Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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 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.

Overview

Tenax Therapeutics is a Phase 3, development-stage pharmaceutical company leveraging clinical insights to develop novel cardiopulmonary therapies. We employ a clinician-driven drug development approach, led by key opinion leaders and advised by thought leaders who are pulmonary hypertension and heart failure experts and informed by their clinical insights to precisely target disease pathophysiology. We are currently actively conducting the LEVEL and LEVEL-2 clinical trials to evaluate levosimendan as our prioritized product candidate, and have deprioritized a Phase 3 clinical trial of imatinib, two drugs supported by promising evidence that they may significantly improve the lives of patients with pulmonary hypertension. Importantly, both levosimendan and imatinib have already been approved in other indications and prescribed around the world for more than 20 years, and we believe their mechanisms of action are uniquely suitable to target and treat pulmonary hypertension. We believe this derisked approach of using already-approved drugs that provide well-established safety profiles from millions of patients, combined with a development path led by preeminent cardiovascular and pulmonary hypertension experts, puts us in a strong position to deliver breakthrough cardiopulmonary therapies designed to improve patients' functioning and quality of life.

Recent Events

In March 2025, we closed a private placement financing raising gross proceeds of approximately $25.0 million. We intend to use the net proceeds from the March 2025 Offering, in addition to approximately $100.0 million raised in August 2024, to advance our Phase 3 oral levosimendan program. Specifically, we plan to complete our ongoing Phase 3 LEVEL study of TNX-103 in PH-HFpEF. We also plan to advance our second global Phase 3 study, LEVEL-2, which commenced in December 2025. Following completion of the two Phase 3 levosimendan trials, we intend to submit marketing authorization applications. We also plan to submit an application for imatinib following completion of a single Phase 3 trial, when appropriate.

Our Phase 3 LEVEL study continues, with high rates of study and therapy continuation during the blinded and open-label extension stages. We achieved our target enrollment of 230 patients in March of 2026. LEVEL is being conducted in the United States and Canada.

Based on our current operating plan, we believe that our existing cash and cash equivalents as of December 31, 2025 will be sufficient to fund our planned operations through at least the end of 2027.

Comparison of the Years Ended December 31, 2025 and 2024 (in thousands)

Research and Development Expenses

Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct a substantial portion of our pre-clinical and our clinical studies; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, and other supplies. All research and development expenses are expensed as incurred. Research and development expenses and percentage changes for the years ended December 31, 2025 and 2024, respectively, are as follows (in thousands):

Clinical and preclinical development costs increased $14.9 million for the year ended December 31, 2025 as compared to the same period in the prior year. Clinical and preclinical development costs for the year ended December 31, 2025 consists primarily of expenses associated with our ongoing Phase 3 LEVEL trial and our second global Phase 3 study, LEVEL-2, which commenced in December 2025, compared with costs for the year ended December 31, 2024,

associated with the planning of LEVEL and the early progress initiating LEVEL sites and enrolling the first LEVEL patients.

Salary and benefits expense increased $1.1 million for the year ended December 31, 2025 as compared to the same period in the prior year primarily due the increased number of employees as we expanded our LEVEL trial and designed, planned, and commenced our LEVEL-2 trial. Stock-based compensation expense increased $3.6 million for the year ended December 31, 2025, as compared to the same period in the prior year due to stock option grants made late in 2024 and during 2025.

Other costs increased $0.3 million for the year ended December 31, 2025, as compared to the same period in the prior year, primarily due to higher regulatory costs over the prior year as we expanded our clinical trial during 2024.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including non-cash stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, and other professional and consulting services. General and administrative expenses and percentage changes for the years ended December 31, 2025 and 2024, respectively, are as follows (in thousands):

Salary and benefits expense remained relatively unchanged for the year ended December 31, 2025, as compared to the same period in the prior year due to lower bonuses offsetting salary increases and new employee salaries. Stock-based compensation expense increased $14.4 million for the year ended December 31, 2024 due to stock option grants in late 2024 and during 2025.

Legal fees consist of the cost of our legal counsel as well as legal costs related to our intellectual property. 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 and professional fees increased $1.7 million for the year ended December 31, 2025 compared to the same period in the prior year primarily related to increased capital market expenses, consulting expenses, and accounting expenses, offset by a decrease in intellectual property related legal costs.

Other costs increased $0.7 million for the year ended December 31, 2025 compared to the same period in the prior year. Other costs include expenses incurred for franchise and other taxes, travel, supplies, insurance, depreciation and other miscellaneous charges. The increase was primarily attributable to increased costs for franchise and other taxes.

Interest Income, Interest Expense, and Other Income (Expense), net

Interest income increased $1.9 million for the year ended December 31, 2025 as compared to the same period in the prior year primarily related to higher interest income on increased cash deposits as a result of the March 2025 Offering and warrant exercises during 2025, and increased interest rates. The Company had no interest expense for the year ended December 31, 2025 and an immaterial amount for the prior year. Other income (expense) was immaterial.

Liquidity and Capital Resources

We have incurred losses since our inception and, as of December 31, 2025, we had an accumulated deficit of $367.5 million. 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, over the long term, imatinib for

PAH, and other potential indications, as well as identifying and developing other potential product candidates, and as a result, we will need to generate significant net product sales, royalty and other revenues to achieve profitability.

The process of conducting preclinical studies and clinical trials necessary to obtain approval from the FDA is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among other things, the quality of the product candidate's early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties discussed above, uncertainty associated with clinical trial enrollment and risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. Development timelines, probability of success and development costs vary widely. We are currently focused on developing our two product candidates, levosimendan and imatinib, and have prioritized levosimendan; however, we will need substantial additional capital in the future in order to finalize the development of levosimendan, commence its commercialization, potentially develop imatinib, and to continue with the development of other potential product candidates.

Liquidity

We have financed our operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. We had total current assets of $104.2 million and $96.7 million and working capital of $97.1 million and $92.0 million as of December 31, 2025 and December 31, 2024, respectively. Our practice is to invest excess cash, where available, in short-term money market investment instruments and high quality corporate and government bonds.

We are currently conducting the LEVEL trial and intend to recruit patients into the first half of 2026 and we commenced our LEVEL-2 trial in December 2025 and are currently enrolling patients. Our ability to continue to pursue development of our products, including completion of a second Phase 3 oral levosimendan trial, beyond 2027, will depend on obtaining license income, income from warrants exercised by investors should they elect to do so, 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.

Financings

On March 5, 2025, we sold in the March 2025 Offering an aggregate of 378,346 shares of our common stock and pre-funded warrants to purchase an aggregate of 3,760,726 shares of our common stock at an offering price of $6.04 per share of common stock and $6.03 per pre-funded warrant, resulting in gross proceeds of $25.0 million. The pre-funded warrants do not expire and have an exercise price of $0.01. Net proceeds from the offering were $23.2 million, after deducting the placement agent fees and offering expenses payable by the Company.

On August 8, 2024, we sold in a private placement financing an aggregate of 1,450,661 shares of our common stock, and pre-funded warrants to purchase an aggregate of 31,882,671 shares of our common stock, and accompanying warrants to purchase up to an aggregate of 16,666,666 shares of our common stock with an exercise price of $4.50, at a combined offering price of $3.00 per share of common stock and accompanying warrant, or $2.99 per pre-funded warrant and accompanying warrant, resulting in gross proceeds of $99.7 million. Net proceeds from the offering were $92.3 million, after deducting the placement agent fees and offering expenses payable by the Company.

On February 8, 2024, we sold in a registered public offering (the "February 2024 Offering") 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 with an exercise price of $5.65, at a combined offering price of $5.65 per share of common stock and accompanying warrant, or $5.649 per pre-funded warrant and accompanying warrant, resulting in gross proceeds to the Company of $9.0 million. Net proceeds of the offering were $8.0 million, after deducting the placement agent fees and offering expenses payable by the Company.

Cash Flows

The following table shows a summary of our cash flows for the periods indicated (in thousands):

Operating Activities

Net cash used in operating activities was $35.8 million for the year ended December 31, 2025, compared to $14.8 million for the year ended December 31, 2024. The increase in cash used for operating activities was primarily due to higher study expense activity and increased employee hiring in the year ended December 31, 2025 as compared to the prior year.

Investing Activities

There was no net cash provided or consumed by investing activities for the years ended December 31, 2025 and December 31, 2024.

Financing Activities

Net cash provided by financing activities was $38.5 million for the year ended December 31, 2025, as compared to $99.9 million in the year ended December 31, 2024. During the year ended December 31, 2025, the Company received proceeds of $23.2 million net cash provided from the sale of common stock and pre-funded warrants in the March 2025 Offering and $15.3 million from the exercise of warrants and pre-funded warrants. During the year ended December 31, 2024 the Company received proceeds of a total of $98.5 million from the August 8, 2024 and February 8, 2024 sales of common stock, and pre-funded warrants and accompanying warrants, and $1.8 million from the exercise of warrants and pre-funded warrants, offset by the principal payment of $0.5 million related to a short-term note.

Operating Capital and Capital Expenditure Requirements

Our future capital requirements will depend on many factors that include, but are not limited to the following:

Based on our working capital on December 31, 2025, we believe we have sufficient capital on hand to continue to fund operations through the end of 2027.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Summary of Critical Accounting Policies

Use of Estimates-The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Preclinical Study and Clinical Accruals-We estimate our preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and CROs that conduct and manage preclinical and clinical trials on our behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:

Warrants for Common Shares and Derivative Financial Instruments-Warrants for shares of common stock and other derivative financial instruments are classified as equity if the contracts: (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). Contracts are classified as equity or liabilities if the contracts: (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions that do not qualify for the scope exception. The Company assesses the classification of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures. The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements. The standard is effective for years beginning after December 15, 2024. The Company adopted and applied the amendments of this ASU to its disclosures. The application of this ASU did not have a material impact on the Company's financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Topic 220-40), which addresses the disaggregation of income statement expenses. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating this standard to determine if adoption will have a material impact on the Company's consolidated financial statements.