Orchestra BioMed Holdings, Inc.

Current report

Changes to trade policy, including tariff and customs regulations, or failure to comply with such regulations may have an adverse effect on our reputation, business, financial condition and results of operations.

Current report

Changes in U.S. or international social, political, regulatory and economic conditions or in laws and policies governing trade, manufacturing, development and investment in the countries where we currently conduct our business could adversely affect our business, reputation, financial condition and results of operations. Changes or proposed changes in U.S. or other countries’ trade policies may result in restrictions and economic disincentives on international trade. The U.S. government has recently imposed, or is currently considering imposing, tariffs on certain trade partners, including China, where we have engaged a vendor. Tariffs, economic sanctions and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S. goods. Further, any emerging protectionist or nationalist trends (whether regulatory- or consumer-driven) either in the United States or in other countries could affect the trade environment. Our business, like many other corporations, would be impacted by changes to the trade policies of the United States and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, the global economy, and our industry, and as a result, could have a material adverse effect on our business, financial condition and results of operations.

Previous report

We may not be able to borrow additional funds under the 2024 LSA, and the terms of the 2024 LSA place restrictions on our operating and financial flexibility.

Previous report

In November 2024, we entered into the 2024 LSA pursuant to which a term loan facility in an aggregate principal amount up to $50.0 million is available to us in four tranches, with the first tranche of $15.0 million drawn on the Closing Date, and 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 up to $20.0 million subject to the sole discretion of the Lenders. There is no assurance that we will be able to achieve the performance and financing milestones necessary to draw additional amounts under the 2024 LSA or that the Lenders will provide funds under the fourth tranche.

Previous report

The 2024 LSA is secured by a lien on substantially all of our assets, including our intellectual property. The 2024 LSA includes affirmative and negative covenants that limit our operating flexibility and events of default applicable to us. The affirmative covenants include, among others, covenants requiring us to permit representatives of Hercules and the Lenders to, among other things, inspect the collateral for the 2024 LSA, keep such collateral clear from any legal process or liens, deliver certain financial reports and maintain insurance coverage. The negative covenants include, among others, restrictions on making changes to the nature of our business, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, and engaging in transactions with affiliates. The 2024 LSA also includes a liquidity covenant that commences on April 1, 2025, or, if certain financing milestones are satisfied, December 1, 2025. There is no guarantee that we will be able to comply with this financial covenant or pay the principal and interest on the 2024 LSA when due.

Previous report

Events of default under the 2024 LSA include, among other things and subject to customary exceptions: (i) insolvency, liquidation, bankruptcy or similar events; (ii) failure to pay any debts due under the 2024 LSA or other related loan documents on a timely basis; (iii) failure to observe certain covenants under the 2024 LSA; (v) occurrence of a "material adverse effect” as set forth in the 2024 LSA; (vi) material misrepresentation by us; (vii) occurrence of any default under any other agreement involving material indebtedness; and (viii) certain material money judgments. If we default under the 2024 LSA, Hercules may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate the 2024 LSA on terms less favorable to us or to immediately cease operations. Further, if we are liquidated, the Lenders’ right to repayment would be senior to the rights of the holders of Company Common stock to receive any proceeds from the liquidation. Any declaration by Hercules of an event of default could significantly harm our business and prospects and could cause the price of the Company Common Stock to decline. If we raise any additional debt financing in the future, the terms of such additional debt could further restrict our operating and financial flexibility.