Greetings and welcome to the Tenax Therapeutics Second Quarter 2015 Business Review and Update. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instruction] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host today, Nancy Hecox. Thank you, Nancy. You may begin.

Thank you and good morning everyone. Welcome to Tenax Therapeutics second quarter fiscal year 2015 conference call. The news release with our financial results and corporate update became available at 6:00 a.m. today and can be found on our Web site at www.tenaxthera.com. You may 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 are made. Tenax Therapeutics undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made. Joining me on the call today is John Kelley, Chief Executive Officer of Tenax Therapeutics who will discuss recent company highlights. Following John, Michael Jebsen, Tenax's Chief Financial Officer will review the company's financial results for the second quarter of fiscal year 2015, 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 and good morning everyone and thank you for joining us. We are excited today to update you on the significant progress we have made these past several months both in the execution of our LEVO-CTS trial for levosimendan as well as our longer term vision of building a multi-faceted critical care company through the broad pipeline of opportunities that can deliver value to our patients and our shareholders. To start, let me update you on our Phase III LEVO-CTS trial for levosimendan in cardiac surgery. In September, we announced the dosing of the first patient in this study, which as a reminder is a double-blind randomized placebo controlled trial that will evaluate the use of levosimendan administered before cardiac surgery to reduce the incidence of low cardiac output syndrome and associated morbidity and mortality. As of today, we have now enrolled 14 patients in the trial and have activated 21 clinical sites. We have signed an additional 8 contracts with hospitals that are in the final stages of activation and are in discussion with another 26 additional sites. We are also evaluating sites in Canada with plan to activate 5 to 10 sites there. We are now planning to activate a total of 60 hospitals for this trial. We expect to have approximately 50 sites activated by the end of the first calendar quarter of 2015. In October, we had investigators meeting to kick-off the initiation of LEVO-CTS trial, 42 sites were represented at the meeting. This meeting offered the opportunity for an exchange on the current use of levosimendan outside of the United States as well as an in-depth discussion of the trial protocol. Dr. Wolfgang Toller, a Cardiac Anesthesiologist from Graz, Austria and a member of the LEVO-CTS Steering Committee shared the European experience of using…

Thank you, John. Total operating expenses for the six months ended October 31, 2014 were $6.6 million compared to $3.9 million in the prior year. General and administrative costs increased approximately $600,000 and research and development costs increased approximately $2 million due to increases in personnel, legal and professional fees, and the costs associated with conducting the Phase III clinical trial for levosimendan. General and administrative expenses for the six months ended October 31, 2014 were $3 million compared to approximately $2.4 million in the prior year. This increase was due primarily to an increase in headcount following the Phyxius acquisition and costs incurred for external Investor Relations services. Research and development expenses for the six months ended October 31, 2014 were $3.5 million compared to $1.5 million in the prior year. The increase in research and development expenses as compared to the same period and the prior year was due primarily to the costs incurred for conducting the Phase III LEVO-CTS study, the cost to support the LeoPARDS study for septic shock and approximately $400,000 of accrued costs to close that activities for our decision to shutdown the TBI trials for Oxycyte. These increases were partially offset by a reduction in costs incurred conducting preclinical safety studies for Oxycyte during the same period in the prior year. For the six months ended October 31, 2014, we reported a net loss of $6.2 million or $0.22 per share compared to a net loss of $5.8 million or $2.94 per share in the prior year. Included in the prior year net loss is approximately $2 million of non-cash charges for the amortization of interest expense on convertible notes which matured in June of this year. As of October 31, 2014, we had cash and cash equivalents, including the value of our investments in marketable securities totaling approximately $53.3 million compared to approximately $58.3 million at April 30, 2014. Overall for the remainder of fiscal 2015, we expect to see significant reductions in R&D expenses as a result of the decision to stop the Phase IIb TBI study overseas as we continue to focus our capital resources on the clinical execution of our LEVO-CTS Phase III clinical study. With our existing capital, we believe we are well positioned with sufficient funds to complete our Phase III LEVO-CTS trial and carry the program through potential approval. Our clinical execution and efficient use of capital also gives us the flexibility to continue to evaluate strategic opportunities for growth, including potential additional indications for levosimendan. With that, I'll turn the call back over to the operator for Q&A.

Thank you. [Operator Instructions] Our first question today is coming from Jeffrey Cohen from Ladenburg Thalmann. Please proceed with your question.

Hi, John and Michael, how are you?

Pretty good, Jeff. How about yourself?

Pretty good. Could you talk a little bit about the sepsis trials as far as the discussion you had with the FDA. And it sounds like you are doing some analysis now internally, but what should we expect as possible next steps, does it seem like they are guiding you to do a Phase II trial as far as U.S. approval or what would they like to see as far as development steps in the U.S.?

Okay. Good question, Jeff. The meeting that we have with the FDA was really to inform them on what was going on with the LeoPARDS trial and to get their reaction to the trial and what guidance they might be able to provide us with regards to next step. We made it clear to the FDA that the trial was not designed to be a regulatory trial that it was the trial that was planned by Imperial College of London and that we were opportunistically participating in it, but we wanted them to be aware of it and see what they thought would be necessary. They actually I think themselves and stress the fact that this is an area of significant unmet need and that anything shown as a positive trend in the trial could be potentially important. And they gave us some ideas with regard to ways the data could be analyzed and looked at, so that perhaps what wasn't powered to be a regulatory trial could be looked at that way. So all of this obviously is going to come down to what the data shows. What we are doing right now is the Imperial College of London and the trial team is looking at the feedback from the FDA and looking at the minutes that we got from the meeting and determining what they would be able to do from an analytical point of view. It really comes down to, are there enough patients to show enough power to see the difference between levosimendan [indiscernible] the competitor. The FDA gave us some ideas how to do that. So that's the next step, evaluating the possibility. The statistical analysis plan has not yet been written for the trial. It needs to be done and they are working on that now. And they have agreed that they will let the FDA review it. So that's really the next step.

So would you pursue any type of regulatory pathway prior to seeing the data as you said in the first quarter of calendar 2016?

Well, once this trial is complete and the analysis is done and we have data, we will determine whether or not we are in a position to file for regulatory approval.

Okay. But that interior would not be in the next calendar year?

The rate at which they are enrolling patients would suggest that they should finish some time in 2015 with the trial. That's assuming that it continues to go the way it goes. But, we are not conducting the trial someone else is. It's a little bit outside of our control. So we really are depending on them finishing the trials, them doing the analysis and then us getting the data. So it may sound like I'm hedging a little bit here, but that's because it's not our trial.

Got it. As far as the current trial, the event rates and the two interim analysis, what should we expect to hear as far as in the public domain from the event rate and the interim analysis, what do you plan to say or what should we expect as far as press releases or commentary?

Well, I think once we get to 200 patients, we would certainly let people know that we have achieved that milestone and then it really is depending on what DSMB details – anticipation is that if the trial is running the way it's supposed to that is just going to tell us to continue doing what we are doing. So the announcement will be, we have achieved, we hit 200 patients. With regards to the 50% and 70% interim analysis, again, it really is a matter of what we are told by the DSMB that would be doing the evaluation and maybe just that we got over 50% of them then we were told to continue. If there is some significant results, we would obviously share that.

Got it. And one more if I may for Michael. If you could talk a little bit about the SG&A and R&D, so you said the R&D spent was about $400,000 due to the close out of Oxycyte. So how should we think about the R&D for the balance of 2015? And also could you talk about SG&A for the balance of 2015 as well?

SG&A, I think if you focus on the three months ended October 31, SG&A came in just under $1.6 million and R&D came in at just over $2.5 million. I think that's going to be consistent and a pretty good threshold for the remainder of fiscal 2015. We will be trading the costs that were currently incurred on TBI trial as the LEVO-CTS trial really starts to continue to build momentum. I anticipate it's going to peak in the third quarter as we get the remainder of the sites activated and any variations over the next four to five quarters would be depending upon the rate at which patients are enrolled. For forecasting measures I think the $2.5 million to $3 million per quarter in R&D is a pretty fair estimate.

Perfect. Okay. Thanks a lot guys. I appreciate it.

Okay.

Thank you. Our next question today is coming from Vernon Bernardino from MLV & Company. Please proceed with your question.

Hi, guys. Thanks for taking my question and congrats on the progress so far.

Thanks.

I just want to follow up on the LeoPARDS study, and yes, does it seem like it's enrolling faster than expected. And you did “has” but would it be possible that an earlier read out than calendar year 2016 would be possible?

It's certainly is possible. But again, what I'm giving you is what the lead investigator the LeoPARDS trial quoted to us is, he expects to finish enrollment by the end of the year – next calendar year with analysis in early 2016. But, you can monitor the trial; they have their own Web sites leopards-trial.org. And they quote out; they put out there the number of patients that they have enrolled. They update it about once a week, so you can track it for yourself and you will see that enrollment has picked up, which was in terms of the grant we gave them, is to go to more hospitals and enroll faster. So it looks like that's working.

Terrific, yes. Looks like money well spent. Since it's not a regulatorily, I don't know if that's really a good word designed trial. Do you anticipate perhaps what kind of data do you actually anticipate perhaps being announced? I know one thing you want to do is perhaps preserve it because if the FDA is guided, for example that this could have at least announcement of regulatory, I guess mode of analysis than you might want to preserve. But, is there any data perhaps that would be announced that would still preserve that?

Well, again, we are not in control of what data is announced when. The protocol is out there and you can look out at that. It's on their Web site and you can see that the primary end point that they are looking at is something called the self score, which is a measurement of organ function and it's across five key organ systems, cardiovascular, respiratory, gastrointestinal and few others. And so I think the question there becomes one of, how significant is that and is that a certain end point for something like mortality. And I think that's the key question that the FDA would have. And then it's really the size of the trial, size that 516 patients to show a difference in the self score. But, it's not sized at 515 patients necessarily show a different in mortality. So that was part of the discussion with the FDA is, can you achieve greater power by doing an analysis in a certain way. And they made some suggestions to us. We will have to see.

Yes. That's a very exciting trial. Obviously, one reason why I'm asking so many questions about it. And so you did share some details about it with FDA. Regarding LEVO-CTS, it has 21 sites activated. And I don't want to do too much math here, but and you guided that you want to have 55 sties activated by the end of calendar year that is 2015 first quarter?

Yes, 50 sites by the end of the first quarter.

Okay. And that seem like a little too slow or do you – so by the – just wondering if you could comment a little more about that rate of activation?

Well, again, as I said, we have 21 sites that have been activated; quite a few of those have been activated here in the month of December. So the pace have picked up there. We got 8 contracts that are signed which – those are hospitals that really everything is work through and it's a matter of finishing out IRB approval and getting them activated. And then there is another 26 hospitals that are in the queue for a discussion and we just need to move through with getting contract signed and getting their IRB approved. So right now the projections that we put in place would say that we can get to 50 hospitals by the end of the first quarter. If we could get their quicker we would, but a lot of this is depending on IRB approvals. And when the hospital does IRB meeting and that is something that is just out of our control.

Thank you for that. And one more question before I hop back in the queue. So you mentioned that the [indiscernible] agreed is submitted to the FDA and FDA has approved to add CABG patients with aortic valve procedures. Does that change anything about the mechanical assist component of the dual end points?

No, no. I mean I think these are just patients that were originally excluded. The reason we excluded them in the first place is that aortic valve patients don't typically have a lot of events. And/or if they have aortic stenosis that you wouldn't necessarily want to use a drug with invasive dilator in those patients. What we heard from investigators at the meeting was that well, just aortic valve patients don't have a lot of events. But for CABG plus aortic valve they do that they are sick patients and we check that out. And that appears to be very accurate. And then they also said that they would not be concerned about using invasive dilator in patients with aortic stenosis simply because they are carefully monitored under cardiac surgery. So after doing the analysis, we determine that this would be a good patient population to add. Anecdotal reports from hospitals we talk to is that it would significantly increase their pool of patients that they could enroll. And it wouldn't change anything else in terms of the types of events that we would expect to see.

Okay. Yes. That's my thought exactly that in fact you increased the rate of enrollment. Thank you very much for taking the questions.

Sure.

Thank you. [Operator Instructions] Our next question is coming from Brian Jeep from WallachBeth Capital. Please proceed with your question.

Good morning. Thanks for taking the question. I just want to clarify one thing. On the additional patients and the move to enroll Canadian sites, I don't know if the Canadian move is actually, if that's neutral that was always part of the plan, but have you have any trouble or more trouble than you expect enrolling patients from the U.S. so far getting sites online?

Well, it honestly has taken longer than we – I think would have liked, I think the challenge has been that just the process we have to go through is a hospital by hospital process. They all have their own methods for doing this, their own IRB approval procedures, contract procedures and so it has taken a little bit longer. I think that the reason for going to Canada actually it is a part of our license territory that we have. We had always considered the possibility but didn't think it was the most important priority up front. But, we have actually gotten the request from hospitals in Canada for compassionate use of the drug and request some hospitals in Canada to participate in the trial. So we have been doing that evaluation and we are in the process of identifying what would be we think the trial is for 10 most productive sites to enroll patients.

By including Canadian efficiency in the trial, is there an opportunity to leverage the LEVO-CTS data in your potential filing in Canada?

Well, we wouldn't – we could have used the file from the United States to file in Canada, we wouldn't need to use hospitals in Canada. But it certainly helps and we have been encouraged by Health Canada to consider the use of Canadian hospitals. So we are doing that.

Okay. And last question, this one is certainly R&D spend, I think the $2.5 million, $2.6 million a bit lighter than I was expecting for peak with LEVO-CTS running? Is that – that's not just LEVO-CTS R&D expectation, what's total R&D expectation for quarter at LEVO-CTS peak?

Yes. We are not anticipating a great deal of spend on R&D activities outside of LEVO-CTS. We have accrued for what we believe is our best estimate of close out calls for the TBI trial also included in that number is the $500,000 support we gave to LEVO-CTS. So the $2.5 million that's reflected in the 3 months ended October 31, about $900,000 of that spend is non-LEVO-CTS related. We are anticipating that to convert into LEVO-CTS trial spend, which is why the overall dollar amount is – in my opinion going to stay between $2.5 million and $3 million depending on the rate at which site they are activated and patients enrolled because we are giving away approximately $900,000 or $1 million a quarter on other spend.

And the $500,000 invested in the LeoPARDS trial, are we seeing the full acceleration impact at this point or I'm just looking at – it wasn't given that long ago, so I mean, you think it will continue to give you an acceleration or do you think this is kind of the place that we should expect?

Well, the grant was to allow them to go from what was plan to be 25 sites to 35 sites. They have opened up 29 sites. So they have another 6 to go, which – my understanding is that that will happen early next year. So it's possible we could see a pick up in patient enrollment. When we were with Dr. Gordon for our meeting with the FDA, he was estimating at that time that they were enrolling about 20 patients per month and thought they would be at 30 patients per month by the end of the year. They are clearly ahead of that right now. So we will see how much more they can accelerate.

Okay, terrific. Thank you very much.

Yes.

Thank you. We reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

All right. Well, this is John Kelley. I would like to thank everybody for joining us today. I would like to thank everyone for their very good questions and for your interest in Tenax. It's been an amazing year since we did the deal last year to acquire Phyxius and to start to move in a new direction. The company is far different today than it was just 12 months ago. And we look forward to continuing to build on that record of execution. Wish everybody a great holiday season and look forward to talking you again soon. Thank you.

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