A closer look at last week’s financing news — and what comes next

Fellow Shareholders: 

This week, Orchestra BioMed announced that the Company has secured over $111 million in proceeds and committed capital, following the completion of its strategic transactions as well as concurrent public and private equity offerings.

Because several interlocking financing mechanisms were announced in rapid succession, we will publish a series of concise blog posts during the first half of August 2025 to highlight the most important elements of this activity for shareholders and other stakeholders.

Today’s post will explain how the recent investments and public offering strengthen our cash position while managing share expansion.

What the investments and offering deliver

The financing package announced last week in total will add over $111 million in gross proceeds to OBIO’s balance sheet when all the various funding streams are complete, and consists of three basic components – including commitments from Ligand Pharmaceuticals Incorporated (NASDAQ: LGND), an established royalty investor, and also from OBIO’s strategic partner Medtronic, Inc., the global market leader in cardiac rhythm management:

• Public follow-on offering.
  • 9,413,367 shares of common stock and pre-funded warrants to purchase up to an aggregate of 5,136,363 shares of common stock raised gross proceeds of approximately $40 million at $2.75 per share.
• Ligand commitment.
  • Non-dilutive $35 million commitment for a tiered royalty interest in Orchestra’s future royalty revenues from AVIM Therapy and Virtue SAB as well as a $5 million investment in a private placement offering of shares of our common stock at a purchase price of $2.75 per share.
• Medtronic commitment.
  • Non-dilutive $20 million commitment for secured note that converts to prepaid royalties upon FDA approval of AVIM therapy, plus an $11.2 million investment in a private placement offering of shares of our common stock at a purchase price of $2.75 per share.

Management estimates that these proceeds, combined with cash that was already on the balance sheet or expected to be received in future, will extend OBIO’s projected runway into the third quarter of 2027, funding completion of enrollment and follow up of primary endpoints data for the BACKBEAT global pivotal study and substantial enrollment of the Virtue SAB U.S. coronary pivotal trial. Approximately half of the new capital arrives through royalty or revenue-linked instruments that provide cash without creating/adding dilutive common equity on day one.

Shareholders should note that Ligand is a biopharmaceutical company enabling scientific advancement through supporting clinical development of high-value medicines. The basis for their investment in OBIO was extensive due diligence, backed by decades of institutional knowledge of the healthcare innovation sector. It is meaningful that they made a long-term commitment to OBIO in the form of a capital partnership, the upside of which derives only from the future commercial success of our lead innovation programs.

Also important: industry-leader Medtronic’s ongoing, and now increased, investment in OBIO reflects its commitment to our collaboration and the clinical and commercial potential of AVIM therapy.

Overall, we believe our strategic capital transactions with Medtronic and Ligand along with sophisticated healthcare investors participation in our public offering shows confidence in the transformative potential our technology and partnership-enabled business model. Management believes the completion of the company’s first underwritten public offering also broadened our institutional shareholder base and enhanced liquidity for all shareholders.

Subsequent Form 4 and Schedule 13 filings will confirm that insiders, including Chief Executive Officer David Hochman, Perceptive and RTW, also participated in the offering on the same economic terms as external investors, underscoring internal confidence in the Company’s outlook.

Liquidity and share expansion, in context

The follow-on public offering raised the minority portion of the $111 million-plus in proceeds, limiting the amount of new shares OBIO issued in the process of securing significant additional capital resources. The new shares were priced at a modest discount to the market price on the trading day the public offering was announced, in line with what is typical for an offering of this kind, and without any additional dilutive structures such as accompanying common stock warrants which are now frequently issued in similar transaction to provide additional incentives to new investors.  As one of the largest overall financings completed by a company in our range of market capitalization in the healthcare sector, we would highlight several considerations about our completed $111 million financing:

1. Capital efficiency. The royalty purchase and revenue-linked note furnish cash without issuing additional common shares at today’s valuation, significantly limiting dilution relative to a pure-equity raise.
2. High-conviction participation. Equity purchased and other investment commitments by Ligand and Medtronic along with equity purchased by established healthcare funds signals conviction in the OBIO opportunity.
3. Multi-year funding clarity. With the balance sheet now positioned to cover both late-stage clinical programs, Orchestra BioMed can execute on its key clinical milestones (the BACKBEAT study and enrollment for the Virtue SAB trial)without near-term dependence on additional equity-market activity.

Taken together, we believe that the investments and public and private offerings lay the groundwork for additional liquidity in the stock and substantially strengthen our balance sheet.

Looking ahead

Hypertension and atherosclerotic artery disease remain large, global markets with substantial unmet clinical need. Orchestra BioMed’s device-based AVIM therapy and Virtue Sirolimus AngioInfusion Balloon target high-risk patient populations with these conditions with differentiated mechanisms intended to improve outcomes while fitting seamlessly into existing interventional workflows.

Financial commitments from industry leaders such as Medtronic and established biopharma royalty investors like Ligand demonstrate strong conviction in the science underlying OBIO’s technologies, as well as in OBIO’s ability to deliver regulatory-submission-ready products for our strategic collaborators to bring to market.

— Team OBIO