TENAX THERAPEUTICS, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS 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, 2022. All references in this Quarterly Report to “Tenax Therapeutics,” “Tenax,” “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 was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. Effective June 30, 2008, we changed the domiciliary state of the corporation to Delaware and changed the Company name to Oxygen Biotherapeutics, Inc. On September 19, 2014, we changed the Company name to Tenax Therapeutics, Inc. On November 13, 2013, we acquired a license granting Life Newco Inc., our wholly-owned subsidiary, an exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. On October 9, 2020 and January 25, 2022, we entered into amendments to the license to include two product dose forms containing levosimendan, in capsule and solid dosage form, and a subcutaneously administered product containing levosimendan, subject to specified limitations. On January 15, 2021, we acquired 100% of the equity of PHPrecisionMed Inc., a Delaware corporation, or PHPM, with PHPM surviving as our wholly-owned subsidiary. As a result of the merger, we plan to develop and commercialize pharmaceutical products containing imatinib for the treatment of pulmonary arterial hypertension, or PAH. Business Strategy Having carefully considered alternatives within the ongoing strategic process announced in September 2022, and having raised capital to fund the Company through to the first quarter of 2024, the Company has elected to prioritize its LEVEL trial (Phase 3 testing of oral levosimendan to treat pulmonary hypertension and heart failure with preserved ejection fraction (PH-HFpEF)), ahead of imatinib. Activity to initiate the LEVEL trial continued in the third quarter of 2023, and site qualification and selection processes are ongoing, the Company having received FDA input into the oral levosimendan protocol and clinical development program in the third quarter of 2023. The Company plans to begin initiating sites in the fourth quarter of 2023 and enrolling patients early in 2024. Additional funding will be needed to complete the LEVEL trial. Supporting the strategic decision to prioritize levosimendan were two U.S. Patents issued in March and July 2023, covering the use of IV and oral levosimendan in patients with PH-HFpEF. These patents are the second and third levosimendan patents granted to Tenax since the start of 2022. This prioritization of the Phase 3 testing of levosimendan places the start of a Phase 3 imatinib trial outside the 2023 timeframe, pending strategic considerations. 17 Table of Contents The Company took steps to reduce its monthly operating expenses and conserve cash, as it commenced exploring strategic alternatives in late 2022. The Company at that time cancelled many non-essential operating expenses such as its office lease, and dues and subscriptions and office supplies associated with that leased office. During the third quarter of 2023, the Company and its contracted clinical research organization (CRO) increased outreach to North American clinical trial sites, Institutional Review Boards, and other partners who will support the LEVEL trial, resulting in an increase in R&D expenses in the third quarter of 2023. Pending the outcome of our ongoing strategic process, key elements of our business strategy are outlined below. Efficiently conduct clinical development to establish clinical proof of principle in new indications, refine formulation, and commence Phase 3 testing of our current product candidates. Levosimendan and imatinib have been approved and prescribed in countries around the world for more than 20 years, but we believe their mechanisms of action have not been fully exploited, despite promising evidence they may significantly improve the lives of patients with pulmonary hypertension. We are conducting clinical development with the intent to establish proof of beneficial activity in cardiopulmonary diseases in which these therapeutics would be expected to have benefit for patients with diseases for which either no pharmaceutical therapies are approved at all, or in the case of PAH, where numerous, expensive therapies generally offer a modest reduction of symptoms. Our focus is primarily on designing and executing formulation improvements, protecting these innovations with patents and other forms of exclusivity, and employing innovative clinical trial science to establish a robust foundation for subsequent development, product approval, and commercialization. We intend to submit marketing authorization applications following two Phase 3 trials of levosimendan and, when appropriate, a single Phase 3 trial of imatinib. Our trials are designed to incorporate and reflect advanced clinical trial design science and the regulatory and advisory experience of our team. We intend to continue partnering with innovative companies, renowned biostatisticians and trialists, medical leaders, formulation and regulatory experts, and premier clinical testing organizations to help expedite development, and continue expanding into complementary areas when opportunities arise through our development, research, and discoveries. We also intend to continue outsourcing when designing and executing our research. Efficiently explore new high-potential therapeutic applications, in particular where expedited regulatory pathways are available, leveraging third-party research collaborations and our results from related areas . Levosimendan has shown promise in multiple disease areas in the two decades following its approval. Our own Phase 2 study and open-label extension has demonstrated that a formerly under-appreciated mechanism of action of levosimendan, its property of relaxing the venous circulation, brings about durable improvements in exercise capacity and quality of life, as well as other clinical assessments, in patients with heart failure with PH-HFpEF. We believe this patient population today has no pharmaceutical therapies available and we are committed to exploring potential clinical indications where our therapies may achieve best-in-class profile, and where we can address significant unmet medical needs. We believe these factors will support approval by the FDA of these product candidates based on positive Phase 3 data. Through our agreement with our licensor, Orion, the originator of levosimendan for acute decompensated heart failure, we have access to a library of ongoing and completed trials and research projects, including certain documentation, which we believe, in combination with positive Phase 3 data we hope to generate in at least one indication, will support FDA approval of levosimendan. Likewise, the regulatory pathway for approval of imatinib for the treatment of PAH, as formulated by Tenax Therapeutics at the dose shown to be effective in a prior Phase 3 trial conducted by Novartis, allows Tenax to build on the dossier of research results already reviewed by the FDA. In order to achieve our objectives of developing these medicines for new groups of patients, we have established collaborative research relationships with investigators from leading research and clinical institutions, and our strategic partners. These collaborative relationships have enabled us to explore where our product candidates may have therapeutic relevance, gain the advice and support of key opinion leaders in medicine and clinical trial science, and invest in development efforts to exploit opportunities to advance beyond current clinical care. Continue to expand our intellectual property portfolio. Our intellectual property, and the confidentiality of all our Company information, is important to our business and we take significant steps to help protect its value. Our research and development efforts, both through internal activities and through collaborative research activities with others, aim to develop new intellectual property and enable us to file patent applications that cover new applications of our existing technologies, alone or in combination with existing therapies, as well as other product candidates. 18 Table of Contents Notice of Allowance and Patent On February 1, 2023, the Company announced it was granted a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for its patent application with claims covering the use of IV levosimendan (TNX-101) in the treatment of PH-HFpEF. This patent (U.S. Patent No. 11,607,412) was issued on March 21, 2023. On July 19, 2023, the Company announced USPTO issuance of another patent, this one including claims covering the use of oral levosimendan (TNX-103) in patients with PH-HFpEF. This issued patent (U.S. Patent No. 11,701,355) provides exclusivity through December 2040. At present, Tenax Therapeutics has other patent applications pending, with additional decisions expected beyond 2023. Enter into licensing or product co-development arrangements. In addition to our internal development efforts, an important part of our product development strategy is to work with collaborators and partners to accelerate product development, maintain our low development and business operations costs, and broaden our commercialization capabilities globally. We believe this strategy will help us to develop a portfolio of high-quality product development opportunities, enhance our clinical development and commercialization capabilities, and increase our ability to generate value from our proprietary technologies. As we focus on our strategic process, we also continue to position ourselves to execute upon licensing and other partnering opportunities. To do so, we will need to continue to maintain our strategic direction, manage and deploy our available cash efficiently and strengthen our collaborative research development and partner relationships. Historically, we have financed our operations principally through equity and debt offerings, including private placements and loans from our stockholders. Based on our current operating plan, there is substantial doubt about our ability to continue as a going concern. Management has implemented certain cost-cutting measures as described above and is actively exploring a diverse range of strategic options to help drive stockholder value including, among other things, capital raises, a sale of our Company, merger, one or more license agreements, a co-development agreement, a combination of these, or other strategic transactions; however, there is no assurance that these efforts will result in a transaction or other alternative or that any additional funding will be available. Our ability to continue as a going concern depends on our ability to raise additional capital, through the sale of equity or debt securities and through collaboration and licensing agreements, to support our future operations. If we are unable to complete a strategic transaction or secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs. COVID-19 The COVID-19 pandemic or similar epidemics as well as other societal/healthcare disruptions could in the future, directly or indirectly, adversely impact our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to or impact of such illnesses, which could negatively impact our trials, increase our operating expenses, and have a material adverse effect on our financial results. In May 2023, the World Health Organization declared that COVID-19 was no longer a global health emergency, however, any lingering impact or resurgence of COVID-19 cannot be estimated. We will continue to assess the potential impact of the COVID-19 pandemic on our business and operations, including our clinical operations and manufacturing activities. Financial Overview – Three Months Ended September 30, 2023 Operating Expenses Three months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Operating expenses General and administrative $ 1,051,524 $ 1,377,283 $ (325,759 ) (24 )% Research and development 1,065,855 1,540,205 (474,350 ) (31 )% Total operating expenses $ 2,117,379 $ 2,917,488 $ (800,109 ) (27 )% 19 Table of Contents General and Administrative Expenses General and administrative expenses were $1.0 million for the three months ended September 30, 2023, compared to $1.4 million for the same period in 2022. General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including 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 September 30, 2023 and 2022, respectively, are as follows: Three months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Personnel costs $ 439,622 $ 489,369 $ (49,747 ) (10 )% Legal and professional fees 412,121 668,172 (256,051 ) (38 )% Other costs 196,820 180,390 16,430 9 % Facilities 2,961 39,352 (36,391 ) (92 )% Total general and administrative expenses $ 1,051,524 $ 1,377,283 $ (325,759 ) (24 )% Personnel costs decreased approximately $50,000 for the three months ended September 30, 2023, compared to the same period in the prior year. The change was primarily due to decreased employment related costs due to lower headcount in the current period compared to the same period in the prior year. Legal and professional fees decreased approximately $256,000 for the three months ended September 30, 2023, compared to the same period in the prior year. 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 fees decreased approximately $24,000 for the three months ended September 30, 2023, compared to the same period in the prior year. The change was primarily due to decreased legal fees associated with general corporate matters, fundraising activities and IP costs that were incurred during the same period in the prior year. Professional fees decreased approximately $232,000 for the three months ended September 30, 2023, compared to the same period in the prior year. The change was primarily attributable to decreased capital market expenses and consulting expenses offset by increases in accounting costs. Other costs increased approximately $16,000 for the three months ended September 30, 2023, 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. The change was primarily attributable to increased costs for insurance and general office supplies offset by decreases in dues, franchise and other taxes and banking fees. Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina. Facilities costs decreased approximately $36,000 for the three months ended September 30, 2023, compared to the same period in the prior year. The decrease is the result of the Company’s relocation to new shared office space resulting in lower rent costs. 20 Table of Contents Research and Development Expenses Research and development expenses were approximately $1.1 million for the three months ended September 30, 2023, compared to $1.5 million for the same period in the prior year. Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, 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 September 30, 2023 and 2022, respectively, are as follows: Three months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Clinical and preclinical development $ 978,767 $ 1,376,795 $ (398,028 ) (29 )% Personnel costs 71,898 146,685 (74,787 ) (51 )% Other costs 15,190 16,725 (1,535 ) (9 )% Total research and development expenses $ 1,065,855 $ 1,540,205 $ (474,350 ) (31 )% Clinical and preclinical development costs decreased approximately $398,000 for the three months ended September 30, 2023 compared to the same period in the prior year. Clinical and preclinical development costs for the three months ended September 30, 2023 consist of start-up costs related to the LEVEL trial, compared with costs for the three months ended September 30, 2022 associated with our imatinib Phase 1 Pharmacokinetics Study, imatinib Phase 3 IMPROVE Study, and development costs associated with the formulation for imatinib. The decrease is primarily attributable to lower Phase 1 and Phase 3 costs for imatinib, since the Company paused clinical development activities for this product candidate in 2022, offset by increased LEVEL trial costs in the third quarter of 2023. Personnel costs decreased approximately $75,000 for the three months ended September 30, 2023, compared to the same period in the prior year, primarily attributable to the timing of general employment costs. Other costs decreased approximately $1,500 for the three months ended September 30, 2023, compared to the same period in the prior year, primarily attributable to decreased regulatory consulting costs. Other Income and Expense Other income and expense include non-operating income and expense items not otherwise recorded in our consolidated statement of comprehensive loss. These items include but are not limited to interest income earned and fixed asset disposals. Interest expense increased approximately $4,965 for the three months ended September 30, 2023, compared to the same period in the prior year. The change is due primarily to interest expense paid on the premium finance note agreement (the “Note”) with AFCO Credit Corporation. Other income increased approximately $149,000 primarily related to interest income on cash deposits as a result of the February 2023 offering. Financial Overview – Nine Months Ended September 30, 2023 Operating Expenses Nine months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Operating expenses General and administrative $ 3,363,511 $ 4,255,454 $ (891,943 ) (21 )% Research and development 1,529,493 4,242,565 (2,713,072 ) (64 )% Total operating expenses $ 4,893,004 $ 8,498,019 $ (3,605,015 ) (42 )% 21 Table of Contents General and Administrative Expenses General and administrative expenses were $3.3 million for the nine months ended September 30, 2023, compared to $4.3 million for the same period in 2022. General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including 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 nine months ended September 30, 2023 and 2022, respectively, are as follows: Nine months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Personnel costs $ 1,446,549 $ 1,617,284 $ (170,735 ) (11 )% Legal and professional fees 1,299,021 1,918,403 (619,382 ) (32 )% Other costs 592,174 606,538 (14,364 ) (2 )% Facilities 25,767 113,229 (87,462 ) (77 )% Total general and administrative expenses $ 3,363,511 $ 4,255,454 $ (891,943 ) (21 )% Personnel costs decreased approximately $171,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. The change was primarily due to decreased employment related costs in the current period compared to the same period in the prior year. Legal and professional fees decreased approximately $619,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. 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 fees decreased approximately $335,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. The change was primarily due to decreased legal fees associated with general corporate matters, fundraising activities and IP costs that were incurred during the same period in the prior year. Professional fees decreased approximately $284,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. The decrease was primarily attributable to decreased investor relations and consulting fees offset by increases in capital market fees and accounting costs. Other costs decreased approximately $14,000 for the nine months ended September 30, 2023, 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. The change was primarily attributable to decreased costs for travel, dues, taxes and general office supplies offset by increased costs for insurance. Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina. Facilities costs decreased approximately $87,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. The decrease is the result of the Company’s relocation to new shared office space resulting in lower rent costs. 22 Table of Contents Research and Development Expenses Research and development expenses were $1.5 million for the nine months ended September 30, 2023, compared to $4.2 million for the same period in the prior year. Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, 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 nine months ended September 30, 2023 and 2022, respectively, are as follows: Nine months ended September 30, Increase/ (Decrease) % Increase/ (Decrease) 2023 2022 Clinical and preclinical development $ 1,119,920 $ 3,751,696 $ (2,631,776 ) (70 )% Personnel costs 340,625 466,223 (125,598 ) (27 )% Other costs 68,948 24,646 44,302 180 % Total research and development expenses $ 1,529,493 $ 4,242,565 $ (2,713,072 ) (64 )% Clinical and preclinical development costs decreased approximately $2.6 million for the nine months ended September 30, 2023 compared to the same period in the prior year. Clinical and preclinical development costs for the nine months ended September 30, 2023 consist of start-up costs related to the LEVEL trial, compared to costs incurred in the same period in the prior year related to the Phase 2 HELP Open Label Extension Study for levosimendan, and costs associated with our imatinib Phase 1 Pharmacokinetics Study, imatinib Phase 3 IMPROVE Study, and development costs associated with the formulation for imatinib. The decrease is primarily attributable to lower Phase 1 and Phase 3 costs for imatinib, since the Company paused clinical development activities for this product candidate in 2022, offset by increased LEVEL trial costs in the third quarter of 2023. Personnel costs decreased approximately $126,000 for the nine months ended September 30, 2023, compared to the same period in the prior year, primarily attributable to the timing of general employment costs. Other costs increased approximately $44,000 for the nine months ended September 30, 2023, compared to the same period in the prior year, primarily attributable to increased regulatory consulting costs. Other Income and Expense Other income and expense include non-operating income and expense items not otherwise recorded in our consolidated statement of comprehensive loss. These items include but are not limited to interest income earned and fixed asset disposals. Interest expense increased approximately $17,000 for the nine months ended September 30, 2023, compared to the same period in the prior year. This increase is due primarily to interest expense paid on the Note. Other income increased $426,000 primarily related to an earned license fee and interest income earned on higher cash balances resulting from our securities offering offset, offset by the lease loss of $140,000. Liquidity, Capital Resources and Plan of Operation We have incurred losses since our inception and, as of September 30, 2023, we had an accumulated deficit of approximately $294.0 million. We will continue to incur losses until we generate sufficient revenue to offset our expenses, and we anticipate 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 in the LEVEL trial and imatinib for pulmonary hypertension 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. 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 imatinib, and have prioritized levosimendan in the short-term; however, we will need substantial additional capital in the future in order to complete the development and potential commercialization of levosimendan and imatinib, and to continue with the development of other potential product candidates. 23 Table of Contents 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 approximately $11.9 million and $3.2 million and working capital of approximately $11.3 million and $1.4 million as of September 30, 2023 and December 31, 2022, respectively. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds. Clinical and Preclinical Product Development We have completed the open label extension phase of the levosimendan HELP clinical trial, during which patients were transitioned from an intravenous to oral formulation of levosimendan for the treatment of pulmonary hypertension. In the third quarter of 2023, we also began site qualification and selection processes for the LEVEL trial. Our ability to continue to pursue development of our products beyond the first quarter of calendar year 2024, including completing the LEVEL trial, will depend on obtaining license income or outside financial resources. There is no assurance that we will obtain any license agreement or outside financing or that we will otherwise succeed in obtaining any necessary resources. The COVID-19 pandemic or a similar epidemic could in the future, directly or indirectly, adversely affect our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to or impact from respiratory illnesses or other similar widespread infections if an outbreak occurs in their geography. Further, some patients may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services, or if the patients become infected with COVID-19 or a similar disease themselves, which would delay our ability to complete our clinical trials or release clinical trial results. Financings On February 3, 2023, we sold in a registered public offering (i) an aggregate of 6,959,444 shares of our common stock and pre-funded warrants to purchase an aggregate of 1,707,222 shares of our common stock and (ii) accompanying warrants to purchase up to an aggregate of 17,333,332 shares of our common stock at a combined offering price of $1.80 per share of common stock and associated warrant, or $1.799 per pre-funded warrant and associated warrant, resulting in gross proceeds to the Company of approximately $15.6 million. Net proceeds of the offering were approximately $13.6 million, after deducting the placement agent fees and offering expenses payable by the Company. On May 17, 2022, we sold 529,802 units in a private placement at a purchase price of $15.50 per unit for net proceeds of approximately $7.9 million. Each unit consisted of one unregistered pre-funded warrant to purchase one share of our common stock and one unregistered warrant to purchase one share of common stock. Cash Flows The following table shows a summary of our cash flows for the periods indicated: Nine months ended September 30, 2023 2022 Net cash (used in) operating activities $ (4,728,992 ) $ (9,699,791 ) Net cash provided by (used in) investing activities 2,843 (6,323 ) Net cash provided by financing activities 13,743,603 7,928,591 Net cash used in operating activities. Net cash used in operating activities was approximately $4.7 million for the nine months ended September 30, 2023, compared to approximately $9.7 million for the nine months ended September 30, 2022. The decrease in cash used for operating activities was primarily due to lower expense activity in the current period as compared to the prior year. 24 Table of Contents Net cash provided by (used in) investing activities . Net cash provided by investing activities was approximately $2,843 for the nine months ended September 30, 2023, compared to net cash used in investing activities of approximately $6,300 in the nine months ended September 30, 2022. The increase in cash provided by investing activities was primarily due to the sale of office furniture related to the relocation of the Company’s headquarters. Net cash provided by financing activities . Net cash provided by financing activities was approximately $14.0 million for the nine months ended September 30, 2023, compared to approximately $8.0 million in the nine months ended September 30, 2022. The increase in cash provided by financing activities was due to the net proceeds from the February 3, 2023 sale of common stock and warrants and the exercise of 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, 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; · 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; · delays that may be caused by the global coronavirus pandemic or similar global societal disruptions; and · the possible costs of litigation. Based on our working capital on September 30, 2023, we believe we have sufficient capital on hand to continue to fund operations through to the first quarter of calendar year 2024. We will need substantial additional capital beyond the first quarter of calendar year 2024 assuming ongoing preparation, planning activities, and other outsourced activities associated with the LEVEL trial continue at the expected pace. In addition, we will need additional funding in the future in order to complete enrollment and treatment of patients in the LEVEL trial, complete the regulatory approval and commercialization of levosimendan, as well as to fund the development and commercialization of other future product candidates. Until we can generate a sufficient amount of product revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements. Such funding, if needed, may not be available on favorable terms, if at all. In the event we are unable to obtain additional capital, we may delay or reduce the scope of our current research and development programs and other expenses. As a result of our historical operating losses and expected future negative cash flows from operations, we have concluded that there is substantial doubt about our ability to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our December 31, 2022 consolidated financial statements include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock and make it more difficult to obtain financing. 25 Table of Contents If adequate funds are not available, we may also be required to eliminate one or more of our clinical trials, delaying approval of levosimendan or our commercialization efforts. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. We may also consider strategic alternatives, including a sale of our company, merger, other business combination or recapitalization. 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, 2022 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Smaller reporting companies are not required to provide the information required by this item.