Orchestra BioMed to go public via SPAC with HSAC2
Jump to heading Orchestra BioMed to go public via SPAC with HSAC2
Orchestra BioMed will go public and collaborate with Medtronic on cardiac neuromodulation treatment.
Orchestra BioMed announced a number of agreements today, including a strategic partnership with Medtronic (NYSE:MDT) and a SPAC agreement to take the firm public.
The international strategic alliance will aid in the advancement of Orchestra BioMed's BackBeat Cardiac Neuromodulation Therapy (CNT) as a viable therapy for hypertension in individuals who have been prescribed a cardiac pacemaker.
In addition, Orchestra BioMed secured a $110 million Series D funding led by Medtronic, RTW Investments, LP ("RTW"), Perceptive Advisors, Terumo Corporation ("Terumo"), SternAegis Ventures, and other investors.
Ultimately, the firm will go public via a definitive business merger deal with the SPAC HSAC2. According to a press release, the agreement is planned to yield a minimum of $70 million in total cash to the merged business at closure and up to $160 million if no HSAC2 shareholders redeem their shares. The Series D funding was not conditional on the company merger being completed.
The business merger agreement includes a total of $20 million in forward purchase agreements from Medtronic and RTW (an associate of HSAC2's sponsor and a major health sciences investment company), as well as a trust backstop arrangement with RTW worth up to $50 million.
Orchestra BioMed anticipates a fully diluted pro forma market cap of $407 million assuming no redemptions and $317 million providing the minimum gross cash requirement is fulfilled. Orchestra BioMed expect the merged company's pro forma fully diluted enterprise value will be $158 million.
Following the completion of the deal, the firm will be known as "Orchestra BioMed Holdings." David Hochman, Chair, CEO, and co-founder of Orchestra BioMed, will continue to run the firm, which will list on the Nasdaq under the symbol "OBIO."
The business combination and Series D financing are expected to generate at least $180 million in gross proceeds, according to the firm. Based on current plans and forecasts, the merged business should have enough capital to sustain operations through 2026 if the minimal pro forma cash level is maintained.
"These substantial agreements confirm the value of Orchestra BioMed's key research initiatives and our new partnership-enabled operating model." "Medtronic is the appropriate firm to help us develop BackBeat CNT for the treatment of hypertension, which is very pervasive and generates major health risks in the pacemaker community," Hochman said in a press release. "This joint initiative, together with our existing strategic alliance with Terumo for the development and commercialization of Virtue Sirolimus AngioInfusion Balloon (SAB) for treating artery disease, exemplifies our commitment to building potentially high-impact medical innovations in collaboration with global medical technology leaders." The funds from our Series D funding and anticipated business combination provides Orchestra BioMed with a significant financial range and position us to reach key milestones."
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(As of July 7, 2022, funds managed by Cohanzick Management, LLC and its affiliates do not own a position HSAC2, Medtronic, Terumo Corporation.)
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