Orchestra Keeps the Music Going for This Alternative Method of Going Public

Contrary to popular opinion, special purpose acquisition corporation (SPAC) mergers aren’t dead. The alternative method of going public is just seeing some tough times because of an unstable market.

Orchestra BioMed is the second company in the past few weeks to jump back on the SPAC bandwagon. Earlier this week, the New Hope, PA-based firm said it would combine with Health Sciences Acquisitions Corporation 2.

The Business Combination is supported by $20 million in total forward purchase agreements and an up to $50 million backstop agreement.

Orchestra BioMed is in a strategic collaboration with Medtronic to develop BackBeat Cardiac Neuromodulation Therapy (CNT) as a potential integrated hypertension treatment for cardiac pacemaker patients.

Back Beat CNT is a bioelectronic treatment that is compatible with standard pacemakers.

The recent peer-reviewed, double-blind, randomized pilot study, MODERATO II, showed that patients treated with the BackBeat CNT experienced net reductions of 8.1 mmHg in 24-hour ambulatory systolic blood pressure (aSBP) and 12.3 mmHg in office systolic blood pressure (oSBP) when compared to control patients at six months.

Orchestra BioMed said it plans to conduct a worldwide pivotal trial to further evaluate the safety and efficacy of the BackBeat CNT in lowering blood pressure in a similar target population of patients who have been indicated for, and recently received a cardiac pacemaker implant.

The strategic collaboration with Medtronic will provide Orchestra BioMed with development, clinical, and regulatory support for this planned multi-national study. Upon regulatory approval, Medtronic will have the global rights to commercialize BackBeat CNT-enabled pacing systems for this target population.

Orchestra BioMed will share in the revenues generated from Medtronic sales of the BackBeat CNT-enabled pacing systems.

Orchestra also received $40 million from Medtronic to bring its series D round to $110 million. The company also received a $20 million investment from RTW, and investments from other existing shareholders of Orchestra BioMed including Perceptive Advisors, Terumo Corporation, SternAegis Ventures and others.

“These significant transactions further validate the potential of Orchestra BioMed’s flagship development programs and our novel partnership-enabled business model. As the global leader in advanced cardiac pacing therapies, Medtronic is the ideal company to help us develop BackBeat CNT for the treatment of hypertension, which is remarkably common and drives significant health risk in the pacemaker population,” David Hochman, Chairman, CEO and Co-Founder of Orchestra BioMed, said in a release. 

The company also announced a partnership with Terumo. The collaboration calls for to execute a global clinical program in an effort to gain regulatory approval for commercial sale of Virtue SAB in multiple markets and indications. Terumo made an upfront payment of $30 million to Orchestra BioMed and Terumo will potentially make additional future clinical and regulatory milestone payments.

Orchestra BioMed will share meaningfully in future commercial revenues of Virtue SAB through royalties and per unit payments as the exclusive supplier of SirolimusEFR. Orchestra BioMed retains the rights to develop and license SirolimusEFR and other technologies used in Virtue SAB for clinical applications outside of coronary and peripheral vascular interventions.

“This new collaboration along with our established strategic partnership with Terumo for the development and commercialization of Virtue Sirolimus AngioInfusion Balloon (SAB) for the treatment of artery disease exemplify our commitment to developing potential high-impact medical innovations with global medical technology leaders,” Hochman said in a release.

Returning Trend?

2021 was a great year for medtech companies going public through SPACs. However, the good fortunes for SPAC companies crashed suddenly in 2022 as many backed out of this alternative method to a traditional IPO.  

However, last month, Human Longevity broke the trend of medtech companies backing out of SPACs. The San Diego, CA-based company signed a non-binding letter of intent with Freedom Acquisition 1 Corporation for a business combination that would be valued at $1 billion. The transaction is set to close by 1Q23.

Human Longevity has developed an AI-enabled personalized health intelligence platform that combines genome sequencing, whole body quantitative MRI, and blood biomarkers, enabling early detection and disease-mitigating risk assessments of critical diseases.