All right. Thanks everybody for joining this session. I'm Matt Taylor, the U.S. Medical Supplies and Devices Analyst here at Jefferies, and pleased to be joined here by the management team from Orchestra BioMed. David Hochman is the CEO. Thanks, Matt. We're going to go through a fireside chat format here, Dave. I guess just to start, always want to make sure we speak to folks who may not be as familiar with. Yep. The company. Could you just talk about high level sort of thesis behind Orchestra BioMed? Because it's very interesting and differentiated as far as the model goes in med tech. Sure. Orchestra BioMed was a company founded to drive biomedical innovation through a partnership model. We're great at developing intellectual property and products. We have two pivotal stage programs, but what we're doing in the medtech space is what we see commonly done in biopharma, bringing those products forward into market through partnerships, where our job is to drive the pivotal trial execution, get the data, and our partners then are positioned to take over from a standpoint of regulatory, manufacturing, commercialization. Our lead program is partnered with Medtronic, for example, and as we now look to pivotal data less than a year from now, we're really excited about how that model can work. Means our concentrated spending is on R&D, but on commercialization, really, we can potentially bring spending down significantly, but our royalty interest in the product could see a nice steep climb in revenue, but also a quick turn to profitability. Yeah. I think there's already some good proof points here that this is a model that's much needed in med tech. Very much. You've got some great partners with your lead programs, so maybe we could dive into those and talk about the first one. Sure. First with Medtronic, the BackBeat program. Could you give us an update on where that is, and maybe talk about the structure of that partnership? Sure. The BackBeat trial is for a therapy that is called AVIM or atrioventricular interval modulation therapy. This therapy and the partnership really aligns with the core foundational business of Medtronic, which is cardiac pacing. Medtronic was founded around the pacemaker, and that is still one of the most significant businesses, one of the businesses where they really, truly dominate the market. Approaching $2.5 billion in revenue, significant cash contribution, and now a business that's turning to growth where our therapy redefines the paradigm for what the device can do by enabling treatment of hypertension and particularly hypertensive heart disease in those patients and beyond. Older patients with high-risk hypertension that is driving immediate risk of heart attack, stroke, but also really driving progression to heart failure. Our therapy is programming for the device commercially to be firmware. You don't change the device. You don't change the way it's implanted. There's been some significant changes in how leads are actually being positioned, which are really synergistic, that Medtronic has been driving. If you take a device that is a significant revenue driver, significant profit driver, and now supercharge it with new clinical impact, that can actually lead to premium pricing fit with an existing reimbursement, but also potentially enhance reimbursement. It could be a major growth driver for Medtronic while having a huge impact on the patients they already serve and opening up, in our view, an opportunity to treat hundreds of thousands or millions of additional patients with that same technology. Where the program is. We've been enrolling patients in the BackBeat trial, which is a double-blind, randomized study of AVIM therapy, where we're looking to demonstrate superiority in blood pressure management versus patients just being on meds, and we're nearing completion of enrollment. We hope to finish enrollment by the end of next quarter, or actually this quarter, excuse me now. I don't know, I'm sorry, end of Q3, sorry, in June. I'm sorry, I've been traveling so much, I forget what the dates are, so, and the next quarter. It's a three-month primary efficacy and safety endpoint, so that should put us in a position to hopefully report data in Q2 at a major conference. The cycle from there then becomes really exciting because of the partnership structure. Medtronic would file for approval promptly. We hope this to be a PMA supplement, so you could see approval by the end of 2027, and in the hands of Medtronic global commercialization in 2028 into 2029. Really kind of key inflection point right now. Right. Well, there's a lot there I want to unpack, too. Maybe first, we could just talk a little bit about the effect that you've seen. Yeah. From the therapy in some of the predecessor studies, because you've already shown pretty good data in a phase II, and I would expect we could see something similar in the pivotal. Maybe better. Frankly, the data's been outstanding. What's important to note about AVIM therapy is it's a programmable therapy in a pacemaker. It works immediately. One of the things that we just showed at HRS from our phase II study, which is new data, is that before we randomize patients, we set them up with a therapy, and we're looking for the therapy to drive a threshold response, at least 5 mm of mercury reduction. We were 97% successful in our last trial in getting the therapy to drive that, and actually, the average result was 13.2 mm reduction in systolic blood pressure. That double-digit reduction in systolic blood pressure is consistently seen out to two-year follow-up and in a cohort of patients out to four years. You see it on day one, 15 mm drop. You see it in the six-month endpoint in that trial. FDA prefers a three-month endpoint for blood pressure studies, and that's what we have in BackBeat. Across every time point, AVIM drives systolic reductions of over 10 mm, both ambulatory and office blood pressure. To put that in perspective, a 10 mm reduction in office blood pressure, if we think about all hypertensive patients, has been demonstrated to be a 20%-30% in relative risk of heart attack, stroke, progression to heart failure, progression to end-stage kidney disease, progression of atherosclerotic disease. In the older patients we're treating, the relative risk reductions are going to be even more significant. This is a therapy that can be game-changing for managing the trunk of the tree, the thing that drives all of these cardiovascular events, but doing it in a way where you're not relying on additional meds, additional patient compliance. Our therapy works in the background immediately. Patient doesn't even really feel the therapy. The data's been great. To your point, I think if we can replicate that data in the BackBeat trial, we have a potential new paradigm for these patients. We're excited about what we're seeing, at least prior to the blinded randomization of the patients. I think there's advantages to the therapy running on the Medtronic platform, and I wouldn't be surprised if actually the data is equal or even better. Mm-hmm. Yeah. I mean, it's certainly a meaningful reduction. Yeah. Oftentimes when we've done research on, of course, everybody knows Medtronic's doing renal denervation- as well, which is sort of an adjacent hypertensive treatment. Highly synergistic, actually. We had seen a few management meetings with the Medtronic team this week. Really, if you think about our patient population is over 65, generally. The targets for renal denervation are under 65. I think the vision we and Medtronic, I think, share. I think you'll hear more from Medtronic as we progress. One, it layers on top of a core business, gives them something no one else has in hypertension therapy. They clearly are building and leading the market in bringing device therapy into hypertension with renal denervation. I think the numbers continue to track nicely. Their role in hypertension management from a device perspective is going to, I think, be dominant. AVIM gives them another really powerful tool for that. Yeah. Just knowing from talking with many physicians, they would view certainly a double-digit reduction as very clinically meaningful. Yeah. It's a big effect size. Having both, as you said, would be a really powerful differentiator. Maybe we could talk about two things. You mentioned your travel schedule. We were joking about that before, but I think it could be illustrative to help people understand what do you do? What are the services that you provide in these clinical stages as a company that helps to offload some of that work that Medtronic might have. Sure. Themselves. The role of innovation has to go through the gauntlet of clinical trial execution, I think in the last five years, certainly post-COVID, clinical trial execution's gotten harder for everyone. One, the size of trials, the regulatory burden has grown, more importantly, research is driven. There's a lot of physicians that love doing research, ultimately, the research coordination tends to be really driven by small groups within hospitals. What we bring to the table as an organization that now is a little under 100 people, large portion of that organization is clinical operations and field clinical that has the entrepreneurial drive at a small company that essentially our future is going to be built off of that clinical result. At the same time, under the partnership, we're the company absorbing the P&L expenses of the trial. That's where we're spending money. From the partnership with Medtronic perspective, there are huge advantages to this collaboration. We're the frontline, but we have enormous support from their field clinical, even their commercial organization, because we're running the trial. They're not necessarily the front line. We have all of that leverage, but they've got the advantage of having an outside team that's hungry, motivated, focused, where our leadership team, our organization is showing up at our clinical sites all the time. I've been to two-thirds of our sites personally. I think that not only is it a P&L advantage, but a real operational execution advantage. We think of big companies as being able to do everything. They have limitless resources, but they do have limited resources, and so we extend those resources, and we obviously have direct knowledge. We built this IP. We ran the prior studies, and so we're able to execute in a way that I think has gotten this program to this inflection point, and maybe it wouldn't have worked the same way had Medtronic run that trial on its own. In the meantime, because we have another program, we've built great relationships with some of the best research centers. We have a lot of perspective now on who actually can drive enrollments and not. That's going to be a core competency for Orchestra we can build on as we move to other programs. Maybe flipping to the commercial side of things, can you talk about how the economics will work? Sure. Once Medtronic goes commercial, and maybe talk about what that could mean for your P&L going forward? Sure. One of the exciting things about layering a therapy onto a well-established global paradigm of cardiac pacing is patients that need a pacemaker get them all over the world. While reimbursement values vary, these are procedures that are covered everywhere. Because the devices have been around, pacemakers have been around for over six decades, and there isn't significant, on the transvenous pacing side, differentiation. How Medtronic has maintained dominance and leadership is through contracting and service. Oftentimes at commoditized pricing versus Abbott or Boston Scientific or BIOTRONIK. Where they're able to drive better pricing, by the way, without changing reimbursement, is where they can have differentiation from their competitors. The last major differentiation was MRI compatibility. On the lead side, right now, there's differentiation in conduction system pacing, but it's usually an arms race. What we and Medtronic sees an opportunity for AVIM to redefine the clinical impact of the device with now hypertension management, but do so in a way where our relationship's exclusive. Only Medtronic will have this offering. We have spent from the inception of developing the therapy, which goes back a long time, actually. We've been working on this for over a decade. We have built very carefully what we think is a dominant IP estate. Over 120 issued patents globally. Medtronic did a lot of work on that. Through the license, they have the leverage of that protection. We're the only program running, so we are years ahead of any of their competitors in terms of clinical and regulatory development. There is an immediate low-hanging opportunity to bring this new therapy, which will be their, when they launch it, top-of-the-line offering in at a premium price, but within an established reimbursement structure. What we have is an attractive alignment on royalty-based revenue share. Outside the U.S., we have a minimum payment of $500 per device. U.S., China, and Japan, there's a higher minimum payment. Without changing reimbursement here in the U.S., we can get up to $1,600 of the upside of each device as a royalty payment. That could be pretty substantial given that we see globally 1 million patients every year get pacemakers that have hypertension, and half those patients are already getting Medtronic devices. There's a very significant royalty stream, but if you look at Medtronic's perspective, they're only going to pay that royalty if there's even more significant revenue growth, and every dollar to them is ultimately going to be contribution margin. Real alignment of interest to be able to take advantage and drive the clinical impact, but the commercial advantage. For us, those type of royalties on an only R&D base P&L could mean a very fast turn to profitability, and that's why we pursued this business. We have a great second program in Virtue, but there's a lot of opportunity to be taking advantage of this type of business, in a time where big company's looking to drive growth, but that operational and financial flexibility to do all the clinical development is a real limiting factor in the med tech space. We think we have the right model at the right time and are now at key proof points and could have significant fuel from one success to do more as we grow the business into the future. Got you. Just to be clear, we could see data potentially early next year? We think we're on track to, and we've just announced this timeline aligned with Medtronic to key milestones in the next year. Finish enrollment, hopefully by the end of Q3. Three-month primary visits, so really finish all the primary visits right around the end of the year. Then do the data analysis in Q1, and there's a couple good opportunities to look at late breakers. The ideal way to unleash this data will be late breaker publication with obviously then a very aggressive approach on Medtronic's part to regulatory approvals and commercialization. Once again, the device has been developed. It's built. You're talking about the largest manufacturer in the world of pacemakers, the largest commercial organization with the best sales and service, and that part's really important. It's amazing now working with Medtronic. Their field clinical people are critical to how these devices are programmed and implanted and serviced all over the world. It's a priceless relationship because there's no company in the world like Medtronic when it comes to cardiac pacing, and this is arguably their strongest business. Maybe we should shift gears and talk about your second program. Sure. That you alluded to. Allude is a good word. That's true. Yeah, maybe I'll tee it up for you and just say that folks are likely familiar with drug-coated balloons. Yep. You've got a solution that could potentially be better. We believe. Love you to explain a little bit how your solution's different. How you're choosing to express that through the trial design. Drug-coated balloons are a paradigm shift in the treatment of artery disease and big dynamic and coronary. In the U.S., Boston Scientific's first to the market with the AGENT paclitaxel balloon. The whole idea is how do we get good outcomes for patients, particularly in some of the more difficult-to-treat areas of coronary disease, like in-stent restenosis and smaller vessels, without having to leave metal behind, but getting the advantage of proven drugs. Boston's product uses a drug that used to be available in stents, no longer is, called paclitaxel. All the stents deliver a drug called sirolimus or an analog. What we did is we looked at this whole concept and said, "Exciting idea, but a coated balloon is inherently a difficult or challenging device construct. You can only put so much drug on it. It's a fragile coating. By definition, you really want the drug to come off when you treat and then take the balloon out." Not great for sirolimus. We actually did early work in that and saw that it is a drug that needs to be there at a sufficient dose, we know this from millions of stents, for at least 30 days, but on its own, has a short half-life and doesn't really want to go into tissue. We took a very different approach, and when you look at the field and how quickly things are changing, it's exciting to be in a field where every other competitor is pretty much doing the same thing. We did it differently. What did we do? We focused on the drug itself, first and foremost, and developed an encapsulation that does two things that are really differentiated. One, enables significant drug uptake, two, allows for extended release of the drug without changing the active drug at all. We deliver that, we manufacture that separately, then use that drug formulation as the way to inflate our balloon. It is inside the balloon. We deliver it through what we call microporous or AngioInfusion balloon. What we're able to do is with a familiar procedure, you hand the physician a balloon, essentially it's a plain balloon. Now they're inflating the balloon and delivering a much bigger dose of drug. It's liquid formulation. Essentially, you're really bathing the artery with drug. We've demonstrated actually and published very large animal series where 8 to 10-fold the amount of drug delivered versus a stent, not versus a balloon, all the way through the 30-day healing period. What that translated to in our lead indication is treating coronary in-stent restenosis. This is the lead indication that Boston got approved on, where at least the indication and a lot of the uptake is. Just by comparison, in single layer restenosis at one year, in their pivotal trial, they showed a 13.5% TLF rate, target lesion failure. Did a patient need to get retreated or have a major adverse event or both? Ours was 2.8% at 12 months. What we see in the AGENT data now to three years is high growth in TLF and revascularization procedures, essentially 50% growth a year now, two and three years later. In our pilot study, we had only 5.6% TLF at two and three years and no revascularization. Why? We're using a drug we know works. We're just getting a lot more of it and better delivery. Well, it's a better drug and getting more of it there through a novel mechanism. We're in a pivotal trial there as well. We decided to go head-to-head against Boston Scientific's product because it's now available. We're very confident in success because it's a non-inferiority primary endpoint. We're really doing that trial because we think we can show better data and potentially demonstrate on a secondary level superiority. If we do, we think we have a real blockbuster, something that can be disruptive to the field, and there's a lot of indications both within vascular and eventually beyond vascular for the platform technology. Maybe you could just talk about the partnership with Terumo there? Sure. As well. It was recently restructured, I would love to hear about why they're the right partner. Maybe take us through some of the details of the agreement. It's a different relationship with Terumo than we have with Medtronic, where it's more traditional right of first refusal on the coronary application with Terumo. That was the end result of the restructuring. Terumo, for those of you who don't know, is the largest global Japanese medical device company. Sell great products, their biggest business line is interventional cardiology. Frankly, they have differentiated wires, guides, balloons, but they don't have a lead therapeutic asset, particularly in the U.S. They could be a great partner, but because it's a right of first refusal, we do have optionality to look broadly at. We think there's as many as a dozen potential global partners, probably half a dozen outstanding potential partners for Virtue. Terumo could be one of them. Their right of first refusal allows, at least up until about 90 days past our pivotal data, them to look at any transaction we want to do and have 30 days to say, "We want to match or exceed that transaction." We've got one of the best companies we could potentially align with long term already at the table. They've invested and paid us a total of about $65 million for that right. At the same time, we have, I think, a broad audience that's really watching and interested. I just came back, we were talking about from Europe, PCR in Paris. We met with a number of those companies. We're keeping them informed on the program. At the moment, we're well-funded to, we think, finish enrollment of that study next year. We feel we can advance the program. We have some really exciting next-generation technology that we're excited to share with strategics as well, the clinical investor community. We have in Terumo a potential option that is keenly watching what we're doing, but also interest from other strategics. We think that the partnership for Virtue is going to be kind of a next potential event for us in the next one to two years as something to look forward to, along with obviously the trial and the data that could come from the Virtue trial. Can you just remind us on the timeline for that study and when we can see the data? We just got started on that study late last year. We've been activating sites and are really in a nice ramp of site activations. Our hope would be to finish enrollment next year in the study. Ideally, mid to late in the year, we're going to provide more specific guidance probably later this year as we have more sites and more activations to get a better sense of what the enrollment rate is. It's a 740-patient study. We'll ultimately have a lot of centers in the U.S. We're also thinking about adding centers out of the U.S. It's off to a great start, and you can't activate and train a center on Virtue without really the physicians understanding that significant differentiation that we talked about. In the early experience, it's gone great. Physicians are really excited about what this product can do versus potential drug-coated balloon solutions. Whether it's Terumo or it ends up being someone else, what could that deal structure look like in terms of the royalty or how you would get paid? Well, we think that there's margin capacity where, if you think about the Medtronic partnership, where all the math translates to a robust double-digit royalty, and it's easier to calculate the dollar impact, that's why we express it that way. Certainly, this product has an opportunity because it has both a drug and device component and at scale, some real cost advantages to support a double-digit royalty, but potentially we could think of different structures. It's all about aligning our interests with our partners in a way where we have a partner who is hungry to go after the full global opportunity across indications. We think a double-digit royalty certainly would be one of the key goals for us in a partnership, but it's great to have the flexibility to be able to think about how do you structure to align interests with the best possible partner. It's interesting to think about, since I've known you, basically been working on these two programs, and we're nearing part one, at least, of completion of the first one. What are you going to do with all your free time? I'll probably spend a little more time with my wife and family. It's my wedding anniversary today. Got to have a do a little bit of that, a lot of that later. I think we believe we're building a sustainable growth business through the core competencies we talked about. We have now built a team, I think they're getting tried by fire in really innovative, large studies that is doing a great job and hitting our stride at executing on clinical research. We have a model that solves problems for innovators as well as for strategics. I guess I'm not sure we're going to have the free time. I think we are always looking at new opportunities. We have a very high bar and very particular in terms of what we're looking for. Large markets where the kind of partners we have can dominate and do a better job than we could ever do or any startup could do in commercializing technologies like these that are clinically impactful, but commercially disruptive and where there's an economic alignment where a royalty could work for both parties. We looked at hundreds of other opportunities. I think that we're eyeing, as we potentially see some freedom in terms of our operating capacity, what would be the right timing. We have our eye on a few things that we think would be a fit for the model. If not, we could just be a massive cash generator. That could be good for shareholders, too. The passion of the people here, myself very much included, is to take the unique approach we've taken and take the expertise that we've built and drive more value long into the future. We think there's a long runway of impact that Orchestra can do, both with the platforms we have and with other opportunities that we can uniquely pursue. That's one question I wanted to ask you was, you've got a fork in the road ahead, potentially, where you could take BackBeat further and into other indications. You could do that certainly with Virtue, or you could go into some white space. How do you think about which bridge to cross there? We're laser focused on how do we create the most value in and around the two assets we have. We think they are two extraordinary assets. One of the things that's come from our business development and corporate development work, we're an active looker and probably, I think, we would say our perspective on new technology is as strong as any of the venture funds or strategics. We're always talking, but it's a limited group and we have a great head of corporate development. What it's taught us, though, is we love the programs that we have. We wouldn't probably trade them for anything else out there. There's still a lot of value maximization. One way to look at that for the BackBeat AVIM program is while we're fully aligned with Medtronic on the pacemaker population, we see a huge expansion opportunity for patients that are from a demographic age, health-wise standpoint, very similar to the pacemaker population, but don't yet have an indication. Medtronic has a right of first negotiation there, so there's a lot of discussion going on, and I think a likely path that Orchestra and Medtronic are being aligned for that growth opportunity. We also think the data coming out of the BackBeat trial is going to be foundational to even potentially pursuing a label or at least guiding the clinical development pathway to a label. There's a lot more work to do on that program to expand the opportunity set between us and Medtronic, and Orchestra could play a role in further work there. We might not have to. For Virtue, there's the lead indication, but other indications and potentially other markets for the technology. Those three themes are what guide us in looking at new opportunities. Cardiovascular medicine we understand very well. We see opportunities both within cardiovascular and beyond. A space we are spending a lot of time on is heart failure. We're looking at new technologies there, but we've also looked in other interesting adjacencies, interventional oncology, interventional pulmonology. Most likely, if we do something new, I wouldn't be surprised if it's in one of the core cardiovascular markets that we understand and that we have proven relationships and expertise in. Great. Well, I think that's perfect timing. I think we have to end there. Great. This is a great summary, and thanks so much for spending the time with us. Thanks, Matt. Thank you. It's always a pleasure.