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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 001-39421

Graphic

ORCHESTRA BIOMED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

   

92-2038755

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

150 Union Square Drive

New Hope, Pennsylvania 18938

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (215) 862-5797

Securities registered pursuant to Section 12(b) of the Act

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

OBIO

 

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 10, 2023, the registrant had 35,743,972 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

Table of Contents

Page

PART I. FINANCIAL INFORMATION

1

Item 1.

Financial Statements

1

Unaudited Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

1

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022

2

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2023 and 2022

3

Condensed Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2023 and 2022

5

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

PART II. OTHER INFORMATION

50

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

52

Signatures

53

i

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, regulatory approvals, timing, and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this report include, but are not limited to, statements about:

our ability to raise financing in the future;
our ability to realize the anticipated benefits of the Business Combination (as defined in Part I, Item 1, Note 1, “Organization and Basis of Presentation,” in the notes to unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q);
our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
our ability and/or the ability of third-party vendors and partners to manufacture our product candidates;
our ability to source critical components or materials for the manufacture of our product candidates;
our ability to achieve and sustain profitability;
our ability to achieve our projected development and commercialization goals;
the rate of progress, costs and results of our clinical studies and research and development activities;
market acceptance of our product candidates, if approved;
our ability to compete successfully with larger companies in a highly competitive industry;
changes in our operating results, which make future operations results difficult to predict;
serious adverse events, undesirable side effects that could halt the clinical development, regulatory approval or certification, of our product candidates;
our ability to manage growth or control costs related to growth;
economic conditions that may adversely affect our business, financial condition and stock price;
our reliance on third parties to drive successful marketing and sale of our initial product candidates, if approved;
our reliance on third parties to manufacture and provide important materials and components for our products and product candidates;

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our and our partners’ abilities to obtain necessary regulatory approvals and certifications for our product candidates in an uncomplicated and inexpensive manner;
our ability to maintain compliance with regulatory and post-marketing requirements;
adverse medical events, failure or malfunctions in connection with our product candidates and possible subjection to regulatory sanctions;
healthcare costs containment pressures and legislative or administrative reforms which affect coverage and reimbursement practices of third-party payors;
our ability to protect or enforce our intellectual property, unpatented trade secrets, know-how and other proprietary technology;
our ability to obtain necessary intellectual property rights from third parties;
our ability to protect our trademarks, trade names and build our names recognition;
our ability to maintain the listing of our common stock on The Nasdaq Stock Market LLC (“Nasdaq”);
the success of our licensing agreements; and
our public securities’ liquidity and trading.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this report and are subject to a number of risks, uncertainties, and assumptions described under the heading “Item 1A. Risk Factors” in Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Q1 10-Q”) and under the heading “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q, as well as elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We do not plan to publicly update or revise any forward-looking statements contained herein whether as a result of any new information, future events, or otherwise, except as required by law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ORCHESTRA BIOMED HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

    

September 30, 

    

December 31, 

2023

2022

ASSETS

 

  

 

  

CURRENT ASSETS:

 

  

 

  

Cash and cash equivalents

$

19,078

$

19,784

Marketable securities

 

89,410

 

63,915

Strategic investments, current portion

 

362

 

86

Accounts receivable, net

 

86

 

96

Inventory

 

137

 

276

Prepaid expenses and other current assets

 

1,116

 

533

Total current assets

 

110,189

 

84,690

Property and equipment, net

 

1,355

 

1,489

Right-of-use assets

 

1,714

 

2,187

Strategic investments, less current portion

 

2,495

 

2,495

Deposits and other assets

 

604

 

4,711

TOTAL ASSETS

$

116,357

$

95,572

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

CURRENT LIABILITIES:

 

  

 

  

Accounts payable

$

3,150

$

3,968

Accrued expenses and other liabilities

 

4,301

 

5,376

Operating lease liability, current portion

 

747

 

697

Warrant liability

 

 

2,089

Deferred revenue, current portion

 

3,676

 

6,436

Loan payable, current portion

 

9,599

 

Total current liabilities

 

21,473

 

18,566

Deferred revenue, less current portion

 

13,845

 

13,103

Loan payable, less current portion

9,490

Operating lease liability, less current portion

 

1,117

 

1,683

Other long-term liabilities

 

266

 

196

TOTAL LIABILITIES

 

36,701

 

43,038

STOCKHOLDERS’ EQUITY

 

  

 

  

Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized; none issued or outstanding at September 30, 2023 and December 31, 2022.

 

 

Common stock, $0.0001 par value per share; 340,000,000 shares authorized; 35,743,972 and 20,187,850 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.

 

4

 

2

Additional paid-in capital

 

315,765

 

252,274

Accumulated other comprehensive loss

 

(77)

 

(8)

Accumulated deficit

 

(236,036)

 

(199,734)

TOTAL STOCKHOLDERS’ EQUITY

 

79,656

 

52,534

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

116,357

$

95,572

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ORCHESTRA BIOMED HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)

    

Three Months Ended September 30, 

    

Nine Months Ended September 30, 

2023

2022

2023

2022

Revenue:

 

  

 

  

 

  

 

  

Partnership revenue

$

271

$

986

$

2,018

$

1,931

Product revenue

 

148

 

177

 

480

 

499

Total revenue

 

419

 

1,163

 

2,498

 

2,430

Expenses:

 

  

 

  

 

  

 

  

Cost of product revenues

 

41

 

56

 

139

 

158

Research and development

 

8,558

 

5,899

 

25,311

 

14,402

Selling, general and administrative

 

6,344

 

5,275

 

16,073

 

10,699

Total expenses

 

14,943

 

11,230

 

41,523

 

25,259

Loss from operations

 

(14,524)

 

(10,067)

 

(39,025)

 

(22,829)

Other income (expense):

 

  

 

  

 

  

 

  

Interest income (expense), net

 

915

 

63

 

2,741

 

(419)

Gain (loss) on fair value adjustment of warrant liability

 

 

36

 

(294)

 

(1,124)

Loss on debt extinguishment

(682)

Gain (loss) on fair value of strategic investments

 

293

 

(314)

 

276

 

1,196

Total other income (expense)

 

1,208

 

(215)

 

2,723

 

(1,029)

Net loss

$

(13,316)

$

(10,282)

$

(36,302)

$

(23,858)

Net loss per share

 

  

 

  

 

  

 

  

Basic and diluted

$

(0.38)

$

(0.51)

$

(1.11)

$

(1.80)

Weighted-average shares used in computing net loss per share, basic and diluted

 

35,243,598

 

20,187,773

 

32,586,431

 

13,236,450

Comprehensive loss

 

  

 

  

 

  

 

Net loss

$

(13,316)

$

(10,282)

$

(36,302)

$

(23,858)

Unrealized loss on marketable securities

 

19

 

 

(69)

 

Comprehensive loss

$

(13,297)

$

(10,282)

$

(36,371)

$

(23,858)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ORCHESTRA BIOMED HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)

    

    

    

    

Accumulated

    

    

Total

Convertible Preferred

Additional

Other

Stockholders’

Stock

Common Stock

Paid-in

Comprehensive

Accumulated

Equity

Shares

    

Amount

Shares

    

Amount

Capital

(Loss)

Deficit

(Deficit)

Balance, January 1, 2023 (as previously reported)

 

35,694,179

$

165,923

 

2,522,214

$

$

86,353

$

(8)

$

(199,734)

$

(113,389)

Retroactive application of reverse capitalization (Note 3)

 

(35,694,179)

 

(165,923)

 

17,665,636

 

2

 

165,921

 

 

165,923

Balance, January 1, 2023 effect of Merger

 

 

 

20,187,850

 

2

 

252,274

 

(8)

 

(199,734)

 

52,534

Effect of Merger and recapitalization (refer to Note 3)

 

 

 

11,422,741

 

1

 

54,301

 

 

 

54,302

Reclassification of Legacy Orchestra common stock warrants to stockholders’ equity

 

 

 

 

 

2,373

 

 

 

2,373

Unrealized loss on marketable securities

 

 

 

 

 

 

(27)

 

 

(27)

Stock-based compensation

 

 

 

 

 

1,489

 

 

 

1,489

Exercise of stock options

 

 

 

2,325

 

 

10

 

 

 

10

Exercise of warrants

 

 

 

128,231

 

 

11

 

 

 

11

Net loss

 

 

 

 

 

 

 

(10,940)

 

(10,940)

Balance, March 31, 2023

 

$

 

31,741,147

$

3

$

310,458

$

(35)

$

(210,674)

$

99,752

Issuance of shares in settlement of earnout

3,999,987

1

1

Unrealized loss on marketable securities

(61)

(61)

Stock-based compensation

1,707

1,707

Exercise of stock options

15,500

64

64

Exercise of warrants

32,279

22

22

Forfeiture of restricted stock awards

(45,906)

Net loss

(12,046)

(12,046)

Balance, June 30, 2023

 

$

 

35,743,007

$

4

$

312,251

$

(96)

$

(222,720)

$

89,439

Unrealized gain on marketable securities

19

19

Stock-based compensation

3,510

3,510

Exercise of stock options

965

4

4

Net loss

(13,316)

(13,316)

Balance, September 30, 2023

$

35,743,972

$

4

$

315,765

$

(77)

$

(236,036)

$

79,656

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ORCHESTRA BIOMED HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(Unaudited)

    

    

    

    

    

    

Accumulated

    

    

Total

Convertible Preferred

Additional

Other

Stockholders’

Stock

Common Stock

Paid-in

Comprehensive

Accumulated

Equity

Shares

Amount  

Shares

Amount

Capital

(Loss)

Deficit

(Deficit)

Balance, January 1, 2022 (as previously reported)

 

12,075,976

$

51,452

 

2,185,297

$

$

94,894

$

$

(166,126)

$

(71,232)

Retroactive application of reverse capitalization (Note 3)

 

(12,075,976)

 

(51,452)

 

6,636,983

 

1

 

51,451

 

 

 

51,452

Balance, January 1, 2022 effect of Merger

 

 

 

8,822,280

 

1

 

146,345

 

 

(166,126)

 

(19,780)

Stock-based compensation

 

 

 

 

 

70

 

 

 

70

Exercise of stock options

 

 

 

5,696

 

 

25

 

 

 

25

Exercise of warrants

 

 

 

68,588

 

 

230

 

 

 

230

Proceeds from private placement

 

 

 

1,240,169

 

 

25,262

 

 

 

25,262

Net loss

 

 

 

 

 

 

 

(5,729)

 

(5,729)

Balance, March 31, 2022

 

$

 

10,136,733

$

1

$

171,932

$

$

(171,855)

$

78

Stock-based compensation

219

219

Exercise of stock options

21,442

92

92

Exercise of warrants

4,650

(151)

(151)

Proceeds from private placement financing

10,015,015

1

76,392

76,393

Shares issued pursuant to consulting agreement

9,300

38

38

Issuance of warrants pursuant to debt refinancing

178

178

Other

506

506

Net loss

(7,847)

(7,847)

Balance, June 30, 2022

$

20,187,140

$

2

$

249,206

$

$

(179,702)

$

69,506

Stock-based compensation

2,223

2,223

Exercise of stock options

710

4

4

Proceeds from private placement financing

(23)

(23)

Net loss

(10,282)

(10,282)

Balance, September 30, 2022

$

20,187,850

$

2

$

251,410

$

$

(189,984)

$

61,428

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ORCHESTRA BIOMED HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, except share and per share data)

(Unaudited)

    

Nine Months Ended September 30, 

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net loss

$

(36,302)

$

(23,858)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

  

Depreciation and amortization

 

215

 

152

Shares issued as compensation for consulting services

38

Stock-based compensation

 

6,706

 

2,512

Loss on fair value adjustment of warrant liability

 

294

 

1,124

Gain on fair value of strategic investments

 

(276)

 

(1,196)

Accretion and interest related to marketable securities

 

(3,181)

Loss on debt extinguishment

 

 

682

Non-cash lease expense

 

473

 

419

Amortization of deferred financing fees

109

 

127

Changes in operating assets and liabilities:

 

Accounts receivable

 

10

 

25

Inventory

 

139

 

(262)

Prepaid expenses and other assets

 

(458)

 

(475)

Accounts payable, accrued expenses and other liabilities

 

(348)

 

2,294

Operating lease liabilities – current and non-current

 

(516)

 

(196)

Deferred revenue

 

(2,018)

 

(1,931)

Net cash used in operating activities

 

(35,153)

 

(20,545)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

  

Purchases of property and equipment

 

(81)

 

(537)

Sales of marketable securities

115,690

Purchases of marketable securities

 

(138,073)

 

(208)

Net cash used in investing activities

 

(22,464)

 

(745)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Repayment of debt financing, inclusive of debt extinguishment costs

 

 

(6,446)

Proceeds from Avenue term loan

10,000

Proceeds from exercise of warrants

 

23

 

79

Proceeds from exercise of stock options

 

78

 

121

Effect of merger, net of transaction costs (Note 3)

 

56,810

 

Proceeds from private placement financing

 

 

109,830

Deferred financing, offering and merger costs

 

 

(5,237)

Net cash provided by financing activities

 

56,911

 

108,347

Net (decrease) increase in cash and cash equivalents

 

(706)

 

87,057

Cash and cash equivalents, beginning of the period

 

19,784

 

9,938

Cash and cash equivalents, end of the period

$

19,078

$

96,995

Supplemental Disclosures of Cash Flow Information

 

  

 

  

Cash paid during the nine months ended September 30:

 

  

 

  

Interest

$

1,098

$

1,040

Non-cash financing activities:

 

  

 

  

Deferred offering and merger costs in accounts payable and accrued expenses

 

 

5,682

Warrants issued pursuant to private placement financing

620

Warrants issued pursuant to debt financing

178

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ORCHESTRA BIOMED HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Basis of Presentation

Orchestra BioMed Holdings, Inc. (collectively, with its subsidiaries, “Orchestra” or the “Company”) (formerly known as Health Sciences Acquisitions Corporation 2) is a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies. The Company’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. The Company’s lead product candidate is BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”) for the treatment of hypertension (“HTN”), a significant risk factor for death worldwide. The Company is also developing Virtue Sirolimus AngioInfusion Balloon (“Virtue SAB”) for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide.

Prior to January 26, 2023, the Company was a special purpose acquisition company formed for the purpose of entering into a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. On January 26, 2023 (the “Closing Date”), the Company consummated the business combination contemplated by the Agreement and Plan of Merger, dated as of July 4, 2022 (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated July 21, 2022, and Amendment No. 2 to Agreement and Plan of Merger, dated November 21, 2022, the “Merger Agreement”) by and among Health Sciences Acquisitions Corporation 2, a special purpose acquisition company incorporated as a Cayman Islands exempted company in 2020 (“HSAC2”), HSAC Olympus Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HSAC2 (“Merger Sub”), and Orchestra BioMed, Inc. (“Legacy Orchestra”). Pursuant to the Merger Agreement, (i) HSAC2 deregistered in the Cayman Islands in accordance with the Companies Act (2022 Revision) (As Revised) of the Cayman Islands and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law (the “Domestication”) and (ii) Merger Sub merged with and into Legacy Orchestra, with Legacy Orchestra as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly owned subsidiary of Orchestra (the “Merger” and, together with the Domestication and the other transactions contemplated by the Merger Agreement, the “Business Combination”). As part of the Domestication, the Company’s name was changed from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” See Note 3 for additional information.

Legacy Orchestra, the Company’s wholly owned subsidiary, was incorporated in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private placements. In May 2018, Legacy Orchestra concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc., a Delaware corporation, BackBeat Medical, Inc., a Delaware Corporation, and FreeHold Surgical, Inc., a Delaware corporation. Legacy Orchestra completed the conversions of BackBeat Medical, Inc. to BackBeat Medical, LLC (“BackBeat”), a Delaware limited liability company, of FreeHold Surgical, Inc. to FreeHold Surgical, LLC (“FreeHold”) and of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC (“Caliber”), a Delaware limited liability company, in 2019.

Caliber

Caliber Therapeutics, Inc. was incorporated in Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such as a stent in the artery. In 2019, Legacy Orchestra entered into a distribution agreement with Terumo Medical Corporation (“Terumo”) for global development and commercialization of Virtue SAB (the “Terumo Agreement”) (See Note 4).

BackBeat

BackBeat Medical, Inc. was incorporated in Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable cardiac stimulation-based treatment for

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hypertension that is designed to immediately, substantially and persistently lower blood pressure while simultaneously modulating autonomic nervous system responses that normally drive and maintain blood pressure higher. Refer to Note 5 for details regarding the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Legacy Orchestra, BackBeat and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”).

FreeHold

FreeHold Surgical, Inc. was incorporated in Delaware in May 2010 and began development of its hands-free, intracorporeal retractor device for minimally-invasive surgery in 2012. FreeHold is engaged in the development, sales and marketing of its retractor products that provide optimized visual and total surgeon control during laparoscopic and robotic procedures.

Basis of Presentation and Liquidity

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulation of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. These condensed statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to fairly present the results of the interim periods. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date. Operating results and cash flows for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our report for the year ended December 31, 2022 together with the related notes thereto, filed as Exhibit 99.1 to the Company’s Form 8-K/A filed with the SEC on March 24, 2023.

The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of September 30, 2023, the Company had an accumulated deficit of $236.0 million and has experienced net losses each year since its inception. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance its products to commercialization. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biomedical device industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses.

The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

Based on the available balance of cash and cash equivalents and marketable securities as of September 30, 2023, management has concluded that sufficient capital is available to fund its operations and meet cash requirements through the one-year period subsequent to the issuance date of these financial statements. Management may consider plans to raise capital beyond the one-year period subsequent to the issuance date of these financial statements through issuance of equity securities, debt securities, and/or additional development and commercialization partnerships for other products within the Company’s development pipeline. The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of the Company’s research and development programs.

2. Summary of Significant Accounting Policies

Reverse Recapitalization

The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company, and Legacy Orchestra

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is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. As a result, the consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Legacy Orchestra. Additionally, the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). For additional information on the Business Combination and the Exchange Ratio, see Note 3 to these unaudited condensed consolidated financial statements.

Emerging Growth Company and Smaller Reporting Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the closing of the initial public offering of HSAC2, (2) the last day of the fiscal year in which the Company has total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which the Company is deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of the common stock of the Company (“Company Common Stock”) held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (4) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

The Company is also a “smaller reporting company” as defined in the Exchange Act. The C