TENAX THERAPEUTICS, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANA LYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The 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. Cautionary Note Regarding Forward-Looking Statements This 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. Overview Tenax 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 pulmonary hypertension 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. Currently, we do not have any significant imatinib development activities ongoing. Importantly, both levosimendan and imatinib have already been approved in other indications and prescribed around the world starting more than 25 years ago, 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. Recent Events In March 2025 and August 2024, we completed two private placement financings raising gross proceeds, in the aggregate, of approximately $125 million. We intend to use the net proceeds from these financings, together with proceeds received from the subsequent exercise of warrants and pre-funded warrants sold in the March 2025 and August 2024 offerings, to advance our Phase 3 oral levosimendan program. Specifically, we plan to complete our ongoing Phase 3 LEVEL clinical trial of TNX-103 in PH-HFpEF and make public before the end of 2026 the results of the 12-week randomized treatment period. The open-label stage of the trial will continue after this. We also plan to continue our second, global, Phase 3 clinical trial, LEVEL-2, which began in December 2025. Following completion of the two Phase 3 levosimendan trials, we intend to submit marketing authorization applications. Our Phase 3 LEVEL clinical trial continues, with high rates of clinical trial and therapy continuation during the blinded and open-label extension stages. We completed randomization in the LEVEL clinical trial of more than 230 patients before the end of the first quarter of 2026, and we expect to report initial topline data in August of 2026. LEVEL is being conducted in the United States and Canada. Our second Phase 3 clinical trial, LEVEL-2, is ongoing globally, with enrollment completion anticipated by the end of 2027. Based on our current operating plan, we believe that our existing cash and cash equivalents as of June 30, 2026, along with cash received from warrant exercises subsequent to quarter end, will be sufficient to fund our planned operations through the second quarter of 2028. 15 Table of Contents Financial Overview – Three and Six Months Ended June 30, 2026 (in thousands) For the three months ended June 30, Increase/ % Increase/ For the six months ended June 30, Increase/ % Increase/ 2026 2025 (Decrease) (Decrease) 2026 2025 (Decrease) (Decrease) Operating expenses: Research and development $ 12,850 $ 6,121 $ 6,729 110 % $ 24,389 $ 11,804 $ 12,585 107 % Selling, general and administrative 5,934 5,671 263 5 % 10,968 11,326 (358 ) (3 ) % Total operating expenses $ 18,784 $ 11,792 $ 6,992 59 % $ 35,357 $ 23,130 $ 12,227 53 % Net operating loss (18,784 ) (11,792 ) (6,992 ) 59 % (35,357 ) (23,130 ) (12,227 ) 53 % Other segment items Interest income 981 954 27 3 % 1,842 1,884 (42 ) (2 ) % Other expense, net - (9 ) 9 (100 ) % (4 ) (9 ) 5 (56 ) % Net loss $ (17,803 ) $ (10,847 ) $ (6,956 ) 64 % $ (33,519 ) $ (21,255 ) $ (12,264 ) 58 % Research and Development Expenses Research 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 and six months ended June 30, 2026 and 2025 are as follows (in thousands): For the three months ended June 30, Increase/ % Increase/ For the six months ended June 30, Increase/ % Increase/ 2026 2025 (Decrease) (Decrease) 2026 2025 (Decrease) (Decrease) Clinical and preclinical development $ 11,004 $ 4,515 $ 6,489 144 % $ 21,037 $ 8,788 $ 12,249 139 % Salary and benefits 971 468 503 107 % 1,862 839 1,023 122 % Stock-based compensation 674 982 (308 ) (31 ) % 1,211 1,843 (632 ) (34 ) % Other costs 201 156 45 29 % 279 334 (55 ) (16 ) % Total research and development expense $ 12,850 $ 6,121 6,729 110 % $ 24,389 $ 11,804 12,585 107 % Clinical and preclinical development costs increased $6.5 million and $12.2 million for the three and six months ended June 30, 2026, respectively, as compared to the same period in the prior year. Clinical and preclinical development costs for the three and six months ended June 30, 2026 consist primarily of expenses associated with our ongoing Phase 3 LEVEL trial and our second, larger, global, Phase 3 clinical trial, LEVEL-2, which began in December 2025, as compared to the three and six months ended June 30, 2025, which consisted primarily of costs associated with our Phase 3 LEVEL trial. Salary and benefits costs increased by $0.5 million and $1.0 million for the three and six months ended June 30, 2026, respectively, as compared to the same period in the prior year primarily due to the hiring of additional development personnel resulting in higher salary and benefit costs. 16 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of compensation for executive, commercial and administrative personnel, including non-cash stock-based compensation. Other selling, 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. Selling, general and administrative expenses and percentage changes for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands): For the three months ended June 30, Increase/ % Increase/ For the six months ended June 30, Increase/ % Increase/ 2026 2025 (Decrease) (Decrease) 2026 2025 (Decrease) (Decrease) Salary and benefits $ 1,144 $ 673 $ 471 70 % $ 1,983 $ 1,218 $ 765 63 % Stock-based compensation 2,657 3,626 (969 ) (27 ) % 4,957 6,907 (1,950 ) (28 ) % Legal and professional fees 1,612 1,050 562 54 % 2,978 2,309 669 29 % Other costs 521 322 199 62 % 1,050 892 158 18 % Total selling, general and administrative expense $ 5,934 $ 5,671 263 5 % $ 10,968 $ 11,326 (358 ) (3 ) % Salary and benefits increased $0.5 million and $0.8 million for the three and six months ended June 30, 2026, compared to the same period in 2025. The change was primarily attributable to increased personnel and their related compensation and benefits. Non-cash stock-based compensation expense decreased $1.0 million and $1.9 million for the three and six months ended June 30, 2026, respectively, 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. Legal and professional fees consist of general legal costs, those related to our intellectual property, accounting fees, consulting fees and investor relations services, as well as fees paid to the members of our Board of Directors. Legal and professional fees increased $0.6 million and $0.7 million for the three and six months ended June 30, 2026, respectively, as compared to the same period in the prior year. Other costs include expenses incurred for franchise and other taxes, travel, supplies, insurance, depreciation, and other miscellaneous charges. As we advance the development of levosimendan, our selling, general and administrative expenses have been increasing. We recently began to incur commercial costs, and with levosimendan continuing through Phase 3 development and progressing closer to commercial availability, we expect our selling, general and administrative expenses to increase in future periods. Interest Income and Other Expense, net Interest income and other expense was flat for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. Liquidity, Capital Resources and Plan of Operation We have incurred losses since our inception and, as of June 30, 2026, we had an accumulated deficit of $401.0 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, potentially, 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 product sales, royalty and other revenues to achieve profitability. The 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 17 Table of Contents imatinib, and have prioritized levosimendan. We will need substantial additional capital in the future in order to finalize the development of levosimendan, commence its commercialization, potentially reinitiate the development of imatinib, and to continue with the development of other potential product candidates. Liquidity We 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 $121.7 million and $104.2 million and working capital of $113.6 million and $97.1 million as of June 30, 2026 and December 31, 2025, respectively. Warrant exercises resulted in approximately $13.4 million and $43.8 million of cash for the Company in the three and six months ended June 30, 2026, respectively. There is the potential to raise an additional $34 million if all outstanding warrants from the August 2024 Offering and February 2024 Offering as of June 30, 2026 are exercised. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds. We completed randomization in the LEVEL trial at the end of the first quarter of 2026 and expect to report topline data in August 2026. We began our LEVEL-2 trial in December 2025 and are currently enrolling patients, with enrollment completion anticipated by the end of 2027. Our ability to continue to pursue development of our products beyond the second quarter of 2028, including completion of this second Phase 3 oral levosimendan trial (LEVEL-2), will depend on obtaining license income, income from warrants exercised by investors should they elect to do so, or other financial resources. There is no assurance that we will obtain any license agreement or other financing or that we will otherwise succeed in obtaining any necessary resources. Financings On March 5, 2025, we sold 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 March 2025 Offering were $23.2 million, after deducting the placement agent fees and offering expenses payable by the Company. On 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 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. Cash Flows The following table shows a summary of our cash flows for the periods indicated (in thousands): Six months ended June 30, 2026 2025 Net cash used in operating activities $ (23,459 ) $ (13,230 ) Net cash provided by investing activities - - Net cash provided by financing activities 43,870 23,841 Operating Activities Net cash used in operating activities was $23.5 million for the six months ended June 30, 2026, compared to $13.2 million for the six months ended June 30, 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 six months ended June 30, 2026 as compared to the prior year period. Investing Activities There was no net cash provided or consumed by investing activities for the six months ended June 30, 2026 or the six months ended June 30, 2025. Financing Activities Net cash provided by financing activities was $43.9 million for the six months ended June 30, 2026, compared to $23.8 million for the six months ended June 30, 2025, an increase of $20.0 million. During the six months ended June 30, 2026, the Company 18 Table of Contents received proceeds of $43.8 million from the exercise of warrants and pre-funded warrants. During the six months ended June 30, 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 $0.6 million from the exercise of warrants and pre-funded warrants. Operating Capital and Capital Expenditure Requirements Our future capital requirements will depend on many factors that include, but are not limited to the following: • the initiation, design, progress, timing and completion of clinical trials for our product candidates and potential product candidates; • the outcome, timing and cost of regulatory approvals and the regulatory approval process; • delays that may be caused by changing regulatory requirements and resource levels at regulators; • the number of product candidates we pursue; • the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; • the timing and terms of future collaboration, licensing, consulting or other arrangements that we may enter into; • the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities; • the cost of procuring clinical and commercial supplies of our product candidates; • the extent to which we acquire or invest in businesses, products or technologies; and • the possible costs of litigation. Based on our working capital on June 30, 2026, and additional cash received subsequent to quarter end of $8.1 million, we believe we have sufficient capital on hand to fund operations through the second quarter of 2028. Critical Accounting Policies and Significant Judgments and Estimates Our 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. Off-Balance Sheet Arrangements Since 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. 19 Table of Contents ITEM 3. QUANTITATIVE AND QUA LITATIVE DISCLOSURES ABOUT MARKET RISK Smaller reporting companies are not required to provide the information required by this item. ITEM 4. CON TROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, under the supervision and with the participation of our management, including our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), we conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on their evaluation, our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), concluded that our disclosure controls and procedures were effective as of June 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q, in that they provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC and is accumulated and communicated to our management, including our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We routinely review our internal controls over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal controls over financial reporting on an ongoing basis and will take action as appropriate. 20 Table of Contents PART II – OTHER INFOR MATION ITEM 1. LE GAL PROCEEDINGS There are no material pending legal proceedings to which we are a party or to which any of our property is subject. ITEM 1A. RIS K FACTORS The risks we face have not materially changed from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.