Document And Entity Information
Document And Entity Information | 6 Months Ended |
Jun. 30, 2023 | |
Document And Entity Information Abstract | |
Document Type | S-1 |
Entity Registrant Name | ORCHESTRA BIOMED HOLDINGS, INC. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001814114 |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ 16,409 | $ 19,784 | $ 9,938 | ||||
Marketable securities | 101,295 | 63,915 | |||||
Strategic investments, current portion | 69 | 86 | 958 | ||||
Accounts receivable, net | 171 | 96 | 121 | ||||
Inventory | 178 | 276 | 68 | ||||
Prepaid expenses and other current assets | 1,468 | 533 | 234 | ||||
Total current assets | 119,590 | 84,690 | 11,319 | ||||
Property and equipment, net | 1,407 | 1,489 | 1,120 | ||||
Right-of-use assets | 1,874 | 2,187 | |||||
Strategic investments, less current portion | 2,495 | 2,495 | 398 | ||||
Deposits and other assets | 517 | 4,711 | 690 | ||||
TOTAL ASSETS | 125,883 | 95,572 | 13,527 | ||||
CURRENT LIABILITIES: | |||||||
Accounts payable | 3,011 | 3,968 | 2,029 | ||||
Accrued expenses and other liabilities | 3,826 | 5,376 | 2,034 | ||||
Operating lease liability, current portion | 729 | 697 | |||||
Warrant liability | 2,089 | 635 | |||||
Deferred revenue, current portion | 4,294 | 6,436 | 5,542 | ||||
Total current liabilities | 11,860 | 18,566 | 12,240 | ||||
Deferred revenue, less current portion | 13,498 | 13,103 | 16,859 | ||||
Loan payable | 9,563 | 9,490 | 3,673 | ||||
Operating lease liability, less current portion | 1,310 | 1,683 | |||||
Other long-term liabilities | 213 | 196 | 535 | ||||
TOTAL LIABILITIES | 36,444 | 43,038 | 33,307 | ||||
STOCKHOLDERS' EQUITY | |||||||
Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized; none issued or outstanding at June 30, 2023 and December 31, 2022. | |||||||
Common stock, $0.0001 par value per share; 340,000,000 shares authorized; 35,743,007 and 20,187,850 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. | 4 | 2 | 1 | ||||
Additional paid-in capital | 312,251 | 252,274 | 146,345 | ||||
Accumulated other comprehensive loss | (96) | (8) | |||||
Accumulated deficit | (222,720) | (199,734) | (166,126) | ||||
TOTAL STOCKHOLDERS' EQUITY | 89,439 | $ 99,752 | 52,534 | $ 69,506 | $ 78 | (19,780) | $ 2,910 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 125,883 | $ 95,572 | $ 13,527 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2023 | Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||||
Preference shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preference shares, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preference shares, shares issued | 0 | 0 | 0 | |
Preference shares, shares outstanding | 0 | 0 | 0 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 340,000,000 | 340,000,000 | 340,000,000 | 340,000,000 |
Common stock, shares issued | 35,743,007 | 20,187,850 | 8,822,280 | |
Common stock, shares outstanding | 35,743,007 | 20,187,850 | 8,822,280 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | ||||||||
Revenue | $ 915 | $ 401 | $ 2,079 | $ 1,267 | $ 3,533 | $ (782) | ||
Expenses: | ||||||||
Cost of product revenues | 54 | 60 | 98 | 102 | 211 | 199 | ||
Research and development | 8,499 | 5,029 | 16,753 | 8,503 | 21,945 | 12,890 | ||
Selling, general and administrative | 5,318 | 2,946 | 9,729 | 5,424 | 14,034 | 7,928 | ||
Total expenses | 13,871 | 8,035 | 26,580 | 14,029 | 36,190 | 21,017 | ||
Loss from operations | (12,956) | (7,634) | (24,501) | (12,762) | (32,657) | (21,799) | ||
Other income (expense): | ||||||||
Interest income (expense), net | 941 | (246) | 1,826 | (482) | 50 | (927) | ||
Loss on fair value adjustment of warrant liability | (1,015) | (294) | (1,160) | (1,350) | 699 | |||
Loss on debt extinguishment | (682) | (682) | (682) | |||||
(Loss) gain on fair value of strategic investments | (31) | 1,730 | (17) | 1,510 | 1,031 | (987) | ||
Total other income (expense) | 910 | (213) | 1,515 | (814) | (951) | (1,215) | ||
Net loss | $ (12,046) | $ (10,940) | $ (7,847) | $ (5,729) | $ (22,986) | $ (13,576) | $ (33,608) | $ (23,014) |
Net loss per share | ||||||||
Basic (in Dollars per share) | $ (0.35) | $ (0.77) | $ (0.74) | $ (0.74) | $ (2.24) | $ (2.61) | ||
Diluted (in Dollars per share) | $ (0.35) | $ (0.77) | $ (0.74) | $ (0.74) | $ (2.24) | $ (2.61) | ||
Weighted-average shares used in computing net loss per share, basic (in Shares) | 34,613,466 | 10,138,169 | 31,228,323 | 18,446,239 | 14,988,584 | 8,818,115 | ||
Weighted-average shares used in computing net loss per share, diluted (in Shares) | 34,613,466 | 10,138,169 | 31,228,323 | 18,446,239 | 14,988,584 | 8,818,115 | ||
Comprehensive loss | ||||||||
Net loss | $ (12,046) | (10,940) | $ (7,847) | $ (5,729) | $ (22,986) | $ (13,576) | $ (33,608) | $ (23,014) |
Unrealized loss on marketable securities | (61) | $ (27) | (88) | (8) | 2 | |||
Comprehensive loss | (12,107) | (7,847) | (23,074) | (13,576) | (33,616) | (23,012) | ||
Partnership revenue | ||||||||
Revenue: | ||||||||
Revenue | 728 | 229 | 1,747 | 945 | 2,862 | (1,475) | ||
Product revenue | ||||||||
Revenue: | ||||||||
Revenue | $ 187 | $ 172 | $ 332 | $ 322 | $ 671 | $ 693 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders Equity (Deficit) - USD ($) | Previously Reported Convertible Preferred Stock | Previously Reported Common Stock | Previously Reported Additional Paid-In Capital | Previously Reported Accumulated Other Comprehensive (Loss) | Previously Reported Accumulated Deficit | Previously Reported | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) | Accumulated Deficit | Total |
Retroactive application of reverse capitalization (Note 3) | $ (51,452,000) | $ 1,000 | $ 51,451,000 | $ 51,452,000 | |||||||
Retroactive application of reverse capitalization (Note 3) (in shares) | (12,075,976) | 6,761,598 | |||||||||
Balance at Dec. 31, 2020 | $ 51,452,000 | 94,572,000 | $ (2,000) | $ (143,112,000) | (48,542,000) | $ 1,000 | $ 146,023,000 | $ (2,000) | $ (143,112,000) | $ 2,910,000 | |
Balance (in shares) at Dec. 31, 2020 | 12,075,976 | 2,056,497 | 8,818,095 | ||||||||
Unrealized loss on marketable securities | 2,000 | 2,000 | |||||||||
Stock-based compensation | 302,000 | 302,000 | |||||||||
Exercise of stock options | 3,000 | 3,000 | |||||||||
Exercise of stock options (in shares) | 697 | ||||||||||
Exercise of warrants | 17,000 | 17,000 | |||||||||
Exercise of warrants (in shares) | 3,488 | ||||||||||
Net loss | (23,014,000) | (23,014,000) | |||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in Shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Retroactive application of reverse capitalization (Note 3) | $ (51,452,000) | $ 1,000 | 51,451,000 | 51,452,000 | |||||||
Retroactive application of reverse capitalization (Note 3) (in shares) | (12,075,976) | 6,636,983 | |||||||||
Stock-based compensation | 70,000 | 70,000 | |||||||||
Exercise of stock options | 25,000 | 25,000 | |||||||||
Exercise of stock options (in shares) | 5,696 | ||||||||||
Exercise of warrants | 230,000 | 230,000 | |||||||||
Exercise of warrants (in shares) | 68,588 | ||||||||||
Proceeds from private placement financing | 25,262,000 | 25,262,000 | |||||||||
Proceeds from private placement financing (in shares) | 1,240,169 | ||||||||||
Net loss | (5,729,000) | (5,729,000) | |||||||||
Balance at Mar. 31, 2022 | $ 1,000 | 171,932,000 | (171,855,000) | 78,000 | |||||||
Balance (in Shares) at Mar. 31, 2022 | 10,136,733 | ||||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Net loss | (13,576,000) | ||||||||||
Balance at Jun. 30, 2022 | $ 2,000 | 249,206,000 | (179,702,000) | 69,506,000 | |||||||
Balance (in Shares) at Jun. 30, 2022 | 20,187,140 | ||||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Unrealized loss on marketable securities | (8,000) | (8,000) | |||||||||
Stock-based compensation | 3,375,000 | 3,375,000 | |||||||||
Exercise of stock options | 121,000 | 121,000 | |||||||||
Exercise of stock options (in shares) | 27,848 | ||||||||||
Exercise of warrants | 79,000 | 79,000 | |||||||||
Exercise of warrants (in shares) | 73,238 | ||||||||||
Proceeds from private placement financing | $ 1,000 | 101,632,000 | 101,633,000 | ||||||||
Proceeds from private placement financing (in shares) | 11,255,184 | ||||||||||
Shares issued pursuant to consulting agreement | 38,000 | 38,000 | |||||||||
Shares issued pursuant to consulting agreement (in shares) | 9,300 | ||||||||||
Issuance of warrants pursuant to debt financing | 178,000 | 178,000 | |||||||||
Other | 506,000 | 506,000 | |||||||||
Net loss | (33,608,000) | (33,608,000) | |||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | 86,353,000 | (8,000) | (199,734,000) | (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in Shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Balance at Mar. 31, 2022 | $ 1,000 | 171,932,000 | (171,855,000) | 78,000 | |||||||
Balance (in shares) at Mar. 31, 2022 | 10,136,733 | ||||||||||
Stock-based compensation | 219,000 | 219,000 | |||||||||
Exercise of stock options | 92,000 | 92,000 | |||||||||
Exercise of stock options (in shares) | 21,442 | ||||||||||
Exercise of warrants | (151,000) | (151,000) | |||||||||
Exercise of warrants (in shares) | 4,650 | ||||||||||
Proceeds from private placement financing | $ 1,000 | 76,392,000 | 76,393,000 | ||||||||
Proceeds from private placement financing (in shares) | 10,015,015 | ||||||||||
Shares issued pursuant to consulting agreement | 38,000 | 38,000 | |||||||||
Issuance of warrants pursuant to debt financing | 178,000 | 178,000 | |||||||||
Issuance of warrants pursuant to debt financing (in shares) | 9,300 | ||||||||||
Other | 506,000 | 506,000 | |||||||||
Net loss | (7,847,000) | (7,847,000) | |||||||||
Balance at Jun. 30, 2022 | $ 2,000 | 249,206,000 | (179,702,000) | 69,506,000 | |||||||
Balance (in Shares) at Jun. 30, 2022 | 20,187,140 | ||||||||||
Retroactive application of reverse capitalization (Note 3) | $ (165,923,000) | $ 2,000 | 165,921,000 | 165,923,000 | |||||||
Retroactive application of reverse capitalization (Note 3) (in shares) | (35,694,179) | 17,665,636 | |||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | 86,353,000 | (8,000) | (199,734,000) | (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Effect of Merger and recapitalization (refer to Note 3) | $ 1,000 | 54,301,000 | 54,302,000 | ||||||||
Effect of Merger and recapitalization (refer to Note 3) (in shares) | 11,422,741 | ||||||||||
Reclassification of Legacy Orchestra common stock warrants to stockholders' equity | 2,373,000 | 2,373,000 | |||||||||
Unrealized loss on marketable securities | (27,000) | (27,000) | |||||||||
Stock-based compensation | 1,489,000 | 1,489,000 | |||||||||
Exercise of stock options | $ 2,325 | 10,000 | 10,000 | ||||||||
Exercise of warrants | 128,231 | 11,000 | 11,000 | ||||||||
Net loss | (10,940,000) | (10,940,000) | |||||||||
Balance at Mar. 31, 2023 | $ 3,000 | 310,458,000 | (35,000) | (210,674,000) | 99,752,000 | ||||||
Balance (in Shares) at Mar. 31, 2023 | 31,741,147 | ||||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | $ 86,353,000 | $ (8,000) | $ (199,734,000) | $ (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Unrealized loss on marketable securities | (88,000) | ||||||||||
Net loss | (22,986,000) | ||||||||||
Balance at Jun. 30, 2023 | $ 4,000 | 312,251,000 | (96,000) | (222,720,000) | 89,439,000 | ||||||
Balance (in Shares) at Jun. 30, 2023 | 35,743,007 | ||||||||||
Balance at Mar. 31, 2023 | $ 3,000 | 310,458,000 | (35,000) | (210,674,000) | 99,752,000 | ||||||
Balance (in shares) at Mar. 31, 2023 | 31,741,147 | ||||||||||
Issuance of shares in settlement of earnout | $ 1,000 | 1,000 | |||||||||
Issuance of shares in settlement of earnout (in shares) | 3,999,987 | ||||||||||
Unrealized loss on marketable securities | (61,000) | (61,000) | |||||||||
Stock-based compensation | 1,707,000 | 1,707,000 | |||||||||
Exercise of stock options | 64,000 | 64,000 | |||||||||
Exercise of stock options (in shares) | 15,500 | ||||||||||
Exercise of warrants | 22,000 | 22,000 | |||||||||
Exercise of warrants (in shares) | 32,279 | ||||||||||
Forfeiture of restricted stock awards (in shares) | (45,906) | ||||||||||
Net loss | (12,046,000) | (12,046,000) | |||||||||
Balance at Jun. 30, 2023 | $ 4,000 | $ 312,251,000 | $ (96,000) | $ (222,720,000) | $ 89,439,000 | ||||||
Balance (in Shares) at Jun. 30, 2023 | 35,743,007 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (22,986) | $ (13,576) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 144 | 98 |
Shares issued as compensation for consulting services | 38 | |
Stock-based compensation | 3,196 | 289 |
Loss on fair value adjustment of warrant liability | 294 | 1,160 |
Loss (gain) on fair value of strategic investments | 17 | (1,510) |
Accretion and interest related to marketable securities | (2,118) | |
Loss on debt extinguishment | 682 | |
Non-cash lease expense | 313 | 269 |
Amortization of deferred financing fees | 73 | 91 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (75) | 41 |
Inventory | 98 | (65) |
Prepaid expenses and other assets | (723) | (485) |
Accounts payable, accrued expenses and other liabilities | (1,016) | 672 |
Operating lease liabilities - current and non-current | (341) | (48) |
Deferred revenue | (1,747) | (945) |
Net cash used in operating activities | (24,871) | (13,289) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (62) | (313) |
Sales of marketable securities | 64,200 | |
Purchases of marketable securities | (99,549) | (208) |
Net cash used in investing activities | (35,411) | (521) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of debt financing, inclusive of debt extinguishment costs | (6,446) | |
Proceeds from Avenue term loan | 10,000 | |
Proceeds from exercise of warrants | 23 | 79 |
Proceeds from exercise of stock options | 74 | 117 |
Effect of merger, net of transaction costs (Note 3) | 56,810 | |
Deferred financing, offering and merger costs | (2,735) | |
Net cash provided by financing activities | 56,907 | 110,845 |
Net (decrease) increase in cash and cash equivalents | (3,375) | 97,035 |
Cash and cash equivalents, beginning of the period | 19,784 | 9,938 |
Cash and cash equivalents, end of the period | 16,409 | 106,973 |
Cash paid during the six months ended June 30: | ||
Interest | 718 | 741 |
Non-cash financing activities: | ||
Deferred offering and merger costs in accounts payable and accrued expenses | 6,844 | |
Warrants issued pursuant to private placement financing | 620 | |
Warrants issued pursuant to debt financing | 178 | |
Series D-1 Preferred Stock | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from private placement financing | $ 109,830 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Organization and Basis of Presentation | ||
Organization and Basis of Presentation | 1. Orchestra BioMed Holdings, Inc. (formerly known as Health Sciences Acquisitions Corporation 2) (collectively, with its subsidiaries, “Orchestra” or the “Company”) is a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies. The Company’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. The Company’s flagship product candidates are 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. 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 (the “Closing Date”), the Company 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 (“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, the Company’s name was changed from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” See Note 3 for additional information. Legacy Orchestra, the Company’s wholly owned subsidiary, was incorporated in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private placements. In May 2018, Legacy Orchestra concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc. (“Caliber”), a Delaware corporation, BackBeat Medical, Inc. (“BackBeat”), a Delaware Corporation, and FreeHold Surgical, Inc. (“FreeHold”), a Delaware corporation. Caliber Caliber was incorporated in Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such as a stent in the artery. In 2019, Legacy Orchestra entered into a distribution agreement with Terumo Medical Corporation (“Terumo”) for global development and commercialization of Virtue SAB (the “Terumo Agreement”) (See Note 4). BackBeat BackBeat was incorporated in Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable cardiac stimulation-based treatment for hypertension that is designed to immediately, substantially and persistently lower blood pressure while simultaneously modulating autonomic nervous system responses that normally drive and maintain blood pressure higher. BackBeat is currently in a pre-revenue stage of operations. Refer to Note 5 for details regarding 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”). FreeHold FreeHold was incorporated in Delaware in May 2010 and began development of its hands-free, intracorporeal retractor device for minimally-invasive surgery in 2012. FreeHold is engaged in the development, sales and marketing of its retractor products that provide optimized visual and total surgeon control during laparoscopic and robotic procedures. Basis of Presentation and Liquidity The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulation of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. These condensed statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to fairly present the results of the interim periods. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date. Operating results and cash flows for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our report for the year ended December 31, 2022 together with the related notes thereto, filed as Exhibit 99.1 to the Company’s Form 8-K/A filed with the SEC on March 24, 2023. The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of June 30, 2023, the Company had an accumulated deficit of $222.7 million and has experienced net losses each year since its inception. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance its products to commercialization. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biomedical device industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern Based on the available balance of cash and cash equivalents and marketable securities as of June 30, 2023, management has concluded that sufficient capital is available to fund its operations and meet cash requirements through the one-year period subsequent to the issuance date of these financial statements. Management may consider plans to raise capital beyond the one-year period subsequent to the issuance date of these financial statements through issuance of equity securities, debt securities, and/or additional development and commercialization partnerships for other products within the Company’s development pipeline. The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of the Company’s research and development programs. | 1. Orchestra BioMed Holdings, Inc. (formerly known as Health Sciences Acquisitions Corporation 2) (collectively, with its subsidiaries, “Orchestra” or the “Company”) is a biomedical innovation company seeking to provide high-impact solutions for large unmet needs in procedure-based medicine. The Company’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. The Company’s business model seeks to adapt the strategic partnering tactics widely used by the biopharmaceutical industry to the medical device market. The Company’s goal is to accelerate and improve the likelihood of the Company’s product candidates reaching patients and providers worldwide by sharing the risks and rewards of developing and commercializing these product candidates with established companies. The Company’s flagship product candidates are Virtue Sirolimus AngioInfusion Balloon (“Virtue SAB”) for the treatment of artery disease, the leading cause of mortality worldwide, and BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”) for the treatment of hypertension, a significant risk factor for death worldwide. The Company has additional product candidates in its pipeline and plans to thoughtfully expand its product pipeline in the future through acquisitions, strategic collaborations, licensing and organic development. Orchestra BioMed, Inc. (“Legacy Orchestra”) was incorporated in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private placements. In May 2018, Legacy Orchestra concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc. (“Caliber”), a Delaware corporation, BackBeat Medical, Inc. (“BackBeat”), a Delaware Corporation, and FreeHold Surgical, Inc. (“FreeHold”), a Delaware corporation. Caliber Caliber was incorporated in Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such as a stent in the artery. In 2019, the Company entered into a distribution agreement with Terumo Medical Corporation (“Terumo”) for global development and commercialization of Virtue SAB (the “Terumo Agreement”) (Note 3). BackBeat BackBeat was incorporated in Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable cardiac stimulation-based treatment for hypertension that is designed to immediately, substantially and persistently lower blood pressure while simultaneously modulating autonomic nervous system responses that normally drive and maintain blood pressure higher. BackBeat is currently in a pre-revenue stage of operations. Refer to Note 4 for details regarding the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”). FreeHold FreeHold was incorporated in Delaware in May 2010 and began development of its hands-free, intracorporeal retractor device for minimally-invasive surgery in 2012. FreeHold is engaged in the development, sales and marketing of its retractor products that provide optimized visual and total surgeon control during laparoscopic and robotic procedures. The Company generated revenue of approximately $693,000 and $671,000 during the years ended December 31, 2021 and 2022, respectively related to this legacy FreeHold Surgical, Inc. technology. Business Combination Transaction Prior to January 26, 2023, Health Sciences Acquisitions Corporation 2 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 (the “Closing Date”), the Company 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 (“HSAC2”), HSAC Olympus Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HSAC2 (“Merger Sub”), and 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, the Company’s name was changed from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represent the operations of Legacy Orchestra, and the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). Upon the closing of the Business Combination, the Company’s certificate of incorporation provided for, among other things, a total number of authorized shares of capital stock of 350,000,000 shares, of which 340,000,000 shares were designated common stock, $0.0001 per value per share, and of which 10,000,000 shares were designated preferred stock, $0.0001 par value per share. Basis of Presentation and Liquidity The accompanying consolidated financial statements herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of December 31, 2022, the Company had an accumulated deficit of $199.7 million and has experienced net losses each year since its inception. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance its products to commercialization. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern Based on the available balance of cash and cash equivalents and marketable securities as of December 31, 2022, as well as the proceeds received from the consummation of the Business Combination in January 2023 (Note 14), management has concluded that sufficient capital is available to fund its operations and meet cash requirements through the one-year period subsequent to the issuance date of these financial statements. Management may consider plans to raise capital beyond the one-year period subsequent to the issuance date of these financial statements through issuance of equity securities, debt securities, and/or additional development and commercialization partnerships for other products within the Company’s development pipeline. The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of the Company’s research and development programs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | 2. Reverse Recapitalization The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represent the operations of Legacy Orchestra, and the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). For additional information on the Business Combination and the Exchange Ratio, see Note 3 to these unaudited condensed consolidated financial statements. Emerging Growth Company and Smaller Reporting Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)., As such, it is 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. The Company has 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, the Company, 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 the Company’s condensed 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. The Company 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 the Company has total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which the Company is 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 the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. The Company is also a “smaller reporting company” as defined in the Exchange Act. The Company may continue to be a smaller reporting company even after the Company is no longer an emerging growth company. The Company 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 the Company’s voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of the Company’s second fiscal quarter, or (ii)(a) the Company’s annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of the Company’s voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of the Company’s second fiscal quarter. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 4). Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ equity as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a Motus GI Holdings, Inc. (“Motus GI”), a publicly-held company and related party, and preferred shares of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party. The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities. Therefore, the Company categorized the investments as current assets. 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. Additionally, as the investments in Vivasure are not readily marketable, the Company categorized the investments as non-current assets. As of June 30, 2023 and December 31, 2022, the carrying value of the investments in Vivasure was $2.5 million. Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at June 30, 2023, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 6 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of June 30, 2023 and December 31, 2022, an allowance for doubtful accounts was not deemed necessary. Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of June 30, 2023 and December 31, 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its third-party service providers, which include the conduct of preclinical and clinical studies. The Company is required to estimate its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the terms of the arrangement. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use (“ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is to not record leases with a lease term of 12 months or less on its balance sheets. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the statements of operations. Payments due under each lease agreement include fixed and variable payments. Variable payments relate to the Company’s share of the lessor’s operating costs associated with the underlying asset and are recognized when the event on which those payments are assessed occurs. Variable payments have been excluded from the lease liability and associated right-of-use asset. The interest rate implicit in lease agreements is typically not readily determinable, and as such, the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity, Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. 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. Partnership Revenues To date, the Company’s partnership revenues have related to the Terumo Agreement as further described in Note 4. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 5. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the U.S. Food and Drug Administration (the “FDA”) for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the Company’s condensed consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss is the same as diluted net loss since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, Earnout Consideration (Note 3) and unvested restricted stock awards. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares (as defined in Note 3)) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees were deferred to be offset against proceeds received when the Business Combination was completed. As of December 31, 2022, there were $4.0 million of deferred transaction costs included in deposits and other assets on the accompanying condensed consolidated balance sheet. Upon the close of the Business Combination, these deferred costs were recorded against net proceeds in additional paid-in capital. For further discussion on the Business Combination, see Note 3. Defined Contribution Plan The Company has a defined retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. Effective January 1, 2023, the Company participates in a matching safe harbor 401(k) Plan with a Company contribution of up to 3.5% of each eligible participating employee’s compensation. Safe harbor contributions vest immediately for each participant. During the three and six months ended June 30, 2023, the Company made $67,000 and $181,000, respectively, in contributions under this safe harbor 401(k) Plan. Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | 2. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 3). Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ deficit as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a publicly-held company and related party (Motus GI) and preferred shares and convertible notes of a privately-held company and related party (Vivasure). The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at December 31, 2022, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 5 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of December 31, 2021 and 2022, an allowance for doubtful accounts was not deemed necessary. Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of December 31, 2021 and 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”) The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities for leases that are less than one year in duration. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities). Upon adoption on January 1, 2022, the Company recognized ROU assets of $2.6 million and lease liabilities of $2.9 million. The adoption of the new lease standard did not impact the Company’s condensed consolidated statement of operations and comprehensive loss or its condensed consolidated statement of cash flows. The effect of the transition adjustment along with balances before, and after adoption is outlined below: Deferred ROU Lease lease liability Assets Liabilities Balance – December 31, 2021 $ 241 $ — $ — ASC 842 Transition adjustment (241) 2,612 2,853 Balance – January 1, 2022 $ — $ 2,612 $ 2,853 The Company determines if an arrangement is a lease at inception. For the Company’s operating leases, the ROU asset represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since all the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. 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 judgements 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. Partnership Revenues To date, the Company’s Partnership revenues related to the Terumo Agreement as further described in Note 3. In future periods, Partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 4. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the FDA for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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 do the total costs expected to be incurred through the completion of the performance obligation. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss per share by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss attributable to common stockholders is the same as diluted net loss attributable to common stockholders since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, and restricted stock. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees, are deferred and will be offset against proceeds received when the financing events are completed. In the event the offering or merger is terminated, all deferred costs will be expensed. As of December 31, 2022, the Company has capitalized $4.0 million of deferred merger costs related to the Business Combination discussed in Note 15, which are included in deposits and other assets on the accompanying balance sheet. As of December 31, 2021, the Company capitalized $100,000 of deferred offering costs related to private placement financings, which was offset against the proceeds received in March of 2022. Defined Contribution Plan The Company has a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. The Company does not make matching employee contributions. Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . During 2018 and 2019, the FASB also issued subsequent amendments to the initial guidance (collectively, “Topic 326”). Topic 326 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Topic 326 will be effective for the Company on January 1, 2023. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 — Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions |
Business Combination and Recapi
Business Combination and Recapitalization | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Recapitalization | |
Business Combination and Recapitalization | 3. On January 26, 2023, Legacy Orchestra and HSAC2 consummated the Business Combination, with Legacy Orchestra surviving as a wholly owned subsidiary of HSAC2. As part of the Business Combination, HSAC2 changed its name to Orchestra BioMed Holdings, Inc. Upon the closing of the Business Combination (the “Closing”), the Company’s certificate of incorporation provided for, among other things, a total number of authorized shares of capital stock of 350,000,000 shares, of which 340,000,000 shares were designated common stock, $0.0001 par value per share, and of which 10,000,000 shares were designated preferred stock, $0.0001 par value per share. The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. The net assets of HSAC2 are stated at historical cost, with no goodwill or intangible In connection with the Business Combination, HSAC 2 Holdings, LLC (the “Sponsor”) agreed that 25% or 1,000,000 shares of its shares of common stock of the Company (“Company Common Stock”) will be forfeited to the Company (the “Forfeitable Shares”) on the first business day following the fifth anniversary of the Closing unless, as to 500,000 shares, the volume-weighted average price of the Company Common Stock is greater than or equal to $15.00 per share over any 20 trading days within any 30-trading day period (the “Initial Milestone Event”), and as to the remaining 500,000 shares, the volume-weighted average price of the Company Common Stock is greater than or equal to $20.00 per share over any 20 trading days within any 30-trading day period (the “Final Milestone Event”). Further, the Sponsor and HSAC2’s other initial shareholders prior to HSAC2’s initial public offering (the “HSAC2 IPO”) agreed to subject (i) the 4,000,000 shares of Company Common Stock issued to HSAC2’s initial shareholders prior to the HSAC2 IPO (the “Insider Shares”) and (ii) the 450,000 shares of Company Common Stock purchased in a private placement simultaneously with the HSAC2 IPO (the “Private Shares”) to a lock-up for up to 12 months following the Closing, and the Sponsor forfeited 50% of its 1,500,000 warrants in HSAC2 purchased upon consummation of the HSAC2 IPO (the “Private Warrants”), comprising 750,000 Private Warrants, for no consideration, immediately prior to the Closing (the “Sponsor Forfeiture”). Pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, HSAC2 issued 750,000 warrants to purchase Company Common Stock to eleven specified employees and directors of Legacy Orchestra. These new warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 and 36 months after the Closing. On April 12, 2023, the Initial Milestone Event was achieved, and, as a result, 500,000 of the Forfeitable Shares are no longer subject to forfeiture. In connection with the Business Combination, existing Legacy Orchestra stockholders also had the opportunity to elect to participate in an earnout (the “Earnout”) pursuant to which each such electing stockholder (an “Earnout Participant”) may receive a portion of additional contingent consideration of up to 8,000,000 shares of Company Common Stock in the aggregate (“Earnout Consideration”). Each Earnout Participant agreed to extend their applicable lock-up period from 6 months to 12 months, pursuant to an Earnout Election Agreement and such Earnout Participants will collectively be entitled to receive: (i) 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, from the time beginning immediately after the Closing until the fifth anniversary of the Closing Date (the “Earnout Period”), the Initial Milestone Event occurs; and (ii) an additional 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, during the Earnout Period, the Final Milestone Event occurs. Approximately, 91% of Legacy Orchestra stockholders elected to participate in the Earnout. On April 12, 2023, the Initial Milestone Event was achieved, and each Earnout Participant was issued their Pro Rata Portion (as such term is defined in the Merger Agreement) of 4,000,000 shares of Company Common Stock, resulting in a total of 3,999,987 shares of Company Common Stock being issued due to rounding. Simultaneously with the execution of the Merger Agreement, HSAC2 and Legacy Orchestra entered into separate forward purchase agreements (each, as amended, a “Forward Purchase Agreement” and, together, the “Forward Purchase Agreements”) with certain funds managed by RTW Investments, LP (the “RTW Funds”) and Covidien Group S.à.r.l., an affiliate of Medtronic plc (“Medtronic” and the RTW Funds, each a “Purchasing Party”), pursuant to which each of the Purchasing Parties agreed to purchase $10 million of ordinary shares of HSAC2 (“HSAC2 Ordinary Shares”) immediately prior to the Domestication (as defined below), less the dollar amount of HSAC2 Ordinary Shares holding redemption rights that the Purchasing Party acquired and held until immediately prior to the Domestication (such HSAC2 Ordinary Shares either purchased from HSAC2 or acquired and held until immediately prior to the Domestication, the “Forward Purchase Shares”). The RTW Funds completed their purchases of HSAC2 Ordinary Shares under their Forward Purchase Agreement on or before July 22, 2022. Medtronic completed approximately $9.9 million of purchases of HSAC2 Ordinary Shares under its Forward Purchase Agreement on or before January 20, 2023. Medtronic subsequently completed $0.1 million in purchases of HSAC2 Ordinary Shares and/or Company Common Stock on or before January 30, 2023. Simultaneously with the execution of the Merger Agreement and Forward Purchase Agreements, HSAC2, Legacy Orchestra and the RTW Funds entered into a Backstop Agreement (the “Backstop Agreement”), pursuant to which the RTW Funds, jointly and severally, agreed to purchase such number of HSAC2 Ordinary Shares at a price of $10.00 per share to the extent that the amount of cash remaining in HSAC2’s working capital and trust account as of immediately prior to the closing of the Merger was less than $60 million (which calculation excludes amounts received pursuant to Medtronic’s Forward Purchase Agreement or are otherwise held in HSAC2’s trust account established pursuant to the HSAC2 IPO (the “HSAC2 Trust Account”) in respect of Medtronic’s Forward Purchase Shares, but is inclusive of amounts received pursuant to the RTW Funds’ Forward Purchase Agreement and otherwise held in the HSAC2 Trust Account in respect of the RTW Funds’ Forward Purchase Shares). Pursuant to the Backstop Agreement, the RTW Funds purchased 1,808,512 HSAC2 Ordinary Shares on January 25, 2023, immediately prior to the Domestication. Immediately prior to the closing of the Business Combination, each issued and outstanding share of Legacy Orchestra preferred stock (the “Legacy Orchestra Preferred Stock”) was canceled and converted into shares of Legacy Orchestra common stock (the “Legacy Orchestra Common Stock”) based on predetermined ratios (see Note 9). Upon the consummation of the Business Combination, each issued and outstanding share of Legacy Orchestra Common Stock was canceled and converted into the right to receive shares of Company Common Stock based upon the Exchange Ratio. The shares and corresponding capital amounts and loss per share related to Legacy Orchestra Common Stock prior to the Business Combination have been retroactively restated to reflect the Exchange Ratio. Outstanding stock options, whether vested or unvested, to purchase shares of Legacy Orchestra Common Stock (“Legacy Orchestra Options”) granted under the Orchestra BioMed, Inc. 2018 Stock Incentive Plan (“2018 Plan”) (see Note 11) converted into stock options for shares of Company Common Stock upon the same terms and conditions that were in effect with respect to such stock options immediately prior to the Business Combination, after giving effect to the Exchange Ratio (the “Exchanged Options”). The following table details the number of shares of Company Common Stock issued immediately following the consummation of the Business Combination: Number of Shares Common stock of HSAC2, outstanding prior to the Business Combination 6,762,117 Less: Redemption of HSAC2 shares (1,597,888) Common stock held by former HSAC2 shareholders 5,164,229 HSAC2 sponsor shares 4,450,000 Shares issued related to Backstop Agreement 1,808,512 Total shares outstanding prior to issuance of merger consideration to Legacy Orchestra stockholders 11,422,741 Shares issued to Legacy Orchestra stockholders – Company Common Stock (1) 20,191,338 Total shares of Company Common Stock immediately after Business Combination (2) 31,614,079 (1) The number of shares of common stock issued to Legacy Orchestra equity holders was determined based on (i) 2,522,214 shares of Legacy Orchestra Common Stock outstanding immediately prior to the closing of the Business Combination converted based on the Exchange Ratio and (ii) 35,694,179 shares of Legacy Orchestra Preferred Stock outstanding immediately prior to the closing of the Business Combination converted based on the Exchange Ratio. All fractional shares were rounded down. (2) Excludes 8,000,000 shares of Company Common Stock issued or to be issued based on satisfaction of the Initial Milestone Event and the Final Milestone Event. On April 12, 2023, the Initial Milestone Event was achieved, and each Earnout Participant was issued their Pro Rata Portion (as such term is defined in the Merger Agreement) of 4,000,000 shares of Company Common Stock, resulting in a total of 3,999,987 shares of Company Common Stock being issued due to rounding. The following table reconciles the elements of the Business Combination to the Company’s condensed consolidated statement of changes in stockholders’ equity (deficit) (in thousands): Amount Cash – HSAC2’s trust (net of redemption) $ 51,915 Cash – Backstop Agreement 18,085 Gross proceeds 70,000 Less: HSAC2 and Legacy Orchestra transaction costs paid (15,698) Effect of Business Combination, net of redemptions and transaction costs $ 54,302 The $54.3 million above differs from the $56.8 million effect of the Business Combination on the condensed consolidated statements of cash flows, due to $2.5 million of transaction costs paid by Legacy Orchestra in 2022. |
Terumo Agreement
Terumo Agreement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Terumo Agreement. | ||
Terumo Agreement | 4. In June 2019, Legacy Orchestra entered into the Terumo Agreement, pursuant to which Terumo secured global commercialization rights for Virtue SAB in coronary and peripheral vascular indications (the “Terumo Indications”). Under this agreement, Legacy Orchestra received an upfront payment of $30 million 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. The Company was initially eligible to receive up to $65 million in additional payments based on the achievement of certain development and regulatory milestones and is 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 the issuance date of these financial statements, the target achievement date for two $5 million milestone payments has already passed. In addition, due to delays in the Company’s 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, the Company is unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $25 million in time-based milestone payments pursuant to the Terumo Agreement. Although the Company is currently negotiating with Terumo mutually agreeable adjustments to certain target achievement dates to reflect the regulatory and pandemic-related delays, there is no assurance as to the outcome of these negotiations with respect to any potential modifications to the milestone target achievement dates. Pursuant to the terms of the Terumo Agreement, Legacy Orchestra licensed intellectual property rights to Terumo and the Company is primarily responsible for completing the development of the product in the United States through premarket approval by the FDA for the ISR indication. These research and development services to be provided by the Company include (i) manufacturing, testing and packaging the drug required for the clinical trials, (ii) supplying Terumo with information related to the design and manufacture of the delivery device and the technology transfer needed for Terumo to ultimately commence manufacture of the delivery device, and (iii) carrying out regulatory activities related to clinical trials in the United States for the ISR indication. The Company has concluded that the license granted to Terumo is not distinct from the research and development services that will be provided to Terumo through the completion of the development of ISR indication, as Terumo cannot obtain the benefit of the license without the related research and development services. Accordingly, the Company will recognize revenues for this combined performance obligation over the estimated period of research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total estimated costs of the research and development services. In 2019, Legacy Orchestra received a total of $32.5 million from Terumo related to the stock purchase and the revenue generating elements of the Terumo Agreement. The Company recorded the estimated fair value of the shares of $2.5 million in stockholders’ equity, as the value paid by Terumo is consistent with the value paid by other third-party stockholders in Legacy Orchestra’s offering of its Series B-1 Preferred Stock. The Company allocated the remaining $30 million to the transaction price of the Terumo Agreement. The Company considers the future potential development and regulatory milestones to be variable consideration, which are fully constrained from the transaction price as of June 30, 2023 and December 31, 2022, as the achievement of such milestone payments are uncertain and highly susceptible to factors outside of the Company’s control. The Company plans to re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur. In addition, the arrangement also includes sales-based royalties on product sales by Terumo subsequent to commercialization ranging from 10 - 15%, none of which have been recognized to date. The Company recorded the $30 million upfront payment received from Terumo in 2019 within deferred revenue. The following table presents the changes in the Company’s deferred revenue balance from the Terumo Agreement during the three and six months ended June 30, 2023 and 2022: Deferred Revenue – December 31, 2022 (in thousands) $ 19,539 Revenue recognized (1,747) Deferred Revenue – June 30, 2023 $ 17,792 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (945) Deferred Revenue – June 30, 2022 $ 21,456 The Company’s balance of deferred revenue contains the transaction price from the Terumo Agreement allocated to the combined license and research and development performance obligation, which was partially unsatisfied as of June 30, 2023. The Company expects to recognize approximately $4.3 million of its deferred revenue during the next twelve months 2026 - 2027 and may be As of each quarterly reporting date, the Company evaluates its estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updates its estimates as necessary. For the three months ended June 30, 2023 and 2022, the expenses incurred related to the Terumo Agreement were approximately $4.5 million and $3.9 million, respectively. For the six months ended June 30, 2023 and 2022, the expenses incurred related to the Terumo Agreement were approximately $8.3 million and $6.6 million, respectively. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 3% as of June 30, 2023, as compared to the estimates as of December 31, 2022, and increased by approximately 10% as of June 30, 2022, as compared to the estimates as of December 31, 2021. While the Company believes it has 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. The impact of the changes in estimates resulted in a reduction of partnership revenues of $392,000 and $836,000 for the three months ended June 30, 2023 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of the changes in estimates resulted in a reduction of partnership revenues of $303,000 and $847,000 for the six months ended June 30, 2023 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of these changes in estimates on the net loss per share attributable to common stockholders, basic and diluted, for the three months ended June 30, 2023 and 2022 was an increase of $0.01 and $0.08 was an increase of $0.01 and $0.05 The Company will also manufacture, or have manufactured, SirolimusEFR and has exclusive rights to sell it on a per unit basis to Terumo for use in the Virtue SAB product. The Company has determined that this promise does not contain a material right as the pricing is based on standalone selling prices. Through June 30, 2023, there have been no additional amounts recognized as revenue under the Terumo Agreement other than the recognition of a portion of the upfront payment described above. | 3 . In June 2019, the Company entered into the Terumo Agreement, pursuant to which Terumo secured global commercialization rights for Virtue SAB in coronary and peripheral vascular indications (the “Terumo Indications”). Under this agreement, the Company received an upfront payment of $30 million and an equity commitment of up to $5 million of which $2.5 million was invested in June 2019 as part of the Series B-1 financing. The Company was initially eligible to receive up to $65 million in additional payments based on the achievement of certain development and regulatory milestones and is also eligible to earn royalties on future sales by Terumo based on royalty rates ranging from 10 – 15%. As of the issuance date of these financial statements, the target achievement date for two $5 million milestone payments has already passed. In addition, due to delays in Orchestra’s 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, Orchestra is unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $25 million in time-based milestone payments pursuant to the Terumo Agreement. However, in June 2022, Orchestra and Terumo signed a letter agreement whereby the parties agreed to negotiate in good faith over 12 months mutually agreeable adjustments to certain target achievement dates to reflect the regulatory and pandemic-related delays. There is no assurance as to the outcome of these negotiations with respect to any potential modifications to the milestone target achievement dates. Pursuant to the terms of the Terumo Agreement, the Company licensed intellectual property rights to Terumo and the Company shall be primarily responsible for completing the development of the product in the United States through premarket approval by the FDA for the in-stent restenosis (“ISR”) indication. These research and development services to be provided by the Company include (i) manufacturing, testing and packaging the drug required for the clinical trials, (ii) supplying Terumo with information related to the design and manufacture of the delivery device and the technology transfer needed for Terumo to ultimately commence manufacture of the delivery device, and (iii) carrying out regulatory activities related to clinical trials in the United States for the ISR indication. The Company has concluded that the license granted to Terumo is not distinct from the research and development services that will be provided to Terumo through the completion of the development of ISR indication, as Terumo cannot obtain the benefit of the license without the related research and development services. Accordingly, the Company will recognize revenues for this combined performance obligation over the estimated period of research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total estimated costs of the research and development services. In 2019, the Company received a total of $32.5 million from Terumo related to the stock purchase and the revenue generating elements of the Terumo Agreement. The Company recorded the estimated fair value of the shares of $2.5 million in stockholders’ equity, as the value paid by Terumo is consistent with the value paid by other third-party stockholders in the Company’s offering of its Series B-1 Preferred Stock. The Company allocated the remaining $30 million to the transaction price of the Terumo Agreement. The Company considers the future potential development and regulatory milestones to be variable consideration, which are fully constrained from the transaction price as of December 31, 2021 and 2022, as the achievement of such milestone payments are uncertain and highly susceptible to factors outside of the Company’s control. The Company plans to re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur. In addition, the arrangement also includes sales-based royalties on product sales by Terumo subsequent to commercialization ranging from 10 - 15%, none of which have been recognized to date. The Company recorded the $30 million upfront payment received from Terumo in 2019 within deferred revenue. The following table presents the changes in the Company’s deferred revenue balance from the Terumo Agreement during the years ended December 31, 2021 and 2022: Deferred Revenue – January 1, 2021 (in thousands) $ 20,926 Revenue reduction 1,475 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (2,862) Deferred Revenue – December 31, 2022 $ 19,539 The Company’s balance of deferred revenue contains the transaction price from the Terumo Agreement allocated to the combined license and research and development performance obligation, which was partially unsatisfied as of December 31, 2022. The Company expects to recognize approximately $6.4 million of its deferred revenue during the next twelve months 2026 As of each quarterly reporting date, the Company evaluates its estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updates its estimates as necessary. For the years ended December 31, 2021 and 2022, the expenses incurred related to the Terumo Agreement were approximately $9.9 million and $14.3 million, respectively. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 85% as of December 31, 2021 as compared to the estimates as of December 31, 2020, and increased by approximately 10% as of December 31, 2022, as compared to the estimates as of December 31, 2021. The increase in the estimated costs relates to an extension of the estimated performance period by twelve months, due in part by delays resulting from the COVID-19 pandemic, as well as 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 the Company to amend its original project plan. While the Company believes it has 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. The impact of the changes in estimates resulted in reduction of partnership revenues of $6.5 million and $1.0 million for the years ended December 31, 2021 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of these changes in estimates on the net loss per share attributable to common stockholders, basic and diluted, was an increase of $0.73 and $0.07 Orchestra will also manufacture, or have manufactured, SirolimusEFR and have exclusive rights to sell it on a per unit basis to Terumo for use in the Virtue SAB product. The Company has determined that this promise does not contain a material right as the pricing is based on standalone selling prices. Through December 31, 2022, there have been no additional amounts recognized as revenue under the Terumo Agreement other than the recognition of a portion of the upfront payment described above. |
Medtronic Agreement
Medtronic Agreement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Medtronic Agreement | ||
Medtronic Agreement | 5. In June 2022, Legacy Orchestra, BackBeat Medical, LLC and Medtronic entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of hypertension (“HTN”) in patients indicated for a cardiac pacemaker (the “Primary Field”). Under the terms of the Medtronic Agreement, the Company will sponsor a multinational pivotal study to support regulatory approval of BackBeat CNT in the Primary Field and be financially responsible for development, clinical and regulatory costs associated with this pivotal study. Medtronic is currently working with the Company to integrate BackBeat CNT into its top-of-the-line, commercially available dual-chamber pacemaker system for use in the pivotal trial and will provide development, clinical and regulatory resources in support of the pivotal trial, for which the Company will reimburse Medtronic at cost. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights to commercialize BackBeat CNT-enabled pacing systems globally following receipt of regulatory approval. Medtronic would be entirely responsible for global commercialization following receipt of regulatory approvals, including manufacturing, sales, marketing and distribution costs. The Company is expected to receive between $500 and $1,600 per BackBeat CNT-enabled device sold based on a formula of the higher of (1) a fixed dollar amount per BackBeat CNT-enabled device (amount varies materially on a country-by-country basis) or (2) a percentage of the BackBeat CNT-generated sales. Procedures using the BackBeat CNT-enabled pacemakers are expected to be billed under existing reimbursement codes. Medtronic has a right of first negotiation through FDA approval of BackBeat CNT in the Primary Field, to expand its global rights to BackBeat CNT for the treatment of HTN patients not indicated for a pacemaker. The Company assessed whether the Medtronic Agreement fell within the scope of ASC 808 and concluded that the Medtronic Agreement is a collaboration within the scope of ASC 808. In addition, the Company determined that 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. The Company has concluded that the license granted to Medtronic is not distinct from the development and implementation services that will be provided to Medtronic through the completion of the development of HTN indication, as Medtronic cannot obtain the benefit of the license without the related development and implementation services. ASC 606-10-55-65 includes an exception for the recognition of revenue relating to licenses of intellectual property with sales-based or usage-based royalties. Under this exception, royalty revenue is not recorded until the subsequent sale or usage occurs, or the performance obligation has been satisfied, whichever is later. The Company concluded that the exemption applies and therefore, the royalty revenue associated with these performance obligations will be recognized as the underlying sales occur. Additionally, pursuant to the Medtronic Agreement, expenses incurred by Medtronic in connection with clinical device development and regulatory activities performed will be reimbursed by the Company. The Company will record such expenses as research and development expenses as incurred. During the three and six months ended June 30, 2023, the Company incurred approximately $1.0 million and $2.3 million, respectively, of research and development costs related to these reimbursements to the Medtronic Agreement, of which $1.9 million is included within accounts payable and accrued expenses in the Company’s June 30, 2023 condensed consolidated balance sheet. Concurrently with the close of the Medtronic Agreement, Legacy Orchestra also received a $40 million investment from Medtronic in connection with Legacy Orchestra’s Series D-2 Preferred Stock financing. The equity was purchased at a fair value consistent with the price paid by other investors at that time, and accordingly, the proceeds received were recorded as an equity investment. Through June 30, 2023, there have been no amounts recognized as revenue under the Medtronic Agreement. | 4 . In June 2022, Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (“Medtronic”) entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of hypertension (“HTN”) in patients indicated for a cardiac pacemaker (the “Primary Field”). Under the terms of the Medtronic Agreement, Orchestra will sponsor a multinational pivotal study to support regulatory approval of BackBeat CNT in the Primary Field and be financially responsible for development, clinical and regulatory costs associated with this pivotal study. Medtronic is currently working with Orchestra to integrate BackBeat CNT into its top-of-the-line, commercially available dual-chamber pacemaker system for use in the pivotal trial and will provide development, clinical and regulatory resources in support of the pivotal trial, for which Orchestra will reimburse Medtronic at cost. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights to commercialize BackBeat CNT-enabled pacing systems globally following receipt of regulatory approval. Medtronic would be entirely responsible for global commercialization following receipt of regulatory approvals, including manufacturing, sales, marketing and distribution costs. Orchestra is expected to receive between $500 and $1,600 per BackBeat CNT enabled device sold based on a formula of the higher of (1) a fixed dollar amount per BackBeat CNT-enabled device (amount varies materially on a country-by-country basis) or (2) a percentage of the BackBeat CNT generated sales. Procedures using the BackBeat CNT-enabled pacemakers are expected to be billed under existing reimbursement codes. Medtronic has a right of first negotiation through FDA approval of BackBeat CNT in the Primary Field, to expand its global rights to BackBeat CNT for the treatment of HTN patients not indicated for a pacemaker. The Company assessed whether the Medtronic Agreement fell within the scope of ASC 808 and concluded that the Medtronic Agreement fell within the scope of ASC 808. In addition, the Company determined that 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. The Company has concluded that the license granted to Medtronic is not distinct from the development and implementation services that will be provided to Medtronic through the completion of the development of HTN indication, as Medtronic cannot obtain the benefit of the license without the related development and implementation services. ASC 606-10-55-65 includes an exception for the recognition of revenue relating to licenses of intellectual property with sales-based or usage-based royalties. Under this exception, royalty revenue is not recorded until the subsequent sale or usage occurs, or the performance obligation has been satisfied, whichever is later. The Company concluded that the exemption applies and therefore, the royalty revenue associated with these performance obligations will be recognized as the underlying sales occur. Additionally, pursuant to the Medtronic Agreement, expenses incurred by Medtronic in connection with clinical device development and regulatory activities performed will be reimbursed by Orchestra. The Company will record such expenses as research and development expenses as incurred. During the year ended December 31, 2022, the Company incurred approximately $1.7 million of research and development costs related to these reimbursements to the Medtronic Agreement, all of which is included within accounts payable and accrued expenses in the December 31, 2022 consolidated balance sheet. Concurrently with the close of the Medtronic Agreement, Orchestra also received a $40 million investment from Medtronic in connection with a private placement financing. The equity was purchased at a fair value consistent with the price paid by other investors at that time, and accordingly, the proceeds received were recorded as an equity investment. Through December 31, 2022, there have been no amounts recognized as revenue under the Medtronic Agreement. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Financial Instruments and Fair Value Measurements | ||
Financial Instruments and Fair Value Measurements | 6. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy: June 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 13,193 $ — $ — $ 13,193 Investment in Motus GI (see Note 7) 69 — — 69 Marketable securities (Corporate and Government debt securities) — 101,295 — 101,295 Total assets $ 13,262 $ 101,295 $ — $ 114,557 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 8,708 $ — $ — $ 8,708 Investment in Motus GI (see Note 7) 86 — — 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 8,794 $ 63,915 $ — $ 72,709 Liabilities: Warrant liability (see Note 10) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 The Level 2 assets consist of government and corporate debt securities which are valued using market observable inputs, including the current interest rate and other characteristics for similar types of investments, whose fair value may not represent actual transactions of identical securities. There were no transfers between Levels 1, 2 or 3 for the periods presented. Prior to the closing of the Business Combination, the Company’s warrant liability was measured at fair value on a recurring basis using unobservable inputs and were classified as Level 3 inputs, and any change in fair value was recognized as change in fair value of warrant liability in the Company’s condensed consolidated statements of operations and comprehensive loss. As of the Closing Date, all Legacy Orchestra liability classified warrants were reclassified to equity. Refer to Note 9 for the valuation technique and assumptions used in estimating the fair value of the warrants and discussion on the change in classification. The following table presents a roll-forward of the aggregate fair values of the Company’s liabilities for which fair value is determined by Level 3 inputs (in thousands): Warrant Liability Balance—December 31, 2022 $ 2,089 Warrants exercised prior to the Business Combination (10) Change in fair value of warrants 294 Warrants reclassified to equity (2,373) Balance—March 31, 2023 — Balance—June 30, 2023 $ — | 5 . The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy: December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 958 $ — $ — $ 958 Total assets $ 958 $ — $ — $ 958 Liabilities: Warrant liability (see Note 9) $ — $ — $ 635 $ 635 Total liabilities $ — $ — $ 635 $ 635 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 86 $ — $ — $ 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 86 $ 63,915 $ — $ 64,001 Liabilities: Warrant liability (see Note 9) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 The Company’s warrant liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs, and any change in fair value is recognized as change in fair value of warrant liability in the consolidated statements of operations and comprehensive loss. Refer to Note 8 for the valuation technique and assumptions used in estimating the fair value of the warrants. The Level 2 assets consist of government and corporate debt securities which are valued using market observable inputs, including the current interest rate and other characteristics for similar types of investments, whose fair value may not represent actual transactions of identical securities. There were no transfers between Levels 1, 2 or 3 for the periods presented. |
Marketable Securities and Strat
Marketable Securities and Strategic Investments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Marketable Securities and Strategic Investments | ||
Marketable Securities and Strategic Investments | 7. Marketable Securities The following is a summary of the Company’s marketable securities as of June 30, 2023 and December 31, 2022: June 30, 2023 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 48,100 $ — $ (39) $ 48,061 Government debt securities 53,291 — (57) 53,234 Total $ 101,391 $ — $ (96) $ 101,295 December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 The Company believes it is more likely than not that its marketable securities in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any allowance for credit losses on its investment securities. The Company determined that the unrealized losses were not attributed to credit risk but were primarily driven by the broader change in interest rates. For the three and six months ended June 30, 2023, the Company recognized realized losses on its marketable securities of $102,000. For the three and six months ended June 30, 2022, the Company did not recognize any realized gains or losses on its marketable securities. Strategic Investments The Company values the Motus GI investment by measuring fair value using the listed share price on the Nasdaq Capital Market on each valuation date. Aggregate losses of $31,000 and $160,000 during the three months ended June 30, 2023 and 2022, respectively, and aggregate losses of $17,000 and $380,000 during the six months ended June 30, 2023 and 2022, respectively, were recorded to adjust the strategic investments in equity securities of Motus GI to its fair value of $69,000 at June 30, 2023 and $86,000 at December 31, 2022, which is classified as strategic investments within current assets on the accompanying condensed consolidated balance sheets. The Company’s long term strategic investments as of June 30, 2023 represent investments made in Vivasure in 2020, 2021 and 2022 that were originally recorded at cost. There were no observable price changes, other than as described below, or impairments identified during the three and six months ended June 30, 2023 or the three and six months ended June 30, 2022 related to these investments. In May 2022, Vivasure announced a Series D private placement, in which it received a material investment from Haemonetics Corporation, a new strategic investor. In conjunction with a €30 million investment in Vivasure, Haemonetics Corporation also secured an option to acquire Vivasure based on the achievement of certain milestones. As a result, Legacy Orchestra’s existing convertible redeemable notes converted into Series D Preferred Stock of Vivasure in May 2022. The investment in the Vivasure Series D Preferred Stock represents an observable price change in an orderly transaction for an identical instrument of the same issuer, and accordingly, the Company recognized a gain on its strategic investment in Vivasure of $1.9 million in the second quarter of 2022. This amount represents a portion of the previously impaired investment balance described below. During the fourth quarter of 2019, the Company identified indicators of impairment of Vivasure strategic investments held at that time as a result of adverse changes in Vivasure’s business operations, including liquidity concerns. As a result, the Company recorded an impairment charge in the fourth quarter of 2019 of $5.8 million, which represents the cumulative impairment charges recorded on Vivasure strategic investments to date. | 6 . Marketable Securities The following is a summary of the Company’s marketable securities as December 31, 2022: December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 As of December 31, 2021, there were no marketable securities held. For the years ended December 31, 2021 and 2022, the Company did not recognize any realized gains or losses on its marketable securities. Strategic Investments The Company values the Motus GI investment by measuring fair value using the listed share price on the Nasdaq Capital Market on each valuation date. Aggregate losses of $1.0 million and $0.9 million during the years ended December 31, 2021 and 2022, respectively, were recorded to adjust the strategic investments in equity securities of Motus GI to its fair value of $1.0 million at December 31, 2021 and $86,000 at December 31, 2022, which is classified as strategic investments within current assets on the accompanying consolidated balance sheet. The Company’s long term strategic investments as of December 31, 2022 represent investments made in Vivasure in 2020, 2021 and 2022 that were originally recorded at cost. There were no observable price changes or impairments identified during the year ended December 31, 2021 related to these investments. In May 2022, Vivasure announced a Series D private placement, in which it received a material investment from a new strategic investor. As a result, the Company’s existing convertible redeemable notes converted into Series D Preferred Stock of Vivasure in May 2022. The investment in the Vivasure Series D Preferred Stock represents an observable price change in an orderly transaction for an identical instrument of the same issuer, and accordingly, the Company recognized a gain on its strategic investment in Vivasure of $1.9 million in the second quarter of 2022. This amount represents a portion of the previously impaired investment balance described below. During the fourth quarter of 2019, the Company identified indicators of impairment of Vivasure strategic investments held at that time as a result of adverse changes in Vivasure’s business operations, including liquidity concerns. As a result, the Company recorded an impairment charge in the fourth quarter of 2019 of $5.8 million, which represents the cumulative impairment charges recorded on Vivasure strategic investments to date. |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Balance Sheet Components | ||
Balance Sheet Components | 8. Property and Equipment, Net Property and equipment, net consists of the following: June 30, December 31, (in thousands) 2023 2022 Equipment $ 1,745 $ 1,712 Office furniture 364 364 Leasehold improvements 197 191 Construction in progress 22 — Property and equipment, gross 2,328 2,267 Less accumulated depreciation and amortization (921) (778) Total Property and equipment, net $ 1,407 $ 1,489 Depreciation and amortization expense was $72,000 and $49,000 for the three months ended June 30, 2023 and 2022, respectively. Depreciation and amortization expense was $144,000 and $98,000 for the six months ended June 30, 2023 and 2022, respectively. Accrued Expenses Accrued expenses consist of the following: June 30, December 31, (in thousands) 2023 2022 Accrued compensation $ 1,954 $ 2,480 Clinical trial accruals 895 1,003 Other accrued expenses 977 1,893 Total accrued expenses $ 3,826 $ 5,376 | 7 . Property and Equipment, Net Property and equipment, net consists of the following: December 31, (in thousands) 2021 2022 Equipment $ 1,207 $ 1,712 Office furniture 305 364 Leasehold improvements 177 191 Construction in progress 16 — Property and equipment, gross 1,705 2,267 Less accumulated depreciation and amortization (585) (778) Total Property and equipment, net $ 1,120 $ 1,489 Depreciation and amortization expense was $181,000 and $222,000 for the years ended December 31, 2021 and 2022, respectively. Accrued Expenses Accrued expenses consist of the following: December 31, (in thousands) 2021 2022 Accrued compensation $ 1,319 $ 2,480 Deferred offering and merger costs 100 — Deferred lease liability 45 — Clinical trial accruals 39 1,003 Other accrued expenses 531 1,893 Total accrued expenses $ 2,034 $ 5,376 |
Common and Preferred Stock
Common and Preferred Stock | 6 Months Ended |
Jun. 30, 2023 | |
Common and Preferred Stock | |
Common and Preferred Stock | 9. Common Stock The Company is authorized to issue up to 340,000,000 shares of Company Common Stock, par value $0.0001 per share. As discussed in Note 3, the Company has retroactively adjusted the shares issued and outstanding prior to January 26, 2023 to give effect to the Exchange Ratio to determine the number of shares of Company Common Stock into which they were converted. Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share. The board of directors of the Company (the “Board”) has the authority to issue preferred stock and to determine the rights, privileges, preferences, restrictions, and voting rights of those shares. As of June 30, 2023, no shares of preferred stock were outstanding. |
Warrants
Warrants | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Warrants | ||
Warrants | 10. The Company evaluates its outstanding warrants to determine if the instruments qualify for equity or liability classification. Private Warrants Prior to the Merger, HSAC2 had outstanding 1,500,000 Private Warrants, which were issued in connection with the HSAC2 IPO to the Sponsor. Each Private Warrant entitles the holder thereof to purchase one share of Company Common Stock at a price of $11.50 per share, subject to adjustment as provided herein. The Private Warrants became exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination. Each Private Warrant is non-redeemable and may be exercised on a cashless basis. Since these warrants are indexed to the Company’s publicly traded common stock, they are classified within equity. As described in Note 3, the Sponsor and HSAC2’s other initial shareholders prior to the HSAC2 IPO agreed to subject (i) the 4,000,000 Insider Shares and (ii) the 450,000 Private Shares to a lock-up for up to 12 months following the Closing and the Sponsor forfeited 50% of its 1,500,000 Private Warrants, comprising 750,000 Private Warrants, for no consideration, immediately prior to the Closing. Pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, HSAC2 issued 750,000 warrants to purchase Company Common Stock to eleven specified employees and directors of Legacy Orchestra. These new warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 and 36 months after the Closing. Assumed Legacy Orchestra Warrants Prior to the close of the Business Combination, the majority of Legacy Orchestra’s warrants (the “Legacy Orchestra Warrants”) were required to be accounted for as liabilities as certain features within the warrant agreements contained features that were not considered “fixed for fixed” pursuant to ASC 815, and therefore, the fair value of the warrant liability was marked-to-market at each balance sheet date, with the change in fair value recorded in the Company’s condensed consolidated statements of operations and comprehensive loss within other income (expense). Upon the close of the Business Combination, all liability classified Legacy Orchestra Warrants became equity classified on that date, as the warrant agreements became “fixed for fixed.” As a result, the warrant liability was fair valued and adjusted from $2.1 million as of December 31, 2022 to $2.4 million as of January 26, 2023, and then subsequently reclassified into stockholders’ equity. In addition, Legacy Orchestra also had outstanding other equity classified warrants recorded within additional paid-in capital at the time of issuance at fair value that were not subject to subsequent remeasurement. The Company calculates the fair value of the outstanding warrant liability at each reporting date by estimating the equity value of the Company, and then utilizing option pricing models to allocate the total equity value to the shares and warrants outstanding. The inputs used in the valuation models for the Company’s warrant liability are as follows: Period from January 1, 2023 to January 26, 2023 June 30, 2022 Expected volatility 44 – 49% 45 – 54% Risk-free interest rate 3.60 – 4.80% 2.60 – 3.00% Remaining term in years 0.35 – 5.00 0.92 – 5.38 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of Legacy preferred warrants — — Common stock price $10.63 $9.18 Legacy preferred stock price — — Expected dividend yield 0% 0% The Company’s warrant liability related to Legacy Orchestra warrant activity rollforward is as follows, with the warrants having been converted to reflect the effect of the Merger: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2022 — 1,327,074 $ 2,089 Warrants exercised prior to the business combination — (1,163) (10) Change in fair value of warrants as of January 26, 2023 — — 294 Warrants reclassified to equity — (1,325,911) (2,373) Balance March 31, 2023 — — — Balance June 30, 2023 — — $ — Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2021 206,997 1,189,162 $ 635 Exercise of warrants — (68,587) (156) Change in the fair value of warrants — — 145 Balance March 31, 2022 206,997 1,120,575 624 Exercise of warrants — (4,650) (15) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to Legacy Orchestra preferred stock financing — 159,965 620 Amendments of existing warrants (206,997) 206,997 810 Other — (150,000) (335) Change in the fair value of warrants — — 243 Balance June 30, 2022 — 1,328,237 $ 1,909 Private Warrants and Assumed Legacy Orchestra Warrants The following table summarizes outstanding warrants to purchase shares of Company Common Stock as of June 30, 2023 and December 31, 2022: Number of Shares June 30, December 31, Exercise 2023 2022 Price Term Liability-classified Warrants Legacy Orchestra Warrants — 1,327,074 $0.50 – $14.00 0.10 – 4.75 Equity-classified Warrants Legacy Orchestra Warrants 541,808 250,000 $0.50 – $14.00 0.10 – 9.00 Private Warrants Held by Sponsor 750,000 1,500,000 $11.50 4.57 – 4.82 Private Warrants Held by Employees (Note 11) 675,000 — $11.50 4.57 1,966,808 1,750,000 Total Outstanding 1,966,808 3,077,074 | 8 . The Company evaluates its outstanding warrants to determine if the instruments qualify for equity or liability classification. To date, the majority of the Company’s warrants are required to be accounted for as liabilities, and therefore, the fair value of the warrant liability is marked-to-market at each balance sheet date, with the change in fair value recorded in the statements of operations and comprehensive loss within other income (expense). Upon conversion or exercise of a warrant classified as a liability, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. The Company calculates the fair value of the outstanding warrant liability at each reporting date by estimating the equity value of the Company, and then utilizing option pricing models to allocate the total equity value to the shares and warrants outstanding. The inputs used in the valuation models for Orchestra’s warrant liability are as follows: December 31, 2021 2022 Expected volatility 44 – 55% 45 – 47% Risk-free interest rate 0.27 – 1.11% 4.00 – 4.30% Remaining term in years 1.41 – 7.94 0.14 – 5.07 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of preferred warrants $19.35 – $32.26 — Common stock price $3.35 $9.72 Preferred stock price $5.38 – $7.35 — Expected dividend yield 0% 0% The Company’s warrant liability activity rollforward is as follows: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2020 206,997 1,192,650 $ 1,347 Exercise of warrants — (3,488) (13) Change in the fair value of warrants — — (699) Balance December 31, 2021 206,997 1,189,162 $ 635 Reclassification of warrant liability upon exercise — (73,238) (171) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to private placement financing — 159,965 620 Amendment of existing warrants (206,997) 206,997 810 Other — (151,162) (345) Change in the fair value of warrants — — 578 Balance December 31, 2022 — 1,327,074 $ 2,089 In June 2022, concurrent with the close of a private placement financing, the Company amended the terms of certain existing warrant agreements, which included modifying the underlying shares of the warrants from preferred warrants to common warrants and reducing the strike prices. Such amendments resulted in $0.8 million of additional expense for the year ended December 31, 2022. As of December 31, 2022, the Company has 250,000 warrants classified within equity with strike prices ranging from $1.33 — $4.06 and remaining terms in years of 6.94 — 9.50. The equity classified warrants were recorded within additional paid-in capital at the time of issuance at fair value and are not subject to subsequent remeasurement. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Share-Based Compensation | ||
Stock-Based Compensation | 11. As of June 30, 2023, the only equity compensation plan from which the Company may currently issue new awards is the Company’s 2023 Equity Incentive Plan (the “2023 Plan”), as more fully described below. Orchestra BioMed, Inc. 2018 Stock Incentive Plan Prior to the Merger, Legacy Orchestra maintained the 2018 Plan, under which Legacy Orchestra granted incentive stock options, non-qualified stock options and restricted stock awards to its employees and certain non-employees, including consultants, advisors and directors. The maximum aggregate shares of Legacy Orchestra Common Stock that was subject to awards and issuable under the 2018 Plan was 5.2 million shares prior to the Merger. Employees, consultants, and directors were eligible for awards granted under the 2018 Plan which generally have a contractual life of up to 10 years As described in Note 3, in connection with the Merger, each Legacy Orchestra Option that was outstanding and unexercised immediately prior to the time that the Merger became effective (the “Effective Time”) (whether vested or unvested) was assumed by the Company and converted into an option to purchase an adjusted number of shares of Company Common Stock at an adjusted exercise price per share, based on the Exchange Ratio, and will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former option. Each Exchanged Option is exercisable for a number of whole shares of Company Common Stock equal to the product of the number of shares of Legacy Orchestra Common Stock underlying such Legacy Orchestra Options multiplied by the Exchange Ratio, and the per share exercise price of such Exchanged Option is equal to the quotient determined by dividing the exercise price per share of the Legacy Orchestra Option by the Exchange Ratio. Following the closing of the Merger, no new awards may be made under the 2018 Plan. The Company accounted for the Exchanged Options as a modification of the existing options. Incremental compensation costs, measured as the excess, if any, of the fair value of the modified options over the fair value of the original options immediately before its terms are modified, is measured based on the fair value of the underlying shares and other pertinent factors at the modification date. The impact of the option modifications were de minimis. Orchestra BioMed Holdings, Inc. 2023 Equity Incentive Plan At the Effective Time, the Company adopted the 2023 Plan which permits the granting of incentive stock options, non-qualified options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based award to employees, directors, and non-employee consultants and/or advisors. As of June 30, 2023, 3,561,678 shares of Company Common Stock are authorized for issuance pursuant to awards under the 2023 Plan. The pool of available shares will be automatically increased on the first day of each calendar year, beginning January 1, 2023 and ending January 1, 2032, by an amount equal to the lesser of (i) 4.8% of the outstanding shares of our Common Stock determined on a fully-diluted basis as of the immediately preceding December 31 and (ii) 3,036,722 shares of Common Stock, and (iii) such number of shares of Common Stock determined by the Board or the Compensation Committee prior to January 1st of a given year. In addition, any awards outstanding under the 2018 Plan upon the Closing, after adjustment for the Business Combination, remain outstanding. If any of those awards subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares after the closing of the Business Combination, the shares of Company Common Stock underlying those awards will automatically become available for issuance under the 2023 Plan. Total stock-based compensation related to option issuances was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 330 $ 52 $ 815 $ 91 Selling, general and administrative 631 91 1,369 107 Total stock-based compensation $ 961 $ 143 $ 2,184 $ 198 As of June 30, 2023, there was approximately $6.6 million of unrecognized stock-based compensation expense associated with the stock options noted above that is expected to be recognized over a weighted average period of three years. Total stock-based compensation related to restricted stock was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ — $ — $ — $ — Selling, general and administrative 498 76 547 91 Total stock-based compensation $ 498 $ 76 $ 547 $ 91 As of June 30, 2023, there was approximately $312,000 of unrecognized restricted stock-based compensation expense associated with the restricted stock noted above that is expected to be recognized over a weighted average period of approximately three years. As previously discussed in Note 3 and Note 10, pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, the Company issued 750,000 warrants to purchase Company Common Stock to eleven specified employees and directors of Legacy Orchestra. These warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 Total stock-based compensation related to warrants was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 120 $ — $ 207 $ — Selling, general and administrative 128 — 258 — Total stock-based compensation $ 248 $ — $ 465 $ — As of June 30, 2023, there was approximately $2.8 million of unrecognized stock-based compensation expense associated with the warrants noted above that is expected to be recognized over a weighted average period of approximately three years. Stock Option Activity The following table summarizes the stock option activity of the Company under the 2018 Plan and the 2023 Plan: Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (in thousands) Outstanding at January 1, 2023 7,868,448 3.51 8.35 — Retroactive application of Reverse Recapitalization (Note 3) (4,209,620) 4.05 — — Outstanding at January 1, 2023, effect of Merger 3,658,828 7.56 8.35 — Granted 323,175 9.89 — — Exercised (17,825) 4.16 — — Forfeited/canceled (142,256) 5.35 — — Outstanding June 30, 2023 3,821,922 7.97 5.31 $ 4,002 Exercisable at June 30, 2023 2,163,768 6.60 7.09 $ 3,412 The following table summarizes the restricted stock activity of the Company under the Plan: Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (in thousands) Outstanding January 1, 2023 158,589 9.14 — Granted — — — Vested (63,451) — — Forfeited/canceled (45,901) — — Outstanding June 30, 2023 49,237 8.67 $ 549 During the six months ended June 30, 2023, the Company did not grant any restricted stock awards (“RSAs”) while 63,451 RSAs vested at a weighted-average grant date fair value of $3.52. Determination of Stock Option Awards Fair Value The estimated grant-date fair value of all the Company’s option awards was calculated using the Black-Scholes option pricing model, based on the following weighted average assumptions: Six Months Ended June 30, 2023 2022 Expected term (in years) 6.00 6.00 Expected volatility 50 % 49 % Risk-free interest rate 3.60 % 2.70 % Expected dividend yield 0 % 0 % Fair value of common stock $ 9.63 $ 4.06 The fair value of each stock option grant was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment and estimation by management. Expected Term Expected Volatility Risk-Free Interest Rate Expected Dividend Yield Fair Value of Common Stock | 9. Stock-based Compensation — Orchestra BioMed 2018 Stock Incentive Plan As of December 31, 2022, all stock-based awards were outstanding under a single equity incentive plan, the Orchestra BioMed, Inc. 2018 Stock Incentive Plan (the “Plan”). Under the Plan, up to 5.2 million shares of the Company’s common stock may be issued pursuant to awards granted in the form of nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards. Employees, consultants, and directors are eligible for awards granted under the plan which generally have a contractual life of up to 10 years and may be exercisable in cash or as otherwise determined by the board of directors. Vesting generally occurs over a period of not greater than three years. Total stock-based compensation related to option issuances was as follows: Year ended December 31, (in thousands) 2021 2022 Research and development $ 83 $ 398 Selling, general and administrative 88 2,704 Total stock-based compensation $ 171 $ 3,102 As of December 31, 2022, there was approximately $7.2 million of unrecognized stock-based compensation expense associated with the stock options noted above that is expected to be recognized over a weighted average period of three years. Total restricted stock-based compensation was as follows: Year ended December 31, (in thousands) 2021 2022 Research and development $ — $ — Selling, general and administrative 131 273 Total stock-based compensation $ 131 $ 273 As of December 31, 2022, there was approximately $408,000 of unrecognized restricted stock-based compensation expense associated with the restricted stock noted above that is expected to be recognized over a weighted average period of approximately 3 years. The following table summarizes the stock option activity of the Company under the Plan: Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (thousands) Outstanding at January 1, 2022 1,348,464 4.47 7.13 — Granted 2,357,807 9.33 — — Exercised (27,848) 4.32 — — Forfeited/canceled (19,595) 4.67 — — Outstanding December 31, 2022 3,658,828 7.56 8.35 $ 8,277 Exercisable at December 31, 2022 1,806,093 5.78 6.72 $ 6,815 The following table summarizes the restricted stock activity of the Company under the Plan: Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (thousands) Outstanding January 1, 2022 21,907 7.60 — Granted 182,962 9.15 — Vested (46,280) — — Forfeited/canceled — — — Outstanding December 31, 2022 158,589 9.14 $ 980 During the year ended December 31, 2022, the Company granted 182,961 Determination of Fair Value The estimated grant-date fair value of all the Company’s option awards was calculated using the Black-Scholes option pricing model, based on the following weighted average assumptions: Year ended December 31, 2021 2022 Expected term (in years) 6.00 6.00 Expected volatility 60 % 50 % Risk-free interest rate 0.99 % 3.01 % Expected dividend yield 0 % 0 % Fair value of common stock $ 4.71 $ 9.72 The fair value of each stock option grant was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment and estimation by management. Expected Term Expected Volatility Risk-Free Interest Rate Expected Dividend Yield Fair Value of Common Stock |
Leases
Leases | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Leases | ||
Leases | 12. Office Lease In August 2019, Legacy Orchestra entered into an addendum to the original December 2009 lease agreement for 8,052 square feet of office space in New Hope, PA. The lease will expire in September 2024. Monthly fees will be between $9,000 and $19,000 for the period from commencement through termination. In November 2019, Legacy Orchestra entered into a new lease agreement for approximately 5,200 square feet of office space in New York, NY. The lease will expire in March 2028. Monthly fees will be between $28,000 and $30,000 for the period from commencement through termination. In January 2020, Legacy Orchestra entered into an agreement for the use of portions of the office space of Motus GI, a related party, in Fort Lauderdale, Florida. The agreement will expire in September 2024. The monthly fee commenced on the month following the date of agreement. Monthly fees will be between $12,000 and $17,000 for the period from commencement through termination. In May 2022, Legacy Orchestra amended the agreement with Motus GI for a larger portion of the office space and extended the expiration date to November 2024. Monthly fees will be between $7,000 and $23,000 for the period from commencement of the amendment to expiration. The amount paid is estimated to be proportionate to the percentage of space used by the Company applied to the monthly rent obligated to be paid by Motus GI to their landlord. Operating cash flow supplemental information for the six months ended June 30, 2023: Cash paid for amounts included in the present value of operating lease liabilities was $410,000 during the six months ended June 30, 2023 compared to $354,000 during the six months ended June 30, 2022. As of June 30, 2023: Weighted average remaining lease term – operating leases, in years 3.73 Weighted average discount rate – operating leases 6.25 % Operating Leases Rent/lease expense for office and lab space was approximately $209,000 and $180,000 for the three months ended June 30, 2023 and 2022, respectively. Rent/lease expense for office and lab space was approximately $417,000 and $354,000 for the six months ended June 30, 2023 and 2022, respectively. The table below shows the future minimum rental payments, exclusive of taxes, insurance, and other costs, under the leases as of June 30, 2023: Operating Leases Year ending December 31: (in thousands) 2023 (remaining six months) $ 413 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,284 Imputed interest (245) Total liability $ 2,039 | 10. Office Lease In August 2019, the Company entered into an addendum to the original December 2009 lease agreement for 8,052 square feet of office space in New Hope, PA. The lease will expire in September 2024. Monthly fees will be between $9,000 and $19,000 for the period from commencement through termination. In November 2019, the Company entered into a new lease agreement for approximately 5,200 square feet of office space in New York, NY. The lease will expire in March 2028. Monthly fees will be between $28,000 and $30,000 for the period from commencement through termination. In January 2020, the Company entered into an agreement for the use of portions of the office space of Motus GI, a related party, in Fort Lauderdale, Florida. The agreement will expire in September 2024. The monthly fee commenced on the month following the date of agreement. Monthly fees will be between $12,000 and $17,000 for the period from commencement through termination. In May 2022, the Company amended the agreement with Motus GI for a larger portion of the office space and extended the expiration date to November 2024. Monthly fees will be between $7,000 and $23,000 for the period from commencement of the amendment to expiration. The amount paid is estimated to be proportionate to the percentage of space used by the Company applied to the monthly rent obligated to be paid by Motus GI to their landlord. Operating cash flow supplemental information for the year ended December 31, 2022: An initial right-of-use asset of $2.6 million was recognized as an asset and operating lease liabilities of $2.9 million was recognized as a liability upon the adoption of the new lease standard. Cash paid for amounts included in the present value of operating lease liabilities was $702,000 during the year ended December 31, 2022. As of December 31, 2022: Weighted average remaining lease term – operating leases, in years 4.06 Weighted average discount rate – operating leases 6.25 % Operating Leases Rent/lease expense for office and lab space was approximately $697,000 and $735,000 for the years ended December 31, 2021 and 2022 respectively. The table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases as of December 31, 2022: Operating Leases Year ending December 31: (in thousands) 2023 $ 823 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,694 Imputed interest (314) Total liability $ 2,380 |
Related Party Transactions
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Related Party Transactions | ||
Related Party Transactions | 13. In addition to transactions and balances related to cash and stock-based compensation to officers and directors, the Company had the following transactions and balances with related parties during the year ended 2022 and the six months ended June 30, 2023: Vivasure Investments In December 2020 and 2021, and April 2022, Legacy Orchestra invested in Vivasure, a related party, $183,000, $213,000, and $208,000, respectively, in the form of unsecured convertible redeemable notes. The unsecured convertible redeemable notes converted into Series D preferred stock of Vivasure in May of 2022 (Note 7). | 12. In addition to transactions and balances related to cash and stock-based compensation to officers and directors, the Company had the following transactions and balances with related parties and executive officers during 2021 and 2022: Vivasure Investments In December 2020 and 2021, and April 2022, the Company invested in Vivasure, a related party, $183,000, $213,000 and $208,000, respectively, in the form of unsecured convertible redeemable notes. The unsecured convertible redeemable notes converted into Series D preferred stock of Vivasure in May of 2022 (Note 6). |
Debt Financing
Debt Financing | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Financing | ||
Debt Financing | 14. In June 2022, Legacy Orchestra entered into a loan and security agreement (the “2022 Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P. (“Avenue I”) and Avenue Venture Opportunities Fund II, L.P. (“Avenue II,” and, collectively with Avenue I, “Avenue”). The terms of the 2022 Loan and Security Agreement include a term loan of up to $20 million available in two tranches with the first tranche of $10 million that was drawn at closing in June of 2022, and a second tranche of $10 million available at closing of the Legacy Orchestra Series D-2 Preferred Stock financing was not drawn. Additionally, the Company may have access to a third tranche of $30 million subject to certain financing milestones. The term loan matures on June 1, 2026. In addition, the lender has the right, at its discretion, but not the obligation, to convert any portion of the outstanding principal amount of the loans up to $5 million into shares of Company Common Stock at a price per share equal to $12.00 (the “Conversion Option”), subject to adjustment; provided, however, the Conversion Option shall not be exercised by lender during the six Pursuant to the terms of the 2022 Loan and Security Agreement, Legacy Orchestra issued Avenue warrants that will be exercisable for 100,000 shares of Company Common Stock, and the estimated fair value of the warrants of $178,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the 2022 Loan and Security Agreement. In addition, other financing costs totaling $405,000 were also recorded as debt discount and is being amortized to interest expense over the term of the facility. The term loan accrues interest at a floating per annum rate equal to the Wall Street Journal prime rate plus 6.45%. The rate in effect at June 30, 2023 was 14.7%. The repayment terms of the loan include monthly payments over a 4-year 2-year Concurrent with the closing of the 2022 Loan and Security Agreement, Legacy Orchestra terminated and repaid an existing 2019 Loan and Security Agreement with Silicon Valley Bank (the “2019 Loan and Security Agreement”), which resulted in a loss on extinguishment of $682,000. Pursuant to the terms of the 2019 Loan and Security Agreement, Legacy Orchestra issued Silicon Valley Bank a warrant that, to the extent Legacy Orchestra made draws on the 2019 Loan and Security Agreement, was exercisable for a number of shares of Legacy Orchestra Common Stock equal to 2% of the amount drawn divided by the exercise price of $1.33 per share of Legacy Orchestra Common Stock. As a result of the draw in December of 2020, Legacy Orchestra issued 150,000 Legacy Orchestra Common Stock warrants to Silicon Valley Bank, and the estimated fair value of the warrants of $544,000 was recorded as debt discount on the date of issuance and was being amortized to interest expense over the term of the credit facility. These warrants have been exercised and are no longer outstanding. The term loan accrued interest at a floating per annum rate equal to the greater of (i) the Wall Street Journal prime rate plus 1.00% or (ii) 6.25%. In addition, there was a final payment equal to 8.25% of the original aggregate principal amount which accrued over the term of the loan using the effective-interest method. Total interest expense recorded on these facilities during the three months ended June 30, 2023 and June 30, 2022 was approximately $457,000 and $257,000, respectively. Total interest expense recorded on these facilities during the six months ended June 30, 2023 and June 30, 2022 was approximately $897,000 and $493,000, respectively. The following table shows the amount of principal payments due pursuant to the term loan by year: Principal Payments Period ending June 30: (in thousands) 2023 (remaining 6 months) $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. | 13. In December 2019, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “2019 Loan and Security Agreement”). The terms of the 2019 Loan and Security Agreement include a term loan of $20 million available in two tranches. The first $10 million tranche is available to the Company with interest-only monthly payments during a 12-month draw period from December 2019 through December 31, 2020. On December 31, 2020, the Company borrowed the first $10 million tranche of the 2019 Loan and Security Agreement. Pursuant to the terms of the 2019 Loan and Security Agreement, the Company issued Silicon Valley Bank a warrant that, to the extent the Company draws on the 2019 Loan and Security Agreement, will be exercisable for a number of shares of common stock equal to 2% of the amount drawn under the 2019 Loan and Security Agreement divided by the exercise price of $1.33 per share. As a result of the draw in December of 2020, the Company issued 150,000 common stock warrants to Silicon Valley Bank, and the estimated fair value of the warrants of $544,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the credit facility. The term loan accrues interest at a floating per annum rate equal to the greater of (i) the Wall Street Journal prime rate plus 1.00% or (ii) 6.25%. In addition, there is a final payment equal to 8.25% of the original aggregate principal amount which will be accrued over the term of the loan using the effective-interest method. The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. In June 2022, the Company entered into a Loan and Security Agreement with Avenue Venture Opportunities Fund I and II (the “2022 Loan and Security Agreement”). The terms of the 2022 Loan and Security Agreement include a term loan of up to $20 million available in two tranches with the first tranche of $10 million that was drawn at closing in June of 2022, and a second tranche of $10 million available at closing of the Series D-2 that has not yet been drawn. Additionally, the Company may have access to a third tranche of $30 million subject to certain financing milestones. The term loan matures on June 1, 2026. In addition, the lender has the right, at their discretion, but not the obligation, to convert any portion of the outstanding principal amount of the loans up to $5 million into shares of the Company’s common stock at a price per share equal to $12.00 (the “Conversion Option”), subject to adjustment; provided, however, the Conversion Option shall not be exercised by lender during the six Pursuant to the terms of the 2022 Loan and Security Agreement, the Company issued Avenue Venture Opportunities Fund I and II warrants that will be exercisable for 100,000 shares of common stock, and the estimated fair value of the warrants of $178,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the Loan and Security Agreement. In addition, other financing costs totaling $405,000 were also recorded as debt discount and is being amortized to interest expense over the term of the facility. The term loan accrues interest at a floating per annum rate equal to the Wall Street Journal prime rate plus 6.45%. The rate in effect at December 31, 2022 was 13.45%. Total interest expenses recorded on the facility during the year ended December 31, 2022 was approximately $711,000. The repayment terms of the loan include monthly payments over a 4-year 2 year Principal Payments (in thousands) Period ending December 31: 2023 $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Share | |
Net Loss Per Share | 15. Basic net loss per share of Company Common Stock is computed by dividing net loss by the weighted-average number of shares of Company Common Stock. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares – see Note 3) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. As discussed in Note 3, in connection with the Business Combination, existing Legacy Orchestra stockholders had the opportunity to elect to participate in the Earnout pursuant to which each such Earnout Participant may receive a portion of additional contingent consideration of up to 8,000,000 shares of Earnout Consideration. On April 12, 2023, the Initial Milestone Event was achieved, and each Earnout Participant was issued their Pro Rata Portion (as such term is defined in the Merger Agreement) of 4,000,000 shares of Company Common Stock, resulting in a total of 3,999,987 shares of Company Common Stock being issued due to rounding. Additionally, 500,000 of the Forfeitable Shares are no longer subject to forfeiture as a result of the Initial Milestone Event. Diluted net loss per share of Company Common Stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, Legacy Orchestra Warrants and Private Warrants, and Forfeitable Shares and Earnout Consideration, which would result in the issuance of incremental shares of Company Common Stock, unless their effect would be anti-dilutive. The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2023 and June 30, 2022, as their effect is anti-dilutive: Three and Six Months Ended June 30, 2023 2022 Stock options 3,821,922 1,578,316 Company common stock warrants 1,966,808 1,328,237 Unvested restricted stock awards 49,237 168,108 Conversion option 416,667 — Forfeitable shares 500,000 — Earnout consideration 4,000,000 — Total 10,754,634 3,074,661 |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||
Subsequent Events | 16. On August 8, 2023, the Company announced that the FDA granted investigational device exemption approval with conditions to initiate the Company’s planned Virtue ISR-US pivotal study evaluating the efficacy and safety of Virtue SAB for the treatment of patients with Coronary ISR. The Company is permitted to begin enrollment of the study upon completion of standard clinical trial initiation activities including clinical center Institutional Review Board approvals. The conditional approval also requires the Company to submit additional information to the FDA. On September 19, 2023, the Company announced that the FDA granted investigational device exemption approval to initiate the Company’s planned BACKBEAT pivotal study evaluating the efficacy and safety for the development and commercialization of BackBeat CNT, also known as Atrioventricular Interval Modulation (AVIM) therapy for hypertensive pacemaker patients. The Company is permitted to begin enrollment upon completion of standard clinical trial initiation activities, including clinical center Institutional Review Board approvals. The Company expects to begin enrollment in the BACKBEAT pivotal study before the end of 2023. On October 6, 2023, the Company repaid and terminated the 2022 Loan and Security Agreement. In connection with the repayment and termination, the Company repaid $10 million of principal and issued warrants to purchase 27,707 shares of Company Common Stock at an exercise price of $7.67 per share in lieu of a cash payment of approximately $212,500 due with respect to certain fees under the 2022 Loan and Security Agreement. The Company also paid approximately $849,000 of net interest, prepayment fees, and legal fees. | 14. On January 26, 2023 (the “Closing Date”), the Company consummated the previously-announced Business Combination (the “Closing”). In connection with the Business Combination, HSAC2 changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware and changed its name to “Orchestra BioMed Holdings, Inc.” (“New Orchestra”). On the Closing Date, Merger Sub merged with and into Orchestra with Orchestra being the surviving corporation and a wholly owned subsidiary of New Orchestra. The Company refers to HSAC2 common stock, after giving effect to the Business Combination, as “New Orchestra Common Stock.” Upon the Closing, based on a ratio (the “Exchange Ratio”) of 0.465 shares of HSAC2 Common Stock for each whole share of Orchestra common stock, par value $0.0001 per share (the “Orchestra Common Stock”), 20,191,338 shares of New Orchestra Common Stock were issued to Orchestra stockholders (exclusive of the additional shares subject to earnout discussed below in this paragraph) and 5,523,834 shares of New Orchestra Common Stock were reserved for issuance pursuant to the Orchestra stock options and warrants converted into New Orchestra stock options and warrants in the Merger. In addition, upon the Closing, all of the Company’s outstanding preferred stock automatically converted New Orchestra Common Stock. In connection with the Business Combination, HSAC 2 Holdings, LLC (the “Sponsor”) agreed that 25% or 1,000,000 shares of its New Orchestra Common Stock will be forfeited to New Orchestra on the first business day following the fifth anniversary of the Closing unless, as to 500,000 shares, the volume-weighted average price of the New Orchestra Common Stock is greater than or equal to $15.00 per share over any 20 trading days within any 30 -trading day period (the “Initial Milestone Event”), and as to the remaining 500,000 shares, the volume-weighted average price of the New Orchestra Common Stock is greater than or equal to $20.00 per share over any 20 trading days within any 30 -trading day period (the “Final Milestone Event”). Further, the Sponsor and HSAC2’s other initial shareholders prior to HSAC2’s initial public offering (the “IPO”) agreed to subject (i) the 4,000,000 shares of New Orchestra Common Stock issued to HSAC2’s initial shareholders prior to the IPO (the “Insider Shares”) and (ii) the 450,000 shares of New Orchestra Common Stock purchased in a private placement simultaneously with the IPO (the “Private Shares”) to a lock-up for up to 12 months following the Closing, and the Sponsor forfeited 50% of its 1,500,000 warrants in HSAC2 purchased upon consummation of the IPO (the “Private Warrants”), comprising 750,000 Private Warrants, for no consideration, immediately prior to the Closing (the “Sponsor Forfeiture”). Pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, HSAC2 issued 750,000 warrants to purchase New Orchestra Common Stock to eleven specified employees and directors of Orchestra. These new warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 and 36 months after the Closing. In connection with the Business Combination, existing Orchestra stockholders also had the opportunity to elect to participate in an earnout (the “Earnout”) pursuant to which each such electing stockholder (an “Earnout Participant”) may receive a portion of additional contingent consideration of up to 8,000,000 shares of New Orchestra Common Stock in the aggregate (“Earnout Consideration”). Approximately 91% of Orchestra stockholders elected to participate in the Earnout. Each Earnout Participant agreed to extend their applicable lock-up period from 6 months to 12 months , pursuant to an Earnout Election Agreement and such Earnout Participants will collectively be entitled to receive: (i) 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, from the time beginning immediately after the Closing until the fifth anniversary of the Closing Date (the “Earnout Period”), the Initial Milestone Event (as defined below) occurs; and (ii) an additional 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, during the Earnout Period, the Final Milestone Event occurs. Prior to the Business Combination, HSAC2’s public shares were listed on The Nasdaq Capital Market under the symbol “HSAQ.” On January 27, 2023, the New Orchestra Common Stock began trading on The Nasdaq Global Market under the symbol “OBIO.” On August 8, 2023, the Company announced that the FDA granted investigational device exemption approval with conditions to initiate the Company’s planned Virtue ISR-US pivotal study evaluating the efficacy and safety of Virtue SAB for the treatment of patients with Coronary ISR. The Company is permitted to begin enrollment of the study upon completion of standard clinical trial initiation activities including clinical center Institutional Review Board approvals. The conditional approval also requires the Company to submit additional information to the FDA. On September 19, 2023, the Company announced that the FDA granted investigational device exemption approval to initiate the Company’s planned BACKBEAT pivotal study evaluating the efficacy and safety for the development and commercialization of BackBeat CNT, also known as Atrioventricular Interval Modulation (AVIM) therapy for hypertensive pacemaker patients. The Company is permitted to begin enrollment upon completion of standard clinical trial initiation activities, including clinical center Institutional Review Board approvals. The Company expects to begin enrollment in the BACKBEAT pivotal study before the end of 2023. On October 6, 2023, the Company repaid and terminated the 2022 Loan and Security Agreement. In connection with the repayment and termination, the Company repaid $10 million of principal and issued warrants to purchase 27,707 shares of Company Common Stock at an exercise price of $7.67 per share in lieu of a cash payment of approximately $212,500 due with respect to certain fees under the 2022 Loan and Security Agreement. The Company also paid approximately $849,000 of net interest, prepayment fees, and legal fees. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Reverse Recapitalization | Reverse Recapitalization The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represent the operations of Legacy Orchestra, and the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). For additional information on the Business Combination and the Exchange Ratio, see Note 3 to these unaudited condensed consolidated financial statements. | |
Emerging Growth Company and Smaller Reporting Company Status | Emerging Growth Company and Smaller Reporting Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)., As such, it is 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. The Company has 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, the Company, 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 the Company’s condensed 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. The Company 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 the Company has total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which the Company is 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 the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. The Company is also a “smaller reporting company” as defined in the Exchange Act. The Company may continue to be a smaller reporting company even after the Company is no longer an emerging growth company. The Company 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 the Company’s voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of the Company’s second fiscal quarter, or (ii)(a) the Company’s annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of the Company’s voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of the Company’s second fiscal quarter. | |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 4). | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 3). |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. | Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. |
Marketable Securities | Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ equity as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. | Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ deficit as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. |
Strategic Investments | Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a Motus GI Holdings, Inc. (“Motus GI”), a publicly-held company and related party, and preferred shares of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party. The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities. Therefore, the Company categorized the investments as current assets. 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. Additionally, as the investments in Vivasure are not readily marketable, the Company categorized the investments as non-current assets. As of June 30, 2023 and December 31, 2022, the carrying value of the investments in Vivasure was $2.5 million. | Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a publicly-held company and related party (Motus GI) and preferred shares and convertible notes of a privately-held company and related party (Vivasure). The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at June 30, 2023, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 6 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. | Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at December 31, 2022, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 5 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of June 30, 2023 and December 31, 2022, an allowance for doubtful accounts was not deemed necessary. | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of December 31, 2021 and 2022, an allowance for doubtful accounts was not deemed necessary. |
Inventory | Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of June 30, 2023 and December 31, 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. | Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of December 31, 2021 and 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. |
Research and Development Prepayments, Accruals and Related Expenses | Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its third-party service providers, which include the conduct of preclinical and clinical studies. The Company is required to estimate its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. | Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years |
Leases | Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the terms of the arrangement. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use (“ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is to not record leases with a lease term of 12 months or less on its balance sheets. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the statements of operations. Payments due under each lease agreement include fixed and variable payments. Variable payments relate to the Company’s share of the lessor’s operating costs associated with the underlying asset and are recognized when the event on which those payments are assessed occurs. Variable payments have been excluded from the lease liability and associated right-of-use asset. The interest rate implicit in lease agreements is typically not readily determinable, and as such, the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. | Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”) The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities for leases that are less than one year in duration. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities). Upon adoption on January 1, 2022, the Company recognized ROU assets of $2.6 million and lease liabilities of $2.9 million. The adoption of the new lease standard did not impact the Company’s condensed consolidated statement of operations and comprehensive loss or its condensed consolidated statement of cash flows. The effect of the transition adjustment along with balances before, and after adoption is outlined below: Deferred ROU Lease lease liability Assets Liabilities Balance – December 31, 2021 $ 241 $ — $ — ASC 842 Transition adjustment (241) 2,612 2,853 Balance – January 1, 2022 $ — $ 2,612 $ 2,853 The Company determines if an arrangement is a lease at inception. For the Company’s operating leases, the ROU asset represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since all the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. |
Debt Discount and Debt Issuance Costs | Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. | Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. |
Warrants | Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity, Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. | Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. | Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. |
Product Revenues | 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. | 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 judgements 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. |
Partnership Revenues | Partnership Revenues To date, the Company’s partnership revenues have related to the Terumo Agreement as further described in Note 4. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 5. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the U.S. Food and Drug Administration (the “FDA”) for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. | Partnership Revenues To date, the Company’s Partnership revenues related to the Terumo Agreement as further described in Note 3. In future periods, Partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 4. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the FDA for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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 do the total costs expected to be incurred through the completion of the performance obligation. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. |
Stock-Based Compensation | Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the Company’s condensed consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. | Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. |
Net Loss Per Share | Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss is the same as diluted net loss since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, Earnout Consideration (Note 3) and unvested restricted stock awards. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares (as defined in Note 3)) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. | Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss per share by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss attributable to common stockholders is the same as diluted net loss attributable to common stockholders since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, and restricted stock. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. | Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. |
Deferred Offering and Merger Costs | Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees were deferred to be offset against proceeds received when the Business Combination was completed. As of December 31, 2022, there were $4.0 million of deferred transaction costs included in deposits and other assets on the accompanying condensed consolidated balance sheet. Upon the close of the Business Combination, these deferred costs were recorded against net proceeds in additional paid-in capital. For further discussion on the Business Combination, see Note 3. | Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees, are deferred and will be offset against proceeds received when the financing events are completed. In the event the offering or merger is terminated, all deferred costs will be expensed. As of December 31, 2022, the Company has capitalized $4.0 million of deferred merger costs related to the Business Combination discussed in Note 15, which are included in deposits and other assets on the accompanying balance sheet. As of December 31, 2021, the Company capitalized $100,000 of deferred offering costs related to private placement financings, which was offset against the proceeds received in March of 2022. |
Defined Contribution Plan | Defined Contribution Plan The Company has a defined retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. Effective January 1, 2023, the Company participates in a matching safe harbor 401(k) Plan with a Company contribution of up to 3.5% of each eligible participating employee’s compensation. Safe harbor contributions vest immediately for each participant. During the three and six months ended June 30, 2023, the Company made $67,000 and $181,000, respectively, in contributions under this safe harbor 401(k) Plan. | Defined Contribution Plan The Company has a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. The Company does not make matching employee contributions. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. | Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. | Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. |
New Accounting Standards | New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . During 2018 and 2019, the FASB also issued subsequent amendments to the initial guidance (collectively, “Topic 326”). Topic 326 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Topic 326 will be effective for the Company on January 1, 2023. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 — Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Schedule of property and equipment useful lives | Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years | Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years |
Business Combination and Reca_2
Business Combination and Recapitalization (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Recapitalization | |
Schedule of common stock following the consummation of business combination | The following table details the number of shares of Company Common Stock issued immediately following the consummation of the Business Combination: Number of Shares Common stock of HSAC2, outstanding prior to the Business Combination 6,762,117 Less: Redemption of HSAC2 shares (1,597,888) Common stock held by former HSAC2 shareholders 5,164,229 HSAC2 sponsor shares 4,450,000 Shares issued related to Backstop Agreement 1,808,512 Total shares outstanding prior to issuance of merger consideration to Legacy Orchestra stockholders 11,422,741 Shares issued to Legacy Orchestra stockholders – Company Common Stock (1) 20,191,338 Total shares of Company Common Stock immediately after Business Combination (2) 31,614,079 (1) The number of shares of common stock issued to Legacy Orchestra equity holders was determined based on (i) 2,522,214 shares of Legacy Orchestra Common Stock outstanding immediately prior to the closing of the Business Combination converted based on the Exchange Ratio and (ii) 35,694,179 shares of Legacy Orchestra Preferred Stock outstanding immediately prior to the closing of the Business Combination converted based on the Exchange Ratio. All fractional shares were rounded down. (2) Excludes 8,000,000 shares of Company Common Stock issued or to be issued based on satisfaction of the Initial Milestone Event and the Final Milestone Event. On April 12, 2023, the Initial Milestone Event was achieved, and each Earnout Participant was issued their Pro Rata Portion (as such term is defined in the Merger Agreement) of 4,000,000 shares of Company Common Stock, resulting in a total of 3,999,987 shares of Company Common Stock being issued due to rounding. |
Schedule of reconciliation of business combination to statement of changes in stockholders equity | The following table reconciles the elements of the Business Combination to the Company’s condensed consolidated statement of changes in stockholders’ equity (deficit) (in thousands): Amount Cash – HSAC2’s trust (net of redemption) $ 51,915 Cash – Backstop Agreement 18,085 Gross proceeds 70,000 Less: HSAC2 and Legacy Orchestra transaction costs paid (15,698) Effect of Business Combination, net of redemptions and transaction costs $ 54,302 |
Terumo Agreement (Tables)
Terumo Agreement (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Terumo Agreement. | ||
Schedule of deferred revenue | Deferred Revenue – December 31, 2022 (in thousands) $ 19,539 Revenue recognized (1,747) Deferred Revenue – June 30, 2023 $ 17,792 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (945) Deferred Revenue – June 30, 2022 $ 21,456 | Deferred Revenue – January 1, 2021 (in thousands) $ 20,926 Revenue reduction 1,475 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (2,862) Deferred Revenue – December 31, 2022 $ 19,539 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Financial Instruments and Fair Value Measurements | ||
Schedule of financial assets and liabilities measured at fair value | June 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 13,193 $ — $ — $ 13,193 Investment in Motus GI (see Note 7) 69 — — 69 Marketable securities (Corporate and Government debt securities) — 101,295 — 101,295 Total assets $ 13,262 $ 101,295 $ — $ 114,557 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 8,708 $ — $ — $ 8,708 Investment in Motus GI (see Note 7) 86 — — 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 8,794 $ 63,915 $ — $ 72,709 Liabilities: Warrant liability (see Note 10) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 | December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 958 $ — $ — $ 958 Total assets $ 958 $ — $ — $ 958 Liabilities: Warrant liability (see Note 9) $ — $ — $ 635 $ 635 Total liabilities $ — $ — $ 635 $ 635 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 86 $ — $ — $ 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 86 $ 63,915 $ — $ 64,001 Liabilities: Warrant liability (see Note 9) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 |
Schedule of liabilities for which fair value is determined by Level 3 | The following table presents a roll-forward of the aggregate fair values of the Company’s liabilities for which fair value is determined by Level 3 inputs (in thousands): Warrant Liability Balance—December 31, 2022 $ 2,089 Warrants exercised prior to the Business Combination (10) Change in fair value of warrants 294 Warrants reclassified to equity (2,373) Balance—March 31, 2023 — Balance—June 30, 2023 $ — |
Marketable Securities and Str_2
Marketable Securities and Strategic Investments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Marketable Securities and Strategic Investments | ||
Schedule of marketable securities | June 30, 2023 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 48,100 $ — $ (39) $ 48,061 Government debt securities 53,291 — (57) 53,234 Total $ 101,391 $ — $ (96) $ 101,295 December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 | December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Balance Sheet Components | ||
Schedule of property and equipment balances, net | June 30, December 31, (in thousands) 2023 2022 Equipment $ 1,745 $ 1,712 Office furniture 364 364 Leasehold improvements 197 191 Construction in progress 22 — Property and equipment, gross 2,328 2,267 Less accumulated depreciation and amortization (921) (778) Total Property and equipment, net $ 1,407 $ 1,489 | December 31, (in thousands) 2021 2022 Equipment $ 1,207 $ 1,712 Office furniture 305 364 Leasehold improvements 177 191 Construction in progress 16 — Property and equipment, gross 1,705 2,267 Less accumulated depreciation and amortization (585) (778) Total Property and equipment, net $ 1,120 $ 1,489 |
Schedule of accrued expenses | June 30, December 31, (in thousands) 2023 2022 Accrued compensation $ 1,954 $ 2,480 Clinical trial accruals 895 1,003 Other accrued expenses 977 1,893 Total accrued expenses $ 3,826 $ 5,376 | December 31, (in thousands) 2021 2022 Accrued compensation $ 1,319 $ 2,480 Deferred offering and merger costs 100 — Deferred lease liability 45 — Clinical trial accruals 39 1,003 Other accrued expenses 531 1,893 Total accrued expenses $ 2,034 $ 5,376 |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Warrants | ||
Schedule of fair value of the outstanding warrant liability | Period from January 1, 2023 to January 26, 2023 June 30, 2022 Expected volatility 44 – 49% 45 – 54% Risk-free interest rate 3.60 – 4.80% 2.60 – 3.00% Remaining term in years 0.35 – 5.00 0.92 – 5.38 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of Legacy preferred warrants — — Common stock price $10.63 $9.18 Legacy preferred stock price — — Expected dividend yield 0% 0% | December 31, 2021 2022 Expected volatility 44 – 55% 45 – 47% Risk-free interest rate 0.27 – 1.11% 4.00 – 4.30% Remaining term in years 1.41 – 7.94 0.14 – 5.07 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of preferred warrants $19.35 – $32.26 — Common stock price $3.35 $9.72 Preferred stock price $5.38 – $7.35 — Expected dividend yield 0% 0% |
Schedule of warrant activity rollforward | The Company’s warrant liability related to Legacy Orchestra warrant activity rollforward is as follows, with the warrants having been converted to reflect the effect of the Merger: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2022 — 1,327,074 $ 2,089 Warrants exercised prior to the business combination — (1,163) (10) Change in fair value of warrants as of January 26, 2023 — — 294 Warrants reclassified to equity — (1,325,911) (2,373) Balance March 31, 2023 — — — Balance June 30, 2023 — — $ — Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2021 206,997 1,189,162 $ 635 Exercise of warrants — (68,587) (156) Change in the fair value of warrants — — 145 Balance March 31, 2022 206,997 1,120,575 624 Exercise of warrants — (4,650) (15) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to Legacy Orchestra preferred stock financing — 159,965 620 Amendments of existing warrants (206,997) 206,997 810 Other — (150,000) (335) Change in the fair value of warrants — — 243 Balance June 30, 2022 — 1,328,237 $ 1,909 | Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2020 206,997 1,192,650 $ 1,347 Exercise of warrants — (3,488) (13) Change in the fair value of warrants — — (699) Balance December 31, 2021 206,997 1,189,162 $ 635 Reclassification of warrant liability upon exercise — (73,238) (171) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to private placement financing — 159,965 620 Amendment of existing warrants (206,997) 206,997 810 Other — (151,162) (345) Change in the fair value of warrants — — 578 Balance December 31, 2022 — 1,327,074 $ 2,089 |
Schedule of purchase shares of Company Common Stock | The following table summarizes outstanding warrants to purchase shares of Company Common Stock as of June 30, 2023 and December 31, 2022: Number of Shares June 30, December 31, Exercise 2023 2022 Price Term Liability-classified Warrants Legacy Orchestra Warrants — 1,327,074 $0.50 – $14.00 0.10 – 4.75 Equity-classified Warrants Legacy Orchestra Warrants 541,808 250,000 $0.50 – $14.00 0.10 – 9.00 Private Warrants Held by Sponsor 750,000 1,500,000 $11.50 4.57 – 4.82 Private Warrants Held by Employees (Note 11) 675,000 — $11.50 4.57 1,966,808 1,750,000 Total Outstanding 1,966,808 3,077,074 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Share-Based Compensation | ||
Schedule of cost related to stock-based compensation | Total stock-based compensation related to option issuances was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 330 $ 52 $ 815 $ 91 Selling, general and administrative 631 91 1,369 107 Total stock-based compensation $ 961 $ 143 $ 2,184 $ 198 Total stock-based compensation related to restricted stock was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ — $ — $ — $ — Selling, general and administrative 498 76 547 91 Total stock-based compensation $ 498 $ 76 $ 547 $ 91 Total stock-based compensation related to warrants was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 120 $ — $ 207 $ — Selling, general and administrative 128 — 258 — Total stock-based compensation $ 248 $ — $ 465 $ — | Year ended December 31, (in thousands) 2021 2022 Research and development $ 83 $ 398 Selling, general and administrative 88 2,704 Total stock-based compensation $ 171 $ 3,102 Year ended December 31, (in thousands) 2021 2022 Research and development $ — $ — Selling, general and administrative 131 273 Total stock-based compensation $ 131 $ 273 |
Schedule of restricted stock activity | Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (in thousands) Outstanding January 1, 2023 158,589 9.14 — Granted — — — Vested (63,451) — — Forfeited/canceled (45,901) — — Outstanding June 30, 2023 49,237 8.67 $ 549 | Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (thousands) Outstanding January 1, 2022 21,907 7.60 — Granted 182,962 9.15 — Vested (46,280) — — Forfeited/canceled — — — Outstanding December 31, 2022 158,589 9.14 $ 980 |
Schedule of estimated grant-date fair value calculated using Black-Scholes option pricing model | Six Months Ended June 30, 2023 2022 Expected term (in years) 6.00 6.00 Expected volatility 50 % 49 % Risk-free interest rate 3.60 % 2.70 % Expected dividend yield 0 % 0 % Fair value of common stock $ 9.63 $ 4.06 | Year ended December 31, 2021 2022 Expected term (in years) 6.00 6.00 Expected volatility 60 % 50 % Risk-free interest rate 0.99 % 3.01 % Expected dividend yield 0 % 0 % Fair value of common stock $ 4.71 $ 9.72 |
Schedule of stock option activity | Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (in thousands) Outstanding at January 1, 2023 7,868,448 3.51 8.35 — Retroactive application of Reverse Recapitalization (Note 3) (4,209,620) 4.05 — — Outstanding at January 1, 2023, effect of Merger 3,658,828 7.56 8.35 — Granted 323,175 9.89 — — Exercised (17,825) 4.16 — — Forfeited/canceled (142,256) 5.35 — — Outstanding June 30, 2023 3,821,922 7.97 5.31 $ 4,002 Exercisable at June 30, 2023 2,163,768 6.60 7.09 $ 3,412 | Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (thousands) Outstanding at January 1, 2022 1,348,464 4.47 7.13 — Granted 2,357,807 9.33 — — Exercised (27,848) 4.32 — — Forfeited/canceled (19,595) 4.67 — — Outstanding December 31, 2022 3,658,828 7.56 8.35 $ 8,277 Exercisable at December 31, 2022 1,806,093 5.78 6.72 $ 6,815 |
Leases (Tables)
Leases (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Leases | ||
Schedule of recognized as an asset and operating lease liabilities | As of June 30, 2023: Weighted average remaining lease term – operating leases, in years 3.73 Weighted average discount rate – operating leases 6.25 % | As of December 31, 2022: Weighted average remaining lease term – operating leases, in years 4.06 Weighted average discount rate – operating leases 6.25 % |
Schedule of future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases | Operating Leases Year ending December 31: (in thousands) 2023 (remaining six months) $ 413 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,284 Imputed interest (245) Total liability $ 2,039 | Operating Leases Year ending December 31: (in thousands) 2023 $ 823 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,694 Imputed interest (314) Total liability $ 2,380 |
Debt Financing (Tables)
Debt Financing (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Financing | ||
Schedule of amount of principal payments | Principal Payments Period ending June 30: (in thousands) 2023 (remaining 6 months) $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 | Principal Payments (in thousands) Period ending December 31: 2023 $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Share | |
Schedule of calculation of diluted net loss per share | Three and Six Months Ended June 30, 2023 2022 Stock options 3,821,922 1,578,316 Company common stock warrants 1,966,808 1,328,237 Unvested restricted stock awards 49,237 168,108 Conversion option 416,667 — Forfeitable shares 500,000 — Earnout consideration 4,000,000 — Total 10,754,634 3,074,661 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Organization and Basis of Presentation | |||
Accumulated deficit | $ (222,720) | $ (199,734) | $ (166,126) |
Business Combination [Member] | |||
Organization and Basis of Presentation | |||
Accumulated deficit | $ 222,700 | $ (199,700) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Other (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 01, 2023 | Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
Summary of Significant Accounting Policies | |||||
Strategic investments | $ 2,495,000 | $ 2,495,000 | $ 2,495,000 | $ 398,000 | |
Allowance for doubtful accounts receivable | 0 | 0 | 0 | $ 0 | |
Impairment of long-lived assets | 0 | $ 0 | |||
Income tax benefit percentage | 21% | 21% | |||
Deferred offering deposit | $ 4,000,000 | $ 100,000 | |||
Defined contribution plan, percentage | 3.50% | ||||
Contribution | 67,000 | $ 181,000 | |||
Number of operating segments | segment | 1 | 1 | |||
Terumo Agreement | |||||
Summary of Significant Accounting Policies | |||||
Term of billing from date of milestone achievement | 10 days | 10 days | |||
Term of royalty payments from close of each quarter | 20 days | 20 days | |||
Term of optional services from receipt of invoice | 20 days | 20 days | |||
Term of SirolimusERF from receipt of shipping invoice | 30 days | 30 days | |||
Strategic Investments Less Current Portion | |||||
Summary of Significant Accounting Policies | |||||
Strategic investments | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | $ 398,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of property and equipment (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Manufacturing Equipment Member | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 10 years | 10 years |
Office furniture | Minimum | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 3 years | 3 years |
Office furniture | Maximum | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 7 years | 7 years |
Research And Development Equipment Member | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 7 years | 7 years |
Business Combination and Reca_3
Business Combination and Recapitalization - Other (Details) $ / shares in Units, $ in Millions | Apr. 12, 2023 shares | Jan. 30, 2023 USD ($) | Jan. 26, 2023 USD ($) D employee $ / shares shares | Jan. 25, 2023 shares | Jan. 20, 2023 USD ($) | Jul. 04, 2022 USD ($) $ / shares | Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares |
Business Combination and Recapitalization | |||||||||
Common stock, shares authorized | 340,000,000 | 340,000,000 | 340,000,000 | 340,000,000 | |||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Preference shares, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Preference shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Warrants outstanding (in shares) | 1,966,808 | 3,077,074 | |||||||
Maximum | |||||||||
Business Combination and Recapitalization | |||||||||
Common stock, shares authorized | 340,000,000 | ||||||||
HSAC 2 Holdings, LLC | |||||||||
Business Combination and Recapitalization | |||||||||
Sponsor share forfeiture (as percent) | 25% | ||||||||
Number of shares forfeiture by sponsor | 1,000,000 | ||||||||
Insider shares subject to lock up period | 4,000,000 | ||||||||
Private shares subject to lock up period | 450,000 | ||||||||
Share lock up period | 12 months | ||||||||
Number of warrants issued | 750,000 | ||||||||
Number of employees and directors, warrants issued | employee | 11 | ||||||||
Number of shares issuable as earnout consideration | 500,000 | ||||||||
HSAC 2 Holdings, LLC | Minimum | |||||||||
Business Combination and Recapitalization | |||||||||
Warrants exercisable term | 24 months | ||||||||
HSAC 2 Holdings, LLC | Maximum | |||||||||
Business Combination and Recapitalization | |||||||||
Warrants exercisable term | 36 months | ||||||||
HSAC 2 Holdings, LLC | Private warrants | |||||||||
Business Combination and Recapitalization | |||||||||
Sponsor warrant forfeiture (as percent) | 50% | ||||||||
Warrants outstanding (in shares) | 1,500,000 | ||||||||
Number of warrants forfeiture by sponsor | 750,000 | ||||||||
Consideration for forfeiture of warrants | $ | $ 0 | ||||||||
HSAC 2 Holdings, LLC | Initial milestone event | |||||||||
Business Combination and Recapitalization | |||||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 15 | ||||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||||
HSAC 2 Holdings, LLC | Final milestone event | |||||||||
Business Combination and Recapitalization | |||||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 20 | ||||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||||
HSAC2 | |||||||||
Business Combination and Recapitalization | |||||||||
Insider shares subject to lock up period | 4,000,000 | ||||||||
Private shares subject to lock up period | 450,000 | ||||||||
Share lock up period | 12 months | ||||||||
Number of warrants issued | 750,000 | ||||||||
Number of employees and directors, warrants issued | employee | 11 | ||||||||
Percent of shareholders elected to participate in earnout | 91% | ||||||||
HSAC2 | RTW Funds and Covidien Group | Forward purchase agreement | |||||||||
Business Combination and Recapitalization | |||||||||
Aggregate amount of shares to be issued | $ | $ 10 | ||||||||
HSAC2 | Medtronic | Forward purchase agreement | |||||||||
Business Combination and Recapitalization | |||||||||
Value of shares issued | $ | $ 0.1 | $ 9.9 | |||||||
HSAC2 | RTW Funds | Backstop agreement | |||||||||
Business Combination and Recapitalization | |||||||||
Share issue price (in dollars per share) | $ / shares | $ 10 | ||||||||
Threshold remaining working capital and trust account for share issue | $ | $ 60 | ||||||||
Shares issued (in shares) | 1,808,512 | ||||||||
HSAC2 | Minimum | |||||||||
Business Combination and Recapitalization | |||||||||
Share lock up period | 6 months | ||||||||
Warrants exercisable term | 24 months | ||||||||
HSAC2 | Maximum | |||||||||
Business Combination and Recapitalization | |||||||||
Share lock up period | 12 months | ||||||||
Warrants exercisable term | 36 months | ||||||||
Number of shares issuable as earnout consideration | 8,000,000 | ||||||||
HSAC2 | Initial milestone event | |||||||||
Business Combination and Recapitalization | |||||||||
Number of shares issuable as earnout consideration | 4,000,000 | 4,000,000 | |||||||
Number of shares issuable as earnout consideration due to rounding | 3,999,987 | ||||||||
HSAC2 | Final milestone event | |||||||||
Business Combination and Recapitalization | |||||||||
Number of shares issuable as earnout consideration | 4,000,000 | ||||||||
HSAC2 | |||||||||
Business Combination and Recapitalization | |||||||||
Shares authorized (in shares) | 350,000,000 | ||||||||
Common stock, shares authorized | 340,000,000 | ||||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||||
Preference shares, shares authorized | 10,000,000 | ||||||||
Preference shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||||
Goodwill | $ | $ 0 | ||||||||
Intangible assets | $ | $ 0 |
Business Combination and Reca_4
Business Combination and Recapitalization - Common stock outstanding (Details) - shares | 3 Months Ended | 12 Months Ended | |||
Apr. 12, 2023 | Jan. 26, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Combination and Recapitalization | |||||
Common stock of HSAC2, outstanding prior to the Business Combination | 8,822,280 | ||||
Total shares of Company Common Stock immediately after Business Combination | 35,743,007 | 20,187,850 | 8,822,280 | ||
Common stock, shares outstanding | 35,743,007 | 20,187,850 | 8,822,280 | ||
Preference shares, shares outstanding | 0 | 0 | 0 | ||
Legacy Orchestra | |||||
Business Combination and Recapitalization | |||||
Common stock of HSAC2, outstanding prior to the Business Combination | 6,762,117 | ||||
Less: Redemption of HSAC2 shares | (1,597,888) | ||||
Common stock held by former HSAC2 shareholders | 5,164,229 | ||||
HSAC2 sponsor shares | 4,450,000 | ||||
Exercise of warrants (in shares) | 1,808,512 | ||||
Total shares outstanding prior to issuance of merger consideration to Legacy Orchestra stockholders | 11,422,741 | ||||
Shares issued to Legacy Orchestra stockholders - Company Common Stock | 20,191,338 | ||||
Total shares of Company Common Stock immediately after Business Combination | 31,614,079 | 2,522,214 | |||
Common stock, shares outstanding | 31,614,079 | 2,522,214 | |||
Preference shares, shares outstanding | 35,694,179 | ||||
Number of shares issuable as earnout consideration | 4,000,000 | 8,000,000 | |||
Number of shares issuable as earnout consideration due to rounding | 3,999,987 |
Business Combination and Reca_5
Business Combination and Recapitalization - Schedule of reconciliation of business combination elements to changes in equity (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Combination and Recapitalization | ||||
Deferred financing, offering and merger costs | $ (2,735) | $ (10,317) | ||
HSAC2 | ||||
Business Combination and Recapitalization | ||||
Cash - HSAC2's trust (net of redemption) | 51,915 | |||
Cash - Backstop Agreement | 18,085 | |||
Gross proceeds | 70,000 | |||
Deferred financing, offering and merger costs | (15,698) | |||
Effect of Business Combination, net of redemptions and transaction costs | 54,302 | |||
Proceeds from reverse recapitalization | $ 56,800 | |||
HSAC2 | Legacy Orchestra | ||||
Business Combination and Recapitalization | ||||
Transaction costs | $ 2,500 |
Terumo Agreement - Other (Detai
Terumo Agreement - Other (Details) - Collaborative Arrangement - Terumo - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2022 | |
Terumo Agreement | |||
Upfront payment received | $ 30 | $ 30 | |
Equity commitment | 5 | ||
Amount invested for financing | 2.5 | ||
Amount receivable on Milestones | 35 | ||
Target milestone payment date already passed | $ 5 | ||
Remaining time-based milestones by the specified target achievement | $ 25 | ||
Stock purchase and the revenue generating elements | 32.5 | ||
Estimated fair value of the shares | 2.5 | ||
Transaction price | $ 30 | ||
Minimum | |||
Terumo Agreement | |||
Royalty receivable percentage | 10% | ||
Sales-based royalties percentage | 10% | ||
Maximum | |||
Terumo Agreement | |||
Additional payments on the achievement milestone | $ 65 | ||
Royalty receivable percentage | 15% | ||
Sales-based royalties percentage | 15% |
Terumo Agreement - Deferred rev
Terumo Agreement - Deferred revenue (Details) - Collaborative Arrangement - Terumo - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Changes in the Company's deferred revenue balance | |||
Deferred Revenue - December 31, 2022 (in thousands) | $ 19,539 | $ 22,401 | $ 22,401 |
Revenue recognized | 1,747 | 945 | 2,862 |
Deferred Revenue - June 30, 2023 | $ 17,792 | $ 21,456 | $ 19,539 |
Terumo Agreement - Remaining pe
Terumo Agreement - Remaining performance obligation (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Terumo Agreement | ||
Revenue remaining performance obligation amount | $ 4.3 | $ 6.4 |
Remaining performance obligation recognition period | 12 months | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | ||
Terumo Agreement | ||
Revenue remaining performance obligation amount | $ 13.5 | $ 13.1 |
Remaining performance obligation recognition period | 24 months | 24 months |
Terumo Agreement - Other narrat
Terumo Agreement - Other narratives (Details) - Collaborative Arrangement - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Terumo Agreement | ||||||
Estimated total costs increase (decrease) percentage | 10% | 10% | ||||
Terumo | ||||||
Terumo Agreement | ||||||
Cost incurred | $ 4,500,000 | $ 3,900,000 | $ 8,300,000 | $ 6,600,000 | $ 14,300,000 | $ 9,900,000 |
Estimated total costs increase (decrease) percentage | 3% | 85% | ||||
Increase (decrease) in revenue from change in estimate | $ 392,000 | $ 836,000 | $ 303,000 | $ 847,000 | $ 1,000,000 | $ 6,500,000 |
Collaborative Arrangement, Change in Estimate, Increase (Decrease) in Earnings Per Share , Basic | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.73 | $ 0.73 |
Collaborative Arrangement, Change in Estimate, Increase (Decrease) in Earnings Per Share | $ 0.08 | $ 0.08 | $ 0.05 | $ 0.05 | $ 0.07 | $ 0.07 |
Medtronic Agreement (Details)
Medtronic Agreement (Details) - Medtronic Agreement - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Medtronic agreement | |||
Reimbursable research and development expense | $ 1,000,000 | $ 2,300,000 | $ 1,700,000 |
Proceeds from issuance of Series D-2 Preferred Stock | 40,000,000 | 40,000,000 | |
Revenue recognized to date | $ 0 | 0 | 0 |
Minimum | |||
Medtronic agreement | |||
Expected to receive product price | 500 | 500 | |
Maximum | |||
Medtronic agreement | |||
Expected to receive product price | 1,600 | $ 1,600 | |
Accounts Payable and Accrued Expenses | |||
Medtronic agreement | |||
Reimbursable research and development expense | $ 1,900,000 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements - Schedule of financial assets and liabilities measured at fair value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Financial assets and liabilities measured at fair value | |||
Total assets | $ 114,557 | $ 72,709 | |
Total liabilities | 2,089 | $ 635 | |
Money market fund | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 13,193 | 8,708 | |
Investment in Motus GI | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 69 | 86 | |
Marketable securities (Corporate and Government debt securities) | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 101,295 | 63,915 | |
Warrant liability. | |||
Financial assets and liabilities measured at fair value | |||
Total liabilities | 2,089 | 635 | |
Level 1 | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 13,262 | 8,794 | |
Level 1 | Money market fund | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 13,193 | 8,708 | |
Level 1 | Investment in Motus GI | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 69 | 86 | |
Level 2 | |||
Financial assets and liabilities measured at fair value | |||
Total assets | 101,295 | 63,915 | |
Level 2 | Marketable securities (Corporate and Government debt securities) | |||
Financial assets and liabilities measured at fair value | |||
Total assets | $ 101,295 | 63,915 | |
Level 3 | |||
Financial assets and liabilities measured at fair value | |||
Total liabilities | 2,089 | 635 | |
Level 3 | Warrant liability. | |||
Financial assets and liabilities measured at fair value | |||
Total liabilities | $ 2,089 | $ 635 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - Schedules of liabilities for which fair value is determined by Level 3 (Details) - Warrant liability. - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | |
Roll-forward of liabilities determined by Level 3 inputs | ||
Balance - beginning | $ 2,089 | |
Warrants exercised prior to the Business Combination | (10) | |
Change in fair value of warrants | 294 | |
Warrants reclassified to equity | (2,373) | |
Balance - ending |
Marketable Securities and Str_3
Marketable Securities and Strategic Investments (Details) € in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
May 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2019 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 31, 2022 EUR (€) | |
Marketable Securities and Strategic Investments | |||||||||
Recognized gains (loss) | $ (102,000) | $ 0 | $ (102,000) | $ 0 | $ 0 | $ 0 | |||
Investments fair value | 69,000 | 69,000 | 86,000 | 958,000 | |||||
Strategic Investment Motus GI | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Recognized gains (loss) | (31,000) | (160,000) | (17,000) | (380,000) | (900,000) | (1,000,000) | |||
Investments fair value | 69,000 | 69,000 | $ 86,000 | 1,000,000 | |||||
Impairment charge | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Strategic Investment Vivasure | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Investments gain | $ 1,900,000 | ||||||||
Impairment charge | $ 5,800,000 | ||||||||
Haemonetics Corporation | Strategic Investment Vivasure | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Investments fair value | € | € 30 |
Marketable Securities and Str_4
Marketable Securities and Strategic Investments - Schedule of marketable securities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable Securities | |||
Amortized Cost Basis | $ 101,391 | $ 63,923 | |
Unrealized Gains | 7 | ||
Unrealized Losses | (96) | (15) | |
Fair Value | 101,295 | 63,915 | $ 0 |
Corporate debt securities | |||
Marketable Securities | |||
Amortized Cost Basis | 48,100 | 52,242 | |
Unrealized Gains | 7 | ||
Unrealized Losses | (39) | ||
Fair Value | 48,061 | 52,249 | |
Government debt securities | |||
Marketable Securities | |||
Amortized Cost Basis | 53,291 | 11,681 | |
Unrealized Gains | |||
Unrealized Losses | (57) | (15) | |
Fair Value | $ 53,234 | $ 11,666 |
Balance Sheet Components - Othe
Balance Sheet Components - Other (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Balance Sheet Components | ||||||
Depreciation and amortization expense | $ 72,000 | $ 49,000 | $ 144,000 | $ 98,000 | $ 222,000 | $ 181,000 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of property and equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Property and Equipment, Net | |||
Property and equipment, gross | $ 2,328 | $ 2,267 | $ 1,705 |
Less accumulated depreciation and amortization | (921) | (778) | (585) |
Total Property and equipment, net | 1,407 | 1,489 | 1,120 |
Equipment | |||
Schedule of Property and Equipment, Net | |||
Property and equipment, gross | 1,745 | 1,712 | 1,207 |
Office furniture | |||
Schedule of Property and Equipment, Net | |||
Property and equipment, gross | 364 | 364 | 305 |
Leasehold Improvements | |||
Schedule of Property and Equipment, Net | |||
Property and equipment, gross | 197 | $ 191 | 177 |
Construction in progress | |||
Schedule of Property and Equipment, Net | |||
Property and equipment, gross | $ 22 | $ 16 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of accrued expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Components | |||
Accrued compensation | $ 1,954 | $ 2,480 | $ 1,319 |
Clinical trial accruals | 895 | 1,003 | 39 |
Other accrued expenses | 977 | 1,893 | 531 |
Total accrued expenses | $ 3,826 | $ 5,376 | $ 2,034 |
Common and Preferred Stock (Det
Common and Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Common Stock | |||||
Common stock, shares authorized | 340,000,000 | 340,000,000 | 340,000,000 | 340,000,000 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Preferred Stock | |||||
Preference shares, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||
Preference shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Preference shares, shares outstanding | 0 | 0 | 0 | ||
Maximum | |||||
Common Stock | |||||
Common stock, shares authorized | 340,000,000 | ||||
Legacy Orchestra | |||||
Preferred Stock | |||||
Preference shares, shares outstanding | 35,694,179 | ||||
Series D-1 Preferred Stock | |||||
Preferred Stock | |||||
Proceeds from private placement financing | $ 109,830 |
Warrants - Other (Details)
Warrants - Other (Details) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jan. 26, 2023 USD ($) employee shares | Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 shares | |
Warrants | |||
Warrants outstanding (in shares) | 1,966,808 | 3,077,074 | |
Price per share (in dollars per share) | $ / shares | $ 11.50 | ||
HSAC2 | |||
Warrants | |||
Insider shares subject to lock up period | 4,000,000 | ||
Private shares subject to lock up period | 450,000 | ||
Share lock up period | 12 months | ||
Number of warrants issued | 750,000 | ||
Number of employees and directors, warrants issued | employee | 11 | ||
HSAC2 | Minimum | |||
Warrants | |||
Warrants exercisable term | 24 months | ||
Share lock up period | 6 months | ||
HSAC2 | Maximum | |||
Warrants | |||
Warrants exercisable term | 36 months | ||
Share lock up period | 12 months | ||
Private Warrants Held by Sponsor | |||
Warrants | |||
Warrants outstanding (in shares) | 1,500,000 | 750,000 | 1,500,000 |
Price per share (in dollars per share) | $ / shares | $ 11.50 | ||
Warrants exercisable term | 30 days | ||
Warrants expiry term | 5 years | ||
Private Warrants Held by Sponsor | Minimum | |||
Warrants | |||
Warrants expiry term | 4 years 6 months 25 days | ||
Private Warrants Held by Sponsor | Maximum | |||
Warrants | |||
Warrants expiry term | 4 years 9 months 25 days | ||
Private Warrants Held by Sponsor | HSAC2 | |||
Warrants | |||
Warrants outstanding (in shares) | 1,500,000 | ||
Sponsor warrant forfeiture (as percent) | 50% | ||
Number of warrants forfeiture by sponsor | 750,000 | ||
Consideration for forfeiture of warrants | $ | $ 0 |
Warrants - Valuation models for
Warrants - Valuation models for Warrants (Details) $ in Millions | Jan. 26, 2023 USD ($) Y $ / shares | Dec. 31, 2022 USD ($) Y $ / shares | Jun. 30, 2022 $ / shares Y | Dec. 31, 2021 $ / shares Y |
Warrants | ||||
Warrant liability, Fair value | $ | $ 2.4 | $ 2.1 | ||
Expected volatility | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 0.44 | 0.45 | 0.45 | 0.44 |
Expected volatility | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 0.49 | 0.47 | 0.54 | 0.55 |
Risk-free interest rate | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 0.0360 | 0.0400 | 0.0260 | 0.0027 |
Risk-free interest rate | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 0.0480 | 0.0430 | 0.0300 | 0.0111 |
Remaining Term (in Years) | Minimum | ||||
Warrants | ||||
Warrants, measurement input | Y | 0.35 | 0.14 | 0.92 | 1.41 |
Remaining Term (in Years) | Maximum | ||||
Warrants | ||||
Warrants, measurement input | Y | 5 | 5.07 | 5.38 | 7.94 |
Stock price | ||||
Warrants | ||||
Warrants, measurement input | 10.63 | 9.18 | ||
Expected dividend yield | ||||
Warrants | ||||
Warrants, measurement input | 0 | 0 | 0 | 0 |
Preferred Warrants | Exercise price | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 19.35 | |||
Preferred Warrants | Exercise price | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 32.26 | |||
Commons Warrants | Exercise price | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 1.08 | 1.08 | 1.08 | 1.08 |
Commons Warrants | Exercise price | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 30.11 | 30.11 | 30.11 | 30.11 |
Warrants - Assumed Legacy Orche
Warrants - Assumed Legacy Orchestra Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Warrants | ||||||
Warrants beginning balance (Number) | 3,077,074 | 3,077,074 | ||||
Warrants closing balance | 1,966,808 | 3,077,074 | ||||
Warrants beginning balance (Amount) | $ 2,089 | $ 624 | $ 635 | $ 2,089 | $ 635 | $ 1,347 |
Warrants exercised (Amount) | (10) | (15) | (156) | (13) | ||
Forfeiture of warrants (Amount) | (38) | (38) | ||||
Issuance of warrants related to Legacy Orchestra preferred stock financing (Amount) | 620 | |||||
Amendments of existing warrants (Amount) | 810 | 810 | ||||
Other (Amount) | (335) | (345) | ||||
Change in the fair value of warrants | 294 | 243 | 145 | 578 | (699) | |
Warrants reclassified to equity | $ (2,373) | |||||
Warrants closing balance | $ 1,909 | $ 624 | $ 2,089 | $ 635 | ||
Legacy Orchestra Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 250,000 | 250,000 | ||||
Warrants closing balance | 250,000 | |||||
Preferred Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 206,997 | 206,997 | 206,997 | 206,997 | ||
Amendments of existing warrants | (206,997) | (206,997) | ||||
Warrants closing balance | 206,997 | 206,997 | ||||
Commons Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 1,327,074 | 1,120,575 | 1,189,162 | 1,327,074 | 1,189,162 | 1,192,650 |
Exercise of warrants | (1,163) | (4,650) | (68,587) | (3,488) | ||
Forfeiture of warrants | (4,650) | (4,650) | ||||
Issuance of warrants related to Legacy Orchestra preferred stock financing | 159,965 | |||||
Amendments of existing warrants | 206,997 | 206,997 | ||||
Other | (150,000) | (151,162) | ||||
Warrants reclassified to equity | (1,325,911) | |||||
Warrants closing balance | 1,328,237 | 1,120,575 | 1,327,074 | 1,189,162 |
Warrants - Private Warrants and
Warrants - Private Warrants and Assumed Legacy Orchestra Warrants (Details) - $ / shares | Jun. 30, 2023 | Jan. 26, 2023 | Dec. 31, 2022 |
Warrants | |||
Warrants | 1,966,808 | 3,077,074 | |
Exercise Price | $ 11.50 | ||
Legacy Orchestra Warrants | |||
Warrants | |||
Warrants | 1,327,074 | ||
Legacy Orchestra Warrants | Minimum | |||
Warrants | |||
Exercise Price | $ 0.50 | ||
Term | 1 month 6 days | ||
Legacy Orchestra Warrants | Maximum | |||
Warrants | |||
Exercise Price | $ 14 | ||
Term | 4 years 9 months | ||
Equity-classified Warrants | |||
Warrants | |||
Warrants | 1,966,808 | 1,750,000 | |
Equity-classified Warrants | Minimum | |||
Warrants | |||
Exercise Price | $ 1.33 | ||
Term | 6 years 11 months 8 days | ||
Equity-classified Warrants | Maximum | |||
Warrants | |||
Exercise Price | $ 4.06 | ||
Term | 9 years 6 months | ||
Legacy Orchestra Warrants | |||
Warrants | |||
Warrants | 541,808 | 250,000 | |
Legacy Orchestra Warrants | Minimum | |||
Warrants | |||
Exercise Price | $ 0.50 | ||
Term | 1 month 6 days | ||
Legacy Orchestra Warrants | Maximum | |||
Warrants | |||
Exercise Price | $ 14 | ||
Term | 9 years | ||
Private Warrants Held by Sponsor | |||
Warrants | |||
Warrants | 750,000 | 1,500,000 | 1,500,000 |
Exercise Price | $ 11.50 | ||
Term | 5 years | ||
Private Warrants Held by Sponsor | Minimum | |||
Warrants | |||
Term | 4 years 6 months 25 days | ||
Private Warrants Held by Sponsor | Maximum | |||
Warrants | |||
Term | 4 years 9 months 25 days | ||
Private Warrants Held by Employees | |||
Warrants | |||
Warrants | 675,000 | ||
Term | 4 years 6 months 25 days |
Stock-Based Compensation - Othe
Stock-Based Compensation - Other (Details) - Legacy Orchestra - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
2018 Plan | ||
Stock-Based Compensation | ||
Number of shares authorized | 5,200,000 | 5,200,000 |
2018 Plan | Maximum | ||
Stock-Based Compensation | ||
Expiration period (in years) | 10 years | 10 years |
Vesting period (in years) | 3 years | 3 years |
2023 Plan | ||
Stock-Based Compensation | ||
Number of shares authorized | 3,561,678 | |
Percentage of shares outstanding | 4.80% | |
Shares available for future issuance | 3,036,722 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of cost related to stock-based compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation | ||||||
Unrecognized stock-based compensation expense for options | $ 6,600,000 | $ 6,600,000 | $ 7,200,000 | |||
Stock option | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 961,000 | $ 143,000 | $ 2,184,000 | $ 198,000 | $ 3,102,000 | $ 171,000 |
Expected period to be recognized | 3 years | 3 years | ||||
Stock option | 2023 Plan | Legacy Orchestra | Research and development | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 330,000 | 52,000 | $ 815,000 | 91,000 | $ 398,000 | 83,000 |
Stock option | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 631,000 | 91,000 | 1,369,000 | 107,000 | 2,704,000 | 88,000 |
Restricted Stock | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 498,000 | 76,000 | 547,000 | 91,000 | 273,000 | 131,000 |
Unrecognized stock-based compensation expense for options | 312,000 | $ 312,000 | $ 408,000 | |||
Expected period to be recognized | 3 years | 3 years | ||||
Restricted Stock | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 498,000 | $ 76,000 | $ 547,000 | $ 91,000 | $ 273,000 | $ 131,000 |
Warrant | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 248,000 | 465,000 | ||||
Unrecognized stock-based compensation expense for options | 2,800,000 | $ 2,800,000 | ||||
Expected period to be recognized | 3 years | |||||
Warrant | 2023 Plan | Legacy Orchestra | Research and development | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 120,000 | $ 207,000 | ||||
Warrant | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | $ 128,000 | $ 258,000 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions (Details) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) employee shares | Jan. 26, 2023 USD ($) Y $ / shares | Dec. 31, 2022 USD ($) Y shares | Jun. 30, 2022 $ / shares Y | Dec. 31, 2021 Y | |
Stock-Based Compensation | ||||||
Warrant liability, Fair value | $ | $ 2,400,000 | $ 2,100,000 | ||||
Warrants outstanding (in shares) | 1,966,808 | 1,966,808 | 3,077,074 | |||
Remaining Term (in Years) | Minimum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | Y | 0.35 | 0.14 | 0.92 | 1.41 | ||
Remaining Term (in Years) | Maximum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | Y | 5 | 5.07 | 5.38 | 7.94 | ||
Expected volatility | Minimum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0.44 | 0.45 | 0.45 | 0.44 | ||
Expected volatility | Maximum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0.49 | 0.47 | 0.54 | 0.55 | ||
Risk-free interest rate | Minimum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0.0360 | 0.0400 | 0.0260 | 0.0027 | ||
Risk-free interest rate | Maximum | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0.0480 | 0.0430 | 0.0300 | 0.0111 | ||
Expected dividend yield | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0 | 0 | 0 | 0 | ||
Fair value of common stock | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | $ / shares | 10.63 | 9.18 | ||||
Legacy Orchestra Warrants | ||||||
Stock-Based Compensation | ||||||
Warrants outstanding (in shares) | 250,000 | |||||
Legacy Orchestra Warrants | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Number of warrants to be issued | 750,000 | 750,000 | ||||
Number of warrants forfeited | 75,000 | 75,000 | ||||
Warrants outstanding (in shares) | 675,000 | 675,000 | ||||
Number of employees and directors, warrants issued | employee | 11 | |||||
Legacy Orchestra Warrants | Restricted Stock | Minimum | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants exercisable term | 24 months | |||||
Legacy Orchestra Warrants | Restricted Stock | Maximum | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants exercisable term | 36 months | |||||
Legacy Orchestra Warrants | Remaining Term (in Years) | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 5 | 5 | ||||
Legacy Orchestra Warrants | Expected volatility | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 50 | 50 | ||||
Legacy Orchestra Warrants | Risk-free interest rate | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 3.54 | 3.54 | ||||
Legacy Orchestra Warrants | Expected dividend yield | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrants, measurement input | 0 | 0 | ||||
Legacy Orchestra Warrants | Fair value of common stock | Restricted Stock | 2023 Plan | ||||||
Stock-Based Compensation | ||||||
Warrant liability, Fair value | $ | $ 10.63 | $ 10.63 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of stock option activity (Details) - 2018 and 2023 Plan - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 3,658,828 | 1,348,464 | |
Restricted Stock Outstanding, Granted | 323,175 | 2,357,807 | |
Exercise of stock options (in shares) | 17,825 | 27,848 | |
Restricted Stock Outstanding, Forfeited/canceled | 142,256 | 19,595 | |
Restricted Stock Outstanding, Ending | 3,821,922 | 3,658,828 | 1,348,464 |
Shares Underlying Options, Exercisable | 2,163,768 | 1,806,093 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 7.56 | $ 4.47 | |
Weighted Average Exercise Price, Granted | 9.89 | 9.33 | |
Weighted Average Exercise Price, Exercised | 4.16 | 4.32 | |
Weighted Average Exercise Price, Forfeited/canceled | 5.35 | 4.67 | |
Weighted Average Exercise Price, Outstanding June 30, 2023 | 7.97 | 7.56 | $ 4.47 |
Weighted Average Exercise Price, Exercisable at June 30, 2023 | $ 6.60 | $ 5.78 | |
Weighted Average Remaining Term (years) and Aggregate Intrinsic Value | |||
Weighted Average Remaining Term (years), Outstanding June 30, 2023 | 5 years 3 months 21 days | 8 years 4 months 6 days | 7 years 1 month 17 days |
Weighted Average Remaining Term (years), Exercisable at June 30, 2023 | 7 years 1 month 2 days | 6 years 8 months 19 days | |
Aggregate Intrinsic Value Outstanding | $ 4,002 | $ 8,277 | |
Aggregate Intrinsic Value, Exercisable at June 30, 2023 | $ 3,412 | $ 6,815 | |
Previously Reported | |||
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 7,868,448 | ||
Restricted Stock Outstanding, Ending | 7,868,448 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 3.51 | ||
Weighted Average Exercise Price, Outstanding June 30, 2023 | $ 3.51 | ||
Weighted Average Remaining Term (years) and Aggregate Intrinsic Value | |||
Weighted Average Remaining Term (years), Outstanding June 30, 2023 | 8 years 4 months 6 days | ||
Retroactive application of Reverse Recapitalization | |||
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 4,209,620 | ||
Restricted Stock Outstanding, Ending | 4,209,620 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 4.05 | ||
Weighted Average Exercise Price, Outstanding June 30, 2023 | $ 4.05 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of restricted stock activity (Details) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Stock Outstanding | |||
Shares Underlying Options Outstanding, Beginning at January 1, 2023 | 158,589 | 21,907 | |
Shares Underlying Options, Granted | 0 | 182,962 | |
Vested | 63,451 | 46,280 | 46,281 |
Forfeited/canceled | 45,901 | 0 | |
Shares Underlying Options, Outstanding June 30, 2023 | 49,237 | 158,589 | 21,907 |
Weighted Average Remaining Term (years) | 8 years 8 months 1 day | 9 years 1 month 20 days | 7 years 7 months 6 days |
Aggregate Intrinsic Value | $ 549 | $ 980 | |
Restricted Stock Vested, weighted-average grant date fair | $ 3.52 | $ 3.12 |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of estimated grant-date fair value calculated using Black-Scholes option pricing model (Details) - Stock option - $ / shares | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation | ||||
Expected term | 6 years | 6 years | 6 years | 6 years |
Expected volatility | 50% | 49% | 50% | 60% |
Risk-free interest rate | 3.60% | 2.70% | 3.01% | 0.99% |
Expected dividend yield | 0% | 0% | 0% | 0% |
Fair value of common stock | $ 9.63 | $ 4.06 | $ 9.72 | $ 4.71 |
Leases - Other (Details)
Leases - Other (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
May 31, 2022 USD ($) | Jan. 31, 2020 USD ($) | Nov. 30, 2019 USD ($) ft² | Aug. 31, 2019 USD ($) ft² | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Leases | ||||||||||
Lease space | ft² | 5,200 | 8,052 | ||||||||
Rent lease expense | $ 209,000 | $ 180,000 | $ 417,000 | $ 354,000 | $ 735,000 | $ 697,000 | ||||
Cash paid for operating lease liabilities | $ 410,000 | $ 354,000 | $ 702,000 | |||||||
Minimum | ||||||||||
Leases | ||||||||||
Monthly rent expense | $ 7,000 | $ 12,000 | $ 28,000 | $ 9,000 | ||||||
Maximum | ||||||||||
Leases | ||||||||||
Monthly rent expense | $ 23,000 | $ 17,000 | $ 30,000 | $ 19,000 |
Leases - Schedule of recognized
Leases - Schedule of recognized as an asset and operating lease liabilities (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted average remaining lease term - operating leases, in years | 3 years 8 months 23 days | 4 years 21 days |
Weighted average discount rate - operating leases | 6.25% | 6.25% |
Leases - Schedule of future min
Leases - Schedule of future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Operating Lease Maturity | ||
2023 (remaining six months) | $ 413 | |
2024 | 727 | $ 823 |
2025 | 352 | 727 |
2026 | 352 | 352 |
2027 | 352 | 352 |
2028 | 352 | |
Thereafter | 88 | |
Thereafter | 88 | |
Total future minimum lease payments | 2,284 | 2,694 |
Imputed interest | (245) | (314) |
Total liability | $ 2,039 | $ 2,380 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | ||
Apr. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Vivasure | |||
Related Party Transaction | |||
Unsecured convertible redeemable notes | $ 208,000 | $ 213,000 | $ 183,000 |
Debt Financing - Other (Details
Debt Financing - Other (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 USD ($) tranche $ / shares shares | Dec. 31, 2019 USD ($) tranche | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Financing | |||||||||
Outstanding principal amount of the loans converted into common stock | $ 178,000 | $ 178,000 | |||||||
Warrants outstanding (in shares) | shares | 1,966,808 | 1,966,808 | 3,077,074 | ||||||
Loss on extinguishment | $ (682,000) | (682,000) | $ (682,000) | ||||||
Interest expense | $ 457,000 | 257,000 | $ 897,000 | 493,000 | |||||
Fund I and II warrants | |||||||||
Debt Financing | |||||||||
Opportunities Fund I and II warrants | $ 100,000 | 100,000 | 100,000 | ||||||
Estimated fair value of the warrants | 178,000 | 178,000 | 178,000 | ||||||
Other financing cost | 405,000 | 405,000 | 405,000 | ||||||
2022 Loan and Security Agreement | |||||||||
Debt Financing | |||||||||
Term loan | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | ||||||
Number of tranches | tranche | 2 | ||||||||
Outstanding principal amount of the loans converted into common stock | $ 5,000,000 | ||||||||
Conversion price | $ / shares | $ 12 | $ 12 | $ 12 | ||||||
Conversion option not exercisable term | 6 months | ||||||||
Interest rate | 14.70% | 14.70% | 13.45% | 13.45% | |||||
Repayment terms of the loan | 4 years | ||||||||
Repayment of interest only term | 2 years | ||||||||
Repayment of principal | $ 417,000 | ||||||||
Percentage of initial commitment amount | 4.25% | ||||||||
Initial commitment amount | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | ||||||
2022 Loan and Security Agreement | Prime rate | |||||||||
Debt Financing | |||||||||
Interest rate variable (as a percent) | 6.45% | ||||||||
Tranche One | |||||||||
Debt Financing | |||||||||
Term loan | $ 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Tranche Two | |||||||||
Debt Financing | |||||||||
Term loan | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Tranche Three | |||||||||
Debt Financing | |||||||||
Term loan | 30,000,000 | 30,000,000 | 30,000,000 | ||||||
2019 Loan and Security Agreement | |||||||||
Debt Financing | |||||||||
Term loan | $ 10,000,000 | ||||||||
Number of tranches | tranche | 2 | ||||||||
Estimated fair value of the warrants | $ 544,000 | $ 544,000 | $ 544,000 | 544,000 | |||||
Warrants outstanding (in shares) | shares | 0 | 0 | 0 | ||||||
Loss on extinguishment | $ 682,000 | ||||||||
Percentage of amount drawn | 2% | 2% | |||||||
Share price | $ / shares | $ 1.33 | $ 1.33 | $ 1.33 | $ 1.33 | |||||
Warrants Issued | $ 150,000 | $ 150,000 | |||||||
Interest rate stated (as a percent) | 6.25% | ||||||||
Percentage of original aggregate principal amount | 8.25% | 8.25% | |||||||
Interest expense | $ 711,000 | ||||||||
2019 Loan and Security Agreement | Maximum | |||||||||
Debt Financing | |||||||||
Term loan | $ 20,000,000 | ||||||||
Interest rate variable (as a percent) | 1% | ||||||||
Interest rate stated (as a percent) | 6.25% | 6.25% | 6.25% | ||||||
2019 Loan and Security Agreement | Prime rate | Maximum | |||||||||
Debt Financing | |||||||||
Interest rate variable (as a percent) | 1% |
Debt Financing - Schedule of am
Debt Financing - Schedule of amount of principal payments (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Maturity | ||
2024 | $ 2,500 | $ 2,500 |
2025 | 5,000 | 5,000 |
2026 | 2,500 | 2,500 |
Total | $ 10,000 | $ 10,000 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of calculation of diluted net loss per share (Details) - shares | 6 Months Ended | |||
Apr. 12, 2023 | Jan. 26, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Anti-dilutive Securities | ||||
Earnout first milestone | 4,000,000 | |||
Earnout first milestone Round off | 3,999,987 | |||
Forfeitable shares | 500,000 | |||
Antidilutive securities | 10,754,634 | 3,074,661 | ||
Maximum | ||||
Anti-dilutive Securities | ||||
Shares consideration | 8,000,000 | |||
Stock options | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 3,821,922 | 1,578,316 | ||
Warrant liability. | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 1,966,808 | 1,328,237 | ||
Unvested Restricted Stock Awards | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 49,237 | 168,108 | ||
Conversion Option | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 416,667 | |||
Forfeitable Shares | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 500,000 | |||
Earnout Consideration | ||||
Anti-dilutive Securities | ||||
Antidilutive securities | 4,000,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Oct. 06, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsequent Events | |||||
Repayment of principal | $ 6,446,000 | $ 6,446,000 | $ 4,000,000 | ||
Exercise Price | $ 11.50 | ||||
Subsequent events | 2022 Loan and Security Agreement | |||||
Subsequent Events | |||||
Repayment of principal | $ 10,000,000 | ||||
Number of shares of common stock called by warrants issued | 27,707 | ||||
Exercise Price | $ 7.67 | ||||
Cash payment due with respect to certain fees | $ 212,500 | ||||
Payment of net interest, prepayment fees, and legal fees | $ 849,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 19,784 | $ 9,938 |
Marketable securities | 63,915 | |
Strategic investments, current portion | 86 | 958 |
Accounts receivable, net | 96 | 121 |
Inventory | 276 | 68 |
Prepaid expenses and other current assets | 533 | 234 |
Total current assets | 84,690 | 11,319 |
Property and equipment, net | 1,489 | 1,120 |
Right-of-use assets | 2,187 | |
Strategic investments, less current portion | 2,495 | 398 |
Deposits and other assets | 4,711 | 690 |
TOTAL ASSETS | 95,572 | 13,527 |
CURRENT LIABILITIES: | ||
Accounts payable | 3,968 | 2,029 |
Accrued expenses and other liabilities | 5,376 | 2,034 |
Operating lease liability, current portion | 697 | |
Warrant liability | 2,089 | 635 |
Deferred revenue, current portion | 6,436 | 5,542 |
Loan payable, current portion | 2,000 | |
Total current liabilities | 18,566 | 12,240 |
Deferred revenue, less current portion | 13,103 | 16,859 |
Loan payable, less current portion | 9,490 | 3,673 |
Operating lease liability, less current portion | 1,683 | |
Other long-term liabilities | 196 | 535 |
TOTAL LIABILITIES | 43,038 | 33,307 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized; none issued or outstanding at December 31, 2021 and December 31, 2022. | ||
Common stock, $0.0001 par value; 340,000,000 shares authorized; 8,822,280 and 20,187,850 shares issued and outstanding as of December 31, 2021 and December 31, 2022, respectively. | 2 | 1 |
Additional paid-in capital | 252,274 | 146,345 |
Accumulated other comprehensive loss | (8) | |
Accumulated deficit | (199,734) | (166,126) |
TOTAL STOCKHOLDERS' EQUITY | 52,534 | (19,780) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 95,572 | $ 13,527 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2023 | Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||||
Preference shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preference shares, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preference shares, shares issued | 0 | 0 | 0 | |
Preference shares, shares outstanding | 0 | 0 | 0 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 340,000,000 | 340,000,000 | 340,000,000 | 340,000,000 |
Common stock, shares issued | 35,743,007 | 20,187,850 | 8,822,280 | |
Common stock, shares outstanding | 35,743,007 | 20,187,850 | 8,822,280 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | ||||||||
Revenue | $ 915 | $ 401 | $ 2,079 | $ 1,267 | $ 3,533 | $ (782) | ||
Expenses: | ||||||||
Cost of product revenues | 54 | 60 | 98 | 102 | 211 | 199 | ||
Research and development | 8,499 | 5,029 | 16,753 | 8,503 | 21,945 | 12,890 | ||
Selling, general and administrative | 5,318 | 2,946 | 9,729 | 5,424 | 14,034 | 7,928 | ||
Total expenses | 13,871 | 8,035 | 26,580 | 14,029 | 36,190 | 21,017 | ||
Loss from operations | (12,956) | (7,634) | (24,501) | (12,762) | (32,657) | (21,799) | ||
Other income (expense): | ||||||||
Interest income (expense), net | 941 | (246) | 1,826 | (482) | 50 | (927) | ||
Gain (loss) on fair value adjustment of warrant liability | (1,015) | (294) | (1,160) | (1,350) | 699 | |||
Loss on debt extinguishment | (682) | (682) | (682) | |||||
(Loss) gain on fair value of strategic investments | (31) | 1,730 | (17) | 1,510 | 1,031 | (987) | ||
Total other income (expense) | 910 | (213) | 1,515 | (814) | (951) | (1,215) | ||
Net loss | $ (12,046) | $ (10,940) | $ (7,847) | $ (5,729) | $ (22,986) | $ (13,576) | $ (33,608) | $ (23,014) |
Net loss per share | ||||||||
Basic (in Dollars per share) | $ (0.35) | $ (0.77) | $ (0.74) | $ (0.74) | $ (2.24) | $ (2.61) | ||
Diluted (in Dollars per share) | $ (0.35) | $ (0.77) | $ (0.74) | $ (0.74) | $ (2.24) | $ (2.61) | ||
Weighted-average shares used in computing net loss per share, basic (in Shares) | 34,613,466 | 10,138,169 | 31,228,323 | 18,446,239 | 14,988,584 | 8,818,115 | ||
Weighted-average shares used in computing net loss per share, diluted (in Shares) | 34,613,466 | 10,138,169 | 31,228,323 | 18,446,239 | 14,988,584 | 8,818,115 | ||
Comprehensive loss | ||||||||
Net loss | $ (12,046) | (10,940) | $ (7,847) | $ (5,729) | $ (22,986) | $ (13,576) | $ (33,608) | $ (23,014) |
Unrealized gain (loss) on marketable securities | (61) | $ (27) | (88) | (8) | 2 | |||
Comprehensive loss | (12,107) | (7,847) | (23,074) | (13,576) | (33,616) | (23,012) | ||
Partnership revenue | ||||||||
Revenue: | ||||||||
Revenue | 728 | 229 | 1,747 | 945 | 2,862 | (1,475) | ||
Product revenue | ||||||||
Revenue: | ||||||||
Revenue | $ 187 | $ 172 | $ 332 | $ 322 | $ 671 | $ 693 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) | Previously Reported Convertible Preferred Stock | Previously Reported Common Stock | Previously Reported Additional Paid-In Capital | Previously Reported Accumulated Other Comprehensive (Loss) | Previously Reported Accumulated Deficit | Previously Reported | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) | Accumulated Deficit | Total |
Retroactive application of reverse capitalization | $ (51,452,000) | $ 1,000 | $ 51,451,000 | $ 51,452,000 | |||||||
Retroactive application of reverse capitalization (in shares) | (12,075,976) | 6,761,598 | |||||||||
Balance at Dec. 31, 2020 | $ 51,452,000 | 94,572,000 | $ (2,000) | $ (143,112,000) | (48,542,000) | $ 1,000 | $ 146,023,000 | $ (2,000) | $ (143,112,000) | $ 2,910,000 | |
Balance (in shares) at Dec. 31, 2020 | 12,075,976 | 2,056,497 | 8,818,095 | ||||||||
Unrealized gain (loss) on marketable securities | 2,000 | 2,000 | |||||||||
Stock-based compensation | 302,000 | 302,000 | |||||||||
Exercise of stock options | 3,000 | 3,000 | |||||||||
Exercise of stock options (in shares) | 697 | ||||||||||
Exercise of warrants | 17,000 | 17,000 | |||||||||
Exercise of warrants (in shares) | 3,488 | ||||||||||
Net loss | (23,014,000) | (23,014,000) | |||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in Shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Retroactive application of reverse capitalization | $ (51,452,000) | $ 1,000 | 51,451,000 | 51,452,000 | |||||||
Retroactive application of reverse capitalization (in shares) | (12,075,976) | 6,636,983 | |||||||||
Stock-based compensation | 70,000 | 70,000 | |||||||||
Exercise of stock options | 25,000 | 25,000 | |||||||||
Exercise of stock options (in shares) | 5,696 | ||||||||||
Exercise of warrants | 230,000 | 230,000 | |||||||||
Exercise of warrants (in shares) | 68,588 | ||||||||||
Proceeds from private placement financing | 25,262,000 | 25,262,000 | |||||||||
Proceeds from private placement financing (in shares) | 1,240,169 | ||||||||||
Net loss | (5,729,000) | (5,729,000) | |||||||||
Balance at Mar. 31, 2022 | $ 1,000 | 171,932,000 | (171,855,000) | 78,000 | |||||||
Balance (in Shares) at Mar. 31, 2022 | 10,136,733 | ||||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Net loss | (13,576,000) | ||||||||||
Balance at Jun. 30, 2022 | $ 2,000 | 249,206,000 | (179,702,000) | 69,506,000 | |||||||
Balance (in Shares) at Jun. 30, 2022 | 20,187,140 | ||||||||||
Balance at Dec. 31, 2021 | $ 51,452,000 | 94,894,000 | (166,126,000) | (71,232,000) | $ 1,000 | 146,345,000 | (166,126,000) | (19,780,000) | |||
Balance (in shares) at Dec. 31, 2021 | 12,075,976 | 2,185,297 | 8,822,280 | ||||||||
Unrealized gain (loss) on marketable securities | (8,000) | (8,000) | |||||||||
Stock-based compensation | 3,375,000 | 3,375,000 | |||||||||
Exercise of stock options | 121,000 | 121,000 | |||||||||
Exercise of stock options (in shares) | 27,848 | ||||||||||
Exercise of warrants | 79,000 | 79,000 | |||||||||
Exercise of warrants (in shares) | 73,238 | ||||||||||
Proceeds from private placement financing | $ 1,000 | 101,632,000 | 101,633,000 | ||||||||
Proceeds from private placement financing (in shares) | 11,255,184 | ||||||||||
Shares issued pursuant to consulting agreement | 38,000 | 38,000 | |||||||||
Shares issued pursuant to consulting agreement (in shares) | 9,300 | ||||||||||
Issuance of warrants pursuant to debt financing | 178,000 | 178,000 | |||||||||
Other | 506,000 | 506,000 | |||||||||
Net loss | (33,608,000) | (33,608,000) | |||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | 86,353,000 | (8,000) | (199,734,000) | (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in Shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Balance at Mar. 31, 2022 | $ 1,000 | 171,932,000 | (171,855,000) | 78,000 | |||||||
Balance (in shares) at Mar. 31, 2022 | 10,136,733 | ||||||||||
Stock-based compensation | 219,000 | 219,000 | |||||||||
Exercise of stock options | 92,000 | 92,000 | |||||||||
Exercise of stock options (in shares) | 21,442 | ||||||||||
Exercise of warrants | (151,000) | (151,000) | |||||||||
Exercise of warrants (in shares) | 4,650 | ||||||||||
Proceeds from private placement financing | $ 1,000 | 76,392,000 | 76,393,000 | ||||||||
Proceeds from private placement financing (in shares) | 10,015,015 | ||||||||||
Shares issued pursuant to consulting agreement | 38,000 | 38,000 | |||||||||
Issuance of warrants pursuant to debt financing | 178,000 | 178,000 | |||||||||
Issuance of warrants pursuant to debt financing (in shares) | 9,300 | ||||||||||
Other | 506,000 | 506,000 | |||||||||
Net loss | (7,847,000) | (7,847,000) | |||||||||
Balance at Jun. 30, 2022 | $ 2,000 | 249,206,000 | (179,702,000) | 69,506,000 | |||||||
Balance (in Shares) at Jun. 30, 2022 | 20,187,140 | ||||||||||
Retroactive application of reverse capitalization | $ (165,923,000) | $ 2,000 | 165,921,000 | 165,923,000 | |||||||
Retroactive application of reverse capitalization (in shares) | (35,694,179) | 17,665,636 | |||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | 86,353,000 | (8,000) | (199,734,000) | (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Effect of Merger and recapitalization (refer to Note 3) | $ 1,000 | 54,301,000 | 54,302,000 | ||||||||
Effect of Merger and recapitalization (refer to Note 3) (in shares) | 11,422,741 | ||||||||||
Reclassification of Legacy Orchestra common stock warrants to stockholders' equity | 2,373,000 | 2,373,000 | |||||||||
Unrealized gain (loss) on marketable securities | (27,000) | (27,000) | |||||||||
Stock-based compensation | 1,489,000 | 1,489,000 | |||||||||
Exercise of stock options | $ 2,325 | 10,000 | 10,000 | ||||||||
Exercise of warrants | 128,231 | 11,000 | 11,000 | ||||||||
Net loss | (10,940,000) | (10,940,000) | |||||||||
Balance at Mar. 31, 2023 | $ 3,000 | 310,458,000 | (35,000) | (210,674,000) | 99,752,000 | ||||||
Balance (in Shares) at Mar. 31, 2023 | 31,741,147 | ||||||||||
Balance at Dec. 31, 2022 | $ 165,923,000 | $ 86,353,000 | $ (8,000) | $ (199,734,000) | $ (113,389,000) | $ 2,000 | 252,274,000 | (8,000) | (199,734,000) | 52,534,000 | |
Balance (in shares) at Dec. 31, 2022 | 35,694,179 | 2,522,214 | 20,187,850 | ||||||||
Unrealized gain (loss) on marketable securities | (88,000) | ||||||||||
Net loss | (22,986,000) | ||||||||||
Balance at Jun. 30, 2023 | $ 4,000 | 312,251,000 | (96,000) | (222,720,000) | 89,439,000 | ||||||
Balance (in Shares) at Jun. 30, 2023 | 35,743,007 | ||||||||||
Balance at Mar. 31, 2023 | $ 3,000 | 310,458,000 | (35,000) | (210,674,000) | 99,752,000 | ||||||
Balance (in shares) at Mar. 31, 2023 | 31,741,147 | ||||||||||
Issuance of shares in settlement of earnout | $ 1,000 | 1,000 | |||||||||
Issuance of shares in settlement of earnout (in shares) | 3,999,987 | ||||||||||
Unrealized gain (loss) on marketable securities | (61,000) | (61,000) | |||||||||
Stock-based compensation | 1,707,000 | 1,707,000 | |||||||||
Exercise of stock options | 64,000 | 64,000 | |||||||||
Exercise of stock options (in shares) | 15,500 | ||||||||||
Exercise of warrants | 22,000 | 22,000 | |||||||||
Exercise of warrants (in shares) | 32,279 | ||||||||||
Forfeiture of restricted stock awards (in shares) | (45,906) | ||||||||||
Net loss | (12,046,000) | (12,046,000) | |||||||||
Balance at Jun. 30, 2023 | $ 4,000 | $ 312,251,000 | $ (96,000) | $ (222,720,000) | $ 89,439,000 | ||||||
Balance (in Shares) at Jun. 30, 2023 | 35,743,007 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (33,608) | $ (23,014) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 222 | 181 |
Shares issued as compensation for consulting services | 38 | |
Stock-based compensation | 3,375 | 302 |
Deferred rent | (33) | |
(Gain) loss on fair value adjustment of warrant liability | 1,350 | (699) |
Loss (gain) on fair value of strategic investments | (1,031) | 987 |
Loss on debt extinguishment | 682 | |
Non-cash lease expense | 571 | |
Accretion and interest related to marketable securities | (600) | |
Amortization of deferred financing fees | 163 | 217 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 25 | 47 |
Inventory | (208) | 1 |
Prepaid expenses and other assets | (439) | 29 |
Accounts payable, accrued expenses and other liabilities | 3,352 | 1,078 |
Operating lease liabilities - current and non-current | (319) | |
Deferred revenue | (2,862) | 1,475 |
Net cash used in operating activities | (29,289) | (19,429) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (591) | (274) |
Purchases of related party convertible notes | (213) | |
Purchases of marketable securities | (63,323) | |
Sales of marketable securities | 13,504 | |
Purchases of strategic investments | (208) | |
Net cash used in investing activities | (64,122) | 13,017 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of debt financing, inclusive of debt extinguishment costs | (6,446) | (4,000) |
Proceeds from Avenue term loan | 10,000 | |
Proceeds from exercise of warrants | 79 | 4 |
Warrant repurchases | (10) | |
Proceeds from exercise of stock options | 121 | 3 |
Deferred financing, offering and merger costs | (10,317) | |
Net cash provided by financing activities | 103,257 | (3,993) |
Net (decrease) increase in cash and cash equivalents | 9,846 | (10,405) |
Cash and cash equivalents, beginning of the period | 9,938 | 20,343 |
Cash and cash equivalents, end of the period | 19,784 | 9,938 |
Cash paid during the year for: | ||
Interest | 1,371 | 389 |
Non-cash financing activities: | ||
Deferred offering and merger costs in accounts payable and accrued expenses | 1,646 | 100 |
Warrants issued pursuant to private placement financing | 620 | |
Warrants issued pursuant to debt financing | 178 | |
Series D-1 Preferred Stock | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from private placement financing | $ 109,830 |
Organization and Basis of Pre_3
Organization and Basis of Presentation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Organization and Basis of Presentation | ||
Organization and Basis of Presentation | 1. Orchestra BioMed Holdings, Inc. (formerly known as Health Sciences Acquisitions Corporation 2) (collectively, with its subsidiaries, “Orchestra” or the “Company”) is a biomedical innovation company accelerating high-impact technologies to patients through risk-reward sharing partnerships with leading medical device companies. The Company’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. The Company’s flagship product candidates are 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. 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 (the “Closing Date”), the Company 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 (“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, the Company’s name was changed from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” See Note 3 for additional information. Legacy Orchestra, the Company’s wholly owned subsidiary, was incorporated in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private placements. In May 2018, Legacy Orchestra concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc. (“Caliber”), a Delaware corporation, BackBeat Medical, Inc. (“BackBeat”), a Delaware Corporation, and FreeHold Surgical, Inc. (“FreeHold”), a Delaware corporation. Caliber Caliber was incorporated in Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such as a stent in the artery. In 2019, Legacy Orchestra entered into a distribution agreement with Terumo Medical Corporation (“Terumo”) for global development and commercialization of Virtue SAB (the “Terumo Agreement”) (See Note 4). BackBeat BackBeat was incorporated in Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable cardiac stimulation-based treatment for hypertension that is designed to immediately, substantially and persistently lower blood pressure while simultaneously modulating autonomic nervous system responses that normally drive and maintain blood pressure higher. BackBeat is currently in a pre-revenue stage of operations. Refer to Note 5 for details regarding 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”). FreeHold FreeHold was incorporated in Delaware in May 2010 and began development of its hands-free, intracorporeal retractor device for minimally-invasive surgery in 2012. FreeHold is engaged in the development, sales and marketing of its retractor products that provide optimized visual and total surgeon control during laparoscopic and robotic procedures. Basis of Presentation and Liquidity The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulation of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. These condensed statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to fairly present the results of the interim periods. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date. Operating results and cash flows for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our report for the year ended December 31, 2022 together with the related notes thereto, filed as Exhibit 99.1 to the Company’s Form 8-K/A filed with the SEC on March 24, 2023. The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of June 30, 2023, the Company had an accumulated deficit of $222.7 million and has experienced net losses each year since its inception. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance its products to commercialization. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biomedical device industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern Based on the available balance of cash and cash equivalents and marketable securities as of June 30, 2023, management has concluded that sufficient capital is available to fund its operations and meet cash requirements through the one-year period subsequent to the issuance date of these financial statements. Management may consider plans to raise capital beyond the one-year period subsequent to the issuance date of these financial statements through issuance of equity securities, debt securities, and/or additional development and commercialization partnerships for other products within the Company’s development pipeline. The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of the Company’s research and development programs. | 1. Orchestra BioMed Holdings, Inc. (formerly known as Health Sciences Acquisitions Corporation 2) (collectively, with its subsidiaries, “Orchestra” or the “Company”) is a biomedical innovation company seeking to provide high-impact solutions for large unmet needs in procedure-based medicine. The Company’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. The Company’s business model seeks to adapt the strategic partnering tactics widely used by the biopharmaceutical industry to the medical device market. The Company’s goal is to accelerate and improve the likelihood of the Company’s product candidates reaching patients and providers worldwide by sharing the risks and rewards of developing and commercializing these product candidates with established companies. The Company’s flagship product candidates are Virtue Sirolimus AngioInfusion Balloon (“Virtue SAB”) for the treatment of artery disease, the leading cause of mortality worldwide, and BackBeat Cardiac Neuromodulation Therapy (“BackBeat CNT”) for the treatment of hypertension, a significant risk factor for death worldwide. The Company has additional product candidates in its pipeline and plans to thoughtfully expand its product pipeline in the future through acquisitions, strategic collaborations, licensing and organic development. Orchestra BioMed, Inc. (“Legacy Orchestra”) was incorporated in Delaware in January 2017 and was formed to acquire operating and other assets as well as to raise capital conducted through private placements. In May 2018, Legacy Orchestra concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc. (“Caliber”), a Delaware corporation, BackBeat Medical, Inc. (“BackBeat”), a Delaware Corporation, and FreeHold Surgical, Inc. (“FreeHold”), a Delaware corporation. Caliber Caliber was incorporated in Delaware in October 2005 and began development of its lead product Virtue SAB in 2008. Virtue SAB is a patented drug/device combination product candidate for the treatment of artery disease that delivers a proprietary extended release formulation of sirolimus called SirolimusEFR to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need for leaving a permanent implant such as a stent in the artery. In 2019, the Company entered into a distribution agreement with Terumo Medical Corporation (“Terumo”) for global development and commercialization of Virtue SAB (the “Terumo Agreement”) (Note 3). BackBeat BackBeat was incorporated in Delaware in January 2010 and began development of its lead product BackBeat CNT that same year. BackBeat CNT is a patented implantable cardiac stimulation-based treatment for hypertension that is designed to immediately, substantially and persistently lower blood pressure while simultaneously modulating autonomic nervous system responses that normally drive and maintain blood pressure higher. BackBeat is currently in a pre-revenue stage of operations. Refer to Note 4 for details regarding the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”). FreeHold FreeHold was incorporated in Delaware in May 2010 and began development of its hands-free, intracorporeal retractor device for minimally-invasive surgery in 2012. FreeHold is engaged in the development, sales and marketing of its retractor products that provide optimized visual and total surgeon control during laparoscopic and robotic procedures. The Company generated revenue of approximately $693,000 and $671,000 during the years ended December 31, 2021 and 2022, respectively related to this legacy FreeHold Surgical, Inc. technology. Business Combination Transaction Prior to January 26, 2023, Health Sciences Acquisitions Corporation 2 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 (the “Closing Date”), the Company 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 (“HSAC2”), HSAC Olympus Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HSAC2 (“Merger Sub”), and 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, the Company’s name was changed from “Health Sciences Acquisitions Corporation 2” to “Orchestra BioMed Holdings, Inc.” The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represent the operations of Legacy Orchestra, and the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). Upon the closing of the Business Combination, the Company’s certificate of incorporation provided for, among other things, a total number of authorized shares of capital stock of 350,000,000 shares, of which 340,000,000 shares were designated common stock, $0.0001 per value per share, and of which 10,000,000 shares were designated preferred stock, $0.0001 par value per share. Basis of Presentation and Liquidity The accompanying consolidated financial statements herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of December 31, 2022, the Company had an accumulated deficit of $199.7 million and has experienced net losses each year since its inception. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance its products to commercialization. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern Based on the available balance of cash and cash equivalents and marketable securities as of December 31, 2022, as well as the proceeds received from the consummation of the Business Combination in January 2023 (Note 14), management has concluded that sufficient capital is available to fund its operations and meet cash requirements through the one-year period subsequent to the issuance date of these financial statements. Management may consider plans to raise capital beyond the one-year period subsequent to the issuance date of these financial statements through issuance of equity securities, debt securities, and/or additional development and commercialization partnerships for other products within the Company’s development pipeline. The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of the Company’s research and development programs. |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | 2. Reverse Recapitalization The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, HSAC2 is treated as the “acquired” company and Legacy Orchestra is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Orchestra issuing stock for the net assets of HSAC2, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represent the operations of Legacy Orchestra, and the shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the exchange ratio established in the Merger Agreement (the “Exchange Ratio”). For additional information on the Business Combination and the Exchange Ratio, see Note 3 to these unaudited condensed consolidated financial statements. Emerging Growth Company and Smaller Reporting Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)., As such, it is 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. The Company has 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, the Company, 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 the Company’s condensed 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. The Company 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 the Company has total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which the Company is 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 the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. The Company is also a “smaller reporting company” as defined in the Exchange Act. The Company may continue to be a smaller reporting company even after the Company is no longer an emerging growth company. The Company 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 the Company’s voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of the Company’s second fiscal quarter, or (ii)(a) the Company’s annual revenue is less than $100.0 million during the most recently completed fiscal year and (b) the market value of the Company’s voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of the Company’s second fiscal quarter. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 4). Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ equity as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a Motus GI Holdings, Inc. (“Motus GI”), a publicly-held company and related party, and preferred shares of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party. The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities. Therefore, the Company categorized the investments as current assets. 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. Additionally, as the investments in Vivasure are not readily marketable, the Company categorized the investments as non-current assets. As of June 30, 2023 and December 31, 2022, the carrying value of the investments in Vivasure was $2.5 million. Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at June 30, 2023, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 6 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of June 30, 2023 and December 31, 2022, an allowance for doubtful accounts was not deemed necessary. Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of June 30, 2023 and December 31, 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its third-party service providers, which include the conduct of preclinical and clinical studies. The Company is required to estimate its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the terms of the arrangement. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use (“ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is to not record leases with a lease term of 12 months or less on its balance sheets. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the statements of operations. Payments due under each lease agreement include fixed and variable payments. Variable payments relate to the Company’s share of the lessor’s operating costs associated with the underlying asset and are recognized when the event on which those payments are assessed occurs. Variable payments have been excluded from the lease liability and associated right-of-use asset. The interest rate implicit in lease agreements is typically not readily determinable, and as such, the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity, Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. 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. Partnership Revenues To date, the Company’s partnership revenues have related to the Terumo Agreement as further described in Note 4. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 5. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the U.S. Food and Drug Administration (the “FDA”) for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the Company’s condensed consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss is the same as diluted net loss since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, Earnout Consideration (Note 3) and unvested restricted stock awards. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares (as defined in Note 3)) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees were deferred to be offset against proceeds received when the Business Combination was completed. As of December 31, 2022, there were $4.0 million of deferred transaction costs included in deposits and other assets on the accompanying condensed consolidated balance sheet. Upon the close of the Business Combination, these deferred costs were recorded against net proceeds in additional paid-in capital. For further discussion on the Business Combination, see Note 3. Defined Contribution Plan The Company has a defined retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. Effective January 1, 2023, the Company participates in a matching safe harbor 401(k) Plan with a Company contribution of up to 3.5% of each eligible participating employee’s compensation. Safe harbor contributions vest immediately for each participant. During the three and six months ended June 30, 2023, the Company made $67,000 and $181,000, respectively, in contributions under this safe harbor 401(k) Plan. Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | 2. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 3). Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ deficit as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a publicly-held company and related party (Motus GI) and preferred shares and convertible notes of a privately-held company and related party (Vivasure). The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at December 31, 2022, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 5 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of December 31, 2021 and 2022, an allowance for doubtful accounts was not deemed necessary. Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of December 31, 2021 and 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”) The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities for leases that are less than one year in duration. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities). Upon adoption on January 1, 2022, the Company recognized ROU assets of $2.6 million and lease liabilities of $2.9 million. The adoption of the new lease standard did not impact the Company’s condensed consolidated statement of operations and comprehensive loss or its condensed consolidated statement of cash flows. The effect of the transition adjustment along with balances before, and after adoption is outlined below: Deferred ROU Lease lease liability Assets Liabilities Balance – December 31, 2021 $ 241 $ — $ — ASC 842 Transition adjustment (241) 2,612 2,853 Balance – January 1, 2022 $ — $ 2,612 $ 2,853 The Company determines if an arrangement is a lease at inception. For the Company’s operating leases, the ROU asset represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since all the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. 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 judgements 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. Partnership Revenues To date, the Company’s Partnership revenues related to the Terumo Agreement as further described in Note 3. In future periods, Partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 4. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the FDA for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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 do the total costs expected to be incurred through the completion of the performance obligation. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss per share by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss attributable to common stockholders is the same as diluted net loss attributable to common stockholders since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, and restricted stock. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees, are deferred and will be offset against proceeds received when the financing events are completed. In the event the offering or merger is terminated, all deferred costs will be expensed. As of December 31, 2022, the Company has capitalized $4.0 million of deferred merger costs related to the Business Combination discussed in Note 15, which are included in deposits and other assets on the accompanying balance sheet. As of December 31, 2021, the Company capitalized $100,000 of deferred offering costs related to private placement financings, which was offset against the proceeds received in March of 2022. Defined Contribution Plan The Company has a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. The Company does not make matching employee contributions. Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . During 2018 and 2019, the FASB also issued subsequent amendments to the initial guidance (collectively, “Topic 326”). Topic 326 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Topic 326 will be effective for the Company on January 1, 2023. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 — Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions |
Terumo Agreement_2
Terumo Agreement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Terumo Agreement. | ||
Terumo Agreement | 4. In June 2019, Legacy Orchestra entered into the Terumo Agreement, pursuant to which Terumo secured global commercialization rights for Virtue SAB in coronary and peripheral vascular indications (the “Terumo Indications”). Under this agreement, Legacy Orchestra received an upfront payment of $30 million 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. The Company was initially eligible to receive up to $65 million in additional payments based on the achievement of certain development and regulatory milestones and is 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 the issuance date of these financial statements, the target achievement date for two $5 million milestone payments has already passed. In addition, due to delays in the Company’s 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, the Company is unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $25 million in time-based milestone payments pursuant to the Terumo Agreement. Although the Company is currently negotiating with Terumo mutually agreeable adjustments to certain target achievement dates to reflect the regulatory and pandemic-related delays, there is no assurance as to the outcome of these negotiations with respect to any potential modifications to the milestone target achievement dates. Pursuant to the terms of the Terumo Agreement, Legacy Orchestra licensed intellectual property rights to Terumo and the Company is primarily responsible for completing the development of the product in the United States through premarket approval by the FDA for the ISR indication. These research and development services to be provided by the Company include (i) manufacturing, testing and packaging the drug required for the clinical trials, (ii) supplying Terumo with information related to the design and manufacture of the delivery device and the technology transfer needed for Terumo to ultimately commence manufacture of the delivery device, and (iii) carrying out regulatory activities related to clinical trials in the United States for the ISR indication. The Company has concluded that the license granted to Terumo is not distinct from the research and development services that will be provided to Terumo through the completion of the development of ISR indication, as Terumo cannot obtain the benefit of the license without the related research and development services. Accordingly, the Company will recognize revenues for this combined performance obligation over the estimated period of research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total estimated costs of the research and development services. In 2019, Legacy Orchestra received a total of $32.5 million from Terumo related to the stock purchase and the revenue generating elements of the Terumo Agreement. The Company recorded the estimated fair value of the shares of $2.5 million in stockholders’ equity, as the value paid by Terumo is consistent with the value paid by other third-party stockholders in Legacy Orchestra’s offering of its Series B-1 Preferred Stock. The Company allocated the remaining $30 million to the transaction price of the Terumo Agreement. The Company considers the future potential development and regulatory milestones to be variable consideration, which are fully constrained from the transaction price as of June 30, 2023 and December 31, 2022, as the achievement of such milestone payments are uncertain and highly susceptible to factors outside of the Company’s control. The Company plans to re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur. In addition, the arrangement also includes sales-based royalties on product sales by Terumo subsequent to commercialization ranging from 10 - 15%, none of which have been recognized to date. The Company recorded the $30 million upfront payment received from Terumo in 2019 within deferred revenue. The following table presents the changes in the Company’s deferred revenue balance from the Terumo Agreement during the three and six months ended June 30, 2023 and 2022: Deferred Revenue – December 31, 2022 (in thousands) $ 19,539 Revenue recognized (1,747) Deferred Revenue – June 30, 2023 $ 17,792 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (945) Deferred Revenue – June 30, 2022 $ 21,456 The Company’s balance of deferred revenue contains the transaction price from the Terumo Agreement allocated to the combined license and research and development performance obligation, which was partially unsatisfied as of June 30, 2023. The Company expects to recognize approximately $4.3 million of its deferred revenue during the next twelve months 2026 - 2027 and may be As of each quarterly reporting date, the Company evaluates its estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updates its estimates as necessary. For the three months ended June 30, 2023 and 2022, the expenses incurred related to the Terumo Agreement were approximately $4.5 million and $3.9 million, respectively. For the six months ended June 30, 2023 and 2022, the expenses incurred related to the Terumo Agreement were approximately $8.3 million and $6.6 million, respectively. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 3% as of June 30, 2023, as compared to the estimates as of December 31, 2022, and increased by approximately 10% as of June 30, 2022, as compared to the estimates as of December 31, 2021. While the Company believes it has 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. The impact of the changes in estimates resulted in a reduction of partnership revenues of $392,000 and $836,000 for the three months ended June 30, 2023 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of the changes in estimates resulted in a reduction of partnership revenues of $303,000 and $847,000 for the six months ended June 30, 2023 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of these changes in estimates on the net loss per share attributable to common stockholders, basic and diluted, for the three months ended June 30, 2023 and 2022 was an increase of $0.01 and $0.08 was an increase of $0.01 and $0.05 The Company will also manufacture, or have manufactured, SirolimusEFR and has exclusive rights to sell it on a per unit basis to Terumo for use in the Virtue SAB product. The Company has determined that this promise does not contain a material right as the pricing is based on standalone selling prices. Through June 30, 2023, there have been no additional amounts recognized as revenue under the Terumo Agreement other than the recognition of a portion of the upfront payment described above. | 3 . In June 2019, the Company entered into the Terumo Agreement, pursuant to which Terumo secured global commercialization rights for Virtue SAB in coronary and peripheral vascular indications (the “Terumo Indications”). Under this agreement, the Company received an upfront payment of $30 million and an equity commitment of up to $5 million of which $2.5 million was invested in June 2019 as part of the Series B-1 financing. The Company was initially eligible to receive up to $65 million in additional payments based on the achievement of certain development and regulatory milestones and is also eligible to earn royalties on future sales by Terumo based on royalty rates ranging from 10 – 15%. As of the issuance date of these financial statements, the target achievement date for two $5 million milestone payments has already passed. In addition, due to delays in Orchestra’s 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, Orchestra is unlikely to be able to complete the remaining time-based milestones by the specified target achievement dates to earn the remaining $25 million in time-based milestone payments pursuant to the Terumo Agreement. However, in June 2022, Orchestra and Terumo signed a letter agreement whereby the parties agreed to negotiate in good faith over 12 months mutually agreeable adjustments to certain target achievement dates to reflect the regulatory and pandemic-related delays. There is no assurance as to the outcome of these negotiations with respect to any potential modifications to the milestone target achievement dates. Pursuant to the terms of the Terumo Agreement, the Company licensed intellectual property rights to Terumo and the Company shall be primarily responsible for completing the development of the product in the United States through premarket approval by the FDA for the in-stent restenosis (“ISR”) indication. These research and development services to be provided by the Company include (i) manufacturing, testing and packaging the drug required for the clinical trials, (ii) supplying Terumo with information related to the design and manufacture of the delivery device and the technology transfer needed for Terumo to ultimately commence manufacture of the delivery device, and (iii) carrying out regulatory activities related to clinical trials in the United States for the ISR indication. The Company has concluded that the license granted to Terumo is not distinct from the research and development services that will be provided to Terumo through the completion of the development of ISR indication, as Terumo cannot obtain the benefit of the license without the related research and development services. Accordingly, the Company will recognize revenues for this combined performance obligation over the estimated period of research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total estimated costs of the research and development services. In 2019, the Company received a total of $32.5 million from Terumo related to the stock purchase and the revenue generating elements of the Terumo Agreement. The Company recorded the estimated fair value of the shares of $2.5 million in stockholders’ equity, as the value paid by Terumo is consistent with the value paid by other third-party stockholders in the Company’s offering of its Series B-1 Preferred Stock. The Company allocated the remaining $30 million to the transaction price of the Terumo Agreement. The Company considers the future potential development and regulatory milestones to be variable consideration, which are fully constrained from the transaction price as of December 31, 2021 and 2022, as the achievement of such milestone payments are uncertain and highly susceptible to factors outside of the Company’s control. The Company plans to re-evaluate the transaction price at each reporting period and as uncertain events are resolved or other changes in circumstances occur. In addition, the arrangement also includes sales-based royalties on product sales by Terumo subsequent to commercialization ranging from 10 - 15%, none of which have been recognized to date. The Company recorded the $30 million upfront payment received from Terumo in 2019 within deferred revenue. The following table presents the changes in the Company’s deferred revenue balance from the Terumo Agreement during the years ended December 31, 2021 and 2022: Deferred Revenue – January 1, 2021 (in thousands) $ 20,926 Revenue reduction 1,475 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (2,862) Deferred Revenue – December 31, 2022 $ 19,539 The Company’s balance of deferred revenue contains the transaction price from the Terumo Agreement allocated to the combined license and research and development performance obligation, which was partially unsatisfied as of December 31, 2022. The Company expects to recognize approximately $6.4 million of its deferred revenue during the next twelve months 2026 As of each quarterly reporting date, the Company evaluates its estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updates its estimates as necessary. For the years ended December 31, 2021 and 2022, the expenses incurred related to the Terumo Agreement were approximately $9.9 million and $14.3 million, respectively. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 85% as of December 31, 2021 as compared to the estimates as of December 31, 2020, and increased by approximately 10% as of December 31, 2022, as compared to the estimates as of December 31, 2021. The increase in the estimated costs relates to an extension of the estimated performance period by twelve months, due in part by delays resulting from the COVID-19 pandemic, as well as 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 the Company to amend its original project plan. While the Company believes it has 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. The impact of the changes in estimates resulted in reduction of partnership revenues of $6.5 million and $1.0 million for the years ended December 31, 2021 and 2022, respectively, as compared to the amounts that would have been recorded based on the previous estimates. The impact of these changes in estimates on the net loss per share attributable to common stockholders, basic and diluted, was an increase of $0.73 and $0.07 Orchestra will also manufacture, or have manufactured, SirolimusEFR and have exclusive rights to sell it on a per unit basis to Terumo for use in the Virtue SAB product. The Company has determined that this promise does not contain a material right as the pricing is based on standalone selling prices. Through December 31, 2022, there have been no additional amounts recognized as revenue under the Terumo Agreement other than the recognition of a portion of the upfront payment described above. |
Medtronic Agreement_2
Medtronic Agreement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Medtronic Agreement | ||
Medtronic Agreement | 5. In June 2022, Legacy Orchestra, BackBeat Medical, LLC and Medtronic entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of hypertension (“HTN”) in patients indicated for a cardiac pacemaker (the “Primary Field”). Under the terms of the Medtronic Agreement, the Company will sponsor a multinational pivotal study to support regulatory approval of BackBeat CNT in the Primary Field and be financially responsible for development, clinical and regulatory costs associated with this pivotal study. Medtronic is currently working with the Company to integrate BackBeat CNT into its top-of-the-line, commercially available dual-chamber pacemaker system for use in the pivotal trial and will provide development, clinical and regulatory resources in support of the pivotal trial, for which the Company will reimburse Medtronic at cost. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights to commercialize BackBeat CNT-enabled pacing systems globally following receipt of regulatory approval. Medtronic would be entirely responsible for global commercialization following receipt of regulatory approvals, including manufacturing, sales, marketing and distribution costs. The Company is expected to receive between $500 and $1,600 per BackBeat CNT-enabled device sold based on a formula of the higher of (1) a fixed dollar amount per BackBeat CNT-enabled device (amount varies materially on a country-by-country basis) or (2) a percentage of the BackBeat CNT-generated sales. Procedures using the BackBeat CNT-enabled pacemakers are expected to be billed under existing reimbursement codes. Medtronic has a right of first negotiation through FDA approval of BackBeat CNT in the Primary Field, to expand its global rights to BackBeat CNT for the treatment of HTN patients not indicated for a pacemaker. The Company assessed whether the Medtronic Agreement fell within the scope of ASC 808 and concluded that the Medtronic Agreement is a collaboration within the scope of ASC 808. In addition, the Company determined that 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. The Company has concluded that the license granted to Medtronic is not distinct from the development and implementation services that will be provided to Medtronic through the completion of the development of HTN indication, as Medtronic cannot obtain the benefit of the license without the related development and implementation services. ASC 606-10-55-65 includes an exception for the recognition of revenue relating to licenses of intellectual property with sales-based or usage-based royalties. Under this exception, royalty revenue is not recorded until the subsequent sale or usage occurs, or the performance obligation has been satisfied, whichever is later. The Company concluded that the exemption applies and therefore, the royalty revenue associated with these performance obligations will be recognized as the underlying sales occur. Additionally, pursuant to the Medtronic Agreement, expenses incurred by Medtronic in connection with clinical device development and regulatory activities performed will be reimbursed by the Company. The Company will record such expenses as research and development expenses as incurred. During the three and six months ended June 30, 2023, the Company incurred approximately $1.0 million and $2.3 million, respectively, of research and development costs related to these reimbursements to the Medtronic Agreement, of which $1.9 million is included within accounts payable and accrued expenses in the Company’s June 30, 2023 condensed consolidated balance sheet. Concurrently with the close of the Medtronic Agreement, Legacy Orchestra also received a $40 million investment from Medtronic in connection with Legacy Orchestra’s Series D-2 Preferred Stock financing. The equity was purchased at a fair value consistent with the price paid by other investors at that time, and accordingly, the proceeds received were recorded as an equity investment. Through June 30, 2023, there have been no amounts recognized as revenue under the Medtronic Agreement. | 4 . In June 2022, Orchestra, BackBeat Medical, LLC and Medtronic, Inc. (an affiliate of Medtronic plc) (“Medtronic”) entered into the Medtronic Agreement for the development and commercialization of BackBeat CNT for the treatment of hypertension (“HTN”) in patients indicated for a cardiac pacemaker (the “Primary Field”). Under the terms of the Medtronic Agreement, Orchestra will sponsor a multinational pivotal study to support regulatory approval of BackBeat CNT in the Primary Field and be financially responsible for development, clinical and regulatory costs associated with this pivotal study. Medtronic is currently working with Orchestra to integrate BackBeat CNT into its top-of-the-line, commercially available dual-chamber pacemaker system for use in the pivotal trial and will provide development, clinical and regulatory resources in support of the pivotal trial, for which Orchestra will reimburse Medtronic at cost. Under the terms of the Medtronic Agreement, Medtronic will have exclusive rights to commercialize BackBeat CNT-enabled pacing systems globally following receipt of regulatory approval. Medtronic would be entirely responsible for global commercialization following receipt of regulatory approvals, including manufacturing, sales, marketing and distribution costs. Orchestra is expected to receive between $500 and $1,600 per BackBeat CNT enabled device sold based on a formula of the higher of (1) a fixed dollar amount per BackBeat CNT-enabled device (amount varies materially on a country-by-country basis) or (2) a percentage of the BackBeat CNT generated sales. Procedures using the BackBeat CNT-enabled pacemakers are expected to be billed under existing reimbursement codes. Medtronic has a right of first negotiation through FDA approval of BackBeat CNT in the Primary Field, to expand its global rights to BackBeat CNT for the treatment of HTN patients not indicated for a pacemaker. The Company assessed whether the Medtronic Agreement fell within the scope of ASC 808 and concluded that the Medtronic Agreement fell within the scope of ASC 808. In addition, the Company determined that 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. The Company has concluded that the license granted to Medtronic is not distinct from the development and implementation services that will be provided to Medtronic through the completion of the development of HTN indication, as Medtronic cannot obtain the benefit of the license without the related development and implementation services. ASC 606-10-55-65 includes an exception for the recognition of revenue relating to licenses of intellectual property with sales-based or usage-based royalties. Under this exception, royalty revenue is not recorded until the subsequent sale or usage occurs, or the performance obligation has been satisfied, whichever is later. The Company concluded that the exemption applies and therefore, the royalty revenue associated with these performance obligations will be recognized as the underlying sales occur. Additionally, pursuant to the Medtronic Agreement, expenses incurred by Medtronic in connection with clinical device development and regulatory activities performed will be reimbursed by Orchestra. The Company will record such expenses as research and development expenses as incurred. During the year ended December 31, 2022, the Company incurred approximately $1.7 million of research and development costs related to these reimbursements to the Medtronic Agreement, all of which is included within accounts payable and accrued expenses in the December 31, 2022 consolidated balance sheet. Concurrently with the close of the Medtronic Agreement, Orchestra also received a $40 million investment from Medtronic in connection with a private placement financing. The equity was purchased at a fair value consistent with the price paid by other investors at that time, and accordingly, the proceeds received were recorded as an equity investment. Through December 31, 2022, there have been no amounts recognized as revenue under the Medtronic Agreement. |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measurements | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Financial Instruments and Fair Value Measurements | ||
Financial Instruments and Fair Value Measurements | 6. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy: June 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 13,193 $ — $ — $ 13,193 Investment in Motus GI (see Note 7) 69 — — 69 Marketable securities (Corporate and Government debt securities) — 101,295 — 101,295 Total assets $ 13,262 $ 101,295 $ — $ 114,557 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 8,708 $ — $ — $ 8,708 Investment in Motus GI (see Note 7) 86 — — 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 8,794 $ 63,915 $ — $ 72,709 Liabilities: Warrant liability (see Note 10) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 The Level 2 assets consist of government and corporate debt securities which are valued using market observable inputs, including the current interest rate and other characteristics for similar types of investments, whose fair value may not represent actual transactions of identical securities. There were no transfers between Levels 1, 2 or 3 for the periods presented. Prior to the closing of the Business Combination, the Company’s warrant liability was measured at fair value on a recurring basis using unobservable inputs and were classified as Level 3 inputs, and any change in fair value was recognized as change in fair value of warrant liability in the Company’s condensed consolidated statements of operations and comprehensive loss. As of the Closing Date, all Legacy Orchestra liability classified warrants were reclassified to equity. Refer to Note 9 for the valuation technique and assumptions used in estimating the fair value of the warrants and discussion on the change in classification. The following table presents a roll-forward of the aggregate fair values of the Company’s liabilities for which fair value is determined by Level 3 inputs (in thousands): Warrant Liability Balance—December 31, 2022 $ 2,089 Warrants exercised prior to the Business Combination (10) Change in fair value of warrants 294 Warrants reclassified to equity (2,373) Balance—March 31, 2023 — Balance—June 30, 2023 $ — | 5 . The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy: December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 958 $ — $ — $ 958 Total assets $ 958 $ — $ — $ 958 Liabilities: Warrant liability (see Note 9) $ — $ — $ 635 $ 635 Total liabilities $ — $ — $ 635 $ 635 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 86 $ — $ — $ 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 86 $ 63,915 $ — $ 64,001 Liabilities: Warrant liability (see Note 9) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 The Company’s warrant liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs, and any change in fair value is recognized as change in fair value of warrant liability in the consolidated statements of operations and comprehensive loss. Refer to Note 8 for the valuation technique and assumptions used in estimating the fair value of the warrants. The Level 2 assets consist of government and corporate debt securities which are valued using market observable inputs, including the current interest rate and other characteristics for similar types of investments, whose fair value may not represent actual transactions of identical securities. There were no transfers between Levels 1, 2 or 3 for the periods presented. |
Marketable Securities and Str_5
Marketable Securities and Strategic Investments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Marketable Securities and Strategic Investments | ||
Marketable Securities and Strategic Investments | 7. Marketable Securities The following is a summary of the Company’s marketable securities as of June 30, 2023 and December 31, 2022: June 30, 2023 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 48,100 $ — $ (39) $ 48,061 Government debt securities 53,291 — (57) 53,234 Total $ 101,391 $ — $ (96) $ 101,295 December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 The Company believes it is more likely than not that its marketable securities in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any allowance for credit losses on its investment securities. The Company determined that the unrealized losses were not attributed to credit risk but were primarily driven by the broader change in interest rates. For the three and six months ended June 30, 2023, the Company recognized realized losses on its marketable securities of $102,000. For the three and six months ended June 30, 2022, the Company did not recognize any realized gains or losses on its marketable securities. Strategic Investments The Company values the Motus GI investment by measuring fair value using the listed share price on the Nasdaq Capital Market on each valuation date. Aggregate losses of $31,000 and $160,000 during the three months ended June 30, 2023 and 2022, respectively, and aggregate losses of $17,000 and $380,000 during the six months ended June 30, 2023 and 2022, respectively, were recorded to adjust the strategic investments in equity securities of Motus GI to its fair value of $69,000 at June 30, 2023 and $86,000 at December 31, 2022, which is classified as strategic investments within current assets on the accompanying condensed consolidated balance sheets. The Company’s long term strategic investments as of June 30, 2023 represent investments made in Vivasure in 2020, 2021 and 2022 that were originally recorded at cost. There were no observable price changes, other than as described below, or impairments identified during the three and six months ended June 30, 2023 or the three and six months ended June 30, 2022 related to these investments. In May 2022, Vivasure announced a Series D private placement, in which it received a material investment from Haemonetics Corporation, a new strategic investor. In conjunction with a €30 million investment in Vivasure, Haemonetics Corporation also secured an option to acquire Vivasure based on the achievement of certain milestones. As a result, Legacy Orchestra’s existing convertible redeemable notes converted into Series D Preferred Stock of Vivasure in May 2022. The investment in the Vivasure Series D Preferred Stock represents an observable price change in an orderly transaction for an identical instrument of the same issuer, and accordingly, the Company recognized a gain on its strategic investment in Vivasure of $1.9 million in the second quarter of 2022. This amount represents a portion of the previously impaired investment balance described below. During the fourth quarter of 2019, the Company identified indicators of impairment of Vivasure strategic investments held at that time as a result of adverse changes in Vivasure’s business operations, including liquidity concerns. As a result, the Company recorded an impairment charge in the fourth quarter of 2019 of $5.8 million, which represents the cumulative impairment charges recorded on Vivasure strategic investments to date. | 6 . Marketable Securities The following is a summary of the Company’s marketable securities as December 31, 2022: December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 As of December 31, 2021, there were no marketable securities held. For the years ended December 31, 2021 and 2022, the Company did not recognize any realized gains or losses on its marketable securities. Strategic Investments The Company values the Motus GI investment by measuring fair value using the listed share price on the Nasdaq Capital Market on each valuation date. Aggregate losses of $1.0 million and $0.9 million during the years ended December 31, 2021 and 2022, respectively, were recorded to adjust the strategic investments in equity securities of Motus GI to its fair value of $1.0 million at December 31, 2021 and $86,000 at December 31, 2022, which is classified as strategic investments within current assets on the accompanying consolidated balance sheet. The Company’s long term strategic investments as of December 31, 2022 represent investments made in Vivasure in 2020, 2021 and 2022 that were originally recorded at cost. There were no observable price changes or impairments identified during the year ended December 31, 2021 related to these investments. In May 2022, Vivasure announced a Series D private placement, in which it received a material investment from a new strategic investor. As a result, the Company’s existing convertible redeemable notes converted into Series D Preferred Stock of Vivasure in May 2022. The investment in the Vivasure Series D Preferred Stock represents an observable price change in an orderly transaction for an identical instrument of the same issuer, and accordingly, the Company recognized a gain on its strategic investment in Vivasure of $1.9 million in the second quarter of 2022. This amount represents a portion of the previously impaired investment balance described below. During the fourth quarter of 2019, the Company identified indicators of impairment of Vivasure strategic investments held at that time as a result of adverse changes in Vivasure’s business operations, including liquidity concerns. As a result, the Company recorded an impairment charge in the fourth quarter of 2019 of $5.8 million, which represents the cumulative impairment charges recorded on Vivasure strategic investments to date. |
Balance Sheet Components_2
Balance Sheet Components | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Balance Sheet Components | ||
Balance Sheet Components | 8. Property and Equipment, Net Property and equipment, net consists of the following: June 30, December 31, (in thousands) 2023 2022 Equipment $ 1,745 $ 1,712 Office furniture 364 364 Leasehold improvements 197 191 Construction in progress 22 — Property and equipment, gross 2,328 2,267 Less accumulated depreciation and amortization (921) (778) Total Property and equipment, net $ 1,407 $ 1,489 Depreciation and amortization expense was $72,000 and $49,000 for the three months ended June 30, 2023 and 2022, respectively. Depreciation and amortization expense was $144,000 and $98,000 for the six months ended June 30, 2023 and 2022, respectively. Accrued Expenses Accrued expenses consist of the following: June 30, December 31, (in thousands) 2023 2022 Accrued compensation $ 1,954 $ 2,480 Clinical trial accruals 895 1,003 Other accrued expenses 977 1,893 Total accrued expenses $ 3,826 $ 5,376 | 7 . Property and Equipment, Net Property and equipment, net consists of the following: December 31, (in thousands) 2021 2022 Equipment $ 1,207 $ 1,712 Office furniture 305 364 Leasehold improvements 177 191 Construction in progress 16 — Property and equipment, gross 1,705 2,267 Less accumulated depreciation and amortization (585) (778) Total Property and equipment, net $ 1,120 $ 1,489 Depreciation and amortization expense was $181,000 and $222,000 for the years ended December 31, 2021 and 2022, respectively. Accrued Expenses Accrued expenses consist of the following: December 31, (in thousands) 2021 2022 Accrued compensation $ 1,319 $ 2,480 Deferred offering and merger costs 100 — Deferred lease liability 45 — Clinical trial accruals 39 1,003 Other accrued expenses 531 1,893 Total accrued expenses $ 2,034 $ 5,376 |
Warrants_2
Warrants | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Warrants | ||
Warrants | 10. The Company evaluates its outstanding warrants to determine if the instruments qualify for equity or liability classification. Private Warrants Prior to the Merger, HSAC2 had outstanding 1,500,000 Private Warrants, which were issued in connection with the HSAC2 IPO to the Sponsor. Each Private Warrant entitles the holder thereof to purchase one share of Company Common Stock at a price of $11.50 per share, subject to adjustment as provided herein. The Private Warrants became exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination. Each Private Warrant is non-redeemable and may be exercised on a cashless basis. Since these warrants are indexed to the Company’s publicly traded common stock, they are classified within equity. As described in Note 3, the Sponsor and HSAC2’s other initial shareholders prior to the HSAC2 IPO agreed to subject (i) the 4,000,000 Insider Shares and (ii) the 450,000 Private Shares to a lock-up for up to 12 months following the Closing and the Sponsor forfeited 50% of its 1,500,000 Private Warrants, comprising 750,000 Private Warrants, for no consideration, immediately prior to the Closing. Pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, HSAC2 issued 750,000 warrants to purchase Company Common Stock to eleven specified employees and directors of Legacy Orchestra. These new warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 and 36 months after the Closing. Assumed Legacy Orchestra Warrants Prior to the close of the Business Combination, the majority of Legacy Orchestra’s warrants (the “Legacy Orchestra Warrants”) were required to be accounted for as liabilities as certain features within the warrant agreements contained features that were not considered “fixed for fixed” pursuant to ASC 815, and therefore, the fair value of the warrant liability was marked-to-market at each balance sheet date, with the change in fair value recorded in the Company’s condensed consolidated statements of operations and comprehensive loss within other income (expense). Upon the close of the Business Combination, all liability classified Legacy Orchestra Warrants became equity classified on that date, as the warrant agreements became “fixed for fixed.” As a result, the warrant liability was fair valued and adjusted from $2.1 million as of December 31, 2022 to $2.4 million as of January 26, 2023, and then subsequently reclassified into stockholders’ equity. In addition, Legacy Orchestra also had outstanding other equity classified warrants recorded within additional paid-in capital at the time of issuance at fair value that were not subject to subsequent remeasurement. The Company calculates the fair value of the outstanding warrant liability at each reporting date by estimating the equity value of the Company, and then utilizing option pricing models to allocate the total equity value to the shares and warrants outstanding. The inputs used in the valuation models for the Company’s warrant liability are as follows: Period from January 1, 2023 to January 26, 2023 June 30, 2022 Expected volatility 44 – 49% 45 – 54% Risk-free interest rate 3.60 – 4.80% 2.60 – 3.00% Remaining term in years 0.35 – 5.00 0.92 – 5.38 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of Legacy preferred warrants — — Common stock price $10.63 $9.18 Legacy preferred stock price — — Expected dividend yield 0% 0% The Company’s warrant liability related to Legacy Orchestra warrant activity rollforward is as follows, with the warrants having been converted to reflect the effect of the Merger: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2022 — 1,327,074 $ 2,089 Warrants exercised prior to the business combination — (1,163) (10) Change in fair value of warrants as of January 26, 2023 — — 294 Warrants reclassified to equity — (1,325,911) (2,373) Balance March 31, 2023 — — — Balance June 30, 2023 — — $ — Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2021 206,997 1,189,162 $ 635 Exercise of warrants — (68,587) (156) Change in the fair value of warrants — — 145 Balance March 31, 2022 206,997 1,120,575 624 Exercise of warrants — (4,650) (15) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to Legacy Orchestra preferred stock financing — 159,965 620 Amendments of existing warrants (206,997) 206,997 810 Other — (150,000) (335) Change in the fair value of warrants — — 243 Balance June 30, 2022 — 1,328,237 $ 1,909 Private Warrants and Assumed Legacy Orchestra Warrants The following table summarizes outstanding warrants to purchase shares of Company Common Stock as of June 30, 2023 and December 31, 2022: Number of Shares June 30, December 31, Exercise 2023 2022 Price Term Liability-classified Warrants Legacy Orchestra Warrants — 1,327,074 $0.50 – $14.00 0.10 – 4.75 Equity-classified Warrants Legacy Orchestra Warrants 541,808 250,000 $0.50 – $14.00 0.10 – 9.00 Private Warrants Held by Sponsor 750,000 1,500,000 $11.50 4.57 – 4.82 Private Warrants Held by Employees (Note 11) 675,000 — $11.50 4.57 1,966,808 1,750,000 Total Outstanding 1,966,808 3,077,074 | 8 . The Company evaluates its outstanding warrants to determine if the instruments qualify for equity or liability classification. To date, the majority of the Company’s warrants are required to be accounted for as liabilities, and therefore, the fair value of the warrant liability is marked-to-market at each balance sheet date, with the change in fair value recorded in the statements of operations and comprehensive loss within other income (expense). Upon conversion or exercise of a warrant classified as a liability, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. The Company calculates the fair value of the outstanding warrant liability at each reporting date by estimating the equity value of the Company, and then utilizing option pricing models to allocate the total equity value to the shares and warrants outstanding. The inputs used in the valuation models for Orchestra’s warrant liability are as follows: December 31, 2021 2022 Expected volatility 44 – 55% 45 – 47% Risk-free interest rate 0.27 – 1.11% 4.00 – 4.30% Remaining term in years 1.41 – 7.94 0.14 – 5.07 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of preferred warrants $19.35 – $32.26 — Common stock price $3.35 $9.72 Preferred stock price $5.38 – $7.35 — Expected dividend yield 0% 0% The Company’s warrant liability activity rollforward is as follows: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2020 206,997 1,192,650 $ 1,347 Exercise of warrants — (3,488) (13) Change in the fair value of warrants — — (699) Balance December 31, 2021 206,997 1,189,162 $ 635 Reclassification of warrant liability upon exercise — (73,238) (171) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to private placement financing — 159,965 620 Amendment of existing warrants (206,997) 206,997 810 Other — (151,162) (345) Change in the fair value of warrants — — 578 Balance December 31, 2022 — 1,327,074 $ 2,089 In June 2022, concurrent with the close of a private placement financing, the Company amended the terms of certain existing warrant agreements, which included modifying the underlying shares of the warrants from preferred warrants to common warrants and reducing the strike prices. Such amendments resulted in $0.8 million of additional expense for the year ended December 31, 2022. As of December 31, 2022, the Company has 250,000 warrants classified within equity with strike prices ranging from $1.33 — $4.06 and remaining terms in years of 6.94 — 9.50. The equity classified warrants were recorded within additional paid-in capital at the time of issuance at fair value and are not subject to subsequent remeasurement. |
Stock-Based Compensation_2
Stock-Based Compensation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Share-Based Compensation | ||
Stock-Based Compensation | 11. As of June 30, 2023, the only equity compensation plan from which the Company may currently issue new awards is the Company’s 2023 Equity Incentive Plan (the “2023 Plan”), as more fully described below. Orchestra BioMed, Inc. 2018 Stock Incentive Plan Prior to the Merger, Legacy Orchestra maintained the 2018 Plan, under which Legacy Orchestra granted incentive stock options, non-qualified stock options and restricted stock awards to its employees and certain non-employees, including consultants, advisors and directors. The maximum aggregate shares of Legacy Orchestra Common Stock that was subject to awards and issuable under the 2018 Plan was 5.2 million shares prior to the Merger. Employees, consultants, and directors were eligible for awards granted under the 2018 Plan which generally have a contractual life of up to 10 years As described in Note 3, in connection with the Merger, each Legacy Orchestra Option that was outstanding and unexercised immediately prior to the time that the Merger became effective (the “Effective Time”) (whether vested or unvested) was assumed by the Company and converted into an option to purchase an adjusted number of shares of Company Common Stock at an adjusted exercise price per share, based on the Exchange Ratio, and will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former option. Each Exchanged Option is exercisable for a number of whole shares of Company Common Stock equal to the product of the number of shares of Legacy Orchestra Common Stock underlying such Legacy Orchestra Options multiplied by the Exchange Ratio, and the per share exercise price of such Exchanged Option is equal to the quotient determined by dividing the exercise price per share of the Legacy Orchestra Option by the Exchange Ratio. Following the closing of the Merger, no new awards may be made under the 2018 Plan. The Company accounted for the Exchanged Options as a modification of the existing options. Incremental compensation costs, measured as the excess, if any, of the fair value of the modified options over the fair value of the original options immediately before its terms are modified, is measured based on the fair value of the underlying shares and other pertinent factors at the modification date. The impact of the option modifications were de minimis. Orchestra BioMed Holdings, Inc. 2023 Equity Incentive Plan At the Effective Time, the Company adopted the 2023 Plan which permits the granting of incentive stock options, non-qualified options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based award to employees, directors, and non-employee consultants and/or advisors. As of June 30, 2023, 3,561,678 shares of Company Common Stock are authorized for issuance pursuant to awards under the 2023 Plan. The pool of available shares will be automatically increased on the first day of each calendar year, beginning January 1, 2023 and ending January 1, 2032, by an amount equal to the lesser of (i) 4.8% of the outstanding shares of our Common Stock determined on a fully-diluted basis as of the immediately preceding December 31 and (ii) 3,036,722 shares of Common Stock, and (iii) such number of shares of Common Stock determined by the Board or the Compensation Committee prior to January 1st of a given year. In addition, any awards outstanding under the 2018 Plan upon the Closing, after adjustment for the Business Combination, remain outstanding. If any of those awards subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares after the closing of the Business Combination, the shares of Company Common Stock underlying those awards will automatically become available for issuance under the 2023 Plan. Total stock-based compensation related to option issuances was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 330 $ 52 $ 815 $ 91 Selling, general and administrative 631 91 1,369 107 Total stock-based compensation $ 961 $ 143 $ 2,184 $ 198 As of June 30, 2023, there was approximately $6.6 million of unrecognized stock-based compensation expense associated with the stock options noted above that is expected to be recognized over a weighted average period of three years. Total stock-based compensation related to restricted stock was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ — $ — $ — $ — Selling, general and administrative 498 76 547 91 Total stock-based compensation $ 498 $ 76 $ 547 $ 91 As of June 30, 2023, there was approximately $312,000 of unrecognized restricted stock-based compensation expense associated with the restricted stock noted above that is expected to be recognized over a weighted average period of approximately three years. As previously discussed in Note 3 and Note 10, pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, the Company issued 750,000 warrants to purchase Company Common Stock to eleven specified employees and directors of Legacy Orchestra. These warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 Total stock-based compensation related to warrants was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 120 $ — $ 207 $ — Selling, general and administrative 128 — 258 — Total stock-based compensation $ 248 $ — $ 465 $ — As of June 30, 2023, there was approximately $2.8 million of unrecognized stock-based compensation expense associated with the warrants noted above that is expected to be recognized over a weighted average period of approximately three years. Stock Option Activity The following table summarizes the stock option activity of the Company under the 2018 Plan and the 2023 Plan: Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (in thousands) Outstanding at January 1, 2023 7,868,448 3.51 8.35 — Retroactive application of Reverse Recapitalization (Note 3) (4,209,620) 4.05 — — Outstanding at January 1, 2023, effect of Merger 3,658,828 7.56 8.35 — Granted 323,175 9.89 — — Exercised (17,825) 4.16 — — Forfeited/canceled (142,256) 5.35 — — Outstanding June 30, 2023 3,821,922 7.97 5.31 $ 4,002 Exercisable at June 30, 2023 2,163,768 6.60 7.09 $ 3,412 The following table summarizes the restricted stock activity of the Company under the Plan: Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (in thousands) Outstanding January 1, 2023 158,589 9.14 — Granted — — — Vested (63,451) — — Forfeited/canceled (45,901) — — Outstanding June 30, 2023 49,237 8.67 $ 549 During the six months ended June 30, 2023, the Company did not grant any restricted stock awards (“RSAs”) while 63,451 RSAs vested at a weighted-average grant date fair value of $3.52. Determination of Stock Option Awards Fair Value The estimated grant-date fair value of all the Company’s option awards was calculated using the Black-Scholes option pricing model, based on the following weighted average assumptions: Six Months Ended June 30, 2023 2022 Expected term (in years) 6.00 6.00 Expected volatility 50 % 49 % Risk-free interest rate 3.60 % 2.70 % Expected dividend yield 0 % 0 % Fair value of common stock $ 9.63 $ 4.06 The fair value of each stock option grant was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment and estimation by management. Expected Term Expected Volatility Risk-Free Interest Rate Expected Dividend Yield Fair Value of Common Stock | 9. Stock-based Compensation — Orchestra BioMed 2018 Stock Incentive Plan As of December 31, 2022, all stock-based awards were outstanding under a single equity incentive plan, the Orchestra BioMed, Inc. 2018 Stock Incentive Plan (the “Plan”). Under the Plan, up to 5.2 million shares of the Company’s common stock may be issued pursuant to awards granted in the form of nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards. Employees, consultants, and directors are eligible for awards granted under the plan which generally have a contractual life of up to 10 years and may be exercisable in cash or as otherwise determined by the board of directors. Vesting generally occurs over a period of not greater than three years. Total stock-based compensation related to option issuances was as follows: Year ended December 31, (in thousands) 2021 2022 Research and development $ 83 $ 398 Selling, general and administrative 88 2,704 Total stock-based compensation $ 171 $ 3,102 As of December 31, 2022, there was approximately $7.2 million of unrecognized stock-based compensation expense associated with the stock options noted above that is expected to be recognized over a weighted average period of three years. Total restricted stock-based compensation was as follows: Year ended December 31, (in thousands) 2021 2022 Research and development $ — $ — Selling, general and administrative 131 273 Total stock-based compensation $ 131 $ 273 As of December 31, 2022, there was approximately $408,000 of unrecognized restricted stock-based compensation expense associated with the restricted stock noted above that is expected to be recognized over a weighted average period of approximately 3 years. The following table summarizes the stock option activity of the Company under the Plan: Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (thousands) Outstanding at January 1, 2022 1,348,464 4.47 7.13 — Granted 2,357,807 9.33 — — Exercised (27,848) 4.32 — — Forfeited/canceled (19,595) 4.67 — — Outstanding December 31, 2022 3,658,828 7.56 8.35 $ 8,277 Exercisable at December 31, 2022 1,806,093 5.78 6.72 $ 6,815 The following table summarizes the restricted stock activity of the Company under the Plan: Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (thousands) Outstanding January 1, 2022 21,907 7.60 — Granted 182,962 9.15 — Vested (46,280) — — Forfeited/canceled — — — Outstanding December 31, 2022 158,589 9.14 $ 980 During the year ended December 31, 2022, the Company granted 182,961 Determination of Fair Value The estimated grant-date fair value of all the Company’s option awards was calculated using the Black-Scholes option pricing model, based on the following weighted average assumptions: Year ended December 31, 2021 2022 Expected term (in years) 6.00 6.00 Expected volatility 60 % 50 % Risk-free interest rate 0.99 % 3.01 % Expected dividend yield 0 % 0 % Fair value of common stock $ 4.71 $ 9.72 The fair value of each stock option grant was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment and estimation by management. Expected Term Expected Volatility Risk-Free Interest Rate Expected Dividend Yield Fair Value of Common Stock |
Leases_2
Leases | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Leases | ||
Leases | 12. Office Lease In August 2019, Legacy Orchestra entered into an addendum to the original December 2009 lease agreement for 8,052 square feet of office space in New Hope, PA. The lease will expire in September 2024. Monthly fees will be between $9,000 and $19,000 for the period from commencement through termination. In November 2019, Legacy Orchestra entered into a new lease agreement for approximately 5,200 square feet of office space in New York, NY. The lease will expire in March 2028. Monthly fees will be between $28,000 and $30,000 for the period from commencement through termination. In January 2020, Legacy Orchestra entered into an agreement for the use of portions of the office space of Motus GI, a related party, in Fort Lauderdale, Florida. The agreement will expire in September 2024. The monthly fee commenced on the month following the date of agreement. Monthly fees will be between $12,000 and $17,000 for the period from commencement through termination. In May 2022, Legacy Orchestra amended the agreement with Motus GI for a larger portion of the office space and extended the expiration date to November 2024. Monthly fees will be between $7,000 and $23,000 for the period from commencement of the amendment to expiration. The amount paid is estimated to be proportionate to the percentage of space used by the Company applied to the monthly rent obligated to be paid by Motus GI to their landlord. Operating cash flow supplemental information for the six months ended June 30, 2023: Cash paid for amounts included in the present value of operating lease liabilities was $410,000 during the six months ended June 30, 2023 compared to $354,000 during the six months ended June 30, 2022. As of June 30, 2023: Weighted average remaining lease term – operating leases, in years 3.73 Weighted average discount rate – operating leases 6.25 % Operating Leases Rent/lease expense for office and lab space was approximately $209,000 and $180,000 for the three months ended June 30, 2023 and 2022, respectively. Rent/lease expense for office and lab space was approximately $417,000 and $354,000 for the six months ended June 30, 2023 and 2022, respectively. The table below shows the future minimum rental payments, exclusive of taxes, insurance, and other costs, under the leases as of June 30, 2023: Operating Leases Year ending December 31: (in thousands) 2023 (remaining six months) $ 413 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,284 Imputed interest (245) Total liability $ 2,039 | 10. Office Lease In August 2019, the Company entered into an addendum to the original December 2009 lease agreement for 8,052 square feet of office space in New Hope, PA. The lease will expire in September 2024. Monthly fees will be between $9,000 and $19,000 for the period from commencement through termination. In November 2019, the Company entered into a new lease agreement for approximately 5,200 square feet of office space in New York, NY. The lease will expire in March 2028. Monthly fees will be between $28,000 and $30,000 for the period from commencement through termination. In January 2020, the Company entered into an agreement for the use of portions of the office space of Motus GI, a related party, in Fort Lauderdale, Florida. The agreement will expire in September 2024. The monthly fee commenced on the month following the date of agreement. Monthly fees will be between $12,000 and $17,000 for the period from commencement through termination. In May 2022, the Company amended the agreement with Motus GI for a larger portion of the office space and extended the expiration date to November 2024. Monthly fees will be between $7,000 and $23,000 for the period from commencement of the amendment to expiration. The amount paid is estimated to be proportionate to the percentage of space used by the Company applied to the monthly rent obligated to be paid by Motus GI to their landlord. Operating cash flow supplemental information for the year ended December 31, 2022: An initial right-of-use asset of $2.6 million was recognized as an asset and operating lease liabilities of $2.9 million was recognized as a liability upon the adoption of the new lease standard. Cash paid for amounts included in the present value of operating lease liabilities was $702,000 during the year ended December 31, 2022. As of December 31, 2022: Weighted average remaining lease term – operating leases, in years 4.06 Weighted average discount rate – operating leases 6.25 % Operating Leases Rent/lease expense for office and lab space was approximately $697,000 and $735,000 for the years ended December 31, 2021 and 2022 respectively. The table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases as of December 31, 2022: Operating Leases Year ending December 31: (in thousands) 2023 $ 823 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,694 Imputed interest (314) Total liability $ 2,380 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance sheet basis differences. In accordance with ASC 740, Income Taxes The change in the valuation allowance for the years ended December 31, 2021 and 2022 was an increase of $7.2 million and $8.8 million, respectively. In general, the U.S. Federal and state income tax returns remain open to examination by taxing authorities for tax years beginning in 2018 to present. However, if the Company claims net operating loss (“NOL”) carryforwards from years prior to 2018 against future taxable income, the tax returns pertaining to those losses may be examined by the taxing authorities. The components of the deferred tax assets are as follows: December 31, (in thousands) 2021 2022 Deferred tax assets Net operating loss carryovers – Federal $ 19,936 $ 22,798 Net operating loss carryovers – State 5,640 4,811 Unrealized loss on equity securities 2,415 2,913 Research and development credits 2,300 3,149 Loss on impairment of strategic investments 1,449 1,177 Research and experimental costs — 4,973 Other 552 1,478 Lease liability — 629 Deferred revenue 5,353 5,166 Total deferred tax assets 37,645 47,094 Less: valuation allowance (37,630) (46,457) Total deferred tax assets 15 637 Deferred tax liabilities Right-of-use asset — (578) Depreciation and amortization (15) (59) Total deferred tax liabilities (15) (637) Total net deferred tax asset $ — $ — Reconciliation of the statutory federal income tax to the Company’s effective tax is as follows: December 31, 2021 2022 Income tax benefit at federal statutory rate 21.0 % 21.0 % State and local income tax (net of Federal benefit) 7.2 % 4.8 % Permanent items 0.6 % (0.9) % Research and development credits 1.9 % 3.1 % Research and development, uncertain tax positions (0.4) % (0.6) % Change in valuation allowance (31.2) % (26.2) % Effect of rate changes — % (1.2) % True-ups 0.9 % — % Other — % — % Effective tax rate — % — % The Company had approximately $108.6 million and $88.0 million of gross NOL carryforwards (Federal and state, respectively) and approximately $3.1 million of Federal research and development tax credits, respectively, as of December 31, 2022, after applying Section 382 and Section 383 limitations. The federal net operating losses for years ending on or before December 31, 2017 start to expire from 2027 to 2037. The federal net operating losses generated after the year ended December 31, 2017 have an indefinite carryforward period, subject to 80% taxable income limitation on an annual basis. Certain state net operating losses start to expire in 2027, and certain states have an indefinite carryforward period. The federal research and development (“R&D”) tax credit starts to expire from 2028 to 2042. The NOL carryforwards and R&D tax credits are available to reduce future taxable income. However, Sections 382 and 383 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the NOL carryforwards and R&D tax credits available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change in the ownership interest of significant stockholders in excess of 50% over a three-year The Tax Cuts and Jobs Act resulted in significant changes to the treatment of research and experimental expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize these expenditures that are paid or incurred in connection with their trade or business. Specifically, costs for U.S.-based research and experimental activities must be amortized over five years and costs for foreign research and experimental activities must be amortized over 15 years—both using a midyear convention. During the year ended December 31, 2022, the Company recorded a deferred tax asset of $5.0 million for such costs. In assessing the realizability of the net deferred tax asset, the Company considers all relevant positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. Management believes it is more likely than not that the Company’s deferred income tax assets will not be realized. As such, the Company has provided a 100% valuation allowance on its net deferred tax assets as of December 31, 2021 and 2022. Following is a reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits: December 31, (in thousands) 2021 2022 Unrecognized tax benefits Unrecognized tax benefits at the beginning of the period $ 481 $ 572 Additions due to current year activity 111 203 Other reductions (20) — Unrecognized tax benefits at the end of the period $ 572 $ 775 The total liabilities associated with the unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $572,000 and $775,000 at December 31, 2021 and 2022, respectively. It is not anticipated that the balance of unrecognized tax benefits at December 31, 2022 will change significantly over the next twelve months. The balance of unrecognized tax benefits as reflected in the table above are recorded on the balance sheet as a reduction to the related deferred tax asset in accordance with ASU 2013-11. The Company’s policy is to recognize interest accrued and, if applicable penalties related to unrecognized tax benefits in income tax expense for all periods presented. No interest or penalties were recognized during 2021 or 2022. On December 27, 2020, the Consolidated Appropriations Act 2021 (the “Appropriations Act”) was enacted in response to the COVID-19 pandemic. The Appropriations Act, among other things, temporarily extends through December 31, 2025, certain expiring tax provisions. Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020. The accounting is now complete. On March 11, 2021, the American Rescue Plan (“ARP”) was signed into law. Management has evaluated the impact of the law and does not expect the ARP would result in any tax or cash benefits. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA made several changes to the U.S. tax code effective after December 31, 2022, including, but not limited to, a 15% minimum tax on large corporations with average annual financial statement income of more than $1 billion for a three tax-year period and a 1% excise tax on public company stock buybacks, which will be accounted for in treasury stock. We do not expect these changes to have a material impact on our provision for income taxes or financial statements. |
Related Party Transactions_2
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Related Party Transactions | ||
Related Party Transactions | 13. In addition to transactions and balances related to cash and stock-based compensation to officers and directors, the Company had the following transactions and balances with related parties during the year ended 2022 and the six months ended June 30, 2023: Vivasure Investments In December 2020 and 2021, and April 2022, Legacy Orchestra invested in Vivasure, a related party, $183,000, $213,000, and $208,000, respectively, in the form of unsecured convertible redeemable notes. The unsecured convertible redeemable notes converted into Series D preferred stock of Vivasure in May of 2022 (Note 7). | 12. In addition to transactions and balances related to cash and stock-based compensation to officers and directors, the Company had the following transactions and balances with related parties and executive officers during 2021 and 2022: Vivasure Investments In December 2020 and 2021, and April 2022, the Company invested in Vivasure, a related party, $183,000, $213,000 and $208,000, respectively, in the form of unsecured convertible redeemable notes. The unsecured convertible redeemable notes converted into Series D preferred stock of Vivasure in May of 2022 (Note 6). |
Debt Financing_2
Debt Financing | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Financing | ||
Debt Financing | 14. In June 2022, Legacy Orchestra entered into a loan and security agreement (the “2022 Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P. (“Avenue I”) and Avenue Venture Opportunities Fund II, L.P. (“Avenue II,” and, collectively with Avenue I, “Avenue”). The terms of the 2022 Loan and Security Agreement include a term loan of up to $20 million available in two tranches with the first tranche of $10 million that was drawn at closing in June of 2022, and a second tranche of $10 million available at closing of the Legacy Orchestra Series D-2 Preferred Stock financing was not drawn. Additionally, the Company may have access to a third tranche of $30 million subject to certain financing milestones. The term loan matures on June 1, 2026. In addition, the lender has the right, at its discretion, but not the obligation, to convert any portion of the outstanding principal amount of the loans up to $5 million into shares of Company Common Stock at a price per share equal to $12.00 (the “Conversion Option”), subject to adjustment; provided, however, the Conversion Option shall not be exercised by lender during the six Pursuant to the terms of the 2022 Loan and Security Agreement, Legacy Orchestra issued Avenue warrants that will be exercisable for 100,000 shares of Company Common Stock, and the estimated fair value of the warrants of $178,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the 2022 Loan and Security Agreement. In addition, other financing costs totaling $405,000 were also recorded as debt discount and is being amortized to interest expense over the term of the facility. The term loan accrues interest at a floating per annum rate equal to the Wall Street Journal prime rate plus 6.45%. The rate in effect at June 30, 2023 was 14.7%. The repayment terms of the loan include monthly payments over a 4-year 2-year Concurrent with the closing of the 2022 Loan and Security Agreement, Legacy Orchestra terminated and repaid an existing 2019 Loan and Security Agreement with Silicon Valley Bank (the “2019 Loan and Security Agreement”), which resulted in a loss on extinguishment of $682,000. Pursuant to the terms of the 2019 Loan and Security Agreement, Legacy Orchestra issued Silicon Valley Bank a warrant that, to the extent Legacy Orchestra made draws on the 2019 Loan and Security Agreement, was exercisable for a number of shares of Legacy Orchestra Common Stock equal to 2% of the amount drawn divided by the exercise price of $1.33 per share of Legacy Orchestra Common Stock. As a result of the draw in December of 2020, Legacy Orchestra issued 150,000 Legacy Orchestra Common Stock warrants to Silicon Valley Bank, and the estimated fair value of the warrants of $544,000 was recorded as debt discount on the date of issuance and was being amortized to interest expense over the term of the credit facility. These warrants have been exercised and are no longer outstanding. The term loan accrued interest at a floating per annum rate equal to the greater of (i) the Wall Street Journal prime rate plus 1.00% or (ii) 6.25%. In addition, there was a final payment equal to 8.25% of the original aggregate principal amount which accrued over the term of the loan using the effective-interest method. Total interest expense recorded on these facilities during the three months ended June 30, 2023 and June 30, 2022 was approximately $457,000 and $257,000, respectively. Total interest expense recorded on these facilities during the six months ended June 30, 2023 and June 30, 2022 was approximately $897,000 and $493,000, respectively. The following table shows the amount of principal payments due pursuant to the term loan by year: Principal Payments Period ending June 30: (in thousands) 2023 (remaining 6 months) $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. | 13. In December 2019, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “2019 Loan and Security Agreement”). The terms of the 2019 Loan and Security Agreement include a term loan of $20 million available in two tranches. The first $10 million tranche is available to the Company with interest-only monthly payments during a 12-month draw period from December 2019 through December 31, 2020. On December 31, 2020, the Company borrowed the first $10 million tranche of the 2019 Loan and Security Agreement. Pursuant to the terms of the 2019 Loan and Security Agreement, the Company issued Silicon Valley Bank a warrant that, to the extent the Company draws on the 2019 Loan and Security Agreement, will be exercisable for a number of shares of common stock equal to 2% of the amount drawn under the 2019 Loan and Security Agreement divided by the exercise price of $1.33 per share. As a result of the draw in December of 2020, the Company issued 150,000 common stock warrants to Silicon Valley Bank, and the estimated fair value of the warrants of $544,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the credit facility. The term loan accrues interest at a floating per annum rate equal to the greater of (i) the Wall Street Journal prime rate plus 1.00% or (ii) 6.25%. In addition, there is a final payment equal to 8.25% of the original aggregate principal amount which will be accrued over the term of the loan using the effective-interest method. The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. In June 2022, the Company entered into a Loan and Security Agreement with Avenue Venture Opportunities Fund I and II (the “2022 Loan and Security Agreement”). The terms of the 2022 Loan and Security Agreement include a term loan of up to $20 million available in two tranches with the first tranche of $10 million that was drawn at closing in June of 2022, and a second tranche of $10 million available at closing of the Series D-2 that has not yet been drawn. Additionally, the Company may have access to a third tranche of $30 million subject to certain financing milestones. The term loan matures on June 1, 2026. In addition, the lender has the right, at their discretion, but not the obligation, to convert any portion of the outstanding principal amount of the loans up to $5 million into shares of the Company’s common stock at a price per share equal to $12.00 (the “Conversion Option”), subject to adjustment; provided, however, the Conversion Option shall not be exercised by lender during the six Pursuant to the terms of the 2022 Loan and Security Agreement, the Company issued Avenue Venture Opportunities Fund I and II warrants that will be exercisable for 100,000 shares of common stock, and the estimated fair value of the warrants of $178,000 was recorded as debt discount on the date of issuance and is being amortized to interest expense over the term of the Loan and Security Agreement. In addition, other financing costs totaling $405,000 were also recorded as debt discount and is being amortized to interest expense over the term of the facility. The term loan accrues interest at a floating per annum rate equal to the Wall Street Journal prime rate plus 6.45%. The rate in effect at December 31, 2022 was 13.45%. Total interest expenses recorded on the facility during the year ended December 31, 2022 was approximately $711,000. The repayment terms of the loan include monthly payments over a 4-year 2 year Principal Payments (in thousands) Period ending December 31: 2023 $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 The term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants. |
Subsequent Events_2
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||
Subsequent Events | 16. On August 8, 2023, the Company announced that the FDA granted investigational device exemption approval with conditions to initiate the Company’s planned Virtue ISR-US pivotal study evaluating the efficacy and safety of Virtue SAB for the treatment of patients with Coronary ISR. The Company is permitted to begin enrollment of the study upon completion of standard clinical trial initiation activities including clinical center Institutional Review Board approvals. The conditional approval also requires the Company to submit additional information to the FDA. On September 19, 2023, the Company announced that the FDA granted investigational device exemption approval to initiate the Company’s planned BACKBEAT pivotal study evaluating the efficacy and safety for the development and commercialization of BackBeat CNT, also known as Atrioventricular Interval Modulation (AVIM) therapy for hypertensive pacemaker patients. The Company is permitted to begin enrollment upon completion of standard clinical trial initiation activities, including clinical center Institutional Review Board approvals. The Company expects to begin enrollment in the BACKBEAT pivotal study before the end of 2023. On October 6, 2023, the Company repaid and terminated the 2022 Loan and Security Agreement. In connection with the repayment and termination, the Company repaid $10 million of principal and issued warrants to purchase 27,707 shares of Company Common Stock at an exercise price of $7.67 per share in lieu of a cash payment of approximately $212,500 due with respect to certain fees under the 2022 Loan and Security Agreement. The Company also paid approximately $849,000 of net interest, prepayment fees, and legal fees. | 14. On January 26, 2023 (the “Closing Date”), the Company consummated the previously-announced Business Combination (the “Closing”). In connection with the Business Combination, HSAC2 changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware and changed its name to “Orchestra BioMed Holdings, Inc.” (“New Orchestra”). On the Closing Date, Merger Sub merged with and into Orchestra with Orchestra being the surviving corporation and a wholly owned subsidiary of New Orchestra. The Company refers to HSAC2 common stock, after giving effect to the Business Combination, as “New Orchestra Common Stock.” Upon the Closing, based on a ratio (the “Exchange Ratio”) of 0.465 shares of HSAC2 Common Stock for each whole share of Orchestra common stock, par value $0.0001 per share (the “Orchestra Common Stock”), 20,191,338 shares of New Orchestra Common Stock were issued to Orchestra stockholders (exclusive of the additional shares subject to earnout discussed below in this paragraph) and 5,523,834 shares of New Orchestra Common Stock were reserved for issuance pursuant to the Orchestra stock options and warrants converted into New Orchestra stock options and warrants in the Merger. In addition, upon the Closing, all of the Company’s outstanding preferred stock automatically converted New Orchestra Common Stock. In connection with the Business Combination, HSAC 2 Holdings, LLC (the “Sponsor”) agreed that 25% or 1,000,000 shares of its New Orchestra Common Stock will be forfeited to New Orchestra on the first business day following the fifth anniversary of the Closing unless, as to 500,000 shares, the volume-weighted average price of the New Orchestra Common Stock is greater than or equal to $15.00 per share over any 20 trading days within any 30 -trading day period (the “Initial Milestone Event”), and as to the remaining 500,000 shares, the volume-weighted average price of the New Orchestra Common Stock is greater than or equal to $20.00 per share over any 20 trading days within any 30 -trading day period (the “Final Milestone Event”). Further, the Sponsor and HSAC2’s other initial shareholders prior to HSAC2’s initial public offering (the “IPO”) agreed to subject (i) the 4,000,000 shares of New Orchestra Common Stock issued to HSAC2’s initial shareholders prior to the IPO (the “Insider Shares”) and (ii) the 450,000 shares of New Orchestra Common Stock purchased in a private placement simultaneously with the IPO (the “Private Shares”) to a lock-up for up to 12 months following the Closing, and the Sponsor forfeited 50% of its 1,500,000 warrants in HSAC2 purchased upon consummation of the IPO (the “Private Warrants”), comprising 750,000 Private Warrants, for no consideration, immediately prior to the Closing (the “Sponsor Forfeiture”). Pursuant to the terms of the Merger Agreement, immediately following the Sponsor Forfeiture and prior to the Closing, HSAC2 issued 750,000 warrants to purchase New Orchestra Common Stock to eleven specified employees and directors of Orchestra. These new warrants have substantially similar terms to the forfeited Private Warrants, except that they will become exercisable between 24 and 36 months after the Closing. In connection with the Business Combination, existing Orchestra stockholders also had the opportunity to elect to participate in an earnout (the “Earnout”) pursuant to which each such electing stockholder (an “Earnout Participant”) may receive a portion of additional contingent consideration of up to 8,000,000 shares of New Orchestra Common Stock in the aggregate (“Earnout Consideration”). Approximately 91% of Orchestra stockholders elected to participate in the Earnout. Each Earnout Participant agreed to extend their applicable lock-up period from 6 months to 12 months , pursuant to an Earnout Election Agreement and such Earnout Participants will collectively be entitled to receive: (i) 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, from the time beginning immediately after the Closing until the fifth anniversary of the Closing Date (the “Earnout Period”), the Initial Milestone Event (as defined below) occurs; and (ii) an additional 4,000,000 shares of the Earnout Consideration, in the aggregate, in the event that, during the Earnout Period, the Final Milestone Event occurs. Prior to the Business Combination, HSAC2’s public shares were listed on The Nasdaq Capital Market under the symbol “HSAQ.” On January 27, 2023, the New Orchestra Common Stock began trading on The Nasdaq Global Market under the symbol “OBIO.” On August 8, 2023, the Company announced that the FDA granted investigational device exemption approval with conditions to initiate the Company’s planned Virtue ISR-US pivotal study evaluating the efficacy and safety of Virtue SAB for the treatment of patients with Coronary ISR. The Company is permitted to begin enrollment of the study upon completion of standard clinical trial initiation activities including clinical center Institutional Review Board approvals. The conditional approval also requires the Company to submit additional information to the FDA. On September 19, 2023, the Company announced that the FDA granted investigational device exemption approval to initiate the Company’s planned BACKBEAT pivotal study evaluating the efficacy and safety for the development and commercialization of BackBeat CNT, also known as Atrioventricular Interval Modulation (AVIM) therapy for hypertensive pacemaker patients. The Company is permitted to begin enrollment upon completion of standard clinical trial initiation activities, including clinical center Institutional Review Board approvals. The Company expects to begin enrollment in the BACKBEAT pivotal study before the end of 2023. On October 6, 2023, the Company repaid and terminated the 2022 Loan and Security Agreement. In connection with the repayment and termination, the Company repaid $10 million of principal and issued warrants to purchase 27,707 shares of Company Common Stock at an exercise price of $7.67 per share in lieu of a cash payment of approximately $212,500 due with respect to certain fees under the 2022 Loan and Security Agreement. The Company also paid approximately $849,000 of net interest, prepayment fees, and legal fees. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 4). | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. Areas where significant estimates exist include, but are not limited to, the fair value of stock-based compensation, research and development costs incurred, the fair value of the warrant liability, and the estimated costs to complete the combined performance obligation pursuant to the Terumo Agreement (Note 3). |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. | Cash and Cash Equivalents Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash. |
Marketable Securities | Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ equity as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. | Marketable Securities The Company accounts for its marketable securities with remaining maturities of less than one year, or where its intent is to use the investments to fund current operations or to make them available for current operations, as short-term investments. These investments represent debt investments in corporate or government securities that are designated as available-for-sale and are carried at fair value, with unrealized gains and losses reported in stockholders’ deficit as accumulated other comprehensive income (loss). The disclosed fair value related to the Company’s investments is based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data. |
Strategic Investments | Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a Motus GI Holdings, Inc. (“Motus GI”), a publicly-held company and related party, and preferred shares of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party. The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities. Therefore, the Company categorized the investments as current assets. 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. Additionally, as the investments in Vivasure are not readily marketable, the Company categorized the investments as non-current assets. As of June 30, 2023 and December 31, 2022, the carrying value of the investments in Vivasure was $2.5 million. | Strategic Investments Management has made investments in affiliated companies and assesses whether the Company exerts significant influence over its strategic investments. The Company considers the nature and magnitude of its investment, any voting and protective rights it holds, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationships. To date, the Company has concluded that it does not have the ability to exercise significant influence over its strategic investments. The Company’s strategic investments consist of equity investments in common stock of a publicly-held company and related party (Motus GI) and preferred shares and convertible notes of a privately-held company and related party (Vivasure). The Company classifies strategic investments on its balance sheet as current assets if the assets are available for use for current operations, and the Company does not have a specific plan to hold the investments for a certain duration of time. The shares held of Motus GI represent equity securities with a readily determinable fair value and are 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, Recognition and Measurement of Financial Assets and Liabilities |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at June 30, 2023, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 6 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. | Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”) The carrying value of the Company’s cash and cash equivalents, accounts receivable, prepaid expense, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its investment in Motus GI, marketable securities, and warrant liabilities at fair value. In addition, at December 31, 2022, the Company believed the carrying value of debt approximates fair value as the interest rates were reflective of the rate the Company could obtain on debt with similar terms and conditions. See Note 5 for additional information regarding fair value measurements. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of June 30, 2023 and December 31, 2022, an allowance for doubtful accounts was not deemed necessary. | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent amounts due from customers. The allowance for doubtful accounts is recorded for estimated losses by evaluating various factors, including relative creditworthiness of each customer, historical collections experience and aging of the receivable. As of December 31, 2021 and 2022, an allowance for doubtful accounts was not deemed necessary. |
Inventory | Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of June 30, 2023 and December 31, 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. | Inventory Inventory is stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) and net realizable value. Net realizable value represents the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company analyzes its inventory levels and writes down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value or inventory quantities in excess of expected requirements. Excess requirements are determined based on comparison of existing inventories to forecasted sales, with consideration given to inventory shelf life. Expired inventory is disposed of, and the related costs are recognized in cost of goods sold. As of December 31, 2021 and 2022, an impairment charge as a result of obsolete inventory was not deemed necessary. |
Research and Development Prepayments, Accruals and Related Expenses | Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its third-party service providers, which include the conduct of preclinical and clinical studies. The Company is required to estimate its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. | Research and Development Prepayments, Accruals and Related Expenses The Company incurs costs of research and development activities conducted by its 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. The Company determines 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 fee 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 the Company or the services are performed. Accruals are recorded for the amounts of services provided that have not yet been invoiced. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful life or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years |
Leases | Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the terms of the arrangement. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use (“ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is to not record leases with a lease term of 12 months or less on its balance sheets. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the statements of operations. Payments due under each lease agreement include fixed and variable payments. Variable payments relate to the Company’s share of the lessor’s operating costs associated with the underlying asset and are recognized when the event on which those payments are assessed occurs. Variable payments have been excluded from the lease liability and associated right-of-use asset. The interest rate implicit in lease agreements is typically not readily determinable, and as such, the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. | Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”) The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities for leases that are less than one year in duration. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities). Upon adoption on January 1, 2022, the Company recognized ROU assets of $2.6 million and lease liabilities of $2.9 million. The adoption of the new lease standard did not impact the Company’s condensed consolidated statement of operations and comprehensive loss or its condensed consolidated statement of cash flows. The effect of the transition adjustment along with balances before, and after adoption is outlined below: Deferred ROU Lease lease liability Assets Liabilities Balance – December 31, 2021 $ 241 $ — $ — ASC 842 Transition adjustment (241) 2,612 2,853 Balance – January 1, 2022 $ — $ 2,612 $ 2,853 The Company determines if an arrangement is a lease at inception. For the Company’s operating leases, the ROU asset represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since all the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. |
Debt Discount and Debt Issuance Costs | Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. | Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and reflected as a reduction to the related debt liability. The costs are amortized to interest expense over the term of the debt using the effective-interest method. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. The Company has not identified any such impairment losses to date. |
Warrants | Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity, Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. | Warrants The Company evaluates its warrants to determine if the contracts qualify as liabilities in accordance with ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging In bundled transactions, the proceeds received from any debt instruments and liability classified warrants are allocated to the warrant at fair value first, and the residual value is then allocated to the debt instrument. Upon conversion or exercise of a warrant that is subject to liability treatment, the instrument is marked to fair value at the conversion or exercise date and the fair value is reclassified to equity. Equity classified warrants are recorded within additional paid-in capital at the time of issuance at fair value as of the issuance date and are not subject to subsequent remeasurement. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. | Revenue Recognition The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”) The Company’s revenues are currently comprised of product revenue from the sale of FreeHold’s intracorporeal organ retractors, and partnership revenues from the Terumo Agreement related to the development and commercialization of Virtue SAB. |
Product Revenues | 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. | 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 judgements 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. |
Partnership Revenues | Partnership Revenues To date, the Company’s partnership revenues have related to the Terumo Agreement as further described in Note 4. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 5. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the U.S. Food and Drug Administration (the “FDA”) for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. | Partnership Revenues To date, the Company’s Partnership revenues related to the Terumo Agreement as further described in Note 3. In future periods, Partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 4. The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) The promised goods or services in the Terumo Agreement include (i) license rights to the Company’s intellectual property, and (ii) research and development services. The Company also has 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, the Company 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. The Company estimates the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration includes both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes 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, the Company evaluates whether the milestones are considered probable of being reached and estimates 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, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its 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, the Company will recognize royalty revenue when the related sales occur. To date, the Company has not recognized any royalty revenue under the arrangement. The Company has determined that intellectual property licensed to Terumo and the research and development services to be provided through the premarket approval by the FDA for the in-stent restenosis (“ISR”) indication represent a combined performance obligation that is satisfied over time, 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 do the total costs expected to be incurred through the completion of the performance obligation. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives 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 any sales of the SirolimusEFR are within 30 days after receipt of the shipping invoices. Upfront payments are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional. |
Stock-Based Compensation | Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the Company’s condensed consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. | Stock-Based Compensation The Company applies ASC 718-10, Compensation — Stock Compensation Under the requirements of ASU 2018-07, the Company accounts for stock-based compensation to nonemployees under the fair value method, which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur. |
Net Loss Per Share | Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss is the same as diluted net loss since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, Earnout Consideration (Note 3) and unvested restricted stock awards. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares (as defined in Note 3)) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. | Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss per share by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive shares of common stock. Since the Company was in a loss position for the periods presented, basic net loss attributable to common stockholders is the same as diluted net loss attributable to common stockholders since the effects of potentially dilutive securities are antidilutive. Potentially dilutive securities include all outstanding warrants, stock options, and restricted stock. In periods in which there is net income, the Company would apply the two-class method to compute net income per share. Under this method, earnings are allocated to common stock and participating securities based on their respective rights to receive dividends, as if all undistributed earnings for the period were distributed. The two-class method does not apply in periods in which a net loss is reported. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. | Income Taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”) The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. |
Deferred Offering and Merger Costs | Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees were deferred to be offset against proceeds received when the Business Combination was completed. As of December 31, 2022, there were $4.0 million of deferred transaction costs included in deposits and other assets on the accompanying condensed consolidated balance sheet. Upon the close of the Business Combination, these deferred costs were recorded against net proceeds in additional paid-in capital. For further discussion on the Business Combination, see Note 3. | Deferred Offering and Merger Costs Offering and merger costs, consisting of legal, accounting, printer and filing fees, are deferred and will be offset against proceeds received when the financing events are completed. In the event the offering or merger is terminated, all deferred costs will be expensed. As of December 31, 2022, the Company has capitalized $4.0 million of deferred merger costs related to the Business Combination discussed in Note 15, which are included in deposits and other assets on the accompanying balance sheet. As of December 31, 2021, the Company capitalized $100,000 of deferred offering costs related to private placement financings, which was offset against the proceeds received in March of 2022. |
Defined Contribution Plan | Defined Contribution Plan The Company has a defined retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. Effective January 1, 2023, the Company participates in a matching safe harbor 401(k) Plan with a Company contribution of up to 3.5% of each eligible participating employee’s compensation. Safe harbor contributions vest immediately for each participant. During the three and six months ended June 30, 2023, the Company made $67,000 and $181,000, respectively, in contributions under this safe harbor 401(k) Plan. | Defined Contribution Plan The Company has a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer a portion of their annual compensation on a pre-tax basis. The Company does not make matching employee contributions. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. | Comprehensive Loss Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. | Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment. |
New Accounting Standards | New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . During 2018 and 2019, the FASB also issued subsequent amendments to the initial guidance (collectively, “Topic 326”). Topic 326 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Topic 326 will be effective for the Company on January 1, 2023. The Company is evaluating the impact that this standard will have on its consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 — Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Schedule of property and equipment useful lives | Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years | Asset category Depreciable life Manufacturing equipment 10 years Office equipment 3 Research and development equipment 7 years |
ASU 2016-02 | ||
Summary of Significant Accounting Policies | ||
Schedule of effect of the transition adjustment along with balances before, and after adoption | Deferred ROU Lease lease liability Assets Liabilities Balance – December 31, 2021 $ 241 $ — $ — ASC 842 Transition adjustment (241) 2,612 2,853 Balance – January 1, 2022 $ — $ 2,612 $ 2,853 |
Terumo Agreement (Tables)_2
Terumo Agreement (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Terumo Agreement. | ||
Schedule of deferred revenue | Deferred Revenue – December 31, 2022 (in thousands) $ 19,539 Revenue recognized (1,747) Deferred Revenue – June 30, 2023 $ 17,792 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (945) Deferred Revenue – June 30, 2022 $ 21,456 | Deferred Revenue – January 1, 2021 (in thousands) $ 20,926 Revenue reduction 1,475 Deferred Revenue – December 31, 2021 $ 22,401 Revenue recognized (2,862) Deferred Revenue – December 31, 2022 $ 19,539 |
Financial Instruments and Fai_6
Financial Instruments and Fair Value Measurements (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Financial Instruments and Fair Value Measurements | ||
Schedule of financial assets and liabilities measured at fair value | June 30, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 13,193 $ — $ — $ 13,193 Investment in Motus GI (see Note 7) 69 — — 69 Marketable securities (Corporate and Government debt securities) — 101,295 — 101,295 Total assets $ 13,262 $ 101,295 $ — $ 114,557 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Money market fund (included in cash and cash equivalents) $ 8,708 $ — $ — $ 8,708 Investment in Motus GI (see Note 7) 86 — — 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 8,794 $ 63,915 $ — $ 72,709 Liabilities: Warrant liability (see Note 10) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 | December 31, 2021 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 958 $ — $ — $ 958 Total assets $ 958 $ — $ — $ 958 Liabilities: Warrant liability (see Note 9) $ — $ — $ 635 $ 635 Total liabilities $ — $ — $ 635 $ 635 December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Investment in Motus GI (see Note 6) $ 86 $ — $ — $ 86 Marketable securities (Corporate and Government debt securities) — 63,915 — 63,915 Total assets $ 86 $ 63,915 $ — $ 64,001 Liabilities: Warrant liability (see Note 9) $ — $ — $ 2,089 $ 2,089 Total liabilities $ — $ — $ 2,089 $ 2,089 |
Marketable Securities and Str_6
Marketable Securities and Strategic Investments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Marketable Securities and Strategic Investments | ||
Summary of the Company's marketable securities | June 30, 2023 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 48,100 $ — $ (39) $ 48,061 Government debt securities 53,291 — (57) 53,234 Total $ 101,391 $ — $ (96) $ 101,295 December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 | December 31, 2022 Amortized Unrealized Unrealized Fair (in thousands) Cost Basis Gains Losses Value Corporate debt securities $ 52,242 $ 7 $ — $ 52,249 Government debt securities 11,681 — (15) 11,666 Total $ 63,923 $ 7 $ (15) $ 63,915 |
Balance Sheet Components (Tab_2
Balance Sheet Components (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Balance Sheet Components | ||
Schedule of property and equipment, net | June 30, December 31, (in thousands) 2023 2022 Equipment $ 1,745 $ 1,712 Office furniture 364 364 Leasehold improvements 197 191 Construction in progress 22 — Property and equipment, gross 2,328 2,267 Less accumulated depreciation and amortization (921) (778) Total Property and equipment, net $ 1,407 $ 1,489 | December 31, (in thousands) 2021 2022 Equipment $ 1,207 $ 1,712 Office furniture 305 364 Leasehold improvements 177 191 Construction in progress 16 — Property and equipment, gross 1,705 2,267 Less accumulated depreciation and amortization (585) (778) Total Property and equipment, net $ 1,120 $ 1,489 |
Schedule of accrued expenses | June 30, December 31, (in thousands) 2023 2022 Accrued compensation $ 1,954 $ 2,480 Clinical trial accruals 895 1,003 Other accrued expenses 977 1,893 Total accrued expenses $ 3,826 $ 5,376 | December 31, (in thousands) 2021 2022 Accrued compensation $ 1,319 $ 2,480 Deferred offering and merger costs 100 — Deferred lease liability 45 — Clinical trial accruals 39 1,003 Other accrued expenses 531 1,893 Total accrued expenses $ 2,034 $ 5,376 |
Warrants (Tables)_2
Warrants (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Warrants | ||
Schedule of fair value of the outstanding warrant liability | Period from January 1, 2023 to January 26, 2023 June 30, 2022 Expected volatility 44 – 49% 45 – 54% Risk-free interest rate 3.60 – 4.80% 2.60 – 3.00% Remaining term in years 0.35 – 5.00 0.92 – 5.38 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of Legacy preferred warrants — — Common stock price $10.63 $9.18 Legacy preferred stock price — — Expected dividend yield 0% 0% | December 31, 2021 2022 Expected volatility 44 – 55% 45 – 47% Risk-free interest rate 0.27 – 1.11% 4.00 – 4.30% Remaining term in years 1.41 – 7.94 0.14 – 5.07 Exercise price of common warrants $1.08 – $30.11 $1.08 – $30.11 Exercise price of preferred warrants $19.35 – $32.26 — Common stock price $3.35 $9.72 Preferred stock price $5.38 – $7.35 — Expected dividend yield 0% 0% |
Schedule of warrant activity rollforward | The Company’s warrant liability related to Legacy Orchestra warrant activity rollforward is as follows, with the warrants having been converted to reflect the effect of the Merger: Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2022 — 1,327,074 $ 2,089 Warrants exercised prior to the business combination — (1,163) (10) Change in fair value of warrants as of January 26, 2023 — — 294 Warrants reclassified to equity — (1,325,911) (2,373) Balance March 31, 2023 — — — Balance June 30, 2023 — — $ — Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2021 206,997 1,189,162 $ 635 Exercise of warrants — (68,587) (156) Change in the fair value of warrants — — 145 Balance March 31, 2022 206,997 1,120,575 624 Exercise of warrants — (4,650) (15) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to Legacy Orchestra preferred stock financing — 159,965 620 Amendments of existing warrants (206,997) 206,997 810 Other — (150,000) (335) Change in the fair value of warrants — — 243 Balance June 30, 2022 — 1,328,237 $ 1,909 | Preferred Common (in thousands, except share data) Warrants Warrants Amount Balance December 31, 2020 206,997 1,192,650 $ 1,347 Exercise of warrants — (3,488) (13) Change in the fair value of warrants — — (699) Balance December 31, 2021 206,997 1,189,162 $ 635 Reclassification of warrant liability upon exercise — (73,238) (171) Forfeiture of warrants — (4,650) (38) Issuance of warrants related to private placement financing — 159,965 620 Amendment of existing warrants (206,997) 206,997 810 Other — (151,162) (345) Change in the fair value of warrants — — 578 Balance December 31, 2022 — 1,327,074 $ 2,089 |
Stock-Based Compensation (Tab_2
Stock-Based Compensation (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Share-Based Compensation | ||
Schedule of cost related to stock-based compensation | Total stock-based compensation related to option issuances was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 330 $ 52 $ 815 $ 91 Selling, general and administrative 631 91 1,369 107 Total stock-based compensation $ 961 $ 143 $ 2,184 $ 198 Total stock-based compensation related to restricted stock was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ — $ — $ — $ — Selling, general and administrative 498 76 547 91 Total stock-based compensation $ 498 $ 76 $ 547 $ 91 Total stock-based compensation related to warrants was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Research and development $ 120 $ — $ 207 $ — Selling, general and administrative 128 — 258 — Total stock-based compensation $ 248 $ — $ 465 $ — | Year ended December 31, (in thousands) 2021 2022 Research and development $ 83 $ 398 Selling, general and administrative 88 2,704 Total stock-based compensation $ 171 $ 3,102 Year ended December 31, (in thousands) 2021 2022 Research and development $ — $ — Selling, general and administrative 131 273 Total stock-based compensation $ 131 $ 273 |
Schedule of restricted stock activity | Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (in thousands) Outstanding January 1, 2023 158,589 9.14 — Granted — — — Vested (63,451) — — Forfeited/canceled (45,901) — — Outstanding June 30, 2023 49,237 8.67 $ 549 | Weighted Aggregate Restricted Average Intrinsic Stock Remaining Value Outstanding Term (years) (thousands) Outstanding January 1, 2022 21,907 7.60 — Granted 182,962 9.15 — Vested (46,280) — — Forfeited/canceled — — — Outstanding December 31, 2022 158,589 9.14 $ 980 |
Schedule of estimated grant-date fair value calculated using Black-Scholes option pricing model | Six Months Ended June 30, 2023 2022 Expected term (in years) 6.00 6.00 Expected volatility 50 % 49 % Risk-free interest rate 3.60 % 2.70 % Expected dividend yield 0 % 0 % Fair value of common stock $ 9.63 $ 4.06 | Year ended December 31, 2021 2022 Expected term (in years) 6.00 6.00 Expected volatility 60 % 50 % Risk-free interest rate 0.99 % 3.01 % Expected dividend yield 0 % 0 % Fair value of common stock $ 4.71 $ 9.72 |
Schedule of stock option activity | Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (in thousands) Outstanding at January 1, 2023 7,868,448 3.51 8.35 — Retroactive application of Reverse Recapitalization (Note 3) (4,209,620) 4.05 — — Outstanding at January 1, 2023, effect of Merger 3,658,828 7.56 8.35 — Granted 323,175 9.89 — — Exercised (17,825) 4.16 — — Forfeited/canceled (142,256) 5.35 — — Outstanding June 30, 2023 3,821,922 7.97 5.31 $ 4,002 Exercisable at June 30, 2023 2,163,768 6.60 7.09 $ 3,412 | Weighted Weighted Aggregate Shares Average Average Intrinsic Underlying Exercise Remaining Value Options Price Term (years) (thousands) Outstanding at January 1, 2022 1,348,464 4.47 7.13 — Granted 2,357,807 9.33 — — Exercised (27,848) 4.32 — — Forfeited/canceled (19,595) 4.67 — — Outstanding December 31, 2022 3,658,828 7.56 8.35 $ 8,277 Exercisable at December 31, 2022 1,806,093 5.78 6.72 $ 6,815 |
Leases (Tables)_2
Leases (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Leases | ||
Schedule of recognized as an asset and operating lease liabilities | As of June 30, 2023: Weighted average remaining lease term – operating leases, in years 3.73 Weighted average discount rate – operating leases 6.25 % | As of December 31, 2022: Weighted average remaining lease term – operating leases, in years 4.06 Weighted average discount rate – operating leases 6.25 % |
Schedule of future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases | Operating Leases Year ending December 31: (in thousands) 2023 (remaining six months) $ 413 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,284 Imputed interest (245) Total liability $ 2,039 | Operating Leases Year ending December 31: (in thousands) 2023 $ 823 2024 727 2025 352 2026 352 2027 352 Thereafter 88 Total future minimum lease payments $ 2,694 Imputed interest (314) Total liability $ 2,380 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of components of the deferred tax assets and liabilities | The components of the deferred tax assets are as follows: December 31, (in thousands) 2021 2022 Deferred tax assets Net operating loss carryovers – Federal $ 19,936 $ 22,798 Net operating loss carryovers – State 5,640 4,811 Unrealized loss on equity securities 2,415 2,913 Research and development credits 2,300 3,149 Loss on impairment of strategic investments 1,449 1,177 Research and experimental costs — 4,973 Other 552 1,478 Lease liability — 629 Deferred revenue 5,353 5,166 Total deferred tax assets 37,645 47,094 Less: valuation allowance (37,630) (46,457) Total deferred tax assets 15 637 Deferred tax liabilities Right-of-use asset — (578) Depreciation and amortization (15) (59) Total deferred tax liabilities (15) (637) Total net deferred tax asset $ — $ — |
Schedule of reconciliation of the statutory federal income tax to the Company's effective tax | December 31, 2021 2022 Income tax benefit at federal statutory rate 21.0 % 21.0 % State and local income tax (net of Federal benefit) 7.2 % 4.8 % Permanent items 0.6 % (0.9) % Research and development credits 1.9 % 3.1 % Research and development, uncertain tax positions (0.4) % (0.6) % Change in valuation allowance (31.2) % (26.2) % Effect of rate changes — % (1.2) % True-ups 0.9 % — % Other — % — % Effective tax rate — % — % |
Schedule of reconciliation of total amounts of gross unrecognized tax benefits | Following is a reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits: December 31, (in thousands) 2021 2022 Unrecognized tax benefits Unrecognized tax benefits at the beginning of the period $ 481 $ 572 Additions due to current year activity 111 203 Other reductions (20) — Unrecognized tax benefits at the end of the period $ 572 $ 775 |
Debt Financing (Tables)_2
Debt Financing (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Financing | ||
Schedule of amount of principal payments | Principal Payments Period ending June 30: (in thousands) 2023 (remaining 6 months) $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 | Principal Payments (in thousands) Period ending December 31: 2023 $ — 2024 2,500 2025 5,000 2026 2,500 Total $ 10,000 |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Business Combination Transaction (Details) - $ / shares | Jun. 30, 2023 | Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Business Combination and Recapitalization | ||||
Common stock, shares authorized | 340,000,000 | 340,000,000 | 340,000,000 | 340,000,000 |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preference shares, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preference shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Common Stock | ||||
Business Combination and Recapitalization | ||||
Common stock, shares authorized | 350,000,000 | |||
Maximum | ||||
Business Combination and Recapitalization | ||||
Common stock, shares authorized | 340,000,000 | |||
HSAC2 | ||||
Business Combination and Recapitalization | ||||
Common stock, shares authorized | 340,000,000 | |||
Common stock, par value (in Dollars per share) | $ 0.0001 | |||
Preference shares, shares authorized | 10,000,000 | |||
Preference shares, par value (in Dollars per share) | $ 0.0001 |
Organization and Basis of Pre_5
Organization and Basis of Presentation (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2023 | |
Organization and Basis of Presentation | |||
Accumulated deficit | $ (199,734,000) | $ (166,126,000) | $ (222,720,000) |
Business Combination | |||
Organization and Basis of Presentation | |||
Accumulated deficit | (199,700,000) | $ 222,700,000 | |
FreeHold Surgical, Inc | Product revenue | |||
Organization and Basis of Presentation | |||
Revenue | $ 671,000 | $ 693,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Other (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jan. 01, 2023 | Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Summary of Significant Accounting Policies | ||||||
Strategic investments | $ 2,495,000 | $ 2,495,000 | $ 2,495,000 | $ 398,000 | ||
Allowance for doubtful accounts receivable | 0 | 0 | 0 | 0 | ||
Impairment of long-lived assets | 0 | 0 | ||||
Right-of-use assets | 1,874,000 | 1,874,000 | 2,187,000 | |||
Lease liabilities | 2,039,000 | $ 2,039,000 | 2,380,000 | |||
Deferred offering cost | $ 4,000,000 | $ 100,000 | ||||
Number of operating segments | segment | 1 | 1 | ||||
Income tax benefit percentage | 21% | 21% | ||||
Defined contribution plan, percentage | 3.50% | |||||
Contribution | 67,000 | $ 181,000 | ||||
ASU 2016-02 | ||||||
Summary of Significant Accounting Policies | ||||||
Lease liabilities | $ 2,900,000 | |||||
ASU 2016-02 | Adjustment | ||||||
Summary of Significant Accounting Policies | ||||||
Right-of-use assets | $ 2,612,000 | |||||
Lease liabilities | $ 2,853,000 | |||||
Terumo Agreement | ||||||
Summary of Significant Accounting Policies | ||||||
Term of billing from date of milestone achievement | 10 days | 10 days | ||||
Term of royalty payments from close of each quarter | 20 days | 20 days | ||||
Term of optional services from receipt of invoice | 20 days | 20 days | ||||
Term of SirolimusERF from receipt of shipping invoice | 30 days | 30 days | ||||
Strategic Investments Less Current Portion | ||||||
Summary of Significant Accounting Policies | ||||||
Strategic investments | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | $ 398,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of property and equipment (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Manufacturing Equipment Member | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 10 years | 10 years |
Office furniture | Minimum | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 3 years | 3 years |
Office furniture | Maximum | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 7 years | 7 years |
Research And Development Equipment Member | ||
Schedule of Property and Equipment, Net | ||
Total asset category | 7 years | 7 years |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Transition adjustment along with balances before, and after adoption is outlined (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||||
Deferred lease liability | $ 241 | |||
ROU Assets | $ 1,874 | $ 2,187 | ||
Lease Liabilities | $ 2,039 | 2,380 | ||
ASU 2016-02 | ||||
Summary of Significant Accounting Policies | ||||
Lease Liabilities | $ 2,900 | |||
ASU 2016-02 | Adjustment | ||||
Summary of Significant Accounting Policies | ||||
Deferred lease liability | $ (241) | |||
ROU Assets | 2,612 | |||
Lease Liabilities | 2,853 | |||
ASU 2016-02 | Adjusted balance | ||||
Summary of Significant Accounting Policies | ||||
ROU Assets | 2,612 | |||
Lease Liabilities | $ 2,853 |
Terumo Agreement - Other (Det_2
Terumo Agreement - Other (Details) - Collaborative Arrangement - Terumo - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2022 | |
Terumo Agreement | |||
Upfront payment received | $ 30 | $ 30 | |
Equity commitment | 5 | ||
Amount invested for financing | 2.5 | ||
Amount receivable on Milestones | 35 | ||
Target milestone payment date already passed | $ 5 | ||
Remaining time-based milestones by the specified target achievement | $ 25 | ||
Stock purchase and the revenue generating elements | 32.5 | ||
Estimated fair value of the shares | 2.5 | ||
Transaction price | $ 30 | ||
Minimum | |||
Terumo Agreement | |||
Royalty receivable percentage | 10% | ||
Sales-based royalties percentage | 10% | ||
Maximum | |||
Terumo Agreement | |||
Additional payments on the achievement milestone | $ 65 | ||
Royalty receivable percentage | 15% | ||
Sales-based royalties percentage | 15% |
Terumo Agreement - Deferred r_2
Terumo Agreement - Deferred revenue (Details) - Collaborative Arrangement - Terumo - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in the Company's deferred revenue balance | ||||
Deferred Revenue - December 31, 2022 (in thousands) | $ 19,539 | $ 22,401 | $ 22,401 | $ 20,926 |
Revenue recognized | (1,747) | (945) | (2,862) | |
Revenue reduction | 1,475 | |||
Deferred Revenue - June 30, 2023 | $ 17,792 | $ 21,456 | $ 19,539 | $ 22,401 |
Terumo Agreement - Remaining _2
Terumo Agreement - Remaining performance obligation (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Terumo Agreement | ||
Revenue remaining performance obligation amount | $ 4.3 | $ 6.4 |
Remaining performance obligation recognition period | 12 months | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | ||
Terumo Agreement | ||
Revenue remaining performance obligation amount | $ 13.5 | $ 13.1 |
Remaining performance obligation recognition period | 24 months | 24 months |
Terumo Agreement - Other narr_2
Terumo Agreement - Other narratives (Details) - Collaborative Arrangement - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Terumo Agreement | ||||||
Estimated total costs increase (decrease) percentage | 10% | 10% | ||||
Terumo | ||||||
Terumo Agreement | ||||||
Cost incurred | $ 4,500,000 | $ 3,900,000 | $ 8,300,000 | $ 6,600,000 | $ 14,300,000 | $ 9,900,000 |
Estimated total costs increase (decrease) percentage | 3% | 85% | ||||
Increase (decrease) in revenue from change in estimate | $ 392,000 | $ 836,000 | $ 303,000 | $ 847,000 | $ 1,000,000 | $ 6,500,000 |
Collaborative Arrangement, Change in Estimate, Increase (Decrease) in Earnings Per Share , Basic | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.73 | $ 0.73 |
Collaborative Arrangement, Change in Estimate, Increase (Decrease) in Earnings Per Share | $ 0.08 | $ 0.08 | $ 0.05 | $ 0.05 | $ 0.07 | $ 0.07 |
Medtronic Agreement (Details)_2
Medtronic Agreement (Details) - Medtronic Agreement - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Preferred Stock | |||
Reimbursable research and development expense | $ 1,000,000 | $ 2,300,000 | $ 1,700,000 |
Proceeds from issuance of Series D-2 Preferred Stock | 40,000,000 | 40,000,000 | |
Revenue recognized to date | $ 0 | 0 | 0 |
Minimum | |||
Preferred Stock | |||
Expected to receive product price | 500 | 500 | |
Maximum | |||
Preferred Stock | |||
Expected to receive product price | 1,600 | $ 1,600 | |
Accounts Payable and Accrued Expenses | |||
Preferred Stock | |||
Reimbursable research and development expense | $ 1,900,000 |
Financial Instruments and Fai_7
Financial Instruments and Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Instruments and Fair Value Measurements | ||
Total assets | $ 64,001 | $ 958 |
Total liabilities | 2,089 | 635 |
Marketable securities | 0 | |
Investment in Motus GI | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 86 | 958 |
Marketable securities (Corporate and Government debt securities) | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 63,915 | |
Warrant liability. | ||
Financial Instruments and Fair Value Measurements | ||
Total liabilities | 2,089 | 635 |
Level 1 | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 86 | 958 |
Level 1 | Investment in Motus GI | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 86 | 958 |
Level 2 | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 63,915 | |
Level 2 | Marketable securities (Corporate and Government debt securities) | ||
Financial Instruments and Fair Value Measurements | ||
Total assets | 63,915 | |
Level 3 | ||
Financial Instruments and Fair Value Measurements | ||
Total liabilities | 2,089 | 635 |
Level 3 | Warrant liability. | ||
Financial Instruments and Fair Value Measurements | ||
Total liabilities | $ 2,089 | $ 635 |
Marketable Securities and Str_7
Marketable Securities and Strategic Investments (Details) € in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
May 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2019 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 31, 2022 EUR (€) | |
Marketable Securities and Strategic Investments | |||||||||
Marketable securities held | $ 101,295,000 | $ 101,295,000 | $ 63,915,000 | $ 0 | |||||
Recognized gains (loss) | (102,000) | $ 0 | (102,000) | $ 0 | 0 | 0 | |||
Investments fair value | 69,000 | 69,000 | 86,000 | 958,000 | |||||
Strategic Investment Motus GI | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Recognized gains (loss) | (31,000) | (160,000) | (17,000) | (380,000) | (900,000) | (1,000,000) | |||
Investments fair value | 69,000 | 69,000 | $ 86,000 | 1,000,000 | |||||
Impairment charge | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Strategic Investment Vivasure | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Investments gain | $ 1,900,000 | ||||||||
Impairment charge | $ 5,800,000 | ||||||||
Haemonetics Corporation | Strategic Investment Vivasure | |||||||||
Marketable Securities and Strategic Investments | |||||||||
Investments fair value | € | € 30 |
Marketable Securities and Str_8
Marketable Securities and Strategic Investments - Summary of the Company's marketable securities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable Securities and Strategic Investments | |||
Amortized Cost Basis | $ 101,391 | $ 63,923 | |
Unrealized Gains | 7 | ||
Unrealized Losses | (96) | (15) | |
Fair Value | 101,295 | 63,915 | $ 0 |
Corporate debt securities | |||
Marketable Securities and Strategic Investments | |||
Amortized Cost Basis | 48,100 | 52,242 | |
Unrealized Gains | 7 | ||
Unrealized Losses | (39) | ||
Fair Value | 48,061 | 52,249 | |
Government debt securities | |||
Marketable Securities and Strategic Investments | |||
Amortized Cost Basis | 53,291 | 11,681 | |
Unrealized Gains | |||
Unrealized Losses | (57) | (15) | |
Fair Value | $ 53,234 | $ 11,666 |
Balance Sheet Components - Ot_2
Balance Sheet Components - Other (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Balance Sheet Components | ||||||
Depreciation and amortization expense | $ 72,000 | $ 49,000 | $ 144,000 | $ 98,000 | $ 222,000 | $ 181,000 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of property and equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Components | |||
Property and equipment, gross | $ 2,328 | $ 2,267 | $ 1,705 |
Less accumulated depreciation and amortization | (921) | (778) | (585) |
Total Property and equipment, net | 1,407 | 1,489 | 1,120 |
Equipment | |||
Balance Sheet Components | |||
Property and equipment, gross | 1,745 | 1,712 | 1,207 |
Office furniture | |||
Balance Sheet Components | |||
Property and equipment, gross | 364 | 364 | 305 |
Leasehold Improvements | |||
Balance Sheet Components | |||
Property and equipment, gross | 197 | $ 191 | 177 |
Construction in progress | |||
Balance Sheet Components | |||
Property and equipment, gross | $ 22 | $ 16 |
Balance Sheet Components - Sc_4
Balance Sheet Components - Schedule of accrued expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Components | |||
Accrued compensation | $ 1,954 | $ 2,480 | $ 1,319 |
Deferred offering and merger costs | 100 | ||
Deferred lease liability | 45 | ||
Clinical trial accruals | 895 | 1,003 | 39 |
Other accrued expenses | 977 | 1,893 | 531 |
Total accrued expenses | $ 3,826 | $ 5,376 | $ 2,034 |
Warrants - Other (Details)_2
Warrants - Other (Details) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | |
Jan. 26, 2023 USD ($) employee shares | Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Warrants | |||
Additional expense on amendment | $ | $ 0.8 | ||
Warrants outstanding (in shares) | 1,966,808 | 3,077,074 | |
Price per share (in dollars per share) | $ / shares | $ 11.50 | ||
HSAC2 | |||
Warrants | |||
Insider shares subject to lock up period | 4,000,000 | ||
Private shares subject to lock up period | 450,000 | ||
Share lock up period | 12 months | ||
Number of warrants issued | 750,000 | ||
Number of employees and directors, warrants issued | employee | 11 | ||
HSAC2 | Minimum | |||
Warrants | |||
Warrants exercisable term | 24 months | ||
Share lock up period | 6 months | ||
HSAC2 | Maximum | |||
Warrants | |||
Warrants exercisable term | 36 months | ||
Share lock up period | 12 months | ||
Private Warrants Held by Sponsor | |||
Warrants | |||
Warrants outstanding (in shares) | 1,500,000 | 750,000 | 1,500,000 |
Price per share (in dollars per share) | $ / shares | $ 11.50 | ||
Warrants exercisable term | 30 days | ||
Warrants expiry term | 5 years | ||
Private Warrants Held by Sponsor | Minimum | |||
Warrants | |||
Warrants expiry term | 4 years 6 months 25 days | ||
Private Warrants Held by Sponsor | Maximum | |||
Warrants | |||
Warrants expiry term | 4 years 9 months 25 days | ||
Private Warrants Held by Sponsor | HSAC2 | |||
Warrants | |||
Warrants outstanding (in shares) | 1,500,000 | ||
Sponsor warrant forfeiture (as percent) | 50% | ||
Number of warrants forfeiture by sponsor | 750,000 | ||
Consideration for forfeiture of warrants | $ | $ 0 | ||
Equity-classified Warrants | |||
Warrants | |||
Warrants outstanding (in shares) | 1,966,808 | 1,750,000 | |
Equity-classified Warrants | Minimum | |||
Warrants | |||
Price per share (in dollars per share) | $ / shares | $ 1.33 | ||
Warrants expiry term | 6 years 11 months 8 days | ||
Equity-classified Warrants | Maximum | |||
Warrants | |||
Price per share (in dollars per share) | $ / shares | $ 4.06 | ||
Warrants expiry term | 9 years 6 months |
Warrants - Valuation models f_2
Warrants - Valuation models for Warrants (Details) $ in Millions | Jan. 26, 2023 USD ($) Y $ / shares | Dec. 31, 2022 USD ($) Y $ / shares | Jun. 30, 2022 $ / shares Y | Dec. 31, 2021 $ / shares Y |
Warrants | ||||
Warrant liability, Fair value | $ | $ 2.4 | $ 2.1 | ||
Expected volatility | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 0.44 | 0.45 | 0.45 | 0.44 |
Expected volatility | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 0.49 | 0.47 | 0.54 | 0.55 |
Risk-free interest rate | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 0.0360 | 0.0400 | 0.0260 | 0.0027 |
Risk-free interest rate | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 0.0480 | 0.0430 | 0.0300 | 0.0111 |
Remaining Term (in Years) | Minimum | ||||
Warrants | ||||
Warrants, measurement input | Y | 0.35 | 0.14 | 0.92 | 1.41 |
Remaining Term (in Years) | Maximum | ||||
Warrants | ||||
Warrants, measurement input | Y | 5 | 5.07 | 5.38 | 7.94 |
Stock price | ||||
Warrants | ||||
Warrants, measurement input | 10.63 | 9.18 | ||
Expected dividend yield | ||||
Warrants | ||||
Warrants, measurement input | 0 | 0 | 0 | 0 |
Common Stock | Stock price | ||||
Warrants | ||||
Warrants, measurement input | 9.72 | 3.35 | ||
Preferred Stock | Stock price | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 5.38 | |||
Preferred Stock | Stock price | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 7.35 | |||
Commons Warrants | Exercise price | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 1.08 | 1.08 | 1.08 | 1.08 |
Commons Warrants | Exercise price | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 30.11 | 30.11 | 30.11 | 30.11 |
Preferred Warrants | Exercise price | Minimum | ||||
Warrants | ||||
Warrants, measurement input | 19.35 | |||
Preferred Warrants | Exercise price | Maximum | ||||
Warrants | ||||
Warrants, measurement input | 32.26 |
Warrants - Assumed Legacy Orc_2
Warrants - Assumed Legacy Orchestra Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Warrants | ||||||
Warrants beginning balance (Number) | 3,077,074 | 3,077,074 | ||||
Warrants closing balance | 1,966,808 | 3,077,074 | ||||
Warrants beginning balance (Amount) | $ 2,089 | $ 624 | $ 635 | $ 2,089 | $ 635 | $ 1,347 |
Warrants exercised (Amount) | (10) | (15) | (156) | (13) | ||
Reclassification of warrant liability upon exercise (Amount) | (171) | |||||
Forfeiture of warrants (Amount) | (38) | (38) | ||||
Issuance of warrants related to preferred stock financing (Amount) | 620 | |||||
Issuance of warrants related to Legacy Orchestra preferred stock financing (Amount) | 620 | |||||
Amendments of existing warrants (Amount) | 810 | 810 | ||||
Other (Amount) | (335) | (345) | ||||
Change in the fair value of warrants (Amounts) | 294 | 243 | 145 | 578 | (699) | |
Warrants reclassified to equity | $ (2,373) | |||||
Warrants closing balance | $ 1,909 | $ 624 | $ 2,089 | $ 635 | ||
Legacy Orchestra Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 250,000 | 250,000 | ||||
Warrants closing balance | 250,000 | |||||
Preferred Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 206,997 | 206,997 | 206,997 | 206,997 | ||
Amendments of existing warrants | (206,997) | (206,997) | ||||
Warrants closing balance | 206,997 | 206,997 | ||||
Commons Warrants | ||||||
Warrants | ||||||
Warrants beginning balance (Number) | 1,327,074 | 1,120,575 | 1,189,162 | 1,327,074 | 1,189,162 | 1,192,650 |
Exercise of warrants | (1,163) | (4,650) | (68,587) | (3,488) | ||
Reclassification of warrant liability upon exercise | (73,238) | |||||
Forfeiture of warrants | (4,650) | (4,650) | ||||
Issuance of warrants related to preferred stock financing | 159,965 | |||||
Issuance of warrants related to Legacy Orchestra preferred stock financing | 159,965 | |||||
Amendments of existing warrants | 206,997 | 206,997 | ||||
Other | (150,000) | (151,162) | ||||
Warrants reclassified to equity | (1,325,911) | |||||
Warrants closing balance | 1,328,237 | 1,120,575 | 1,327,074 | 1,189,162 |
Stock-Based Compensation - Ot_2
Stock-Based Compensation - Other (Details) - Legacy Orchestra - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
2018 Plan | ||
Stock-Based Compensation | ||
Number of shares authorized | 5,200,000 | 5,200,000 |
2018 Plan | Maximum | ||
Stock-Based Compensation | ||
Expiration period (in years) | 10 years | 10 years |
Vesting period (in years) | 3 years | 3 years |
2023 Plan | ||
Stock-Based Compensation | ||
Number of shares authorized | 3,561,678 | |
Percentage of shares outstanding | 4.80% | |
Shares available for future issuance | 3,036,722 |
Stock-Based Compensation - Sc_5
Stock-Based Compensation - Schedule of cost related to stock-based compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation | ||||||
Unrecognized stock-based compensation expense for options | $ 6,600,000 | $ 6,600,000 | $ 7,200,000 | |||
Stock option | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 961,000 | $ 143,000 | $ 2,184,000 | $ 198,000 | $ 3,102,000 | $ 171,000 |
Expected period to be recognized | 3 years | 3 years | ||||
Stock option | 2023 Plan | Legacy Orchestra | Research and development | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 330,000 | 52,000 | $ 815,000 | 91,000 | $ 398,000 | 83,000 |
Stock option | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 631,000 | 91,000 | 1,369,000 | 107,000 | 2,704,000 | 88,000 |
Restricted Stock | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 498,000 | 76,000 | 547,000 | 91,000 | 273,000 | 131,000 |
Unrecognized stock-based compensation expense for options | 312,000 | $ 312,000 | $ 408,000 | |||
Expected period to be recognized | 3 years | 3 years | ||||
Restricted Stock | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 498,000 | $ 76,000 | $ 547,000 | $ 91,000 | $ 273,000 | $ 131,000 |
Warrant | 2023 Plan | Legacy Orchestra | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 248,000 | 465,000 | ||||
Unrecognized stock-based compensation expense for options | 2,800,000 | $ 2,800,000 | ||||
Expected period to be recognized | 3 years | |||||
Warrant | 2023 Plan | Legacy Orchestra | Research and development | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | 120,000 | $ 207,000 | ||||
Warrant | 2023 Plan | Legacy Orchestra | Selling, general and administrative | ||||||
Stock-Based Compensation | ||||||
Total stock-based compensation | $ 128,000 | $ 258,000 |
Stock-Based Compensation - Sc_6
Stock-Based Compensation - Schedule of stock option activity (Details) - 2018 and 2023 Plan - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 3,658,828 | 1,348,464 | |
Restricted Stock Outstanding, Granted | 323,175 | 2,357,807 | |
Exercise of stock options (in shares) | 17,825 | 27,848 | |
Restricted Stock Outstanding, Forfeited/canceled | 142,256 | 19,595 | |
Restricted Stock Outstanding, Ending | 3,821,922 | 3,658,828 | 1,348,464 |
Shares Underlying Options, Exercisable | 2,163,768 | 1,806,093 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 7.56 | $ 4.47 | |
Weighted Average Exercise Price, Granted | 9.89 | 9.33 | |
Weighted Average Exercise Price, Exercised | 4.16 | 4.32 | |
Weighted Average Exercise Price, Forfeited/canceled | 5.35 | 4.67 | |
Weighted Average Exercise Price, Outstanding June 30, 2023 | 7.97 | 7.56 | $ 4.47 |
Weighted Average Exercise Price, Exercisable at June 30, 2023 | $ 6.60 | $ 5.78 | |
Weighted Average Remaining Term (years) and Aggregate Intrinsic Value | |||
Weighted Average Remaining Term (years), Outstanding January 1, 2022 | 5 years 3 months 21 days | 8 years 4 months 6 days | 7 years 1 month 17 days |
Weighted Average Remaining Term (years), Exercisable at December 31, 2022 | 7 years 1 month 2 days | 6 years 8 months 19 days | |
Aggregate Intrinsic Value Outstanding | $ 4,002 | $ 8,277 | |
Aggregate Intrinsic Value, Exercisable at December 31, 2022 | $ 3,412 | $ 6,815 | |
Previously Reported | |||
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 7,868,448 | ||
Restricted Stock Outstanding, Ending | 7,868,448 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 3.51 | ||
Weighted Average Exercise Price, Outstanding June 30, 2023 | $ 3.51 | ||
Weighted Average Remaining Term (years) and Aggregate Intrinsic Value | |||
Weighted Average Remaining Term (years), Outstanding January 1, 2022 | 8 years 4 months 6 days | ||
Retroactive application of Reverse Recapitalization | |||
Shares Underlying Options | |||
Restricted Stock Outstanding, Beginning | 4,209,620 | ||
Restricted Stock Outstanding, Ending | 4,209,620 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning at January 1, 2023 | $ 4.05 | ||
Weighted Average Exercise Price, Outstanding June 30, 2023 | $ 4.05 |
Stock-Based Compensation - Sc_7
Stock-Based Compensation - Schedule of restricted stock activity (Details) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Stock Outstanding | |||
Shares Underlying Options Outstanding, Beginning at January 1, 2023 | 158,589 | 21,907 | |
Shares Underlying Options, Granted | 0 | 182,962 | |
Vested | 63,451 | 46,280 | 46,281 |
Forfeited/canceled | 45,901 | 0 | |
Shares Underlying Options, Outstanding June 30, 2023 | 49,237 | 158,589 | 21,907 |
Granted, weighted-average grant date fair value | $ 3.61 | ||
Weighted Average Remaining Term (years) | 8 years 8 months 1 day | 9 years 1 month 20 days | 7 years 7 months 6 days |
Weighted Average Remaining Term (years) | 9 years 1 month 24 days | ||
Aggregate Intrinsic Value | $ 549 | $ 980 | |
Restricted Stock Vested, weighted-average grant date fair | $ 3.52 | $ 3.12 |
Stock-Based Compensation - Sc_8
Stock-Based Compensation - Schedule of estimated grant-date fair value calculated using Black-Scholes option pricing model (Details) - Stock option - $ / shares | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation | ||||
Expected term | 6 years | 6 years | 6 years | 6 years |
Expected volatility | 50% | 49% | 50% | 60% |
Risk-free interest rate | 3.60% | 2.70% | 3.01% | 0.99% |
Expected dividend yield | 0% | 0% | 0% | 0% |
Fair value of common stock | $ 9.63 | $ 4.06 | $ 9.72 | $ 4.71 |
Leases - Other (Details)_2
Leases - Other (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
May 31, 2022 USD ($) | Jan. 31, 2020 USD ($) | Nov. 30, 2019 USD ($) ft² | Aug. 31, 2019 USD ($) ft² | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Leases | ||||||||||
Lease space | ft² | 5,200 | 8,052 | ||||||||
Rent lease expense | $ 209,000 | $ 180,000 | $ 417,000 | $ 354,000 | $ 735,000 | $ 697,000 | ||||
Cash paid for operating lease liabilities | 410,000 | $ 354,000 | $ 702,000 | |||||||
Lease liabilities | $ 2,039,000 | $ 2,039,000 | 2,380,000 | |||||||
ASU 2016-02 | ||||||||||
Leases | ||||||||||
Operating lease liabilities | 2,600,000 | |||||||||
Lease liabilities | $ 2,900,000 | |||||||||
Minimum | ||||||||||
Leases | ||||||||||
Monthly rent expense | $ 7,000 | $ 12,000 | $ 28,000 | $ 9,000 | ||||||
Maximum | ||||||||||
Leases | ||||||||||
Monthly rent expense | $ 23,000 | $ 17,000 | $ 30,000 | $ 19,000 |
Leases - Schedule of recogniz_2
Leases - Schedule of recognized as an asset and operating lease liabilities (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted average remaining lease term - operating leases, in years | 3 years 8 months 23 days | 4 years 21 days |
Weighted average discount rate - operating leases | 6.25% | 6.25% |
Leases - Schedule of future m_2
Leases - Schedule of future minimum rental payments, exclusive of taxes, insurance and other costs, under the leases (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Operating Lease Maturity | ||
2023 | $ 727 | $ 823 |
2024 | 352 | 727 |
2025 | 352 | 352 |
2026 | 352 | 352 |
2027 | 352 | |
Thereafter | 88 | |
Thereafter | 88 | |
2023 (remaining six months) | 413 | |
Total future minimum lease payments | 2,284 | 2,694 |
Imputed interest | (245) | (314) |
Total liability | $ 2,039 | $ 2,380 |
Income Taxes - Components of th
Income Taxes - Components of the deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | ||
Net operating loss carryovers - Federal | $ 22,798 | $ 19,936 |
Net operating loss carryovers - State | 4,811 | 5,640 |
Unrealized loss on equity securities | 2,913 | 2,415 |
Research and development credits | 3,149 | 2,300 |
Loss on impairment of strategic investments | 1,177 | 1,449 |
Research and experimental costs | 4,973 | |
Other | 1,478 | 552 |
Lease liability | 629 | |
Deferred revenue | 5,166 | 5,353 |
Total deferred tax assets | 47,094 | 37,645 |
Less: valuation allowance | (46,457) | (37,630) |
Total deferred tax assets | 637 | 15 |
Deferred tax liabilities | ||
Right-of-use asset | (578) | |
Depreciation and amortization | (59) | (15) |
Total deferred tax liabilities | $ (637) | $ (15) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the statutory federal income tax to the Company's effective tax (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of the statutory federal income tax to the Company's effective tax | ||
Income tax benefit at federal statutory rate | 21% | 21% |
State and local income tax (net of Federal benefit) | 4.80% | 7.20% |
Permanent items | (0.90%) | 0.60% |
Research and development credits | 3.10% | 1.90% |
Research and development, uncertain tax positions | (0.60%) | (0.40%) |
Change in valuation allowance | (26.20%) | (31.20%) |
Effect of rate changes | (1.20%) | |
True-ups | 0.90% |
Income Taxes - Gross unrecogniz
Income Taxes - Gross unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in unrecognized tax benefits | ||
Unrecognized tax benefits at the beginning of the period | $ 572 | $ 481 |
Additions due to current year activity | 203 | 111 |
Other reductions | (20) | |
Unrecognized tax benefits at the end of the period | $ 775 | $ 572 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Increase from change in the valuation allowance | $ 8,800,000 | $ 7,200,000 |
Federal research and development tax credits | $ 3,149,000 | $ 2,300,000 |
Percentage of taxable income limitation on an annual basis | 80% | |
Maximum percentage of cumulative change in the ownership interest | 50% | |
Period considered for cumulative change in the ownership interest | 3 years | |
Deferred tax assets recognized for research and experimental activities | $ 5,000,000 | |
Percentage of valuation allowance on net deferred tax assets | 100% | 100% |
Unrecognized tax benefits, if recognized, would impact the Company's effective tax rate | $ 775,000 | $ 572,000 |
Interest accrued | 0 | 0 |
Penalties accrued | 0 | $ 0 |
Federal | ||
Income Taxes | ||
Gross NOL carryforwards | 108,600,000 | |
Federal research and development tax credits | $ 3,100,000 | |
Period of amortization of research and experimental activities | 5 years | |
State | ||
Income Taxes | ||
Gross NOL carryforwards | $ 88,000,000 | |
Foreign | ||
Income Taxes | ||
Period of amortization of research and experimental activities | 15 years |
Related Party Transactions (D_2
Related Party Transactions (Details) - USD ($) | 1 Months Ended | ||
Apr. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Vivasure | |||
Related Party Transaction | |||
Unsecured convertible redeemable notes | $ 208,000 | $ 213,000 | $ 183,000 |
Debt Financing (Details)
Debt Financing (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 USD ($) tranche $ / shares shares | Dec. 31, 2019 USD ($) tranche | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Financing | |||||||||
Outstanding principal amount of the loans converted into common stock | $ 178,000 | $ 178,000 | |||||||
Warrants outstanding (in shares) | shares | 1,966,808 | 1,966,808 | 3,077,074 | ||||||
Loss on extinguishment | $ (682,000) | (682,000) | $ (682,000) | ||||||
Interest expense | $ 457,000 | 257,000 | $ 897,000 | 493,000 | |||||
Fund I and II warrants | |||||||||
Debt Financing | |||||||||
Opportunities Fund I and II warrants | $ 100,000 | 100,000 | 100,000 | ||||||
Estimated fair value of the warrants | 178,000 | 178,000 | 178,000 | ||||||
Other financing cost | 405,000 | 405,000 | 405,000 | ||||||
2022 Loan and Security Agreement | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | ||||||
Number of tranches | tranche | 2 | ||||||||
Outstanding principal amount of the loans converted into common stock | $ 5,000,000 | ||||||||
Conversion price | $ / shares | $ 12 | $ 12 | $ 12 | ||||||
Conversion option not exercisable term | 6 months | ||||||||
Interest rate | 14.70% | 14.70% | 13.45% | 13.45% | |||||
Repayment terms of the loan | 4 years | ||||||||
Repayment of interest only term | 2 years | ||||||||
Repayment of principal | $ 417,000 | ||||||||
Percentage of initial commitment amount | 4.25% | ||||||||
Initial commitment amount | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | ||||||
2022 Loan and Security Agreement | Prime rate | |||||||||
Debt Financing | |||||||||
Interest rate variable (as a percent) | 6.45% | ||||||||
Tranche One | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | $ 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Tranche Two | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Tranche Three | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | 30,000,000 | 30,000,000 | 30,000,000 | ||||||
2019 Loan and Security Agreement | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | $ 10,000,000 | ||||||||
Number of tranches | tranche | 2 | ||||||||
Estimated fair value of the warrants | $ 544,000 | $ 544,000 | $ 544,000 | 544,000 | |||||
Warrants outstanding (in shares) | shares | 0 | 0 | 0 | ||||||
Loss on extinguishment | $ 682,000 | ||||||||
Percentage of amount drawn | 2% | 2% | |||||||
Share price | $ / shares | $ 1.33 | $ 1.33 | $ 1.33 | $ 1.33 | |||||
Warrants Issued | $ 150,000 | 150,000 | |||||||
Interest rate stated (as a percent) | 6.25% | ||||||||
Percentage of original aggregate principal amount | 8.25% | 8.25% | |||||||
Interest expense | $ 711,000 | ||||||||
2019 Loan and Security Agreement | Maximum | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | $ 20,000,000 | ||||||||
Interest rate variable (as a percent) | 1% | ||||||||
Interest rate stated (as a percent) | 6.25% | 6.25% | 6.25% | ||||||
2019 Loan and Security Agreement | Prime rate | Maximum | |||||||||
Debt Financing | |||||||||
Interest rate variable (as a percent) | 1% | ||||||||
First Tranche | |||||||||
Debt Financing | |||||||||
Debt instrument, face value | $ 10,000,000 |
Debt Financing - Schedule of _2
Debt Financing - Schedule of amount of principal payments (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Maturity | ||
2024 | $ 2,500 | $ 2,500 |
2025 | 5,000 | 5,000 |
2026 | 2,500 | 2,500 |
Total | $ 10,000 | $ 10,000 |
Subsequent Events (Details)_2
Subsequent Events (Details) | 6 Months Ended | 12 Months Ended | |||||
Oct. 06, 2023 USD ($) $ / shares shares | Apr. 12, 2023 shares | Jan. 26, 2023 USD ($) D employee $ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | |
Subsequent Events | |||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Warrants outstanding (in shares) | 1,966,808 | 3,077,074 | |||||
Repayment of principal | $ | $ 6,446,000 | $ 6,446,000 | $ 4,000,000 | ||||
Exercise Price | $ / shares | $ 11.50 | ||||||
Subsequent events | 2022 Loan and Security Agreement | |||||||
Subsequent Events | |||||||
Repayment of principal | $ | $ 10,000,000 | ||||||
Number of shares of common stock called by warrants issued | 27,707 | ||||||
Exercise Price | $ / shares | $ 7.67 | ||||||
Cash payment due with respect to certain fees | $ | $ 212,500 | ||||||
Payment of net interest, prepayment fees, and legal fees | $ | $ 849,000 | ||||||
HSAC 2 Holdings, LLC | |||||||
Subsequent Events | |||||||
Sponsor share forfeiture (as percent) | 25% | ||||||
Number of shares forfeiture by sponsor | 1,000,000 | ||||||
Insider shares subject to lock up period | 4,000,000 | ||||||
Private shares subject to lock up period | 450,000 | ||||||
Share lock up period | 12 months | ||||||
Number of warrants issued | 750,000 | ||||||
Number of employees and directors, warrants issued | employee | 11 | ||||||
Number of shares issuable as earnout consideration | 500,000 | ||||||
HSAC 2 Holdings, LLC | Subsequent events | |||||||
Subsequent Events | |||||||
Sponsor share forfeiture (as percent) | 25% | ||||||
Number of shares forfeiture by sponsor | 1,000,000 | ||||||
Insider shares subject to lock up period | 4,000,000 | ||||||
Private shares subject to lock up period | 450,000 | ||||||
Share lock up period | 12 months | ||||||
Sponsor warrant forfeiture (as percent) | 50% | ||||||
Number of warrants issued | 750,000 | ||||||
Number of employees and directors, warrants issued | employee | 11 | ||||||
Percent of shareholders elected to participate in earnout | 91% | ||||||
HSAC 2 Holdings, LLC | Minimum | |||||||
Subsequent Events | |||||||
Warrants exercisable term | 24 months | ||||||
HSAC 2 Holdings, LLC | Minimum | Subsequent events | |||||||
Subsequent Events | |||||||
Share lock up period | 6 months | ||||||
Warrants exercisable term | 24 months | ||||||
HSAC 2 Holdings, LLC | Maximum | |||||||
Subsequent Events | |||||||
Warrants exercisable term | 36 months | ||||||
HSAC 2 Holdings, LLC | Maximum | Subsequent events | |||||||
Subsequent Events | |||||||
Share lock up period | 12 months | ||||||
Warrants exercisable term | 36 months | ||||||
Number of shares issuable as earnout consideration | 8,000,000 | ||||||
HSAC 2 Holdings, LLC | Private warrants | |||||||
Subsequent Events | |||||||
Sponsor warrant forfeiture (as percent) | 50% | ||||||
Warrants outstanding (in shares) | 1,500,000 | ||||||
Consideration for forfeiture of warrants | $ | $ 0 | ||||||
HSAC 2 Holdings, LLC | Private warrants | Subsequent events | |||||||
Subsequent Events | |||||||
Warrants outstanding (in shares) | 1,500,000 | ||||||
Number of warrants issued | 750,000 | ||||||
Consideration for forfeiture of warrants | $ | $ 0 | ||||||
HSAC 2 Holdings, LLC | Initial milestone event | |||||||
Subsequent Events | |||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 15 | ||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||
HSAC 2 Holdings, LLC | Initial milestone event | Subsequent events | |||||||
Subsequent Events | |||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 15 | ||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||
Number of shares issuable as earnout consideration | 4,000,000 | ||||||
HSAC 2 Holdings, LLC | Final milestone event | |||||||
Subsequent Events | |||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 20 | ||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||
HSAC 2 Holdings, LLC | Final milestone event | Subsequent events | |||||||
Subsequent Events | |||||||
Number of shares forfeiture by sponsor | 500,000 | ||||||
Sponsor share forfeiture, stock price trigger | $ / shares | $ 20 | ||||||
Sponsor share forfeiture, threshold trading days | D | 20 | ||||||
Sponsor share forfeiture, threshold consecutive trading days | D | 30 | ||||||
Number of shares issuable as earnout consideration | 4,000,000 | ||||||
HSAC2 | |||||||
Subsequent Events | |||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
HSAC2 | Subsequent events | |||||||
Subsequent Events | |||||||
Number of shares issued in Business combination | $ / shares | 0.465 | ||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | ||||||
HSAC2 | Orchestra common stock | Subsequent events | |||||||
Subsequent Events | |||||||
Number of new shares issued for each existing shareholder | 20,191,338 | ||||||
Number of new shares reserved for issuance of options and warrants | 5,523,834 |