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Orchestra BioMed Holdings, Inc.

Orchestra BioMed Holdings, Inc.OBIOEarnings & Financial Report

Nasdaq · Health Care · Surgical & Medical Instruments & Apparatus

Orchestra BioMed Holdings, Inc. is a clinical-stage medical technology company focused on developing novel, evidence-based therapeutic solutions for cardiovascular and other high-burden chronic diseases. It collaborates with leading healthcare stakeholders, operates primarily across North American and European markets, with core segments covering interventional cardiology and chronic disease care optimization.

What changed in Orchestra BioMed Holdings, Inc.'s 10-K — 2023 vs 2024

Top changes in Orchestra BioMed Holdings, Inc.'s 2024 10-K

826 paragraphs added · 704 removed · 588 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

327 edited+118 added−57 removed423 unchanged
Under the terms of the Medtronic Agreement, we are the sponsor for the BACKBEAT pivotal study to support regulatory approval in the United States, European Union (the “EU”), Japan and other potential territories of AVIM therapy in the Primary Field and we are financially responsible for development, clinical and regulatory costs associated with this pivotal study.
Under the terms of the Medtronic Agreement, we are the sponsor for the BACKBEAT study to support regulatory approval in the United States, European Union (the “EU”), Japan and other potential territories of AVIM therapy in the Primary Field and we are financially responsible for development, clinical and regulatory costs associated with this pivotal study.
Medtronic has completed integration and associated validation and verification testing of AVIM therapy algorithms as a field downloadable addition to its premium, commercially available dual-chamber pacemaker systems for use in the pivotal study. Medtronic is also providing clinical, regulatory, operational field clinical resources in support of the BACKBEAT pivotal study.
Medtronic has completed integration and associated validation and verification testing of AVIM therapy algorithms as a field downloadable addition to its premium, commercially available dual-chamber pacemaker systems for use in the pivotal study. Medtronic is also providing clinical, regulatory, operational field clinical resources in support of the BACKBEAT study.
As a novel HTN therapy completely integrated with an established existing commercially-available device patients already require for a critical medical indication, we believe AVIM therapy can be readily adopted into the existing paradigm of care for hypertensive patients that already require a pacemaker implant.
As a novel HTN therapy that can be completely integrated with an established existing commercially available device patients already require for a critical medical indication, we believe AVIM therapy can be readily adopted into the existing paradigm of care for hypertensive patients that already require a pacemaker implant.
Further, we believe that AVIM therapy-enabled devices can garner meaningfully higher ASPs that can be supported by existing reimbursement without the need for new procedure codes. While AVIM therapy is designed to achieve certain results as described above and below, there is no guarantee that AVIM therapy will prove to be safe and effective.
Further, we believe that AVIM-enabled devices can garner meaningfully higher ASPs that can be supported by existing reimbursement without the need for new procedure codes. While AVIM therapy is designed to achieve certain results as described above and below, there is no guarantee that AVIM therapy will prove to be safe and effective.
Clinical data from the SABRE trial, a multi-center, prospective, independent core lab-adjudicated pilot clinical study of 50 patients conducted in Europe, has positioned Virtue SAB for a U.S. pivotal clinical study to support potential FDA approval for the treatment of ISR. We will sponsor this study, called the Virtue ISR-US.
Clinical data from the SABRE trial, a multi-center, prospective, independent core lab-adjudicated pilot clinical study of 50 patients conducted in Europe, has positioned Virtue SAB for a U.S. pivotal clinical study to support potential FDA approval for the treatment of ISR. We will sponsor this study, called the Virtue ISR-US study.
This work includes a variety of benchtop as well as small and large animal models. Large animal studies have been conducted in a porcine animal model, a widely used model for testing of interventional cardiovascular devices.
This work includes a variety of benchtop as well as small and large animal models. Large animal studies have been conducted in a porcine animal model, a widely used model for testing interventional cardiovascular devices.
All intellectual property that Integer developed for BackBeat Medical during the performance of the Integer Agreement, whether independently or jointly, and that resulted from or uses BackBeat Medical’s technology or intellectual property are owned by BackBeat Medical.
All intellectual property that Integer developed for BackBeat Medical during the performance of the Integer Agreement, whether developed independently or jointly, and that resulted from or uses BackBeat Medical’s technology or intellectual property are owned by BackBeat Medical.
Our continued success depends on our, and in some cases, our strategic partners’ ability to: • develop innovative, proprietary products that can cost-effectively address significant clinical needs in a manner that is safe and effective for patients and easy to use for physicians; • continue to innovate and develop scientifically advanced technology; • forge risk and reward sharing partnerships with established commercial market leaders to help support product development and commercialization; • obtain and maintain regulatory clearances, certifications or approvals; 47 Table of Contents ​ • demonstrate efficacy in sponsored and third-party clinical studies; • obtain and maintain adequate reimbursement for procedures using its products; • apply technology to develop pipeline product candidates for additional clinical indications; • attract and retain skilled research and development and sales personnel; and • cost-effectively manufacture and successfully market and sell products. ​ Our Intellectual Property Our success depends in part on our ability to obtain, maintain, protect and enforce our proprietary technology and intellectual property rights, and, in particular, our patent rights, as well as our ability to preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating or otherwise violating the valid and enforceable patents and other intellectual property rights of third parties.
Our continued success depends on our, and in some cases, our strategic partners’ ability to: • develop innovative, proprietary products that can cost-effectively address significant clinical needs in a manner that is safe and effective for patients and easy to use for physicians; • continue to innovate and develop scientifically advanced technology; • forge risk and reward sharing partnerships with established commercial market leaders to help support product development and commercialization; • obtain and maintain regulatory clearances, certifications or approvals; • demonstrate efficacy in sponsored and third-party clinical studies; • obtain and maintain adequate reimbursement for procedures using its products; • apply technology to develop pipeline product candidates for additional clinical indications; • attract and retain skilled research and development and sales personnel; and • cost-effectively manufacture and successfully market and sell products. ​ 44 Table of Contents ​ Our Intellectual Property Our success depends in part on our ability to obtain, maintain, protect and enforce our proprietary technology and intellectual property rights, and, in particular, our patent rights, as well as our ability to preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating or otherwise violating the valid and enforceable patents and other intellectual property rights of third parties.
All of the product candidates in our pipeline were conceived and developed by our management team and employees through predecessor companies founded by a medical device accelerator, Accelerated Technologies, Inc. (“ATI”). ATI was originally founded in 2000 and employed active collaboration with industry-leading physicians to identify and purpose-build transformational therapeutic devices. Our founders and senior executives, Mr. Hochman and Mr.
All of the product candidates in our pipeline were conceived and developed by our management team and employees through predecessor companies founded by a medical device accelerator, Accelerated Technologies, Inc. (“ATI”). ATI was originally founded in 2000 and employed active collaboration with industry-leading physicians to identify and purpose-build transformational therapeutic devices. Our founders and senior executives, Mr.
According to data from the National Cardiovascular Data Registry, restenosis within a stent occurs in 5 – 10% of stented patients during the first year and continues at a rate of up to 3% per year thereafter, resulting in what we currently estimate to be an annual addressable global market of nearly 347,000 lesions that may require treatment.
According to the National Cardiovascular Data Registry, restenosis within a stent occurs in 5 – 10% of stented patients during the first year and continues at a rate of up to 3% per year thereafter, resulting in what we currently estimate to be an annual addressable global market of nearly 347,000 lesions that may require treatment.
We believe these results were encouraging given that the ITT population had a high percentage of difficult to treat diffuse lesions as well as lesions with average time since original stent implantation of nearly four years which is substantially longer than typical ISR, which is most likely to occur 3 to 12 months after stenting.
We believe these results were encouraging given that the ITT population had a high percentage of difficult to treat diffuse lesions as well as lesions with an average time since original stent implantation of nearly four years which is substantially longer than typical ISR, which is most likely to occur 3 to 12 months after stenting.
Vivasure’s lead product candidates include is PerQSeal (CE marked) and PerQSeal+, both fully bioabsorbable, patch-based large-bore (12 – 24 French, 4 – 8 mm) percutaneous closure devices. In May 2023, Vivasure announced the initiation of enrollment of the PATCH study, a pivotal study of PerQSeal+ for large hole closure designed to support FDA approval of the device.
Vivasure’s lead product candidates include is PerQSeal (CE marked) and PerQSeal+, both fully bioabsorbable, patch-based large-bore (12 – 24 French, 4 – 8 mm) percutaneous closure devices. In May 2023, Vivasure announced the initiation of enrollment of the PATCH IDE study, a pivotal study of PerQSeal and PerQSeal+ for large hole closure designed to support FDA approval of the device.
Patients were then reevaluated following three months of treatment for changes in blood pressure assessed by both office cuff measurements and by 24-hour ambulatory blood pressure recordings. The study’s co-primary efficacy endpoints were changes in oSBP and mean 24-hour aSBP (added as study amendment) from pre-activation through three months post activation of therapy.
Patients were then reevaluated following three months of treatment for changes in blood pressure assessed by both office cuff measurements and by 24-hour ambulatory blood pressure recordings. The study’s co-primary efficacy endpoints were changes in oSBP and mean 24-hour aSBP (added as a study amendment) from pre-activation through three months post activation of therapy.
While our Sostenocel technology is designed to achieve certain results as described above, there is no guarantee that it will prove to be safe and effective. We retain all rights to develop additional therapies using its proprietary SirolimusEFR to potentially treat focal inflammation outside of coronary and peripheral vascular indications.
While our Sostenocel technology is designed to achieve certain results as described above, there is no guarantee that it will prove to be safe and effective. We retain all rights to develop additional therapies using our proprietary SirolimusEFR to potentially treat focal inflammation outside of coronary and peripheral vascular indications.
These devices are designed to enable a variety of advanced robotic and laparoscopic surgical procedures for the treatment of obesity, GI disorders and other indications. Versatile design makes retractors appropriate for a broad range of minimally invasive procedures, including bariatric and foregut surgeries, nephrectomies, colectomies, cholecystectomies, paraaortic node dissections, hysterectomies, and other procedures.
These devices are designed to enable a variety of advanced robotic and laparoscopic surgical procedures for the treatment of obesity, GI disorders and other indications. Their versatile design makes retractors appropriate for a broad range of minimally invasive procedures, including bariatric and foregut surgeries, nephrectomies, colectomies, cholecystectomies, paraaortic node dissections, hysterectomies, and other procedures.
Three cases were excluded due to treatment of lesions that were longer than available Virtue SAB devices were designed to treat or multiple lesions in the vessel where there was a target lesion. Finally, three cases were excluded due to previously stented restenosis ( i.e. , the lesion already had two overlapping treatment stents).
Three cases were excluded due to treatment of lesions that were longer than the available Virtue SAB devices were designed to treat or because there were multiple lesions in the vessel where there was a target lesion. Finally, three cases were excluded due to previously stented restenosis (i.e., the lesion already had two overlapping treatment stents).
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, the Company is unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $25 million in time-based milestone payments pursuant to the Terumo Agreement.
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, the Company is 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.
We are reimbursing Medtronic at cost for these development, clinical and regulatory resources. Medtronic will integrate AVIM therapy, at our cost, as a firmware component of a premium pacemaker for potential regulatory approval and commercialization of AVIM therapy-enabled commercial devices following a successful outcome of the BACKBEAT pivotal study.
We are reimbursing Medtronic at cost for these development, clinical and regulatory resources. Medtronic will integrate AVIM therapy, at our cost, as a firmware component of a premium pacemaker for potential regulatory approval and commercialization of AVIM-enabled commercial devices following a successful outcome of the BACKBEAT study.
Human clinical studies are typically conducted in three or four sequential phases, which may overlap or be combined: • Phase 1 : The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 : The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. • Phase 3 : The drug is administered to an expanded patient population, generally at geographically dispersed clinical study sites, in well-controlled clinical studies to generate enough data to statistically evaluate the efficacy 63 Table of Contents ​ and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product. • Phase 4 : In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical studies after NDA approval.
Human clinical studies are typically conducted in three or four sequential phases, which may overlap or be combined: • Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. • Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed clinical study sites, in well-controlled clinical studies to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product. • Phase 4: In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical studies after NDA approval.
Under the terms of our partnership, it is expected that Terumo will assume financial and execution responsibility for substantially all future clinical and regulatory development, with the exception of the Virtue ISR-US pivotal study, for which we are responsible.
Under the current terms of our partnership, it is expected that Terumo will assume financial and execution responsibility for substantially all future clinical and regulatory development, with the exception of the Virtue ISR-US pivotal study, for which we are responsible.
Our Growth Strategy Our growth strategy is primarily focused on the execution of key development initiatives and partnership opportunities within its existing product pipeline, with the objective to advance these product candidates to key value inflection points and to form strategic partnerships for commercial value realization.
Our Growth Strategy Our growth strategy is primarily focused on the execution of key development initiatives and partnership opportunities within our existing product pipeline, with the objective to advance these product candidates to key value inflection points and to form strategic partnerships for commercial value realization.
Our goal is to accelerate and improve the likelihood of its product innovations reaching patients and providers worldwide by sharing the risks and rewards of developing and commercializing these product candidates with established multinational companies, such as Medtronic and Terumo.
Our goal is to accelerate and improve the likelihood of our product innovations reaching patients and providers worldwide by sharing the risks and rewards of developing and commercializing these product candidates with established multinational companies, such as Medtronic and Terumo.
Global Clinical and Regulatory Program Per the terms of the Terumo Agreement, we and Terumo plan to execute a global clinical and regulatory program for Virtue SAB for multiple indications, with an initial focus on coronary ISR, coronary SV, and peripheral BTK lesions.
Global Clinical and Regulatory Program Per the current terms of the Terumo Agreement, we and Terumo plan to execute a global clinical and regulatory program for Virtue SAB for multiple indications, with an initial focus on coronary ISR, coronary SV, and peripheral BTK lesions.
We currently do not have plans to commercialize this system in the EU on our own but believe there is a significant opportunity for Medtronic to commercialize AVIM therapy-enabled pacemakers in the EU post-marketing approval.
We currently do not have plans to commercialize this system in the EU on our own but believe there is a significant opportunity for Medtronic to commercialize AVIM-enabled pacemakers in the EU post-marketing approval.
Therapeutic Medical Device Innovation — Opportunities and Challenges Opportunities Therapeutic medical device innovations that can help reduce healthcare costs while improving clinical outcomes are a critical component of successful healthcare delivery and offer future opportunities for clinical and commercial value creation.
Therapeutic Medical Device Innovation — Opportunities and Challenges Opportunities Therapeutic medical device innovations that can help reduce healthcare costs while improving clinical outcomes are a critical component of successful healthcare delivery and offer opportunities for clinical and commercial value creation.
Medtronic will integrate AVIM therapy, at our cost, as a firmware component of a premium pacemaker for potential regulatory approval and commercialization of AVIM therapy-enabled commercial devices following a successful outcome of the BACKBEAT pivotal study.
Medtronic will integrate AVIM therapy, at our cost, as a firmware component of a premium pacemaker for potential regulatory approval and commercialization of AVIM-enabled commercial devices following a successful outcome of the BACKBEAT study.
The following table lists our material patents relating to Virtue SAB as of December 31, 2023, their jurisdiction and expiration: Jurisdiction ​ Patent No. ​ Expiration Date ​ Related Product United States ​ 8,696,644 ​ 3/9/2032 ​ Virtue SAB United States ​ 8,715,230 ​ 12/30/2030 ​ Virtue SAB United States ​ 9,649,478 ​ 12/30/2030 ​ Virtue SAB United States ​ 9,649,479 ​ 12/30/2030 ​ Virtue SAB United States ​ 10,207,084 ​ 1/6/2031 ​ Virtue SAB United States ​ 10,806,909 ​ 1/6/2031 ​ Virtue SAB Australia ​ AU2010339379 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2014202452 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2016202636 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2017225072 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2019202994 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2020281081 ​ 12/30/2030 ​ Virtue SAB China ​ ZL201080064442.2 ​ 12/30/2030 ​ Virtue SAB China ​ ZL201822023030.0 ​ 12/4/2028 ​ Virtue SAB Japan ​ JP5553908 ​ 12/30/2030 ​ Virtue SAB Canada ​ CA02786282 ​ 12/30/2030 ​ Virtue SAB Canada ​ CA3065396 ​ 12/30/2030 ​ Virtue SAB India ​ IN385350 ​ 12/30/2030 ​ Virtue SAB Europe ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Great Britain ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB France ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Germany ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Switzerland ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Sweden ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Italy ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Spain ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Netherlands ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB ​ FreeHold Devices Our FreeHold Devices and additional minimally invasive surgery enabling devices are protected by an intellectual property portfolio which currently includes issued U.S. patents and pending U.S. applications and issued patents and pending applications in countries outside of the United States covering methods and apparatus for intracorporeal retraction and removal of organs, internal adjustment of device and retraction, as well as design for safe device removal.
The following table lists our material patents relating to Virtue SAB as of December 31, 2024, their jurisdiction and expiration: Jurisdiction ​ Patent No. ​ Expiration Date ​ Related Product United States ​ 8,696,644 ​ 3/9/2032 ​ Virtue SAB United States ​ 8,715,230 ​ 12/30/2030 ​ Virtue SAB United States ​ 9,649,478 ​ 12/30/2030 ​ Virtue SAB United States ​ 9,649,479 ​ 12/30/2030 ​ Virtue SAB United States ​ 10,207,084 ​ 1/6/2031 ​ Virtue SAB United States ​ 10,806,909 ​ 1/6/2031 ​ Virtue SAB United States ​ 12,144,945 ​ 1/6/2031 ​ Virtue SAB Australia ​ AU2010339379 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2014202452 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2016202636 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2017225072 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2019202994 ​ 12/30/2030 ​ Virtue SAB Australia ​ AU2020281081 ​ 12/30/2030 ​ Virtue SAB China ​ ZL201080064442.2 ​ 12/30/2030 ​ Virtue SAB China ​ ZL201822023030.0 ​ 12/4/2028 ​ Virtue SAB Japan ​ JP5553908 ​ 12/30/2030 ​ Virtue SAB Canada ​ CA02786282 ​ 12/30/2030 ​ Virtue SAB Canada ​ CA3065396 ​ 12/30/2030 ​ Virtue SAB India ​ IN385350 ​ 12/30/2030 ​ Virtue SAB Europe ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Great Britain ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB France ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Germany ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Switzerland ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Sweden ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Italy ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Spain ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB Netherlands ​ EP2603274 ​ 12/30/2030 ​ Virtue SAB ​ FreeHold Devices Our FreeHold Devices and additional minimally invasive surgery enabling devices are protected by an intellectual property portfolio which currently includes issued U.S. patents and issued patents and pending applications in countries outside of the United States covering methods and apparatus for intracorporeal retraction and removal of organs, internal adjustment of device and retraction, as well as design for safe device removal.
We intend to carefully screen new opportunities utilizing our focused innovation selection criteria to ensure a fit with its partnership-enabled business model. • Target mature therapeutic device markets with significant unmet needs .
We intend to carefully screen new opportunities utilizing our focused innovation selection criteria to ensure a fit with our partnership-enabled business model. • Target mature therapeutic device markets with significant unmet needs.
We believe FreeHold devices are designed to offer several potential advantages over existing retraction options: 43 Table of Contents ​ • Improve Patient Care • No additional incisions required: deployed through same access incisions as used in standard procedures; • Minimize complications from suboptimal visualization and additional incisions; and • Avoid trauma associated with the use of Nathanson-type retractors • Enable Full Surgeon Autonomy • Surgeon controls positioning and adjustment of retractor; • Once positioned, surgeon has full use of both hands to perform surgery; and • No coordination with circulator required • Optimize Visualization • Easily adjustable throughout the procedure for sustained visibility; and • Low profile design minimizes procedural clutter and collisions Targeted Commercialization — we estimate over 20,000 procedures using FreeHold devices have been performed in the United States to date, primarily in bariatric (obesity) and foregut (GI, metabolic) surgeries with some initial experience in paraaortic node dissections (gynecologic oncology), nephrectomies (kidney removal) and cholecystectomies (gallbladder removal).
We believe FreeHold devices are designed to offer several potential advantages over existing retraction options: • Improve Patient Care • No additional incisions required as they are deployed through same access incisions as used in standard procedures; • Minimize complications from suboptimal visualization and additional incisions; and • Avoid trauma associated with the use of Nathanson-type retractors • Enable Full Surgeon Autonomy • Surgeon controls positioning and adjustment of retractor; • Once positioned, surgeon has full use of both hands to perform surgery; and • No coordination with circulator required • Optimize Visualization • Easily adjustable throughout the procedure for sustained visibility; and • Low profile design minimizes procedural clutter and collisions Targeted Commercialization — we estimate over 20,000 procedures using FreeHold devices have been performed in the United States to date, primarily in bariatric (obesity) and foregut (GI, metabolic) surgeries with some initial experience in paraaortic node dissections (gynecologic oncology), nephrectomies (kidney removal) and cholecystectomies (gallbladder removal).
Upon completion of the PMA review, the FDA may: (i) approve the PMA which authorizes commercial marketing with specific prescribing information for one or more indications, which can be more limited than those originally sought; (ii) issue an approvable letter which indicates the FDA’s belief that the PMA is approvable and states what additional information the FDA requires, or the post-approval commitments that must be agreed to prior to approval; (iii) issue a “ not approvable” letter which outlines steps required for approval, but which are typically more onerous than those in an approvable letter, and may require additional clinical studies that are often expensive and time consuming and can delay approval for months or even years; or (iv) deny the application.
Upon completion of the PMA review, the FDA may: (i) approve the PMA which authorizes commercial marketing with specific prescribing information for one or more indications, which can be more limited than those originally sought; (ii) issue an approvable letter which indicates the FDA’s belief that the PMA is approvable and states what additional information the FDA requires, or the post-approval commitments that must be agreed to prior to approval; (iii) issue a “not approvable” letter which outlines steps required for approval, but which are typically more onerous than those in an approvable letter, and may require additional clinical studies that are often expensive and time consuming and can delay approval for months or even years; or (iv) deny the application.
Importantly, the therapeutic effects of AVIM therapy are designed to not rely on patient adherence or compliance, offering a significant complement to pharmaceutical therapies for which adherence and compliance are a key challenge. We estimate that the addressable annual market for pacemaker-indicated patients with HTN will comprise more than 750,000 patients worldwide by 2025.
Importantly, the therapeutic effects of AVIM therapy are designed to not rely on patient adherence or compliance, offering a significant complement to pharmaceutical therapies for which adherence and compliance are a key challenge. We estimate that the addressable annual market for pacemaker-indicated patients with HTN will comprise more than 750,000 patients worldwide by 2026.
This exclusivity period may be extended by an additional six months if certain requirements are met to qualify the product for pediatric exclusivity, including the receipt of a written request from the FDA that the 66 Table of Contents ​ NDA holder conduct certain pediatric studies, the submission of study reports from such studies to the FDA after receipt of the written request and satisfaction of the conditions specified in the written request.
This exclusivity period may be extended by an additional six months if certain requirements are met to qualify the product for pediatric 61 Table of Contents ​ exclusivity, including the receipt of a written request from the FDA that the NDA holder conduct certain pediatric studies, the submission of study reports from such studies to the FDA after receipt of the written request and satisfaction of the conditions specified in the written request.
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 have a strategic collaboration with Terumo Corporation and Terumo Medical Corporation (collectively, “Terumo”) for the development and commercialization of Virtue SAB for the treatment of coronary and peripheral artery disease.
We expect that the BACKBEAT pivotal study will include at least 20 clinical study sites in the EU, including several sites that participated in the MODERATO I and II studies.
We expect that the BACKBEAT study will include at least 20 clinical study sites in the EU, including several sites that participated in the MODERATO I and II studies.
We believe the concept of combining balloon angioplasty with simultaneous delivery of anti-proliferative medication may offer incremental benefits over available interventional therapies by (i) preserving the artery’s original anatomy; (ii) enabling treatment of vessels where DES delivery is challenging, such as small and bifurcated vessels; (iii) offering potential clinical improvement in lesions where available interventional devices have shown poor performance, including below-the-knee and restenotic lesions; and (iv) minimizing the dependency on long-term dual antiplatelet therapy and associated bleeding risks.
We believe the concept of combining balloon angioplasty with simultaneous delivery of anti-proliferative medication may offer incremental benefits over available interventional therapies by (i) preserving the artery’s original anatomy; (ii) enabling treatment of vessels where DES delivery is challenging, such as small and bifurcated 26 Table of Contents ​ vessels; (iii) offering potential clinical improvement in lesions where available interventional devices have shown poor performance, including below-the-knee and restenotic lesions; and (iv) minimizing the dependency on long-term dual antiplatelet therapy and associated bleeding risks.
ATI was subsequently acquired by Legacy Orchestra in December 2019. Our Strategic Holdings We own outright or maintains ownership of minority equity interests, convertible debt and/or royalty-stream interests in additional therapeutic device assets currently undergoing early-stage commercialization and further product development that we believe have growth and value appreciation potential.
ATI was subsequently acquired by Legacy Orchestra in December 2019. Our Strategic Holdings We own outright or maintain ownership of minority equity interests, convertible debt and/or royalty-stream interests in additional therapeutic device assets currently undergoing early-stage commercialization and further product development that we believe have growth and value appreciation potential.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. ​ Clinical Studies ​ Clinical studies are almost always required to support pre-market approval and are sometimes required for 510(k) clearance.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. 52 Table of Contents ​ ​ Clinical Studies ​ Clinical studies are almost always required to support pre-market approval and are sometimes required for 510(k) clearance.
Some trials also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a Data Safety Monitoring Board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical study based on prespecified criteria, for example, if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.
Some trials also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a Data Safety Monitoring Board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical study based on prespecified criteria, for example, if it determines that there is an unacceptable safety risk for subjects 58 Table of Contents ​ or other grounds, such as no demonstration of efficacy.
On January 8, 2024, we announced that the first patient was enrolled and randomized into the BACKBEAT pivotal study in late December 2023.
On January 8, 2024, we announced that the first patient was enrolled and randomized into the BACKBEAT study in late December 2023.
BIOELECTRONIC PRODUCT CANDIDATES — BackBeat CNT (AVIM Therapy) for Hypertension and CNT-HF for Heart Failure We are developing bioelectronic therapies based on patented CNT technology. Our product candidates are designed to use standard active implantable cardiac rhythm management systems, such as pacemakers, with changes to firmware and software only.
BIOELECTRONIC PRODUCT CANDIDATES — AVIM Therapy for Uncontrolled Hypertension and CNT-HF for Heart Failure We are developing bioelectronic therapies based on patented CNT technology. Our product candidates are designed to use standard active implantable cardiac rhythm management systems, such as pacemakers, with changes to firmware and software only.
SirolimusEFR — Additional Focal Therapies Product Candidates and Development Initiatives We are also seeking to establish a pipeline of additional targeted therapeutic product candidates for development and future licensing based on our proprietary SirolimusEFR formulation as well as, potentially, the microporous AngioInfusion balloon technology used in the Virtue SAB.
SirolimusEFR — Additional Interventional Therapies Product Candidates and Development Initiatives We are also seeking to establish a pipeline of additional targeted therapeutic product candidates for development and future licensing based on our proprietary SirolimusEFR formulation as well as, potentially, the microporous AngioInfusion balloon technology used in the Virtue SAB.
The AngioInfusion Balloon is designed to offer the following benefits: • Enable high-pressure angioplasty to dilate artery, restoring blood flow; • Protect SirolimusEFR in transit to deliver the intended therapeutic dose at the target lesion; • Deliver SirolimusEFR simultaneously with angioplasty; and • Leave no permanent implant behind. 32 Table of Contents ​ • Our proprietary, investigational SirolimusEFR powered by Sostenocel, a fully bioabsorbable technology, is designed to enable extended focal release of a therapeutic dose of the anti-restenotic sirolimus over the critical healing period.
The AngioInfusion Balloon is designed to offer the following benefits: • Enable high-pressure angioplasty to dilate artery, restoring blood flow; • Protect SirolimusEFR in transit to deliver the intended therapeutic dose at the target lesion; • Deliver SirolimusEFR simultaneously with angioplasty; and • Leave no permanent implant behind. • Our proprietary, investigational SirolimusEFR powered by Sostenocel, a fully bioabsorbable technology, is designed to enable extended focal release of a therapeutic dose of the anti-restenotic sirolimus over the critical healing period.
Revenue share payments with respect to each applicable country (or group of countries) are to be paid for a minimum period of time determined by the latest to occur of (a) the expiration of the last valid claim of certain specified patents (as well as any patents claiming priority to, from or through such patents) (the “Patent-Based Expiration”) or (b) the date that is 12 years after the first commercial sale of any Backbeat CNT-enabled pacemakers in the applicable country or group of countries (the “Time-Based Revenue Share Expiration”).
Revenue share payments with respect to each applicable country (or group of countries) are to be paid for a minimum period of time determined by the latest to occur of (a) the expiration of the last valid claim of certain specified patents (as well as any patents claiming priority to, from or through such patents) (the “Patent-Based Expiration”) or (b) the date that is 12 years after the first commercial sale of any AVIM-enabled pacemakers in the applicable country or group of countries (the “Time-Based Revenue Share Expiration”).
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA and other government authorities, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA and other government authorities, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, product tracking and tracing, advertising and promotion and reporting of adverse experiences with the product.
The AngioInfusion Package is expected to be stored at room temperature with target shelf-life of two years at commercial launch (shelf-life independent of SirolimusEFR Package), if approved. ​ • SirolimusEFR Package: This package includes SirolimusEFR in freeze-dried powder form in a vial with all components needed to reconstitute the formulation and set the desired dose to be delivered for the target lesion based on length and vessel diameter according to the Dose Chart and IFU provided in the package.
The AngioInfusion Package is expected to be stored at room temperature with a target shelf-life of two years at commercial launch (shelf-life independent of SirolimusEFR Package), if approved. ​ 30 Table of Contents ​ • SirolimusEFR Package: This package includes SirolimusEFR in freeze-dried powder form in a vial with all components needed to reconstitute the formulation and set the desired dose to be delivered for the target lesion based on length and vessel diameter according to the Dose Chart and IFU provided in the package.
According to the SVB Healthcare Report 2019, approximately 85% of venture-backed medical device companies that were acquired by larger companies required commercial traction prior to their acquisition. 41 Table of Contents ​ • Emerging medical device companies are increasingly required to commercialize their technologies, a process which is both expensive and challenging in a highly consolidated industry, forcing investors to deploy more capital and also prioritize commercial-stage or near commercial-stage companies.
According to the SVB Healthcare Report 2019, approximately 85% of venture-backed medical device companies that were acquired by larger companies required commercial traction prior to their acquisition. • Emerging medical device companies are increasingly required to commercialize their technologies, a process which is both expensive and challenging in a highly consolidated industry, forcing investors to deploy more capital and also prioritize commercial-stage or near commercial-stage companies.
Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K, including logos, artwork, and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our right or the rights of the applicable licensor to these trademarks and trade names.
Solely for convenience, trademarks and trade names referred to in this Annual Report on 45 Table of Contents ​ Form 10-K, including logos, artwork, and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our right or the rights of the applicable licensor to these trademarks and trade names.
Further, we believe any experienced and trained physicians who perform pacemaker implants, such as electrophysiologists and cardiologists, will be able to select a AVIM therapy-enabled pacemaker for an appropriate patient without the need for another physician referral, if approved.
Further, we believe any experienced and trained physicians who perform pacemaker implants, such as electrophysiologists and cardiologists, will be able to select an AVIM-enabled pacemaker for an appropriate patient without the need for another physician referral, if approved.
This chart demonstrates that (1) BackBeat CNT drove a substantial reduction of 24-hour aSBP from baseline levels (shown in orange with each box representing a full 24-hour period of aSBP measurement); (2) this blood pressure reduction was maintained through the period that BackBeat CNT was active (as reflected in the orange line made up of orange boxes); and (3) blood pressure levels took more than 10 days to return to baseline levels after BackBeat CNT was turned off, indicating that sympathetic tone responses and afterload levels were potentially modulated by chronic delivery of BackBeat CNT since aSBP levels would be expected to return immediately to baseline levels if sympathetic tone and afterload were not modulated.
This chart demonstrates that (1) AVIM therapy drove a substantial reduction of 24-hour aSBP from baseline levels (shown in orange with each box representing a full 24-hour period of aSBP measurement); (2) this blood pressure reduction was maintained through the period that AVIM therapy was active (as reflected in the orange line made up of orange boxes); and (3) blood pressure levels took more than 10 days to return to baseline levels after AVIM therapy was turned off, indicating that sympathetic tone responses and afterload levels were potentially modulated by chronic delivery of AVIM therapy since aSBP levels would be expected to return immediately to baseline levels if sympathetic tone and afterload were not modulated.
The new clinical data demonstrate the favorable hemodynamic impact of AVIM therapy as compared to standard right ventricular (RV) pacing on systolic blood pressure and overall cardiac function when delivered using both conduction system as well as standard pacing lead locations.
The new clinical data demonstrate the favorable hemodynamic impact of AVIM therapy as compared to standard right ventricular (“RV”) pacing on systolic blood pressure and overall cardiac function when delivered using both conduction system as well as standard pacing lead locations.
We believe that physicians such as implanting cardiologists and electrophysiologists who currently implant pacemakers and are responsible for the care of these patients can make the medical decision to implant a AVIM therapy-enabled pacemaker in an eligible patient.
We believe that physicians such as implanting cardiologists and electrophysiologists who currently implant pacemakers and are responsible for the care of these patients can make the medical decision to implant an AVIM-enabled pacemaker in an eligible patient.
Concerns of drug loss in transit and risk of particulates have prompted existing drug-coated balloon manufacturers to recommend balloon inflation within 30 seconds of balloon insertion into the patient, making it challenging for physicians to reach target lesions and ensure proper placement in such a short period of time, particularly in difficult coronary and peripheral lesions such ISR, small vessel disease, and below-the-knee disease.
Concerns of drug loss in transit and risk of particulates have prompted existing drug-coated balloon manufacturers to recommend balloon inflation within 30 seconds of balloon insertion into the patient, making it challenging for physicians to reach target lesions and ensure proper placement in such a short period of time, particularly in difficult coronary and peripheral lesions such ISR, small 27 Table of Contents ​ vessel disease, and below-the-knee disease.
By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are e.g., co-packaged), the medicinal product is regulated in 71 Table of Contents ​ accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the EU Medical Devices Regulation.
By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are e.g., co-packaged), the medicinal product is regulated in accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the EU Medical Devices Regulation.
Virtue SAB is currently protected by six issued U.S. patents and 21 issued patents outside the United States with additional patent applications pending in the United States and in countries outside of the United States covering key aspects of Virtue SAB product design, clinical application and enabling technology.
Virtue SAB is currently protected by 7 issued U.S. patents and 21 issued patents outside the United States with additional patent applications pending in the United States and in countries outside of the United States covering key aspects of Virtue SAB product design, clinical application and enabling technology.
Advancing a High-Impact Pipeline ​ (1) Will seek to leverage data from the pilot and pivotal trials involving HTN in patients indicated for a cardiac pacemaker (the “HTN+P population” or the “Primary Field”) to support clinical and regulatory development for High-Risk HTN indication given that age and other demographic factors of the target population are expected to be similar, the type of hypertension treated will likely be isolated systolic hypertension which is predominant in the HTN+P population, and other co-morbidities are also expected to be common to both target populations.
Advancing a High-Impact Pipeline 1 Will seek to leverage data from the pilot and pivotal trials involving HTN in patients indicated for a cardiac pacemaker (the “HTN+P population” or the “Primary Field”) to support clinical and regulatory development for HTN with high cardiovascular risk in patients not yet indicated for a pacemaker indication given that age and other demographic factors of the target population are expected to be similar, the type of hypertension treated will likely be isolated systolic hypertension which is predominant in the HTN+P population, and other co-morbidities are also expected to be common to both target populations.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product or complete withdrawal of the product from the market; • fines, warning letters or holds on ongoing or proposed clinical studies; • refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; • mandated modification of promotional materials and labeling and the issuance of corrective information; 67 Table of Contents ​ • the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or • injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product or complete withdrawal of the product from the market; • fines, warning letters or holds on ongoing or proposed clinical studies; • refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; • mandated modification of promotional materials and labeling and the issuance of corrective information; • the issuance of safety alerts, Dear Healthcare Provider letters, pre ss releases and other communications containing warnings or other safety information about the product; or 62 Table of Contents ​ • injunctions or the imposition of civil or criminal penalties.
Revenue share payments with respect to each applicable country (or group of countries) are to be paid for a minimum period of time determined by the latest to occur of (a) the expiration of the last valid claim of certain specified patents or (b) the date that is 12 years after the first commercial sale of any Backbeat CNT-enabled pacemakers in the applicable country or group of countries.
Revenue share payments with respect to each applicable country (or group of countries) are to be paid for a minimum period of time determined by the latest to occur of (a) the expiration of the last valid claim of certain specified patents or (b) the date that is 12 years after the first commercial sale of any AVIM-enabled pacemakers in the applicable country or group of countries.
Cardiac preload is the amount of stretching of the ventricle of the heart driven by the volume of blood that fills the ventricle. Pacing with shorter AV delays reduces fill volume and, thereby, cardiac preload. Lower preload results in lower blood pressure. 10 Table of Contents ​ 2.
Cardiac preload is the amount of stretching of the ventricle of the heart driven by the volume of blood that fills the ventricle. Pacing with shorter AV delays reduces fill volume and, thereby, cardiac preload. Lower preload results in lower blood pressure. 9 Table of Contents ​ 2.
BackBeat CNT was delivered via pacing algorithms in a prototype device in the canine model. Chronic delivery of BackBeat CNT significantly reduced 24-hour aSBP by an average of 32.5 mmHg over a one-month period (n=4). The reduction occurred immediately upon activation of therapy and was maintained for the period that the therapy was active (approximately 30 days).
AVIM therapy was delivered via pacing algorithms in a prototype device in the canine model. Chronic delivery of AVIM therapy significantly reduced 24-hour aSBP by an average of 32.5 mmHg over a one-month period (n=4). The reduction occurred immediately upon activation of therapy and was maintained for the period that the therapy was active (approximately 30 days).
Published quantitative analysis of various drug-coated balloons showed a substantial number of large particles (>300μm). Large particles have the potential to occlude microvessels downstream following balloon inflation. ​ 29 Table of Contents ​ In addition, third-party clinical data demonstrated that 50 – 80% of drug was washed or scraped off during transit to the target lesion prior to balloon inflation.
Published quantitative analysis of various drug-coated balloons showed a substantial number of large particles (>300μm). Large particles have the potential to occlude microvessels downstream following balloon inflation. In addition, third-party clinical data demonstrated that 50 – 80% of drug was washed or scraped off during transit to the target lesion prior to balloon inflation.
Further, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs.
Further, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to bring 69 Table of Contents ​ transparency to product pricing and reduce the cost of products and services under government healthcare programs.
To the extent there are revenue share payments made under the Medtronic Agreement after the Time-Based Revenue Share Expiration and prior to the Patent-Based Expiration, those payments would likely be based on intellectual property we develop in the future, and not the current patents held by us. BackBeat CNT and CNT-HF are also protected by trade secrets and proprietary know-how.
To the extent there are revenue share payments made under the Medtronic Agreement after the Time-Based Revenue Share Expiration and prior to the Patent-Based Expiration, those payments would likely be based on intellectual property we develop in the future, and not the current patents held by us. AVIM therapy and CNT-HF are also protected by trade secrets and proprietary know-how.
The patient had an excellent post-procedure outcome which was maintained through angiographic follow-up at 193 days. The LLL was measured at -0.03 mm. ​ 37 Table of Contents ​ Patient 2 (11-03) : Patient presented with a 17.8 mm diffuse lesion of mid-left arterior descending artery following implantation of a DES seven months prior.
The patient had an excellent post-procedure outcome which was maintained through angiographic follow-up at 193 days. The LLL was measured at -0.03 mm. Patient 2 (11-03): Patient presented with a 17.8 mm diffuse lesion of mid-left arterior descending artery following implantation of a DES seven months prior.
Many of these competitors are large, well-capitalized companies with significantly greater market share and resources than we have. As a consequence, they are able to spend more on product development, marketing, sales and other product initiatives than we can. We also compete with smaller medical device companies that have single products or a limited range of products.
Many of these competitors are large, well-capitalized companies with significantly greater market share and resources than we have. Consequently, they are able to spend more on product development, marketing, sales and other product initiatives than we can. We also compete with smaller medical device companies that have single products or a limited range of products.
Class III devices such as the BackBeat CNT and CNT-HF product candidates require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA application process is much more demanding than the 510(k) clearance process.
Class III devices such as the AVIM therapy and CNT-HF product candidates require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA application process is much more demanding than the 510(k) clearance process.
For additional information regarding obligations under federal healthcare statues and regulations, please see the section titled “ Risk Factors — Risks Related to Government Regulation and Our Industry — Our relationships with physicians, patients and payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, and other healthcare laws and regulations .” 74 Table of Contents ​ United States Healthcare Reform There have been and continue to be proposals by the federal government, state governments, regulators and third-party payors to control or manage the increased costs of healthcare and, more generally, to reform the U.S. healthcare system.
For additional information regarding obligations under federal healthcare statues and regulations, please see the section titled “Risk Factors — Risks Related to Government Regulation and Our Industry — Our relationships with physicians, patients and payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, and other healthcare laws and regulations.” United States Healthcare Reform There have been and continue to be proposals by the federal government, state governments, regulators and third-party payors to control or manage the increased costs of healthcare and, more generally, to reform the U.S. healthcare system.
Approximately 8.5 million people over age 40 in the United States have PAD, including up to 20% of individuals older than age 60, according to the CDC. Interventional Cardiology Interventional cardiology is a medical specialty that uses minimally invasive transcatheter, percutaneous technologies and techniques to treat artery disease and atherosclerosis.
The CDC also estimates approximately 8.5 million people over age 40 in the United States have PAD, including up to 20% of individuals older than age 60. Interventional Cardiology Interventional cardiology is a medical specialty that uses minimally invasive transcatheter, percutaneous technologies and techniques to treat artery disease and atherosclerosis.
The limitations of DES prompted innovation for improved solutions that enable local delivery of anti-proliferative drugs while not leaving a permanent metal implant in the vessel. Bioabsorbable vascular scaffolds (“ BVS ”), were developed with the objective of performing like stents while eventually dissolving and leaving nothing behind after a few years.
The limitations of DES prompted innovation for improved solutions that enable local delivery of anti-proliferative drugs while not leaving a permanent metal implant in the vessel. Bioabsorbable vascular scaffolds (“BVS”), were developed with the objective of performing like stents while eventually dissolving and leaving nothing behind after a few years.
Class I devices are deemed to be low risk and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse 55 Table of Contents ​ medical events and truthful and non-misleading advertising and promotion.
Class I devices are deemed to be low risk and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse medical events and truthful and non-misleading advertising and promotion.
We further believe the substantial potential added clinical value and differentiation of BackBeat CNT-enabled pacemakers can help Medtronic potentially expand market share and grow revenue. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights in the Primary Field to commercialize BackBeat CNT-enabled pacing systems globally following receipt of regulatory approvals.
We further believe the substantial potential added clinical value and differentiation of AVIM-enabled pacemakers can help Medtronic potentially expand market share and grow revenue. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights in the Primary Field to commercialize AVIM-enabled pacing systems globally following receipt of regulatory approvals.
Furthermore, these patients are likely to suffer from other co-morbidities common to this population such as atherosclerosis, hyperlipidemia, diabetes mellitus and chronic kidney disease. We believe these patients could benefit substantially from a HTN therapy like BackBeat CNT that can be administered via an already necessary pacemaker.
Furthermore, these patients are likely to suffer from other co-morbidities common to this population such as atherosclerosis, hyperlipidemia, diabetes mellitus and chronic kidney disease. We believe these patients could benefit substantially from a HTN therapy like AVIM therapy that can be administered via an already necessary pacemaker.
Target Patient Populations and Market Opportunity for AVIM Therapy The initial target market for AVIM therapy (BackBeat CNT) is the large population of patients with uncontrolled HTN who also require the implant or replacement of a pacemaker (the HTN+P population).
Target Patient Populations and Market Opportunity for AVIM Therapy The initial target market for AVIM therapy is the large population of patients with uncontrolled HTN who also require the implant or replacement of a pacemaker (the HTN+P population).
Based on the balloon size selected, the required dose volume of the reconstituted liquid formulation is loaded into the Dose Unit. The SirolimusEFR-loaded Dose Unit is connected to the AngioInfusion Balloon catheter. 2. Prime the catheter • The AngioInfusion Balloon is a semi-compliant microporous balloon.
Based on the balloon size selected, the required dose volume of the reconstituted liquid formulation is loaded into the Dose Unit. The SirolimusEFR-loaded Dose Unit is connected to the AngioInfusion Balloon catheter. 2. Prime the cathete r • The AngioInfusion Balloon is a semi-compliant microporous balloon.
Sherman assumed control of ATI in 2009 and proceeded to found new companies that developed Virtue SAB (Caliber Therapeutics), BackBeat CNT (BackBeat Medical), and the FreeHold Duo and Trio Retractors (FreeHold Surgical). Legacy Orchestra’s business was formed in May 2018 upon the merger of these three entities and a concurrent recapitalization.
Sherman assumed control of ATI in 2009 and proceeded to found new companies that developed Virtue SAB (Caliber Therapeutics), AVIM therapy (BackBeat Medical), and the FreeHold Duo and Trio Retractors (FreeHold Surgical). Legacy Orchestra’s business was formed in May 2018 upon the merger of these three entities and a concurrent recapitalization.
Programmed variable blood pressure patterns (achieved using programmed pacing with a combination of shorter and longer AV delays) designed to maintain average blood pressure reduction by modulating sympathetic tone and reducing cardiac afterload. Sympathetic tone refers to the level of activity of the sympathetic nervous system response which is known to drive and maintain elevated blood pressures.
Programmed variable blood pressure patterns (achieved using programmed pacing with a combination of short and intermittent longer AV delays) designed to maintain average blood pressure reduction by modulating sympathetic tone and reducing cardiac afterload. Sympathetic tone refers to the level of activity of the sympathetic nervous system response which is known to drive and maintain elevated blood pressures.
Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical studies or post-authorization safety studies. The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical studies or post-authorization safety studies. 65 Table of Contents ​ The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
Two-year follow-up data available from these 21 patients was presented for the first time in October 2017 at the Transcatheter Cardiovascular Therapeutics (TCT) conference in Denver, Colorado.
Two-year follow-up data available from these 21 patients was presented for the first time in October 2017 at the Transcatheter Cardiovascular Therapeutics (“TCT”) conference in Denver, Colorado.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and 59 Table of Contents ​ foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
Healthcare Fraud Statute 73 Table of Contents ​ The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 1996 (“ HIPAA”) and its implementing regulations created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services.
Healthcare Fraud Statute The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 1996 (“HIPAA”) and its implementing regulations created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services.
Sirolimus, a pharmaceutical agent also known as rapamycin, is a macrolide compound that is used to treat artery disease (drug-eluting stents or drug-coated balloons), prevent organ transplant rejection, treat rare lung disease called lymphangioleiomyomatosis, and sh own to be effective against various tumor types.
Sirolimus, a pharmaceutical agent also known as rapamycin, is a macrolide compound that is used to treat artery disease (drug-eluting stents or drug-coated balloons), prevent organ transplant rejection, treat rare lung disease called lymphangioleiomyomatosis, and shown to be effective against various tumor types.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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To the extent we do bring these functions in-house, we will be directly subject to FDA and other regulations with respect to these activities, such as the FDA’s good laboratory practice requirements, cGMP regulations and similar foreign requirements.
To the extent we do bring these functions in-house, we will be directly subject to FDA and other regulations with respect to these activities, such as the FDA’s good laboratory practice requirements, cGMP requirements and similar foreign requirements.
In the EU, we must inform the notified body that carried out the conformity assessment of the medical devices that we market or sell in the EU and the EEA of any planned substantial changes to our quality system or substantial changes to our medical devices that could affect compliance with the general safety and performance requirements laid down in Annex I to the EU Medical Devices Regulation or cause a substantial change to the intended use for which the device has been CE marked.
In the EU, we must inform the notified body that carried out the conformity assessment of the medical devices that we market or sell in the EU and the EEA of any planned substantial changes to our quality system or substantial changes to our medical devices that could affect compliance with the general safety and performance requirements laid down in Annex I to the EU Medical Devices Regulation or cause a substantial change to the intended use for which the device has been CE marked.
The notified body will then assess the planned changes and verify whether they affect the products’ ongoing conformity with the EU Medical Devices Regulation.
The notified body will then assess the planned changes and verify whether they affect the products’ ongoing conformity with the EU Medical Devices Regulation.
In such a case, the marketing authorization application must include — where available — the results of the assessment of the conformity of the device part with the EU Medical Devices Regulation contained in the manufacturer’s EU declaration of conformity of the device or the relevant certificate issued by a notified body.
In such a case, the marketing authorization application must include — where available — the results of the assessment of the conformity of the device part with the EU Medical Devices Regulation contained in the manufacturer’s EU declaration of conformity of the device or the relevant certificate issued by a notified body.
If the marketing authorization application does not include the results of the conformity assessment and where for the conformity assessment of the device, if used separately, the involvement of a notified body is required, the EMA or the EU member state competent authority must require the applicant to provide a notified body opinion on the conformity of the device.
If the marketing authorization application does not include the results of the conformity assessment and where for the conformity assessment of the device, if used separately, the involvement of a notified body is required, the EMA or the EU member state competent authority must require the applicant to provide a notified body opinion on the conformity of the device.
By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are, e.g., co-packaged), the medicinal product is regulated in accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the EU Medical Devices Regulation.
By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are, e.g., co-packaged), the medicinal product is regulated in accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the EU Medical Devices Regulation.
We have in the past and may in the future experience unforeseen events during, or because of, the clinical study process that could delay or prevent us from receiving regulatory approval or certification for new products, modification of existing products, or approval or certification of new indications for existing products including: • we may be unable to generate sufficient preclinical toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical studies; • the FDA or similar foreign regulatory authorities may find the product candidates are not sufficiently safe for investigational use in humans; • officials at the FDA or similar foreign regulatory authorities may interpret data from preclinical testing and clinical studies in less favorable ways than we do; • there may be delays or failures in obtaining regulatory authorization from the FDA or other regulatory authorities to commence a clinical study; • there may be delays or failures in the manufacture or supply of devices and/or drugs for use in clinical studies; • there may be delays in reaching agreement on acceptable terms with prospective CROs and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites; • there may be delays in identifying, recruiting and training suitable investigators; • there may be delays in obtaining IRB or ethics committee (“EC”) approvals or governmental approvals, authorizations or allowances to conduct clinical studies at prospective sites; • enrollment in our clinical studies may be slower than we anticipate, or we may experience high drop-out rates of subjects from our clinical studies, resulting in significant delays; • delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical studies or failing to return for post-treatment follow-up; • failure by our CROs, other third parties or us to adhere to clinical study protocols, failure to perform in accordance 79 Table of Contents ​ with the FDA’s or any other regulatory authority’s GCPs, or applicable regulatory guidelines in other countries, or occurrence of adverse events in trials of comparable products conducted by other companies; • the occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • we may have to amend clinical study protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB or EC and/or regulatory authorities for re-examination; • the cost of clinical studies may be greater than we anticipate; • we may have trouble in managing multiple clinical sites; • our clinical studies may produce negative or inconclusive results, or may not generate data with the level of statistical significance needed by the FDA or other regulatory authorities, and we may decide, or regulators may require us, to conduct additional clinical or preclinical testing or to abandon programs; • the FDA or similar foreign regulatory authorities may find our or our suppliers’ manufacturing processes or facilities unsatisfactory; • the FDA or similar foreign regulatory authorities may change their approval policies or adopt new regulations that may negatively affect or delay our ability to bring a product candidate to market or receive approvals or certification to treat new indications; • our regulatory approvals may be tied to our current supply chain, especially for combination products, and if we need to change locations or vendors, we may be required to repeat preclinical testing, including biocompatibility testing, that would delay or prevent our ability to produce clinical or commercial products; • we may be required to transfer manufacturing processes to larger-scale facilities operated by a CMO, and could be adversely affected by delays or failures by our CMOs or us to make any necessary changes to such manufacturing process; and • third parties may be unwilling or unable to satisfy their contractual obligations to us.
We have in the past and may in the future experience unforeseen events during, or because of, the clinical study process that could delay or prevent us from receiving regulatory approval or certification for new products, modification of existing products, or approval or certification of new indications for existing products including: • we may be unable to generate sufficient preclinical toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical studies; • the FDA or similar foreign regulatory authorities may find the product candidates are not sufficiently safe for investigational use in humans; • officials at the FDA or similar foreign regulatory authorities may interpret data from preclinical testing and clinical studies in less favorable ways than we do; • there may be delays or failures in obtaining regulatory authorization from the FDA or other regulatory authorities to commence a clinical study; • there may be delays or failures in the manufacture or supply of devices and/or drugs for use in clinical studies; • there may be delays in reaching agreement on acceptable terms with prospective CROs and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites; • there may be delays in identifying, recruiting and training suitable investigators; • there may be delays in obtaining IRB or ethics committee (“EC”) approvals or governmental approvals, authorizations or allowances to conduct clinical studies at prospective sites; • enrollment in our clinical studies may be slower than we anticipate, or we may experience high drop-out rates of subjects from our clinical studies, resulting in significant delays; • delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical studies or failing to return for post-treatment follow-up; • failure by our CROs, other third parties or us to adhere to clinical study protocols, failure to perform in accordance with the FDA’s or any other regulatory authority’s GCPs, or applicable regulatory guidelines in other countries, or occurrence of adverse events in trials of comparable products conducted by other companies; • the occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • we may have to amend clinical study protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB or EC and/or regulatory authorities for re-examination; • the cost of clinical studies may be greater than we anticipate; • we may have trouble in managing multiple clinical sites; 74 Table of Contents ​ • our clinical studies may produce negative or inconclusive results, or may not generate data with the level of statistical significance needed by the FDA or other regulatory authorities, and we may decide, or regulators may require us, to conduct additional clinical or preclinical testing or to abandon programs; • the FDA or similar foreign regulatory authorities may find our or our suppliers’ manufacturing processes or facilities unsatisfactory; • the FDA or similar foreign regulatory authorities may change their approval policies or adopt new regulations that may negatively affect or delay our ability to bring a product candidate to market or receive approvals or certification to treat new indications; • our regulatory approvals may be tied to our current supply chain, especially for combination products, and if we need to change locations or vendors, we may be required to repeat preclinical testing, including biocompatibility testing, that would delay or prevent our ability to produce clinical or commercial products; • we may be required to transfer manufacturing processes to larger-scale facilities operated by a CMO, and could be adversely affected by delays or failures by our CMOs or us to make any necessary changes to such manufacturing process; and • third parties may be unwilling or unable to satisfy their contractual obligations to us.
The emergence of a new pandemic or epidemic may also cause us to experience additional disruptions that could severely impact our business and clinical studies, including: • delays or difficulties in enrolling patients in our clinical studies; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical studies, including the diversion of hospitals serving as our clinical study sites and hospital staff supporting the conduct of our clinical trials; • interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical study subject visits and study procedures, the occurrence of which could affect the integrity of clinical study data; • risk that participants enrolled in our clinical studies will contract the contagious disease while the clinical study is ongoing, which could impact the results of the clinical study, including by increasing the number of observed adverse events; • limitations in employee resources that would otherwise be focused on the conduct of our clinical studies, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; • delays in receiving authorizations, allowances or approvals from local regulatory authorities to initiate our planned clinical studies; • delays in clinical sites receiving the supplies and materials needed to conduct our clinical studies, including interruption in global shipping that may affect the transport of clinical study materials, such as investigational materials used in our clinical studies; • changes in local regulations as part of a response to such pandemic or epidemic which may require us to change 84 Table of Contents ​ the ways in which our clinical studies are conducted, which may result in unexpected costs, or the discontinuation of such clinical studies altogether; • interruptions or delays in preclinical studies due to restricted or limited operations at research and development laboratory facilities; • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and • refusal of the FDA to accept data from clinical studies in affected geographies.
The emergence of a new pandemic or epidemic may also cause us to experience additional disruptions that could severely impact our business and clinical studies, including: • delays or difficulties in enrolling patients in our clinical studies; • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; • diversion of healthcare resources away from the conduct of clinical studies, including the diversion of hospitals serving as our clinical study sites and hospital staff supporting the conduct of our clinical trials; • interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical study subject visits and study procedures, the occurrence of which could affect the integrity of clinical study data; • risk that participants enrolled in our clinical studies will contract the contagious disease while the clinical study is ongoing, which could impact the results of the clinical study, including by increasing the number of observed adverse events; • limitations in employee resources that would otherwise be focused on the conduct of our clinical studies, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; • delays in receiving authorizations, allowances or approvals from local regulatory authorities to initiate our planned clinical studies; • delays in clinical sites receiving the supplies and materials needed to conduct our clinical studies, including interruption in global shipping that may affect the transport of clinical study materials, such as investigational materials used in our clinical studies; • changes in local regulations as part of a response to such pandemic or epidemic which may require us to change the ways in 78 Table of Contents ​ which our clinical studies are conducted, which may result in unexpected costs, or the discontinuation of such clinical studies altogether; • interruptions or delays in preclinical studies due to restricted or limited operations at research and development laboratory facilities; • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and • refusal of the FDA to accept data from clinical studies in affected geographies.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies have suffered significant setbacks in advanced clinical studies, even after receiving positive results in earlier trials. Any of our products may malfunction or may produce undesirable adverse effects that could cause us or regulatory authorities to interrupt, delay or halt clinical studies.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies have suffered significant setbacks in advanced clinical studies, even after receiving positive results in earlier trials. Any of our products may malfunction or may produce undesirable adverse effects that could cause us, IRBs or regulatory authorities to interrupt, delay or halt clinical studies.
Individuals may bring a product liability claims against us, including frivolous lawsuits, if one of our products causes, or merely appears to have caused, an injury. We currently have product liability insurance for $6.0 million per occurrence with an annual aggregate maximum of $6.0 million.
Individuals may bring a product liability claims against us, including frivolous lawsuits, if one or more of our products causes, or merely appears to have caused, an injury. We currently have product liability insurance for $6.0 million per occurrence with an annual aggregate maximum of $6.0 million.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; • the failure of the third party to manufacture our product candidates according to our specifications; • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time, leading to clinical study interruptions, or of drug or medical device supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them; • the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms; • the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us; • the breach by the third-party contractors of our agreements with them; • the failure of third-party contractors to comply with applicable regulatory requirements; • the failure of the third party to manufacture our product candidates according to our specifications; 89 Table of Contents ​ • the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified; • clinical supplies not being delivered to clinical sites on time, leading to clinical study interruptions, or of drug or medical device supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and • the misappropriation of our proprietary information, including our trade secrets and know-how.
Even if we obtain all necessary FDA approvals, our product candidates may not achieve or maintain market acceptance and may be subject to additional regulatory requirements post-approval Even if we obtain FDA approval of our product candidates, or new indications for our products, market acceptance of our products in the healthcare community, including physicians, patients and third-party payors, will depend on many factors, including: • our ability to provide incremental clinical and economic data that shows the safety and clinical efficacy and cost-effectiveness of, and patient benefits from, our products; • the availability of alternative treatments; 81 Table of Contents ​ • whether our products are included on insurance company formularies or coverage plans; • the willingness and ability of patients and the healthcare community to adopt new technologies; • customer demand; • liability risks generally associated with the use of new product candidates; • the training required to use a new product candidate; • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness over existing alternatives; • the convenience and ease of use of our products relative to other treatment methods; • the pricing and reimbursement of our products relative to other treatment methods; and • the marketing and distribution support for our products.
Even if we obtain all necessary FDA approvals, our product candidates may not achieve or maintain market acceptance and may be subject to additional regulatory requirements post-approval Even if we obtain FDA approval of our product candidates, or new indications for our products, market acceptance of our products in the healthcare community, including physicians, patients and third-party payors, will depend on many factors, including: • our ability to provide incremental clinical and economic data that shows the safety and clinical efficacy and cost-effectiveness of, and patient benefits from, our products; • the availability of alternative treatments; • whether our products are included on insurance company formularies or coverage plans; • the willingness and ability of patients and the healthcare community to adopt new technologies; • customer demand; • liability risks generally associated with the use of new product candidates; • the training required to use a new product candidate; • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness over existing alternatives; • the convenience and ease of use of our products relative to other treatment methods; • the pricing and reimbursement of our products relative to other treatment methods; and • the marketing and distribution support for our products.
The FDA, comparable regulatory authorities (or notified bodies) can delay, limit or deny approval of a drug or approval or certification of a medical device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses; • inability to satisfy regulators on the biocompatibility of our novel materials or to gain agreement with regulators on the methods or results of biocompatibility testing; • the disagreement of the FDA or the applicable foreign regulatory authority or notified body with the design or implementation of our clinical studies or the interpretation of data from preclinical studies or clinical studies; • serious and unexpected adverse effects experienced by participants in our clinical studies; • the data from our preclinical studies and clinical studies may be insufficient to support approval; 102 Table of Contents ​ • our inability to demonstrate that the clinical and other benefits of the product candidate outweigh the risks; • the quality systems, manufacturing processes and/or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for approval or certification.
The FDA, comparable regulatory authorities (or notified bodies) can delay, limit or deny approval of a drug or approval or certification of a medical device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses; • inability to satisfy regulators on the biocompatibility of our novel materials or to gain agreement with regulators on the methods or results of biocompatibility testing; • the disagreement of the FDA or the applicable foreign regulatory authority or notified body with the design or implementation of our clinical studies or the interpretation of data from preclinical studies or clinical studies; • serious and unexpected adverse effects experienced by participants in our clinical studies; • the data from our preclinical studies and clinical studies may be insufficient to support approval; • our inability to demonstrate that the clinical and other benefits of the product candidate outweigh the risks; • the quality systems, manufacturing processes and/or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for approval or certification.
While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries, including ours.
While many of the impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries, including ours.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention or seizure of our products; • customer notifications or repair, replacement or refunds; 104 Table of Contents ​ • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMA approvals or foreign regulatory approvals or certifications of new products, new intended uses or modifications to existing products; • withdrawals or suspensions of our current PMA or foreign regulatory approvals or certifications, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMA approvals or foreign regulatory approvals or certifications of new products, new intended uses or modifications to existing products; • withdrawals or suspensions of our current PMA or foreign regulatory approvals or certifications, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Disruptions at the FDA, other government agencies and notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, certified or commercialized in a timely manner or at all, or otherwise prevent those agencies and bodies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business The ability of the FDA, other government agencies and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s or other government agencies’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s, other government agencies’ and notified bodies’ ability to perform routine functions.
Disruptions at the FDA, other government agencies and notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, certified or commercialized in a timely manner or at all, or otherwise prevent those agencies and bodies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business The ability of the FDA, other government agencies and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s or other government agencies’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise 84 Table of Contents ​ affect the FDA’s, other government agencies’ and notified bodies’ ability to perform routine functions.
Additional risks related to operating in foreign countries include: • differing reimbursement regimes in foreign countries, including price controls; • unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • unexpected changes in tariffs, trade barriers and regulatory requirements; • foreign currency fluctuations, which could result in increased operating expenses, reduced revenue and other obligations incidental to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the U.S.
Additional risks related to operating in foreign countries include: • differing reimbursement regimes in foreign countries, including price controls; • unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • unexpected changes in tariffs, trade barriers and regulatory requirements; • foreign currency fluctuations, which could result in increased operating expenses, reduced revenue and other obligations incidental to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; 85 Table of Contents ​ • potential liability under the U.S.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to 108 Table of Contents ​ violate it to have committed a violation; • the federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; • the federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; • HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
The misuse or promotion of off-label uses of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies, any of which could be costly to our business Any products that we market will be a pproved for specific indicated uses and subject to limitations on those uses as specified in their respective approved for certified labeling .
The misuse or promotion of off-label uses of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies, any of which could be costly to our business Any products that we market will be approved for specific indicated uses and subject to limitations on those uses as specified in their respective approved for certified labeling.
The Medicare Access and CHIP Reauthorization Act of 2015 (the “MACRA”), enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and implemented fixed annual updates and a new system of incentive payments that began in 2019 100 Table of Contents ​ that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations.
The Medicare Access and CHIP Reauthorization Act of 2015 (the “MACRA”), enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and implemented fixed annual updates and a new system of incentive payments that began in 2019 that are based on various performance measures and physicians’ participation in alternative payment models such as 93 Table of Contents ​ accountable care organizations.
If our clinical studies are unsuccessful or significantly delayed, or if we do not complete our clinical studies, our business may be harmed In order to obtain approval of a PMA from the FDA for a device-led combination product candidate, such as our Virtue SAB , or for device candidates like BackBeat CNT or CNT-HF which are designed to be integrated with the collaboration of device manufacturers into their existing medical devices such as pacemakers, as well as other future product candidates, or marketing approval for an NDA , such as our extended release formulation of sirolimus called “SirolimusEFR,” we must conduct well-controlled clinical studies designed to assess the safety and efficacy of the product candidate , in addition to nonclinical and other product development studies .
If our clinical studies are unsuccessful or significantly delayed, or if we do not complete our clinical studies, our business may be harmed In order to obtain approval of a PMA from the FDA for a device-led combination product candidate, such as our Virtue SAB, or for device candidates like AVIM therapy or CNT-HF which are designed to be integrated with the collaboration of device manufacturers into their existing medical devices such as pacemakers, as well as other future product candidates, or marketing approval for an NDA, such as our extended release formulation of sirolimus called “SirolimusEFR,” we must conduct well-controlled clinical studies designed to assess the safety and efficacy of the product candidate, in addition to nonclinical and other product development studies.
We will remain an emerging growth 125 Table of Contents ​ company until the earliest of (i) the last day of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of shares by our predecessor in its initial public offering , which will be December 31, 2026 .
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of shares by our predecessor in its initial public offering, which will be December 31, 2026.
In addition, if the FDA 98 Table of Contents ​ or any other applicable regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, without delay, or at all, which would significantly impact our ability to fulfill our supply obligations for SirolimusEFR for Virtue SAB, as well as sales of SirolimusEFR for other potential clinical applications.
In addition, if the FDA or any other applicable regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, without delay, or at all, which would significantly impact our ability to fulfill our supply obligations for SirolimusEFR for Virtue SAB, as well as sales of SirolimusEFR for other potential clinical applications.
Clinical development is a long, expensive and uncertain process and is 78 Table of Contents ​ subject to delays and to the risk that products may not ultimately adequately demonstrate safety or effectiveness in treating the indications for which they are designed. Completion of the clinical studies required to support a marketing authorization usually takes several years or more.
Clinical development is a long, expensive and uncertain process and is subject to delays and to the risk that products may not ultimately adequately demonstrate safety or effectiveness in treating the indications for which they are designed. Completion of the clinical studies required to support a 73 Table of Contents ​ marketing authorization usually takes several years or more.
If a prolonged government shutdown occurs, or if new or existing global health concerns continue to hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if new global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
There is also a risk that due to statutory or regulatory changes or other unforeseen reasons, our future NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to realize a tax benefit from the use of any future NOLs we generate, whether or not we attain profitability.
There is also a risk that due to statutory or regulatory changes or other unforeseen reasons, our futur e NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to realize a tax benefit from the use of any future NOLs we generate, whether or not we attain profitability.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products against third parties in violation of our intellectual property rights generally.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products by third parties in violation of our intellectual property rights generally.
Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical study in accordance with regulatory requirements or our clinical protocols, results of regulatory inspection of the clinical study operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using 80 Table of Contents ​ the investigational product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical study.
Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical study in accordance with regulatory requirements or our clinical protocols, results of regulatory inspection of the clinical study operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the investigational product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical study.
In addition, under Section 382 of the Internal Revenue Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% 93 Table of Contents ​ change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited.
In addition, under Section 382 of the Internal Revenue Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited.
Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as: warning letters; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future approvals or certifications; withdrawals or suspensions of current approvals or certifications, resulting in prohibitions on sales of our products; and, in the most serious cases, criminal penalties.
Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as: warning letters; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future 95 Table of Contents ​ approvals or certifications; withdrawals or suspensions of current approvals or certifications, resulting in prohibitions on sales of our products; and, in the most serious cases, criminal penalties.
Additionally, if one or more of our product candidates receives marketing approval or certification and we or others later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result, including but not limited to: • regulatory authorities may suspend, limit or withdraw approvals or certifications of such product, or seek an injunction against sale or distribution; • regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; • we may be required to change the way the product is administered or conduct additional clinical studies or post- 86 Table of Contents ​ approval studies; • we may be required to create and implement a REMS, which could include a medication guide outlining the risks of such side effects for distribution to patients or other similar measures ; • we may be subject to fines, injunctions or the imposition of criminal penalties; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
Additionally, if one or more of our product candidates receives marketing approval or certification and we or others later identify undesirable side effects or adverse events caused by such products, including as part of any post-approval studies, a number of potentially significant negative consequences could result, including but not limited to: • regulatory authorities may suspend, limit or withdraw approvals or certifications of such product, or seek an injunction against sale or distribution; • regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; • we may be required to change the way the product is administered or conduct additional clinical studies or post-approval studies; • we may be required to create and implement a REMS, which could include a medication guide outlining the risks of such side effects for distribution to patients or other similar measures; • we may be subject to fines, injunctions or the imposition of criminal penalties; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
These types of activities subject us to inherent costs and risks associated with replacing and changing these systems, fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, acquisition and retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time and other risks and costs of delays or difficulties in transitioning to or integrating new systems into our current systems.
These types of activities subject us to inherent costs and risks associated with replacing and changing these systems, fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, acquisition and retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time and other risks and costs of delays or difficulties 83 Table of Contents ​ in transitioning to or integrating new systems into our current systems.
In addition to these fines, supervisory authorities have extensive audit and inspection rights, and powers 111 Table of Contents ​ to order temporary or permanent bans on all or some processing of personal data carried out by noncompliant actors; the GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR.
In addition to these fines, supervisory authorities have extensive audit and inspection rights, and powers to order temporary or permanent bans on all or some processing of personal data carried out by noncompliant actors; the GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR.
For example, the EU and the UK General Data Protection Regulations (respectively, the “EU GDPR” and the “UK GDPR,” together, the “GDPR ”) each impose strict requirements for processing the personal data of individuals within the EEA, and/or the UK and to processing that occurs in the context of an establishment in, respectively, the EEA and/or UK.
For example, the EU and the UK General Data Protection Regulations (respectively, the “EU GDPR” and the “UK GDPR,” together, the “GDPR”) each impose strict requirements for processing the personal data of individuals within the EEA, and/or the UK and to processing that occurs in the context of an establishment in, respectively, the EEA and/or UK.
It is possible that as we test our product candidates in larger, longer and more extensive clinical studies, or as use of these product candidates becomes more widespread if they receive regulatory approval or certification, illnesses, injuries, discomforts and other adverse events that were observed in previous trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients.
It is possible that as we 79 Table of Contents ​ test our product candidates in larger, longer and more extensive clinical studies, or as use of these product candidates becomes more widespread if they receive regulatory approval or certification, illnesses, injuries, discomforts and other adverse events that were observed in previous trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients.
We depend on these consultants, CROs and clinical investigators to perform the clinical studies and trials and monitor and analyze data from these studies and trials under the investigational plan and protocol for the study or trial and in compliance with regulations and requirements for conducting, recording and reporting results of clinical studies or trials to assure that the data and results are credible and accurate and the trial participants are adequately protected, as required by the FDA and foreign regulatory authorities.
We depend on 90 Table of Contents ​ these consultants, CROs and clinical investigators to perform the clinical studies and trials and monitor and analyze data from these studies and trials under the investigational plan and protocol for the study or trial and in compliance with regulations and requirements for conducting, recording and reporting results of clinical studies or trials to assure that the data and results are credible and accurate and the trial participants are adequately protected, as required by the FDA and foreign regulatory authorities.
The exemptions available to emerging growth companies include: (a) exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements.
The exemptions available to emerging growth companies include: (a) exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in 116 Table of Contents ​ its periodic reports and proxy statements.
It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, will impact our business. In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
It is unclear how other healthcare reform measures of the new administration or other efforts, if any, will impact our business. In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
Although the FDA and similar foreign regulatory agencies have or may have systems in place for the review and approval or certification of combination products such as ours, we have and may continue to experience delays in the development and commercialization of our product candidates due to regulatory timing constraints and uncertainties in the product development and approval process, as well as coordination between two different centers within FDA responsible for review of the different components of the combination product.
Although the FDA and similar foreign regulatory agencies have or may have systems in place for the review and approval or certification of combination products such as ours, we have and may continue to experience delays in the development and commercialization of our product candidates due to regulatory timing constraints and uncertainties in the product development and approval 99 Table of Contents ​ process, as well as coordination between two different centers within FDA responsible for review of the different components of the combination product.
These include, but may not be limited to, with respect to Virtue SAB and other product candidates our Focal Therapies group intends to develop, the chemical and physical aspects of the polymers and excipients in our formulation and the process by which our formulation is mixed, purified, concentrated, diluted, stored, filled into vials, freeze dried, sterilized, inspected, labeled and packaged, as well as physical and engineering aspects of our catheter, detailed specifications of our porous balloon, and physical and engineering aspects of our dose unit, recon unit, 115 Table of Contents ​ and pre-filled syringe.
These include, but may not be limited to, with respect to Virtue SAB and other product candidates our Interventional Therapies group intends to develop, the chemical and physical aspects of the polymers and excipients in our formulation and the process by which our 107 Table of Contents ​ formulation is mixed, purified, concentrated, diluted, stored, filled into vials, freeze dried, sterilized, inspected, labeled and packaged, as well as physical and engineering aspects of our catheter, detailed specifications of our porous balloon, and physical and engineering aspects of our dose unit, recon unit, and pre-filled syringe.
In addition, we may in the future experience disruptions caused by pandemics, which may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical studies.
In addition, we may in the future experience disruptions caused by pandemics or geopolitical events, which may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical studies.
Approval and certification procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, and may necessitate additional preclinical studies or clinical studies. Any of these occurrences could have an adverse effect on our business, financial condition and results of operations.
Approval and certification procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, and may necessitate 75 Table of Contents ​ additional preclinical studies or clinical studies. Any of these occurrences could have an adverse effect on our business, financial condition and results of operations.
Any termination of collaborations we have entered into or may enter into in the future, or any delay in entering into collaborations 94 Table of Contents ​ related to our products or product candidates, could delay the development and commercialization of our products or product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations.
Any termination of collaborations we have entered into or may enter into in the future, or any delay in entering into collaborations related to our products or product candidates, could delay the development and commercialization of our products or product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations.
Any failure or perceived failure by us or our collaborators, service providers and contractors to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing 110 Table of Contents ​ processing of personal information could result in negative publicity, diversion of management time and effort and proceedings against us by governmental entities or others.
Any failure or perceived failure by us or our collaborators, service providers and contractors to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing processing of personal information could result in negative publicity, diversion of management time and effort and proceedings against us by governmental entities or others.
Further, while the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us or our directors, officers, or other employees in a venue other than in the federal district courts of the United States.
Further, 113 Table of Contents ​ while the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us or our directors, officers, or other employees in a venue other than in the federal district courts of the United States.
If adequate funds are not available on acceptable terms, we may be unable to invest in our future growth opportunities, which could harm our business, operating results and financial condition. If we incur debt, the debt holders could have rights senior to holders of our common 123 Table of Contents ​ stock to make claims on our assets.
If adequate funds are not available on acceptable terms, we may be unable to invest in our future growth opportunities, which could harm our business, operating results and financial condition. If we incur debt, the debt holders could have rights senior to holders of our common stock to make claims on our assets.
If we do not accurately anticipate physician and patient needs, as well as evaluate the commercial potential or target market for a particular potential product, we may miss valuable product development opportunities or we may relinquish valuable rights to that potential product through future collaborations, licenses and other similar arrangements in cases in which it would have been more advantageous for us to further advance development or to retain sole development and commercialization rights to such potential product.
If we do not accurately anticipate physician and patient needs, as well as evaluate the commercial potential 86 Table of Contents ​ or target market for a particular potential product, we may miss valuable product development opportunities or we may relinquish valuable rights to that potential product through future collaborations, licenses and other similar arrangements in cases in which it would have been more advantageous for us to further advance development or to retain sole development and commercialization rights to such potential product.
Growth could place significant strain on our management, employees, operations, operating and financial systems, and other resources. To accommodate significant growth, we could be required to open additional facilities, expand and improve our information 87 Table of Contents ​ systems and procedures and hire, train, motivate and manage a growing workforce, all of which would increase our costs.
Growth could place significant strain on our management, employees, operations, operating and financial systems, and other resources. To accommodate significant growth, we could be required to open additional facilities, expand and improve our information systems and procedures and hire, train, motivate and manage a growing workforce, all of which would increase our costs.
In particular, the U.S. government may enact significant changes to the taxation of business entities including, among others, an increase in the corporate income tax rate, the imposition of minimum taxes or surtaxes on certain types of income, significant changes to the taxation of income derived from international operations, and an addition of further limitations on the deductibility of business interest.
In particular, the U.S. government may enact significant changes to the taxation of business entities including, among others, a change in the corporate income tax rate, the imposition of minimum taxes or surtaxes on certain types of income, significant changes to the taxation of income derived from international operations, and an addition of further limitations on the deductibility of business interest.
Because there is often no separate reimbursement for products used in surgical procedures, the additional cost associated with the use of some of our products can impact the profit margin of the hospital or surgery center where the procedure is performed. 109 Table of Contents ​ Some of our target customers may be unwilling to adopt our products in light of the additional associated cost.
Because there is often no separate reimbursement for products used in surgical procedures, the additional cost associated with the use of some of our products can impact the profit margin of the hospital or surgery center where the procedure is performed. Some of our target customers may be unwilling to adopt our products in light of the additional associated cost.
In addition, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation. While several notified bodies have been designated, current designated notified bodies are facing a large amount of requests with the new regulation as a consequence of which review times have 91 Table of Contents ​ lengthened.
In addition, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation. While several notified bodies have been designated, current designated notified bodies are facing a large amount of requests with the new regulation as a consequence of which review times have lengthened.
Further, we currently do not have redundancy built into our supply chain We utilize and intend to continue to utilize partners and third-party vendors to assist in the manufacture and assembly of our products and product candidates, as well as to provide materials and components essential to the manufacture of our 95 Table of Contents ​ products and product candidates, in particular Virtue SAB.
Further, we currently do not have redundancy built into our supply chain We utilize and intend to continue to utilize partners and third-party vendors to assist in the manufacture and assembly of our products and product candidates, as well as to provide materials and components essential to the manufacture of our products and product candidates, in particular Virtue SAB.
We expect that obtaining regulatory approvals for our product candidates will require us to conduct human clinical studies. For our medical device product candidates and combination drug/device product candidates regulated as medical devices, we will need to obtain approval of an I DE, prior to beginning a clinical study in the United States.
We expect that obtaining regulatory approvals for our product candidates will require us to conduct human clinical studies. For our medical device product candidates and combination drug/device product candidates regulated as medical devices, we will need to obtain approval of an IDE, prior to beginning a clinical study in the United States.
Moreover, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge our priority of invention or other features of patentability with respect to our patents and patent applications.
Moreover, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge our priority of invention or other features of patentability with respect to our 109 Table of Contents ​ patents and patent applications.
This may allow those competitors to spend more time with potential customers and to focus on a larger number of potential customers, which would give them a significant advantage over the sales and marketing team we would use and our international distributors in making sales.
This may allow those competitors to spend more time with potential customers 76 Table of Contents ​ and to focus on a larger number of potential customers, which would give them a significant advantage over the sales and marketing team we would use and our international distributors in making sales.
In addition, our estimates of the sizes of the PAD and CAD patient population may include patients who are asymptomatic 83 Table of Contents ​ or in the early stages of disease; these patients might never progress to more advanced disease stages and, accordingly, might never be likely candidates for treatment with our products.
In addition, our estimates of the sizes of the PAD and CAD patient population may include patients who are asymptomatic or in the early stages of disease; these patients might never progress to more advanced disease stages and, accordingly, might never be likely candidates for treatment with our products.
If the assessment is favorable, the notified body will issue a new certificate of conformity or an addendum to the existing certificate attesting compliance with the general safety and 103 Table of Contents ​ performance requirements and quality system requirements laid down in the Annexes to the EU Medical Devices Regulation.
If the assessment is favorable, the notified body will issue a new certificate of conformity or an addendum to the existing certificate attesting compliance with the general safety and performance requirements and quality system requirements laid down in the Annexes to the EU Medical Devices Regulation.
In addition, the attacks by Hamas on Israel in October 2023, Israel’s response and a potential broader armed conflict in the Middle East are likely to continue impacting the global economy, including that of the United States and have added to concerns of a widening conflict in the Middle 90 Table of Contents ​ East.
In addition, the attacks by Hamas on Israel in October 2023, Israel’s response and a potential broader armed conflict in the Middle East are likely to continue impacting the global economy, including that of the United States and have added to concerns of a widening conflict in the Middle East.
Any of such factors, including the factors listed below, could have a material adverse effect on your investment in 122 Table of Contents ​ our securities and our securities may trade at prices significantly below the price you paid. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Any of such factors, including the factors listed below, could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
In such an event, potential competitors might be able 118 Table of Contents ​ to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition and results of operations.
In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition and results of operations.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (manufacturers are required to submit reports to the government by the 90th day of each calendar year); and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state and foreign laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (manufacturers are required to submit reports to the government by the 90th day of each calendar year); and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state and foreign laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information. 101 Table of Contents ​ Ensuring that our internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. Moreover, in the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. 114 Table of Contents ​ Moreover, in the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
Although we believe a single marketing application for the approval of a combination product would be appropriate and successful, there can be no 106 Table of Contents ​ assurance that the FDA will not determine that separate marketing applications are necessary.
Although we believe a single marketing application for the approval of a combination product would be appropriate and successful, there can be no assurance that the FDA will not determine that separate marketing applications are necessary.
Manufacturing facilities used to make our balloons or other components may be shut down, sold or otherwise become unavailable and it will take time and money for us to identify and requalify new facilities. In addition, assuming our BackBeat CNT product candidate is approved, we will be reliant on Medtronic, Inc.
Manufacturing facilities used to make our balloons or other components may be shut down, sold or otherwise become unavailable and it will take time and money for us to identify and requalify new facilities. In addition, assuming our AVIM therapy product candidate is approved, we will be reliant on Medtronic, Inc.
The large number of patent issuances, the rapid rate of new patent application filings, the complexities of the technologies involved, and the uncertainty of litigation may increase the risk to our business and result in business resources 116 Table of Contents ​ and management’s attention being diverted to patent litigation.
The large number of patent issuances, the rapid rate of new patent application filings, the complexities of the technologies involved, and the uncertainty of litigation may increase the risk to our business and result in business resources and management’s attention being diverted to patent litigation.
We do not believe Virtue SAB or BackBeat CNT or other of our current product candidates will be exempt from, or eligible for, clearance under Section 510(k) of the FDCA. We expect our product candidates will require submission and FDA approval of a PMA to be marketed in the United States.
We do not believe Virtue SAB or AVIM therapy or other of our current product candidates will be exempt from, or eligible for, clearance under Section 510(k) of the FDCA. We expect our product candidates will require submission and FDA approval of a PMA to be marketed in the United States.
If we are unable to adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies or the goodwill we have acquired in the marketplace and erode or negate 113 Table of Contents ​ any competitive advantage we may have, which could ultimately harm our business and ability to achieve profitability.
If we are unable to adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies or the goodwill we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could ultimately harm our business and ability to achieve profitability.
With respect to BackBeat CNT, this may include, but may not be limited to, certain aspects of our proprietary algorithms. However, trade secrets and unpatented proprietary technology are difficult to protect. To protect proprietary technology and processes, we rely in part on confidentiality and intellectual property assignment agreements with our employees, consultants and others.
With respect to AVIM therapy, this may include, but may not be limited to, certain aspects of our proprietary algorithms. However, trade secrets and unpatented proprietary technology are difficult to protect. To protect proprietary technology and processes, we rely in part on confidentiality and intellectual property assignment agreements with our employees, consultants and others.
As such, licensing and collaboration payments, including upfront and milestone payments, as well as royalties and revenue sharing arrangements related to our products and product candidates, will account for substantially all of our revenue for the foreseeable future.
As such, licensing and collaboration payments, including upfront and milestone payments, as well as royalties and revenue 87 Table of Contents ​ sharing arrangements related to our products and product candidates, will account for substantially all of our revenue for the foreseeable future.
In addition, our expenses could increase beyond expectations if we decide to or are required by the FDA or foreign regulatory authorities or notified bodies to perform non-clinical tests or clinical studies or trials for our product candidates in addition to those that we currently anticipate.
In addition, our expenses could increase beyond expectations if we decide to or are required by the FDA or foreign regulatory authorities or notified bodies to perform non-clinical tests or clinical studies or trials for our product candidates in addition to those that we currently 72 Table of Contents ​ anticipate.
Even if we generate revenues from the sale of our 77 Table of Contents ​ products (or through the sale of products by our partners), we may not be profitable and may need to obtain additional funding to continue operations.
Even if we generate revenues from the sale of our products (or through the sale of products by our partners), we may not be profitable and may need to obtain additional funding to continue operations.
These requirements may give rise to patent litigation and mandatory delays in approval of our NDAs for 107 Table of Contents ​ up to 30 months or longer depending on the outcome of any litigation.
These requirements may give rise to patent litigation and mandatory delays in approval of our NDAs for up to 30 months or longer depending on the outcome of any litigation.
Using hazardous substances in our operations exposes us to the risk of accidental 112 Table of Contents ​ injury, contamination or other liability from the use, storage, importation, handling or disposal of hazardous materials.
Using hazardous substances in our operations exposes us to the risk of accidental injury, contamination or other liability from the use, storage, importation, handling or disposal of hazardous materials.
During the extended 21-month follow-up period, that included 24 patients who continued with BackBeat CNT, there were 25 SAEs in twelve patients. Five events in three patients were adjudicated as “possibly” device related.
During the extended 21-month follow-up period, that included 24 patients who continued with AVIM therapy, there were 25 SAEs in twelve patients. Five events in three patients were adjudicated as “possibly” device related.
Uses outside of the approved or certified indications for use are known as “off-label uses.” We cannot prevent a physician from using our products off-label in the physician’s independent 88 Table of Contents ​ professional medical judgment . However, t here may be increased risk of injury to patients if physicians attempt to use our products off-label.
Uses outside of the approved or certified indications for use are known as “off-label uses.” We cannot prevent a physician from using our products off-label in the physician’s independent professional medical judgment. However, there may be increased risk of injury to patients if physicians attempt to use our products off-label.
For the MODERATO II study, there were no major adverse cardiac events (“MACE”) in the BackBeat CNT group and three MACE in two patients in the control group (one death from cancer and two cardiac events) at six months.
For the MODERATO II study, there were no major adverse cardiac events (“MACE”) in the AVIM therapy group and three MACE in two patients in the control group (one death from cancer and two cardiac events) at six months.
A Class I or Class II device that is exempt from 510(k) requirements must still comply with other requirements unless the device is explicitly exempt from those requirements as indicated in the regulation for that device type.
A Class I or Class II device that is exempt from 510(k) requirements must still comply with other requirements unless 94 Table of Contents ​ the device is explicitly exempt from those requirements as indicated in the regulation for that device type.
Holders of such “out of the money” warrants are not likely to exercise 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.
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.
As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Patents enable us to stop unauthorized third parties from making, using, selling, offering for sale or importing products that are covered under valid and enforceable patents.
Physicians historically have moved quickly to new products and new technologies. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Patents enable us to stop unauthorized third parties from making, using, selling, offering for sale or importing products that are covered under valid and enforceable patents.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited As of December 31, 2023, we had gross net operating loss (“NOL”) carryforwards of approximately $135.1 million for federal income tax purposes, and $113.5 million for state income tax purposes, and approximately $6.1 million of federal research and development tax credits, after applying limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited As of December 31, 2024, we had gross net operating loss (“NOL”) carryforwards of approximately $178 million for federal income tax purposes, and $148 million for state income tax purposes, and approximately $6.4 million of federal research and development tax credits, after applying limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Cybersecurity partners to the Company, including consultants and other third-party service providers, are a key part of Orchestra’s cybersecurity risk management strategy and infrastructure and provide services including maintenance of an IT assets inventory, periodic vulnerability testing, identity access management controls, including restricted access of privileged accounts, physical security measures at Company facilities, information protection/detection systems including 127 Table of Contents ​ maintenance of firewalls and anti-malware tools, network and traffic monitoring and automated alerting, ongoing cybersecurity user awareness training, remote monitoring and management, capacity management, industry-standard encryption protocols, formalized processes over asset and data destruction, formalized change management processes, data backups management, infrastructure maintenance, incident response, cybersecurity strategy, and cyber risk advisory, and assessment.
Cybersecurity partners to the Company, including consultants and other third-party service providers , are a key part of Orchestra’s cybersecurity risk management strategy and infrastructure and provide services including maintenance of an IT assets inventory, periodic vulnerability testing, identity access management controls, including restricted access of privileged accounts, physical security measures at Company facilities, information protection/detection systems including maintenance of firewalls and anti-malware tools, network and traffic monitoring and automated alerting, ongoing cybersecurity user awareness training, remote monitoring and management, capacity management, industry-standard encryption protocols, formalized processes over asset and 119 Table of Contents ​ data destruction, formalized change management processes, data backups management, infrastructure maintenance, incident response, cybersecurity strategy, and cyber risk advisory, and assessment.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties Our headquarters are located at 150 Union Square Drive New Hope, Pennsylvania 18938, where we lease approximately 8,052 rentable square feet of office and laboratory space under a lease that terminates on September 30, 128 Table of Contents ​ 2024.
Item 2. Properties Our headquarters are located at 150 Union Square Drive New Hope, Pennsylvania 18938, where we lease 8,052 rentable square feet of office and laboratory space under a lease that terminates on September 30, 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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We are not currently a party to any material legal proceedings and are not aware of any pending or threatened legal proceeding against us that we believe would have a material adverse effect on our business, operating results or financial condition.
We are not currently a party to any material legal proceedings and are not aware of any pending or threatened legal proceeding against us that we believe would have a material adverse effect on our business, operating results or financial condition. 120 Table of Contents ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Prior to the consummation of the Business Combination, HSAC2’s ordinary shares were listed on the Nasdaq Capital Market under the symbol “HSAQ.” Holders As of March 22, 2024, there were 595 holders of record of our common stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares through nominee names.
Prior to the consummation of the Business Combination, HSAC2’s ordinary shares were listed on the Nasdaq Capital Market under the symbol “HSAQ.” Holders As of March 27, 2025, there were 683 holders of record of our common stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares through nominee names.
Securities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference. ​ Recent Sales of Unregistered Securities The following sets forth information as to all of equity securities sold during the year ended December 31, 2023 which were not registered under the Securities Act: Warrants Issued to Avenue 129 Table of Contents ​ In June 2022, Legacy Orchestra entered into a loan and security agreement (the “2022 Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P.
Securities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference. ​ Recent Sales of Unregistered Securities Not applicable. ​
Removed
(“Avenue I”) and Avenue Venture Opportunities Fund II, L.P. (“Avenue II,” and, collectively with Avenue I, “Avenue”). On October 6, 2023, the 2022 Loan and Security Agreement was repaid in full and terminated.
Removed
In connection with the repayment and termination of the 2022 Loan and Security Agreement, on October 6, 2023, the Company issued two warrants to purchase an aggregate of 27,707 shares of common stock to Avenue at an exercise price of $7.67 per share.
Removed
The warrants were issued in lieu of a cash payment of $212,500 due with respect to certain fees under the 2022 Loan and Security Agreement. The Company issued these securities in a transaction not involving an underwriter and not requiring registration under Section 5 of the Securities Act in reliance on the exemption afforded by Section 4(a)(2) thereof.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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In future periods, partnership revenues may also include revenues related to the Exclusive License and Collaboration Agreement, dated as of September 30, 2022, by and among, Legacy Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”), discussed in Note 5, Medtronic Agreement , to the Consolidated Financial Statements.
In future periods, partnership revenues may also include revenues related to the Exclusive License and Collaboration Agreement, dated as of September 30, 2022, by and among, Legacy Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”), discussed in Note 5 to the Consolidated Financial Statements.
Treasury notes with maturities approximately equal to the stock-based awards’ expected term. ● Expected Dividend Yield — The expected dividend yield is zero as neither the Company nor Legacy Orchestra has paid, and we do not anticipate paying, any dividends on the Company Common Stock in the foreseeable future. ● Common Stock Valuation — Prior to the Business Combination, given the absence of a public trading market for Legacy Orchestra’s common stock, Legacy Orchestra’s board of directors considered numerous subjective and objective factors to determine the best estimate of fair value of Legacy Orchestra’s common stock underlying the stock options granted to its employees and non-employees.
Treasury notes with maturities approximately equal to the stock-based awards’ expected term. ● Expected Dividend Yield — The expected dividend yield is zero as neither we nor Legacy Orchestra has paid, and we do not anticipate paying, any dividends on the Company Common Stock in the foreseeable future. ● Common Stock Valuation — Prior to the Business Combination, given the absence of a public trading market for Legacy Orchestra’s common stock, Legacy Orchestra’s board of directors considered numerous subjective and objective factors to determine the best estimate of fair value of Legacy Orchestra’s common stock underlying the stock options granted to its employees and non-employees.
We have determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the FDA for the ISR indication represent a combined performance obligation that is satisfied over time, which is currently estimated to be completed in 2029, and that the appropriate method of measuring progress for purposes of recognizing revenues relates to a proportional performance model that measures the proportional performance based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the performance obligation.
We have determined that intellectual property licensed to Terumo and the research and development services to be provided to support the premarket approval by the FDA for the ISR indication represent a combined performance obligation that is satisfied over time, which is currently estimated to be completed in 2029, and that the appropriate method of measuring progress for purposes of recognizing revenues relates to a proportional performance model that measures the proportional performance based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the performance obligation.
The value of our common stock may fluctuate and may not exceed the exercise price of the warrants at any given time. As of the date of this Annual Report on Form 10-K, a significant portion of our warrants are “out of the money,” meaning the exercise price is higher than the market price of our 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 Annual Report on Form 10-K, 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.
This may make comparison of our 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.
This may make comparison of our 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 fair value of Legacy Orchestra’s common stock was determined based upon a variety of factors, including valuations of Legacy Orchestra’s common stock performed with the assistance of independent third-party valuation specialists; Legacy Orchestra’s stage of development and business strategy, including the status of research and development efforts of its product candidates, and the material risks related to its business and industry; Legacy Orchestra’s business conditions and projections; Legacy Orchestra’s results of operations and financial position, including its levels of available capital resources; the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies; the lack of marketability of Legacy Orchestra’s common stock as a private company; the prices of Legacy Orchestra’s convertible preferred stock sold to investors in arm’s length transactions and the rights, preferences and privileges of its convertible preferred stock relative to those of its common stock; the likelihood of achieving a liquidity event for the holders of Legacy Orchestra’s common stock, such as an initial public offering or a sale of Legacy Orchestra given prevailing market conditions; trends and developments in its industry; the hiring of key personnel and the experience of management; and external market conditions affecting the life sciences and biotechnology industry sectors.
The fair value of Legacy Orchestra’s common stock was determined based upon a variety of factors, including valuations of Legacy Orchestra’s common stock performed with the assistance of independent third-party valuation specialists; Legacy Orchestra’s stage of development and business strategy, including the status of research and development efforts of its product candidates, and the material risks related to its business and industry; Legacy Orchestra’s business conditions and projections; Legacy Orchestra’s results of operations and financial position, including its levels of available capital resources; the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies; the 136 Table of Contents ​ lack of marketability of Legacy Orchestra’s common stock as a private company; the prices of Legacy Orchestra’s convertible preferred stock sold to investors in arm’s length transactions and the rights, preferences and privileges of its convertible preferred stock relative to those of its common stock; the likelihood of achieving a liquidity event for the holders of Legacy Orchestra’s common stock, such as an initial public offering or a sale of Legacy Orchestra given prevailing market conditions; trends and developments in its industry; the hiring of key personnel and the experience of management; and external market conditions affecting the life sciences and biotechnology industry sectors.
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 Orchestra and the Virtue SAB program.
Recent Developments 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 Orchestra and the Virtue SAB program.
We evaluate the measure of progress at each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. In the year ended December 31, 2023, we updated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation.
We evaluate the measure of progress at each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. In the year ended December 31, 2024, we updated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation.
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, 133 Table of Contents ​ 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 $25 million in time-based milestone payments pursuant to the Terumo Agreement.
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.
Emerging Growth Company and Smaller Reporting Company Status We are 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”).
Emerging Growth Company and Smaller Reporting Company Status We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
This discrepancy in purchase prices may have an impact on the market perception of our common stock’s value and could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock.
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.
These payments are not included in the above table of contractual obligations and commitments. 141 Table of Contents ​ Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements in conformity with U.S.
These payments are not included in the above table of contractual obligations and commitments. Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements in conformity with U.S.
We estimate the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the Terumo Agreement. The consideration includes both fixed consideration and variable consideration.
We estimate the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services pursuant to the Terumo Agreement. The consideration includes both fixed consideration and variable consideration.
For additional information on the Business Combination and the Exchange Ratio, see Note 3 to the Consolidated Financial Statements. Overview We are a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies.
For additional information on the Business Combination and the Exchange Ratio, see Note 3 to the Consolidated Financial Statements – “Business Combination and Recapitalization.” Overview We are a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies.
Significant changes to the key assumptions underlying the factors used could result in different fair values of Legacy Orchestra’s 144 Table of Contents ​ common stock at each valuation date. In determining the exercise prices for options granted and fair value of restricted stock, we have considered the fair value of the common stock as of the grant date.
Significant changes to the key assumptions underlying the factors used could result in different fair values of Legacy Orchestra’s common stock at each valuation date. In determining the exercise prices for options granted and fair value of restricted stock, we have considered the fair value of the common stock as of the grant date.
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, 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 candidate, in 2018.
Of these milestone payments, $35 million relate to achieving certain milestones by specified target achievement dates. As of the date of this Annual Report on Form 10-K, we have already passed the target achievement dates for two $5 million milestone payments, in each case, without achieving the related milestones.
Of these milestone payments, $35 million relate to achieving certain milestones by specified target achievement dates. As of the date of this Annual Report on Form 10-K, the target achievement dates for three $5 million milestone payments have already passed, in each case, without achieving the related milestones.
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 the Terumo Agreement, borrowings under debt arrangements and, to a lesser extent, from FreeHold product revenue.
We have funded our operations primarily through the issuance of convertible preferred stock and 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.
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 the Terumo Agreement, borrowings under debt arrangements and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”).
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”).
In addition, the exercise price of our warrants, in certain circumstances, may be higher than the prevailing market price of our common stock and the cash proceeds to us associated with the exercise of our warrants are contingent upon our stock price.
Exercise of Warrants 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.
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 December 31, 2023, there have been no amounts recognized as revenue under the Medtronic Agreement.
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 transact ions in the Medtronic Agreement should be accounted for under ASC 606. Through December 31, 2024, there have been no amounts recognized as revenue under the Medtronic Agreement.
Our non-cash charges primarily consisted of a loss on fair value adjustment of warrant liability of $294,000 and stock-based compensation of $7.6 million, offset by $3.8 million related to accretion and interest 140 Table of Contents ​ of marketable securities.
Our non-cash charges primarily consisted of stock-based compensation of $7.6 million and a loss on fair value adjustment of warrant liability of $294,000, partially offset by $3.8 million related to accretion and interest of marketable securities.
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.
The net interest income in the 2024 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 2023 period consisted primarily of interest earned from marketable securities, partially offset by monthly interest expense incurred resulting from the 2022 Loan and Security Agreement.
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 our common stock in connection with the Business Combination.
Registration Statement 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.
Our revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors and partnership revenues under the Terumo Agreement related to the development and commercialization of Virtue SAB.
Our revenues are currently comprised of partnership revenues under the Terumo Agreement related to the development and commercialization of Virtue SAB, and product revenue from the sale of FreeHold’s intracorporeal organ retractors. Partnership Revenues To date, our partnership revenues have related to the Terumo Agreement described below.
We have recognized $12.6 million in cumulative partnership revenues from 2019 through December 31, 2023. There were no other proceeds received pursuant to the Terumo Agreement from 2019 through December 31, 2023.
We have recognized $14.6 million in cumulative partnership revenues from 2019 through December 31, 2024. There were no other proceeds received pursuant to the Terumo Agreement from 2019 through December 31, 2024.
Closing of Business Combination 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 Merger Agreement.
Closing of Business Combination 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.
The amounts recognized for the year ended December 31, 2023 relate to the change in fair value in our common stock holdings of Motus GI.
The amounts recognized for the years ended December 31, 2024 and 2023 relate to the change in fair value in our common stock holdings of Motus GI.
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. For the year ended December 31, 2023 and 2022, the expenses incurred related to the Terumo Agreement were approximately $15.4 million and $14.3 million, respectively.
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. For the years ended December 31, 2024 and 2023, the expenses incurred related to the Terumo Agreement were approximately $12.5 million and $15.4 million, respectively.
In the year ended December 31, 2022, the impact of the changes in estimates resulted in reduction of partnership revenues of $1.0 million, which resulted in a $0.07 effect on net loss per share, basic and diluted. We receive payments from Terumo based on billing schedules established in the contract.
In the year ended December 31, 2023, the impact of the changes in estimates resulted in reduction of partnership revenues of $1.7 million, which resulted in a $0.05 effect on net loss per share, basic and diluted. 135 Table of Contents ​ We receive payments from Terumo based on billing schedules established in the contract.
Product Revenue Product revenue decreased by $17,000, or approximately 3%, to $654,000 in the year ended December 31, 2023 from $671,000 for the year ended December 31, 2022. 137 Table of Contents ​ Product revenue consisted of the sale of FreeHold Duo and Trio intracorporeal organ retractors and revenue is recognized when product is shipped to customers.
Product Revenue Product revenue decreased by $21,000, or approximately 3%, to $633,000 in the year ended December 31, 2024 from $654,000 for the year ended December 31, 2023. 128 Table of Contents ​ Product revenue consisted of the sale of FreeHold Duo and Trio intracorporeal organ retractors and revenue is recognized when product is shipped to customers.
Product Revenue Product revenues related to sales of FreeHold’s intracorporeal organ retractors and such revenues are recognized at a point-in-time upon the shipment of the product to the customer given payment terms are typically 30 days. FreeHold products are currently only sold in the United States.
Product Revenue Product revenues related to sales of FreeHold’s intracorporeal organ retractors and such revenues are recognized at a point-in-time upon the shipment of the product to the customer given payment terms are typically 30 days.
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.
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.
The fair value of stock options is measured using the Black-Scholes option-pricing model and the fair value of restricted stock is measured based on the fair value of the Company Common Stock underlying the award as of the grant date, described further below.
Stock-Based Compensation We account for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model and the fair value of restricted stock is measured based on the fair value of the Company Common Stock underlying the award as of the grant date, described further below.
Upon closing of the Business Combination, all liability classified warrants of Legacy Orchestra became equity classified on that date as they are now considered “fixed for fixed.” Loss on Debt Extinguishment The loss on debt extinguishment represents charges incurred as a result of the payoff of each of the 2019 Loan and Security Agreement and the 2022 Loan and Security Agreements. ​ (Loss) Gain on Fair Value of Strategic Investments The (loss) gain on fair value of strategic investments represents a change in the fair value of our investment in Motus GI Holdings, Inc.
Upon closing of the Business Combination, all liability classified warrants of Legacy Orchestra became equity classified on that date as they are now considered “fixed for fixed.” Loss on Debt Extinguishment The loss on debt extinguishment represents charges incurred as a result of the payoff of each of the 2019 Loan and Security Agreement and the 2022 Loan and Security Agreements. ​ Loss on Fair Value of Strategic Investments 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.
Our net losses were $49.1 million and $33.6 million for the years ended December 31, 2023 and 2022, respectively. We expect to continue to incur significant losses for the foreseeable future. As of December 31, 2023, we had an accumulated deficit of $248.9 million.
Our net losses were $61.0 million and $49.1 million for the years ended December 31, 2024 and 2023, respectively. We expect to continue to incur significant losses for the foreseeable future. As of December 31, 2024, we had an accumulated deficit of $309.9 million.
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, Recognition and Measurement of Financial Assets and Liabilities .
The shares held of Motus GI 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.
Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. 142 Table of Contents ​ Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract.
Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract.
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.
(“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 total research and development expenses summarized above include $15.2 million for the year ended December 31, 2023 and $13.9 million for the year ended December 31, 2022 related to the Terumo Agreement. The increase of $1.3 million is due to increased expense activity related to the Terumo Agreement during the 2023 period.
The total research and development expenses summarized above include $12.3 million for the year ended December 31, 2024 and $15.2 million for the year ended December 31, 2023 related to the Terumo Agreement. The decrease of $2.9 million is due to decreased expense activity related to the Terumo Agreement during the 2024 period.
We have raised a cumulative $166.8 million in gross proceeds through the issuance of convertible preferred stock, $70.0 million in gross proceeds from the Business Combination, and have received $30.0 million from the Terumo Agreement through December 31, 2023. We have incurred net losses each year since inception.
Through December 31, 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.
Following the Business Combination, our board of directors determines the fair value of the Company Common Stock based on the closing price of the Company Common Stock on the date of grant. During the years ended December 31, 2023 and 2022, stock-based compensation was $7.6 million and $3.4 million, respectively.
Following the Business Combination, our board of directors determines the fair value of the Company Common Stock based on the closing price of the Company Common Stock on or around the date of grant. 137 Table of Contents ​ During the years ended December 31, 2024 and 2023, stock-based compensation was $10.6 million and $7.6 million, respectively.
We had $30.6 million in cash and cash equivalents at December 31, 2023, which consisted primarily of bank deposits and money market funds. We also had $57.0 million of short-term marketable securities at December 31, 2023, which consisted primarily of our investments in corporate and government debt securities.
We had $22.3 million in cash and cash equivalents at December 31, 2024, which consisted primarily of bank deposits and money market funds. We also had $44.6 million of short-term marketable securities at December 31, 2024, which consisted primarily of our investments in corporate debt securities.
The impact of the changes in estimates resulted in a reduction in partnership revenues of $1.7 million, which resulted in a $0.05 effect on net loss per share, basic and diluted.
The impact of the changes in estimates resulted in a reduction in partnership revenues of $728,000, which resulted in a $0.02 effect on net loss per share, basic and diluted.
With regard to our BackBeat CNT 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.
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.
In June 2022, Legacy Orchestra, BackBeat Medical, LLC and Medtronic entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of HTN in patients indicated for a cardiac pacemaker. We determined that the arrangement is a collaboration within the scope of ASC 808.
In June 2022, Legacy Orchestra, BackBeat Medical, LLC and Medtronic 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 determined that the arrangement is a collaboration within the scope of ASC 808.
Prior to the Business Combination, valuation analyses were conducted utilizing a probability weighted expected return method, in which the probability of a public company scenario was considered via either an initial public offering or special purpose acquisition company transaction. Subsequent to the Business Combination, based on the closing price of the Common Stock on the date of grant.
Prior to the Business Combination, valuation analyses were conducted utilizing a probability weighted expected return method, in which the probability of a public company scenario was considered via either an initial public offering or special purpose acquisition company transaction. Subsequent to the Business Combination, fair value was determined by market prices of the Company Common Stock.
Net Cash Flows from Financing Activities Net cash provided by financing activities of $46.2 million for the year ended December 31, 2023 was primarily attributable to net proceeds from the Business Combination totaling $56.8 million offset by the principle repayment of $10.8 million, inclusive of debt extinguishment costs, from the termination of the 2022 Loan and Security Agreement with Avenue.
For additional information, see Note 15 to the Consolidated Financial Statements – “Debt Financing.” Net cash provided by financing activities of $46.2 million for the year ended December 31, 2023 was primarily attributable to net proceeds from the Business Combination totaling $56.8 million partially offset by the principal repayment of $10.8 million, inclusive of debt extinguishment costs, from the termination of the 2022 Loan and Security Agreement with Avenue.
In June 2022, Legacy Orchestra entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of HTN in patients indicated for a cardiac pacemaker. We have determined that the arrangement is a collaboration within the scope of ASC 808, Collaborative Arrangements (“ASC 808”).
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”).
(Loss) Gain on Fair Value of Strategic Investments The loss on fair value of strategic investments was $18,000 for the year ended December 31, 2023 as compared to a gain of $1.0 million for the year ended December 31, 2022.
Loss on Fair Value of Strategic Investments The loss on fair value of strategic investments was $68,000 for the year ended December 31, 2024 as compared to a loss of $18,000 for the year ended December 31, 2023.
On September 12, 2023, Motus GI and the Company entered into an agreement, pursuant to which, royalty certificates previously issued to the Company and other holders were amended to terminate the rights of royalty certificate holders to receive royalties in exchange for shares of Motus GI common stock.
During the year ended December 31, 2023, we and Motus GI entered into an agreement, pursuant to which royalty certificates previously issued to us and other holders were amended to terminate the rights of royalty certificate holders to receive royalties in exchange for shares of Motus GI common stock.
The estimated total costs associated with the Terumo Agreement through completion increased by approximately 14% as of December 31, 2023 as compared to the estimates as of December 31, 2022, and increased by approximately 10% as of December 31, 2022, as compared to the estimates as of December 31, 2021.
The estimated total costs associated with the Terumo Agreement through completion increased by approximately 5.0% as of December 31, 2024 as compared to the estimates as of December 31, 2023, and increased by approximately 13.6% as of December 31, 2023, as compared to the estimates as of December 31, 2022.
Additionally, a significant portion of the shares of our common stock being registered for resale were originally purchased by selling securityholders pursuant to investments in Legacy Orchestra at prices considerably below the current market price of our common stock.
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.
We have raised a cumulative $166.8 million in gross proceeds through the issuance of convertible preferred stock, $70.0 million in gross proceeds from the Business Combination, and have received $30.0 million under the Terumo Agreement through December 31, 2023.
Through December 31, 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.
As a result, we have neither included nor intend to include any potential cash proceeds from the exercise of our warrants in our short-term or long-term liquidity projections.
As a result, we have neither included nor intend to include any potential cash proceeds from the exercise of our warrants in our short-term or long-term liquidity projections. We will continue to evaluate the probability of warrant exercise over the life of our warrants and the merit of including potential cash proceeds from the exercise in our liquidity projections.
Net cash used in operating activities for the year ended December 31, 2022 was $29.3 million and primarily consisted of our net loss of $33.6 million, and changes in net operating assets and liabilities of $450,000, which was offset by non-cash charges of $4.7 million.
Net cash used in operating activities for the year ended December 31, 2023 was $46.1 million and primarily consisted of our net loss of $49.1 million and changes in net operating assets and liabilities of $3.3 million, which was partially offset by non-cash charges of $6.3 million.
The net change in operating assets and liabilities was primarily due to a decrease in deferred revenue of $2.1 million, a decrease in operating lease liabilities of $693,000, and an increase in prepaid expenses and other assets of $781,000.
The net change in operating assets and liabilities was primarily due to an increase in accounts payable, accrued expenses, and other liabilities of $3.0 million, partially offset by an increase in prepaid expenses and other assets of $1.1 million, a decrease in deferred revenue of $2.0 million, and a decrease in operating lease liabilities of $652,000.
In June 2022, Legacy Orchestra entered into a loan and security agreement (the “2022 Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P. (“Avenue I”) and Avenue Venture Opportunities Fund II, L.P. (“Avenue II,” and, collectively with Avenue I, “Avenue”).
Refer to Note 15 to our Consolidated Financial Statements. 126 Table of Contents ​ In June 2022, Legacy Orchestra entered into a loan and security agreement (the “2022 Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P. (“Avenue I”) and Avenue Venture Opportunities Fund II, L.P. (“Avenue II,” and, collectively with Avenue I, “Avenue”).
In addition, we concluded 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.
In addition, we concluded 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 December 31, 2024, there have been no amounts recognized as revenue under the Medtronic Agreement.
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 may elect to initiate enrollment regardless of the status or outcome of our negotiations with Terumo. 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.
The increase was primarily due to an increased stock-based compensation of $1.9 million, an increase of $2.0 million of accounting, finance, and legal expenses, and an increase of $2.3 million in investor relations and public relations expenses incurred in connection with the overall growth of the business and the costs of preparing for and operating as a public company.
The increase primarily resulted from an increase in stock-based compensation of $2.1 million, an increase of $1.2 million of accounting, finance, legal, investor relations and public relations expenses incurred in connection with the overall growth of the business and operating as a public company, and an increase in personnel-related expenses of $346,000 due to increased headcount and associated expenses.
Cost of Product Revenue Cost of product revenue decreased by $25,000, or approximately 12%, to $186,000 in the year ended December 31, 2023 from $211,000 for the year ended December 31, 2022. The decrease was primarily due to decreased production costs of FreeHold Duo and Trio intracorporeal organ retractors.
Cost of Product Revenue Cost of product revenue increased by $18,000, or approximately 10%, to $204,000 in the year ended December 31, 2024 from $186,000 for the year ended December 31, 2023. The increase was primarily due to higher production costs per unit of FreeHold Duo and Trio intracorporeal organ retractors.
Securities and Exchange Commission (“SEC”) compliance and investor relations. We expect quarterly selling, general and administrative expenses, excluding stock-based compensation expense, to continue to be elevated reflective of being a public company. Interest Income, Net Interest income reflects the income generated from marketable securities during the year. Interest expense is attributable to loan interest.
Securities and Exchange Commission (“SEC”) compliance and investor relations. We expect annual selling, general and administrative expenses to continue to increase as we expand our operations as a public company. Interest Income, Net Interest income reflects the income generated from marketable securities during the year. Interest expense is attributable to loan interest.
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.
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 – “Business Combination and Recapitalization.” Reverse Recapitalization The Business Combination is accounted for as a reverse recapitalization (the “Reverse Recapitalization”) in accordance with accounting principles generally accepted in the United States of America (“U.S.
We are required to estimate our prepaid and accrued research and development costs at each reporting date. These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with our service providers.
These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with our service providers.
Research and Development Expenses The following table summarizes our research and development expenses for the year ended December 31, 2023 and 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Personnel and consulting costs ​ $ 16,886 ​ $ 9,442 Non-clinical development costs ​ ​ 12,919 ​ 10,570 Clinical development costs ​ 4,017 ​ 1,933 Total research and development expenses ​ $ 33,822 ​ $ 21,945 ​ Research and development expenses increased by $11.9 million, or approximately 54%, to $33.8 million for the year ended December 31, 2023 from $21.9 million for the year ended December 31, 2022.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Personnel and consulting costs ​ $ 19,278 ​ $ 16,886 Non-clinical development costs ​ ​ 15,447 ​ 12,919 Clinical development costs ​ 8,079 ​ 4,017 Total research and development expenses ​ $ 42,804 ​ $ 33,822 ​ Research and development expenses increased by $9.0 million, or approximately 27%, to $42.8 million for the year ended December 31, 2024 from $33.8 million for the year ended December 31, 2023.
Legacy Orchestra entered into the Terumo Agreement as further described in Note 4 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 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.
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 on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”).
Additionally, the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”).
Revenue Recognition We recognize revenue under the core principle according to ASC 606 to depict the transfer of control to our customers in an amount reflecting the consideration we expect to be entitled to.
For further information, see Note 2 to the Consolidated Financial Statements – “Summary of Significant Accounting Policies.” Revenue Recognition We recognize revenue under the core principle according to ASC 606 to depict the transfer of control to our customers in an amount reflecting the consideration we expect to be entitled to.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $6.2 million, or approximately 44%, to $20.2 million for the year ended December 31, 2023, from $14.0 million of expense for the year ended December 31, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $3.7 million, or approximately 18%, to $23.9 million for the year ended December 31, 2024, from $20.3 million of expense for the year ended December 31, 2023.
Cash Flows The following table summarizes our cash flow data for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Net cash used in operating activities ​ $ (46,127) ​ $ (29,289) Net cash provided by (used in) investing activities ​ 10,687 ​ (64,122) Net cash provided by financing activities ​ 46,215 ​ 103,257 Net increase in cash and cash equivalents ​ $ 10,775 ​ $ 9,846 ​ Comparison of the Years Ended December 31, 2023 and 2022 Net Cash Flows from Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $46.1 million and primarily consisted of our net loss of $49.1 million and changes in net operating assets and liabilities of $3.3 million, which was offset by non-cash charges of $6.3 million.
Cash Flows The following table summarizes our cash flow data for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Net cash used in operating activities ​ $ (50,558) ​ $ (46,127) Net cash provided by investing activities ​ 13,089 ​ 10,687 Net cash provided by financing activities ​ 29,171 ​ 46,215 Net (decrease) increase in cash and cash equivalents ​ $ (8,298) ​ $ 10,775 ​ 132 Table of Contents ​ Comparison of the Years Ended December 31, 2024 and 2023 Net Cash Flows from Operating Activities Net cash used in operating activities for the year ended December 31, 2024 was $50.6 million and primarily consisted of our net loss of $61.0 million, partially offset by non-cash charges of $11.2 million and changes in net operating assets and liabilities of $765,000.
This is primarily due to an increase in support of ongoing work to advance BackBeat CNT’s currently enrolling pivotal study and Virtue SAB’s planned pivotal study and included an increase in personnel related expenses of $5.1 million due to increased headcount and associated expenses, along with increased stock-based compensation of $2.3 million, an increase of $2.4 million in non-clinical development costs, and an increase of $2.1 million in research and development program costs, supplies, and testing.
The increase included an increase of $4.1 million in clinical development costs, an increase of $2.5 million in non-clinical development costs associated with research and development program costs, supplies, and testing, and an increase in personnel-related expenses of $1.5 million due to increased headcount and associated expenses, and an increase in stock-based compensation of $902,000.
The losses were due to recognition of unamortized debt discount as well as early termination payments related to the early termination and repayment of the 2022 Loan and Security Agreement in October 2023 and for the 2019 Loan and Security Agreement in June 2022, respectively.
Loss on Debt Extinguishment The loss on debt extinguishment was $1.2 million for the year ended December 31, 2023, which was due to recognition of unamortized debt discount as well as early termination payments related to the early termination and repayment of the 2022 Loan and Security Agreement in October 2023.
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.
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. The promised goods or services in the Terumo Agreement include (i) license rights to our intellectual property and (ii) research and development services.
Cost of Product Revenue and Gross Margin Cost of product revenue consists primarily of costs of finished goods components for use in FreeHold’s products and assembled, warehoused and inventoried by a third-party vendor. We expect cost of finished goods product revenue to increase in absolute terms as our revenue grows.
FreeHold products are currently only sold in the United States. 125 Table of Contents ​ Cost of Product Revenue and Gross Margin Cost of product revenue consists primarily of costs of finished goods components for use in FreeHold’s products and assembled, warehoused and inventoried by a third-party vendor.
Our gross margin has been and will continue to be affected by a variety of factors, including finished goods manufactured component parts and the cost to assemble and warehouse the FreeHold product finished goods inventory. 134 Table of Contents ​ Research and Development Expenses Research and development expenses consist of applicable personnel, consulting, materials and clinical study expenses.
We expect the cost of finished goods product revenue to increase in absolute terms as our revenue grows. Our gross margin has been, and will continue to be, affected by a variety of factors, including finished goods manufactured component parts, as well as the cost to assemble and warehouse the FreeHold product finished goods inventory.
Interest Income, Net Interest income, net, increased to $3.8 million of income for the year ended December 31, 2023 compared to $50,000 of income for the year ended December 31, 2022.
Interest Income, Net Interest income, net, decreased by $493,000, or approximately 13%, to $3.4 million of income for the year ended December 31, 2024 from $3.8 million of income for the year ended December 31, 2023.
The net change in operating assets and liabilities were primarily due to a decrease in deferred revenue of $2.9 million, an increase in prepaid expenses and other assets of $439,000, and an increase in inventory of $208,000, offset by an increase in accounts payable, accrued expenses and other liabilities of $3.4 million and various other immaterial changes. ​ Net Cash Flows from Investing Activities Net cash provided by (used in) investing activities for the year ended December 31, 2023 was $10.7 million, which primarily consisted of the purchase of $142.0 million of marketable securities offset by the sale of $152.8 million of marketable securities.
The net change in operating assets and liabilities was primarily due to a decrease in deferred revenue of $2.1 million, a decrease in operating lease liabilities of $693,000, and an increase in prepaid expenses and other assets of $781,000. ​ Net Cash Flows from Investing Activities Net cash provided by investing activities for the year ended December 31, 2024 was $13.1 million, which primarily consisted of the sale of $86.6 million of marketable securities, partially offset by the purchase of $72.6 million of marketable securities, and $600,000 paid for an asset acquisition, net of cash acquired.
As of December 31, 2023, we had approximately $18.9 million of total unrecognized stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2 years. 145 Table of Contents ​ Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements.
Our business was formed in 2018 by assembling a pipeline of multiple late-stage clinical product candidates originally developed by our founding team. Our lead product candidate is BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”) for the treatment of hypertension (“HTN”), the leading risk factor for death worldwide.
Our business was formed in 2018 by assembling a pipeline of multiple late-stage clinical product candidates originally developed by our founding team.

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