Nancy Hecox - IR John Kelley - CEO Michael Jebson - CFO

John Vandermosten - Zacks

Good day, ladies and gentlemen and welcome to Tenax Therapeutics’ Fiscal Year 2016 Business Review and Update. All lines have been placed in a listen-only mode and the floor will be open for questions following the presentation. [Operator Instructions] At this time it is my pleasure to turn the floor over to Nancy Hecox. Ma’am, the floor is yours.

Thank you. Good morning everyone, and welcome to the earnings call for Tenax Therapeutics’ fiscal year 2016, which ended on December 31, 2016. The news release with our financial results and corporate update became available at 6:00 AM today and can be found on the Investors section of our Web site at www.tenaxthera.com. You can also listen to a live webcast and replay of today’s call on the Investors section of the Web site. Before we begin, let me remind you that statements made on today’s call regarding matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of these forward-looking statements include statements concerning the expected timing for the Company’s clinical trials, statements concerning the potential results of planned clinical trials and future development milestones for the Company’s product candidates. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks are described more fully in Tenax’s filings with the Securities and Exchange Commission. All forward-looking statements made on today’s call speak only as of the date on which they were made. Tenax Therapeutics undertakes no obligation to update such statements to reflect the events that occur or circumstances that exist after the date on which they were made. On the call today is John Kelley, Chief Executive Officer of Tenax Therapeutics who will discuss recent company highlights. Following John, Michael Jebson, Tenax's Chief Financial Officer who will review the company's financial results after which we will open the call for Q&A. Now let me turn the call over to Tenax's CEO John Kelley.

Thanks Nancy, good morning everyone and thank you for joining us today. I want to take this opportunity today to discuss the full dataset of the primary results from our Levosimendan Phase 3 LEVO-CTS trial which was presented at the American College of Cardiology Annual Meeting on March 19. The results were also simultaneously published in the New England Journal of Medicine. You can find the slides for the presentation on our website at www.tenaxthera.com. The LEVO-CTS trial was a Phase 3, double-blind randomized, placebo-controlled study of 880 patients with reference left ventricular systolic dysfunction undergoing cardiac surgery requiring, cardiopulmonary bypass and evaluated whether preoperative treatment with Levosimendan significantly reduced adverse outcomes related to low-cardiac output syndrome or LCOS compared with placebo. The coprimary endpoints of the study were the dual endpoints, a composite of death after 30 days or the use of a mechanical assist device through day five and the quad endpoint, carry operative myocardic infraction or mechanical assist device used through day five and death or the need for renal dialysis through post-operative day 30. Secondary endpoints measured the length of stay in intensive care and critical care units, incidents of LCOS and post-operative use of secondary inotropes associated with the index surgical procedures. Safety endpoints included hypotension, new arterial fibrillation and death through 90 days. The study did not achieve specifically significant reductions in the dual or quad endpoints. Looking at the individual components of each endpoints there was a positive mortality trends with Levosimendan as well as the positive trend observed with renal dialysis. The incidents of MI was nearly the same in each group and slightly more mechanical assist devices were used in the Levosimendan arm. Levosimendan did achieve statically significant results in 2 out of 3 secondary endpoints. Levosimendan did reduce the incidents of LCOS as well as the use of secondary inotropes. Levosimendan also demonstrated a statistically significant improvement in cardiac index. These findings are consistent with what we know about how this drug works. Importantly, Levosimendan was found to be safe and well tolerated with no serious adverse event observed. While not statically significant, Levosimendan did demonstrated a clinically meaningful reduction in mortality of 35% at 90 days. Not included in the primary results presented at ACC, in an analysis if prespecified sub-groups. There is a strong trend on a mortality benefits seen with Levosimendan in both 30 and 90 days in the 563 patients that had cardiac [ph] or coronary bypass surgery only. There was a 67% reduction in mortality at 30 days and a 73% reduction at 90 days. Conversely, if the surgery included any type of valve procedures there appears to be a negative effect of Levosimendan on mortality. Additional analysis is needed to better understand these results. Based on these findings we continue to evaluate cardiac surgery and other cardiac indications that may benefit from Levosimendan. We have had one meeting with the FDA shortly after the primary results were available. At that time we did not have the complete analysis under 90 day data or the complete sub-group analysis. We did raise the question of submitting an NDA for ADHF of Acute Decompensated Heart Failure, the indication for which Levosimendan is marketed in over 60 countries. The FDA asked us the schedule a follow up meeting where we could review complete analysis in the 90 day data from LEVO-CTS along with the Acute Decompensated Heart Failure data. We now have a pre-NDA meeting scheduled with the FDA in the second quarter of this year. At that meeting we will be discussing the existing data that's forced the use of Levosimendan in ADHF as well as the complete 90 day mortality data from and LEVO-CTS and the sub-group analysis [Indiscernible] patients versus patients with any types of valve procedures. We want to explore with FDA how best the summit an NDA for Levosimendan in ADHF or cardiac surgery or bypass surgery, or both with the existing data. While the LEVO-CTS trial did not achieve its primary endpoint, it did demonstrate important clinical benefits especially in patients undergoing [Indiscernible] alone and we want to discuss this with the FDA. Finally, the company believes that is in an excellent position to explore additional strategic options and broaden this product line while looking at options for Levosimendan, to this end we will be engaging an investment bank to assist us with these efforts. We look forward to these further discussions with the regulatory authorities and to updating you on our progress. With that, I’ll turn the call over to Michael for a review of the financials.

Thanks, John. I will begin today by summarizing our financial results for the years ended December 31, 2016 and 2015, followed by a brief discussion of our cash position. For the year ended December 31, 2016, we reported a net loss of $43.9 million or $1.56 per share, compared to a net loss of $15.9 million or $0.57 per share in the prior year. Total operating expenses for the year ended December 31, 2016 were $52.7 million, compared to $16.6 million in the prior year. The approximately $36.1 million increase in operating expenses for the current year was due primarily to a $33.3 million impairment loss recorded against goodwill and our intangible asset related to the Phase 3 LEVO-CTS trial as well as an increase of approximately $4.2 million in research and development costs as compared to the prior year. These costs were partially offset by a decrease of approximately $500,000 in general and administrative costs during the current year and the approximately $1 million write-off of Oxycyte-related assets during the prior year. G&A expenses for the year ended December 31, 2016 were $6.2 million as compared to $6.7 million in the prior year. The approximately $500,000 decrease in G&A costs for the year ended December 31, 2016 was primarily due to decreases in legal and other professional fees incurred in the prior year as a result of our transition to a calendar fiscal year and a decrease in franchise and other state taxes paid in the current year partially offset by a slight increase in personnel cost in the coming year. Research and development expenses for the year ended December 31, 2016 were approximately $13.1 million, compared to $8.9 million in the prior year. The increase in research and development expenses as compared to the prior year was due primarily to the increase in cost incurred for the progression of our Phase 3 LEVO-CTS study, partially offset by the elimination of the cost incurred for clinical and pre-clinical safety studies for Oxycyte during the prior year. As of December 31, 2016 we had cash and cash equivalents including the value of our investment in marketable securities totaling $21.9 million compared to $38.2 million at December 31, 2015. Overall through the first half of 2017, we expect to see significant decreases in quarterly R&D expenses as we wrap up the LEVO-CTS Phase 3 clinical study and complete all of the site closeout activity. With our existing capital, we are well positioned with sufficient funds to continue to work with the FDA to determine the best path forward for Levosimendan while we explore additional strategic options to broaden on our product lines. We believe that we have sufficient capital to fund our operations through the first half of 2018. With that we are ready to open the call for questions.

Thank you. The floor is now open for questions. [Operator Instructions]. Our first question comes from John Vandermosten from Zacks. Please state your question.

First question is on just the anticipated cash burn. You did give some guidance in terms of there being sufficient cash to make it until first half of next year, no problem. Can you give me kind of quarterly cash burn rate that might correspond with that?

So where we stand now, we are anticipating overall full year G&A cost between $5 million and $5.5 million. We anticipate about $2.5 million more dollars in R&D cost related to the close out of the LEVO-CTS study, the majority of which will hit in the first quarter of this year and then taper off into the second quarter. As far as second half 2017 R&D spend, it really is dependent upon our strategic plan moving forward. There are no committed R&D costs where we stand today.

Okay. And then second on Health Canada, there is a mention in there of seeking approval up north. Do they -- might they considered different factors or different studies when looking at approval compared to the FDA? I mean the FDA, it seems to probably give more way to the LEVO-CTS study, but since its Canada, might they consider the researches out there as well?

Yeah, John, I think so Health Canada typically benchmarks offs of things that have happened in Europe, they particularly look at countries like Sweden and Switzerland where the is approved and on the market for Acute Decompensated Heart Failure. So I do think that they might evaluate it in a different light than the FDA would.

Okay. One other question and this maybe a little bit out there. But if high potential is a problem, would it potentially of improved outcomes if a [indiscernible] constrictor was administered in the cases where that was observed? It seems that perhaps the trial protocol didn't allow for any on-the-spot modifications like this, but was that something that was discussed or considered or thought of or potentially something that could have improved outcomes?

Well I mean first of all there were instructions in the protocol with regards to adjusting the dose of the study drug depending on blood pressure and there were no prohibitions against using other drugs that they would normally use. So basically, we administered placebo or Levosimendan and then standard-of-care. So if they felt like they needed a vasopressor to adjust blood pressure they were free to use that. The detailed results if you look at the report, there really wasn't a different in the incidents of hypotension between the two groups. There was a lot more titrating of the study drug in the Levosimendan arm. So it looks like they were adjusting the amount of drug they were giving and controlling blood pressure as they were instructed to.

Okay. That’s helpful. I’ll hope back into the queue.

Right.

Thank you. [Operator Instructions] Okay the next question comes from Grant Houston [ph]. Please state your question.

Okay. Mike, hello my question is and my name is Craig Houston. But my question is, are the results from the earlier study that we just came through enough to -- for the FDA to grant a NDA or will there be further study efforts made?

No, we are going to pursue filing an NDA in cardiac surgery or in Acute Decompensated Heart Failure based on existing data. We do not think that an additional study is necessary.

Okay. Thank you.

You’re welcome.

Thank you, and that appears to be our last question.

Okay. Well, again, I thank everybody for joining us today and we look forward to keeping you updated as our discussions with the regulatory authority’s progress and we look forward to sharing some progress with you in the near future. So thank you very much. And have a great day.

Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time. And have a great day.