Orchestra BioMed Holdings, Inc.

Previous wording

The following discussion should be read together with “Special Note Regarding Forward-Looking Statements” and the Company’s unaudited condensed consolidated financial statements, together with the related notes thereto, included elsewhere in this Quarterly Report (the “Consolidated Financial Statements”), and the Company’s audited consolidated financial statements, together with the related notes thereto, included in the 2023 10K.

Current wording

The following discussion should be read together with “Special Note Regarding Forward-Looking Statements” and the Company’s unaudited condensed consolidated financial statements, together with the related notes thereto, included elsewhere in this Quarterly Report on Form 10-Q (the “Consolidated Financial Statements”), and the Company’s audited consolidated financial statements, together with the related notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025.

Previous wording

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, we 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 and Orchestra’s predecessor (“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, we changed our name from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” On January 27, 2023, our common stock (“Company Common Stock”) began trading on the Nasdaq Global Market under the symbol “OBIO.” For additional information, see Note 3 to the Consolidated Financial Statements.

Current wording

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, we 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 and Orchestra’s predecessor (“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, we changed our name from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” On January 27, 2023, our common stock (“Company Common Stock”) began trading on the Nasdaq Global Market under the symbol “OBIO.”

Previous wording

Our flagship product candidates are atrioventricular interval modulation (“AVIM”) therapy (also known as BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”)), for the treatment of hypertension (“HTN”), a significant risk

Current wording

Our flagship product candidates are atrioventricular interval modulation (“AVIM”) therapy (formerly referred to as BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”)), for the treatment of hypertension (“HTN”), a significant risk factor for death worldwide, and Virtue Sirolimus AngioInfusion Balloon (“Virtue SAB”) for the treatment of artery disease, the leading cause of mortality worldwide. We have an exclusive license and collaboration agreement with Medtronic, Inc. for the development and commercialization of AVIM therapy for the treatment of HTN in patients indicated for a cardiac pacemaker. We are conducting a double-blind, randomized study (“BACKBEAT”) that is expected to enroll a total of 500 patients that have previously been implanted with a Medtronic dual-chamber pacemaker. We currently estimate completion of enrollment of the BACKBEAT study in the first half of 2026; however, there is no assurance that our current operating plan will be achieved. We have a strategic collaboration with Terumo Medical Corporation (“Terumo”) for the development and commercialization of Virtue SAB for the treatment of coronary and peripheral artery disease. We recently received FDA approval for an amended FDA investigational device exemption (“IDE”) to conduct a U.S. pivotal study in coronary ISR randomizing Virtue SAB vs. Boston Scientific Corporation’s

Previous wording

Since Legacy Orchestra’s inception, we have devoted the substantial majority of our resources to performing research and development and clinical activities in support of our product development and collaboration efforts. We have funded our operations primarily through the issuance of convertible preferred stock and proceeds from the Business Combination, as well as through proceeds from our distribution agreement with Terumo (the “Terumo Agreement”), borrowings under debt arrangements and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”). Through September 30, 2024, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million from the Terumo Agreement. We have incurred net losses each year since inception. Our net losses were $44.9 million and $36.3 million for the nine months ended September 30, 2024 and 2023, respectively. We expect to continue to incur significant losses for the foreseeable future. As of September 30, 2024, we had an accumulated deficit of $293.7 million.

Current wording

Since Legacy Orchestra’s inception, we have devoted the substantial majority of our resources to performing research and development and clinical activities in support of our product development and collaboration efforts. We have funded our operations primarily through the issuance of convertible preferred stock and proceeds from the Business Combination, as well as through proceeds from our distribution agreement with Terumo (the “Terumo Agreement”), borrowings under debt arrangements and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”). Through March 31, 2025, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million from the Terumo Agreement. We have incurred net losses each year since inception. Our net losses were $18.8 million and $13.5 million for the three months ended March 31, 2025 and 2024, respectively. We expect to continue to incur significant losses for the foreseeable future. As of March 31, 2025, we had an accumulated deficit of $328.6 million.

Previous wording

Legacy Orchestra, our wholly owned subsidiary, was incorporated in Delaware in 2017 and completed a recapitalization and mergers with Caliber Therapeutics, Inc., a Delaware corporation that has, among other things, the rights to the Virtue SAB product candidate and BackBeat Medical, Inc., a Delaware Corporation that has, among other things, the rights to the Backbeat CNT product candidate, in 2018. Legacy Orchestra completed the conversions of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC, a Delaware limited liability company, and BackBeat Medical, Inc. to BackBeat Medical, LLC, a Delaware limited liability company, in 2019.

Current wording

Legacy Orchestra, our wholly owned subsidiary, was incorporated in Delaware in 2017 and completed a recapitalization and mergers with Caliber Therapeutics, Inc., a Delaware corporation that has, among other things, the rights to the Virtue SAB product candidate and BackBeat Medical, Inc., a Delaware Corporation that has, among other things, the rights to the AVIM therapy product candidate, in 2018. Legacy Orchestra completed the conversions of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC, a Delaware limited liability company, and BackBeat Medical, Inc. to BackBeat Medical, LLC, a Delaware limited liability company, in 2019.

Previous wording

Due to the significant number of redemptions of HSAC2’s ordinary shares in connection with the Business Combination, there was a significantly lower number of HSAC2 ordinary shares that converted into shares of Company Common Stock in connection with the Business Combination. Pursuant to the Amended and Restated Registration Rights Agreement we entered into in connection with the closing of the Business Combination and certain warrant agreements, we filed a registration statement (the “Registration Statement”), which was declared effective on May 9, 2024, that registers, among other things, the resale of an aggregate of 18,586,201 shares of Company Common Stock, which constitutes approximately 49% of the outstanding Company Common Stock as of August 7, 2024. Additionally, some of the shares of the Company Common Stock being registered for resale were originally purchased by selling stockholders pursuant to investments in Legacy Orchestra or HSAC2 at prices considerably below the current market price of the Company Common Stock. These selling stockholders may realize a positive rate of return on the sale of their shares of Company Common Stock covered by the Registration Statement and therefore will have an incentive to sell their shares. Public shareholders may not experience a similar rate of return on shares of Company Common Stock they purchased. This discrepancy in purchase prices may have an impact on the market perception of the Company Common Stock’s value and could increase the volatility of the market price of the Company Common Stock or result in a significant decline

Current wording

Due to the significant number of redemptions of HSAC2’s ordinary shares in connection with the Business Combination, there was a significantly lower number of HSAC2 ordinary shares that converted into shares of Company Common Stock in connection with the Business Combination. Pursuant to the Amended and Restated Registration Rights Agreement we entered into in connection with the closing of the Business Combination and certain warrant agreements, we filed a registration statement (the “Registration Statement”), which was declared effective on May 9, 2024, that registers, among other things, the resale of an aggregate of 18,586,201 shares of Company Common Stock, which constitutes approximately 49% of the outstanding Company Common Stock as of May 8, 2025. Additionally, some of the shares of the Company Common Stock being registered for resale were originally purchased by selling stockholders pursuant to investments in Legacy Orchestra or HSAC2 at prices considerably below the current market price of the Company Common Stock. These selling stockholders may realize a positive rate of return on the sale of their shares of Company Common Stock covered by the Registration Statement and therefore will have an incentive to sell their shares. Public shareholders may not experience a similar rate of return on shares of Company Common Stock they purchased. This discrepancy in purchase prices may have an impact on the market perception of the Company Common Stock’s value and could increase the volatility of the market price of the Company Common Stock or result in a significant decline in the public trading price of the Company Common Stock. The registration of these shares of Company Common Stock for resale creates the possibility of a significant increase in the supply of the Company Common Stock in the market. The increased supply, coupled with the potential disparity in purchase prices, may lead to heightened selling pressure, which could negatively affect the public trading price of the Company Common Stock.

Previous wording

Under the Terumo Agreement, we were initially eligible for certain milestone payments in the amount of $65 million from Terumo upon completion of certain minimum enrollments in clinical studies, making certain filings and submissions, and obtaining certain regulatory approvals and certifications, and are also eligible to earn royalties on future sales by Terumo based on royalty rates ranging from 10 - 15%. Of these milestone payments, $35 million relate to achieving certain milestones by specified target achievement dates. As of the date of this Quarterly Report, we have already passed the target achievement dates for three $5 million milestone payments, in each case, without achieving the related milestones. In addition, due to delays in our Virtue SAB program resulting from the COVID-19 pandemic, supply chain issues and unexpected regulatory delays and requirements, including increased testing and other activities related to chemistry, manufacturing, and control, increased nonclinical and good laboratory practice preclinical data requirements, including biocompatibility, as well as a requirement to repeat good laboratory practice preclinical studies already performed based on changes to source of component materials and a change in manufacturing site, that caused us to amend our original project plan, we are unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $20 million in time-based milestone payments pursuant to the Terumo Agreement. Further, Terumo has the right to terminate the agreement, or certain of its obligations thereunder, if certain milestones are not achieved.

Current wording

Under the Terumo Agreement, we were initially eligible for certain milestone payments in the amount of $65 million from Terumo upon completion of certain minimum enrollments in clinical studies, making certain filings and submissions, and obtaining certain regulatory approvals and certifications, and are also eligible to earn royalties on future sales by Terumo based on royalty rates ranging from 10 - 15%. Of these milestone payments, $35 million relate to achieving certain milestones by specified target achievement dates. As of the date of this Quarterly Report on Form 10-Q, the target achievement dates for three $5 million milestone payments have already passed, in each case, without achieving the related milestones. In addition, due to delays in our Virtue SAB program resulting from the COVID-19 pandemic, supply chain issues and unexpected changes to regulatory requirements, including increased testing and other activities related to chemistry, manufacturing, and control, increased nonclinical and good laboratory practice preclinical data requirements, including biocompatibility, as well as a requirement to repeat good laboratory practice preclinical studies already performed based on changes to source of component materials and a change in manufacturing site, that caused us to amend our original project plan, we are unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $20 million in time-based milestone payments pursuant to the Terumo Agreement.

Previous wording

As previously disclosed, we and Terumo have been negotiating for mutually agreeable adjustments to the Terumo Agreement with the purpose of restructuring milestone payments as well as making other potential material modifications to that agreement including additional financial commitments by Terumo to Orchestra and the Virtue SAB program. If negotiations are not completed to our satisfaction or to the satisfaction of Terumo, clinical study, product development, and commercialization plans for Virtue SAB may continue to be adversely impacted.

Current wording

As previously disclosed, we have been negotiating with Terumo for mutually agreeable adjustments to the Terumo Agreement with the purpose of restructuring milestone payments as well as making other potential material modifications to that agreement, including additional financial commitments by Terumo to us and the Virtue SAB program. The parties

Previous wording

We recorded the $30.0 million upfront payment received in 2019 from Terumo within deferred revenue and are recognizing the upfront payment over time based on a proportional performance model based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the development of the Coronary ISR indication, for which we are primarily responsible. We have recognized $14.5 million in cumulative partnership revenues from 2019 through September 30, 2024. There were no other proceeds received pursuant to the Terumo Agreement from 2019 through September 30, 2024.

Current wording

We recorded the $30.0 million upfront payment received in 2019 from Terumo within deferred revenue and are recognizing the upfront payment over time based on a proportional performance model based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the development of the Coronary ISR indication, for which we are primarily responsible. We have recognized $15.3 million in cumulative partnership revenues from 2019 through March 31, 2025. There were no other proceeds received pursuant to the Terumo Agreement from 2019 through March 31, 2025.

Previous wording

In June 2022, Legacy Orchestra entered into the Medtronic Agreement for the development and commercialization of AVIM therapy for the treatment of pacemaker-indicated patients with uncontrolled HTN despite the use of antihypertensive medications. We have determined that the arrangement is a collaboration within the scope of ASC 808,* Collaborative Arrangements*(“ASC 808”). In addition, we concluded that Medtronic, Inc., an affiliate of Medtronic plc (“Medtronic”), is a customer for a good or service that is a distinct unit of account, and therefore, the transactions in the

Current wording

In June 2022, Legacy Orchestra entered into the Medtronic Agreement for the development and commercialization of AVIM therapy for the treatment of pacemaker-indicated patients with uncontrolled HTN despite the use of anti-hypertensive medications. We have determined that the arrangement is a collaboration within the scope of ASC 808,* Collaborative Arrangements*(“ASC 808”). In addition, we concluded that Medtronic, Inc., an affiliate of Medtronic plc (“Medtronic”), is a customer for a good or service that is a distinct unit of account, and therefore, the transactions in the Medtronic Agreement should be accounted for under ASC 606. Through March 31, 2025, there have been no amounts recognized as revenue under the Medtronic Agreement.

Previous wording

Selling, general and administrative expenses consist of personnel-related expenses, including salaries, benefits, bonus, travel and stock-based compensation. Other selling, general and administrative expenses include professional services fees, including legal, audit, investor/public relations, and insurance costs, outside consultants costs, employee recruiting and training costs, and non-income taxes. Moreover, we incur and expect to continue to incur additional expenses associated with operating as a public company, including legal, accounting, insurance, exchange listing and SEC

Current wording

Selling, general and administrative expenses consist of personnel-related expenses, including salaries, benefits, bonus, travel and stock-based compensation. Other selling, general and administrative expenses include professional services fees, including legal, audit, investor/public relations, and insurance costs, outside consultants costs, employee recruiting and training costs, and non-income taxes. Moreover, we incur and expect to continue to incur additional expenses associated with operating as a public company, including legal, accounting, insurance, exchange listing and U.S. Securities and Exchange Commission (“SEC”) compliance, and investor relations expenses. We expect quarterly selling, general and administrative expenses to continue to increase as we conduct additional clinical trials and expand our operations as a public company.

Previous wording

On November 6, 2024 (the “Closing Date”), we and certain of our subsidiaries (together with us, the “Borrower”) entered into a Loan and Security Agreement (the “2024 LSA”), by and among the Borrower, the several banks and other financial institutions or entities party thereto, as lenders (collectively, the “Lenders”), and Hercules Capital, Inc. (“Hercules”), as administrative agent and collateral agent for itself and the Lenders. The 2024 LSA provides a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million that was drawn on the Closing Date, a second and third tranche of up to an aggregate of $15.0 million available upon achievement of certain performance and financing milestones. Additionally, we may have access to a fourth tranche of $20.0 million subject to future approval.

Current wording

On November 6, 2024 (the “LSA Closing Date”), we and certain of our subsidiaries entered into a Loan and Security Agreement (the “2024 LSA”), with Hercules Capital IV, L.P. (“Hercules IV”), Hercules SBIC V, L.P. (“Hercules V”), and Hercules Capital, Inc., as administrative agent and collateral agent (collectively with Hercules IV and Hercules V, “Hercules”). The 2024 LSA provides a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million drawn on the LSA Closing Date, a second and third tranche of up to an aggregate of $15.0 million available upon achievement of certain performance and financing milestones. Additionally, we may have access to a fourth tranche of $20.0 million subject to future approval. The Term Loan has a maturity date of November 6, 2028 and accrues interest at a floating per annum rate equal to the greater of (i) (x) the “prime rate” as reported in The Wall Street Journal plus (y) 2.0%, and (ii) 9.50%. Refer to Note 13 –“Debt Financing” to our Consolidated Financial Statements.

Previous wording

The loss on fair value of strategic investments represents a change in the preferred shares and convertible notes of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party, and fair value of our investment in Motus GI Holdings, Inc. (“Motus GI”), a previously publicly-held company and a former related party. The investments in Vivasure do not have readily determinable fair values and are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The shares held of Motus GI represent equity securities with a readily determinable fair value and are required to be measured at fair value at each reporting period using readily determinable pricing available on a securities exchange, in accordance with the provisions of ASU 2016-01.

Current wording

The loss on fair value of strategic investments represents a change in the preferred shares and convertible notes of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party, and fair value of our investment in common stock holdings of a previously publicly-held company. The investments in Vivasure do not have readily determinable fair values and are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The common stock held represented equity securities with a readily determinable fair value and were required to be measured at fair value at each reporting period using readily determinable pricing available on a securities exchange, in accordance with the provisions of ASU 2016-01.

Previous wording

Partnership revenue increased by $532,000, or approximately 196%, to $803,000 in the three months ended September 30, 2024 from $271,000 for the three months ended September 30, 2023. Partnership revenue relates to the recognition of the combined performance obligation for the license granted to Terumo and the ongoing research and development services over the estimated performance period for the Virtue SAB coronary ISR indication, using a proportional performance model, based on the costs incurred relative to the total estimated costs of the research and development services. As of each quarterly reporting date, we evaluate our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and update our estimates as necessary.

Current wording

Partnership revenue increased by $235,000, or approximately 47%, to $732,000 in the three months ended March 31, 2025 from $497,000 for the three months ended March 31, 2024. Partnership revenue relates to the recognition of the combined performance obligation for the license granted to Terumo and the ongoing research and development services over the estimated performance period for the Virtue SAB coronary ISR indication, using a proportional performance model, based on the costs incurred relative to the total estimated costs of the research and development services. As of each quarterly reporting date, we evaluate our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and update our estimates as necessary.

Previous wording

For the nine months ended September 30, 2024 and 2023, the expenses incurred related to the Terumo Agreement were approximately $10.5 million and $11.7 million, respectively. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 2.6% as of September 30, 2024 as compared to the estimates as of December 31, 2023, and increased by approximately 7.0% as of September 30, 2023, as compared to the estimates as of December 31, 2022.

Current wording

For the three months ended March 31, 2025 and 2024, the expenses incurred related to the Terumo Agreement were approximately $3.5 million and $2.9 million, respectively. The estimated total costs associated with the Terumo Agreement through completion as of March 31, 2025 were approximately similar as compared to the estimates as of December 31, 2024, and increased by approximately 1.2% as of March 31, 2024, as compared to the estimates as of December 31, 2023.

Previous wording

Product revenue consisted of the sale of FreeHold Duo and Trio intracorporeal organ retractors and revenue is recognized when product is shipped to customers. The decrease in product revenue was primarily due to a decrease in the

Current wording

Product revenue consisted of the sale of FreeHold Duo and Trio intracorporeal organ retractors and revenue is recognized when product is shipped to customers. The increase in product revenue was due to an increase in the purchase

Previous wording

purchase volume of FreeHold Duo and Trio intracorporeal organ retractors. There were no changes to the per unit sale price in either period presented.

Current wording

volume of FreeHold Trio intracorporeal organ retractors. There were no changes to the per unit sale price between the periods presented.

Previous wording

Cost of product revenue increased by $7,000, or approximately 5%, to $146,000 in the nine months ended September 30, 2024 from $139,000 for the nine months ended September 30, 2023. The increase was primarily due to higher production costs per unit of FreeHold Duo and Trio intracorporeal organ retractors.

Current wording

Cost of product revenue increased by $10,000, or approximately 29%, to $44,000 in the three months ended March 31, 2025 from $34,000 for the three months ended March 31, 2024. The increase was primarily due to higher production costs per unit of FreeHold Duo and Trio intracorporeal organ retractors.

Previous wording

Research and development expenses increased by $6.5 million, or approximately 26%, to $31.8 million for the nine months ended September 30, 2024 from $25.3 million for the nine months ended September 30, 2023. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT pivotal study and to advance Virtue SAB into a planned pivotal study and included an increase in personnel related expenses of $1.0 million due to increased headcount and associated expenses, along with increased stock-based compensation of $456,000, an increase of $4.0 million in non-clinical development costs, and an increase of $986,000 in research and development program costs, supplies, and testing.

Current wording

Research and development expenses increased by $4.4 million, or approximately 48%, to $13.5 million for the three months ended March 31, 2025 from $9.1 million for the three months ended March 31, 2024. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT (BradycArdia paCemaKer with AVIM forBlood prEssure treAtmenT) global pivotal study (“BACKBEAT study”) and to advance Virtue SAB into a planned pivotal study. The increase included an increase of $2.6 million in non-clinical development costs associated with research and development program costs, supplies, and testing, an increase in personnel-related expenses of $1.1 million due to increased headcount and associated expenses, an increase of $507,000 in clinical development costs, and an increase in stock-based compensation of $215,000.

Previous wording

The total research and development expenses summarized above include $3.6 million for the three months ended September 30, 2024 and $3.4 million for the three months ended September 30, 2023 related to the Terumo Agreement. The increase of $200,000 is due to increased expense activity related to the Terumo Agreement during the 2024 period.

Current wording

The total research and development expenses summarized above include $3.5 million for the three months ended March 31, 2025 and $2.8 million for the three months ended March 31, 2024 related to the Terumo Agreement. The increase of approximately $700,000 is due to increased expense activity related to the Terumo Agreement during the three months ended March 31, 2025 compared to the same period in 2024.

Previous wording

Selling, general and administrative expenses increased by $2.0 million, or approximately 12%, to $18.0 million for the nine months ended September 30, 2024, from $16.1 million of expense for the nine months ended September 30, 2023. The increase primarily resulted from an increase in personnel-related expenses of $673,000 due to increased headcount and associated expenses, along with increased stock-based compensation of $552,000 and an increase of $1.1 million of accounting, finance, legal, investor relations and public relations expenses incurred in connection with the overall growth of the business and being a public company.

Current wording

Selling, general and administrative expenses increased by $366,000, or approximately 6%, to $6.3 million for the three months ended March 31, 2025, from $5.9 million of expense for the three months ended March 31, 2024. The increase primarily resulted from an increase in stock-based compensation of $162,000, and an increase of $169,000 of marketing, investor relations and public relations expenses incurred in connection with the overall growth of the business and operating as a public company.

Previous wording

Interest income, net, increased by $93,000, or approximately 3%, to $2.8 million of income for the nine months ended September 30, 2024, from $2.7 million of income for the nine months ended September 30, 2023. The net interest income in the 2024 period consisted primarily of interest earned from marketable securities while the net interest income in the 2023 period consisted primarily of interest earned from marketable securities offset by monthly interest expense incurred resulting from the 2022 Loan and Security Agreement.

Current wording

Interest income, net, decreased by $850,000, or approximately 84%, to $166,000 of income for the three months ended March 31, 2025, from $1.0 million of income for the three months ended March 31, 2024. The net interest income in the 2025 period consisted primarily of interest earned from marketable securities partially offset by monthly interest expense resulting from the 2024 LSA. The net interest income in the 2024 period consisted primarily of interest earned from marketable securities.

Previous wording

Loss on Fair Value Adjustment of Warrant Liability

Current wording

Loss on Fair Value of Strategic Investments

Previous wording

There was no adjustment to strategic investments for the three months ended September 30, 2024, as compared to a gain of $293,000 for the three months ended September 30, 2023, which was related to the change in fair value in our common stock holdings of Motus GI.

Current wording

No gain or loss on fair value of strategic investments was recognized for the three months ended March 31, 2025. The loss of $45,000 for the three months ended March 31, 2024 related to the change in fair value in our common stock holdings of a previously publicly-held company.

Previous wording

From inception through September 30, 2024, we have incurred significant operating losses and negative cash flows from our operations. Our net losses were $44.9 million and $36.3 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $293.7 million. We have funded our operations primarily through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, as well as through proceeds from the Terumo Agreement, borrowings under debt arrangements and, to a lesser extent, from FreeHold product revenue. Through September 30, 2024, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million under the Terumo Agreement. We had $25.6 million in cash and cash equivalents at September 30, 2024, which consisted primarily of bank deposits and money market funds. We also had $41.3 million of short-term marketable securities at September 30, 2024, which consisted primarily of our investments in corporate debt securities.

Current wording

From inception through March 31, 2025, we have incurred significant operating losses and negative cash flows from our operations. Our net losses were $18.8 million and $13.5 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $328.6 million. We have funded our operations primarily through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, as well as through proceeds from the Terumo Agreement, borrowings under debt arrangements and, to a lesser extent, from FreeHold product revenue. Through March 31, 2025, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million under the Terumo Agreement. We had $18.4 million in cash and cash equivalents at March 31, 2025, which consisted primarily of bank deposits and money market funds. We also had $31.5 million of short-term marketable securities at March 31, 2025, which consisted primarily of our investments in corporate debt securities.

Previous wording

On May 15, 2024, we entered into an Open Market Sale Agreement SM (the “Prior Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which we were able to offer and sell, from time to time through Jefferies, up to $100 million of shares of Company Common Stock by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act. In connection with the entry into the Sales Agreement (as defined below), on August 12, 2024, we terminated the Prior Agreement with Jefferies (the “Termination”), in accordance with its terms and with the mutual agreement of Jefferies. The purpose of the Termination was to eliminate restrictions under certain SEC rules relating to the publication or dissemination of new research reports on our business by Jefferies in light of its role as sales agent under the Prior Agreement. Prior to the Termination, $15.5 million of shares of Company Common Stock had been sold under the Prior Agreement, with $84.5 million remaining available under the Prior Agreement. We cannot make any further sales of Company Common Stock pursuant to the Prior Agreement.

Current wording

On August 12, 2024, we entered into a sales agreement (the “Sales Agreement”) with TD Securities (USA) LLC, as agent (“TD Cowen”), pursuant to which we may offer and sell, from time to time through TD Cowen, up to $100 million of shares of Company Common Stock by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933 (the “Securities Act”). As of March 31, 2025, all of the $100 million of Company Common Stock are available for sale under the Sales Agreement. In connection with the entry into the Sales Agreement, on August 12, 2024, we terminated (the “Termination”) a similar agreement (the “Prior Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of Company Common Stock having an aggregate offering price of up to $100 million, in accordance with its terms and with the mutual agreement of Jefferies. The purpose of the Termination was to eliminate restrictions under certain SEC rules relating to the publication or dissemination of new research reports on the Company’s business by Jefferies in light of its role as sales agent under the Prior Agreement. Prior to the Termination, we sold $15.5 million of shares of Company Common Stock under the Prior Agreement. We cannot make any further sales of the Company Common Stock pursuant to the Prior Agreement.

Previous wording

On November 6, 2024, the Company and certain of its subsidiaries entered into the 2024 LSA. The 2024 LSA provides a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million that was drawn on the Closing Date, a second and third tranche of up to an aggregate of $15.0 million available upon achievement of certain performance and financing milestones. Additionally, the Company may have access to a fourth tranche of $20.0 million subject to future approval.

Current wording

On November 6, 2024, the Company and certain of its subsidiaries entered into the 2024 LSA. The 2024 LSA provides a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million drawn on the LSA Closing Date, a second and third tranche of up to an aggregate of $15.0 million available upon achievement of certain performance and financing milestones. Additionally, the Company may have access to a fourth tranche of $20.0 million subject to future approval.

Previous wording

The Term Loans accrue interest at a floating per annum rate equal to the greater of (i) (x) the Prime Rate (as reported inThe Wall Street Journal) plus (y) 2.0%, and (ii) 9.50%. The repayment terms of the Term Loans include monthly payments over a 4-year period, consisting of an initial two-year interest-only period, followed by 24 monthly principal payments plus interest, although the interest-only period can be extended under certain circumstances set forth in the 2024 LSA. In addition, the Company will pay an end of term charge of 6.35% upon the prepayment or repayment of the Term Loans and a facility charge of 0.75% upon any draws of the Term Loans.

Current wording

The Term Loans accrue interest at a floating per annum rate equal to the greater of (i) (x) the “prime rate” as reported in The Wall Street Journal plus (y) 2.0%, and (ii) 9.50%. The repayment terms of the Term Loans include monthly payments over a 4-year period, consisting of an initial two-year interest-only period, followed by 24 monthly principal payments plus interest, although the interest-only period can be extended by six months under certain circumstances set forth in the 2024 LSA. At the Company’s option, the Company may prepay all or a portion of the outstanding Term Loans, subject to a prepayment premium equal to (a) 3.0% of the Term Loans being prepaid if the prepayment occurs during the twelve months following the LSA Closing Date, (b) 2.0% of the Term Loans being prepaid if the prepayment occurs after 12 months following the LSA Closing Date but on or prior to 24 months following the LSA Closing Date, and (c) 1.0% of the Term Loans being prepaid if the prepayment occurs after 24 months following the LSA Closing Date and prior to

Previous wording

may not exceed the exercise price of the warrants at any given time. As of the date of this Quarterly Report, a significant portion of our warrants are “out of the money,” meaning the exercise price is higher than the market price of the Company Common Stock. Holders of such “out of the money” warrants are not likely to exercise such warrants. As a result, we may not receive any proceeds from the exercise of such warrants. There can be no assurance that such warrants will be in the money prior to their respective expiration dates, and therefore, we may not receive any cash proceeds from the exercise of such warrants to fund our operations.

Current wording

The exercise price of our outstanding warrants, in certain circumstances, may be higher than the prevailing market price of the Company Common Stock and the cash proceeds to us associated with the exercise of our warrants are contingent upon the price of the Company Common Stock. The value of the Company Common Stock may fluctuate and may not exceed the exercise price of the warrants at any given time. As of the date of this Quarterly Report on Form 10-Q, a significant portion of our warrants are “out of the money,” meaning the exercise price is higher than the market price of the Company Common Stock. Holders of such “out of the money” warrants are not likely to exercise such warrants. As a result, we may not receive any proceeds from the exercise of such warrants. There can be no assurance that such warrants will be in the money prior to their respective expiration dates, and therefore, we may not receive any cash proceeds from the exercise of such warrants to fund our operations.

Previous wording

We continue to prioritize planned spending on our AVIM therapy program and the execution of our BACKBEAT pivotal study, for which we announced the commencement of enrollment on January 8, 2024. With regard to our AVIM therapy program and our planned BACKBEAT pivotal study, we currently expect operating expenses to increase to support clinical study costs as well as additional research and development expenses in support of future potential regulatory approval and commercialization of AVIM therapy-enabled Medtronic pacemakers. As previously disclosed, we reduced our 2024 planned spending related to our Virtue SAB program and the execution of our Virtue ISR-US pivotal study, for which we announced conditional investigational device exemption approval from the FDA on August 8, 2023, in order to focus on (1) optimizing the design of our Virtue ISR-US study in light of the March 2024 FDA approval of BSC’s AGENT paclitaxel DCB for the treatment of coronary ISR; and (2) restructuring our partnership agreement with Terumo in a manner that provides us with a satisfactory amount of additional capital, whether from milestone payments or other financial arrangements, which additional capital we may not receive..

Current wording

We continue to prioritize our spending on our AVIM therapy program and the execution of our BACKBEAT study. We currently expect operating expenses to increase to support clinical study costs as well as additional research and development expenses in support of future potential regulatory approval and commercialization of AVIM-enabled Medtronic pacemakers. This year, we expect spending related to our Virtue SAB program will be primarily focused on initiating enrollment of our planned Virtue Trial (also known as the Virtue ISR-US pivotal study). As previously disclosed, we recently received FDA approval for an IDE amendment to initiate our planned clinical trial for the treatment of coronary ISR comparing Virtue SAB to Boston Scientific Corporation’s AGENT™ DCB.

Previous wording

Based on current internally prepared budget estimates that reflect our operating plans, including the assumptions that we proceed with an optimized Virtue ISR-US study in the first half of 2025 and we successfully restructure the agreement with Terumo, we anticipate that our cash, cash equivalents, marketable securities, and potential future proceeds described below are sufficient to fund our operations into the second half of 2026. The amount and timing of our future funding requirements may change from this current estimate and are dependent on many factors, including the cost and pace of execution of clinical studies and research and development activities, the strength of results from clinical studies and other research, development and manufacturing efforts, as well as the potential receipt of revenues or other payments or investments under a restructured Terumo Agreement, the Medtronic Agreement and/or future collaborations, and the realization of cash from the potential sale of our holdings in Vivasure. There are no assurances that any of these factors will be favorable to us, and we may need to seek additional sources of liquidity to meet our funding requirements earlier than current estimates, including the issuance of new equity, additional drawdowns under the 2024 LSA to the extent we meet the financing and performance requirements to be eligible for such drawdowns, drawdowns on new loan facilities that we may enter into, and/or other financing structures. In this regard, as of the date of this Quarterly Report, we may sell from time to time, up to approximately $100.0 million of shares of Company Common Stock under the Sales Agreement.

Current wording

The amount and timing of our future funding requirements are dependent on many factors, including the cost and pace of execution of clinical studies and research and development activities, the strength of results from clinical studies and other research, development and manufacturing efforts, as well as the potential receipt of revenues or other payments or investments under a restructured Terumo Agreement, the Medtronic Agreement and/or future collaborations, and the realization of cash from the acquisition of Vivasure by Haemonetics. We may also need to seek additional sources of liquidity to meet our funding requirements, including the issuance of new equity, additional drawdowns under the 2024 LSA to the extent we meet the financing and performance requirements to be eligible for such drawdowns, drawdowns on

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2023 was $35.2 million and primarily consisted of our net loss of $36.3 million, and changes in net operating assets and liabilities of $3.2 million, which was partially offset by non-cash charges of $4.3 million. Our non-cash charges primarily consisted of a loss on fair value adjustment of warrant liability of $294,000 and stock-based compensation of $6.7 million, offset by $3.2 million related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $348,000, an increase in prepaid expenses and other assets of $458,000, and a decrease in deferred revenue of $2.0 million.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was $16.6 million and primarily consisted of our net loss of $18.8 million and changes in net operating assets and liabilities of $1.0 million, partially offset by non-cash charges of $3.1 million. Our non-cash charges primarily consisted of stock-based compensation of $3.0 million, partially offset by $112,000 related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to a decrease in deferred revenue of $732,000, a decrease in accounts payable, accrued expenses and other liabilities of $202,000, and a decrease in operating lease liabilities of $132,000.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $37.0 million and primarily consisted of our net loss of $44.9 million, partially offset by non-cash charges of $7.3 million and changes in net operating assets and liabilities of $598,000. Our non-cash charges primarily consisted of stock-based compensation of $7.7 million, partially offset by $1.3 million related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $3.7 million and a decrease in deferred revenue of $1.9 million.

Current wording

Net cash used in operating activities for the three months ended March 31, 2024 was $13.1 million and primarily consisted of our net loss of $13.5 million, and changes in net operating assets and liabilities of $1.8 million, partially offset by non-cash charges of $2.2 million. Our non-cash charges primarily consisted of stock-based compensation of $2.6 million, partially offset by $589,000 related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $1.3 million, an increase in prepaid expenses and other assets of $60,000, and a decrease in deferred revenue of $497,000.

Previous wording

Net cash provided by investing activities for the nine months ended September 30, 2024 was $16.8 million, which primarily consisted of the sale of $69.4 million of marketable securities, partially offset by the purchase of $52.4 million of marketable securities.

Current wording

Net cash provided by investing activities for the three months ended March 31, 2025 was $13.0 million, which primarily consisted of the sale of $16.0 million of marketable securities, partially offset by the purchase of $2.9 million of marketable securities.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2023 was $22.5 million, which primarily consisted of the purchase of $138.1 million of marketable securities offset by the sale of $115.7 million of marketable securities.

Current wording

Net cash provided by investing activities for the three months ended March 31, 2024 was $5.9 million, which primarily consisted of the sale of $29.6 million of marketable securities, partially offset by the purchase of $23.7 million of marketable securities.

Previous wording

Net cash provided by financing activities of $15.2 million for the nine months ended September 30, 2024 was primarily attributable to the proceeds of $15.0 million, net of issuance costs, from the at-the-market offering under the Prior Agreement with Jefferies.

Current wording

Net cash provided by financing activities of $18,000 for the three months ended March 31, 2024 was primarily attributable to exercises of stock options.

Previous wording

We enter into agreements in the normal course of business with clinical research organizations for work related to clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 days prior written notice. These payments are not included in the above table of contractual obligations and commitments. In addition, the above table does not include our obligations to make interest and principal payments under the 2024 LSA, which was entered into after September 30, 2024.

Current wording

We enter into agreements in the normal course of business with clinical research organizations for work related to clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 days prior written notice. These payments are not included in the above table of contractual obligations and commitments.

Previous wording

We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. For further information, see Note 2 to the Consolidated Financial Statements.

Current wording

We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and

Previous wording

arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. We determined that the Terumo Agreement did not fall within the scope of ASC 808. We then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606.

Current wording

Legacy Orchestra entered into the Terumo Agreement as further described in Note 3 to the Consolidated Financial Statements. We assessed whether the Terumo Agreement fell within the scope of ASC 808 based on whether the arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. We determined that the Terumo Agreement did not fall within the scope of ASC 808. We then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606.

Previous wording

In the nine months ended September 30, 2024, we updated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation. The impact of the changes in estimates resulted in a reduction in partnership revenues of $371,000, which resulted in a $0.01 effect on net loss per share, basic and diluted. In the nine months ended September 30, 2023, the impact of the changes in estimates resulted in a reduction of partnership revenues of $882,000, which resulted in a $0.03 effect on net loss per share, basic and diluted.

Current wording

In the three months ended March 31, 2025, we updated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation. The impact of the changes in estimates resulted in a reduction in partnership revenues of $6,000, which resulted in negligible effect on net loss per share, basic and diluted. In the three months ended March 31, 2024, the impact of the changes in estimates resulted in a reduction of partnership revenues of $153,000, which resulted in a de minimis effect on net loss per share, basic and diluted.