Tenax Therapeutics(TENX) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements The company's financial statements for the period ended June 30, 2021, reflect a significant decrease in assets and stockholders' equity compared to year-end 2020, primarily driven by a large net loss Condensed Consolidated Balance Sheets As of June 30, 2021, the company's total assets stood at $2.9 million, a sharp decline from $6.9 million at December 31, 2020 Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,671 | $6,250 | | Total current assets | $2,532 | $6,796 | | Total assets | $2,885 | $6,869 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $1,175 | $2,119 | | Total liabilities | $1,414 | $2,243 | | Total stockholders' equity | $1,471 | $4,626 | | Total liabilities and stockholders' equity | $2,885 | $6,869 | Condensed Consolidated Statements of Comprehensive Loss For the three months ended June 30, 2021, the company reported a net loss of $1.7 million, an improvement from a $2.1 million loss in the same period of 2020 Financial Performance Summary (Unaudited) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $1,271,278 | $869,206 | $2,644,738 | $2,192,165 | | Research and development | $693,222 | $1,274,837 | $23,069,424 | $2,617,363 | | Net Loss | $1,717,016 | $2,146,550 | $25,465,156 | $4,801,194 | | Net loss per share | ($0.10) | ($0.23) | ($1.60) | ($0.59) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2021, net cash used in operating activities was $5.1 million, resulting in a net decrease in cash of $4.6 million Cash Flow Summary for Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,066,239) | $(4,899,965) | | Net cash (used in) provided by investing activities | $(57,231) | $13,911 | | Net cash provided by financing activities | $544,651 | $4,065,366 | | Net change in cash and cash equivalents | $(4,578,819) | $(820,688) | | Cash and cash equivalents, end of period | $1,671,422 | $4,085,305 | Notes to Condensed Consolidated Financial Statements Key notes detail the company's business focus, the PHPM merger, and subsequent events, including a $10 million financing - The company acquired PHPrecisionMed Inc. (PHPM) on January 15, 2021, expensing the $21,582,331 consideration as in-process research and development (IPR&D)[26][67][69] - Management has identified factors raising substantial doubt about the company's ability to continue as a going concern, citing an accumulated deficit of $271 million and significant cash used in operations[28][30] - On July 6, 2021, the company raised approximately $10 million in gross proceeds through a private placement for clinical trials, R&D, and general corporate purposes[111][113] - On May 28, 2021, the company received full forgiveness for its Paycheck Protection Program (PPP) loan, including $244,657 in principal and $2,576 in interest, recorded as other income[64] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its strategy to develop and commercialize products for cardiovascular and pulmonary diseases, highlighting increased R&D expenses and liquidity needs Overview and Current Programs The company is a specialty pharmaceutical firm focused on developing levosimendan for PH-HFpEF and imatinib for PAH, planning Phase 3 trials for both - The company's strategy is to develop and commercialize products for cardiovascular and pulmonary diseases, specifically levosimendan and imatinib[124][125] - The Phase 2 HELP study of levosimendan in PH-HFpEF did not meet its primary efficacy endpoint but demonstrated a statistically significant improvement in 6-minute walk distance, leading to plans for a Phase 3 study using an oral formulation[138][140][145] - Following the acquisition of PHPM, the company plans to initiate a single Phase 3 trial for a modified release formulation of imatinib for PAH, leveraging the 505(b)(2) regulatory pathway[153] Results of Operations For the six-month period, R&D expenses surged by over 300,000% to $23.1 million, almost entirely due to the $21.7 million IPR&D expense from the PHPM merger R&D Expense Comparison (Three Months Ended June 30) | Category | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Clinical and preclinical development | $548,909 | $1,218,156 | $(669,247) | (55)% | | Personnel costs | $142,707 | $54,193 | $88,514 | 163% | | Total R&D | $693,222 | $1,274,837 | $(581,615) | (46)% | R&D Expense Comparison (Six Months Ended June 30) | Category | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Clinical and preclinical development | $1,049,087 | $2,500,817 | $(1,451,730) | (58)% | | Other costs (incl. IPR&D) | $21,741,388 | $7,210 | $21,734,178 | 301,445% | | Total R&D | $23,069,424 | $2,617,363 | $20,452,061 | 781% | - The primary driver for the increase in R&D expenses for the six months ended June 30, 2021, was the recognition of approximately $21.7 million in in-process research and development acquired as part of the merger with PHPM[182] Liquidity, Capital Resources and Plan of Operation The company has a history of losses, with an accumulated deficit of $271 million, and requires substantial additional financing beyond Q2 2022 - As of June 30, 2021, the company had an accumulated deficit of approximately $271 million[187] - Based on working capital at June 30, 2021, and net proceeds from its July 2021 offering, the company believes it has sufficient capital to fund operations through the second quarter of calendar year 2022[188] - The company will need substantial additional capital to complete the development and commercialization of levosimendan and imatinib, seeking it through equity or debt offerings, or collaboration and licensing arrangements[192] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company for this reporting period - Not applicable[199] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[200] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[201] PART II. OTHER INFORMATION 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 - There are no material pending legal proceedings[204] 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, 2020 - Risks have not materially changed from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[205] Other Information On June 10, 2021, the company's stockholders approved an amendment to the 2016 Stock Incentive Plan, increasing available shares by 750,000 - On June 10, 2021, stockholders approved an amendment to the 2016 Stock Incentive Plan to increase the number of issuable shares by 750,000[206] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO and XBRL data files - The report includes filed exhibits such as Amendment No. 2 to the 2016 Stock Incentive Plan, CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[208]