Orchestra BioMed (US:OBIO)2023-05-12 13:04Financial Performance - The net losses for the three months ended March 31, 2023, and 2022 were $10.9 million and $5.7 million, respectively, with an accumulated deficit of $210.7 million as of March 31, 2023[191]. - Total revenue for the three months ended March 31, 2023, was $1.164 million, a 34% increase from $866,000 in the same period of 2022[213]. - Partnership revenue increased by $303,000, or approximately 42%, to $1.0 million in Q1 2023 from $716,000 in Q1 2022[214]. - Net loss for the three months ended March 31, 2023, was $10.9 million, compared to a net loss of $5.7 million in the same period of 2022, representing a 91% increase in losses[227]. - Cash and cash equivalents as of March 31, 2023, were $18.7 million, with an additional $108.4 million in short-term marketable securities[227]. - Net cash used in operating activities for Q1 2023 was $14.4 million, compared to $5.3 million in Q1 2022, indicating a significant increase in cash outflow[232]. - Net cash used in investing activities for Q1 2023 was $43.5 million, primarily for marketable securities[234]. - Net cash provided by financing activities for Q1 2023 was $56.8 million, attributed to net proceeds from the Business Combination[235]. Agreements and Partnerships - The company raised a cumulative $166.8 million through the issuance of convertible preferred stock and $70.0 million from the business combination, with an additional $30.0 million received from the Terumo Agreement as of March 31, 2023[191]. - The company has recognized $11.5 million in cumulative partnership revenues from the Terumo Agreement from 2019 through March 31, 2023[199]. - Under the Terumo Agreement, the company is eligible for milestone payments totaling $65 million, with $35 million related to achieving specific milestones by target dates[198]. - The company entered into the Medtronic Agreement in June 2022 for the development and commercialization of BackBeat CNT, with no revenue recognized under this agreement as of March 31, 2023[200]. - Partnership revenues related to the Terumo Agreement may include milestone payments and royalties, with an increase in partnership revenues of $81,000 in Q1 2023[252]. - The Terumo Agreement includes development and regulatory milestone payments, evaluated for probability of achievement at each reporting period[249]. Expenses - Research and development expenses are expected to increase in absolute dollars as the company continues to develop new products and enhance existing technologies[205]. - Selling, general and administrative expenses are anticipated to rise as the company incurs additional costs associated with operating as a public entity[206]. - Research and development expenses rose by $4.8 million, or approximately 138%, to $8.3 million in Q1 2023, primarily due to increased support for ongoing projects[220]. - Selling, general and administrative expenses increased by $1.9 million, or approximately 78%, to $4.4 million in Q1 2023, driven by higher headcount and associated costs[222]. Stock-Based Compensation - Stock-based compensation is measured at fair value using the Black-Scholes option-pricing model, with expenses recognized over the vesting period[258]. - Stock-based compensation for Q1 2023 was $1.5 million, a significant increase from $70,000 in Q1 2022[265]. - As of March 31, 2023, the company had approximately $11.2 million of total unrecognized stock-based compensation, expected to be recognized over a weighted-average period of approximately 3 years[265]. - The fair value of stock options is estimated based on various factors, including market conditions and company performance[260]. - The expected term for stock-based awards is determined using the "simplified" method, which is the midpoint between the vesting date and the contractual life of the awards[264]. - The expected volatility for stock-based awards is derived from historical stock volatilities of comparable peer public companies[264]. - Stock-based compensation increased significantly, indicating a potential focus on employee incentives and retention strategies[265]. Company Classification and Market Activity - The company remains classified as an "emerging growth company" and will maintain this status until it meets certain revenue or market capitalization thresholds[269]. - The company is also classified as a "smaller reporting company," allowing it to take advantage of scaled disclosures as long as its market value remains below $250 million or annual revenue is below $100 million[270]. - The company’s common stock began trading on The Nasdaq Global Market under the symbol "OBIO" on January 27, 2023, following the business combination[188]. - The expected dividend yield is zero, with no dividends anticipated in the foreseeable future[264]. - The fair value of the company's common stock is determined based on the closing price around the date of grant following the business combination[264]. Other Financial Information - The business combination was accounted for as a reverse recapitalization, treating Legacy Orchestra as the acquirer for financial reporting purposes[189]. - Total contractual obligations as of March 31, 2023, amounted to $16.58 million, with $1.72 million due within one year[238]. - The loss on fair value adjustment of warrant liability was $294,000 for Q1 2023, compared to a loss of $145,000 in Q1 2022, reflecting changes in the fair value of outstanding warrants[225]. - Research and development costs are estimated and accrued based on discussions with service providers regarding the progress of clinical studies[255]. - The estimated total costs associated with the Terumo Agreement decreased by approximately 0.7% as of March 31, 2023, compared to estimates from December 31, 2022[215].