Orchestra BioMed (US:OBIO)2025-05-12 20:05PART I. FINANCIAL INFORMATION This section provides the company's financial statements, management's analysis, market risk disclosures, and internal controls - The company's management concluded that available capital may not be sufficient to fund operations for the next year, raising substantial doubt about its ability to continue as a going concern3031 Financial Statements The company reported an increased net loss of $18.8 million for Q1 2025, holding $49.8 million in cash and marketable securities, with a going concern disclosure Condensed Consolidated Balance Sheets This section presents the company's condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $18,348 | $22,261 | | Marketable securities | $31,536 | $44,551 | | Total current assets | $51,903 | $69,171 | | Total Assets | $59,051 | $76,173 | | Liabilities & Equity | | | | Total current liabilities | $15,489 | $16,207 | | Loan payable | $14,338 | $14,292 | | Total Liabilities | $42,194 | $43,215 | | Accumulated deficit | ($328,633) | ($309,878) | | Total Stockholders' Equity | $16,857 | $32,958 | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024 Condensed Consolidated Statements of Operations (Unaudited) | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $868 | $620 | | Research and development | $13,482 | $9,112 | | Selling, general and administrative | $6,263 | $5,897 | | Loss from operations | ($18,921) | ($14,423) | | Net loss | ($18,755) | ($13,463) | | Net loss per share, basic and diluted | ($0.49) | ($0.38) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) This section outlines the changes in stockholders' equity for the three months ended March 31, 2025 - For the three months ended March 31, 2025, total stockholders' equity decreased from $32.96 million to $16.86 million, primarily due to a $18.76 million net loss, partially offset by $2.97 million in stock-based compensation18 Condensed Consolidated Statements of Cash Flows This section presents the company's condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($16,616) | ($13,114) | | Net cash provided by investing activities | $12,999 | $5,861 | | Net cash (used in) provided by financing activities | ($296) | $18 | | Net decrease in cash and cash equivalents | ($3,913) | ($7,235) | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements, covering significant accounting policies and agreements - The company is a biomedical innovation firm with flagship products AVIM therapy (partnered with Medtronic) for hypertension and Virtue SAB (partnered with Terumo) for artery disease22 - The company is in mediation with Terumo regarding potential adjustments to milestone payments, where an unfavorable outcome could adversely impact the Virtue SAB program82 - Under the Medtronic Agreement, the company sponsors a pivotal study for AVIM therapy, with Medtronic holding exclusive global commercialization rights and the company receiving sales-based payments9293 - In November 2024, the company secured a term loan facility of up to $50.0 million with Hercules Capital, drawing an initial $15.0 million tranche, subject to financial covenants including minimum cash requirements140144 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported an increased net loss of $18.8 million for Q1 2025, driven by higher R&D expenses, with current liquidity of $49.9 million insufficient for the next 12 months, necessitating further funding efforts - The company received FDA Breakthrough Device Designation for its AVIM therapy system for hypertension, expediting development and priority review165 - The company received FDA approval for an amended IDE to initiate the Virtue Trial for its Virtue SAB product, with enrollment targeted for the second half of 2025166167 - The company's liquidity of $49.9 million as of March 31, 2025, is insufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern214 Results of Operations Total revenue increased 40% to $0.87 million in Q1 2025, while total operating expenses grew 32% to $19.8 million, resulting in a 39% higher net loss of $18.8 million Comparison of the Three Months Ended March 31, 2025 and 2024 (in thousands) | | 2025 | 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $868 | $620 | $248 | 40% | | Partnership revenue | $732 | $497 | $235 | 47% | | Total expenses | $19,789 | $15,043 | $4,746 | 32% | | Research and development | $13,482 | $9,112 | $4,370 | 48% | | Selling, general and administrative | $6,263 | $5,897 | $366 | 6% | | Net loss | ($18,755) | ($13,463) | ($5,292) | (39)% | - R&D expenses increased by $4.4 million (48%) to $13.5 million in Q1 2025, primarily due to increased costs for the BACKBEAT pivotal study and advancing the Virtue SAB program193 Liquidity and Capital Resources As of March 31, 2025, the company held $49.9 million in cash and marketable securities, but these resources are insufficient to fund operations for the next 12 months, necessitating additional capital raising efforts - The company has an active at-the-market (ATM) sales agreement with TD Cowen to sell up to $100 million of common stock, with the full amount available as of March 31, 2025199 - The company has a secured term loan facility of up to $50.0 million with Hercules, with $15.0 million drawn and further tranches available upon achieving performance milestones200 - Future funding requirements depend on clinical study costs and pace, potentially necessitating additional liquidity through new equity, further debt drawdowns, or other financing structures209210 Critical Accounting Policies and Estimates The company's critical accounting policies involve significant judgment, particularly in revenue recognition for the Terumo partnership and the valuation of stock-based compensation using the Black-Scholes model - Revenue from the Terumo Agreement is recognized over time using a proportional performance model, requiring estimates of total costs to complete the performance obligation, currently projected for 2029235 - The company estimates the fair value of stock option grants using the Black-Scholes model, with key assumptions including expected term, volatility, and risk-free interest rate245 - As of March 31, 2025, the company had approximately $15.5 million of total unrecognized stock-based compensation, expected to be recognized over a weighted-average period of about 2.2 years246 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the reporting period Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025257 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025258 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other disclosures Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that would materially affect its business - As of the report date, the company is not involved in any material legal proceedings262 Risk Factors No material changes to risk factors from the 2024 Form 10-K, except for a new risk concerning potential adverse effects from changes in trade policy and tariffs - A new risk factor was added regarding changes to trade policy, where tariffs and economic sanctions could adversely affect the company's business and financial condition264 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None reported for the period265 Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None reported for the period266 Mine Safety Disclosures This section is not applicable to the company Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter268 Exhibits This section lists the exhibits filed with the Form 10-Q, including the Certificate of Incorporation, Bylaws, and certifications by the CEO and CFO