TENX: Second Quarter Results
NASDAQ:TENX
READ THE FULL TENX RESEARCH REPORT
Second Quarter Financial and Operational Review
Tenax Therapeutics, Inc. (NASDAQ:TENX) reported 2Q:23 results on August 14, 2023 via its filing of Form 10-Q with the SEC. Despite the slow pace of advancement, we are impressed with the clinical data for both of Tenax’ PAH assets: levosimendan and imatinib. We see tremendous upside if dilution concerns can be addressed and a dramatic quality of life improvement for patients. Levosimendan is an especially remarkable opportunity for pulmonary hypertension patients with heart failure and preserved ejection fraction (PH-HFpEF) which offers no other approved therapies.
Based on the confidence inspired by the recent patent issuance for oral and IV administration of levosimendan in PH-HFpEF, Tenax plans to pursue a Phase III study of oral levosimendan in PH-HFpEF patients. The US Patent Office set a precedent by recognizing PH-HFpEF as a condition separate from heart failure. With the recent $15.6 million raise, Tenax is in a position to start its Phase III levosimendan trial. We expect an Investigational New Drug (IND) application to be made in the near term reflecting the change to the oral formulation of levosimendan, initial trial preparation in 4Q:23 and first patient enrollment in 2024.
Highlights for 2023 include:
➢ Reverse stock split executed - January 5, 2023
➢ $15.6 million public offering completed – February 2023
➢ IV levosimendan patent for PH-HFpEF issued – March - 2023
➢ Prioritization of TNX-103 (levosimendan for PH-HFpEF) in clinical trials – April 2023
➢ PH-HFpEF patent for oral levosimendan issued – July 2023
Tenax produced no revenues in 2Q:23 and incurred operating expenses of $1.2 million resulting in net loss of ($1.1) million, or ($0.05) per share.
For the quarter ending June 30, 2023 versus the same prior year period:
➢ General and administrative expenses fell 22% to $1.0 million primarily due to lower personnel costs related to reduced headcount, reduced legal and professional fees related and a decline in miscellaneous costs. A reduction in the amount of office space also contributed to the decline;
➢ Research and development expenses fell 87% to $198,000 from $1.5 million on lower clinical and preclinical development costs as the company paused development activity as it prepares to begin a pivotal clinical trial in PH-HFpEF. These amounts were partially offset by an increase in regulatory consulting costs;
➢ Net interest income was $131,000 due to greater cash balances and higher interest rates;
➢ Net loss was ($1.1) million versus ($2.9) million, or ($0.05) and ($2.27) per share, respectively.
At the end of 2Q:23, cash and equivalents totaled $13.4 million, compared to $2.1 million at the end of 2022. During the second quarter, cash burn was ($0.9) million. Financing cash flows were ($0.1) million related to the repayment of a short-term note. A capital raise was conducted in 1Q:23 which led to net financing cash flows of around $14 million during the first three months of the year.
Additional Support for Oral Levosimendan
Tenax announced that the US Patent and Trademark Office (USPTO) had granted a Notice of Allowance for its patent covering the use of oral levosimendan in pulmonary hypertension in patients with heart failure and preserved ejection fraction (PH-HFpEF). The Notice of Allowance is a precursor to patent issuance and declares that the invention meets the requirements for patentability. A fee is required prior to grant of the patent, which is the next anticipated step for Tenax prior to the grant of the patent.
A patent for oral levosimendan in PH-HFpEF is significant as it extends protection for this use until the end of 2040. Patent extension and potentially other mechanisms could extend this even further. A patent grant would lengthen what would otherwise be available, which is five years of exclusivity as a New Chemical Entity (NCE). NCE exclusivity is available to drugs that contain an active moiety that has not been previously approved by the FDA in any other drug.
Based on the confidence inspired by the recent USPTO successes with levosimendan in PH-HFpEF, Tenax plans to pursue a Phase III study of oral levosimendan in these patients. The US Patent Office set a precedent by recognizing PH-HFpEF as a condition separate from heart failure. This provides support for later approval of a patent for an oral version of levosimendan in a follow-on patent application that is being reviewed by the agency. With the recent $15.6 million raise, Tenax is in a position to start its Phase III levosimendan trial following clearance from the FDA regarding the use of oral levosimendan in PH-HFpEF patients.
Imatinib Program
With its near-term development focus on PH-HFpEF, Tenax will soon begin its oral levosimendan trial. The company’s second program with imatinib for pulmonary arterial hypertension (PAH) will take a back seat due to financial considerations. While not active, there are events in motion that may orient investor interest towards Tenax’ imatinib program. This could complement any good news that emerges from the levosimendan trial next year. Tenax is not the only company pursuing a disease modifying therapy for PAH, as others including Aerovate Therapeutics (AVTE), Gossamer Bio (GOSS) and Acceleron/Merck (MRK) are all traveling along this route. We provide a review of the other programs and also identify some of the hurdles that Aerovate faces with using an inhaled form of imatinib. If Aerovate is not able to achieve favorable results with its inhaled imatinib, the focus may turn to Tenax which offers a modified formulation that sidesteps the gastrointestinal (GI) side effects that plagued the oral form of imatinib used in the IMPRES study.
Inhaled Imatinib
Imatinib is the subject of a trial by Aerovate Therapeutics (AVTE) that is investigating a dry powder formulation of imatinib for PAH. The sponsor is running a Phase III clinical trial designated IMPAHCT and a long term extension of this trial called IMPAHCT-FUL. The primary endpoint for the Phase III will be the placebo-corrected change in the six-minute walk distance after 24 weeks of treatment. There will be ~460 participants in the randomized trial. As of mid-May, Aerovate expects to report topline data in 2Q:24.
Imatinib is a tyrosine kinase inhibitor (TKI) and was shown to improve a PAH subject’s six-minute walk test in the IMPRES study. Another TKI, seralutinib, was effective in animal models using an inhaled route of administration but had limited effect in humans. Due to its mechanism, the inhaled route of administration may have limitations in humans that are not fully represented in the animal model.
While the inhalation route is attractive on many fronts, including avoiding GI related side effects and direct delivery to the organ of interest, clinical efficacy using this route may not be feasible. Precise dosing and delivery to the alveolar-capillary region is difficult. Furthermore, drug delivered via the peripheral airways has a shorter effect than drug delivered via other routes as it is absorbed quickly.2
Seralutinib
Gossamer Bio (GOSS) conducted a Phase 2 study of seralutinib in patients with pulmonary arterial hypertension (PAH). Seralutinib is a tyrosine kinase inhibitor (TKI) that targets PDGFRα/β, CSF1R, and c-KIT. It is specifically designed to be delivered via dry powder inhaler for the treatment of PAH. The company reported topline data in December 2022. While the primary endpoint of pulmonary vascular resistance (PVR) improved by 14.3% (p value = 0.031), the magnitude was lower than expected. The secondary endpoint was improvement in six-minute walk distance. Active arm results were better than placebo for this endpoint; however, they were not significant. Gossamer is expected to move forward with a Phase III, but lacks investor confidence as indicated by a market cap below cash holdings.
Sotatercept
Acceleron/Merck (MRK) are developing sotatercept, which is a is a first-in-class therapeutic fusion protein that targets an imbalance in activin–growth differentiation factor and BMP pathway signaling. Sotatercept is the subject of clinical trials investigating PAH. In a Phase III study designated STELLAR, Merck reported a clinically meaningful improvement in the six minute walk distance after 24 weeks in October 2022. An improvement in NT-proBNP level was also achieved in the study. Further analysis was provided in a New England Journal of Medicine article Phase 3 Trial of Sotatercept for Treatment of Pulmonary Arterial Hypertension.
Selection of Zacks’ explanatory research for the levosimendan and imatinib programs:
➢ June 3, 2020 – Results from Phase II levosimendan study
o TENX: Target Up on Solid HELP Results
➢ April 9, 2021 – Background on imatinib
o TENX: HELP Results & New Asset to Boot
➢ June 2023 – Corporate Presentation
o Tenax Therapeutics Corporate Presentation
Upcoming Milestones
➢ Filing of IND for levosimendan for oral PH-HFpEF – 3Q:23
➢ First enrollment of Phase III PH-HFpEF subject in levosimendan trial – 1H:24
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1. Tenax Therapeutics June 2023 Corporate Presentation
2. Agnihotri, V., et al. An Update on Advancements and Challenges in Inhalational Drug Delivery for Pulmonary Arterial Hypertension. Molecules, May 2022.
