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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-31 · 88 added, 81 removed, 138 unchanged (55% of the section changed)

ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis together with the consolidated financial statements and the related notes to those statements included in Item 8 – “Financial Statements and Supplementary Data”.

You should read the following discussion and analysis together with the consolidated financial statements and the related notes to those statements included in Part II, Item 8 – “Financial Statements and Supplementary Data”.

This discussion contains forward-looking statements that involve risks and uncertainties.

As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

Tenax Therapeutics 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.

The Company 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.

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On November 13, 2013, we acquired a license granting Life Newco, 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.

On October 9, 2020 and January 25, 2022, we entered into amendments to the license agreement between the Company and Orion to include in the scope of the license two new oral product formulations containing levosimendan, in capsule and solid dosage form (TNX-103), and a subcutaneously administered dosage form (TNX-102), subject to specified limitations.

In February 2024, we entered into an additional amendment to the license, providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of PH-HFpEF, revising the royalty structure, lowering the royalty rates, modifying milestones associated with certain regulatory and commercial achievements, and excluding from our right of first negotiation the right to commercialize new applications of levosimendan for neurological diseases and disorders developed by Orion.

On January 15, 2021, we acquired 100% of the equity of PHPM, with PHPM surviving as our wholly-owned subsidiary.

As a result of the merger, pending the outcome of our strategic process, we plan to develop and commercialize pharmaceutical products containing imatinib for the treatment of PAH.

Reverse Stock Splits

The Company has adjusted all share amounts and references to stock prices in this Annual Report on Form 10-K, as well as our financial statements, to reflect that on January 2, 2024, we effected a 1-for-80 reverse stock split (the “Reverse Stock Split”), and on January 4, 2023, we effected a 1-for-20 reverse stock split (the “Prior Reverse Stock Split”, together with the Reverse Stock Split, the “Reverse Stock Splits”).

The Reverse Stock Splits did not change the number of authorized shares of capital stock or cause an adjustment to the par value of our capital stock.

Pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under our outstanding stock options and warrants.

The number of shares authorized for issuance pursuant to our equity incentive plans have also been adjusted proportionately to reflect the Reverse Stock Splits.

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 recently elected to prioritize the Phase 3 testing of levosimendan, ahead of imatinib, with plans to commence a levosimendan Phase 3 study in 2023.

Supporting this strategic decision is a U.S.

Patent issued in March 2023, covering the use of IV levosimendan in patients with PH-HFpEF.

This patent is the second levosimendan patent granted to Tenax since the start of 2022, and Tenax believes it provides strong precedent for the ongoing review of a third patent which may be granted in 2023 or 2024.

This prioritization of the Phase 3 testing of levosimendan places the start of a Phase 3 imatinib trial likely outside the 2023 timeframe, pending fundraising to support that trial, as well as other strategic considerations.

Having carefully considered alternatives within the ongoing strategic process announced in September 2022, and having raised capital expected to fund the Company through 2024, the Company has elected to prioritize its LEVEL trial (Phase 3 testing of oral levosimendan), ahead of imatinib.

Activity to initiate the LEVEL trial continued in the fourth quarter of 2023, and site qualification, selection, and initiation processes are ongoing, the Company having received U.S.

Food and Drug Administration (“FDA”) input into the oral levosimendan protocol and clinical development program in the third quarter of 2023.

The Company began initiating sites in the fourth quarter of 2023, and commenced enrolling patients early in 2024.

Additional funding will be needed to complete the LEVEL trial, which includes an open label extension phase following the completion of the randomized phase.

The Company will complete efficacy and safety analyses of levosimendan versus placebo at the end of the randomized treatment phase, but many patients will continue to be treated under the protocol on open label levosimendan, beyond the completion of these analyses.

Supporting this strategic decision to prioritize levosimendan development and commence Phase 3 trial work 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 us since the start of 2022.

An additional new patent to be issued in early 2024 provides protections covering all therapeutic doses of all three formulations of the product in patients with PH-HFpEF.

Given our prioritization of the Phase 3 testing of levosimendan, we have suspended plans to launch an imatinib Phase 3 trial.

The Company took steps to reduce its monthly operating expenses and conserve cash, as it commenced exploring strategic alternatives in late 2022.

The Company has cancelled substantially all of its non-essential operating expenses such as consulting, its office lease, and dues and subscriptions and office supplies associated with that leased office.

The Company at that time cancelled many non-essential operating expenses such as consulting, 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 CRO increased outreach to North American clinical trial sites, Institutional Review Boards, and other partners who will support the LEVEL trial, and in the fourth quarter of 2023 commenced site initiations.

Pending the outcome of our ongoing strategic process, the 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 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.

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 either one or two Phase 3 trials of levosimendan and, when appropriate, a single Phase 3 trial of imatinib.

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.

We also intend to continue outsourcing to CROs, and seeking and acting upon the advice of preeminent scientists focused on cardiovascular and pulmonary drug development, 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.

Levosimendan has shown promise in multiple disease areas in the more than two decades following its approval.

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.

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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.

Likewise, the regulatory pathway for approval of imatinib for the treatment of PAH, as formulated by us at the dose shown to be effective in a prior Phase 3 trial conducted by Novartis, allows us to build on the dossier of research results already reviewed by the FDA.

In order to achieve our objective 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.

Additionally, we believe we will be able to leverage clinical safety data and preclinical results from some programs to support accelerated clinical development efforts in other areas, saving substantial development time and resources compared to traditional drug development.

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.

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 was issued on March 21, 2023.

At present, we have two patents pending, with additional decisions expected in 2023.

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 uses of our existing technologies, alone or in combination with existing therapies, as well as other product candidates.

Notice of Allowance and Patents

On February 1, 2023, the Company announced it was granted a Notice of Allowance from the 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.

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.

11,701,355) provides exclusivity through December 2040.

On February 6, 2024, the Company announced it was granted a Notice of Allowance from USPTO for its patent application broadening IP protection for oral, I.V., and subcutaneous use of levosimendan and its active metabolites in PH-HFpEF, at all therapeutic doses and in combination with various cardiovascular drugs.

At present, we have other patent applications pending, with additional decisions expected in the future.

Patents pending in Europe may lead to intellectual property protections on the use of levosimendan in patients with PH-HFpEF in 2024.

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.

We believe this strategy will help us 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.

To do so, we 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.

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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.

The COVID-19 pandemic or similar epidemics 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 such illnesses, which could negatively impact our trials, increase our operating expenses, and have a material adverse effect on our financial results.

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.

Comparison of Our Results of Operations for the Years Ended December 31, 2023 and 2022

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Research and development

(19,769,982 )

Total operating expenses

(21,675,598 )

General and Administrative Expenses

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Personnel costs

$ (2,581,972 )

Legal and professional fees

Personnel costs decreased approximately $2.6 million for the year ended December 31, 2022, compared to the same period in the prior year.

The decrease was primarily due to approximately $1.2 million in severance costs associated with the departure from the Company of the former CEO and other employees in 2021, as well as approximately $266,000 in noncash compensation expense resulting from the modification of the former CEO’s outstanding stock options and the grant of an additional stock option on his separation date.

Legal and professional fees increased approximately $599,000 for the year ended December 31, 2022, compared to the same period in the prior year.

Personnel costs decreased approximately $194,000 for the year ended December 31, 2023, compared to the same period in the prior year.

The decrease was due to reductions in head count and stock compensation expenses.

Stock Compensation expense was approximately $191,000 for the year ended December 31, 2023, and decreased approximately $174,000 compared to the same period in the prior year.

The decrease in expense was due to the decrease in head count and option awards during the year.

Legal and professional fees decreased approximately $402,000 for the year ended December 31, 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 increased approximately $245,000 for the year ended December 31, 2022, as compared to the same period in the prior year.

The increase was primarily due to capital market activities and IP related costs.

Professional fees increased approximately $354,000 for the year ended December 31, 2022, compared to the same period in the prior year.

The increase was primarily attributable to increased consulting fees offset by a decrease in accounting, capital markets, and investor relations costs.

Legal fees decreased approximately $264,000 for the year ended December 31, 2023, as compared to the same period in the prior year.

The decrease was primarily due to lower capital market activities and IP-related costs.

Professional fees decreased approximately $138,000 for the year ended December 31, 2023, compared to the same period in the prior year.

The decrease was primarily attributable to decreased consulting fees and a decrease in accounting, capital markets, and investor relations costs.

Other costs increased approximately $50,000 for the year ended December 31, 2023, compared to the same period in the prior year.

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The increase was primarily attributable to increased costs for insurance offset by decreases in franchise and other taxes.

Facilities costs include costs paid for rent and utilities at our corporate headquarters in North Carolina.

Facilities costs remained relatively unchanged for the years ended December 31, 2022 and 2021.

Facilities costs decreased approximately $124,000 for the year ended December 31, 2023, compared to the same period in the prior year.

The decrease was primarily attributable to lower costs paid for rent and utilities at our corporate headquarters in North Carolina.

Research and Development Expenses

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Clinical and preclinical development

Personnel costs

$ (2,348,264 )

Clinical and preclinical development costs increased approximately $2.0 million for the year ended December 31, 2022 as compared to the same period in the prior year.

Clinical and preclinical development costs consist of expenses associated with our Phase 2 HELP Study for levosimendan, which was completed during fiscal year 2020, the ongoing open label extension phase of this study, costs associated with our intravenous-to-oral levosimendan transition study, and development costs associated with the formulation for imatinib.

The increase is primarily attributable to approximately $2.8 million in expenditures for CRO and development costs associated with imatinib offset by decreased costs of approximately $800,000 related to our modified release imatinib.

Personnel costs decreased $4,732 for the year ended December 31, 2022, as compared to the same period in the prior year.

The decrease is primarily attributable to increased compensation costs offset by a decrease in annual bonus expense.

Other costs decreased approximately $21.8 million for the year ended December 31, 2022, as compared to the same period in the prior year.

The decrease is primarily attributable to the recognition of in-process research and development acquired as part of the merger with PHPM in the prior period.

There were no such expenses incurred in the current year.

Other Income and Expense

Personnel costs

Clinical and preclinical development costs decreased approximately $2.3 million for the year ended December 31, 2023 as compared to the same period in the prior year.

Clinical and preclinical development costs consist of expenses associated with the ongoing open label extension phase of our Phase 2 HELP Study for levosimendan, costs associated with our intravenous-to-oral levosimendan transition 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 suspended clinical development activities for this product candidate in 2022, offset by increased LEVEL trial costs in 2023.

Personnel costs increased approximately $145,000 for the year ended December 31, 2023, as compared to the same period in the prior year.

The increase is primarily attributable to increased incentive compensation costs.

Other costs increased approximately $55,000 for the year ended December 31, 2023, as compared to the same period in the prior year.

The increase is primarily attributable to higher regulatory costs over the prior year.

Other Income and Expense, Net

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, changes in the fair value of financial assets and derivative liabilities, interest income earned and fixed asset disposals.

Other income decreased approximately $246,000 for the year ended December 31, 2022, compared to the same period in the prior year.

This increase is due primarily to the forgiveness of our loan pursuant to the Paycheck Protection Program (“PPP Loan”) in the prior period.

These items include, but are not limited to, interest income earned and fixed asset disposals.

Other income increased approximately $538,000 for the year ended December 31, 2023, compared to the same period in the prior year.

This increase is due primarily to the interest earned from the Company’s money market accounts.

Liquidity, Capital Resources and Plan of Operation

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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 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.

We expect to incur additional expenses related to our development and potential commercialization of levosimendan in the LEVEL trial and, pending the outcome of our strategic process, 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.

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Development timelines, probability of success and development costs vary widely.

We are currently focused on developing our two product candidates, levosimendan and imatinib;

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.

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Clinical and Preclinical Product Development

We are currently concluding an 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.

We are also developing a new formulation of imatinib.

Our ability to continue to pursue development of our products beyond the first quarter of calendar year 2024 will depend on obtaining license income or outside financial resources.

We are currently conducting a Phase 3 trial of oral levosimendan (LEVEL), and intend to recruit patients throughout 2024 and into at least the first half of 2025.

Our ability to continue to pursue development of our products, including completing the LEVEL trial, beyond 2024 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 respiratory illnesses 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 themselves, which would delay our ability to complete our clinical trials or release clinical trial results.

See “ Item 1A – Risk Factors ” above for additional discussion.

On February 8, 2024, we sold in a registered public offering (i) an aggregate of 421,260 shares of our common stock and pre-funded warrants to purchase an aggregate of 1,178,740 shares of our common stock and (ii) accompanying warrants to purchase up to an aggregate of 3,200,000 shares of our common stock at a combined offering price of $5.65 per share of common stock and associated warrant, or $5.649 per pre-funded warrant and associated warrant, resulting in gross proceeds to the Company of approximately $9.0 million.

Net proceeds of the offering were approximately $8.0 million, after deducting the placement agent fees and estimated 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.

On July 6, 2021, we sold 238,664 units in a private placement at a purchase price of $41.90 per unit for net proceeds of approximately $10 million.

As retrospectively adjusted for the Reverse Stock Split, on February 3, 2023, we sold in a registered public offering (i) an aggregate of 86,994 shares of our common stock and pre-funded warrants to purchase an aggregate of 21,341 shares of our common stock and (ii) accompanying warrants to purchase up to an aggregate of 216,667 shares of our common stock at a combined offering price of $144.00 per share of common stock and associated warrant, or $143.92 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 $14.1 million, after deducting the placement agent fees and offering expenses payable by the Company.

As retrospectively adjusted for the Reverse Stock Splits, on May 17, 2022, we sold 6,623 units in a private placement at a purchase price of $1,240.00 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.

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Net cash used in operating activities was approximately $5.9 million for the year ended December 31, 2023 compared to approximately $11.4 million for the year ended December 31, 2022.

The increase in cash used for operating activities was primarily due to an increase in our annual insurance premiums, trade accounts payable and accrued compensation as compared to the prior year.

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.

Net cash (used in)/provided by investing activities

Net cash used in or provided by investing activities was approximately $2,843 for the year ended December 31, 2023, compared to approximately $(2,323) in the year ended December 31, 2022.

The decrease in cash provided by investing activities was primarily due to the purchase of fixed assets in the current period offset by sale of marketable securities in the prior period.

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 $8.6 million for the year ended December 31, 2022 and is primarily attributable to net proceeds from the sale of stock units in our May 2022 private placement of $7.9 million and the exercise of stock warrants of $0.6 million.

Net cash provided by financing activities was approximately $9.7 million for the year ended December 31, 2021 and is primarily attributable to net proceeds from the sale of stock units in our July 2021 private placement of $9.2 million and the exercise of stock warrants of $0.5 million.

Net cash provided by financing activities was approximately $13.6 million for the year ended December 31, 2023, compared to approximately $7.9 million in the prior year.

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

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the possible costs of litigation.

Based on our working capital on December 31, 2022, and the financing completed on February 7, 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 and in the future in order to complete the regulatory approval and commercialization of levosimendan as well as to fund the development and commercialization of other future product candidates.

Based on our working capital on December 31, 2023, and the financing completed on February 8, 2024, we believe we have sufficient capital on hand to continue to fund operations through 2024.

We will need substantial additional capital beyond 2024, assuming ongoing activities with the LEVEL trial continue at the expected pace.

In addition, we will need additional funding in the future in order to 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.

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fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.

Stock-Based Compensation —We account for stock-based awards to employees in accordance with Accounting Standards Codification, or ASC, 718, Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation.

Stock-Based Compensation —We account for stock-based awards to employees in accordance with Accounting Standards Codification, or ASC 718:

Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation.

Fair values of equity securities are determined by management based predominantly on the trading price of our common stock.

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That cost is recognized over the period during which the employee is required to provide service in exchange for the reward.

We account for equity instruments issued to non-employees in accordance with ASC 505-50, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

We account for equity instruments issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees.

We record equity instruments issued to non- at their fair value on the measurement date and periodically adjust them as the underlying equity instruments vest.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board, or the FASB, issued an accounting standard intended to simplify accounting for income taxes.

It removes certain exceptions to the general principles in Topic 740, Income Taxes, and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted.

We adopted this standard on January 1, 2021.

Our adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income.

This standard requires that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2023, with early adoption permitted.

A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach.

We do not believe the adoption of this standard will have a material impact on our consolidated financial statements and related disclosures.

We adopted this standard on January 1, 2023.

Our adoption of the new guidance did not have a significant impact on our consolidated financial statements.

ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis