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

Good afternoon. I'm Serge Belanger, one of the health care analysts at Needham. I want to welcome you to our 24th Annual Healthcare Conference. For our next session here, we have Tenax Therapeutics. And from the company, we have its President and CEO, Chris Giordano; the Chief Business Officer, Doug Randall; and the Chief Medical Officer, Stuart Rich. So the company will give us a presentation here, and then we'll proceed to Q&A. For those listening in online, you do have the option to submit questions via the portal you're watching the presentation. That said, I'll hand it over to the Tenax team.

Serge, thanks very much. We really appreciate the opportunity to be here. This is our first time at Needham as Tenax, and we're grateful for the interest you guys have and that your investors have shown today in the meetings in what we're trying to do for patients with a really devastating diagnosis. So my name is Chris Giordano. I'm the CEO, and I'll walk through a presentation here quickly. These are our disclosures. Just to give a little bit of background on the disease we're studying, here are a few estimates. Of the 7 million or 8 million Americans with heart failure, at least 1/4, and that's a very conservative estimate. It could be as high as 40% have PH resulting from heart failure with preserved ejection fraction. There are no approved -- FDA-approved therapies for these patients. There are a couple of other companies in Phase II development. So there is progress being made for patients with PH-HFpEF. We're in Phase III now with a drug that we learned around 2017, 2018, addresses one of the fundamental underlying biological abnormalities of HFpEF. And this came about when Stuart Rich, currently our CMO and later, Dan Burkhoff and Sanjiv Shah, all leaders in HFpEF and globally in the study of PH came to us and explained that we have a wedge pressure lowering drug and that this drug may address the finding impairment of a group of patients with nothing available. At the time, of course, we knew that IV levosimendan had been approved for over 20 years in 60 countries. It was approved almost 25 years ago. The oral product, which we're studying now in Phase III had never been marketed globally and the IV product had never been launched in the U.S. There's a massive safety database and a very well-understood safety profile of this drug, yet it's an NCE in the U.S. We're about 18 months away, we estimate from top line data in our first of 2 Phase III trials at Tenax. And we're almost 18 years from the expiration after patent term extension of the patents that came in. So there's a long way to go in the patent life of these products because the patents were awarded only a few years ago. And again, we're about 18 months away from top line data in the ongoing LEVEL study. So levosimendan is the only drug to have ever produced favorable hemodynamic changes and to improve exercise tolerance in patients with pHFpEF, and I'll review that data here in a few minutes. This is really the latest news that we've released after a raise of about $100 million in August of last year. At that time, we submitted to FDA for their review and for discussion with us several enhancements to the ongoing Phase III program. These are enhancements we were able to make once we had the new funding in place after August. First, as you can see, the FDA has agreed that we can increase the power of the current study. We're going to increase the target from 152 to 230 subjects randomized. We also aligned with FDA on the second trial, which we intend to initiate this year and have the green light to get that started. In that news release back in February, we also shared some information on observations we made just from reviewing the data we have to date from the LEVEL study. This is just blinded data about the safety as well as the adherence and the participation levels. I'll go into a little bit more detail later, but the open-label extension is a very well-attended part of the study. The patients are remaining on therapy during the randomized phase, but also at very high levels during the open-label extension, which we consider encouraging. And then on the right side of the slide, as you can see, joining the investors from last August, led by BVF and including Janus, T. Rowe Price, Vivo, Venrock and several others, we raised another $25 million in a single investor private placement from RTW. A quick description of the market cap. For those who are new to the story, there are about 4 million common outstanding shares, which will suggest that we have about a $25 million market cap. If we add the other $35 million or so prefunded warrants to that, it brings our market cap up to about $250 million. And then there are another almost 19 million warrants that are priced at $4.50 and $5.65, so all in the money. So it's easy to justify a $300 million market cap for the company. So let me talk a little bit more about the disease and the mechanism of action and then the Phase II data that we have. So this is a pretty simple breakdown of the patients who have heart failure in 2020 estimated and then in 2030. So you can see the significant growth in the prevalence of the disease and then a breakdown of these patients by their ejection fraction. So we are studying in our Phase III trial, those top 2 groups in the blue bar. These are patients with ejection fraction of greater than 40. And it's estimated that somewhere between half and 80% of those patients have PH as a result of HFpEF. So this leads to an estimated prevalence in 2030 of 2.2 million to 3.7 million U.S. patients. A little bit more now about the disease. So the symptoms of heart failure in patients with preserved ejection fraction result not from an inability of the heart to squeeze properly and eject blood, but from the stiffness of the left ventricle, a rigidity basically that -- it means the ventricle doesn't pull in enough blood. So the body adapts to these symptoms and some of that adaptation is a maladaptation, a negative response. And primarily in this group of patients, it's the excessive venous return that results. So the body's reserves of blood are constantly activated, and that drives too much volume into the same ventricle, that same stiff or no longer compliant, optimally compliant ventricle. This drives up pressure in the lungs, and this leads to elevated PA pressure. So classic development of pulmonary hypertension, but from a different source than pulmonary arterial hypertension or some of the other groups. So levosimendan is a potent venodilator, thanks to its mechanism of action as a potassium channel activator. The maladaptation that I described on the previous slide, the excessive venous return that drives the cascade, you can see on this slide, which leads to PH and eventually, PH leads, of course, in all cases, to right heart failure and death if it's left untreated, that maladaptation is what levosimendan is antagonizing. So in summary, this is the only drug out there that both activates these channels and has calcium-sensitizing properties. Our Phase II trial, the HELP trial, which I'll go through some detail on, established that levosimendan's impact on venous beds is what leads to these profound and clinically meaningful reductions in pulmonary capillary wedge pressure and central venous pressure. These are the critical targets to attack in left heart failure. So this very quickly shows you the simple scheme of the ongoing Phase III trial, recently enlarged to target 230 patients enrolled, and our estimate is that will be complete around the end of this year. This trial has 95% power now that it's been enlarged to show a 25-meter difference with a standard deviation of 45 meters. And I referenced it earlier, the review that we did a blinded data from this trial a little over a month ago shows that the participation levels are very encouraging and do reflect the same experience we observed in an open-label extension to our Phase II trial with the oral -- once we move patients to the oral version of levosimendan. It also reflects, we believe, the very well-established side effect profile of the drug since its approval in 1999. So 95% of the patients who've randomized in this data review completed the 12-week therapy -- sorry, greater than 95% of the patients who completed 12 weeks, they completed the randomized phase, elected to enter the open-label extension. And then of those 95%, again, entering the OLE continued participation to this point. So more than half of those patients have been in the open-label extension for 6 months now. And because we started enrollment a little over a year ago, some of them have now got a full year in the open-label extension. So this is where we are today. There's an amendment that's going into effect now in the LEVEL trial to increase the target to 230 patients. We have a green light from FDA to proceed with the initiation of the second of these 2 required Phase III studies. And very importantly, the FDA reiterated that for this drug in this population, the safety database requirements are that we submit evidence of exposure of these patients, 300 of them for 6 months and 100 for 12 months. That is the -- those are the kind of 2 legs of the requirement for safety database. Obviously, we would also need positive data from efficacy endpoint. So with the LEVEL trial, there are 54 sites active. We are still on target to achieve the original objective of 152 subjects in the first half of the year. And the new target we have is to complete enrollment around year-end of 230 subjects. And we now have 95% statistical powering with that increase. We expect to initiate Level II this year as well. We're finalizing the study design now, and we intend to recruit patients in more than 10 countries. The current trial, by the way, LEVEL is recruiting patients in Canada and the United States. So very quickly now why are we confident with the Phase III trial ongoing and another upcoming that 3 milligrams of oral levosimendan daily will again produce favorable exercise tolerance evidence in these patients. The primary endpoint for both of these Phase IIIs is the 6-minute walk -- the change in the 6-minute walk distance. And so why are we confident that we will achieve that in these trials? Well, first, we'll enroll patients who virtually match the 84% of open-label responders whom we randomized into the Phase II -- into that section of the Phase II trial, who when randomized, walked 29 meters further on the IV formulation of levosimendan in a 6-week period. So we're -- again, we're enrolling virtually the same patients who were responders. And we believe they'll perform better when it comes to that endpoint when they're on a steady state of the active metabolite of the therapy, which they will be on because they're on an oral product. We believe they'll perform better in the Phase III assessment on oral daily than they did at trough of the IV level in the Phase II. So to explain what I mean, think of the -- this is the concept behind the Phase II trial, and I'll walk through the data here in a second. Think of this trial as 3 right heart caths. The patients undergo the procedure and are asked to lie down and then lift their legs while prone on a table into pedals and then cycle at a low level of exercise. And so there -- several pressures are measured at each of those stages. And these patients agreed when they random -- when they enrolled in the trial, they agreed to go through that procedure 3 times. The first 2 right heart caths are separated by a 24-hour infusion of the drug. And that's in general, what patients around the world for over 20 years have received when they're hospitalized with heart failure in levosimendan's approved regimen. It's a 24-hour IV infusion. So the first 2 caths in an open-label setting are separated by that 24-hour infusion. We measure the change in an open-label setting and the effects of the drug at rest and at exercise. And then those who responded were randomized for 6 weeks, and they continue to receive once a week a single 24-hour infusion. And at the end of the final of those weeks, so at least 5 days later, when they were at trough, that's when they underwent the third right heart cath, and that's when they were assessed again for the 6-minute walk test, sorry. So this slide now shows you in the open-label phase for all patients at baseline in blue and then 24 hours later in red, their central venous pressure on the left and their wedge pressure on the right. Remember, all previous clinical trial data prior to this was in patients with heart failure with reduced ejection fraction. So this is the first data of the effects of this drug in patients with HFpEF. Pulmonary capillary wedge pressure on the right, the increase in that wedge pressure during exercise is the defining impairment of PH-HFpEF. So the improvement shown there is marked and very meaningful in these patients. The graft data on the right includes 7 patients who didn't meet the hemodynamic criteria for being randomized. So that's obviously an average of all those patients. But of the 44 shown, 7 didn't randomize. Those -- that's kind of the 16% nonresponders. We chose the -- people who designed the study, Stuart and others chose 4 millimeters of mercury as a required reduction to demonstrate a robust response to the drug. And again, that is -- that's the fundamental measurement that has been used to select patients in the Phase III trial. Now in this slide, we see after 6 weeks, the patients on placebo on the left and on levosimendan, their weekly IV infusion on the right. So after 6 weeks of that weekly infusion, the patients on levosimendan have a marked decrease in wedge pressure as compared to placebo, again after 6 weeks. So at this time, the intention of the company was to develop and commercialize an IV formulation of this product and to commercialize it in North America for which we have the license rights. In order to have moved ahead, we needed to have data at trough. The FDA requires that. And so when this trial was designed, the data that you see on the right in red was collected at trough. And these patients at that same time where that hemodynamic data was collected were walked and they walked 29 meters further. So despite being several days from that last infusion, we saw a very meaningful improvement. And in fact, the first time in any HFpEF population that an improvement in 6-minute walk data was shown. So sometime after that, once we negotiated the rights to the oral formulation from our partner in Finland, Orion, we took the opportunity to move patients from that weekly IV infusion to the oral therapy. There is a substantial body of pharmacokinetic, pharmacodynamic data, but also Phase II and Phase III data with the oral formulation in patients with ALS and in patients with heart failure that we use to support this strategy of moving patients from an IV up to 1 and then 2 and then 3 milligrams per day of oral levo. So this is the process by which we got them away from the risks associated with an IV infusion. This quickly summarizes what we observed over the 6- to 8-week period during which those patients were transitioned to oral. Down at the bottom, safety and tolerability, really, I should have put that at the top. This was the objective of the transition. These patients had an indwelling PICC line. I think it's important to note, some of them had completed the randomization well over a year before this. For some patients, it was about 2 years before that they remained on IV in total before they moved to oral. So they had that indwelling PICC line with any therapy delivered that way, there's risk of clotting and infection. So our objective was simply to safely move them on to a dose of oral that we thought would be equivalent for them. And in fact, what we ended up seeing was an improvement during that transition period in the 6-minute walk, again, a smaller improvement. And remember, this is an open-label assessment that's being made, but also reductions, very meaningful reductions in BNP or NT-proBNP. So a clear improvement in the biomarker of cardiac dysfunction that's so important in heart failure, but also those improvements in feeling the KCCQ data and at the top in function with the 6-minute walk test data. So just as a reminder, this is a novel first-in-class, first-in-disease, we hope, mechanism for patients with a disease that has frankly been neglected and for which there is no approved therapy. The Phase II data is really encouraging because we went after exercise wedge pressure, which is a very tough endpoint to go after in these patients, but it's the most important thing to assess at Phase II, we believed. So we demonstrated improved exercise tolerance in that trial and remain very encouraged by that. We will be recruiting in 2025 in both of our Phase III required registrational studies. We have an incredible investor backing today that did not exist a year ago. We have IP out to 2040 plus potential patent term extensions. And I think what many investors have appreciated here is that there's a massive commercial opportunity represented by this unaddressed need of at least $10 billion, we estimate. And I've been able to do quite a bit more research since August than we were prior to that raise to support the addressable market. It's very sizable. So I think this is my last slide, Serge. So I'll leave this up, and we can then just take questions from you and the attendees. So thanks again for the opportunity to share the story.

Thanks to you and spending time with us and giving us the overview. I guess the primary endpoint in level is the 6-minute walking test or distance. Just curious what you view or what is viewed as a clinically significant difference between placebo and treatment for that endpoint?

Great question. So my voice, I rarely get bored by my own voice, but this has done it. So I will -- for that reason alone, it's a good idea to go to somebody else. But Stuart, why don't you talk about what we think is a potentially clinically meaningful benefit?

So Serge, there had never been a drug that caused an improvement in 6-minute walk in this population. So I don't have a comparator. The only competitor that exists in Group 1 PAH which used 6-minute walks for the primary endpoint of most of their trials. And the average of a clinically meaningful improvement was about 30 meters. That group, to be noted, is a much younger population, a lot less comorbidities. And so to the extent that they're able to walk further, that was probably represented. KOLs project less than 30. I don't know whether that's true or not. We will establish the bar with our trial. But at this point, I think it's just premature for us to say we got 29 meters in the Phase II trial with pulse therapy, an infusion once a week. Now it's daily therapy with steady state. So we powered our trial at 25 meters to be conservative. I don't think -- I think that is conservative, and I think we're optimistic that a very meaningful change will occur.

Okay. And then you also talked about other endpoints like KCCQ and the proNT-BNP biomarker. Just curious how important those 2 endpoints are? I know they're more secondary, but are those things that the FDA and physicians also like pay close attention to?

So the KCCQ is a validated questionnaire in heart failure that the FDA accepts. That is our key primary secondary endpoint. Of the 3 requirements, how patients feel, function and survive, we are addressing how they feel and how they function. BNP is an academic endpoint, which is not an improved endpoint from FDA, just like hemodynamics are not approved endpoints. They're not really clinical measures. But we're including it among all of the other secondary endpoints.

Got it. And for the LEVEL II study, I don't know if you've met with the FDA yet about what the trial design would look like, but should we expect something similar to the first Phase III LEVEL study?

Yes. So the overall general structure is going to be the same. It's going to be a parallel design. We're going to have 6-minute walk as the primary endpoint. We'll have KCCQ as the primary secondary endpoint. The dosing will be the same. The essential conduct will be the same. The biggest difference will be in the length of the trial. It will be a longer trial.

Got it. Okay. And then maybe just to wrap up, anything you guys feel -- or I guess, what is the part of the story on 103 that you feel is the most underappreciated or misunderstood by investors when they learn about the story?

I don't know. We haven't talked about that as a team. I'll throw my two cents and then turn it over. But I think the fact that we've been able to revive knowledge of the underlying pathophysiology that was described back 50 years ago and forgotten, namely that restoring the venous circulation back to normal will alleviate this disease. Now in HFrEF, regular heart failure, that's exactly what all of the therapies have done. They've seen this neurohormonal activation, which is maladactive. And all of the drugs that are approved in the guideline therapy, the ACE inhibitors and the ARBs and the beta blockers, et cetera, were designed to restore that back to normal. And we're just, in a sense, doing the same thing only this time with HFpEF and pulmonary hypertension. It sounds a little simplistic when you think of how about a new class of drug, an experimental drug that will change this or change that. So I think the science behind this is absolutely compelling. And the data that we've been able to show so far is very supportive.

Doug Randall, you've talked with -- or listened in on a lot of discussions with current prescribers who treat hundreds of these patients. I wonder if there's anything from that experience that would highlight something underappreciated here.

Yes. I think the market research we've conducted recently with both payers and physicians has been eye-opening in the sense that, one, how much of an unmet need there is here in the limited options that physicians have for these patients and that they're looking for any kind of clinical improvement in these patients that they can possibly find and that a drug approved for this indication is going to be well received. That's clear. I think also from the payer community, it's a bit surprising from a group of -- that would typically be very price conscious, how receptive they are to various price points, again, in an indication where there's nothing available, they really have been quite receptive to various price points, maybe even more encouraging than we would have hoped. So I think that's impressive. The other thing that I think might be underappreciated is just the intellectual property that we have for this asset. We not only have IP that expires out to December of 2040 with now 3 U.S. granted patents, but also at least one of those patents will have PTE attachable to it that should extend that to 2042. So really a long runway for us to commercialize this.

Well, I think we'll end it here. I want to thank you all for spending time with us this afternoon, and telling us more about 103 and the Tenax story. Appreciate your time.

Thanks so much, Serge.

Thank you, Serge. It's a pleasure.