Company Overview
Orchestra BioMed Holdings, Inc. (OBIO) is a biomedical innovation company on a mission to accelerate the development and commercialization of transformative medical technologies. Leveraging a unique partnership-enabled business model, Orchestra BioMed is working to bring its pipeline of late-stage product candidates to patients in need.
Founded in 2018, Orchestra BioMed was created to acquire and advance a portfolio of promising biomedical technologies originally developed by its founding team. The company’s flagship product candidates, atrioventricular interval modulation (AVIM) therapy and Virtue Sirolimus AngioInfusion Balloon (Virtue SAB), target two of the largest unmet medical needs globally – hypertension and atherosclerotic artery disease.
Strategic Partnerships
In 2019, Orchestra’s wholly owned subsidiary, Legacy Orchestra, entered into a distribution agreement with Terumo Medical Corporation (Terumo) for the global development and commercialization of Virtue SAB. This agreement provided Legacy Orchestra with an upfront payment of $30 million and an equity commitment of up to $5 million, strengthening the company’s financial position and development capabilities.
Prior to January 26, 2023, Orchestra BioMed Holdings, Inc. was a special purpose acquisition company formed for the purpose of entering into a business combination. On that date, the company consummated the business combination with Legacy Orchestra, with Legacy Orchestra surviving as a wholly owned subsidiary of Orchestra BioMed Holdings, Inc. This strategic move allowed the company to access public markets and potentially accelerate its growth trajectory.
Financials
Since its inception, Orchestra has dedicated the majority of its resources to research and development and clinical activities in support of its product development and collaboration efforts. The company has funded its operations through various means, including the issuance of convertible preferred stock, proceeds from the business combination, the distribution agreement with Terumo, borrowings under debt arrangements, and to a lesser extent, product revenue from its subsidiary, FreeHold Surgical, LLC.
In the nine months ended September 30, 2024, Orchestra BioMed reported total revenue of $2.38 million, consisting of $1.93 million in partnership revenue and $457,000 in product revenue. The company’s net loss for the period was $44.87 million, with a net loss per share of $1.23. As of September 30, 2024, Orchestra BioMed had $25.61 million in cash and cash equivalents and $41.32 million in marketable securities.
For the fiscal year 2023, Orchestra BioMed reported revenue of $2.76 million, a net loss of $49.12 million, operating cash flow of -$46.13 million, and free cash flow of -$46.21 million. In the most recent quarter (Q3 2024), the company reported revenue of $987,000, a net loss of $15.43 million, operating cash flow of -$13.70 million, and free cash flow of -$13.77 million. Year-over-year revenue growth in Q3 2024 was 136%, driven by an increase in partnership revenue related to the Terumo Agreement.
Orchestra BioMed’s revenue is currently dominated by the partnership revenue from the Terumo Agreement, which accounted for approximately 81% of total revenue in the first nine months of 2024. The company’s product revenue from FreeHold’s retractors makes up the remaining 19% of total revenue. Under the Terumo Agreement, Orchestra BioMed is eligible for up to $65 million in additional milestone payments based on the achievement of certain development and regulatory milestones, as well as royalties on future sales by Terumo ranging from 10-15%. However, the company has already passed the target achievement dates for three $5 million milestone payments without meeting the related milestones. Additionally, due to delays in the Virtue SAB program, Orchestra BioMed is unlikely to be able to complete the remaining time-based milestones by the specified target dates to earn the remaining $20 million in time-based milestone payments. As of September 30, 2024, the company has recognized $14.5 million in cumulative partnership revenue from the Terumo Agreement.
Orchestra BioMed’s product revenue is generated from the sale of FreeHold’s intracorporeal organ retractors. For the nine months ended September 30, 2024, product revenue decreased by 5% compared to the same period in 2023, primarily due to a decrease in the purchase volume of FreeHold Duo and Trio intracorporeal organ retractors, with no changes to the per unit sale price. Currently, the company only sells its FreeHold products in the United States.
Liquidity
Despite the challenging financial performance, Orchestra BioMed has made significant progress in advancing its lead programs. In June 2022, the company entered into an exclusive license and collaboration agreement with Medtronic, Inc. for the development and commercialization of AVIM therapy for the treatment of pacemaker-indicated patients with uncontrolled hypertension. The BACKBEAT pivotal study evaluating AVIM therapy is currently underway, with enrollment ongoing.
Additionally, Orchestra BioMed has a strategic collaboration with Terumo Medical Corporation for the development and commercialization of Virtue SAB for the treatment of coronary and peripheral artery disease. The company is working to restructure its agreement with Terumo to secure additional financial commitments and potentially adjust milestone payments.
In November 2024, Orchestra BioMed entered into a $50 million secured term loan facility with Hercules Capital, Inc. The first tranche of $15 million was drawn at closing, with additional tranches of up to $15 million and $20 million available upon the achievement of certain performance and financing milestones. This financing provides the company with additional runway to advance its pipeline.
As of September 30, 2024, Orchestra BioMed’s debt-to-equity ratio was 0, with cash and cash equivalents of $25.61 million. The company’s current ratio stood at 4.23, and its quick ratio was 4.21, indicating a strong short-term liquidity position.
Product Development
AVIM Therapy
The BACKBEAT pivotal study evaluating AVIM therapy is currently underway, with enrollment ongoing. This therapy targets pacemaker-indicated patients with uncontrolled hypertension, addressing a significant unmet medical need.
Virtue SAB
Orchestra BioMed is collaborating with Terumo Medical Corporation for the development and commercialization of Virtue SAB for the treatment of coronary and peripheral artery disease. The company is working on restructuring its agreement with Terumo to optimize financial commitments and milestone payments.
Future Outlook
Orchestra BioMed’s partnership-enabled business model has allowed the company to leverage the expertise and resources of established medical device companies to drive the development and commercialization of its innovative technologies. By forging strategic collaborations, Orchestra BioMed has been able to share the risks and rewards of product development, potentially delivering significant value to patients and shareholders alike.
Looking ahead, Orchestra BioMed remains focused on executing on its clinical development programs and exploring ways to strengthen its financial position. The company’s ability to navigate the complex regulatory landscape, secure additional financing, and effectively manage its partnerships will be key to its long-term success. Investors should closely monitor Orchestra BioMed’s progress as it continues to advance its mission of accelerating high-impact biomedical innovations.
The medical device industry focused on hypertension and atherosclerotic artery disease treatments is expected to see a compound annual growth rate (CAGR) of 5-7% over the next 5 years, driven by the aging global population and increasing prevalence of these conditions. This positive industry trend could provide tailwinds for Orchestra BioMed’s product development and commercialization efforts.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.