Full Press Release Details
to Consolidated Financial Statements
Financial Statements for Orchestra Biomed, Inc. (accounting predecessor
to Orchestra Biomed Holdings, Inc):
| Years Ended December 31, 2021 and 2022 | ||
| Report of Independent Registered Public Accounting Firm | 1 | |
| Consolidated Balance Sheets | 2 | |
| Consolidated Statements of Operations and Comprehensive Loss | 4 | |
| Consolidated Statements of Stockholders' Deficit | 5 | |
| Consolidated Statements of Cash Flows | 6 | |
| Notes to Consolidated Financial Statements | 8 |
Report of Independent Registered Public Accounting
To the Stockholders and the Board of Directors
of Orchestra BioMed, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Orchestra BioMed, Inc. (the Company) as of December 31, 2021 and 2022 the related consolidated statements of operations
and comprehensive loss, stockholders' deficit and cash flows for the years then ended, and the related notes (collectively
referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December 31, 2021 and 2022, and the results of its operations and its
cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2020.
Philadelphia, Pennsylvania
ORCHESTRA BIOMED, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2021 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 9,938 | $ | 19,784 | ||||
| Marketable securities | - | 63,915 | ||||||
| Strategic investments, current portion | 958 | 86 | ||||||
| Accounts receivable, net | 121 | 96 | ||||||
| Inventory | 68 | 276 | ||||||
| Prepaid expenses and other current assets | 234 | 533 | ||||||
| Total current assets | 11,319 | 84,690 | ||||||
| Property and equipment, net | 1,120 | 1,489 | ||||||
| Right-of-use assets | - | 2,187 | ||||||
| Strategic investments, less current portion | 398 | 2,495 | ||||||
| Deposits and other assets | 690 | 4,711 | ||||||
| TOTAL ASSETS | $ | 13,527 | $ | 95,572 | ||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 2,029 | $ | 3,968 | ||||
| Accrued expenses and other liabilities | 2,034 | 5,376 | ||||||
| Operating lease liability - current | - | 697 | ||||||
| Warrant liability | 635 | 2,089 | ||||||
| Deferred revenue, current portion | 5,542 | 6,436 | ||||||
| Loan payable, current portion | 2,000 | - | ||||||
| Total current liabilities | 12,240 | 18,566 | ||||||
| Deferred revenue, less current portion | 16,859 | 13,103 | ||||||
| Loan payable, less current portion | 3,673 | 9,490 | ||||||
| Operating lease liability, less current portion | - | 1,683 | ||||||
| Other long-term liabilities | 535 | 196 | ||||||
| TOTAL LIABILITIES | 33,307 | 43,038 |
The accompanying notes are an integral part of
these consolidated financial statements
ORCHESTRA BIOMED, INC.
Consolidated Balance Sheets - (Continued)
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2021 | 2022 | |||||||
| REDEEMABLE PREFERRED STOCK | ||||||||
| Series A Preferred Stock, $0.0001 par value, 20,000,000 shares authorized of which 5,346,570 are issued and outstanding at December 31, 2021 and 2022; aggregate liquidation preference of $53,466 at December 31, 2022 | 51,452 | 51,452 | ||||||
| Series D-1 Preferred Stock, $0.0001 par value, 6,100,000 shares authorized of which 0 are issued and outstanding at December 31, 2021 and 5,864,940 are issued and outstanding at December 31, 2022; aggregate liquidation preference of $27,272 at December 31, 2022 | - | 27,272 | ||||||
| Series D-2 Preferred Stock, $0.0001 par value, 25,000,000 shares authorized of which 0 are issued and outstanding at December 31, 2021 and 18,836,115 shares of Series D-2 are issued and outstanding at December 31, 2022; aggregate liquidation preference of $87,588 at December 31, 2022 | - | 87,199 | ||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Preferred Stock, $0.0001 par value, 75,000,000 shares authorized of which 3,364,992 shares of Series B are issued and outstanding at December 31, 2021 and 2022; 2,281,562 shares of Series B-1 are issued and outstanding at December 31, 2021 and 2022; and 1,082,852 and 0 shares of Series C are issued and outstanding at December 31, 2021 and 2022, respectively; aggregate liquidation preference of $67,873 at December 31, 2022 | - | - | ||||||
| Common Stock, $0.0001 par value, 100,000,000 shares authorized of which 2,185,297 and 2,522,214 are issued and outstanding at December 31, 2021 and 2022, respectively | - | - | ||||||
| Additional paid-in capital | 94,894 | 86,353 | ||||||
| Accumulated other comprehensive loss | - | (8 | ) | |||||
| Accumulated deficit | (166,126 | ) | (199,734 | ) | ||||
| TOTAL STOCKHOLDERS' DEFICIT | (71,232 | ) | (113,389 | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | $ | 13,527 | $ | 95,572 |
The accompanying notes are an integral part of
these consolidated financial statements.
ORCHESTRA BIOMED, INC.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
| Years Ended December 31, | ||||||||
| 2021 | 2022 | |||||||
| Revenue: | ||||||||
| Partnership revenue | $ | (1,475 | ) | $ | 2,862 | |||
| Product revenue | 693 | 671 | ||||||
| Total revenue | (782 | ) | 3,533 | |||||
| Expenses: | ||||||||
| Cost of product revenues | 199 | 211 | ||||||
| Research and development | 12,890 | 21,945 | ||||||
| Selling, general and administrative | 7,928 | 14,034 | ||||||
| Total expenses | 21,017 | 36,190 | ||||||
| Loss from operations | (21,799 | ) | (32,657 | ) | ||||
| Other income (expense): | ||||||||
| Interest (expense) income, net | (927 | ) | 50 | |||||
| Gain (loss) on fair value adjustment of warrant liability | 699 | (1,350 | ) | |||||
| Loss on debt extinguishment | - | (682 | ) | |||||
| (Loss) gain on fair value of strategic investments | (987 | ) | 1,031 | |||||
| Total other expense | (1,215 | ) | (951 | ) | ||||
| Net loss | $ | (23,014 | ) | $ | (33,608 | ) | ||
| Deemed distribution to preferred stockholders | - | (2,010 | ) | |||||
| Net loss attributable to common shareholders | $ | (23,014 | ) | $ | (35,618 | ) | ||
| Net loss per share attributable to common stockholders | ||||||||
| Basic and diluted | $ | (10.90 | ) | $ | (14.60 | ) | ||
| Weighted-average shares used in computing net loss per share, basic and diluted | 2,111,161 | 2,439,450 | ||||||
| Comprehensive loss | ||||||||
| Net loss | $ | (23,014 | ) | $ | (33,608 | ) | ||
| Unrealized gain (loss) on marketable securities | 2 | (8 | ) | |||||
| Comprehensive loss | $ | (23,012 | ) | $ | (33,616 | ) |
The accompanying notes are an integral part of
these consolidated financial statements.
ORCHESTRA BIOMED, INC.
Consolidated Statements of Stockholders' Deficit
(in thousands, except share and per share data)
| Preferred Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Series B | Series B-1 | Series C | Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | (Loss) | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||
| Balance - January 1, 2021 | 3,364,992 | $ | - | 2,281,562 | $ | - | 1,082,852 | $ | - | 2,056,497 | $ | - | $ | 94,572 | $ | (2 | ) | $ | (143,112 | ) | $ | (48,542 | ) | |||||||||||||||||||||||||
| Unrealized gain on marketable securities | - | - | - | - | - | - | - | - | - | 2 | - | 2 | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | 302 | - | - | 302 | ||||||||||||||||||||||||||||||||||||
| Restricted stock vesting | - | - | - | - | - | - | 119,800 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | 1,500 | - | 3 | - | - | 3 | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | - | - | - | - | 7,500 | - | 17 | - | - | 17 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (23,014 | ) | (23,014 | ) | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | 3,364,992 | $ | - | 2,281,562 | $ | - | 1,082,852 | $ | - | 2,185,297 | $ | - | $ | 94,894 | $ | - | $ | (166,126 | ) | $ | (71,232 | ) |
| Preferred Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Series B | Series B-1 | Series C | Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | (Loss) | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||
| Balance - January 1, 2022 | 3,364,992 | $ | - | 2,281,562 | $ | - | 1,082,852 | $ | - | 2,185,297 | $ | - | $ | 94,894 | $ | - | $ | (166,126 | ) | $ | (71,232 | ) | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities | - | - | - | - | - | - | - | - | - | (8 | ) | - | (8 | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | 3,375 | - | - | 3,375 | ||||||||||||||||||||||||||||||||||||
| Restricted stock vesting | - | - | - | - | - | - | 99,529 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | 59,888 | - | 121 | - | - | 121 | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | - | - | - | - | 157,500 | - | 79 | - | - | 79 | ||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to consulting agreement | - | - | - | - | - | - | 20,000 | - | 38 | - | - | 38 | ||||||||||||||||||||||||||||||||||||
| Deemed distribution to Series D-1 preferred stockholders due to modification | - | - | - | - | - | - | - | - | (2,010 | ) | - | - | (2,010 | ) | ||||||||||||||||||||||||||||||||||
| Shares converted to Series D-2 as a result of follow-on offering (Note 8) | - | - | - | - | (1,082,852 | ) | - | - | - | (10,828 | ) | - | - | (10,828 | ) | |||||||||||||||||||||||||||||||||
| Issuance of warrants pursuant to debt financing | - | - | - | - | - | - | - | - | 178 | - | - | 178 | ||||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | - | - | - | 506 | - | - | 506 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (33,608 | ) | (33,608 | ) | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | 3,364,992 | $ | - | 2,281,562 | $ | - | - | $ | - | 2,522,214 | $ | - | $ | 86,353 | $ | (8 | ) | $ | (199,734 | ) | $ | (113,389 | ) |
The accompanying notes are an integral part of
these consolidated financial statements.
ORCHESTRA BIOMED, INC.
Consolidated Statements of Cash Flows
(in thousands, except share and per share data)
| Years Ended December 31, | ||||||||
| 2021 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (23,014 | ) | $ | (33,608 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 181 | 222 | ||||||
| Shares issued as compensation for consulting services | - | 38 | ||||||
| Stock-based compensation | 302 | 3,375 | ||||||
| Deferred rent | (33 | ) | - | |||||
| (Gain) loss on fair value adjustment of warrant liability | (699 | ) | 1,350 | |||||
| Loss (gain) on fair value of strategic investments | 987 | (1,031 | ) | |||||
| Loss on debt extinguishment | - | 682 | ||||||
| Non-cash lease expense | - | 571 | ||||||
| Accretion and interest related to marketable securities | - | (600 | ) | |||||
| Amortization of deferred financing fees | 217 | 163 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 47 | 25 | ||||||
| Inventory | 1 | (208 | ) | |||||
| Prepaid expenses and other assets | 29 | (439 | ) | |||||
| Accounts payable, accrued expenses and other liabilities | 1,078 | 3,352 | ||||||
| Operating lease liabilities - current and non-current | - | (319 | ) | |||||
| Deferred revenue | 1,475 | (2,862 | ) | |||||
| Net cash used in operating activities | (19,429 | ) | (29,289 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (274 | ) | (591 | ) | ||||
| Purchases of related party convertible notes | (213 | ) | - | |||||
| Purchases of marketable securities | - | (63,323 | ) | |||||
| Sales of marketable securities | 13,504 | - | ||||||
| Purchases of strategic investments | - | (208 | ) | |||||
| Net cash provided by (used in) investing activities | 13,017 | (64,122 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of debt financing, inclusive of debt extinguishment costs | (4,000 | ) | (6,446 | ) | ||||
| Proceeds from Avenue term loan | - | 10,000 | ||||||
| Proceeds from exercise of warrants | 4 | 79 | ||||||
| Warrant repurchases | - | (10 | ) | |||||
| Proceeds from exercise of stock options | 3 | 121 | ||||||
| Proceeds from Series D-1 Financing | - | 27,276 | ||||||
| Proceeds from Series D-2 Financing | - | 82,554 | ||||||
| Deferred financing, offering and merger costs | - | (10,317 | ) | |||||
| Net cash (used in) provided by financing activities | (3,993 | ) | 103,257 | |||||
| Net (decrease) increase in cash and cash equivalents | (10,405 | ) | 9,846 | |||||
| Cash and cash equivalents, beginning of the period | 20,343 | 9,938 | ||||||
| Cash and cash equivalents, end of the period | $ | 9,938 | $ | 19,784 |
The accompanying notes are an integral part of
these consolidated financial statements.
ORCHESTRA BIOMED, INC.
Consolidated Statements of Cash Flows - (Continued)
(in thousands, except share and per share data)
Supplemental Disclosures of Cash Flow Information
| Years Ended December 31, | ||||||||
| 2021 | 2022 | |||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | 389 | $ | 1,371 | ||||
| Non-cash financing activities: | ||||||||
| Deferred offering and merger costs in accounts payable and accrued expenses | 100 | 1,646 | ||||||
| Warrants issued pursuant to Series D-2 Preferred Stock | - | 620 | ||||||
| Warrants issued pursuant to debt financing | - | 178 | ||||||
| Conversion of Series C Preferred Stock to Series D-2 Preferred Stock | - | 10,828 |
The accompanying notes are an integral part of
these consolidated financial statements
ORCHESTRA BIOMED, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
and Basis of Presentation
Orchestra BioMed, Inc. ("Orchestra"
or the "Company") is a biomedical innovation company seeking to provide high-impact solutions for large unmet needs in procedure-based
medicine. The Company's partnership-enabled business model focuses on forging strategic collaborations with leading medical device
companies to drive successful global commercialization of products it develops. The Company's business model seeks to adapt the
strategic partnering tactics widely used by the biopharmaceutical industry to the medical device market. The Company's goal is to
accelerate and improve the likelihood of the Company's product candidates reaching patients and providers worldwide by sharing the
risks and rewards of developing and commercializing these product candidates with established companies. The Company's flagship
product candidates are Virtue Sirolimus AngioInfusion Balloon ("Virtue SAB") for the treatment of artery disease, the leading
cause of mortality worldwide, and BackBeat Cardiac Neuromodulation Therapy ("BackBeat CNT") for the treatment of hypertension,
a significant risk factor for death worldwide. The Company has additional product candidates in its pipeline and plans to thoughtfully
expand its product pipeline in the future through acquisitions, strategic collaborations, licensing and organic development.
Orchestra was incorporated
in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private
placements. In May 2018, Orchestra concurrently completed its formation mergers (the "Formation Mergers") with Caliber
Therapeutics, Inc. ("Caliber"), a Delaware corporation, BackBeat Medical, Inc. ("BackBeat"), a Delaware Corporation,
and FreeHold Surgical, Inc. ("FreeHold"), a Delaware corporation. Collectively, Orchestra, Caliber, BackBeat and FreeHold
are referred to herein as Orchestra, or the "Company."
Caliber was incorporated in
Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination
product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR
to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such
as a stent in the artery. In 2019, the Company entered into a distribution agreement with Terumo Medical Corporation ("Terumo")
for global development and commercialization of Virtue SAB (the "Terumo Agreement") (Note 3).
BackBeat was incorporated in
Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable