NEW HOPE, Pa. and NEW YORK, July 05, 2022 (GLOBE NEWSWIRE) — Orchestra BioMed, Inc., a biomedical company accelerating high-impact technologies to patients through risk-reward sharing partnerships, and Health Sciences Acquisitions Corporation 2 today announced multiple significant transactions including:
- A global strategic collaboration between Orchestra BioMed and Medtronic to develop Orchestra BioMed BackBeat Cardiac Neuromodulation Therapy™ (CNT™) as a potential treatment for hypertension in patients who are indicated for a cardiac pacemaker.
- The closing of Orchestra BioMed’s $110 million Series D financing, including investments by Medtronic, funds managed by RTW Investments, LP (“RTW”), Perceptive Advisors, Terumo Corporation (“Terumo”), SternAegis Ventures and other investors. The Series D financing was not contingent on the consummation of the Business Combination.
- A definitive Business Combination agreement between Orchestra BioMed and HSAC2, which is structured to provide a minimum of $70 million in gross proceeds to the combined company at closing, and up to $160 million in the event of no redemptions by HSAC2 shareholders. The Business Combination agreement includes $20 million in total forward purchase agreements from Medtronic and RTW (an affiliate of HSAC2’s sponsor and a leading life sciences investment firm), as well as an up to $50 million trust backstop agreement with RTW. The combined company is expected to have a fully diluted pro forma market cap of $407 million assuming no redemptions and $317 million assuming the minimum gross cash condition is met. The combined company’s pro forma fully diluted enterprise value is expected to be $158 million. Upon closing of the transaction, the combined company will be named Orchestra BioMed Holdings, Inc. (“Orchestra BioMed Holdings” or the “Company”) and will be led by David Hochman, Chairman, Chief Executive Officer, and Co-founder of Orchestra BioMed. The common stock of the combined company will be listed on Nasdaq under the ticker symbol “OBIO”.
- On a pro forma basis, Orchestra BioMed Holdings is expected to receive a minimum of $180 million in gross proceeds from the Business Combination and Series D financing. Assuming the minimum pro forma cash balance, the combined company is expected to have sufficient capital to fund operations into 2026 based on current plans and estimates.
“These significant transactions further validate the potential of Orchestra BioMed’s flagship development programs and our novel partnership-enabled business model. As the global leader in advanced cardiac pacing therapies, Medtronic is the ideal company to help us develop BackBeat CNT for the treatment of hypertension, which is remarkably common and drives significant health risk in the pacemaker population,” said David Hochman, Chairman, CEO and Co-Founder of Orchestra BioMed. “This new collaboration along with our established strategic partnership with Terumo for the development and commercialization of Virtue® Sirolimus AngioInfusion™ Balloon (SAB) for the treatment of artery disease exemplify our commitment to developing potential high-impact medical innovations with global medical technology leaders. The capital proceeds from our Series D financing and planned Business Combination provide Orchestra BioMed with a substantial financial runway and position us to achieve major milestones.”
“RTW is proud to lead these transactions, which we believe will enable Orchestra BioMed to further advance its BackBeat CNT and Virtue SAB programs. A recent double-blind, randomized pilot study published in the Journal of the American Heart Association (JAHA)1 showed that BackBeat CNT drove statistically significant and clinically meaningful reductions in blood pressure in its target patient population. These data support Orchestra BioMed’s plans to further investigate the potential for this therapy via a global pivotal study in collaboration with Medtronic,” said Roderick Wong, M.D., Managing Partner and Chief Investment Officer of RTW Investments, LP. “With two partnered programs expected to commence pivotal trials in 2023, we believe Orchestra BioMed is poised for success.”
About BackBeat CNT and the Strategic Collaboration with Medtronic
BackBeat CNT is an investigational bioelectronic treatment designed to lower blood pressure. It is compatible with standard pacemakers and has been evaluated in pilot studies in patients with hypertension who also are indicated for pacemakers. It is estimated that more than 70% of the approximately 1.1 million people globally who are implanted with cardiac pacemakers each year are also diagnosed with hypertension2.
The recent peer-reviewed, double-blind, randomized pilot study, MODERATO II, showed that patients treated with the BackBeat CNT experienced net reductions of 8.1 mmHg in 24-hour ambulatory systolic blood pressure (aSBP) and 12.3 mmHg in office systolic blood pressure (oSBP) when compared to control patients at six months. Orchestra BioMed plans to conduct a global pivotal trial to further evaluate the safety and efficacy of the BackBeat CNT in lowering blood pressure in a similar target population of patients who have been indicated for, and recently received, a cardiac pacemaker implant. The strategic collaboration with Medtronic will provide Orchestra BioMed with development, clinical, and regulatory support for this planned multi-national study. Upon regulatory approval, Medtronic will have the global rights to commercialize BackBeat CNT-enabled pacing systems for this target population. Orchestra BioMed will share in the revenues generated from Medtronic sales of the BackBeat CNT-enabled pacing systems.
About Virtue SAB and the Strategic Collaboration with Terumo
Virtue SAB is a patented drug/device combination product candidate in development for the treatment of certain forms of artery disease that is designed to deliver a proprietary, investigational, extended-release formulation of sirolimus, SirolimusEFR™, to the vessel wall during balloon angioplasty without any coating on the balloon surface or the need to leave a stent or other permanent implant in the artery. Virtue SAB demonstrated positive three-year clinical data in coronary in-stent restenosis (ISR) in the SABRE trial, a multi-center prospective, independent core lab-adjudicated clinical trial of 50 patients conducted in Europe. Virtue SAB has been granted Breakthrough Device designation by the U.S. Food and Drug Administration (“FDA”) for specific indications relating to coronary ISR, coronary small vessel disease and peripheral artery disease below-the-knee.
Under the terms of their collaboration agreement, Orchestra BioMed and Terumo plan to execute a global clinical program in an effort to gain regulatory approval for commercial sale of Virtue SAB in multiple markets and indications. Terumo made an upfront payment of $30 million to Orchestra BioMed and Terumo will potentially make additional future clinical and regulatory milestone payments. Orchestra BioMed will share meaningfully in future commercial revenues of Virtue SAB through royalties and per unit payments as the exclusive supplier of SirolimusEFR. Orchestra BioMed retains the rights to develop and license SirolimusEFR and other technologies used in Virtue SAB for clinical applications outside of coronary and peripheral vascular interventions.
About the Series D Financing
Gross proceeds from Orchestra BioMed’s completed Series D financing totaled $110 million, including a $40 million investment from Medtronic, a $20 million investment from RTW, and investments from other existing shareholders of Orchestra BioMed including Perceptive Advisors, Terumo Corporation, SternAegis Ventures and others. The Series D financing was not contingent on the consummation of the Business Combination.
Orchestra BioMed, subject to certain conditions, has further access to up to $40 million in term debt from the Avenue Venture Opportunities Fund, an affiliate of the Avenue Capital Group.
About the Business Combination
The Business Combination is expected to close in the fourth quarter of 2022. With the Series D financing proceeds already received by Orchestra BioMed, upon closing of the Business Combination, Orchestra BioMed Holdings expects to have sufficient cash to fund business operations into 2026 based on current plans and estimates. Funding will be used to support Orchestra BioMed Holdings’ business operations including planned pivotal trials for BackBeat CNT and Virtue SAB, which are scheduled to initiate in 2023. The Company also plans to identify additional promising therapeutic device innovations for potential strategic addition(s) to the Company’s product development pipeline that can be optimized using its partnership-based business model.
To ensure there is a minimum of $70 million in the HSAC2 trust account at the time of closing to fund the Company, Medtronic and RTW are each committing $10 million to the trust account through support agreements, and RTW is providing up to $50 million to backstop potential redemptions. Assuming no redemptions are made, an additional $90 million may be available from HSAC2’s trust account, providing maximum gross proceeds from the Business Combination and Series D transactions of $270 million to help fund the business.
The boards of directors of both HSAC2 and Orchestra BioMed have unanimously approved the proposed transaction, which is subject to approval by HSAC2 and Orchestra BioMed’s stockholders and the satisfaction or waiver of certain other customary closing conditions.
Upon closing, HSAC2’s current board of directors will resign and be replaced by Orchestra BioMed’s current board of directors.
The description of the Business Combination contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the Business Combination, a copy of which will be filed by HSAC2 with the Securities and Exchange Commission (“SEC”) as an exhibit to a Current Report on Form 8-K, which can be accessed through the SEC’s website at www.sec.gov.
Advisors
Jefferies LLC and Piper Sandler & Co. acted as Joint Lead Placement Agents for the Series D Financing and Aegis Capital acted as Selling Agent. Jefferies LLC is acting as lead financial advisor and a capital markets advisor to Orchestra BioMed in relation to the proposed Business Combination. Piper Sandler & Co. acted as strategic advisor to Orchestra BioMed with respect to the strategic collaboration with Medtronic and is acting as a capital markets advisor to Orchestra BioMed in relation to the proposed Business Combination.
Chardan Capital Markets LLC and Barclays Capital Inc. are serving as financial and capital markets advisors to HSAC2 in relation to the proposed Business Combination.
Paul Hastings LLP is serving as legal counsel for Orchestra BioMed. Loeb & Loeb LLP is serving as legal counsel for HSAC2.
About Orchestra BioMed
Orchestra BioMed is a biomedical company with a business model designed to accelerate high-impact technologies to patients through risk-reward sharing partnerships. Orchestra BioMed’s partnership-enabled business model focuses on forging strategic collaborations with leading medical device companies to drive successful global commercialization of products it develops. Orchestra BioMed’s flagship product candidates include BackBeat Cardiac Neuromodulation Therapy™ for the treatment of hypertension, the leading risk factor for death worldwide, and Virtue® Sirolimus AngioInfusion™ Balloon (SAB) for the treatment of certain forms of artery disease, the leading cause of mortality worldwide. Orchestra BioMed has a strategic collaboration with Medtronic, one of the largest medical device companies in the world, for development and commercialization of BackBeat CNT for the treatment of hypertension in pacemaker-indicated patients, and a strategic partnership with Terumo Corporation, a global leader in medical technology, for development and commercialization of Virtue SAB for the treatment of artery disease. Orchestra BioMed has additional product candidates and plans to potentially expand its product pipeline through acquisitions, strategic collaborations, licensing, and organic development.
About HSAC2
Health Sciences Acquisitions Corporation 2 is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The sponsor of HSAC2 is HSAC 2 Holdings, LLC, an affiliate of RTW Investments, LP.
About RTW Investments, LP
RTW Investments, LP is a New York-based, global, full life-cycle investment firm that focuses on identifying transformational and disruptive innovations across the biopharmaceutical and medical technologies sectors. As a leading partner of industry and academia, RTW combines deep scientific expertise with a solution-oriented investment approach to advance emerging medical therapies by building and supporting the companies and/or academics developing them. For further information about RTW, please visit www.RTWfunds.com.
