Orchestra BioMed Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2026

Unless otherwise indicated or the context otherwise requires, references to “Orchestra,” “Orchestra’s,” the “Company,” “we,” “its” and “our” refer to Orchestra BioMed Holdings, Inc. and its consolidated subsidiaries. All references to years, unless otherwise noted, refer to the Company’s fiscal years, which end on December 31.

The following discussion should be read together with “Special Note Regarding Forward-Looking Statements” and the Company’s unaudited condensed consolidated financial statements, together with the related notes thereto, included elsewhere in this Quarterly Report on Form 10-Q (the “Consolidated Financial Statements”), and the Company’s audited consolidated financial statements, together with the related notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026.

Overview

We are a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies. Our partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products we develop. We are led by a highly accomplished, multidisciplinary management team and a board of directors with extensive experience in all phases of therapeutic device development. Our business was formed in 2018 by assembling a pipeline of multiple late-stage clinical product candidates originally developed by our founding team.

Our two flagship product candidates – Atrioventricular Interval Modulation Therapy (“AVIM Therapy”) and Virtue® Sirolimus AngioInfusion™ Balloon (“Virtue SAB”) – are currently undergoing pivotal clinical trials for their lead indications, each representing multi-billion-dollar annual global market opportunities.

AVIM Therapy is a bioelectronic treatment for hypertension (“HTN”), the leading risk factor for death worldwide, and is designed to be delivered by a pacemaker and achieve immediate, substantial and sustained reductions in blood pressure in patients with hypertensive heart disease. We have an exclusive license and collaboration agreement with Medtronic Inc. (an affiliate of Medtronic plc) (“Medtronic”), one of the largest medical device companies in the world and the global leader in cardiac pacing therapies, for the development and commercialization of AVIM Therapy for the treatment of uncontrolled HTN in patients indicated for a cardiac pacemaker. We are actively conducting a double-blind, randomized, global pivotal trial (the “BACKBEAT Trial”), enrolling up to 316 patients with uncontrolled hypertension who are indicated for a dual-chamber pacemaker, with enrollment currently targeted to be completed by the end of the third quarter of 2026. AVIM Therapy has FDA Breakthrough Device Designations (“BDDs”) for these patients, as well as an estimated 7.7 million total patients in the U.S. with uncontrolled hypertension despite medical therapy and increased cardiovascular risk.

Virtue SAB is a highly differentiated, first-of-its-kind non-coated drug delivery angioplasty balloon system designed to deliver a large liquid dose of proprietary extended-release formulation of sirolimus, SirolimusEFR™, for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide. Virtue SAB has been granted BDD by the FDA for the treatment of coronary in-stent restenosis, coronary small vessel disease and below-the-knee peripheral artery disease, in each case, within specified parameters. We initiated patient enrollments in the Virtue SAB in the Treatment of Coronary In-Stent Restenosis (“ISR”) Trial (the “Virtue Trial”) for our U.S. investigational device exemption (“IDE”) pivotal study randomizing Virtue SAB vs. Boston Scientific Corporation’s AGENT™ drug-coated balloon. Designed to support regulatory approval of Virtue SAB, the Virtue Trial is expected to enroll 740 patients in the United States with enrollment completion currently planned for 2027. We cannot provide assurance that we will be able to complete enrollment of the BACKBEAT Trial or the Virtue Trial in the timeframes we anticipate.

Since Orchestra BioMed, Inc.’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 have funded our operations primarily through the issuance of our common stock, convertible preferred stock, and warrants, as well as proceeds from the Business Combination, our prior Terumo Agreement (as defined below) and the Termination and ROFR Agreement (as defined below), borrowings under debt arrangements, the sale of future revenues, sale of strategic investments, and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”). As of March 31, 2026, we have raised a cumulative $367.2 million in gross proceeds. In May 2026, we received $20.0 million pursuant to the Medtronic Loan Agreement (as such term is defined in Note 14 to the condensed consolidated financial statements – “Debt Financing”), and $15.0 million from Ligand pursuant to the revenue participation right purchase and sale agreement (the “Royalty Purchase Agreement”) we entered into with Ligand Pharmaceuticals Incorporated (“Ligand”)(see Note 13 to the condensed consolidated financial statements – “Royalty Purchase Agreement”). We have incurred net losses each year since inception. Our net losses were $20.7 million and $18.8 million for the three months ended March 31, 2026 and 2025, respectively. We expect to continue to incur significant losses for the foreseeable future. As of March 31, 2026, we had an accumulated deficit of $383.3 million.

Orchestra BioMed, Inc., 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 product candidate, in 2018. Orchestra BioMed, Inc. completed the conversions of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC, a Delaware limited liability company, and BackBeat Medical, Inc. to BackBeat Medical, LLC, a Delaware limited liability company, in 2019.

We were incorporated in the Cayman Islands in 2020, as a special purpose acquisition company under the name Health Sciences Acquisitions Corporation 2 (“HSAC2”). On January 26, 2023, Orchestra BioMed, Inc., our wholly owned subsidiary, and HSAC2 consummated a business combination pursuant to which, among other things, Orchestra BioMed, Inc. became a wholly owned subsidiary of HSAC2 and HSAC2 changed its name to Orchestra BioMed Holdings, Inc. (the “Business Combination”). HSAC2 Holdings, LLC was the sponsor of HSAC2 prior to the Business Combination.

Recent Developments

Orchestra BioMed Presented AVIM Therapy Clinical and Mechanistic Data at HRS 2026

On April 23, 2026, we announced the presentation of new clinical data related to our AVIM Therapy at the Heart Rhythm Society 2026 Annual Meeting. Data from the MODERATO II randomized, prospective, multi-center, double-blind, controlled pilot study demonstrated that activation of AVIM Therapy was associated with an immediate mean reduction of 13.2 mmHg in office systolic blood pressure (“oSBP”) prior to randomization. In addition, 97% of patients experienced a reduction of at least 5 mmHg in oSBP. At six months, mean ambulatory systolic blood pressure (“aSBP”) was 125.2 mmHg, with 89% of patients achieving aSBP below 140 mmHg, the current oSBP treatment goal according to European Society of Cardiology guidelines, and 58% achieving aSBP below 130 mmHg, the more stringent U.S. oSBP treatment goal according to American Heart Association and American College of Cardiology guidelines. Sustained reductions in aSBP were also observed through up to 3.6 years of follow-up in a sub-cohort of patients.

Additional data presented from a pressure-volume loop analysis study in patients with uncontrolled hypertension indicated that AVIM Therapy reduced systolic blood pressure through decreases in cardiac preload and effective arterial elastance (afterload), without a significant reduction in left ventricular contractility. The study also reported reductions in end diastolic volume, end diastolic pressure, end systolic volume, stroke work, and total peripheral resistance, without a significant change in stroke volume.

FDA Grants Orchestra BioMed Additional Breakthrough Device Designation for AVIM Therapy

We now hold two Breakthrough Device Designations (“BDDs”) for AVIM Therapy. On April 30, 2026, we announced that the U.S. Food and Drug Administration (“FDA”) granted AVIM Therapy a second BDD for the treatment of patients with uncontrolled hypertension despite the use of anti-hypertensive medications and an indication for a pacemaker. This population includes the pacemaker-indicated population being evaluated in our BACKBEAT Trial. The first granted BDD applies to patients with increased ten-year atherosclerotic cardiovascular disease (“ASCVD”) risk, preserved left ventricular systolic function, and uncontrolled hypertension, despite the use of anti-hypertensive medications or in patients who may have intolerance to anti-hypertensive medications. Based on the indications specified in both BDDs, we estimate that the addressable U.S. patient population for AVIM Therapy exceeds 7.7 million adults with hypertension despite medication. The FDA Breakthrough Devices Program, which reflects the FDA’s commitment to device innovation and protecting public health, is designed to expedite the development of and provide priority review for innovative medical technologies that have the potential to significantly improve outcomes for patients with serious or life-threatening conditions. To be eligible for this designation, a device must demonstrate the potential to provide more effective treatment or diagnosis of a life-threatening or irreversibly debilitating condition. In addition, the device must meet at least one of the following criteria: it must represent breakthrough technology, have no approved or cleared alternatives, offer significant advantages over existing options, or be determined by the FDA to be in the best interest of patients. Beyond regulatory acceleration, the BDD may also support favorable reimbursement pathways, including eligibility for incremental inpatient reimbursement through the New Technology Add-on Payment and outpatient Transitional Pass-Through payments under the Centers for Medicare & Medicaid Services programs. These mechanisms may help facilitate more timely access to breakthrough technologies while supporting provider adoption and patient access.

BACKBEAT Trial Timeline Update

On May 11, 2026, we announced we are targeting completion of enrollment for the BACKBEAT Trial by the end of the third quarter of 2026. Further, we and Medtronic, our strategic collaborator for the BACKBEAT Trial and the commercialization of AVIM Therapy for the treatment of uncontrolled hypertension in patients indicated for a pacemaker, plan to submit the primary endpoint data for a late-breaking clinical trial presentation at a major cardiovascular conference in the second quarter of 2027. Lastly, assuming primary safety and efficacy endpoints are met, Medtronic plans to submit a marketing application for FDA approval after primary endpoint data analyses and reports are complete, and subsequently to pursue global regulatory approvals.

The updated BACKBEAT Trial timeline is supported by FDA approval of a reduction in the sample size for the clinical trial to a target total of 284 evaluable randomized subjects with the total enrollment target of 316 patients accounting for potential loss to follow up. The primary efficacy endpoint (between-group difference in 24-hour aSBP at 3-month follow up) and primary safety endpoint (freedom from unanticipated serious adverse device events in the AVIM Therapy arm at 3-month follow up) remain robustly powered (>90% statistical power) at the revised sample size for the trial. The sample size is designed to detect a between group difference of at least 5 mmHg in aSBP. The change in sample size reflects collaboration among Medtronic, the FDA and us under the Breakthrough Devices program, and follows FDA approval of an amendment to the BACKBEAT Trial protocol received by us on May 8, 2026.

Components of Our Results of Operations

Partnership Revenue

Previously, our partnership revenues related to our former distribution agreement with Terumo Corporation (“Terumo Corporation”) and Terumo Medical Corporation (“TMC” and, collectively with Terumo Corporation, “Terumo”) for global development and commercialization of Virtue SAB in coronary and peripheral vascular indications (the “Terumo Agreement”). In future periods, partnership revenues may include revenues related to the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Orchestra BioMed, Inc., BackBeat Medical, LLC and Medtronic, discussed in Note 3 – “Medtronic Agreement” to the Consolidated Financial Statements.

Orchestra BioMed, Inc., and its wholly owned subsidiary BackBeat, entered into an Exclusive License and Collaboration Agreement, dated as of June 30, 2022, with Medtronic 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 (the “Medtronic Agreement”). On July 31, 2025, our wholly owned subsidiaries, Orchestra BioMed, Inc. and BackBeat, and Medtronic entered into an amendment to the Medtronic Agreement, which became effective on August 4, 2025 (the “Medtronic Agreement Amendment”), to provide, among other things, a development and commercialization framework for future AVIM-therapy integration into a dual-chamber leadless pacemaker. Pursuant to the Medtronic Agreement Amendment, we will be required, among other things, to reimburse Medtronic for certain expenses incurred in connection with the integration of AVIM-therapy into Medtronic’s dual-chamber leadless pacemaker, up to a specified cap, to the extent Medtronic elects to pursue such integration.

We have determined that the arrangement set forth in the Medtronic Agreement as amended by the Medtronic Agreement Amendment (the “Amended Medtronic Agreement”) is a collaboration within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). In addition, we concluded that Medtronic is a customer for a good or service that is a distinct unit of account, and therefore, the transactions set forth in the Amended Medtronic Agreement should be accounted for under ASC 606. Through March 31, 2026, there have been no amounts recognized as revenue under the Amended Medtronic Agreement.

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.

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 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.

Research and Development Expenses

Research and development expenses consist of applicable personnel, consulting, materials and clinical study expenses. Research and development expenses include:

• Certain personnel-related expenses, including salaries, benefits, bonus, travel and stock-based compensation;
• Cost of clinical studies to support new products and product enhancements, including expenses for clinical research organizations and site payments;
• Product device materials and drug supply, and manufacturing used for internal research and development, and clinical activities;
• Allocated overhead including facilities and information technology expenses; and
• Cost of outside consultants who assist with device and drug development, regulatory affairs, clinical affairs and quality assurance.

Research and development costs are expensed as incurred. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical studies. In the future, we expect research and development expenses to increase in absolute dollars as we continue to develop new products, enhance existing products and technologies, initiate clinical studies, manufacture drug supply for internal research and development and clinical trial supply and perform activities related to obtaining additional regulatory approvals. We do not track expenses by product candidate, unless tracking such expenses is required pursuant to the revenue recognition model for a collaborative arrangement.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of personnel-related expenses, including salaries, benefits, bonus, travel and stock-based compensation. Other selling, general and administrative expenses include professional services fees, including legal, audit, investor/public relations, and insurance costs, outside consultants costs, employee recruiting and training costs, and non-income taxes. Moreover, we incur and expect to continue to incur additional expenses associated with operating as a public company, including legal, accounting, insurance, exchange listing and U.S. Securities and Exchange Commission (“SEC”) compliance, and investor relations expenses. We expect quarterly selling, general and administrative expenses to continue to increase as we conduct additional clinical trials and expand our operations as a public company.

Interest (Expense) Income, Net

Interest (expense) income, net reflects the income generated from marketable securities during the year. Interest expense is attributable to loan interest and interest related to the Royalty Purchase Agreement.

On July 31, 2025, we entered into a revenue participation right purchase and sale agreement (the “Royalty Purchase Agreement”) with Ligand Pharmaceuticals Incorporated (“Ligand”). Under the terms of the Royalty Purchase Agreement, in exchange for payment of $35.0 million (the “Investment Amount”), less certain reimbursable expenses, Ligand acquired the right to receive tiered royalty payments from us (the “Royalty Interest”) with respect to revenue (including certain licensing revenue) received by us in a calendar year in connection with worldwide net product sales, or other product revenue received by, by us and our licensees (“Annual Net Sales”) of (a) AVIM Therapy (the “Primary Product”) and (b) Virtue SAB (the “Secondary Product” and together with the Primary Product, the “Products”) in the field of coronary artery treatment. Our estimate of this total interest expense associated with the Royalty Interest resulted in an effective annual interest rate of approximately 23.3% as of March 31, 2026. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period. We will periodically assess the estimated amounts due and payable to Ligand and to the extent the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect the amount and timing of the royalty payments to be paid by us to Ligand and, correspondingly, the amount of interest expense recorded by us.

On November 6, 2024 (the “LSA Closing Date”), we and certain of our subsidiaries (collectively, the “Borrower”) entered into a Loan and Security Agreement, by and among the Borrower, the several banks and other financial institutions or entities party thereto, as lenders (collectively, the “Hercules Lenders”), and Hercules Capital, Inc. (“Hercules”), as administrative agent and collateral agent for itself and the Hercules Lenders, as amended by that certain First Amendment to Loan and Security Agreement dated as of December 30, 2024, Second Amendment to Loan and Security Agreement dated as of July 31, 2025 and Third Amendment to Loan and Security Agreement, dated as of April 6, 2026 (as amended, the “2024 LSA”) .

The 2024 LSA provides a secured term loan facility of up to $50.0 million in up to two tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million drawn on the LSA Closing Date, and a second tranche of up $35.0 million that may be borrowed by us in the discretion of the lender’s investment committee.

Under the terms of the 2024 LSA, the initial date upon which we have to begin amortizing Term Loans is June 1, 2028. The Term Loans accrue interest at a floating per annum rate equal to the greater of (i) (x) the “prime rate” as reported in The Wall Street Journal plus (y) 2.0%, and (ii) 9.50%. The repayment terms of the Term Loans include monthly payments over a 4-year period, consisting of an interest-only period expiring June 1, 2028, followed by six monthly principal payments plus interest. At our option, we may prepay all or a portion of the outstanding Term Loans, subject to a prepayment premium equal to (a) 3.0% of the Term Loans being prepaid if the prepayment occurs during the twelve months following the LSA Closing Date, (b) 2.0% of the Term Loans being prepaid if the prepayment occurs after 12 months following the LSA Closing Date but on or prior to 24 months following the LSA Closing Date, and (c) 1.0% of the Term Loans being prepaid if the prepayment occurs after 24 months following the LSA Closing Date and prior to the maturity date. In addition, we will pay an end of term charge of 6.35% of the principal amount of the Term Loans upon the prepayment or repayment of the Term Loans and a facility charge of 0.75% upon any draws of the Term Loans. Refer to Note 14 – “Debt Financing” to the Consolidated Financial Statements.

Change in the fair value of derivative liability

In November 2025, we sold 200,000 shares of Series A Preferred Stock at a purchase price equal to $100.00 per share for gross proceeds of $20.0 million. We concluded that certain conversion and redemption features meet the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated the Series A Preferred Stock between (i) the host contract, which was accounted for within mezzanine equity, and (ii) the bifurcated derivative liabilities related to those conversion and redemption features. The bifurcated derivatives are remeasured to fair value at each reporting period with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss.

Gain on Sale of Strategic Investments

The gain on sale 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 common stock holdings of a previously publicly-held company. On January 9, 2026, Haemonetics Corporation, a global medical technology company focused on delivering innovative solutions designed to improve patient outcomes, announced its acquisition of Vivasure. Vivasure was a strategic investment of ours prior to its acquisition. In connection with the closing of the transaction, we recognized a gain on the sale of strategic investments of $2.2 million. We may receive additional proceeds in the future associated with revenue earnouts based on the achievement of certain milestones.

Previously, the investments in Vivasure did not have readily determinable fair values and were 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, in accordance with the provisions of ASU 2016-01.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table presents our statement of operations data for the three months ended March 31, 2026 and 2025, and the dollar and percentage change between the two periods (in thousands):

Partnership Revenue

Partnership revenue decreased by $732,000, or 100%, in the three months ended March 31, 2026 from $732,000 for the three months ended March 31, 2025. Partnership revenue related to the recognition of the combined performance obligation for the license granted to Terumo and the ongoing research and development services over the estimated performance period for the Virtue SAB coronary ISR indication, using a proportional performance model, based on the costs incurred relative to the total estimated costs of the research and development services. Prior to the termination of the Terumo Agreement, as of each quarterly reporting date, we evaluated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updated our estimates as necessary. On October 24, 2025, we and Terumo entered into a termination and right of first refusal agreement (the “Termination and ROFR Agreement”), which superseded and terminated the Terumo Agreement, and we no longer have any performance obligations under the Terumo Agreement.

Prior to the termination of the Terumo Agreement, as of each quarterly reporting date, we evaluated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updated our estimates as necessary. For the three months ended March 31, 2025, the expenses incurred related to the Terumo Agreement were $3.5 million. The estimated total costs associated with the Terumo Agreement through completion as of March 31, 2025, were approximately similar as compared to the estimates as of December 31, 2024.

Product Revenue

Product revenue decreased by $26,000, or approximately 19%, to $110,000 in the three months ended March 31, 2026 from $136,000 for the three months ended March 31, 2025.

Product revenue primarily consisted of the sale of FreeHold Duo and Trio intracorporeal organ retractors and revenue is recognized when product is shipped to customers. The decrease in product revenue was due to a decrease in the purchase volume. There were no changes to the per unit sale price in either period between the periods presented.

Cost of Product Revenue

Cost of product revenue decreased by $12,000, or approximately 27%, to $32,000 in the three months ended March 31, 2026 from $44,000 for the three months ended March 31, 2025. The decrease was primarily due to lower sales volume of FreeHold Duo and Trio intracorporeal organ retractors.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Research and development expenses increased by $2.3 million, or approximately 17%, to $15.8 million for the three months ended March 31, 2026 from $13.5 million for the three months ended March 31, 2025. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT Trial and to advance Virtue SAB into the Virtue Trial. The increase included an increase in personnel-related expenses of $2.1 million due to increased headcount and consulting costs, an increase of $632,000 in clinical development costs, partially offset by a decrease of $408,000 in non-clinical development costs associated with research and development program costs, supplies, and testing.

The total research and development expenses summarized above include $3.5 million for the three months ended March 31, 2025 related to the Terumo Agreement, which was terminated in October 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $110,000, or approximately 2%, to $6.4 million for the three months ended March 31, 2026, from $6.3 million of expense for the three months ended March 31, 2025. The increase primarily resulted from an increase of $168,000 in accounting, finance, and legal expenses partially offset by a decrease of $85,000 in stock-based compensation.

Interest (Expense) Income, Net

Interest (expense) income, net, decreased by $1.0 million, or approximately 595%, to $821,000 of interest expense for the three months ended March 31, 2026, from $166,000 of income for the three months ended March 31, 2025. The net interest expense in the 2026 period consisted primarily of monthly interest expense resulting from the 2024 LSA and the Royalty Purchase Agreement partially offset by interest earned from marketable securities. The net interest income in the 2025 period consisted primarily of interest earned from marketable securities partially offset by monthly interest expense resulting from the 2024 LSA.

Change in the fair value of derivative liability

The derivative liability of the Series A Preferred Stock was remeasured to a fair value of $2.8 million as of March 31, 2026. We recognized a loss of $35,000 for the three months ended March 31, 2026, primarily driven by an increase in our stock price compared to the measurement at December 31, 2025.

Gain on Sale of Strategic Investments

On January 9, 2026, Haemonetics Corporation, a global medical technology company focused on delivering innovative solutions designed to improve patient outcomes, announced its acquisition of Vivasure. In connection with the closing of the transaction, we can receive up to approximately $10.7 million of proceeds in 2026 associated with the transaction. In January, we received the initial upfront payment of $4.7 million and the remainder may be received in 2026 based on the achievement of a milestone. For the three months ended March 31, 2026, we recognized a gain on the sale of strategic investments of $2.2 million.

Liquidity and Capital Resources

Overview

From inception through March 31, 2026, we have incurred significant operating losses and negative cash flows from our operations. Our net losses were $20.7 million and $18.8 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $383.3 million. We have funded our operations primarily through the issuance of our common stock, convertible preferred stock, and warrants, as well as proceeds from the Business Combination, the prior Terumo Agreement and the Termination and ROFR Agreement, borrowings under debt arrangements, the sale of future revenues, sale of strategic investments, and, to a lesser extent, revenue from FreeHold products. On January 9, 2026, Haemonetics closed on an acquisition of Vivasure in which we can receive up to $10.7 million of proceeds in 2026 made up of approximately $4.7 million received upfront and approximately $6.0 million in a first milestone payment expected later this year. As of March 31, 2026, we have raised a cumulative $367.2 million in gross proceeds. We had $94.4 million in cash and cash equivalents and marketable securities at March 31, 2026, comprised of $28.4 million in cash and cash equivalents and $66.0 million in marketable securities. Cash and cash equivalents consisted primarily of bank deposits and money market funds while short-term marketable securities consisted primarily of our investments in corporate debt securities. On May 1, 2026, we received $20.0 million pursuant to the Medtronic Loan Agreement and an additional $15.0 million from Ligand pursuant to the Royalty Purchase Agreement.

Funding Requirements

We intend to prioritize spending on our two flagship product candidates and expect operating expenses to increase accordingly as we focus on continued execution of the BACKBEAT Trial for AVIM Therapy and ramp up execution of the initiated Virtue Trial for Virtue SAB. The additional investment will primarily support clinical study costs as well as other research and development activities.

Based on internally prepared budget estimates that reflect our operating priorities, we anticipate that our cash and cash equivalents, marketable securities, proceeds received subsequent to March 31, 2026 but prior to the filing of this Quarterly Report on Form 10-Q, are sufficient to fund our operations into the fourth quarter of 2027. The amount and timing of our future funding requirements may change from this current estimate and are dependent on many factors, including the cost and pace of execution of clinical studies and research and development activities, the strength of results from clinical studies and other research, development and manufacturing efforts. There are no assurances that any of these factors will be favorable to us, and we may need to seek additional sources of liquidity to meet our funding requirements earlier than current estimates, including the issuance of new equity, and/or other financing structures. In this regard, as of the date of this Quarterly Report on Form 10-Q, we may sell up to $92.4 million of shares of our common stock under the sales agreement (the “Sales Agreement”) we entered into with TD Securities (USA) LLC (“TD Cowen”) pursuant to which we may offer and sell, from time to time through TD Cowen, shares of our common stock by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act.

Our future viability is dependent on our ability to raise additional capital to finance our operations. Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. There can be no assurance that our current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

Pursuant to, among other things, contractual obligations entered into in connection with the Business Combination, we have registered the resale of approximately 18.6 million shares of our common stock pursuant to a registration statement filed with the SEC, which became effective on May 9, 2024 (the “Resale Registration Statement”). The sale of our common stock pursuant to the Resale Registration Statement may result in a decline in the value of our common stock, which may make it more difficult and more dilutive to the existing holders of our common stock to raise funds from the sale of our equity securities.

Cash Flows

The following table summarizes our cash flow data for the periods indicated (in thousands):

Comparison of the Three Months Ended March 31, 2026 and 2025

Net Cash Flows from Operating Activities

Net cash used in operating activities for the three months ended March 31, 2026 was $22.2 million and primarily consisted of our net loss of $20.7 million and changes in net operating assets and liabilities of $3.7 million, partially offset by non-cash charges of $2.2 million. Our non-cash charges primarily consisted of stock-based compensation of $2.9 million and non-cash interest expense on liability related to the Royalty Purchase Agreement of $1.3 million, partially offset by the gain on the sale of strategic investments of $2.2 million. The net change in operating assets and liabilities was primarily due to an increase in accounts payable, accrued expenses and other liabilities of $3.1 million and prepaid expenses and other assets of $477,000.

Net cash used in operating activities for the three months ended March 31, 2025 was $16.6 million and primarily consisted of our net loss of $18.8 million and changes in net operating assets and liabilities of $1.0 million, partially offset by non-cash charges of $3.1 million. Our non-cash charges primarily consisted of stock-based compensation of $3.0 million, partially offset by $112,000 related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to a decrease in deferred revenue of $732,000, a decrease in accounts payable, accrued expenses and other liabilities of $202,000, and a decrease in operating lease liabilities of $132,000.

Net Cash Flows from Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2026 was $10.3 million, which primarily consisted of the sale of $18.9 million of marketable securities and the sale of strategic investments of $4.7 million partially offset by the purchase of $13.1 million of marketable securities.

Net cash provided by investing activities for the three months ended March 31, 2025 was $13.0 million, which primarily consisted of the sale of $16.0 million of marketable securities, partially offset by the purchase of $2.9 million of marketable securities.

Net Cash Flows from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2026 was $5.5 million, which primarily consisted of $5.9 million of proceeds from proceeds from the sale of our common stock pursuant to the Sales Agreement, partially offset by $354,000 used to settle taxes associated with restricted stock vesting.

Net cash provided by financing activities of $296,000 for the three months ended March 31, 2025 was primarily due to $387,000 used to settle taxes associated with restricted stock vesting, partially offset by proceeds of $91,000 related to the exercise of stock options.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of March 31, 2026 (in thousands):

(1) In November 2024, we entered into the 2024 LSA with Hercules, as amended. The 2024 LSA will mature in November 2028. Refer to Note 14 to the Consolidated Financial Statements for additional information.

We enter into agreements in the normal course of business with clinical research organizations for work related to clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 days prior written notice. 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. GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including estimates related to the total costs expected to be incurred though the completion of the combined performance obligation of the Terumo Agreement (prior to its termination in October 2025, effective interest expense related to the Royalty Purchase Agreement, research and development prepayments, accruals and related expenses and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Our critical accounting policies are described in the MD&A section of our Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026. There have been no material changes to our critical accounting policies during the three months ended March 31, 2026.

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.

Smaller Reporting Company Status

We are a “smaller reporting company” as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a smaller reporting company, we will continue to not be required to comply with the auditor attestation requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002 as long as (a) our annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million as of the last business day of the second quarter of such fiscal year. We may also take advantage of certain reduced disclosure requirements as a smaller reporting company, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or (ii)(a) our annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million as of the last business day of the second quarter of such fiscal year.

Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026, the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2026.

Changes in Internal Control Over Financial Reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A in the 2025 10-K. There have been no material changes to the risk factors previously disclosed in Part I, Item 1A in the 2025 10-K.