OBIO US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

The following discussion should be read together with “Special Note Regarding Forward-Looking Statements” and the Company’s audited consolidated financial statements, together with the related notes thereto, included in Item 8 of this Annual Report on Form 10-K (the “Consolidated Financial Statements”). In addition to historical financial information, this discussion contains forward-looking statements based upon our current expectations that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements as a result of various factors, including those set forth under “Item 1A. Risk Factors” herein.

Overview

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

Our flagship product candidates are Atrioventricular Interval Modulation Therapy (“AVIM Therapy”) for the treatment of hypertension (“HTN”), the leading risk factor for death worldwide, and Virtue® Sirolimus AngioInfusionTM Balloon (“Virtue SAB”) for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide. We have an exclusive license and collaboration agreement with Medtronic Inc. (an affiliate of Medtronic plc) (“Medtronic”) for the development and commercialization of AVIM Therapy for the treatment of uncontrolled HTN in patients indicated for a cardiac pacemaker (as amended, the “Medtronic Agreement”). We are actively conducting a double-blind, randomized, global pivotal study (the “BACKBEAT study”), enrolling up to 500 patients with uncontrolled hypertension who are indicated for a Medtronic dual-chamber pacemaker, with enrollment completion currently planned for mid-2026. We recently initiated patient enrollments in the Virtue SAB in the Treatment of Coronary In-Stent Restenosis (“ISR”) Trial (the “Virtue Trial”) for our U.S. investigational device exemption (“IDE”) pivotal study randomizing Virtue SAB vs. Boston Scientific Corporation’s AGENTTM drug-coated balloon. Designed to support regulatory approval of Virtue SAB, the Virtue Trial is expected to enroll 740 patients in the United States with enrollment completion currently planned for mid-2027. We cannot provide assurance that we will be able to complete enrollment of the BACKBEAT study or the Virtue Trial in the timeframes we anticipate.

Since Orchestra BioMed, Inc.’s inception, we have devoted the substantial majority of our resources to performing research and development and clinical activities in support of our product development and collaboration efforts. We have funded our operations primarily through the issuance of common stock, convertible preferred stock, and warrants, as well as proceeds from the Business Combination, our prior Terumo Agreement and the Termination and ROFR Agreement, borrowings under debt arrangements, the sale of future revenues, and, to a lesser extent, from product revenue from our subsidiary, FreeHold Surgical, LLC. (“FreeHold”). As of December 31, 2025, we have raised a cumulative $356.5 million in gross proceeds. Future committed cash receipts expected in April 2026 include $20.0 million from the Medtronic Loan Agreement (as such term is defined in Note 16 to the Consolidated Financial Statements – “Debt Financing”), and an additional $15.0 million from Ligand pursuant to the Royalty Purchase Agreement. On January 9, 2026, we received $4.7 million pursuant to the sale of our Vivasure investment. We have incurred net losses each year since inception. Our net losses were $52.7 million and $61.0 million for the years ended December 31, 2025 and 2024, respectively. We expect to continue to incur significant losses for the foreseeable future. As of December 31, 2025, we had an accumulated deficit of $362.6 million.

​

134

Table of Contents

​

Orchestra BioMed, Inc., our wholly owned subsidiary, was incorporated in Delaware in 2017 and completed a recapitalization and mergers with Caliber Therapeutics, Inc., a Delaware corporation that has, among other things, the rights to the Virtue SAB product candidate and BackBeat Medical, Inc., a Delaware Corporation that has, among other things, the rights to the AVIM Therapy product candidate, in 2018. Orchestra BioMed, Inc. completed the conversions of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC, a Delaware limited liability company, and BackBeat Medical, Inc. to BackBeat Medical, LLC, a Delaware limited liability company, in 2019.

Recent Developments

On January 9, 2026, Haemonetics Corporation (“Haemonetics”), a global medical technology company focused on delivering innovative solutions designed to improve patient outcomes, announced its acquisition of Vivasure Medical Limited (“Vivasure”), a Galway, Ireland-based company pioneering next-generation technology for percutaneous vessel closure. Vivasure was a strategic holding of ours prior to its acquisition. In connection with the closing of the transaction, we can receive up to $10.7 million of proceeds in 2026 associated with the transaction. In January, we received the initial upfront payment of $4.7 million and the remainder may be received in 2026 based on the achievement of a milestone. We may receive additional proceeds in the future associated with revenue earnouts based on the achievement of certain milestones.

Components of Our Results of Operations

Partnership Revenue

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

Orchestra BioMed, Inc. entered into the Terumo Agreement in June 2019 and has determined that the arrangement represents a contract with a customer and is therefore in scope of ASC 606, Revenues from Contracts with Customers (“ASC 606”). Under the Terumo Agreement, Orchestra BioMed, Inc. received an upfront payment of $30.0 million in 2019 and an equity commitment of up to $5.0 million of which $2.5 million was invested in June 2019 as part of the Orchestra BioMed, Inc. Series B-1 financing and $2.5 million was invested in June 2022 as part of the Orchestra BioMed, Inc. Series D-2 financing.

We recorded the $30.0 million non-refundable, upfront payment received in 2019 from Terumo within deferred revenue and were recognizing the upfront payment over time based on a proportional performance model based on the costs incurred to date relative to the total costs expected to be incurred through the completion of the development of the Coronary ISR indication, for which we were primarily responsible.

On October 28, 2025, we entered into a termination and right of first refusal agreement (the “Termination and ROFR Agreement”) with Terumo with respect to Virtue SAB. The Termination and ROFR Agreement, which supersedes and terminates the Terumo Agreement, grants Terumo a right of first refusal (“ROFR”) to acquire the rights, or enter a distribution arrangement, with respect to Virtue SAB for the treatment of coronary artery disease, in exchange for an upfront payment of $10.0 million. In connection with the Termination and ROFR Agreement, on November 7, 2025, Terumo invested an additional $20.0 million in Orchestra BioMed through our Series A Preferred Stock, which is convertible into common stock in the future, subject to certain conditions, at a minimum of $12 per share. Pursuant to the terms of the Termination and ROFR Agreement, Orchestra BioMed, Inc. has no further performance obligations under the Terumo Agreement and therefore recognized the remaining amounts of deferred revenue. We recognized $30.0 million in cumulative partnership revenues from 2019 through December 31, 2025. In addition to recognizing the remainder of the deferred revenue, partnership revenue for the year ended December 31, 2025 included $10.0 million in consideration for the ROFR and $7.4 million associated with the premium above the fair market value of the Series A Preferred Stock.

​

135

Table of Contents

​

In June 2022, Orchestra BioMed, Inc. entered into the Medtronic Agreement for the development and commercialization of AVIM Therapy for the treatment of pacemaker-indicated patients with uncontrolled HTN despite the use of anti-hypertensive medications. On July 31, 2025, Orchestra BioMed, Inc., our wholly owned subsidiary BackBeat Medical, LLC, and Medtronic entered into an amendment to the Medtronic Agreement, which became effective on August 4, 2025 (the “Medtronic Agreement Amendment”), to provide, among other things, a development and commercialization framework for future AVIM-therapy integration into a dual-chamber leadless pacemaker. Pursuant to the Medtronic Agreement Amendment, we will be required, among other things, to reimburse Medtronic for certain expenses incurred in connection with the integration of AVIM-therapy into Medtronic’s dual-chamber leadless pacemaker, up to a specified cap.

We have determined that the arrangement is a collaboration within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). In addition, we concluded that Medtronic is a customer for a good or service that is a distinct unit of account, and therefore, the transactions in the Medtronic Agreement, as amended pursuant to the Medtronic Agreement Amendment (the “Amended Medtronic Agreement”), should be accounted for under ASC 606. Through December 31, 2025, there have been no amounts recognized as revenue under the Amended Medtronic Agreement.

Product Revenue

Product revenues related to sales of FreeHold’s intracorporeal organ retractors and such revenues are recognized at a point-in-time upon the shipment of the product to the customer given payment terms are typically 30 days. FreeHold products are currently only sold in the United States.

Cost of Product Revenue and Gross Margin

Cost of product revenue consists primarily of costs of finished goods components for use in FreeHold’s products and assembled, warehoused and inventoried by a third-party vendor. We expect the cost of finished goods product revenue to increase in absolute terms as our revenue grows.

Our gross margin has been, and will continue to be, affected by a variety of factors, including finished goods manufactured component parts, as well as the cost to assemble and warehouse the FreeHold product finished goods inventory.

Research and Development Expenses

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

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

136

Table of Contents

​

Selling, General and Administrative Expenses

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

Interest (Expense) Income, Net

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

On July 31, 2025, we entered into a revenue participation right purchase and sale agreement (the “Royalty Purchase Agreement”) with Ligand Pharmaceuticals Incorporated (“Ligand”). Under the terms of the Royalty Purchase Agreement, in exchange for payment of $35.0 million (the “Investment Amount”), less certain reimbursable expenses, Ligand acquired the right to receive tiered royalty payments from us (the “Royalty Interest”) with respect to revenue (including certain licensing revenue) received by us in a calendar year in connection with worldwide net product sales, or other product revenue received by, by us and our licensees (“Annual Net Sales”) of (a) AVIM Therapy (the “Primary Product”) and (b) Virtue SAB (the “Secondary Product” and together with the Primary Product, the “Products”) in the field of coronary artery treatment. At execution of the Royalty Purchase Agreement, our estimate of this total interest expense resulted in an effective annual interest rate of approximately 23.1%. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period. We will periodically assess the estimated amounts due and payable to Ligand and to the extent the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense. There are a number of factors that could materially affect the amount and timing of the royalty payments to be paid by us to Ligand and, correspondingly, the amount of interest expense recorded by us.

​

On November 6, 2024 (the “LSA Closing Date”), we and certain of our subsidiaries (collectively, the “Borrower”) entered into a Loan and Security Agreement, by and among the Borrower, the several banks and other financial institutions or entities party thereto, as lenders (collectively, the “Hercules Lenders”), and Hercules Capital, Inc. (“Hercules”), as administrative agent and collateral agent for itself and the Hercules Lenders, as amended by that certain First Amendment to Loan and Security Agreement dated as of December 30, 2024 ( “2024 LSA”). Prior to July 31, 2025, the 2024 LSA provided a secured term loan facility of up to $50.0 million available in up to four tranches (collectively, the “Term Loans”), with the first tranche of $15.0 million drawn on the LSA Closing Date, and a second and third tranche of up to an aggregate of $15.0 million available upon achievement of certain performance and financing milestones. Additionally, we had access to a fourth tranche of $20.0 million subject to future approval. On July 31, 2025, the Borrower, the Hercules Lenders and Hercules entered into the Second Amendment to the 2024 LSA, which, amended the 2024 LSA to, among other things, (i) delay the initial date upon which we must begin amortizing term loans under the 2024 LSA from (a) December 1, 2026 (with amortization payments delayed to as late December 1, 2027 if certain conditions were met) to (b) July 1, 2027 (with amortization payments delayed to as late as January 1, 2028 if certain conditions are met); (ii) increase by $15.0 million (from $20.0 million to $35.0 million) the amount that that may be borrowed by us in the discretion of the lender’s investment committee’s and (iii) eliminate our ability to draw up to $15.0 million if certain milestones are achieved. The Term Loan has a maturity date of November 6, 2028 and accrues interest at a floating per annum rate equal to the greater of (i) (x) the “prime rate” as reported in The Wall Street Journal plus (y) 2.0%, and (ii) 9.50%. Refer to Note 16 – “Debt Financing” to our Consolidated Financial Statements.

137

Table of Contents

​

Change in the fair value of derivative liability

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

Loss on Fair Value of Strategic Investments

The loss on fair value of strategic investments represents a change in the fair value of our investment in common stock holdings of a previously publicly-held company. The common stock held represented equity securities with a readily determinable fair value and were required to be measured at fair value at each reporting period using readily determinable pricing available on a securities exchange, in accordance with the provisions of ASU 2016-01.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table presents our statement of operations data for the years ended December 31, 2025 and 2024, and the dollar and percentage change between the two periods (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31, ​

​ ​ ​ ​ 2025 ​ 2024 ​ Change $ ​ Change % ​

Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​

Cost of product revenues ​ 190 ​ 204 ​ (14) ​ (7) %

Other (expense) income: ​ ​ ​ ​ ​ ​ ​ ​ ​

Change in the fair value of derivative liability ​ ​ 254 ​ ​ — ​ ​ 254 ​ ​ 100 %

Loss on fair value of strategic investments ​ — ​ (68) ​ 68 ​ 100 %

Other expense ​ — ​ ​ (11) ​ ​ 11 ​ ​ 100 %

​

​

138

Table of Contents

​

Partnership Revenue

Partnership revenue increased by $30.9 million, or approximately 1539%, to $32.9 million in the year ended December 31, 2025 from $2.0 million for the year ended December 31, 2024. Partnership revenue relates partially to the recognition of the combined performance obligation for the license granted to Terumo and the ongoing research and development services over the estimated performance period for the Virtue SAB coronary ISR indication, using a proportional performance model, based on the costs incurred relative to the total estimated costs of the research and development services. Partnership revenue primarily relates to our entering into the Termination and ROFR Agreement with Terumo on October 28, 2025, for which we received $30.0 million in exchange for providing a ROFR and issuing Series A Preferred Stock to Terumo. The Termination and ROFR Agreement superseded and terminated the Terumo Agreement, and we no longer have any performance obligations under the Terumo Agreement. In addition to recognizing the remainder of the deferred revenue, partnership revenue for the year ended December 31, 2025 included $10.0 million in consideration for the ROFR and $7.4 million associated with the premium above the fair market value of the Series A Preferred Stock.

Prior to the termination of the Terumo Agreement, as of each quarterly reporting date, we evaluated our estimates of the total costs expected to be incurred through the completion of the combined performance obligation and updated our estimates as necessary. For the year ended December, 31, 2025, the termination of the Terumo Agreement resulted in the conclusion of the related performance obligations and therefore, resulted in the recognition of the remaining deferred revenue. For the year ended December 31, 2024, the expenses incurred related to the Terumo Agreement were $12.5 million. The estimated total costs associated with the Terumo Agreement through completion increased by approximately 5.0% as of December 31, 2024, as compared to the estimates as of December 31, 2023.

Product Revenue

Product revenue decreased by $22,000, or approximately 3%, to $611,000 in the year ended December 31, 2025 from $633,000 for the year ended December 31, 2024.

​

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

Cost of Product Revenue

Cost of product revenue decreased by $14,000, or approximately 7%, to $190,000 in the year ended December 31, 2025 from $204,000 for the year ended December 31, 2024. The decrease was primarily due to lower sales volume of FreeHold Duo and Trio intracorporeal organ retractors.

Research and Development Expenses

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024 (in thousands):

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Year Ended December 31,

Personnel and consulting costs ​ $ 26,974 ​ $ 19,278

Total research and development expenses ​ $ 58,185 ​ $ 42,804

​

​

139

Table of Contents

​

Research and development expenses increased by $15.4 million, or approximately 36%, to $58.2 million for the year ended December 31, 2025 from $42.8 million for the year ended December 31, 2024. This is primarily due to an increase in support of ongoing work to advance the BACKBEAT study and to advance Virtue SAB into the Virtue Trial, which commenced in October 2025. The increase included an increase of $4.9 million in clinical development costs, an increase in personnel-related expenses of $6.6 million due to increased headcount and consulting costs, an increase of $2.8 million in non-clinical development costs associated with research and development program costs, supplies, and testing, and an increase in stock-based compensation of $1.1 million.

The total research and development expenses summarized above include $14.3 million for the year ended December 31, 2025 and $12.3 million for the year ended December 31, 2024 related to the Terumo Agreement. The increase of $2.0 million is due to increased expense activity related to the Terumo Agreement during the 2025 period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $3.0 million, or approximately 12%, to $26.9 million for the year ended December 31, 2025, from $23.9 million of expense for the year ended December 31, 2024. The increase primarily resulted from an increase of $1.9 million in accounting, finance, legal, marketing, investor relations and public relations expenses, an increase in personnel-related expenses of $871,000 due to increased headcount and consulting costs, and an increase of $220,000 in stock-based compensation.

Interest (Expense) Income, Net

Interest (expense) income, net, decreased by $4.5 million, or approximately 134%, to $1.1 million of expense for the year ended December 31, 2025 from $3.4 million of income for the year ended December 31, 2024. The net interest expense in the 2025 period consisted primarily of monthly interest expense resulting from the 2024 LSA and the Royalty Purchase Agreement partially offset by interest earned from marketable securities. The net interest income in the 2024 period consisted primarily of interest earned from marketable securities. The decrease in interest (expense) income, net resulted from interest expense related to the Royalty Purchase Agreement, which was not in place during 2024.

Change in the fair value of derivative liability

The derivative liability of the Series A Preferred Stock was remeasured to a fair value of $2.7 million as of December 31, 2025. We recognized a gain of $254,000 for the year ended December 31, 2025, primarily driven by decreases in our stock price compared to initial measurement at issuance.

Loss on Fair Value of Strategic Investments

No gain or loss on fair value of strategic investments was recognized for the year ended December 31, 2025 as compared to a loss of $68,000 for the year ended December 31, 2024 related to the change in fair value in our common stock holdings of a previously publicly-held company.

140

Table of Contents

​

Liquidity and Capital Resources

Overview

From inception through December 31, 2025, we have incurred significant operating losses and negative cash flows from our operations. Our net losses were $52.7 million and $61.0 million for the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $362.6 million. We have funded our operations primarily through the issuance of common stock, convertible preferred stock, and warrants, as well as proceeds from the Business Combination, the prior Terumo Agreement and the ROFR and Termination Agreement, borrowings under debt arrangements, the sale of future revenues, and to a lesser extent, revenue from FreeHold products. As of December 31, 2025, we have raised a cumulative total of $356.5 million in gross proceeds. We had $106.5 million in cash and cash equivalents and marketable securities at December 31, 2025, comprised of $34.7 million in cash and cash equivalents and $71.8 million in marketable securities. Cash and cash equivalents consisted primarily of bank deposits and money market funds while short-term marketable securities consisted primarily of our investments in corporate debt securities. Future committed cash receipts expected in April 2026 include $20.0 million from the Medtronic Loan Agreement, and an additional $15.0 million from Ligand pursuant to the Royalty Purchase Agreement. On January 9, 2026, Haemonetics closed on an acquisition of Vivasure in which we can receive up to $10.7 million of proceeds in 2026 made up of approximately $4.7 million upfront and approximately $6.0 million in a first milestone payment.

Funding Requirements

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

​

Based on internally prepared budget estimates that reflect our operating priorities, we anticipate that our Cash and cash equivalents, Marketable securities, proceeds received subsequent to December 31, 2025 but prior to the filing of this Annual Report on Form 10-K, expected future proceeds from contractual financing commitments and other potential future proceeds described below are sufficient to fund our operations into the fourth quarter of 2027. The amount and timing of our future funding requirements may change from this current estimate and are dependent on many factors, including the cost and pace of execution of clinical studies and research and development activities, the strength of results from clinical studies and other research, development and manufacturing efforts, as well as the receipt of payments under the Royalty Purchase Agreement and the Medtronic Loan Agreement, and receipt of additional expected funds under the terms of the sale of Vivasure to Haemonetics. There are no assurances that any of these factors will be favorable to us, and we may need to seek additional sources of liquidity to meet our funding requirements earlier than current estimates, including the issuance of new equity, and/or other financing structures. In this regard, as of the date of this Annual Report on Form 10-K, we may sell up to $92.4 million of shares of our common stock under the sales agreement we entered into with TD Securities (USA) LLC (the “Sales Agreement”).

​

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

​

As noted above, the sale of our common stock pursuant to the Resale Registration Statement may result in a decline in the value of our common stock, which may make it more difficult and more dilutive to the existing holders of our common stock to raise funds from the sale of our equity securities.

141

Table of Contents

​

Cash Flows

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

​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Net cash used in operating activities ​ $ (48,963) ​ $ (50,558)

Net cash (used in) provided by investing activities ​ (26,941) ​ 13,089

Net cash provided by financing activities ​ 88,333 ​ 29,171

Net increase (decrease) in cash and cash equivalents ​ $ 12,429 ​ $ (8,298)

​

Comparison of the Years Ended December 31, 2025 and 2024

Net Cash Flows from Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $49.0 million and primarily consisted of our net loss of $52.7 million, partially offset by non-cash charges of $14.1 million and changes in net operating assets and liabilities of $10.4 million. Our non-cash charges primarily consisted of stock-based compensation of $12.0 million and $2.0 million in non-cash interest expense in liability related to the Royalty Purchase Agreement. The net change in operating assets and liabilities was primarily due to a decrease in deferred revenue of $15.4 million, partially offset by an increase in accounts payable, accrued expenses, and other liabilities of $4.9 million.

Net cash used in operating activities for the year ended December 31, 2024 was $50.6 million and primarily consisted of our net loss of $61.0 million, partially offset by non-cash charges of $11.2 million and changes in net operating assets and liabilities of $765,000. Our non-cash charges primarily consisted of stock-based compensation of $10.6 million and $1.0 million in acquired in-process research and development, partially offset by $1.5 million related to accretion and interest of marketable securities. The net change in operating assets and liabilities was primarily due to an increase in accounts payable, accrued expenses, and other liabilities of $3.0 million, partially offset by an increase in prepaid expenses and other assets of $1.1 million, a decrease in deferred revenue of $2.0 million, and a decrease in operating lease liabilities of $652,000.

​

Net Cash Flows from Investing Activities

Net cash (used in) provided by investing activities for the year ended December 31, 2025 was $26.9 million, which primarily consisted of the purchase of $76.3 million of marketable securities and $489,000 paid for purchases of property and equipment, partially offset by the sale of $49.9 million of marketable securities.

Net cash provided by investing activities for the year ended December 31, 2024 was $13.1 million, which primarily consisted of the sale of $86.6 million of marketable securities, partially offset by the purchase of $72.6 million of marketable securities, and $600,000 paid for an asset acquisition, net of cash acquired.

Net Cash Flows from Financing Activities

Net cash provided by financing activities of $88.3 million for the year ended December 31, 2025 primarily consisted of $57.8 million of proceeds from the sale of common stock and the pre-funded warrants, net of issuance costs and $20.0 million of proceeds from the sale of future royalties, $12.6 million of proceeds from the issuance of Series A Preferred Stock, partially offset by $1.6 million used to settle taxes associated with the vesting of restricted stock units.

Net cash provided by financing activities of $29.2 million for the year ended December 31, 2024 was primarily attributable to the proceeds of $15.0 million, net of issuance costs, from the at-the-market offering under the Open Market Sale AgreementSM with Jefferies LLC and proceeds from the 2024 LSA with Hercules of $15.0 million. For additional information, see Note 16 to the Consolidated Financial Statements – “Debt Financing.”

142

Table of Contents

​

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of December 31, 2025 (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Payments Due by Period

​ ​ ​ ​ ​ Less than ​ 1-3 ​ 3-5 ​ More than

​ ​ Total ​ ​ ​ 1 Year ​ ​ ​ Years ​ ​ ​ Years ​ ​ ​ 5 Years

Operating lease obligations ​ $ 1,868 ​ $ 881 ​ $ 987 ​ $ — ​ $ —

We enter into agreements in the normal course of business with clinical research organizations for work related to clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 days prior written notice. These payments are not included in the above table of contractual obligations and commitments.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements in conformity with U.S. GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including estimates related to the total costs expected to be incurred though the completion of the combined performance obligation of the Terumo Agreement, effective interest expense related to the Royalty Purchase Agreement, research and development prepayments, accruals and related expenses and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

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

Revenue Recognition

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

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

Partnership Revenues

To date, our partnership revenues have related to the Terumo Agreement described below. Pursuant to the terms of the Termination and ROFR Agreement, the Terumo Agreement was terminated on October 24, 2025. In future periods, partnership revenues may also include revenues related to the Medtronic Agreement, discussed in Note 4 to the Consolidated Financial Statements.

​

143

Table of Contents

​

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

The promised goods or services in the Terumo Agreement included (i) license rights to our intellectual property and (ii) research and development services. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct in the Terumo Agreement, we considered factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

We estimated the transaction price for the Terumo Agreement performance obligations based on the amount expected to be received for transferring the promised goods or services pursuant to the Terumo Agreement. The consideration included both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, we evaluated the amount of potential payment and the likelihood that the payments would be received. We utilized 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 was probable that a significant revenue reversal would not occur, the variable consideration was included in the transaction price.

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

We had determined that intellectual property that was licensed to Terumo and the research and development services to be provided to support the premarket approval by the FDA for the ISR indication represented a combined performance obligation that was 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. We had evaluated the measure of progress at each reporting period and, if necessary, adjusted the measure of performance and related revenue recognition.

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

144

Table of Contents

​

On October 28, 2025, we entered into the Termination and ROFR Agreement with Terumo with respect to Virtue SAB. The Termination and ROFR Agreement, which supersedes and terminates the Terumo Agreement, grants Terumo a ROFR to acquire the rights, or enter a distribution arrangement, with respect to Virtue SAB for the treatment of coronary artery disease, in exchange for an upfront payment of $10.0 million. In connection with the Termination and ROFR Agreement, Terumo invested an additional $20.0 million in Orchestra BioMed through our Series A Preferred Stock, which is convertible into common stock in the future, subject to certain conditions, at a minimum of $12 per share. Pursuant to the terms of the Termination and ROFR Agreement, we have no further performance obligations under the Terumo Agreement and therefore recognized the remaining amounts of deferred revenue. We recognized $30.0 million in cumulative partnership revenues from 2019 through December 31, 2025. In addition to recognizing the remainder of the deferred revenue, partnership revenue for the year ended December 31, 2025 included $10.0 million in consideration for the ROFR and $7.4 million associated with the premium above the fair market value of the Series A Preferred Stock.

In June 2022, Orchestra BioMed Inc., BackBeat Medical, LLC and Medtronic entered into the Medtronic Agreement for the development and commercialization of AVIM Therapy for the treatment of pacemaker-indicated patients with uncontrolled HTN despite the use of anti-hypertensive medications. We determined that the arrangement is a collaboration within the scope of ASC 808. In addition, we concluded Medtronic is a customer for a good or service that is a distinct unit of account, and therefore the transactions in the Medtronic Agreement should be accounted for under ASC 606. Through December 31, 2025, there have been no amounts recognized as revenue under the Medtronic Agreement.

Product Revenues

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

Research and Development Prepayments, Accruals and Related Expenses

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

Royalty purchase agreement

On July 31, 2025, we entered into the Royalty Purchase Agreement with Ligand. Under the terms of the Royalty Purchase Agreement, in exchange for the Investment Amount, less certain reimbursable expenses, Ligand acquired from us the right to receive Royalty Interest with respect to revenue (including certain licensing revenue) received by us in a calendar year in connection with Annual Net Sales of our Products in the field of coronary artery treatment.

​

145

Table of Contents

​

Pursuant to the Royalty Purchase Agreement, the Investment Amount shall be paid in two tranches: (i) $20.0 million was paid on August 4, 2025(the “Ligand Closing”) and (ii) $15.0 million is payable on May 1, 2026 (the “Second Installment”), provided certain conditions have been met. In repayment of the Investment Amount, we will remit 17.0% of revenues related to the Products until an annual total of $17.0 million has been remitted to Ligand, thereafter we will remit (a) 4.0% of revenues related to the Primary Product in the field of hypertension treatment and (b) 4.0% of revenues related to the Secondary Product in the field of coronary artery treatment. In addition, under the terms of the Royalty Purchase Agreement, unless and until Ligand pays the Second Installment, Ligand shall only be entitled to 57.1% of the amounts it would otherwise be due under the Royalty Purchase Agreement. However, regardless of whether the Second Installment has been paid, under the terms of the Royalty Purchase Agreement, the percentages referenced in the second sentence of this paragraph will incrementally increase from 17.0% and 4.0% up to 20.0% and 7.0%, respectively, if we do not achieve certain enrollment milestones relating to the BACKBEAT clinical study through January 1, 2027.

​

We accounted for the sale of royalty revenues to Ligand, pursuant to the Royalty Purchase Agreement, in accordance with ASC 470, Debt, which addresses situations in which an entity receives cash from an investor in return for an agreement to pay the investor a specified percentage of the revenue from a contractual right. We classified the proceeds received from the sale to Ligand as debt as we determined that it had significant continuing involvement in the generation of the cash flows to Ligand. Interest related to the Royalty Purchase Agreement is recognized utilizing the effective interest method over the estimated term. When the Second Installment is received, it will also be recorded as a liability related to the sale of future royalties when they are received and amortized under the effective interest method over the estimated remaining term of the Royalty Purchase Agreement.

​

As of the Ligand Closing, our estimate of this total interest expense associated with the Royalty Interest resulted in an effective annual interest rate of approximately 23.1%. This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period. We will periodically assess the estimated amounts due and payable to Ligand and to the extent that the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to the consolidated statements of operations and comprehensive loss. There are a number of factors that could materially affect the amount and timing of the royalty payments to be paid by us to Ligand and, correspondingly, the amount of interest expense recorded by us.

​

Series A Preferred Stock

On November 7, 2025, we entered into a preferred stock purchase agreement, pursuant to which we agreed to issue 200,000 shares of our Series A Preferred Stock at a price per share equal to $100.00 for an aggregate amount of $20.0 million. The Series A Preferred Stock contains certain conversion and redemption features. We utilized an option pricing valuation to determine the fair value of the Series A Preferred Stock at issuance. The valuation incorporated Level 3 inputs in the fair value hierarchy including the expected life of Series A Preferred Stock, expected volatility, and discount rate as well as probability-weighted outcomes. Assumptions used in the valuation also take into account the contractual terms as well as the quoted price of our common stock in an active market. Significant changes in any of these inputs in isolation would result in significant changes to the fair value measurement.

​

Derivative Liability

In connection with the issuance of the Series A Preferred Stock, we evaluated the instruments for any features that must be bifurcated and separately accounted for as embedded derivatives. We concluded that certain conversion and redemption features meet the requirements to be separately accounted for as a bifurcated derivative. The Series A Preferred Stock was accounted for as mezzanine equity in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and the embedded conversion and redemption features were separated from the host instrument and recognized as a derivative liability with the change in fair value at each reporting period end recognized in the consolidated statements of operations and comprehensive loss.

​

146

Table of Contents

​

We performed a “with-and-without” scenario analysis to determine the fair value of the derivative liability by comparing the value of the Series A Preferred Stock including the bifurcated embedded derivatives to the value of the Series A Preferred Stock excluding them. We utilized an option pricing valuation with the expected life of Series A Preferred Stock, expected volatility, and discount rate as significant inputs as well as probability-weighted outcomes. Assumptions used in the valuation also take into account the contractual terms as well as the quoted price of our common stock in an active market. Significant changes in any of those inputs in isolation would result in significant changes to the fair value measurement.

​

Stock-Based Compensation

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

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

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

During the years ended December 31, 2025 and 2024, stock-based compensation was $12.0 million and $10.6 million, respectively. As of December 31, 2025, we had approximately $13.3 million of total unrecognized stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.3 years.

​

147

Table of Contents

​

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements.

Smaller Reporting Company Status

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information requested by this Item.

148

Table of Contents

​

Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

​ Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 150

Financial Statements: ​

Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 153

Notes to Consolidated Financial Statements 157

​

​

​

149

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Orchestra BioMed Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Orchestra BioMed Holdings, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

​

Basis for Opinion

​

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

​

150

Table of Contents

​

Critical Audit Matters

​

​

​ ​ Subsequent Measurement of Royalty Purchase Agreement Liability

​

​

151

Table of Contents

​

​ ​

​ ​ Valuation of Series A Preferred Stock and Embedded Derivative Liability

​

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2020.

Philadelphia, Pennsylvania

March 12, 2026

​

​

152

Table of Contents

​

ORCHESTRA BIOMED HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ December 31, ​ ​ ​ December 31,

ASSETS ​ ​ ​ ​

CURRENT ASSETS: ​ ​ ​ ​

Accounts receivable, net ​ 95 ​ 92

Prepaid expenses and other current assets ​ 994 ​ 2,094

Property and equipment, net ​ 1,715 ​ 1,384

Deposits and other assets ​ 1,240 ​ 1,020

​ ​ ​ ​ ​ ​ ​

LIABILITIES, SERIES A PREFERRED STOCK AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​

CURRENT LIABILITIES: ​ ​ ​ ​

Accrued expenses and other liabilities ​ 9,890 ​ 6,084

Operating lease liability, current portion ​ 751 ​ 550

Deferred revenue, current portion ​ — ​ 4,439

Deferred revenue, less current portion ​ — ​ 10,989

Royalty purchase agreement ​ ​ 16,482 ​ ​ —

Derivative liability ​ ​ 2,749 ​ ​ —

Operating lease liability, less current portion ​ 936 ​ 1,687

Other long-term liabilities ​ 308 ​ 40

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

STOCKHOLDERS’ EQUITY ​ ​ ​ ​

Preferred stock, $0.0001 par value, 10,000,000 shares authorized; ​ ​ — ​ —

Accumulated other comprehensive income ​ 60 ​ 52

​

​

The accompanying notes are an integral part of these consolidated financial statements.

153

Table of Contents

ORCHESTRA BIOMED HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Year Ended December 31,

Revenue: ​ ​ ​ ​

Expenses: ​ ​ ​ ​

Cost of product revenues ​ 190 ​ 204

Selling, general and administrative ​ 26,914 ​ 23,931

Other (expense) income: ​ ​ ​ ​

Interest (expense) income, net ​ (1,148) ​ 3,356

Change in the fair value of derivative liability ​ ​ 254 ​ ​ —

Loss on fair value of strategic investments ​ — ​ (68)

Other expense ​ ​ — ​ ​ (11)

Total other (expense) income ​ (894) ​ 3,277

Adjustment to carrying value of Series A Preferred Stock ​ ​ (254) ​ ​ —

Net loss attributable to common stockholders ​ $ (52,955) ​ $ (61,024)

​ ​ ​ ​ ​ ​ ​

Net loss attributable to common stockholders per share ​ ​ ​ ​

Basic and diluted ​ $ (1.11) ​ $ (1.66)

Comprehensive loss ​ ​ ​ ​

Unrealized gain on marketable securities ​ 8 ​ 62

​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

154

Table of Contents

ORCHESTRA BIOMED HOLDINGS, INC.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total

​ ​ Common Stock ​ Paid-in ​ Comprehensive ​ Accumulated ​ Stockholders'

​ ​ Shares ​ Amount ​ Capital ​ (Loss) Income ​ Deficit ​ Equity

Unrealized gain on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ 62 ​ ​ — ​ ​ 62

Stock-based compensation ​ — ​ ​ — ​ ​ 10,615 ​ ​ — ​ ​ — ​ ​ 10,615

Restricted stock unit vesting ​ 289,550 ​ ​ — ​ ​ (550) ​ ​ — ​ ​ — ​ ​ (550)

Exercise of stock options ​ 56,859 ​ ​ — ​ ​ 240 ​ ​ — ​ ​ — ​ ​ 240

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (61,024) ​ ​ (61,024)

Unrealized gain on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ 8 ​ ​ — ​ ​ 8

Stock-based compensation ​ — ​ ​ — ​ ​ 11,978 ​ ​ — ​ ​ — ​ ​ 11,978

Exercise of stock options ​ 22,112 ​ ​ — ​ ​ 91 ​ ​ — ​ ​ — ​ ​ 91

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (52,701) ​ ​ (52,701)

​

​

​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

155

Table of Contents

ORCHESTRA BIOMED HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands, except share and per share data)

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​

Depreciation and amortization ​ 327 ​ 308

Acquired in-process research and development ​ ​ — ​ ​ 1,045

Loss on fair value of strategic investments ​ — ​ 68

Accretion and interest related to marketable securities ​ (811) ​ ​ (1,501)

Non-cash lease expense ​ 607 ​ 654

Change in the fair value of derivative liability ​ ​ (254) ​ ​ —

Amortization of deferred financing fees ​ ​ 215 ​ 31

Other ​ ​ — ​ ​ 11

Changes in operating assets and liabilities: ​ ​ ​ ​ ​

Accounts receivable ​ (3) ​ 22

Prepaid expenses and other assets ​ 880 ​ (1,071)

Accounts payable, accrued expenses and other liabilities ​ 4,866 ​ 2,969

Operating lease liabilities – current and non-current ​ (550) ​ (652)

Net cash used in operating activities ​ (48,963) ​ (50,558)

CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ ​

Purchases of property and equipment ​ (489) ​ (289)

Sales of marketable securities ​ ​ 49,860 ​ ​ 86,628

Purchases of marketable securities ​ (76,312) ​ (72,648)

Asset acquisition, net of cash acquired ​ ​ — ​ ​ (602)

Net cash (used in) provided by investing activities ​ (26,941) ​ 13,089

CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ ​

Proceeds from the royalty purchase agreement ​ ​ 20,000 ​ ​ —

Proceeds from issuance of Series A preferred stock ​ ​ 12,557 ​ ​ —

Repayment of royalty liability ​ ​ (972) ​ ​ —

Proceeds from Hercules term loan ​ ​ — ​ ​ 15,000

Proceeds from At-The-Market offering, net of issuance costs ​ ​ 1,543 ​ ​ 15,035

Proceeds from exercise of stock options ​ 91 ​ 240

Restricted stock units withheld for tax ​ ​ (1,552) ​ ​ (550)

Deferred financing costs ​ (1,114) ​ (554)

Net cash provided by financing activities ​ 88,333 ​ 29,171

Net increase (decrease) in cash and cash equivalents ​ 12,429 ​ (8,298)

Cash and cash equivalents, beginning of the period ​ 22,261 ​ 30,559

Cash and cash equivalents, end of the period ​ $ 34,690 ​ $ 22,261

​ ​ ​ ​ ​ ​ ​

Supplemental Disclosures of Cash Flow Information ​ ​ ​ ​

Cash paid during the year ended December 31: ​ ​ ​ ​

Supplemental disclosure of noncash activities ​ ​ ​ ​ ​ ​

Common stock issued pursuant to asset acquisition ​ $ — ​ $ 352

Warrants issued pursuant to debt financing ​ $ 239 ​ $ 185

Warrants issued pursuant to the royalty purchase agreement ​ $ 3,480 ​ $ —

​

​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

156

Table of Contents

ORCHESTRA BIOMED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

​

1. Organization and Basis of Presentation

Orchestra BioMed Holdings, Inc. (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 Atrioventricular Interval Modulation Therapy (“AVIM Therapy”) for the treatment of hypertension (“HTN”), the leading risk factor for death worldwide, and Virtue® Sirolimus AngioInfusionTM Balloon (“Virtue SAB”) for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide.

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

Orchestra BioMed, Inc. 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, Orchestra BioMed, Inc. concurrently completed its formation mergers (the “Formation Mergers”) with Caliber Therapeutics, Inc., a Delaware corporation, BackBeat Medical, Inc., a Delaware Corporation, and FreeHold Surgical, Inc., a Delaware corporation. Orchestra BioMed, Inc. completed the conversions of BackBeat Medical, Inc. to BackBeat Medical, LLC (“BackBeat”), a Delaware limited liability company, of FreeHold Surgical, Inc. to FreeHold Surgical, LLC (“FreeHold”) and of Caliber Therapeutics, Inc. to Caliber Therapeutics, LLC (“Caliber”), a Delaware limited liability company, in 2019.

Caliber

Caliber Therapeutics, Inc. 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.

BackBeat

BackBeat Medical, Inc. was incorporated in Delaware in January 2010 and began development of its lead product AVIM Therapy that same year. AVIM Therapy is a patented implantable cardiac stimulation-based treatment for HTN 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. Refer to Note 4 for details regarding the Exclusive License and Collaboration Agreement, dated as of June 30, 2022, by and among, Orchestra BioMed, Inc., BackBeat and Medtronic, Inc. (an affiliate of Medtronic plc) (the “Medtronic Agreement”).

FreeHold

FreeHold Surgical, Inc. 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 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”).

157

Table of Contents

The Company has a limited operating history and the sales and income potential of its businesses and markets are unproven. As of December 31, 2025, the Company had an accumulated deficit of $362.6 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, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

Based on the available balance of cash and cash equivalents and marketable securities as of December 31, 2025, subsequent proceeds received (see Note 19 – “Subsequent Events”), and expected future proceeds from contractual financing commitments, 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 through 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 on the progress of the Company’s research and development programs.

2. Summary of Significant Accounting Policies

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, effective interest expense related to the Royalty Purchase Agreement (see Note 15 – “Royalty Purchase Agreement” for additional information), the fair value of Series A Preferred Stock (see Note 8 – “Common and Preferred Stock” for additional information), and the fair value of the derivative liability related to the Series A Preferred Stock (see Note 9 – “Derivative Liability” for additional information).

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.

​

158

Table of Contents

Strategic Investments

Management has made investments in certain 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 preferred shares of Vivasure Medical Limited (“Vivasure”), a privately-held company and related party. 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 December 31, 2025 and 2024, the carrying value of the investments in Vivasure was $2.5 million. For an update to this investment, see Note 19 – “Subsequent Events.”

Fair Value of Financial Instruments

The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

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 marketable securities at fair value. See Note 5– “Financial Instruments and Fair Value Measurements” for additional information regarding fair value measurements. For additional information on the fair value measurements performed as part of the Series A Preferred Stock issuance, see Note 8– “Common and Preferred Stock.”

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, 2025 and 2024, an allowance for doubtful accounts was not deemed necessary.

​

159

Table of Contents

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, 2025 and 2024, 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 the Company’s 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.

Asset Acquisitions and Acquired In-Process Research and Development Expenses

The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions. Asset acquisitions are based on the cost to acquire the asset or group of assets, which include certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. No goodwill is recorded in an asset acquisition. Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in-process research and development (“IPR&D”). Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date. The Company recognized $1.0 million of IPR&D expense for the year ended December 31, 2024. No IPR&D expense was recognized during the year ended December 31, 2025.

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. 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 – 7 years

Research and development equipment 7 years

​

160

Table of Contents

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 consolidated statements of operations and comprehensive loss.

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.

Revenue Recognition

The Company recognizes revenue under the core principle according to ASC 606, Revenue from Contracts with Customers (“ASC 606”), to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled to. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied.

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

​

161

Table of Contents

Partnership Revenues

To date, the Company’s partnership revenues have related to the Terumo Agreement as further described in Note 3.

The Company assessed whether the Terumo Agreement fell within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) based on whether the arrangement involved joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. The Company determined that the Terumo Agreement did not fall within the scope of ASC 808. The Company then analyzed the arrangement pursuant to the provisions of ASC 606 and determined that the arrangement represents a contract with a customer and is therefore within the scope of ASC 606.

The promised goods or services in the Terumo Agreement had included (i) license rights to the Company’s intellectual property, and (ii) research and development services. 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 were 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 estimated 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 included both fixed consideration and variable consideration. At the inception of the Terumo Agreement, as well as at each reporting period, the Company evaluated the amount of potential payments and the likelihood that the payments will be received. The Company utilized either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method better predicted the amount expected to be received. If it was probable that a significant revenue reversal would not occur, the variable consideration was included in the transaction price.

The Company has determined that intellectual property that was licensed to Terumo and the research and development services provided to support the premarket approval by the U.S. Food and Drug Administration (the “FDA”) for the in-stent restenosis (“ISR”) indication represented a combined performance obligation that was satisfied over time, and that the appropriate method of measuring progress for purposes of recognizing revenues related to a proportional performance model that measured 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 evaluated the measure of progress at each reporting period and, if necessary, adjusted the measure of performance and related revenue recognition.

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

On October 24, 2025, the Terumo Agreement was terminated pursuant to a termination and right of first refusal agreement (the “Termination and ROFR Agreement”). In future periods, partnership revenues may also include revenues related to the Medtronic Agreement as discussed in Note 4.

​

162

Table of Contents

Product Revenues

Product revenues related primarily 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.

Stock-Based Compensation

The Company applies ASC 718-10, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expenses for all stock-based payment awards made to employees and directors including employee stock options under the Company’s stock plans based on estimated fair values (see Note 11– “Stock-Based Compensation”). Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as an expense in the financial statements over the respective vesting period on a straight-line basis.

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 consolidated statements of operations and comprehensive loss over the requisite service period. The Company accounts for forfeitures of stock-based awards as they occur.

Series A Preferred Stock

​

The Company applies ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480”) which requires an evaluation to determine if liability classification is required for redeemable convertible stock. Liability classification is required for freestanding financial instruments that are (1) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets, such as those that are mandatorily redeemable, (2) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (3) certain types of instruments that obligate the issuer to issue a variable number of equity shares.

​

Securities that do not meet the scoping criteria to be classified as a liability under ASC 480 are subject to redeemable equity guidance, which prescribes that securities that may be subject to redemption upon an event not solely within the Company’s control should be classified as mezzanine equity. Securities classified in mezzanine equity are initially measured at the fair value, net of issuance costs and excluding the fair value of bifurcated embedded derivatives, if any. Subsequent measurement is required when the combined initial amount recorded in mezzanine equity and its related derivative liability is more than the period end carrying amount. Adjustments to the carrying amount are charged to retained earnings (or additional paid in capital if there are no retained earnings) and do not affect net loss or comprehensive loss in the consolidated financial statements. Subsequent measurement of the carrying value of the redeemable convertible preferred stock is also required when the instrument is probable of becoming redeemable. The Company will accrete the redeemable convertible preferred stock to its redemption value once the instrument is probable of becoming redeemable. In certain circumstances, the redemption price may vary based on changes in stock price, in which case the Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period.

​

Derivative Liability

​

The Company evaluates all its financial instruments, including convertible debt and redeemable convertible preferred stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in these contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contracts if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss at each reporting period end. Bifurcated embedded derivatives are classified as a separate liability in the consolidated balance sheets.

​

163

Table of Contents

The Company’s derivative liability are related to the conversion features embedded in the Series A Preferred Stock. See Note 8 – “Common and Preferred Stock” for additional information.

​

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss less the adjustment to carrying value of Series A Preferred Stock 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 (see Note 18– “Net Loss Per Share”), unvested restricted stock awards, convertible preferred shares (see Note 8 – “Common and Preferred Stock”) and restricted stock units. Shares of Company Common Stock outstanding but subject to forfeiture and cancellation by the Company (e.g., the Forfeitable Shares (as defined in Note 18)) are excluded from the weighted-average number of shares until the period in which such shares are no longer subject to forfeiture. Pre-funded warrants (see Note 10 – “Warrants”) are considered outstanding for the purposes of computing basic and diluted net loss per share because shares may be issued for little or no additional consideration and are fully vested and exercisable after the original issuance date of the pre-funded warrant. 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”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance is recorded if it is more-likely-than-not that some portion or all the deferred tax assets will not be realized in future periods. At December 31, 2025 and 2024, the Company recorded a full valuation allowance on its deferred tax assets.

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 as applicable.

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 years ended December 31, 2025 and 2024, the Company made $426,000 and $380,000, respectively, in contributions under this safe harbor 401(k) Plan.

​

164

Table of Contents

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. For further discussion on Segment Reporting, seeNote 17– “Segment Disclosures.”

New Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires additional income tax disclosures in the annual consolidated financial statements. The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures. For public entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 was adopted prospectively and is effective for all annual periods beginning after December 15, 2024. There was no material effect on the Company’s consolidated financial statements and disclosures.

​

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements

​

3. Terumo Agreement

In June 2019, Orchestra BioMed, Inc. entered into a distribution agreement with Terumo Corporation (“Terumo Corporation”) and Terumo Medical Corporation (“TMC” and, collectively with Terumo Corporation, “Terumo”) for global development and commercialization of Virtue SAB in coronary and peripheral vascular indications (the “Terumo Agreement”). Under the Terumo Agreement, Orchestra BioMed, Inc. received an upfront payment of $30.0 million in 2019 and an equity commitment of up to $5.0 million of which $2.5 million was invested in June 2019 as part of the Orchestra BioMed, Inc. Series B-1 financing and $2.5 million was invested in June 2022 as part of the Orchestra BioMed, Inc. Series D-2 financing.

​

Pursuant to the terms of the Terumo Agreement, Orchestra BioMed, Inc. had licensed intellectual property rights to Terumo and the Company was primarily responsible for completing the development of the product in the United States to support premarket approval by the FDA for the ISR indication. These research and development services to be provided by the Company included (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 had concluded that the license granted to Terumo was not distinct from the research and development services that were to be provided to Terumo through the completion of the development of ISR indication, as Terumo would not obtain the benefit of the license without the related research and development services. Accordingly, the Company had recognized revenues for this combined performance obligation over the estimated period of research and development services using a proportional performance model. The Company had previously measured proportional performance based on the costs incurred relative to the total estimated costs of the research and development services.

​

​

165

Table of Contents

Termination and Right of First Refusal Agreement

On October 24, 2025 (the “Effective Date”), Orchestra BioMed, Inc., entered into a Termination and ROFR Agreement with Terumo, pursuant to which the Terumo Agreement was terminated, and Orchestra BioMed, Inc. agreed to grant Terumo a right of first refusal (the “ROFR”) with respect to certain transactions involving Virtue SAB for the treatment of coronary artery disease globally in exchange for a fee of $10.0 million, which was paid on November 7, 2025. The ROFR does not apply to other vascular indications, such as below-the-knee peripheral artery disease, which were covered by the Terumo Agreement prior to its termination. Accordingly, all rights to these indications are fully retained by the Company.

The ROFR has a term that began on the Effective Date and will end on the date that is 90 days after Orchestra BioMed, Inc. discloses primary endpoint data from its U.S. clinical trial for Virtue SAB pursuant to its investigational device exemption (“IDE”) for ISR to Terumo or the public, whichever occurs first (the “ROFR Period”); provided, however, that the ROFR Period will immediately expire if Terumo completes the acquisition from a third party of the exclusive right to make, use, sell, offer to sell or distribute a Competing Product (as defined in the Termination and ROFR Agreement) in the United States.

Notice of Third-Party Proposal

The ROFR provides that, in the event that during the ROFR Period, Orchestra BioMed, Inc. receives a written proposal (a “Third-Party Proposal”) reflecting the material terms of an agreement pursuant to which Orchestra BioMed, Inc. would grant to a third party either (i) an outright or staged acquisition rights to Virtue SAB or its components or (ii) a license of or the right to distribute Virtue SAB, in each case, in the treatment of coronary artery diseases (a “Virtue Transaction”), Orchestra BioMed, Inc. will promptly deliver notice of each such Third-Party Proposal together with a copy of the applicable Third-Party Proposal to Terumo (a “Third-Party Proposal Notice”).

Exercise of ROFR

Pursuant to the Termination and ROFR Agreement, Terumo will have 30 days after delivery of the Third-Party Proposal Notice (the “ROFR Determination Period”) to exercise the ROFR by providing written notice to Orchestra BioMed, Inc. (the “ROFR Notice”). In the event that Terumo exercises the ROFR during the ROFR Determination Period, the Company and Terumo will negotiate in good faith and on an exclusive basis during the period beginning on the date of delivery of the ROFR Notice and ending 90 days thereafter (the “Terumo ROFR Negotiation Period”) to enter into a Virtue Transaction on substantially the same terms set forth in the applicable Third-Party Proposal.

If Terumo fails to deliver a ROFR Notice to Orchestra BioMed, Inc. prior to the expiration of the ROFR Determination Period, Terumo shall be deemed to have waived the ROFR with respect to the applicable Third-Party Proposal. If Terumo is deemed to have waived a Terumo ROFR pursuant to the preceding sentence, or if Terumo delivers a ROFR Notice within the applicable ROFR Determination Period, but the parties fail to enter into a definitive agreement regarding a Virtue Transaction prior to expiration of the Terumo ROFR Negotiation Period, then, in either case, effective upon such expiration, (i) the ROFR shall terminate, and be of no further force or effect, with respect to the applicable Third-Party Proposal Notice and (ii) Orchestra BioMed, Inc. shall be free to terminate negotiations with Terumo and to enter into a Virtue Transaction with the applicable third party; provided that Orchestra BioMed, Inc. shall not enter into a definitive agreement with the applicable third party on terms and conditions that are materially different than the applicable Third-Party Proposal without first providing Terumo with a renewed Third-Party Proposal Notice and ROFR Determination Period; provided, further, that, if Orchestra BioMed, Inc. does not consummate a transaction with respect to such Third-Party Proposal within 90 days after termination of the ROFR, Terumo will retain its ROFR during the remaining portion of the ROFR Period.

​

166

Table of Contents

Sale Transaction

In the event that Orchestra BioMed, Inc. receives a written proposal reflecting the material terms of an agreement for a Sale Transaction (as defined in the Termination and ROFR Agreement) of Orchestra BioMed, Inc. (such transaction an “Orchestra Sale”), or if Orchestra BioMed, Inc.’s board of directors approves a formal transaction process for a Orchestra BioMed, Inc. Sale (a “Sale Process”), Orchestra BioMed, Inc. will promptly give Terumo written notice (an “Orchestra Sale Notice”). During the period of 30 days that begins with the delivery of the Orchestra Sale Notice (the “Orchestra Sale Notice Period”), Orchestra BioMed, Inc. will not enter into a binding agreement or other arrangement for an Orchestra Sale with any third party. During the Orchestra Sale Notice Period, Terumo shall be given the opportunity to make an offer with respect to a Virtue Transaction, and Orchestra BioMed, Inc. will consider in good faith any such offer made. In addition, Orchestra BioMed, Inc. shall give Terumo the opportunity to participate in any Sale Process and shall consider any offer by Terumo in connection therewith in good faith.

Term

The Termination and ROFR Agreement will remain in effect for (a) the ROFR Period or (b) the end of any Terumo ROFR Negotiation Period and expiration of the parties rights and obligations under Section 3.2 of the Termination and ROFR Agreement with respect to the exercise of the ROFR, whichever comes later; provided that the Termination and ROFR Agreement will automatically terminate in the event that Orchestra BioMed, Inc. has not disclosed primary endpoint data from a U.S. clinical trial pursuant to its IDE for coronary ISR to Terumo or the public prior to the tenth anniversary of the Effective Date.

In 2019, Orchestra BioMed, Inc. 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 Orchestra BioMed, Inc.’s offering of its Series B-1 Preferred Stock. The Company allocated the remaining $30.0 million, which is non-refundable, to the transaction price of the Terumo Agreement and was recorded to deferred revenue.

​

The ROFR is concluded to not result in a performance obligation for the Company under ASC 606 and therefore the $10.0 million received was recognized as partnership revenue for the year ended December 31, 2025. Pursuant to the terms of the Termination and ROFR Agreement, Orchestra BioMed, Inc. has no further performance obligations under the Terumo Agreement and therefore recognized the remaining amounts of 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, 2025 and 2024 (in thousands):

​

​ ​ ​ ​

Revenue recognized ​ ​ (2,005)

Revenue recognized ​ ​ (15,428)

Deferred Revenue – December 31, 2025 ​ $ —

​

Series A Preferred Stock

On November 6, 2025, the Company filed a Certificate of Designation of Series A Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware. The Certificate of Designation sets forth the rights, preferences, powers, restrictions, and limitations of the Series A Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”). Below is a summary of certain of the provisions of the Certificate of Designation.

​

167

Table of Contents

Rank; Liquidation

With respect to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, a holder of Series A Preferred Stock (a “Holder” or, collectively, “Holders”) will be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment is made to the holders of Company Common Stock (or any other class of securities junior to the Series A Preferred Stock) in an amount equal to the liquidation value of the shares of Series A Preferred Stock (“Preferred Shares”) held by such Holder. The liquidation value of the Series A Preferred Stock will equal the purchase price of $100.00 per Share (the “Liquidation Value”) and will be subject to adjustment for stock splits and the like in accordance with the terms of the Certificate of Designation.

Conversion

Under the terms of the Certificate of Designation, a Holder may convert its Preferred Shares into Company Common Stock on or after the earlier of (i) the date that both (a) the Company has publicly disclosed primary endpoint data from its U.S. IDE study for ISR and (b) the trading price of the Company Common Stock has been above $15.00 per share on any trading day subsequent to such public disclosure or (ii) the consummation of a Change of Control (as defined in the Certificate of Designation). A Holder may convert all or any portion of the outstanding whole Preferred Shares held by such Holder into an aggregate number of shares of Company Common Stock as is determined by (i) multiplying the number of Preferred Shares to be converted by the Liquidation Value thereof, and then (ii) dividing the result by the Conversion Price (as defined below) in effect immediately prior to such conversion, with cash being paid in lieu of fractional shares. The “Conversion Price” for the Series A Preferred Stock will be the greater of (i) $12.00 per share and (ii) a 20% discount to the closing price of the Company Common Stock on the Nasdaq Global Market on the date of conversion. Assuming no adjustments to the Conversion Price or the Liquidation Value as a result of stock splits or similar transactions, the 200,000 Preferred Shares would convert into a maximum of 1,666,666 shares of Company Common Stock.

Redemption at the Option of Holders upon a Change of Control

Upon the occurrence of a Change of Control, subject to limited exceptions, each Holder of Preferred Shares shall have the right to require the Company to redeem all or any part of such Holder’s Preferred Shares at a redemption price in cash equal to the aggregate Liquidation Value of such Preferred Shares.

No Voting Rights

Except as otherwise required by the Delaware General Corporation Law, the Holders shall have no voting rights.

Participating Dividends

If the Company declares or pays a dividend or distribution on all shares of the Company Common Stock, whether such dividend or distribution is payable in cash, securities, or other property but excluding any dividend or distribution payable on the Company Common Stock in shares of Company Common Stock, the Company shall simultaneously declare and pay a dividend on the Series A Preferred Stock on a pro rata basis with the Company Common Stock determined on an as-converted basis assuming all Preferred Shares had been converted as of immediately prior to the record date of the applicable dividend (or if no record date is fixed, the date as of which the record holders of Company Common Stock entitled to such dividends are to be determined).

Lockup Agreement

On October 24, 2025, concurrent with the execution of the Termination and ROFR Agreement, the Company and Terumo entered into a Lockup Agreement (the “Lockup Agreement”), pursuant to which Terumo agreed, subject to limited exceptions, that it and its affiliates will not Transfer (as such term is defined in the Lockup Agreement) or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of Company Common Stock held by Terumo until October 24, 2026; provided that the Lockup Agreement only applies to Company Common Stock held by Terumo and its affiliates as of the date of the Lockup Agreement.

​

168

Table of Contents

The Series A Preferred Stock had a fair market value of $12.6 million as of the issuance date and was recognized as part of mezzanine equity. The remaining $7.4 million of the $20.0 million received in consideration resulted in a premium that was recognized as Partnership revenue for the year ended December 31, 2025.

​

4. Medtronic Agreement

In June 2022, Orchestra BioMed, Inc., BackBeat and Medtronic entered into the Medtronic Agreement for the development and commercialization of AVIM Therapy for the treatment of pacemaker-indicated patients with uncontrolled HTN despite the use of anti-hypertensive medications (the “Primary Field”). Under the terms of the Medtronic Agreement, the Company is sponsoring an ongoing multinational pivotal study, to support regulatory approval of AVIM Therapy in the Primary Field and is financially responsible for development, clinical and regulatory costs associated with this pivotal study. AVIM Therapy has been integrated into the Medtronic top-of-the-line, commercially available dual-chamber pacemaker system specifically 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 AVIM-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 AVIM-enabled device sold based on a formula of the higher of (1) a fixed dollar amount per AVIM-enabled device (amount varies materially on a country-by-country basis) or (2) a percentage of the AVIM Therapy-generated sales. Procedures using the AVIM-enabled pacemakers are expected to be billed under existing reimbursement codes.

Medtronic has a right of first negotiation through FDA approval of AVIM Therapy in the Primary Field, to expand its global rights to AVIM Therapy 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 years ended December 31, 2025 and 2024, the Company incurred approximately $13.7 million and $9.2 million, respectively, of research and development costs related to these reimbursements pursuant to the Medtronic Agreement, of which $5.3 million and $5.1 million, respectively, is included within accounts payable and accrued expenses in the Company’s December 31, 2025 and 2024 consolidated balance sheets.

Concurrently with the close of the Medtronic Agreement, Orchestra BioMed, Inc. also received a $40.0 million investment from Medtronic in connection with Orchestra BioMed, Inc.’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.

​

169

Table of Contents