TENX : Tenax Therapeutics Stock Analysis and Research Report

2017-11-10 - by Asif, Contributing Analyst

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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. Effective June 30, 2008, the company changed the domiciliary state of the corporation to Delaware and changed the company name to Oxygen Biotherapeutics, Inc. On September 19, 2014, the company changed the company name to Tenax Therapeutics, Inc.

Tenax Therapeutics, Inc. is a specialty pharmaceutical company focused on identifying, developing and commercializing products for the critical care market. On November 13, 2013, through its wholly owned subsidiary, Life Newco, Inc., or Life Newco, the company acquired a license granting Life Newco an exclusive, sublicenseable right in the United States and Canada to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial, for use in the reduction of morbidity and mortality in cardiac surgery patients at risk for developing Low Cardiac Output Syndrome, or LCOS.

The company were previously developing Oxycyte®, a systemic perfluorocarbon, or PFC, product the company believed to be a safe and effective oxygen carrier for use in situations of acute ischemia. In addition, the company previously developed a family of perfluorocarbon-based oxygen carriers for use in personal care, topical wound healing, and other topical indications. During 2014, the company suspended the development of these PFC products while the company evaluate strategic alternatives for future development and commercialization of these product candidates.

In 2015, its Board of Directors approved a change in its fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. Accordingly, this annual report on Form 10-K includes financial statements as of and for (i) the calendar year ended December 31, 2016; (ii) the eight months ended December 31, 2015; and (iii) the fiscal years ended April 30, 2015 and 2014.

For comparative purposes, an unaudited consolidated statement of operations and comprehensive loss has been included for the year ended December 31, 2015 and for the eight month period from May 1, 2014 to December 31, 2014. The financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 has not been audited and is derived from its books and records. In the opinion of management, the financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 reflects all adjustments necessary to present the financial position and results of operations in accordance with generally accepted accounting principles. Prior to the year-end change, its fiscal year ended on April 30 of each year.

Business Strategy

The company's principal business objective is to identify, develop, and commercialize novel therapeutic products for disease indications that represent significant areas of clinical need and commercial opportunity. The key elements of its business strategy are outlined below.

Efficiently conduct clinical development to establish clinical proof of concept with its lead product candidates. Levosimendan represents novel therapeutic modalities for the treatment of LCOS and other critical care conditions. Tenax Therapeutics is conducting clinical development with the intent to establish proof of concept in several important disease areas where these therapeutics would be expected to have benefit. The company's focus is on conducting well-designed studies to establish a robust foundation for subsequent development, partnership and expansion into complementary areas.

Efficiently explore new high potential therapeutic applications, leveraging third-party research collaborations and its results from related areas. The company's product candidates have shown promise in multiple disease areas. Tenax Therapeutics is committed to exploring potential clinical indications where its therapies may achieve best-in-class profile, and where the company can address significant unmet medical needs. In order to achieve this goal, Tenax Therapeutics has established collaborative research relationships with [investigators from research and clinical institutions and] its strategic partners. These collaborative relationships have enabled it to cost effectively explore where its product candidates may have therapeutic relevance, and how it may be utilized to advance treatment over current clinical care. Additionally, the company believe the company 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 its intellectual property portfolio. The company's intellectual property is important to its business and the company take significant steps to protect its value. Tenax Therapeutics has ongoing research and development efforts, both through internal activities and through collaborative research activities with others, which aim to develop new intellectual property and enable it to file patent applications that cover new applications of its existing technologies or product candidates.

Enter into licensing or product co-development arrangements in certain areas, while out-licensing opportunities in non-core areas. In addition to its internal development efforts, an important part of its product development strategy is to work with collaborators and partners to accelerate product development, reduce its development costs, and broaden its commercialization capabilities. The company believe this strategy will help it to develop a portfolio of high quality product development opportunities, enhance its clinical development and commercialization capabilities, and increase its ability to generate value from its proprietary technologies.

The company's Current Programs

Levosimendan Background

Levosimendan was discovered and developed by Orion Pharma, a Finnish company. Levosimendan is a calcium sensitizer/K-ATP activator developed for intravenous use in hospitalized patients with acutely decompensated heart failure. It is currently approved in over 60 countries for this indication and not available in the United States or Canada. It is estimated that to date over 1,000,000 patients have been treated worldwide with levosimendan.

Levosimendan is a novel, first in class calcium sensitizer/K-ATP activator. The therapeutic effects of levosimendan are mediated through:

  • Increased cardiac contractility by calcium sensitization of troponin C, resulting in a positive inotropic effect which is not associated with substantial increases in oxygen demand.
  • Opening of potassium channels in the vasculature smooth muscle, resulting in a vasodilatory effect on all vascular beds.
  • Opening of mitochondrial potassium channels in cardiomyocytes, resulting in a cardioprotective effect.

This triple mechanism of action helps to preserve heart function during cardiac surgery. Several studies have demonstrated that levosimendan protects the heart and improves tissue perfusion while minimizing tissue damage during cardiac surgery.

In 2013, the company acquired certain assets of Phyxius Pharma, Inc., or Phyxius, including its North American rights to develop and commercialize levosimendan for any indication in the United States and Canada. In the countries where levosimendan is marketed, Levosimendan is indicated for the short-term treatment of acutely decompensated severe chronic heart failure in situations where conventional therapy is not sufficient, and in cases where inotropic support is considered appropriate. In acute decompensated heart failure patients, levosimendan has been shown to significantly improve patients’ symptoms as well as acute hemodynamic measurements such as increased cardiac output, reduced preload and reduced afterload. Other unique properties of levosimendan include sustained efficacy through the formation of a long acting metabolite, lack of impairment of diastolic function, and evidence of better compatibility with beta blockers than dobutamine.

The European Society of Cardiology, or the ESC, recommends levosimendan as a preferable agent over dobutamine to reverse the effect of beta blockade if it is thought to be contributing to hypotension. The ESC guidelines also state that levosimendan is not appropriate for patients with systolic blood pressure less than 85mmHg or in patients in cardiogenic shock unless it is used in combination with other inotropes or vasopressors.

Levosimendan Development for Cardiac Surgery Patients

Levosimendan is under development in North America for reduction in morbidity and mortality of cardiac surgery patients at risk of LCOS. As noted above, Tenax Therapeutics has the exclusive rights in the United States and Canada to develop and commercialize intravenous levosimendan.

The FDA granted Fast Track status for the development of levosimendan to reduce mortality and morbidity in cardiac surgery patients at risk of LCOS and agreed to an SPA which represents agreement with the Phase III clinical trial’s study protocol. The FDA also provided guidance that a single successful trial will be sufficient to support approval of levosimendan in this indication. Pursuant to its license to levosimendan, Tenax Therapeutics is required to use the “Simdax®” trademark to commercialize this product.

Substantial published scientific research indicates that levosimendan may provide important benefits to cardiac surgery patients, including 35 published prospectively designed clinical trials and multiple published meta-analyses. Many of these publications indicate that levosimendan provides substantial mortality and or morbidity benefits to cardiac surgery patients, particularly those at risk of developing LCOS.

LCOS is generally defined as a patient’s inability to maintain a cardiac index >2.2 L/min/m2 and hence requiring use of inotropic agents and/or mechanical assist devices such as an intra-aortic balloon pump or a left ventricular assistance device. LCOS in the cardiac surgery setting is reported to occur in 5-10% of patients undergoing cardiac surgery and is associated with 10-15 fold higher mortality or severe sequelae as a result of poor organ perfusion.

Currently, no pharmacologic therapies are approved for management or prevention of post-cardiotomy LCOS. While conventional inotropes are used to manage cardiac hemodynamics in the peri-operative setting, none have been shown to improve outcomes.

In 2014, the company initiated a Phase III trial (LEVO-CTS) to investigate the safety and efficacy of pre-operative administration of levosimendan treatment to reduce the mortality and morbidity in cardiac surgery patients at risk for developing LCOS. The Phase III trial was conducted under a United States Food and Drug Administration, or FDA, approved Special Protocol Assessment, or SPA, and with FDA granted Fast Track status for the development of levosimendan in cardiac surgery patients at risk of LCOS.

The LEVO-CTS trial design was guided by the published literature, including important dosing refinements and inclusion of patients with low preoperative ejection fraction. In addition, the company relied heavily on the input of European clinicians who have significant personal clinical experience with the use of levosimendan in treating cardiac surgery patients.

Current data in cardiac surgery suggest that levosimendan is superior to traditional inotropes (dobutamine, phosphodiesterase [PDE]-inhibitors) as it achieves:

  • sustained hemodynamic improvement;
  • diminished myocardial injury;
  • improved tissue perfusion;
  • better outcomes and fewer hospital days;
  • effects most favorable in patients with low left ventricular ejection fraction (LVEF) (< 40%); and
  • opportunity to initiate therapy pre-operatively due to increased cardiac contractility without increasing intracellular calcium, without increasing oxygen consumption, or affecting cardiac rhythm and relaxation.

The company selected Duke University’s Duke Clinical Research Institute, or DCRI, to conduct the Phase III trial of levosimendan. DCRI is the world’s largest academic clinical research organization, with substantial experience in conducting cardiac surgery trials. The Phase III trial was conducted in approximately 60-70 major cardiac surgery centers in North America. The trial enrolled patients undergoing coronary artery bypass grafts, or CABG, and/or mitral valve surgery, and CABG with aortic valve surgery who are at risk for developing LCOS. The trial was designed as a double blind, randomized, placebo controlled study seeking to enroll 760 patients. During 2016 the company made the decision to increase enrollment in the LEVO-CTS trial to 880 patients. These additional patients were necessary to ensure sufficient powering and were necessary due to:

  • a small percentage of patients who were randomized but did not receive the study drug;
  • a small percentage of patients who were missing one or more component measurements of the primary endpoint; and
  • a slightly lower primary endpoint event rate than the company originally projected.

Enrollment began in the third quarter of calendar year 2014, and was completed in December of 2016. On January 31, 2017, the company announced top-line results from the Phase III LEVO-CTS trial. Levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days.

However, the study results demonstrated statistically significant reductions in two of three secondary endpoints including reduction in LCOS and a reduction in postoperative use of secondary inotropes. Additionally, levosimendan was found to be safe with no clinically significant increases in hypotension or cardiac arrhythmias and the clinical data showed a non-significant numerical reduction in 90-day mortality.

Notwithstanding the fact that the trial’s primary endpoints were not statistically significant, and given the statistically significant reductions in the secondary endpoints, the company continue to believe levosimendan is an effective and safe inotrope to increase cardiac output in patients at risk for or with perioperative low cardiac output. Following the announcement of the Phase III LEVO-CTS top-line results, the company held a meeting with the FDA to review the preliminary trial data and discuss a path forward to file a NDA for levosimendan. As a follow-up to this meeting, a pre-NDA meeting has been scheduled with the FDA in the second quarter of 2017 to discuss the data that supports the approval of levosimendan for acute decompensated heart failure. The FDA may not approve levosimendan for this or any other indication, and if Tenax Therapeutics is unable to obtain regulatory approval, the company will be unable to commercialize levosimendan in the U.S.

Levosimendan Development for Septic Shock Patients

Septic shock is a serious life-threatening condition with high unmet medical need. Small clinical studies suggest that levosimendan may provide important benefits to septic shock patients in the form of improved cardiac function, renal function, organ perfusion, and mitochondrial function. The company announced a collaboration with Imperial College London in August of 2014 which provided supplemental funding to support the accelerated enrollment and completion of the ongoing LeoPARDS Trial (Levosimendan for the Prevention of Acute oRgan Dysfunction in Sepsis). The LeoPARDS trial was designed to determine whether levosimendan reduces the incidence and severity of acute organ dysfunction in adult patients who have septic shock, as well as evaluate its safety profile.

On October 5, 2016, Anthony Gordon, M.D., Chair in Anaesthesia and Critical Care, Imperial College London, presented results from the LeoPARDS trial evaluating levosimendan in septic shock at the 29th Annual Congress of the European Society of Intensive Care Medicine (ESICM), held in Milan, Italy. Results presented by Dr. Gordon show that the levosimendan treatment arm did not achieve the trial’s primary endpoint of reducing the incidence and severity of acute organ dysfunction in adult patients who have septic shock, as well as the pre-specified secondary endpoints. Based upon these results seen, the company do not anticipate undertaking further development with levosimendan in the septic shock indication.

Other Products

In addition to levosimendan described above, Tenax Therapeutics has previously developed Oxycyte, a PFC-based oxygen carrier, its Dermacyte® line of topical cosmetic products, which contained its PFC technology and other known cosmetic ingredients to promote the appearance of skin health and other desirable cosmetic benefits, as well as Wundecyte™, a novel gel developed under a contract agreement with a lab in Virginia that was designed to be used as a wound-healing gel. As Tenax Therapeutics has suspended the development of these PFC products while the company evaluate strategic alternatives, the company do not expect that Oxycyte, Dermacyte or Wundecyte constitute a material portion of its business going forward.

Suppliers

Pursuant to the terms of its license for levosimendan, Orion Corporation is its sole manufacturing source for levosimendan.

Intellectual Property

The company rely on a combination of patent applications, patents, trade secrets, proprietary know-how, trademarks, and contractual provisions to protect its proprietary rights. The company believe that to have a competitive advantage, the company must develop and maintain the proprietary aspects of its technologies. Currently, the company require its officers, employees, consultants, contractors, manufacturers, outside scientific collaborators and sponsored researchers, and other advisors to execute confidentiality agreements in connection with their employment, consulting, or advisory relationships with it, where appropriate. The company also require its employees, consultants, and advisors who the company expect to work on its products to agree to disclose and assign to it all inventions conceived during the work day, developed using its property, or which relate to its business.

To date, the company own or in-license the rights to seven U.S. and foreign patents. In addition, Tenax Therapeutics has numerous U.S. patent applications pending that are complemented by the appropriate foreign patent applications related to its product candidates and proprietary processes, methods and technologies. The company's issued and in-licensed patents, as well as its pending patents, expire between 2017 and 2030.

Tenax Therapeutics has:

  • one U.S. patent (6,167,887) and one Australian patent (759,557) pertaining to the use and application of PFCs as gas transport agents in blood substitutes and liquid ventilation with an average remaining life of approximately 2 years;
  • one U.S. patent (8,404,752) and one European patent (EPO9798325.8) held jointly with Virginia Commonwealth University Intellectual Property Foundation for the treatment of traumatic brain injury;
  • exclusive in-license to one fundamental gas transport patent application that represents the core technology used in its products and product candidates (other than levosimendan) with an average remaining life of approximately 12 years;
  • one Israel patent (215516) and numerous patent applications for the formulation of perfluorocarbon emulsion with an average remaining life of approximately 14 years; and
  • one U.S. patent application for the use of levosimendan to treat left ventricular systolic dysfunction in patients undergoing cardiac surgery requiring cardiopulmonary bypass with an average remaining life of approximately 19 years.

The company's patent and patent applications include claims covering:

  • methods to treat certain diseases and conditions and for biological gas exchange;
  • therapies for burn and wound victims;
  • delivery of oxygenated PFC;
  • various formulations containing PFC; and
  • use of levosimendan in patients undergoing cardiac surgery.

Tenax Therapeutics has received U.S. trademark registrations for Oxycyte®. Simdax® is owned by Orion and is licensed to it for sales and marketing purposes in the United States and Canada.

Important Note: This research report is incomplete.
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