on third parties to conduct our nonclinical testing and clinical studies and other aspects of our development programs.
	•	We depend on third parties to formulate and manufacture our products.
	•	We currently have no marketing capabilities and no sales organization.

	•	Our success will depend in part on obtaining and maintaining effective patent and other intellectual property protection for our product candidates and proprietary technology.
	•	We rely on confidentiality agreements that, if breached, may be difficult to enforce and could have a material adverse effect on our business and competitive position.
	•	We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use, our technology.
	•	Under current law, we may not be able to enforce all employees’ covenants not to compete.
	•	We may infringe or be alleged to infringe intellectual property rights of third parties.

	•	Our share price has been volatile, and may continue to be volatile, which may subject us to securities class action litigation in the future.
	•	Anti-takeover provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult.
	•	Our bylaws contain an exclusive forum provision for certain disputes, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
	•	We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.
	•	Our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income may be subject to certain limitations.

	·	Opening of potassium channels in the vasculature smooth muscle, resulting in a vasodilatory effect on all vascular beds.
	·	Increasing cardiac contractility by calcium sensitization of troponin C, resulting in a positive inotropic effect which is not associated with substantial increases in oxygen demand.
	·	Opening of mitochondrial potassium channels in cardiomyocytes, resulting in a cardioprotective effect.

	•	the scope, rate of progress, and cost of our clinical trials and other research and development activities;
	•	the number of investigator sites and patients who participate and the impact that factors such as the rate of patient recruitment, the standard deviation of treatment effect, and the number of patients who have events or withdraw from therapy, have on the expected timelines and the eventual required number of patients enrolled for each of our clinical programs;
	•	the costs and timing of regulatory approval;
	•	the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
	•	the effect of competing technological and market developments;
	•	the terms and timing of any collaboration, licensing or other arrangements that we may establish;
	•	the cost and timing of completion of clinical and commercial-scale manufacturing activities; and
	•	the costs of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval.

	•	cause stockholders difficulty in selling our shares without depressing the market price for the shares or selling our shares at all;
	•	substantially impair our ability to raise additional funds;
	•	result in a loss of institutional investor interest and fewer financing opportunities for us; and/or
	•	result in potential breaches of representations or covenants of agreements pursuant to which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations.

	•	the efficacy, safety and potential advantages of our product candidates;
	•	our ability to offer our products for sale at competitive prices;
	•	the convenience and ease of administration compared to alternative treatments, if any;
	•	product labeling or product insert requirements of the FDA or foreign regulatory authorities, including any limitations or warnings contained in a product’s approved labeling, including any black box warning;
	•	the willingness of the target patient population to try new treatments and of physicians to prescribe these treatments;
	•	our ability to hire and retain a sales force in the United States;
	•	the strength of manufacturing, marketing and distribution support;
	•	the availability of third-party coverage and adequate reimbursement for of levosimendan, imatinib and any other product candidates, once approved;
	•	the prevalence and severity of any side effects; and
	•	any restrictions on the use of our products together with other medications.

	•	we may not be able to control the amount and timing of resources that our partners may devote to the development or commercialization of our product candidates or to their marketing and distribution;
	•	partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
	•	disputes may arise between us and our partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and resources;
	•	partners may experience financial difficulties;
	•	partners may not properly maintain or defend our intellectual property rights, or may use our proprietary information, in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential litigation;
	•	business combinations or significant changes in a partner’s business strategy may adversely affect a partner’s willingness or ability to meet its obligations under any arrangement;
	•	a partner could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and
	•	the collaborations with our partners may be terminated or allowed to expire, which would delay the development and may increase the cost of developing our product candidates.

	•	reaching agreements on acceptable terms with prospective trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among trial sites;
	•	obtaining institutional review board (“IRB”) approval to conduct a clinical trial at numerous prospective sites;
	•	recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as our product candidates;
	•	maintaining and supplying clinical trial material on a timely basis;
	•	collecting, analyzing and reporting final data from the clinical trials; and
	•	an epidemic which might cause site closures because of infected staff or cause patients to avoid or be unable to travel to healthcare facilities and physicians’ offices unless due to a health emergency;

	•	failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
	•	inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
	•	unforeseen safety issues or any determination that a trial presents unacceptable health risks; and
	•	lack of adequate funding to continue the clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies, and increased expenses associated with the services of our CROs and other third parties.

	•	the data obtained from laboratory testing and clinical trials are susceptible to varying interpretations, which could delay, limit, or prevent FDA and other regulatory approvals;
	•	adverse events could cause the FDA and other regulatory authorities to halt trials;
	•	at any time, the FDA and other regulatory agencies could change policies and regulations that could result in delay and perhaps rejection of our products;
	•	if a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions; and
	•	even after extensive testing and clinical trials, and receiving agreements and reassurances from the FDA, EMA, and others, as to their future position on a dataset or result to be generated from a trial the design of which they have weighed in on, there is no assurance that regulatory approval will ever be obtained for any of our products.

	•	the federal anti-kickback statute is a criminal statute that makes it a felony for individuals or entities knowingly and willfully to offer or pay, or to solicit or receive, direct or indirect remuneration, in order to induce the purchase, order, lease, or recommendation of items or services, or the referral of patients for services, that are reimbursed under a federal health care program, including Medicare and Medicaid;
	•	the federal False Claims Act imposes liability on any person who knowingly submits, or causes another person or entity to submit, a false claim for payment of government funds, with penalties that include three times the government’s damages plus civil penalties for each false claim; in addition, the False Claims Act permits a person with knowledge of fraud, referred to as a qui tam plaintiff, to file a lawsuit on behalf of the government against the person or business that committed the fraud, and, if the action is successful, the qui tam plaintiff is rewarded with a percentage of the recovery;
	•	the Health Insurance Portability and Accountability Act imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
	•	the Social Security Act contains numerous provisions allowing the imposition of a civil monetary penalty, a monetary assessment, exclusion from the Medicare and Medicaid programs, or some combination of these penalties; and
	•	many states have analogous state laws and regulations, such as state anti-kickback and false claims laws, which, in some cases, impose more strict requirements than the federal laws and may require pharmaceutical companies to comply with certain price reporting and other compliance requirements.

	•	decreased demand for our products and any product candidates that we may develop;
	•	injury to our reputation;
	•	withdrawal of clinical trial participants;
	•	costs to defend the related litigation;
	•	substantial monetary awards to trial participants or patients;
	•	loss of revenue; and
	•	the inability to commercialize any products that we may develop.

	•	our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
	•	the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products;
	•	the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
	•	unforeseen costs and expenses associated with creating and sustaining an independent sales and marketing organization.

	•	we may be required to relinquish important rights to our products or product candidates;
	•	we may not be able to control the amount and timing of resources that our distributors or collaborators may devote to the commercialization of our product candidates;
	•	our distributors or collaborators may experience financial difficulties;
	•	our distributors or collaborators may not devote sufficient time to the marketing and sales of our products; and
	•	business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement.

	•	others may be able to make compositions or formulations that are similar to our product candidates but that are not covered by the claims of our patents;
	•	we might not have been the first to make the inventions covered by our issued patents or pending patent applications;
	•	we might not have been the first to file patent applications for these inventions;
	•	others may independently develop similar or alternative technologies or duplicate any of our technologies;
	•	it is possible that our pending patent applications will not result in issued patents;
	•	our issued patents may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges by third parties;
	•	we may not develop additional proprietary technologies that are patentable; or
	•	the patents of others may have an adverse effect on our business.

	•	these agreements may be breached;
	•	these agreements may not provide adequate remedies for the applicable type of breach; or
	•	our trade secrets or proprietary know-how will otherwise become known.

	•	actual or anticipated fluctuations in our financial condition and operating results;
	•	share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
	•	status and/or results of our clinical trials;
	•	status of ongoing litigation;
	•	results of clinical trials of our competitors’ products;
	•	regulatory actions with respect to our products or our competitors’ products;
	•	actions and decisions by our collaborators or partners;
	•	actual or anticipated changes in our growth rate relative to our competitors;
	•	actual or anticipated fluctuations in our competitors’ operating results or changes in their growth rate;
	•	competition from existing products or new products that may emerge;
	•	issuance of new or updated research or reports by securities analysts;
	•	fluctuations in the valuation of companies perceived by investors to be comparable to us;
	•	share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
	•	market conditions for biopharmaceutical stocks in general;
	•	status of our search and selection of future management and leadership; and
	•	general economic and market conditions, including as a result of epidemics or other disruptive events broadly affecting society, and as a result of geopolitical uncertainties, including in the Middle East and the Russian invasion of and war against the country of Ukraine.

	•	provide that vacancies on the Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum;
	•	eliminate cumulative voting in the election of directors;
	•	grant the Board of directors the authority to increase or decrease the size of the Board;
	•	prohibit stockholders from calling a special meeting of stockholders;
	•	require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; and
	•	authorize the Board of Directors, by a majority vote, to amend the Bylaws.

	The year ended December 31,				Increase/(Decrease)
	2023		2022

Operating expenses
General and administrative	$	5,005,135	$	5,675,231		(670,096	)
Research and development		3,228,806		5,377,412		(2,148,606	)
Total operating expenses		8,233,941		11,052,643		(2,818,702	)

	Year ended December 31,				Increase/ (Decrease)			% Increase/ (Decrease)
	2023		2022
Personnel costs	$	2,176,682	$	2,370,362	$	(193,680	)		(8	)%
Legal and professional fees		1,967,276		2,369,126		(401,850	)		(17	)%
Other costs		831,908		782,023		49,885			6	%
Facilities		29,269		153,720		(124,451	)		(81	)%

	·	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 the global coronavirus pandemic or similar global societal disruptions; and

	·	the possible costs of litigation.

	·	fees paid to CROs in connection with clinical trials;

	·	fees paid to research institutions in conjunction with preclinical research studies; and

	·	fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.

Name	Age	Position with Tenax Therapeutics, Inc.	Director Since
June Almenoff, MD, PhD	67	Director	February 2021
Michael Davidson, MD	67	Director	February 2021
Declan Doogan, MD	72	Director	February 2021
Christopher T. Giordano	50	President and Chief Executive Officer and Director	July 2021
Robyn M. Hunter	62	Director	January 2022
Gerald T. Proehl	65	Chair	April 2014
Stuart Rich, MD	74	Chief Medical Officer and Director	February 2021

	·	Christopher T. Giordano, our President and Chief Executive Officer (our “CEO”);
	·	Stuart Rich, our Chief Medical Officer (our “CMO”); and
	·	Eliot M. Lurier, our Former Interim Chief Financial Officer (our “Former Interim CFO”).