Tenax Therapeutics, Inc. (TENX) Earnings Call Transcript & Summary

All right. Well, thanks, everybody. We are kind of moving towards our -- I believe this is our final fireside chat for the day here at Guggenheim's SMID Cap Conference. We've got a couple of panels after this, but I'm Seamus Fernandez. I'm one of the senior biopharma analysts here at Guggenheim Securities. And I'm really pleased to have the Tenax team here with me today. So Tenax Therapeutics, CEO, Chris Giordano, immediately to my left; and EVP, Business Development and Business Operations, Doug Randall, to Chris' left. Chris, Doug, thanks for coming. Really appreciate it. Maybe just before we dive in, you can give -- Chris, you can give a quick overview of the Tenax story and how we got here in terms of the HFpEF -- sorry, PH-HFpEF opportunity?

Love to. Love to. So thank you. You guys doing an incredible job covering every detail of the Group 2 space. One thing you didn't know is that Doug Randall was promoted to Chief Business Officer. So I thought I'd throw that out there just one little edit. I should have made here. So how did we get into Group 2 PH with levosimendan? An academic leader and a few colleagues came to us years ago and said, "You have a wedge-pressure lowering drug." And the problem that patients in Group 2 PH have is not only that the drugs for Group 1 don't seem to work in them, they have nothing else. And they have a problem with elevated wedge pressure at exercise. So please supply me with this product so that I can start using it in an investigator-initiated trial, whatever I need to do. Patients are desperately ill and neglected. So we said, "Well, let's take a look at that and do some research, et cetera." We ended up with him designing the Phase II study and looking very specifically at this group of patients and whether this drug would lower their wedge pressure, which is the defining impairment of Group 2 PH. So we started there, and that trial gave us the evidence we needed to feel confident moving into Phase III, and we have a new formulation that's never been marketed anywhere in the world, the oral formulation. So we're testing that in Group 2 Phase III now.

And Chris, maybe you can talk a little bit about what differentiates the PH Group 2 opportunity in the PH-HFpEF population from just sort of standard HFpEF or heart failure?

Sure, sure. So idiopathic pulmonary hypertension, right? It used to be called primary PH, is a disease of the arterials. So the drugs that have addressed the growth factors in the arterials have been successful in treating PAH. They've been approved on that basis. Group 2 PH, these patients, 60% to 70% of the patients globally with PH, who, as I mentioned, have no approved therapies, the target for these patients is left atrial pressure. So as people get into PH, they learn all about the vasodilators and all about the orphan disease, idiopathic Group 1, PAH. The 5 groups are based on the underlying condition. That's what defines them as a group. So it's what is the therapeutic target that we should have that leads to that grouping. One major difference between these patients, of course, one of these groups of patients has got 13 approved products, one of them is 0. But the wedge pressure, which I mentioned, the pulmonary capillary wedge pressure is normal in Group 1 patients. It's elevated in these patients at rest, and it gets very elevated at exercise. And so that's a major difference, and that's why we're doing what we're doing.

Great. Doug, maybe you can walk us through just kind of the challenge of developing drugs in the PH-HFpEF space and what you see are the differences for levosimendan?

Yes. Well, I think historically, the drugs that have been developed for PH-HFpEF have been the drugs that were historically developed and approved for PAH, as Chris alluded to. Those drugs, as pulmonary vasodilators, are very effective in treating PAH, but have not shown much utility and in some cases, maybe even some safety signals in treating patients with PH-HFpEF. So it really requires almost kind of a rethinking of how to treat this disease. And I think part of that rethinking that we bring with levosimendan is a focus on a drug that can actually reduce, as Chris alluded to, the pulmonary capillary wedge pressure and also the central venous pressure, which are really the primary hemodynamic defects that these patients have. And so we think unlike some of the other drugs that have been developed historically and not been successful, we've got a whole new approach, and we think one that at least thus far in Phase II has proven to be quite compelling.

And at this point, we're at 0 drugs approved in the Group 2 patient population. Levosimendan has been around for a long time, 20 years. Just talk a little bit about the request from FDA, why it was never approved in the U.S. And maybe you can talk a little bit about why it took so long to study it in PH-HFpEF?

Yes. So the history of levosimendan and its approval is interesting because the FDA took really a different position than other countries around the world. It's been approved in over 60 countries around the world for acute decompensated heart failure. Those countries where it was approved, were willing to accept the data that was conducted in Phase III that showed improvements in clinical worsening, improvements in hemodynamics, but didn't show any real significant improvements in mortality, which is what the FDA is now kind of requiring of acute heart failure drugs. So they took a different point of view, and that was never pursued any further by Orion, the originator company because it was deemed to be a trial that would require just too many patients and be costly. So that's kind of the history around its development around the world in acute decompensated heart failure. Now with respect to PH-HFpEF, a rather unique situation in 2017, where we were approached by Dr. Stuart Rich with this observation that a drug that had never been approved or used in HFpEF, levosimendan might actually have utility in this patient population. And what Stuart brought to our attention was that this drug is a very potent reducer of pulmonary capillary wedge pressure, again, the primary defect in these patients and convinced us that it was a population where it really needed to be studied. And because no one had ever thought about studying it, in this patient population, it actually also led to a pathway that allowed us to get 3 granted patents thus far because it was a completely novel idea and hopefully more to come.

Great. And just in terms of acquiring the rights to levosimendan, how did it end up in your hands and just the terms of the licensing agreement?

Yes. So going way back to the 2010, 2011 time frame, myself and 3 other individuals founded a company around the license for levosimendan to develop it for high-risk cardiac surgery. As we were developing it for that indication, it was about the same time that Stuart had approached us with this alternative development path. That trial read out neutral on the top line endpoint, provided some pretty compelling safety data and a favorable trend in mortality. So we could have continued to pursue that path. But again, Stuart convinced us that this was a much more viable and certainly commercially viable path. And so we've been on that path since then.

That trial was conducted with the IV form, just like the HELP trial that we conducted. The license that we had at that time was for the IV form in North America. And as we move closer to getting the investment that we got last year, I think one of the things that helped us is that we -- on the back of those patents and on the back of the ability to move into Phase III, we renegotiated our license. So we now have worldwide rights to oral and IV at all approved doses for the use of improving exercise in patients with PH-HFpEF. So we also now have the worldwide rights that would support a much bigger opportunity for us.

Great. That's helpful. And in terms of that market opportunity, I think that, Chris -- or maybe either of you, if you want to sort of talk about the market opportunity for levo and PH-HFpEF specifically, and maybe you can break down a little bit of the U.S. opportunity and does it differentiate at all from the international opportunity?

Yes. We're just in the midst of conducting some very interesting and important primary market research around the world to include Europe, Japan and the United States. And I think one of the things that comes out of that research, again, it's still preliminary findings at this point is that there's a huge unmet medical need and that there is significant interest by the physicians that we interviewed for a drug that would treat this condition because as they stand today, there is no therapy that's proven effective. And again, as we alluded to, in some cases, there's actually some question about the safety of drugs that might have been applied historically to treat this condition. So very encouraging signals about physicians' willingness to adopt this drug once it's approved.

Got it. So Chris, talk a little bit about the Phase II HELP study. Academic study, not without its challenges as an IV therapy with long-term treatment. So talk a little bit about those data and what you learned from the data, but also inferences that might be important related to those data.

Okay. Let me connect these 2 things. One thing that we're also hearing from the market research that has been a positive surprise. The level of concern with the t.i.d. product is lower than we thought it would be. So very little hesitation in terms of market uptake. So that's been a pleasant surprise. I'll say at the start of the HELP trial from the history that I've heard, I wasn't there at the very beginning. The idea of giving a patient a drug that had never been given outside of the ICU or the emergency department, critical care floor as a take-home IV infusion was a bit surprising to the people who are supplying that. We supply on an as-needed basis for infants. We supply levosimendan in the U.S. and Canada right now. And so we know where it's going, and we know exactly who's going to use it now. And so Dr. Rich and colleagues, they said, "Oh, well, this is fine." They do -- these patients will take on a lot more than a once-weekly 24-hour infusion. We said, "Really, okay." So that was the pathway. And again, at that time, without the rights to the oral and with the oral being developed in ALS by Orion, we foresaw a commercial future for an IV product. So the trial -- I like to think of it, if people haven't looked at it yet and they're being introduced to the company, is a trial with 3 right heart caths. A patient comes in, he's got PH-HFpEF. They get a right heart cath, we confirm it. Then we give them a 24-hour infusion of IV levosimendan. Right after that, a couple of hours later, they come and they have another right heart cath. This is all open label, and we see how did your wedge pressure change. And what we saw there determined whether we would randomize them. If they had a robust response, they were randomized. And 6 weeks later, they got the third right heart cath. And so the difference between those first 2, it's an open-label period where patients came in with an average of a 25-millimeter of mercury wedge pressure at rest, and it went down about 5 millimeters. So a good response. They then lift their legs, maybe they lift them and put them in pedals and then they start pedaling. So it's 3 stages, legs down, legs up. In each stage at baseline and after 24 hours, of course, their wedge pressure goes up. But in all 3 stages, it's also 4 or 5 millimeters of mercury lower. So we -- the investigators decided that a 4-millimeter change minimum was required for anyone to be randomized. That's the enrichment strategy. So open label, you see do they have that robust change. So again, the patients came in with an elevated wedge, 25, right? 15 is considered not really that elevated in these patients. They dropped by 4 or 5 at all 3 stages. We randomized them. And then they get 5 more infusions once a week. And after their final infusion, about a week goes by, and they come in for that final cath and they walk. And this is one thing we really want to emphasize with people looking at the study that at the time, because we would have gone forward with an IV product, we needed trough data. The FDA wants to see what does this drug look like at trough. And so we collected the 6-minute walk in that randomized period at trough. Several days after, they've received an infusion with a drug, the active metabolite of which has a 72-hour half-life. So it was late. And they walked 29 meters better at that point than they did at the point of randomization, and their hemodynamics all came down in a way that impressed us sufficiently. So remember that the hemodynamic changes, however impressive they are, the approval would come with, in our case, in Phase III and in the case of every PAH drug with a 6-minute walk difference that's meaningful and statistically significant.

So importantly, one thing we didn't really talk about is that, that is the regulatory pathway that you're pursuing.

Yes. Yes. Yes, I think -- yes, it's a -- this is a population of people with heart failure, right? 7.5 million, 8 million Americans in a few years. Half of them have HFpEF roughly. And we think 50, 70, some studies show as high as 80, but probably 60% to 70% of people with HFpEF have PH. So that gives you kind of the addressable market number, but the pathway is PH. We don't have to show mortality. We don't have to show survival. It's feelings and function.

Yes. Great. So more symptomatology is the focus. So Doug...

You can tell on...

Just talked about 6-minute walk distance a little bit. Can you just help us understand a little bit of -- in the work that you've done, apparently, the greater than 25 meter difference in the 6-minute walk certainly resonates with thought leaders in our conversations. Just talk a little bit about the -- not just the importance of the endpoint for the indications and regulatory pathway, but what is that sort of -- what do you think is kind of the threshold that matters to thought leaders?

Well, it's very interesting. That was another component of our recent marketing research. And one of the things that, again, stood out continuously and on this point, in particular, was the significant unmet need. These physicians have nothing to treat these patients. So we had a number of physicians in the research. And these are cardiologists, pulmonologists seeing a lot of these patients saying, "Listen, any statistically significant improvement in 6-minute walk, I would consider enough because I have nothing right now." Now is there some minimum threshold that most physicians would want to see? We didn't really identify that in our research. But I would say, generally speaking, a directional improvement that's statistically significant on whatever of maybe 10 meters or more, I think, is going to be plenty to get physicians to prescribe this drug because they have nothing.

Great. And then the open-label portion of the study, I mean, patients just seem to be willing to stay in this trial almost forever. What were the drivers of that? And then maybe just transition us from that the limitations of an IV formulation. I think we talked about it quite a bit already, but it's sort of obvious. But in terms of the formulation and the need to move to an oral chronic treatment is helpful to understand.

One of the more remarkable aspects of the health study and the open-label IV portion is that we had a number of patients that stayed on the IV, weekly IV, 24-hour infusion. So it had to be attached to an IV infusion pump for 24 hours once a week for well over a year. These are patients in their 60s, 70s, 80s. We don't think that they'd be willing to do that unless they were seeing some sort of significant benefit. Now obviously, there is some inherent risk, safety risk to having an indwelling catheter. So it was in our best interest once we got access to the oral formulation to try to transition those patients to the oral formulation. And of course, they were enthusiastic about doing that. When we evaluated the patients after the transition from IV to oral, we saw numerical improvements in 6-minute walk from their baseline at the end of the IV open label. We saw improvements in BNP on the order of 20% to 25%. And we saw improvements in most of the components of the KCCQ, all of which again indicated to us that the oral was likely providing as much benefit as the weekly IV.

Great. So obviously, you've sort of transitioned that opportunity, the IV to the oral high conviction. Maybe talk a little bit about the Phase III level study. We've got the primary endpoint and just sort of what would be statistical success versus what is kind of clinically significant success? Are those sort of endpoints fundamentally aligned and we can just kind of move from there?

So the Phase III trial we're conducting now is a 12-week treatment trial. The second trial of the 2 that we'll need will be 26 weeks, right? Both -- I'll give the powering of the first trial. It's powered for a 25-meter improvement. We had 29 in the Phase II when patients were tested at trough. So we'll now have patients who will go on to 2 milligrams for a month and then 3 milligrams for 2 months. They'll be on a lot more drug systemically, and we think 25 is conservative. We have a 45-meter standard deviation built in. The trial is powered well over 90%. We factored in 10% dropouts. At present, we don't feel there's any risk there. A lot of patients, who have randomized, have completed and entered the OLE. So that's a very positive sign. We still believe we have a very well-tolerated drug after the experience that we have in the Phase II is great, but these are new patients. They're only on it for 12 weeks. The fact that they'd like to continue is a good sign, we think. So 25-meter improvement would be plenty, we believe, for regulatory approval and the trial is set up well just to show that.

Chris, I think another question that we get a lot is just the other drugs in category. So we're starting to see HFpEF drugs emerge. Presumably, there's going to be some overlap with the PAH population, SGLT2s, GLP-1s. Can you just sort of talk about the -- are there risks to overlap with those drugs? Or is there -- are they just sort of separate and distinct?

No, I think they're very relevant to what we're doing. I mean SGLT2 inhibitors were not approved in these patients at the point in the open-label extension of HELP when one of our patients who was on -- they weren't approved for HFpEF. One of our patients was on one, and she walked 100 meters more. And she was in the open label. So we thought, wow, that's great. We have a patent on that basis. We couldn't find another one. This is 3 years ago, maybe. So the people who are commercializing those products will be delighted to know that at this point in a trial a few years later, at this group of cardiologists who treat HFpEF, as predicted by one of our SAB members, certainly 50% of the patients will be on SGLT2 inhibitors. They're approved in these patients. And these patients are sick HFpEF patients. That's one way to think about the PHF. They're advanced HFpEF patients. So no need to stratify for that. GLP-1s, which are showing mixed things in the data that's coming out in terms of improvement, a 6-minute walk and certainly weight loss early, we are being careful with those. We're making sure that we don't have people coming on and off drug. And we're making sure that anybody enrolled in our study who's on a GLP for the indications approved, of course, have been on it for 90 days and that they're on a stable dose. We've had a few instances where their doc would like to put them on one and they'd also like to put them in the trial and we say just wait, wait for one of those 2 things so that we don't have any -- minimize the compounding impact because some of the data from [ PACK ] study that's coming out right now, for example, is showing these drugs drop the weight and they improved the walk. And so we'd like to -- you got to get from 0.4 to 2 or 2.4 milligrams. It's a long titration up. A lot of people don't make it. We're seeing that, too. So they need to tolerate the drug and be stable on it before they come in and take that first walk.

Got it. Okay. That's super helpful. So GLP-1s will probably be at a lower threshold in the study, at least in the first study and then you sort of see how things evolve in the second study.

In the second study, which will be an international trial, we expect there will be a little bit less. But I don't know that anybody has thought that there wouldn't be much GLP-1 use has been right. So enough that it will matter for sure. And so we'll do the same thing. We'll be very cautious.

Fair enough. Maybe just to wrap up, the commercial opportunity, how you see the size of the opportunity for a drug like this, if successful, in the upcoming 2 studies?

Doug's got the numbers. I'll just say, remember that we'll have kind of -- we would anticipate we will have first to market with an oral. And that is part of what's behind, I think, those prescribers saying that any meters would be enough because they're looking at a TPP for a well-tolerated product with a well-known safety profile that's an oral daily. So that's great, especially if you're first to market, the market size.

It's a very large market, as Chris already alluded to. We're talking about 50% to 60%, 70% of the patients that have HFpEF, have this condition now. And I would also say that from our research, not only with physicians, but also with payers, there is very good receptivity to the fact that these patients do not have a therapy that can help improve their exercise tolerance. So all the indications are that this drug, when approved, if approved, will have very good receptivity, not only we think, from the physicians, but also from the payers.

Yes. So an opportunity for both uptake and pricing power to some degree?

Yes. And I would say just on that final point that we might have been a little conservative in our estimates of price. And so we're going to look hard at that, but it's all very, very encouraging.

Great. Well, you guys have a lot going on. Look forward to seeing the other side of the data, the trials being recruited and hearing about the second trial, hopefully being initiated sooner rather than later.

Thank you, sir. Appreciate it.

Thanks so much.

Thank you, Seamus.

Thank you, Seamus. Thanks.