{"url_path":"/sec/tenx/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/34956/0001193125-26-219383-index.html","accession_number":"0001193125-26-219383","cik":"0000034956","ticker":"TENX","issuer_name":"TENAX THERAPEUTICS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/34956/0001193125-26-219383-index.html","primary_entity_key":"0000034956","primary_entity_name":"TENAX THERAPEUTICS, INC."},"word_count":3033,"has_tables":true,"body_markdown":"ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\nThe 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, 2025. All references in this Quarterly Report to “Tenax Therapeutics,” “we,” “our” and “us” means Tenax Therapeutics, Inc.\n\nCautionary Note Regarding Forward-Looking Statements\n\nThis 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.\n\nOverview\n\nTenax Therapeutics is a Phase 3, development-stage pharmaceutical company using clinical insights to develop novel cardiopulmonary therapies. We employ a clinician-driven drug development approach, led by key opinion leaders and heart failure experts and informed by their clinical insights to precisely target disease pathophysiology. We are currently actively conducting the LEVEL and LEVEL-2 clinical trials to evaluate levosimendan as our prioritized product candidate, and have deprioritized a Phase 3 clinical trial of imatinib, two drugs supported by promising evidence that they may significantly improve the lives of patients with pulmonary hypertension. Importantly, both levosimendan and imatinib have already been approved in other indications and prescribed around the world for more than 20 years, and we believe their mechanisms of action are uniquely suitable to target and treat pulmonary hypertension. We believe this derisked approach of using already-approved drugs that provide well-established safety profiles from millions of patients, combined with a development path led by preeminent cardiovascular and pulmonary hypertension experts, puts us in a strong position to deliver breakthrough cardiopulmonary therapies designed to improve patients’ functioning and quality of life.\n\nRecent Events\n\nIn March 2025, we closed a private placement financing raising gross proceeds of approximately $25.0 million. We intend to use the net proceeds from the March 2025 Offering, in addition to approximately $100.0 million raised in August 2024, to advance our Phase 3 oral levosimendan program. Specifically, we plan to complete our ongoing Phase 3 LEVEL study of TNX-103 in PH-HFpEF. We also plan to advance our second global Phase 3 study, LEVEL-2, which commenced in December 2025. Following completion of the two Phase 3 levosimendan trials, we intend to submit marketing authorization applications. We also plan to submit an application for imatinib following completion of a single Phase 3 trial, when appropriate.\n\nOur Phase 3 LEVEL study continues, with high rates of study and therapy continuation during the blinded and open-label extension stages. We achieved our target enrollment of 230 patients in March of 2026. LEVEL is being conducted in the United States and Canada.\n\nBased on our current operating plan, we believe that our existing cash and cash equivalents as of March 31, 2026, along with cash received from warrant exercises subsequent to quarter end, will be sufficient to fund our planned operations through at least the first quarter of 2028.\n\n \n\n \n\n15\n\n[Table of Contents](#toc_page)\n\n \n\nFinancial Overview – Three Months Ended March 31, 2026 (in thousands)\n\n \n\n \n\n \n\nFor the three months ended March 31,\n\n \n\n \n\nIncrease/\n\n \n\n \n\n% Increase/\n\n \n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n(Decrease)\n\n \n\n \n\n(Decrease)\n\n \n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n   Research and development\n\n \n\n$\n\n11,539\n\n \n\n \n\n$\n\n5,683\n\n \n\n \n\n$\n\n5,856\n\n \n\n \n\n \n\n103\n\n \n\n %\n\n   General and administrative\n\n \n\n \n\n5,034\n\n \n\n \n\n \n\n5,655\n\n \n\n \n\n \n\n(621\n\n)\n\n \n\n \n\n(11\n\n)\n\n %\n\nTotal operating expenses\n\n \n\n$\n\n16,573\n\n \n\n \n\n$\n\n11,338\n\n \n\n \n\n$\n\n5,235\n\n \n\n \n\n \n\n46\n\n \n\n %\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet operating loss\n\n \n\n \n\n(16,573\n\n)\n\n \n\n \n\n(11,338\n\n)\n\n \n\n \n\n(5,235\n\n)\n\n \n\n \n\n46\n\n \n\n %\n\nOther segment items\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n   Interest income\n\n \n\n \n\n861\n\n \n\n \n\n \n\n930\n\n \n\n \n\n \n\n(69\n\n)\n\n \n\n \n\n(7\n\n)\n\n %\n\n   Other expense, net\n\n \n\n \n\n(4\n\n)\n\n \n\n \n\n-\n\n \n\n \n\n \n\n(4\n\n)\n\n \n\n \n\n100\n\n \n\n %\n\nNet loss\n\n \n\n$\n\n(15,716\n\n)\n\n \n\n$\n\n(10,408\n\n)\n\n \n\n$\n\n(5,308\n\n)\n\n \n\n \n\n51\n\n \n\n %\n\nResearch and Development Expenses\n\nResearch and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct a substantial portion of our pre-clinical and our clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to CROs 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 March 31, 2026 and 2025 are as follows (in thousands):\n\n \n\n \n\n \n\n \n\n \n\nFor the three months ended March 31,\n\n \n\n \n\nIncrease/\n\n \n\n \n\n% Increase/\n\n \n\n \n\n \n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n(Decrease)\n\n \n\n \n\n(Decrease)\n\n \n\n \n\nClinical and preclinical development\n\n \n\n \n\n \n\n$\n\n10,033\n\n \n\n \n\n$\n\n4,273\n\n \n\n \n\n$\n\n5,760\n\n \n\n \n\n \n\n135\n\n \n\n%\n\nSalary and benefits\n\n \n\n \n\n \n\n \n\n891\n\n \n\n \n\n \n\n371\n\n \n\n \n\n \n\n520\n\n \n\n \n\n \n\n140\n\n \n\n%\n\nStock-based compensation\n\n \n\n \n\n \n\n \n\n537\n\n \n\n \n\n \n\n861\n\n \n\n \n\n \n\n(324\n\n)\n\n \n\n \n\n(38\n\n)\n\n%\n\nOther costs\n\n \n\n \n\n \n\n \n\n78\n\n \n\n \n\n \n\n178\n\n \n\n \n\n \n\n(100\n\n)\n\n \n\n \n\n(56\n\n)\n\n%\n\nTotal research and development expense\n\n \n\n \n\n \n\n$\n\n11,539\n\n \n\n \n\n$\n\n5,683\n\n \n\n \n\n \n\n5,856\n\n \n\n \n\n \n\n103\n\n \n\n%\n\nClinical and preclinical development costs increased $5.8 million for the three months ended March 31, 2026, as compared to the same period in the prior year. Clinical and preclinical development costs for the three months ended March 31, 2026 consist primarily of expenses associated with our ongoing Phase 3 LEVEL trial and our second global Phase 3 study, LEVEL-2, which commenced in December 2025, as compared to the three months ended March 31, 2025, which consisted primarily of costs associated with our Phase 3 LEVEL trial.\n\nSalary and benefits costs increased by $0.5 million for the three months ended March 31, 2026 as compared to the same period in the prior year primarily due to higher salaries and additional performance-based compensation expense as a result of an increase in the number of employees. Non-cash stock-based compensation expense decreased by $0.3 million for the three months ended March 31, 2026, as compared to the same period in 2025 primarily due to stock options granted in December 2024, for which the expense was recognized over a one year vesting period and became fully vested in December 2025, partially offset by new option grants made in 2026 to employees that vest and are being expensed over four years.\n\nOther costs decreased for the three months ended March 31, 2026 as compared to the same period in the prior year, primarily due to increased regulatory consulting costs as we continued to expand our Phase 3 trials.\n\n \n\nGeneral and Administrative Expenses\n\nGeneral and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including non-cash stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, and other professional and consulting services. General and administrative expenses and percentage changes for the three months ended March 31, 2026 and 2025 are as follows (in thousands):\n\n \n\n16\n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\n \n\nFor the three months ended March 31,\n\n \n\n \n\nIncrease/\n\n \n\n \n\n% Increase/\n\n \n\n \n\n \n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n(Decrease)\n\n \n\n \n\n(Decrease)\n\n \n\n \n\nSalary and benefits\n\n \n\n \n\n \n\n$\n\n839\n\n \n\n \n\n$\n\n545\n\n \n\n \n\n$\n\n294\n\n \n\n \n\n \n\n54\n\n \n\n%\n\nStock-based compensation\n\n \n\n \n\n \n\n \n\n2,301\n\n \n\n \n\n \n\n3,281\n\n \n\n \n\n \n\n(980\n\n)\n\n \n\n \n\n(30\n\n)\n\n%\n\nLegal and professional fees\n\n \n\n \n\n \n\n \n\n1,366\n\n \n\n \n\n \n\n1,259\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n8\n\n \n\n%\n\nOther costs\n\n \n\n \n\n \n\n \n\n528\n\n \n\n \n\n \n\n570\n\n \n\n \n\n \n\n(42\n\n)\n\n \n\n \n\n(7\n\n)\n\n%\n\nTotal general and administrative expense\n\n \n\n \n\n \n\n$\n\n5,034\n\n \n\n \n\n$\n\n5,655\n\n \n\n \n\n \n\n(621\n\n)\n\n \n\n \n\n(11\n\n)\n\n%\n\n \n\nSalary and benefits increased $0.3 million for the three months ended March 31, 2026, compared to the same period in 2025. The change was primarily attributable to increased head count and salaries, and related compensation.\n\nNon-cash stock-based compensation expense decreased $1.0 million for the three months ended March 31, 2026, as compared to the same period in 2025 primarily due to stock options granted in December 2024, for which the expense was amortized over a one-year vesting term, which was partially offset by new option grants made in 2026.\n\nLegal fees consist of the cost of our legal counsel as well as legal costs related to our intellectual property. 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 and professional fees increased $0.1 million for the three month period ended March 31, 2026, as compared to the same period in the prior year.\n\nOther costs include expenses incurred for franchise and other taxes, travel, supplies, insurance, depreciation, and other miscellaneous charges.\n\nInterest Income, Interest Expense, and Other Expense, net\n\nInterest income decreased by $0.1 million for the three months ended March 31, 2026, as compared to the same period in the prior year primarily due to lower interest rates. The Company had an immaterial other expense for the three months ended March 31, 2026 and none for the comparable period in the prior year.\n\nLiquidity, Capital Resources and Plan of Operation\n\nWe have incurred losses since our inception and, as of March 31, 2026, we had an accumulated deficit of $383.2 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.\n\nThe 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.\n\nLiquidity\n\nWe 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 $123.2 million and $104.2 million and working capital of $114.7 million and $97.1 million as of March 31, 2026 and December 31, 2025, respectively. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds.\n\nWe are currently conducting the LEVEL trial and intend to recruit patients into the first half of 2026. We commenced our LEVEL-2 trial in December 2025 and are currently enrolling patients. Our ability to continue to pursue development of our products beyond March of 2028, including completion of a second Phase 3 oral levosimendan trial, will depend on obtaining license income, income from warrants exercised by investors should they elect to do so, or other financial resources. There is\n\n17\n\n[Table of Contents](#toc_page)\n\n \n\nno assurance that we will obtain any license agreement or other financing or that we will otherwise succeed in obtaining any necessary resources.\n\nFinancings\n\nOn March 5, 2025, we sold in the March 2025 Offering an aggregate of 378,346 shares of our common stock and pre-funded warrants to purchase an aggregate of 3,760,726 shares of our common stock at an offering price of $6.04 per share of common stock and $6.03 per pre-funded warrant, resulting in gross proceeds of $25.0 million. The pre-funded warrants do not expire and have an exercise price of $0.01. Net proceeds from the offering were $23.2 million, after deducting the placement agent fees and offering expenses payable by the Company.\n\nOn March 24, 2026, we filed a universal shelf registration statement on Form S-3 with the SEC, which the SEC declared effective on April 1, 2026. Pursuant to this registration statement, we have the ability to sell up to $300.0 million of any combination of our equity or debt securities in one or more public offerings, at prices and on terms that we will determine at the time of offering.\n\nCash Flows\n\nThe following table shows a summary of our cash flows for the periods indicated (in thousands):\n\n \n\n \n\n \n\nThree months ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNet cash used in operating activities\n\n \n\n$\n\n(9,309\n\n)\n\n \n\n$\n\n(6,967\n\n)\n\nNet cash provided by investing activities\n\n \n\n \n\n-\n\n \n\n \n\n \n\n-\n\n \n\nNet cash provided by financing activities\n\n \n\n \n\n30,499\n\n \n\n \n\n \n\n23,563\n\n \n\n \n\nOperating Activities\n\nNet cash used in operating activities was $9.3 million for the three months ended March 31, 2026, compared to $7.0 million for the three months ended March 31, 2025. The increase in cash used in operating activities was primarily due to increased expenses as we expanded our clinical trials and increased payroll costs. The increase in payroll costs was primarily driven by the addition of new employees and targeted salary adjustments, reflecting a necessary investment to support our expanded clinical trial activity during the three months ended March 31, 2026 as compared to the prior year period.\n\nInvesting Activities\n\nThere was no net cash provided or consumed by investing activities for the three months ended March 31, 2026 or the three months ended March 31, 2025.\n\nFinancing Activities\n\nNet cash provided by financing activities was $30.5 million for the three months ended March 31, 2026, compared to $23.6 million for the three months ended March 31, 2025, an increase of $6.9 million. During the three months ended March 31, 2026, the Company received proceeds of $30.5 million from the exercise of warrants and pre-funded warrants. During the three months ended March 31, 2025, the Company received proceeds of $23.2 million net cash provided from the sale of common stock and pre-funded warrants in the March 2025 Offering and $0.3 million from the exercise of warrants and pre-funded warrants.\n\nOperating Capital and Capital Expenditure Requirements\n\nOur future capital requirements will depend on many factors that include, but are not limited to the following:\n\n•\nthe initiation, design, footprint, progress, timing and completion of clinical trials for our product candidates and potential product candidates;\n\n•\nthe outcome, timing and cost of regulatory approvals and the regulatory approval process;\n\n•\ndelays that may be caused by changing regulatory requirements and resource levels at regulators;\n\n•\nthe number of product candidates we pursue;\n\n•\nthe costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;\n\n•\nthe timing and terms of future collaboration, licensing, consulting or other arrangements that we may enter into;\n\n18\n\n[Table of Contents](#toc_page)\n\n \n\n•\nthe cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;\n\n•\nthe cost of procuring clinical and commercial supplies of our product candidates;\n\n•\nthe extent to which we acquire or invest in businesses, products or technologies; and\n\n•\nthe possible costs of litigation.\n\nBased on our working capital on March 31, 2026, and additional cash received subsequent to quarter end of $7.9 million, we believe we have sufficient capital on hand to fund operations through at least the first quarter of 2028.\n\nCritical Accounting Policies and Significant Judgments and Estimates\n\nOur 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, 2025 and Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.\n\nOff-Balance Sheet Arrangements\n\nSince 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.\n\n19\n\n[Table of Contents](#toc_page)"}