Orchestra BioMed (OBIO) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed financial statements, management's analysis, market risk, and internal controls Item 1. Unaudited Condensed Financial Statements This section provides the company's unaudited condensed financial statements and accompanying notes for the reported periods Condensed Balance Sheets This section presents the company's condensed balance sheets, detailing assets, liabilities, and shareholders' deficit at specific dates Condensed Balance Sheets ($) | Metric | September 30, 2021 (Unaudited) ($) | December 31, 2020 ($) | | :----------------------------------- | :------------------------------- | :------------------ | | Total Assets | $161,882,875 | $162,155,744 | | Investments held in Trust Account | $160,018,413 | $160,006,444 | | Total Liabilities | $5,736,829 | $5,718,956 | | Ordinary shares subject to possible redemption | $160,000,000 | $160,000,000 | | Total Shareholders' Deficit | $(3,853,954) | $(3,563,212) | - Total Assets decreased slightly from $162.16 million at December 31, 2020, to $161.88 million at September 30, 2021[11] - Shareholders' Deficit increased from $(3.56) million at December 31, 2020, to $(3.85) million at September 30, 2021[11] Unaudited Condensed Statements of Operations This section presents the company's unaudited condensed statements of operations, detailing revenues, expenses, and net loss over specific periods Unaudited Condensed Statements of Operations ($) | Metric | Three Months Ended Sep 30, 2021 ($) | Three Months Ended Sep 30, 2020 ($) | Nine Months Ended Sep 30, 2021 ($) | Period from May 25, 2020 (Inception) through Sep 30, 2020 ($) | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------------------------------------------- | | General and administrative expenses | $64,445 | $68,625 | $212,711 | $83,839 | | Administrative fee - related party | $30,000 | $- | $90,000 | $- | | Loss from operations | $(94,445) | $(68,625) | $(302,711) | $(83,839) | | Interest income from investments held in Trust Account | $4,034 | $2,411 | $11,969 | $2,411 | | Net loss | $(90,411) | $(66,214) | $(290,742) | $(81,428) | | Basic and diluted net loss per share | $(0.00) | $(0.00) | $(0.01) | $(0.01) | - Net loss for the three months ended September 30, 2021, was $(90.41) thousand, an increase from $(66.21) thousand in the same period of 2020[14] - Net loss for the nine months ended September 30, 2021, was $(290.74) thousand, significantly higher than $(81.43) thousand for the period from inception through September 30, 2020[14] Unaudited Condensed Statements of Changes in Shareholders' Deficit This section presents the company's unaudited condensed statements of changes in shareholders' deficit, tracking equity movements over time Unaudited Condensed Statements of Changes in Shareholders' Deficit ($) | Metric | December 31, 2020 ($) | March 31, 2021 ($) | June 30, 2021 ($) | September 30, 2021 ($) | | :---------------------- | :------------------ | :--------------- | :-------------- | :------------------- | | Accumulated Deficit | $(3,563,657) | $(3,671,659) | $(3,763,988) | $(3,854,399) | | Total Shareholders' Deficit | $(3,563,212) | $(3,671,214) | $(3,763,543) | $(3,853,954) | - The accumulated deficit increased from $(3.56) million at December 31, 2020, to $(3.85) million at September 30, 2021, primarily due to net losses[17] - The number of non-redeemable ordinary shares remained constant at 4,450,000 throughout the periods presented in 2021[17] Unaudited Condensed Statements of Cash Flows This section presents the company's unaudited condensed statements of cash flows, detailing cash movements from operating, investing, and financing activities Unaudited Condensed Statements of Cash Flows ($) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 ($) | Period from May 25, 2020 (Inception) through Sep 30, 2020 ($) | | :-------------------------------- | :----------------------------- | :----------------------------------------------------------------- | | Net cash used in operating activities | $(243,527) | $(247,521) | | Net cash used in investing activities | $- | $(160,000,000) | | Net cash provided by financing activities | $- | $162,285,330 | | Net change in cash | $(243,527) | $2,037,809 | | Cash - end of the period | $1,783,295 | $2,037,809 | - Net cash used in operating activities was $(243.53) thousand for the nine months ended September 30, 2021[19] - Cash at the end of the period decreased to $1.78 million as of September 30, 2021, from $2.03 million at the beginning of the period[19] Notes to Unaudited Condensed Financial Statements This section provides detailed notes explaining the accounting policies, significant transactions, and financial position Note 1 – Description of Organization and Business Operations This note describes the company's incorporation as a blank check company (SPAC), its purpose, and initial public offering details - The Company was incorporated on May 25, 2020, as a blank check company (SPAC) in the Cayman Islands, formed to effect a Business Combination, with an intent to focus on healthcare innovation[22] - The Company has not commenced operations or generated operating revenue; its income is non-operating, derived from investments held in the Trust Account[23] - The Initial Public Offering (IPO) on August 6, 2020, generated $160.0 million gross proceeds, and a simultaneous Private Placement generated $6.0 million, with $160.0 million placed in a Trust Account[24][25][26] - The Company must complete a Business Combination by August 6, 2022, or face automatic winding up, liquidation, and dissolution[33] Note 2 – Basis of Presentation and Summary of Significant Account Policies This note outlines the basis of financial statement presentation, significant accounting policies, and the company's status as an emerging growth company - The financial statements are prepared in conformity with U.S. GAAP and SEC rules, reflecting normal recurring adjustments[39] - The Company revised its financial statements to classify all Public Shares subject to possible redemption in temporary equity, impacting additional paid-in capital and accumulated deficit[42][43][44] - As an 'emerging growth company,' the Company has elected to use the extended transition period for complying with new or revised financial accounting standards, which may affect comparability[45][46] - Investments held in the Trust Account are comprised of U.S. government securities or money market funds, classified as trading securities or recognized at fair value[52] - Ordinary shares subject to possible redemption are classified as temporary equity due to redemption rights outside the Company's control[58] Note 3 – Initial Public Offering This note details the Initial Public Offering, including the number of shares issued, gross proceeds, and associated offering costs - The Company consummated its Initial Public Offering on August 6, 2020, issuing 16,000,000 Public Shares at $10.00 per share[68] - The IPO generated gross proceeds of $160.0 million and incurred approximately $9.4 million in offering costs, including $5.6 million in deferred underwriting commissions[68] Note 4 – Private Placement This note describes the Private Placement, including the shares and warrants issued to the Sponsor and their associated proceeds and terms - Simultaneously with the IPO, the Company completed a Private Placement, issuing 450,000 Private Placement Shares ($4.5 million) and 1,500,000 Private Placement Warrants ($1.5 million) to the Sponsor, totaling $6.0 million in gross proceeds[69] - Each Private Placement Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50, and they will expire worthless if a Business Combination is not completed within the Combination Period[70] Note 5 – Related Party Transactions This note outlines transactions with related parties, including share issuances to the Sponsor, loans, administrative fees, and future commitments - On June 11, 2020, the Company issued 4,000,000 ordinary shares (Insider Shares) to the Sponsor for $28,750[71] - The Sponsor loaned the Company $300,000 for IPO costs, which was fully repaid on August 7, 2020. The Sponsor may provide future 'Working Capital Loans' for Business Combination transaction costs[75][76] - The Company pays an affiliate of the Sponsor $10,000 per month for administrative services, with $120,000 accrued as of September 30, 2021[77] - The Sponsor agreed to purchase 2,500,000 ordinary shares or equivalent for $25.0 million in connection with a Business Combination[78] Note 6 – Commitments and Contingencies This note details the company's commitments and contingencies, including registration rights, deferred underwriting commissions, and the impact of the COVID-19 pandemic - Holders of Insider Shares, Private Placement Shares, and warrants have registration rights for their securities[81] - Underwriters are entitled to a deferred underwriting commission of $5.6 million, payable from the Trust Account upon completion of a Business Combination[83] - Management is evaluating the impact of the COVID-19 pandemic, but its specific financial effect is not readily determinable[84] Note 7 – Ordinary Shares Subject to Possible Redemption This note explains the classification and value of ordinary shares subject to possible redemption as temporary equity - As of September 30, 2021, 16,000,000 ordinary shares were subject to possible redemption and classified as temporary equity, with a redemption value of $160.0 million[85][86] Note 8 – Shareholders' Deficit This note details the company's authorized and outstanding share capital, including preference and ordinary shares, and warrant terms - The Company is authorized to issue 1,000,000 preference shares and 100,000,000 ordinary shares; as of September 30, 2021, no preference shares were issued, and 20,450,000 ordinary shares were outstanding (including 16,000,000 redeemable)[88][89] - Private Placement Warrants are exercisable at $11.50 per share and will expire five years after a Business Combination or earlier upon redemption/liquidation, potentially becoming worthless[90][91][92] Note 9 – Fair Value Measurements This note describes the fair value measurement of investments held in the Trust Account, classified as Level 1 within the fair value hierarchy - Investments held in the Trust Account are measured at fair value and classified as Level 1 within the fair value hierarchy, indicating unadjusted quoted prices in active markets[93][94][95] Note 10 – Subsequent Events This note confirms that no subsequent events requiring adjustment or disclosure were identified through the financial statement issuance date - The Company did not identify any subsequent events requiring adjustment or disclosure through the date the unaudited condensed financial statements were issued[96] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial condition, results of operations, liquidity, and capital resources, including critical accounting policies Cautionary Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The report includes forward-looking statements based on current expectations and projections, subject to known and unknown risks and uncertainties that may cause actual results to differ materially[99] Overview This section provides an overview of the company's formation as a blank check company, its IPO, and the timeline for completing a Business Combination - The Company is a blank check company incorporated on May 25, 2020, aiming to complete a Business Combination, with a focus on healthcare innovation[100] - The Initial Public Offering (IPO) on August 6, 2020, raised $160.0 million, and a simultaneous Private Placement raised $6.0 million, with $160.0 million placed in a Trust Account[101][102][103] - The Company has until August 6, 2022, to complete its initial Business Combination, after which it will automatically wind up and liquidate[105] Liquidity and Capital Resources This section discusses the company's operating cash, working capital, and funding sources, noting the going concern risk due to the mandatory liquidation deadline - As of September 30, 2021, the Company had approximately $1.8 million in operating cash and $1.7 million in working capital[106] - Liquidity needs are met by proceeds from the Private Placement not held in the Trust Account; the Sponsor may provide Working Capital Loans, but none are outstanding[107] - Management believes there is sufficient working capital for one year or until a Business Combination, but the mandatory liquidation by August 6, 2022, raises substantial doubt about the Company's ability to continue as a going concern[108] Results of Operations This section analyzes the company's financial performance, focusing on net loss, expenses, and non-operating income from investments, given its pre-business combination status - The Company's activities since inception have been focused on formation, IPO preparation, and searching for business combination candidates, with no operating revenues generated[110] Results of Operations ($) | Metric | Three Months Ended Sep 30, 2021 ($) | Nine Months Ended Sep 30, 2021 ($) | Three Months Ended Sep 30, 2020 ($) | Period from Inception through Sep 30, 2020 ($) | | :------------------------------------------ | :------------------------------ | :----------------------------- | :------------------------------ | :----------------------------------------------------------------- | | Net Loss | $(90,000) | $(291,000) | $(66,000) | $(81,000) | | General and administrative expenses | $64,000 | $213,000 | $69,000 | $84,000 | | Administrative fee - related party | $30,000 | $- | $90,000 | $- | | Net gain on investments in Trust Account | $4,000 | $12,000 | $2,000 | $2,000 | Related Party Transactions This section details transactions with related parties, including share issuances to the Sponsor, loans, and administrative service agreements - The Company issued 4,000,000 Insider Shares to the Sponsor on June 11, 2020[116] - A $300,000 loan from the Sponsor for IPO costs was fully repaid on August 7, 2020; the Sponsor may provide future Working Capital Loans[118][119] - The Company pays an affiliate of the Sponsor $10,000 per month for administrative services[120] Contractual Obligations This section outlines the company's contractual obligations, including registration rights, deferred underwriting commissions, and the Sponsor's commitment to purchase shares - Holders of Insider Shares, Private Placement Shares, and warrants have registration rights[121] - A deferred underwriting commission of $5.6 million is payable to underwriters upon completion of a Business Combination[123] - The Sponsor has agreed to purchase 2,500,000 ordinary shares or equivalent for $25.0 million in connection with a Business Combination[124] Critical Accounting Policies This section describes the company's critical accounting policies, including those for investments in the Trust Account, redeemable ordinary shares, and net loss per share calculation - Investments held in the Trust Account are classified as trading securities or recognized at fair value, with gains and losses included in net gain from investments[125] - Ordinary shares subject to possible redemption are classified as temporary equity due to redemption rights outside the Company's control, and accretion from initial book value to redemption amount is recognized[126][127] - Net loss per ordinary share calculation does not consider the effect of warrants as their inclusion would be anti-dilutive[130] Off-Balance Sheet Arrangements This section confirms that the company did not have any off-balance sheet arrangements as of the reporting date - As of September 30, 2021, the Company did not have any off-balance sheet arrangements[131] JOBS Act This section explains the company's status as an 'emerging growth company' under the JOBS Act and its election to delay adoption of new accounting pronouncements - The Company qualifies as an 'emerging growth company' under the JOBS Act and has elected to delay the adoption of new or revised accounting pronouncements, which may affect comparability[132] - The Company may take advantage of reduced reporting requirements, including exemptions from auditor attestation, certain executive compensation disclosures, and PCAOB requirements[133] Recent Accounting Pronouncements This section discusses the adoption of ASU 2020-06 and confirms no material impact from other recently issued accounting standards - The Company adopted ASU 2020-06 on January 1, 2021, which simplifies accounting for convertible instruments, with no material impact on financial position, results of operations, or cash flows[134] - Management does not believe any other recently issued, but not yet effective, accounting standards would have a material effect on the financial statements[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Health Sciences Acquisitions Corporation 2 is exempt from providing detailed quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[136] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms management's conclusion that the company's disclosure controls and procedures were effective as of September 30, 2021 - Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021[137] Changes in Internal Control over Financial Reporting This section reports no material changes in internal control over financial reporting during the fiscal quarter ended September 30, 2021 - There were no changes in internal control over financial reporting during the fiscal quarter ended September 30, 2021, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[139] PART II. OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings The company reported no legal proceedings during the period - The Company has no legal proceedings to report[142] Item 1A. Risk Factors As a smaller reporting company, Health Sciences Acquisitions Corporation 2 is not required to provide detailed risk factors - The Company is a smaller reporting company and is not required to provide risk factor disclosures[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section details the proceeds from the Initial Public Offering and Private Placement, outlining fund usage, including Trust Account deposits and offering cost payments - The Initial Public Offering on August 6, 2020, generated $160.0 million gross proceeds from 16,000,000 ordinary shares[144] - A Private Placement simultaneously closed, raising $6.0 million from the Sponsor for 450,000 ordinary shares and 1,500,000 warrants[145] - $160.0 million of the net proceeds from the IPO and Private Placement were placed in a Trust Account[146] - Approximately $3.2 million in underwriting discounts and commissions and $0.6 million for other offering costs were paid, with a $5.6 million deferred underwriting commission payable upon Business Combination[144][147] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - The Company has no defaults upon senior securities to report[149] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures during the period - The Company has no mine safety disclosures to report[149] Item 5. Other Information The company reported no other information during the period - The Company has no other information to report[149] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various certifications and XBRL (eXtensible Business Reporting Language) documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2)[150] - The filing includes Inline XBRL Instance Document and Taxonomy Extension Documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[150] - A Cover Page Interactive Data File (104) is also included[150]