# Orchestra BioMed Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Orchestra BioMed Holdings, Inc.](/companies/obio.md) (CIK 1814114)
- Form: 10-Q
- Filed: 2025-08-12
- Accepted by EDGAR: Aug 12, 2025, 08:00 ET
- Period: 2025-06-30
- Accession: 0001558370-25-011148
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1814114/000155837025011148/obio-20250630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1814114/000155837025011148/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $836.0k | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.7m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $46.0k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $90.0k | us-gaap:CostOfRevenue |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $13.9m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $27.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $6.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $12.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$19.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$38.2m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$19.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$38.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.50 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.99 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.50 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.99 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 38,392,716 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 38,314,936 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$32.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $146.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $18.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $35.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $42.8m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $17.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $42.5m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $15.0m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-06-30 | $295.0k | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 75,048 characters.

*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, 2024 filed with the SEC on March 31, 2025.*

### Closing of Business Combination

Prior to January 26, 2023, the Company was a special purpose acquisition company formed for the purpose of entering into a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. On January 26, 2023, we consummated the business combination contemplated by the Agreement and Plan of Merger, dated as of July 4, 2022 (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated July 21, 2022, and Amendment No. 2 to Agreement and Plan of Merger, dated November 21, 2022, the “Merger Agreement”) by and among Health Sciences Acquisitions Corporation 2, a special purpose acquisition company incorporated as a Cayman Islands exempted company in 2020 and Orchestra’s predecessor (“HSAC2”), HSAC Olympus Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HSAC2 (“Merger Sub”), and Orchestra BioMed, Inc. (“Legacy Orchestra”). Pursuant to the Merger Agreement, (i) HSAC2 deregistered in the Cayman Islands in accordance with the Companies Act (2022 Revision) (As Revised) of the Cayman Islands and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law (the “Domestication”) and (ii) Merger Sub merged with and into Legacy Orchestra, with Legacy Orchestra as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly owned subsidiary of Orchestra (the “Merger” and, together with the Domestication and the other transactions contemplated by the Merger Agreement, the “Business Combination”). As part of the Domestication, we changed our name from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” On January 27, 2023, our common stock (“Company Common Stock”) began trading on the Nasdaq Global Market under the symbol “OBIO.”

### 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 flagship product candidates are atrioventricular interval modulation (“AVIM”) therapy (formerly referred to as BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”)), for the treatment of hypertension (“HTN”), a significant risk factor for death worldwide, and Virtue Sirolimus AngioInfusion Balloon (“Virtue SAB”) for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide. We have an exclusive license and collaboration agreement with Medtronic, Inc. for the development and commercialization of AVIM therapy for the treatment of HTN in patients indicated for a cardiac pacemaker. We are conducting a double-blind, randomized study (the “BACKBEAT study”) that is expected to enroll a total of 500 patients who have previously received a Medtronic dual-chamber pacemaker. We currently estimate completion of enrollment of the BACKBEAT study in mid-2026; however, there is no assurance that our current operating plan will be achieved. We have a strategic collaboration with Terumo Medical Corporation (“Terumo”) for the development and commercialization of Virtue SAB for the treatment of coronary and peripheral artery disease. We recently received FDA approval for an amended FDA investigational device exemption (“IDE”) to conduct a U.S. pivotal study in coronary ISR randomizing Virtue SAB vs. Boston Scientific Corporation’s

AGENT™ drug coated balloon (“DCB”) and are currently targeting initiation of enrollment of this study in the second half of 2025.

Since Legacy Orchestra’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 convertible preferred stock and proceeds from the Business Combination, as well as through proceeds from our distribution agreement with Terumo (the “Terumo Agreement”), borrowings under debt arrangements and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”). Through June 30, 2025, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million from the Terumo Agreement. We have incurred net losses each year since inception. Our net losses were $38.1 million and $29.4 million for the six months ended June 30, 2025 and 2024, respectively. We expect to continue to incur significant losses for the foreseeable future. As of June 30, 2025, we had an accumulated deficit of $348.0 million.

Legacy Orchestra, 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. Legacy Orchestra 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.

### Recent Developments

#### Ligand Pharmaceuticals Incorporated Revenue Participation Right Purchase and Sale Agreement and Purchase of Shares

On July 31, 2025, we entered into a revenue participation right purchase and sale agreement (the “Revenue Purchase and Sale Agreement”) with Ligand Pharmaceuticals Incorporated (“Ligand”). Under the terms of the Revenue Purchase and Sale Agreement, in exchange for payment of $35.0 million (the “Investment Amount”), less certain reimbursable expenses, Ligand acquired from us the right to receive tiered revenue payments (the “Revenue 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.

Pursuant to the Revenue Purchase and Sale Agreement, the Investment Amount shall be paid in two tranches: (i) $20.0 million was paid on August 4, 2025 and (ii) $15.0 million is payable on May 1, 2026 (the “Second Installment”), provided certain conditions have been met. For further information, see Note 16 to the Consolidated Financial Statements, “*Subsequent Events.”*

In connection with the sale of the Revenue Interest, and pursuant to the terms of the Revenue Purchase and Sale Agreement, on August 4, 2025, we issued to Ligand a warrant (the “Ligand Warrant”) to purchase up to 2,000,000 shares of the Company Common Stock (and, such shares underlying the Ligand Warrant, the “Ligand Warrant Shares”), at an exercise price equal to $3.67 per share. The exercise price of the Ligand Warrant and the number of Ligand Warrant Shares issuable upon exercise of the Ligand Warrant are subject to adjustments for stock splits, combinations, stock dividends or similar events. Pursuant to the terms of the Ligand Warrant, the Ligand Warrant Shares shall vest and become exercisable as follows: (i) 1,142,857 of the Ligand Warrant Shares (the “First Tranche”) vested upon issuance; however, the Ligand Warrant may not be exercised for six months after the issuance of the Ligand Warrant, and (ii) 857,143 of the Ligand Warrant Shares will vest on the date of payment of the Second Installment. In the event that the Second Installment is not paid, the Ligand Warrant shall only be exercisable with respect to the First Tranche. The Ligand Warrant is exercisable for ten years from the date of issuance.

Concurrent with the execution of the Revenue Purchase and Sale Agreement, Ligand also agreed to purchase $5.0 million of shares of Company Common Stock (the “Ligand Private Placement Shares”) pursuant to a stock purchase agreement, dated as of July 31, 2025, between the Company and Ligand (the “Ligand Stock Purchase Agreement”), at a purchase price per share equal to the public offering price per share in our next public offering of our equity securities. Pursuant to the Ligand Stock Purchase Agreement, Ligand purchased 1,818,181 shares of Company Common Stock a purchase price of $2.75 per share on August 4, 2025 in connection with the closing of the Public Offering (as defined below).

#### Purchase of Shares by Medtronic and Loan Agreement with Medtronic

On July 31, 2025, we and our wholly-owned subsidiaries, Legacy Orchestra and BackBeat, entered into a Loan Agreement (the “Medtronic Loan Agreement”) with Medtronic, pursuant to which Medtronic agreed to extend a convertible loan to us in the aggregate original principal amount of $20.0 million (the “Medtronic Loan”). The Medtronic Loan is evidenced by a secured subordinated convertible promissory note (the “Medtronic Note”) of us. The issuance of the Medtronic Note to Medtronic and the funding of the Medtronic Loan will take place on April 27, 2026 subject to certain closing conditions as described in the Loan Agreement. For further information, see Note 16 to the Consolidated Financial Statements, “*Subsequent Events.”*

In addition, in connection with the closing of the Public Offering, on August 4, 2025, Medtronic, through its affiliate Covidien Group S.à.r.l. (“Covidien”), purchased 4,077,427 shares of Company Common Stock at a purchase price of $2.75 per share (the “Medtronic Private Placement Shares” and, together with the Ligand Private Placement Shares, the “Private Placement Shares”) pursuant to a stock purchase agreement, dated as of July 31, 2025 and amended on August 1, 2025, between us and Covidien (as amended, the “Medtronic Stock Purchase Agreement” and, together with the Ligand Stock Purchase Agreement, the “Stock Purchase Agreements”). In addition, pursuant to the terms and subject to the conditions of the Medtronic Stock Purchase Agreement, if the underwriters in the Public Offering (as defined below) exercise their option to purchase an additional 2,182,500 shares of Company Common Stock, Medtronic will be obligated to purchase an additional 132,282 shares of Company Common Stock at a purchase price of $2.75 per share.

#### Amendment of Exclusive License and Collaboration Agreement

On July 31, 2025, we, 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, the Company will, among other things, be required 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.

#### Amendments to Hercules Loan and Security Agreement and Warrant Agreements

On July 31, 2025, we, certain of our subsidiaries, the Hercules Lenders (as defined below) and Hercules (as defined below) entered into that certain second amendment (the “LSA Amendment”) to the 2024 LSA (as defined below), which, among other things, amended the existing 2024 LSA to (i) delay the initial date upon which we are to begin amortizing term loans under the 2024 LSA from (a) December 1, 2026 (with amortization payments delayed to as late December 1, 2027 if certain conditions were met) to (b) July 1, 2027 (with amortization payments delayed to as late as January 1, 2028 if certain conditions are met); and (ii) increase by $15.0 million (from $20.0 million to $35.0 million) the amount that that may be borrowed by us in the discretion of the lender’s investment committee’s and (iii) eliminate our ability to draw up to $15.0 million if certain milestones are achieved.

Under the 2024 LSA as amended by the LSA Amendment (the “Amended 2024 LSA”), beginning on December 1, 2025, the Borrower (as defined below) must maintain Qualified Cash (as defined in the Amended 2024 LSA) in an amount greater than or equal to (x) the outstanding principal amount of the Term Loan Advances, multiplied by (y) the applicable Cash Coverage Percentage (as defined in the Amended 2024 LSA), which percentage ranges from a minimum of 60% to a maximum of 100% of Term Loan Advances, depending upon the amount of Qualified Cash.

In addition, concurrently with the effectiveness of the LSA Amendment, we entered into amendments to the warrant agreements dated November 6, 2024 (the “Hercules Warrants”) with the Hercules Lenders under the 2024 LSA (the “Warrant Agreement Amendments”). As a result of the Warrant Agreement Amendments, among other things:

- the exercise price under the Hercules Warrants is now $3.58 (“Exercise Price”); and
- the number of shares issuable upon exercise of the Hercules Warrants is equal to 4% of aggregate principal amount of Term Loan Advances divided by the Exercise Price.

#### Registration Rights Agreement

In connection with the Stock Purchase Agreements and the Ligand Warrant, we, Ligand and Medtronic entered into a Registration Rights Agreement, pursuant to which we have agreed to file a shelf registration statement providing for the resale of the Private Placement Shares and the Ligand Warrant Shares within 90 calendar days of the closing of the Stock Purchase Agreements. For further information, see Note 16 to the Consolidated Financial Statements, “*Subsequent Events.”*

#### Public Offering

On August 4, 2025, we closed an underwritten public offering of 9,413,637 shares of Company Common Stock at a price to the public of $2.75 per share and pre-funded warrants to purchase 5,136,363 shares of Company Common Stock at a price to the public of $2.7499 per pre-funded warrant, which represents the per share public offering price for the shares of Company Common Stock less the $0.0001 per share exercise price for each pre-funded warrant, for total gross proceeds of approximately $40.0 million, before deducting underwriting discounts and commissions and estimated offering expenses (the “Public Offering”). In addition, as part of the Public Offering, we granted the underwriters a 30-day option to purchase up to an additional 2,182,500 shares of Company Common Stock at the public offering price per share, less underwriting discounts and commissions.

### Registration Statement

Due to the significant number of redemptions of HSAC2’s ordinary shares in connection with the Business Combination, there was a significantly lower number of HSAC2 ordinary shares that converted into shares of Company Common Stock in connection with the Business Combination. Pursuant to the Amended and Restated Registration Rights Agreement we entered into in connection with the closing of the Business Combination and certain warrant agreements, we filed a registration statement (the “Resale Registration Statement”), which was declared effective on May 9, 2024, that registers, among other things, the resale of an aggregate of 18,586,201 shares of Company Common Stock, which constitutes approximately 34% of the outstanding Company Common Stock as of August 8, 2025. Additionally, some of the shares of the Company Common Stock being registered for resale were originally purchased by selling stockholders pursuant to investments in Legacy Orchestra or HSAC2 at prices considerably below the current market price of the Company Common Stock. These selling stockholders may realize a positive rate of return on the sale of their shares of Company Common Stock covered by the Resale Registration Statement and therefore will have an incentive to sell their shares. Public shareholders may not experience a similar rate of return on shares of Company Common Stock they purchased. This discrepancy in purchase prices may have an impact on the market perception of the Company Common Stock’s value and could increase the volatility of the market price of the Company Common Stock or result in a significant decline in the public trading price of the Company Common Stock. The registration of these shares of Company Common Stock for resale creates the possibility of a significant increase in the supply of the Company Common Stock in the market. The increased supply, coupled with the potential disparity in purchase prices, may lead to heightened selling pressure, which could negatively affect the public trading price of the Company Common Stock.

### Components of Our Results of Operations

### Partnership Revenue

To date, our partnership revenues have related to the Terumo Agreement described below. In future periods, partnership revenues may also include revenues related to the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Legacy Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”), discussed in Note 4 to the Consolidated Financial Statements.

Legacy Orchestra entered into the Terumo Agreement in June 2019, and has determined that the arrangement represents a contract with a customer and is therefore in scope of ASC 606, *Revenues from Contracts with Customers (“*ASC 606”). Under the Terumo Agreement, Legacy Orchestra received an upfront payment of $30.0 million in 2019 and an equity commitment of up to $5 million of which $2.5 million was invested in June 2019 as part of the Legacy Orchestra Series B-1 financing and $2.5 million was invested in June 2022 as part of the Legacy Orchestra Series D-2 financing.

Under the Terumo Agreement, we were initially eligible for certain milestone payments in the amount of $65 million from Terumo upon completion of certain minimum enrollments in clinical studies, making certain filings and submissions, and obtaining certain regulatory approvals and certifications, and are also eligible to earn royalties on future sales by Terumo based on royalty rates ranging from 10 - 15%. Of these milestone payments, $35 million relate to achieving certain milestones by specified target achievement dates. As of June 30, 2025, the target achievement dates for three $5 million milestone payments have already passed, in each case, without achieving the related milestones. In addition, due to delays in our Virtue SAB program resulting from the COVID-19 pandemic, supply chain issues and unexpected changes to regulatory requirements, including increased testing and other activities related to chemistry, manufacturing, and control, increased nonclinical and good laboratory practice preclinical data requirements, including biocompatibility, as well as a requirement to repeat good laboratory practice preclinical studies already performed based on changes to source of component materials and a change in manufacturing site, that caused us to amend our original project plan, we will not be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $20 million in time-based milestone payments pursuant to the Terumo Agreement.

As previously disclosed, we are in a mediation procedure with Terumo pursuant to the Terumo Agreement and the International Mediation Rules of the International Centre for Dispute Resolution (“ICDR”). The mediation is intended to assist in potentially resolving disagreements and facilitating the completion of negotiations related to restructuring, replacing or terminating the Terumo Agreement. The Terumo Agreement provides that matters that are not resolved through mediation are to be resolved by binding arbitration conducted under the auspices of the ICDR in accordance with its International Arbitration Rules. If the mediation does not lead to a timely agreement or resolution, or, if applicable, we do not prevail in arbitration, or if the Terumo Agreement is terminated, our commercialization plans for Virtue SAB may be adversely impacted. However, any termination of the Terumo Agreement in the context of mediation, an arbitration or otherwise would allow us to pursue an alternative strategic collaboration or other transaction with a different partner. We currently expect the formal mediation to be completed by the end of the third quarter of 2025. Regardless of the mediation process with Terumo, we intend to initiate enrollment of the Virtue SAB trial, our pivotal study of Virtue SAB for coronary in-stent restenosis in the U.S. during the second half of 2025, as well as to continue other product development efforts related to Virtue SAB.

We recorded the $30.0 million upfront payment received in 2019 from Terumo within deferred revenue and are recognizing the upfront payment over time based on a proportional performance model based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the development of the Coronary ISR indication, for which we are primarily responsible. We have recognized $16.0 million in cumulative partnership revenues from 2019 through June 30, 2025. There were no other proceeds received pursuant to the Terumo Agreement from 2019 through June 30, 2025.

In June 2022, Legacy Orchestra entered into the Medtronic Agreement 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. We have determined that the arrangement is a collaboration within the scope of ASC 808, *Collaborative Arrangements (“*ASC 808”). In addition, we concluded that Medtronic, Inc., an affiliate of Medtronic plc (“Medtronic”), is a customer for a good or service that is a distinct unit of account, and therefore, the transactions in the Medtronic Agreement should be accounted for under ASC 606. Through June 30, 2025, there have been no amounts recognized as revenue under the 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.

On November 6, 2024 (the “LSA Closing Date”), we and certain of our subsidiaries (together, 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 (as amended, the “2024 LSA”). The 2024 LSA provided a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million drawn on the LSA Closing Date, and a second and third tranche of up to an aggregate of $15.0 million were available upon achievement of certain performance and financing milestones. Additionally, the Company had access to a fourth tranche of $20.0 million subject to future approval. The Term Loan has a maturity date of November 6, 2028 and accrues 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%. Refer to Note 13 – “*Debt Financing”* to our Consolidated Financial Statements. On July 31, 2025, the Borrower, the Hercules Lenders and Hercules entered into the LSA Amendment, which became effective on August 4, 2025. See “Overview—Amendments to Hercules Loan and Security Agreement and Warrant Agreements” above in this Item 2.

### Loss on Fair Value of Strategic Investments

The loss on fair value 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. The investments in Vivasure do not have readily determinable fair values and are 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. The common stock held represented equity securities with a readily determinable fair value and were required to be measured at fair value at each reporting period using readily determinable pricing available on a securities exchange, in accordance with the provisions of ASU 2016-01.

### Results of Operations

### Comparison of the Six Months Ended June 30, 2025 and 2024

The following table presents our statement of operations data for the six months ended June 30, 2025 and 2024, and the dollar and percentage change between the two periods (in thousands):

| ​ ​ ​ Revenue: | ​ ​ | ​ ​ Six Months Ended June 30, 2025 ​ | ​ ​ | ​ ​ 2024 ​ | ​ ​ | ​ ​ Change $ ​ | ​ ​ | ​ Change % ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- | ---: |
| Partnership revenue | ​ | $1,399 | ​ | $1,125 | ​ | $274 | ​ | ​ | 24% |
| Product revenue | ​ | 305 | ​ | 273 | ​ | 32 | ​ |  | 12% |
| Total revenue | ​ | 1,704 | ​ | 1,398 | ​ | 306 | ​ |  | 22% |
| **Expenses:** | ​ |  | ​ |  | ​ |  | ​ |  | ​ ​ |
| Cost of product revenues | ​ | 90 | ​ | 78 | ​ | 12 | ​ |  | 15% |
| Research and development | ​ | 27,335 | ​ | 20,238 | ​ | 7,097 | ​ |  | 35% |
| Selling, general and administrative | ​ | 12,527 | ​ | 12,364 | ​ | 163 | ​ |  | 1% |
| Total expenses | ​ | 39,952 | ​ | 32,680 | ​ | 7,272 | ​ |  | 22% |
| **Loss from operations** | ​ | (38,248) | ​ | (31,282) | ​ | (6,966) | ​ |  | (22)% |
| **Other income (expense):** | ​ |  | ​ |  | ​ |  | ​ |  | ​ ​ |
| Interest income, net | ​ | 130 | ​ | 1,918 | ​ | (1,788) | ​ |  | (93)% |
| Loss on fair value of strategic investments | ​ | — | ​ | (68) | ​ | 68 | ​ |  | 100% |
| Other expense | ​ | — | ​ | ​ (11) | ​ | ​ 11 | ​ | ​ | 100% |
| Total other income | ​ | 130 | ​ | 1,839 | ​ | (1,709) | ​ |  | (93)% |
| **Net loss** | ​ | $(38,118) | ​ | $(29,443) | ​ | $(8,675) | ​ | ​ | (29)% |

### Partnership Revenue

Partnership revenue increased by $274,000, or approximately 24%, to $1.4 million in the six months ended June 30, 2025 from $1.1 million for the six months ended June 30, 2024. Partnership revenue relates 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. As of each quarterly reporting date, we evaluate our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and update our estimates as necessary.

For the six months ended June 30, 2025 and 2024, the expenses incurred related to the Terumo Agreement were approximately $6.8 million and $6.9 million, respectively. The estimated total costs associated with the Terumo Agreement through completion were similar as of June 30, 2025 compared to the estimates as of December 31, 2024, and increased by approximately 2.8% as of June 30, 2024, as compared to the estimates as of December 31, 2023.

While we believe we have estimated total costs associated with the Terumo Agreement through completion, these estimates encompass a broad range of expenses over a multi-year period and, as such, are subject to periodic changes as new information becomes available.

### Product Revenue

Product revenue increased by $32,000, or approximately 12%, to $305,000 in the six months ended June 30, 2025 from $273,000 for the six months ended June 30, 2024.

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 increase in product revenue was due to an increase in the purchase volume. There were no changes to the per unit sale price between the periods presented.

### Cost of Product Revenue

Cost of product revenue increased by $12,000, or approximately 15%, to $90,000 in the six months ended June 30, 2025 from $78,000 for the six months ended June 30, 2024. The increase was primarily due to higher production costs per unit of FreeHold Duo and Trio intracorporeal organ retractors.

### Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2025 and 2024 (in thousands):

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2025 | ​ | ​ ​ 2024 |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | ---: |
| Personnel and consulting costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $12,544 | ​ | $9,616 |
| Non-clinical development costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ 9,216 | ​ | 8,075 |
| Clinical development costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 5,575 | ​ | 2,547 |
| **Total research and development expenses** | **​** | **​** | **​** | **​** | **​** | **​** | **​** | **$27,335** | **​** | **$20,238** |

Research and development expenses increased by $7.1 million, or approximately 35%, to $27.3 million for the six months ended June 30, 2025 from $20.2 million for the six months ended June 30, 2024. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT study and to advance Virtue SAB into a planned pivotal study. The increase included an increase of $3.0 million in clinical development costs, an increase in personnel-related expenses of $2.2 million due to increased headcount and consulting costs, an increase of $1.1 million in non-clinical development costs associated with research and development program costs, supplies, and testing, and an increase in stock-based compensation of $710,000.

The total research and development expenses summarized above include $6.8 million for the six months ended June 30, 2025 and 2024 related to the Terumo Agreement. The consistency in expense is due to a similar level of expense activity related to the Terumo Agreement during the six months ended June 30, 2025 compared to the same period in 2024.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $163,000, or approximately 1%, to $12.5 million for the six months ended June 30, 2025, from $12.4 million of expense for the six months ended June 30, 2024. The increase primarily resulted from an increase in stock-based compensation of $157,000.

### Interest Income, Net

Interest income, net, decreased by $1.8 million, or approximately 93%, to $130,000 of income for the six months ended June 30, 2025, from $1.9 million of income for the six months ended June 30, 2024. 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. The net interest income in the 2024 period consisted primarily of interest earned from marketable securities. The decrease in net interest income resulted from lower amounts of marketable securities held during the 2025 period.

### Loss on Fair Value of Strategic Investments

No gain or loss on fair value of strategic investments was recognized for the six months ended June 30, 2025. The loss of $68,000 for the six months ended June 30, 2024 related to the change in fair value in our common stock holdings of a previously publicly-held company.

### Comparison of the Three Months Ended June 30, 2025 and 2024

The following table presents our statement of operations data for the three months ended June 30, 2025 and 2024, and the dollar and percentage change between the two periods (in thousands):

| ​ ​ ​ Revenue: | ​ ​ | ​ ​ Three Months Ended June 30, 2025 ​ | ​ ​ | ​ ​ 2024 ​ | ​ ​ | ​ ​ Change $ ​ | ​ ​ | ​ ​ ​ ​ Change % ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Partnership revenue | ​ | $667 | ​ | $628 | ​ | $39 | ​ | $6% |
| Product revenue | ​ | 169 | ​ | 150 | ​ | 19 | ​ | 13% |
| Total revenue | ​ | 836 | ​ | 778 | ​ | 58 | ​ | 7% |
| **Expenses:** | ​ |  | ​ |  | ​ |  | ​ | ​ ​ |
| Cost of product revenues | ​ | 46 | ​ | 44 | ​ | 2 | ​ | 5% |
| Research and development | ​ | 13,853 | ​ | 11,126 | ​ | 2,727 | ​ | 25% |
| Selling, general and administrative | ​ | 6,264 | ​ | 6,467 | ​ | (203) | ​ | (3)% |
| Total expenses | ​ | 20,163 | ​ | 17,637 | ​ | 2,526 | ​ | 14% |
| **Loss from operations** | ​ | (19,327) | ​ | (16,859) | ​ | (2,468) | ​ | (15)% |
| **Other (expense) income:** | ​ |  | ​ |  | ​ |  | ​ | ​ ​ |
| Interest (expense) income, net | ​ | (36) | ​ | 902 | ​ | (938) | ​ | (104)% |
| Loss on fair value of strategic investments | ​ | — | ​ | (23) | ​ | 23 | ​ | 100% |
| Total other (expense) income | ​ | (36) | ​ | 879 | ​ | (915) | ​ | (104)% |
| **Net loss** | ​ | $(19,363) | ​ | $(15,980) | ​ | $(3,383) | ​ | $(21)% |

### Partnership Revenue

Partnership revenue increased by $39,000, or approximately 6%, to $667,000 in the three months ended June 30, 2025 from $628,000 for the three months ended June 30, 2024. Partnership revenue relates 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. As of each quarterly reporting date, we evaluate our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and update our estimates as necessary.

For the three months ended June 30, 2025 and 2024, the expenses incurred related to the Terumo Agreement were approximately $3.3 million and $4.0 million, respectively. The estimated total costs associated with the Terumo Agreement through completion were similar as of June 30, 2025 as compared to the estimates as of March 31, 2025, and increased by approximately 1.6% as of June 30, 2024, as compared to the estimates as of March 31, 2024.

While we believe we have estimated total costs associated with the Terumo Agreement through completion, these estimates encompass a broad range of expenses over a multi-year period and, as such, are subject to periodic changes as new information becomes available.

### Product Revenue

Product revenue increased by $19,000, or approximately 13%, to $169,000 in the three months ended June 30, 2025 from $150,000 for the three months ended June 30, 2024.

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 increase in product revenue was primarily due to an increase in the purchase volume. There were no changes to the per unit sale price in either period presented.

### Cost of Product Revenue

Cost of product revenue increased by $2,000, or approximately 5%, to $46,000 in the three months ended June 30, 2025 from $44,000 for the three months ended June 30, 2024. The increase was primarily due to higher production costs per unit 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 June 30, 2025 and 2024 (in thousands):

| ​ ​ ​ | ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2025 | ​ | ​ ​ 2024 |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | ---: |
| Personnel and consulting costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $6,542 | ​ | $4,909 |
| Non-clinical development costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ 4,678 | ​ | 4,713 |
| Clinical development costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 2,633 | ​ | 1,504 |
| **Total research and development expenses** | **​** | **​** | **​** | **​** | **​** | **​** | **​** | **$13,853** | **​** | **$11,126** |

Research and development expenses increased by $2.7 million, or approximately 25%, to $13.9 million for the three months ended June 30, 2025, from $11.1 million for the three months ended June 30, 2024. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT study and to advance Virtue SAB into a planned pivotal study. The increase included an increase in personnel-related expenses of $1.1 million due to increased headcount and consulting costs, an increase of $1.1 million in clinical development costs, and an increase in stock-based compensation of $494,000.

The total research and development expenses summarized above include $3.3 million for the three months ended June 30, 2025 and $4.0 million for the three months ended June 30, 2024 related to the Terumo Agreement. The decrease of $724,000 is due to decreased expense activity related to the Terumo Agreement during the three months ended June 30, 2025 compared to the same period in 2024.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $203,000, or approximately 3%, to $6.3 million for the three months ended June 30, 2025, from $6.5 million of expense for the three months ended June 30, 2024. The decrease was primarily due to a decrease in professional fees.

### Interest (Expense) Income, Net

Interest (expense) income, net, decreased by $938,000, or approximately 104%, to $36,000 of net interest expense for the three months ended June 30, 2025, from $902,000 of net interest income for the three months ended June 30, 2024. The net interest expense in the 2025 period consisted primarily of monthly interest expense resulting from the 2024 LSA partially offset by interest earned from marketable securities. The net interest income in the 2024 period consisted primarily of interest earned from marketable securities. The decrease in net interest income resulted from lower amounts of marketable securities held during the 2025 period.

### Loss on Fair Value of Strategic Investments

No gain or loss on fair value of strategic investments was recognized for the three months ended June 30, 2025. The loss in fair value of strategic investments was $23,000 for the three months ended June 30, 2024 related to the change in fair value in our common stock holdings of a previously publicly-held company.

### Liquidity and Capital Resources

### Overview

From inception through June 30, 2025, we have incurred significant operating losses and negative cash flows from our operations. Our net losses were $38.1 million and $29.4 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $348.0 million. We have funded our operations primarily through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, as well as through proceeds from the Terumo Agreement, borrowings under debt arrangements and, to a lesser extent, from FreeHold product revenue. Through June 30, 2025, we have raised a cumulative $252.3 million in gross proceeds through the issuance of convertible preferred stock, proceeds from the Business Combination and other equity sales, and have received $30.0 million under the Terumo Agreement. We had $33.9 million in cash and cash equivalents and marketable securities at June 30, 2025, comprised of $18.7 million in cash and cash equivalents and $15.2 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 August 4, 2025, we received $76.2 million as a result of concurrent equity offerings and strategic transactions, which included $16.2 million in proceeds from an equity private placement with Medtronic and Ligand, $40.0 million from a public equity offering, and $20.0 million related to entering into the Revenue Purchase and Sale Agreement with Ligand. Future committed cash receipts expected in April 2026 from the same strategic transactions include $20.0 million from the Medtronic Loan Agreement, and an additional $15.0 million from Ligand under the Revenue Purchase and Sale Agreement.

### Funding Requirements

While we continue to prioritize spending on our AVIM therapy program and the execution of our BACKBEAT study, we are planning to increase spending to support our planned U.S. pivotal clinical trial initiation for our Virtue SAB program. We expect operating expenses to increase to support (1) clinical study costs as well as additional research and development expenses in support of future potential regulatory approval and commercialization of AVIM-enabled Medtronic pacemakers; and (2) our Virtue SAB program, which will be primarily focused on initiating enrollment of our planned Virtue Trial, a U.S. pivotal clinical trial for the treatment of coronary ISR comparing Virtue SAB to Boston Scientific Corporation’s AGENT™ DCB, for which we have received FDA full IDE approval and anticipate launching in the second half of 2025.

Based on internally prepared budget estimates that reflect our operating priorities, we anticipate that our cash, cash equivalents, marketable securities, expected future proceeds from contractual financing commitments and other potential future proceeds described below are sufficient to fund our operations into the second half 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, as well as the receipt of payments under the Revenue Purchase and Sale Agreement and the Medtronic Loan Agreement, and the realization of cash from the sale of some or all of our strategic holdings, most notably, Vivasure Medical. 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 $100.0 million of shares of Company Common Stock under the sales agreement we entered into with TD Securities (USA) LLC (the “Sales Agreement”), subject to the provisions of the lock-up agreement executed in connection with the Public Offering, which, prohibits us from selling shares of Company Common Stock pursuant to the Sales Agreement until October 31, 2025.

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.

As noted above, the sale of Company Common Stock pursuant to the Resale Registration Statement may result in a decline in the value of the Company Common Stock, which may make it more difficult and more dilutive to the existing holders of Company 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):

| ​ ​ ​ | ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2025 | ​ | ​ ​ 2024 |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | ---: |
| Net cash used in operating activities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $(32,143) | ​ | $(23,320) |
| Net cash provided by investing activities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 29,355 | ​ | 16,285 |
| Net cash (used in) provided by financing activities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (724) | ​ | 189 |
| **Net decrease in cash and cash equivalents** | **​** | **​** | **​** | **​** | **​** | **​** | **​** | **$(3,512)** | **​** | **$(6,846)** |

### Comparison of the Six Months Ended June 30, 2025 and 2024

### Net Cash Flows from Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $32.1 million and primarily consisted of our net loss of $38.1 million and changes in net operating assets and liabilities of $632,000, partially offset by non-cash charges of $6.6 million. Our non-cash charges primarily consisted of stock-based compensation of $6.2 million, partially offset by $161,000 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 $1.4 million offset by a decrease in accounts payable, accrued expenses and other liabilities of $888,000.

Net cash used in operating activities for the six months ended June 30, 2024 was $23.3 million and primarily consisted of our net loss of $29.4 million, which was partially offset by changes in net operating assets and liabilities of $1.2 million, and non-cash charges of $4.9 million. Our non-cash charges primarily consisted of stock-based compensation of $5.3 million, partially offset by $914,000 related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $2.4 million and a decrease in deferred revenue of $1.1 million.

### Net Cash Flows from Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2025 was $29.4 million, which primarily consisted of the sale of $32.4 million of marketable securities, partially offset by the purchase of $2.9 million of marketable securities.

Net cash provided by investing activities for the six months ended June 30, 2024 was $16.3 million, which primarily consisted of the sale of $58.8 million of marketable securities, partially offset by the purchase of $42.4 million of marketable securities.

### Net Cash Flows from Financing Activities

Net cash used by financing activities of $724,000 for the six months ended June 30, 2025 was primarily due to $815,000 used to settle taxes associated with restricted stock vesting, partially offset by proceeds of $91,000 related to the exercise of stock options.

Net cash provided by financing activities of $189,000 for the six months ended June 30, 2024 was primarily attributable to exercises of stock options.

### Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of June 30, 2025 (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Payments Due by Period ​ ​ Total | ​ ​ | ​ ​ Less than 1 Year | ​ ​ | ​ ​ 1-3 Years | ​ ​ | ​ ​ 3-5 Years | ​ ​ | ​ ​ More than 5 Years |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Operating lease obligations | ​ | $2,241 | ​ | $806 | ​ | $1,435 | ​ | $— | ​ | $— |
| Debt, principal and interest(1) | ​ | ​ 19,555 | ​ | ​ 1,445 | ​ | ​ 13,691 | ​ | ​ 4,419 | ​ | ​ — |
| **Total** | **​** | **$21,796** | **​** | **$2,251** | **​** | **$15,126** | **​** | **$4,419** | **​** | **$—** |

(1) In November 2024, we entered into the 2024 LSA with Hercules. The 2024 LSA will mature in November 2028. Refer to Note 13 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, 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.

We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. For further information, see Note 2 to the Consolidated Financial Statements – “*Summary of Significant Accounting Policies.”*

### Revenue Recognition

We recognize revenue under the core principle according to ASC 606 to depict the transfer of control to our customers in an amount reflecting the consideration we expect to be entitled to. In order to achieve that core principle, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied.

Our revenues are currently comprised of partnership revenues under the Terumo Agreement related to the development and commercialization of Virtue SAB, and product revenue from the sale of FreeHold’s intracorporeal organ retractors.

### Partnership Revenues

To date, our partnership revenues have related to the Terumo Agreement described below. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement, discussed in Note 4 to the Consolidated Financial Statements.

Legacy Orchestra entered into the Terumo Agreement as further described in Note 3 to the Consolidated Financial Statements. We assessed whether the Terumo Agreement fell within the scope of ASC 808 based on whether the arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. We determined that the Terumo Agreement did not fall within the scope of ASC 808. We then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606.

The promised goods or services in the Terumo Agreement include (i) license rights to our intellectual property and (ii) research and development services. We also have optional additional items in the Terumo Agreement, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct in the Terumo Agreement, we considered factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

We estimate the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services pursuant to the Terumo Agreement. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, we evaluate the amount of potential payment and the likelihood that the payments will be received. We utilize either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method better predicts the amount expected to be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price.

The Terumo Agreement contains development and regulatory milestone payments. At contract inception and at each reporting period, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect partnership revenues and earnings in the period of adjustment.

The Terumo Agreement also includes sales-based royalties and the license is deemed to be the predominant item to which the royalties relate. Accordingly, we will recognize royalty revenue when the related sales occur. To date, we have not recognized any royalty revenue under the arrangement.

We have determined that intellectual property licensed to Terumo and the research and development services to be provided to support the premarket approval by the FDA for the ISR indication represent a combined performance obligation that is satisfied over time, which is currently estimated to be completed in 2029, and that the appropriate method of measuring progress for purposes of recognizing revenues relates to a proportional performance model that measures the proportional performance based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the performance obligation. We evaluate the measure of progress at each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

In the six months ended June 30, 2025, we updated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation. The impact of the changes in estimates resulted in a reduction in partnership revenues of $27,000, which resulted in a de minimis effect on net loss per share, basic and diluted. In the six months ended June 30, 2024, the impact of the changes in estimates resulted in a reduction of partnership revenues of $382,000, which resulted in a $0.01 effect on net loss per share, basic and diluted.

We receive payments from Terumo based on billing schedules established in the contract. Such billings for milestone related events have 10-day terms from the date the milestone is achieved, royalty payments are 20-day terms after the close of each quarter, any optional services are 20 days after receipt of an invoice and sales of SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional.

In June 2022, Legacy Orchestra, BackBeat Medical, LLC and Medtronic entered into the Medtronic Agreement 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. We determined that the arrangement is a collaboration within the scope of ASC 808. In addition, we concluded Medtronic is a customer for a good or service that is a distinct unit of account, and therefore the transactions in the Medtronic Agreement should be accounted for under ASC 606. Through June 30, 2025, there have been no amounts recognized as revenue under the Medtronic Agreement.

### Product Revenues

Product revenues related to sales of FreeHold’s intracorporeal organ retractors are recognized at a point-in-time upon the shipment of the product to the customer, and there are no significant estimates or judgments related to estimating the transaction price. The product revenues consist of a single performance obligation, and the payment terms are typically 30 days. Product revenues are recognized solely in the United States.

### Research and Development Prepayments, Accruals and Related Expenses

We incur costs of research and development activities conducted by our third-party service providers, which include the conduct of preclinical and clinical studies. We are required to estimate our prepaid and accrued research and development costs at each reporting date. These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with our service providers. We determine the estimates of research and development activities incurred at the end of each reporting period through discussion with internal personnel and outside service providers, as to the progress or stage of completion of trials or services, as of the end of the reporting period, pursuant to contracts with the third parties and the agreed upon fees to be paid for such services. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are accepted by us or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced.

### Stock-Based Compensation

We account for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model and the fair value of restricted stock is measured based on the fair value of the Company Common Stock underlying the award as of the grant date, described further below. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for stock-based compensation awards is the date of grant and the expense is recognized on a straight-line basis, over the vesting period. We account for forfeitures as they occur.

Prior to the Business Combination, due to the absence of an active market for Legacy Orchestra’s common stock, Legacy Orchestra utilized methodologies, approaches, and assumptions consistent with the American Institute of Certified

Public Accountants’ Audit and Accounting Practice Guide: Valuation of Privately-Held Company Equity Securities Issued as Compensation to estimate the fair value of its common stock. The fair value of Legacy Orchestra’s common stock was determined based upon a variety of factors, including valuations of Legacy Orchestra’s common stock performed with the assistance of independent third-party valuation specialists; Legacy Orchestra’s stage of development and business strategy, including the status of research and development efforts of its product candidates, and the material risks related to its business and industry; Legacy Orchestra’s business conditions and projections; Legacy Orchestra’s results of operations and financial position, including its levels of available capital resources; the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies; the lack of marketability of Legacy Orchestra’s common stock as a private company; the prices of Legacy Orchestra’s convertible preferred stock sold to investors in arm’s length transactions and the rights, preferences and privileges of its convertible preferred stock relative to those of its common stock; the likelihood of achieving a liquidity event for the holders of Legacy Orchestra’s common stock, such as an initial public offering or a sale of Legacy Orchestra given prevailing market conditions; trends and developments in its industry; the hiring of key personnel and the experience of management; and external market conditions affecting the life sciences and biotechnology industry sectors. Significant changes to the key assumptions underlying the factors used could result in different fair values of Legacy Orchestra’s common stock at each valuation date. In determining the exercise prices for options granted and fair value of restricted stock, we have considered the fair value of the common stock as of the grant date.

Prior to the Business Combination, valuation analyses were conducted utilizing a probability weighted expected return method, in which the probability of a public company scenario was considered via either an initial public offering or special purpose acquisition company transaction. Subsequent to the Business Combination, fair value was determined by market prices of the Company Common Stock.

We classify stock-based compensation expense in our condensed consolidated statements of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model, which is based on the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment and estimation by management.

- *Expected Term —* The expected term represents the period that stock-based awards are expected to be outstanding. Our historical share option exercise information is limited due to a lack of sufficient data points and does not provide a reasonable basis upon which to estimate an expected term. The expected term for option grants is therefore determined using the “simplified” method, as prescribed in the SEC’s Staff Accounting Bulletin (SAB) No. 107. The simplified method deems the expected term to be the midpoint between the vesting date and the contractual life of the stock-based awards.
- *Expected Volatility —* We consummated the Business Combination on January 26, 2023 and lack sufficient company-specific historical and implied volatility information. Therefore, we derived expected stock volatility using a weighted average blend of historical volatility of comparable peer public companies and our own historical volatility, over a period equivalent to the expected term of the stock-based awards.
- *Risk-Free Interest Rate —* The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the stock-based awards’ expected term.
- *Expected Dividend Yield —* The expected dividend yield is zero as neither we nor Legacy Orchestra has paid, and we do not anticipate paying, any dividends on the Company Common Stock in the foreseeable future.
- *Common Stock Valuation —* Prior to the Business Combination, given the absence of a public trading market for Legacy Orchestra’s common stock, Legacy Orchestra’s board of directors considered numerous subjective and objective factors to determine the best estimate of fair value of Legacy Orchestra’s common stock underlying the stock options granted to its employees and non-employees. In determining the grant date fair value of Legacy

Orchestra’s common stock, Legacy Orchestra’s board considered, among other things, contemporaneous valuations of its common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, *Valuation of Privately-Held-Company Equity Securities Issued as Compensation*. Following the Business Combination, our board of directors determines the fair value of the Company Common Stock based on the closing price of the Company Common Stock on or around the date of grant.

During the three months ended June 30, 2025 and 2024, stock-based compensation was $3.2 million and $2.8 million, respectively. During the six months ended June 30, 2025 and 2024, stock-based compensation was $6.2 million and $5.3 million, respectively. As of June 30, 2025, we had approximately $16.8 million of total unrecognized stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.3 years.

### 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.

### Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our Consolidated Financial Statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the closing of the initial public offering of HSAC2, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of the Company Common Stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting Company 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 Company Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

## Controls and procedures

As filed, 2,504 characters.

#### 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 June 30, 2025, 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 June 30, 2025.

#### 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 June 30, 2025 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 error 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.

## Risk factors

As filed, 456 characters.

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 2024 10-K and in Item 1A in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the “Q1 2025 Form 10-Q”). Except as set forth in the Q1 2025 Form 10-Q, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A in the 2024 10-K.

Filed Aug 12, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-011148. Last ingested by Listed: Nov 6, 2026, 18:18 ET. No prices; not investment advice.