Tenax Therapeutics(TENX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for the period ended June 30, 2025, show a significant increase in cash and cash equivalents to $105.5 million, primarily due to financing activities, while the net loss widened substantially to $21.3 million, driven by escalated research and development and general administrative expenses related to ongoing Phase 3 clinical trials, and total stockholders' equity increased to $103.3 million from $92.0 million at year-end 2024 Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $105.9 million from $96.7 million at December 31, 2024, driven by a rise in cash and cash equivalents, while total liabilities decreased to $2.5 million from $4.7 million, leading to an increase in total stockholders' equity to $103.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $105,462 | $94,851 | | Total current assets | $105,857 | $96,686 | | Total liabilities | $2,527 | $4,693 | | Total stockholders' equity | $103,330 | $91,993 | | Total liabilities and stockholders' equity | $105,857 | $96,686 | Condensed Consolidated Statements of Operations The company reported a significantly higher net loss for the three and six months ended June 30, 2025, compared to the same periods in 2024, with the six-month net loss increasing to $21.3 million from $7.4 million year-over-year, primarily due to a sharp rise in both Research and Development (R&D) and General and Administrative (G&A) expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $11,804 | $5,003 | | General and administrative | $11,326 | $2,577 | | Total operating expenses | $23,130 | $7,580 | | Net loss | $(21,255) | $(7,374) | | Net loss per share | $(0.56) | $(4.65) | Condensed Consolidated Statements of Stockholders' Equity For the six months ended June 30, 2025, stockholders' equity increased from $91.99 million to $103.33 million, primarily driven by $23.2 million in net proceeds from a public offering and $8.7 million in stock-based compensation, partially offset by a net loss of $21.3 million - Key drivers for the change in stockholders' equity in the first half of 2025 included a public offering netting $23.2 million, warrant exercises, and significant stock-based compensation expense, counteracted by the period's net loss[14] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash and cash equivalents increased by $10.6 million due to $23.8 million in net cash provided by financing activities, which more than offset the $13.2 million of net cash used in operating activities, contrasting with a net cash decrease of $0.4 million in the prior year period Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,230) | $(8,197) | | Net cash provided by financing activities | $23,841 | $7,789 | | Net change in cash and cash equivalents | $10,611 | $(408) | | Cash and cash equivalents, end of period | $105,462 | $9,384 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business as a Phase 3 pharmaceutical firm with a significant accumulated deficit of $336.1 million, but management believes current cash of $105.5 million is sufficient for operations for at least the next 12 months, with key disclosures including the terms of the levosimendan license agreement with Orion, details of recent equity financings, and a breakdown of stock-based compensation expenses - The company is a Phase 3 development-stage pharmaceutical company focused on novel cardiopulmonary therapies[20] - As of June 30, 2025, the company had an accumulated deficit of $336.1 million but possessed cash and cash equivalents of $105.5 million, which management believes is sufficient to fund operations for at least the next 12 months[21] - In February 2024, the company amended its license agreement with Orion for levosimendan, gaining global rights for PH-HFpEF, which increased future milestone payments to Orion upon regulatory approvals in the US and Japan[36] - The company operates as a single segment focused on identifying and developing therapeutics for cardiovascular and pulmonary diseases, with performance assessed by the CEO based on net loss and cash flow[67][68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant increase in operating expenses for the first half of 2025, attributing it to expanded clinical trial activities for its levosimendan program (Phase 3 LEVEL and LEVEL-2 studies) and higher stock-based compensation, noting that the company raised approximately $25.0 million in gross proceeds from a private placement in March 2025 and, with $105.9 million in current assets as of June 30, 2025, believes it has sufficient capital to fund operations through 2027 Overview and Recent Events Tenax is a clinical-stage pharmaceutical company focused on developing cardiopulmonary therapies, with its prioritized product candidate being levosimendan for pulmonary hypertension, and in March 2025, the company raised $25.0 million in gross proceeds to advance its Phase 3 oral levosimendan program, including the ongoing LEVEL study and the planned LEVEL-2 study, with enrollment for the LEVEL study expected to be completed in the first half of 2026 - The company is prioritizing the development of levosimendan for pulmonary hypertension and has deprioritized a Phase 3 trial of imatinib[79] - In March 2025, a private placement raised gross proceeds of approximately $25.0 million to fund the ongoing Phase 3 LEVEL study and initiate a second global Phase 3 study, LEVEL-2[80] - Enrollment for the Phase 3 LEVEL study is ongoing, with completion expected in the first half of 2026[81] Results of Operations Operating expenses increased significantly for the three and six months ended June 30, 2025, compared to the prior year, with R&D expenses for the six-month period rising 136% to $11.8 million due to costs for the Phase 3 LEVEL and LEVEL-2 trials, and G&A expenses increasing 340% to $11.3 million, primarily due to a $6.9 million increase in non-cash stock-based compensation and higher professional fees Operating Expenses Comparison (in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Research and development | $11,804 | $5,003 | 136% | | General and administrative | $11,326 | $2,577 | 340% | | Total operating expenses | $23,130 | $7,580 | 205% | - The increase in R&D costs was primarily due to expenses for the ongoing Phase 3 LEVEL trial and preliminary work on the LEVEL-2 study[84] - The surge in G&A expenses was mainly driven by a $6.9 million increase in non-cash stock-based compensation from options granted in late 2024 and early 2025[87] Liquidity and Capital Resources The company had an accumulated deficit of $336.1 million as of June 30, 2025, but with working capital of $103.3 million, management believes it has sufficient funds for operations through 2027, a position strengthened by several financings, including a March 2025 offering that provided $23.2 million in net proceeds, even as net cash used in operations increased to $13.2 million for the first six months of 2025 from $8.2 million in the prior year period - As of June 30, 2025, the company had an accumulated deficit of $336.1 million and working capital of $103.3 million[91][93] - Management believes the company has sufficient capital to fund operations through 2027[103] Recent Financings (Gross Proceeds) | Date | Type | Gross Proceeds | | :--- | :--- | :--- | | March 2025 | Private Placement | $25.0 million | | August 2024 | Private Placement | $99.7 million | | February 2024 | Registered Public Offering | $9.0 million | Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,230) | $(8,197) | | Net cash provided by financing activities | $23,841 | $7,789 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is therefore not required to provide the information requested by this item - As a smaller reporting company, Tenax Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[107] Item 4. Controls and Procedures Based on an evaluation as of June 30, 2025, the company's President and Chief Executive Officer and Interim Chief Financial Officer concluded that the disclosure controls and procedures were effective, with no material changes in the company's internal control over financial reporting during the most recent fiscal quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[110] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[111] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that there are no material pending legal proceedings to which it is a party or to which any of its property is subject - The company is not a party to any material pending legal proceedings[115] Item 1A. Risk Factors The company states that the risks it faces have not materially changed from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K[116] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include the Restated Certificate of Incorporation, certifications by the CEO and Interim CFO pursuant to the Sarbanes-Oxley Act, and Inline XBRL documents - The exhibits filed with this report include certifications from the President and Chief Executive Officer and the Interim Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[118]