Zacks Small Cap Research – TENX: First Patient Enrolled – Technologist

By John Vandermosten, CFA

NASDAQ:TENX

READ THE FULL TENX RESEARCH REPORT

What’s New?

On the heels of a share balance consolidation, Tenax Therapeutics, Inc. (NASDAQ:TENX) began February with a burst of activity. It announced a notice of allowance from the USPTO, the enrollment of its first patient in the LEVEL trial and pricing of $9 million in funds to support clinical efforts. Read on for the details of these activities and for background on the Phase III trial.

Enrollment of First Patient in Phase III LEVEL Trial

A February 7th press release signaled the enrollment of the first patent in Tenax’ Phase 3 LEVEL Study (LEVosimendan to Improve Exercise Limitation in PH-HFpEF Patients). The study is listed under NCT05983250 in the National Library of Medicine’s Clinical Trials database. Over 40 sites have agreed to participate in the Group 2 pulmonary arterial hypertension (PAH) trial which is expected to generate topline results by 2H:25.

Tenax filed its investigational new drug (IND) application for the Phase III study in pulmonary hypertension in heart failure with preserved ejection fraction (PH-HFpEF) during 3Q:24 and announced the program’s clearance in a November 13th press release. Activity to initiate the trial began with site qualification and selection work taking place in Fall of 2023. Trial launch and site activity accelerated in the fourth quarter and enrollment has now started. We expect that two Phase III trials will be conducted, each enrolling approximately 150 subjects.

LEVEL’s primary endpoint is the six-minute walk distance (6MWD). Secondary endpoints will include the Kansas City Cardiomyopathy Questionnaire (KCCQ)¹ and BNP/NT-proBNP (B-type natriuretic peptide and N-terminal pro-B-type natriuretic peptide). The latter elements are biomarkers used to help diagnose and monitor heart failure. Clinical worsening events and change in NYHA (New York Heart Association) functional class are other outcome measures that will be monitored.

No long-term, cardiovascular outcomes trial will be required given the long-term data related to levosimendan use in patients. This allowance will reduce the cost and shorten the time to develop a new drug application (NDA) for TNX-103. Three sites have been officially listed on the Clinical Trials website and others are in the process of being added at leading cardiovascular centers in the US and Canada. This includes sites that participated in the Phase II HELP study.

Key LEVEL details:

➢ Launch in 4Q:23

➢ 6-minute walk distance is primary endpoint

➢ 6-month drug exposure required for 300 patients

➢ 12-month drug exposure required for 100 patients

➢ No cardiovascular outcomes trial required

➢ Oral administration

$9 Million Public Offering

On February 8th, 2024 Tenax announced that it had priced $9 million in a public offering to access additional funds to support its Phase III LEVEL trial. The deal includes the issuance of 1.6 million shares and 3.2 million at a purchase price of $5.65 per share. Warrants have a duration of five years with an exercise price of $5.65. Roth Capital Partners is serving as the placement agent.

Patents

Notice of Allowance for Additional PH-HFpEF Patent

Tenax informed investors through a press release on February 6th, 2024 that it had been granted a notice of allowance from the US Patent and Trademark Office (USPTO) for the use of levosimendan in PH-HFpEF. The patent is entitled Levosimendan for treating pulmonary hypertension with heart failure with preserved ejection fraction (PH-HFpEF) and has an anticipated expiration in December 2040. The patent will grant the use of oral, subcutaneous and intravenous administration of levosimendan at all therapeutic doses and in combination with various cardiovascular drugs in PH-HFpEF patients.

Patent Application Granted Notice of Allowance

On February 1st, 2023 Tenax announced it had received a notice of allowance from the USPTO for patent number 11,607,412 entitled Levosimendan for Treating Pulmonary Hypertension with Heart Failure and Preserved Ejection Fraction (PH-HFpEF). A notice of allowance is issued when an examiner determines that a patent application satisfies the requirements for patentability. On March 22nd, Tenax reported that the patent was issued. The patent is expected to provide protection until December 2040 and addresses the subcutaneous use of levosimendan. Intravenous levosimendan has been available generically for many years in Europe as the composition of matter patent expired many years ago; however, the drug was not approved in the US in any form.

Upcoming Milestones

➢ Reverse Stock Split – January 2024

➢ First enrollment of Phase III PH-HFpEF subject in levosimendan trial – February 2024

➢ Complete enrollment in LEVEL trial – 1H:25

➢ LEVEL topline results – 2H:25

Valuation

We update our valuation to reflect the reverse stock split, the recent capital raise, shares related to future capital needs over the next year and the advance of our discounted cash flow model forward one year. As a reminder, we expect clinical trials to continue for levosimendan in PH-HFpEF with registrational results available and FDA submission in 2028 following a second Phase III trial. First sales are expected in 2029. Based on our assumptions, the valuation is $35 per share.

Summary

Tenax has continued to build its patent portfolio which will provide durable protection for its oral levosimendan franchise in PH-HFpEF until at least the end of 2040. With sufficient capital in the bank and the first patient enrolled, we expect Tenax to accelerate its Phase III efforts at an increasing number of sites as 2024 progresses. While imatinib for PAH is on hold, it may move into the spotlight depending on the performance of other programs and capital availability.

Levosimendan may provide a material improvement in quality of life and disease symptoms for patients suffering from Group 2 pulmonary arterial hypertension. Based on the size of an unpenetrated market with no other options, the supportive data generated in the HELP trial and the low entry price for Tenax stock, the opportunity for investors with sufficient funds to see the programs to conclusion appears to be substantial. We update our valuation to $35.00 per share.

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