Good afternoon. We're going to continue to move down through the medical device track at the 45th Annual TD Cowen Healthcare Conference, and we're excited to have David Hochman, Chairman, CEO, and Founder of Orchestra BioMed presenting today. Maybe if there's time, there'll be a couple of questions at the end. David, thanks so much for joining us here. It's an exciting business model that's unique in the medical devices sector and some potentially disruptive technologies, and looking forward to hearing the update.
Thanks so much, Josh. Appreciate it. Thank you for having us. As I said, my name is David Hochman, and hopefully our slides are here.
I'm going to talk about any slides for this, so I can pull them up from the server.
What was that?
They confirmed the slide.
Yeah.
Yeah.
I'm sorry if you can do that.
Yeah, as long as they confirmed at ready room that they are here, then they should be here. I just need to grab that very bottom. That's today's Monday, and then.
There we go.
Your Orchestra, right?
Yeah.
Thanks. This is a PDF, so give me one second.
All right. Technology stands in the way of many things. All right. Only because we're webcasting, I want to make sure we have both. There we go.
All right.
Thanks. Awesome. Great. Orchestra BioMed was founded to pursue and bring a partnership-enabled business model to med tech innovation. A lot of biotech, biopharma companies are presenting here. Partnerships are fundamental to how many drugs are developed in collaboration between a smaller innovation-oriented company and a big company that has a commercial presence. We thought that with the right assets, that could be a powerful way of advancing high-impact innovation in med tech and ultimately build a business that can yield exceptional profitability because we drive the product development to data, make those fixed investments, and ultimately our strategic partners have to drive commercialization through their established channels. We have two internally developed lead programs that are partnered, the first of which is AVIM Therapy, which is a potent treatment for hypertension that runs really as software on an established device, a dual-chamber pacemaker.
We target high-impact hypertension in both the pacemaker population and beyond. We have great data I'll walk through. We're now enrolling our pivotal trial with what we believe is the ideal partner, Medtronic, the dominant market leader in the cardiac pacing therapy business with a significant revenue share that I'll walk through. Our second program, the Virtue Sirolimus AngioInfusion Balloon, is a highly differentiated, in our view, best-in-class drug-eluting balloon that targets a large established market for coronary and peripheral artery disease. Like AVIM, we have strong pilot data, and we have an IDE and expect, and actually today updated our timeline. We expect to run a randomized study versus what is now the market leader, the Boston Scientific Agent Balloon, and get that initiated in the second half of this year. Our partner is the largest global Japanese-headquartered medical device company, Terumo.
Interventional cardiology is their largest market segment, and we also have a significant revenue share that I'll walk through. The concept of this business is clear. We want to be able to participate in the long arc of value of our products through royalty and revenue sharing, outsource commercialization to our strategic partners, and be able to take advantage of multiple shots on goal in our pipeline.
Ultimately, move faster to impact patients by leveraging our expertise and that as well of our partners. What do our partners need from us? Ultimately, they need to deliver growth while at the same time outsourcing the work and the P&L dilution from R&D. Both our programs allow our partners to do that, and we think that those advantages are significant given that the average med tech spend on R&D is only 7% of revenue as compared to pharma that spends 20%.
At the end of the day, it does tons of partnerships. We think this model is something that we're proving and that we can scale. I'll go into this in more detail, but both of our technologies represent platform technologies. Our collaboration with Medtronic, first and foremost, focuses on the significant opportunity to treat hypertension, the number one comorbidity in the existing pacemaker population. We have a big focus, though, on expanding that to hypertension in patients with increased cardiovascular risk, where we think there's overlap between our existing population and that opportunity. We have a pipeline program in heart failure. We think there's overlap with hypertension HFpEF, but also the potential to apply our technology in the future to HFrEF. The Virtue technology focuses on three primary indications where we already have FDA breakthrough designation.
That's coronary in-stent restenosis, coronary de novo small vessel disease, as well as BTK in the periphery. We do think this is a workhorse product in both interventional cardiology, both in the heart and beyond. The technology I'll describe, though, we think has applications outside of cardiovascular that could lend themselves to additional partnerships. We've assembled an outstanding team. This team is highly experienced. Our leadership team collectively has over 300 years' experience doing what we need to do best, which is develop IP and bring products to market. Most of that leadership team has over 25 years' experience, and a lot of us have spent a lot of our careers working together. We've established also a great board of independent directors. Added some strong members to the board this year: Dave Pacitti , John Mack, most recently Chris Cleary.
Our board has substantial med tech, both biotech and public and private experience that we leverage. Driving into our lead program, atrioventricular interval modulation therapy, or AVIM therapy. We originally called this BackBeat CNT. High blood pressure, hypertension is really the biggest medical problem in the world. It affects over 1.2 billion patients. We really focus on the highest-risk patient populations, which tend to be older, comorbid, and we're starting with the pacemaker population because our technology is integrated into that existing device. As you'll see, it immediately, substantially, and persistently lowers blood pressure. We have a great beachhead because hypertension is a huge problem in patients that already need a pacemaker. Ultimately, that represents an annual population of around 750,000 patients that will get a pacemaker every year that also have high blood pressure.
We see that just based on the existing reimbursement, the existing market opportunity, as a $2 billion market that Medtronic can essentially recapture reimbursable dollars that ultimately get commoditized because pacemakers tend to be sold under negotiated contracts. For this market, we're working with the market leader to target the same patients that have this significant comorbidity, over 70% of them. We're going to be working with, and in our trial, working with the same physicians, ultimately implanting the same device and, importantly, leveraging the well-established existing reimbursement in place.
The expansion market, which we think is conservatively stated here, it's a fraction of 1% of the global population, patients that really look a lot like the pacemaker population, older patients that have comorbidities, that have significant blood pressure disease that represents near and present risk of heart attack, stroke, but most importantly, also progression to heart failure and other diseases. We think the data we're generating in the population on the left really informs a significant expansion opportunity for a pacemaker device that now is really delivering AVIM to new patients. Walking through what we and Medtronic bring to this partnership, first and foremost, our team developed AVIM therapy from concept. Really, it was in a predecessor company that became a wholly owned asset when we formed Orchestra. We own all of the IP.
We have over 110 issued patents just for hypertension, additional IP related to heart failure. These patents are continuing to issue. Right now, our patent portfolio extends to really the end of the next decade, around 2040, and we think we're going to continue to extend that patent portfolio with new issues. We conducted the prior studies, which I'll detail now, some of the key data. Importantly, in both our partnerships, we act as the sponsor for the first pivotal study. The BackBeat Global Pivotal Study, we're the operational and financial sponsor, though we have a lot of help from our strategic partner, Medtronic. Our revenue share is here stated in dollars. Once again, assuming the constraint of existing reimbursement worldwide, we stand to make between $500 and $1,600 on every device that Medtronic sells in the future with our technology. The $500 represents the OUS minimum.
There are higher minimums in the US, China, and Japan. The $1,600 represents our upside capture relative to Medtronic's sales. By the way, that's not capped. Assuming that reimbursement has add-on payments, which are certainly possible, we participate in the upside. This is actually quite understated. Medtronic is the dominant global leader in pacing. In the US, their market share is around 55%. Generally, they control about half the global market. Their revenues are actually significantly more than this, but it is a multi-billion dollar foundational business that generates significant cash flow and is actually driving significant innovation in areas like leadless pacing, conduction system pacing. Medtronic has already integrated our therapy for the purposes of our clinical trial, our pivotal trial, as a download into their existing top-of-the-line devices. They have exclusive rights. The commercial device that they're already building will be a firmware integration.
Ultimately, the decision to have an AVIM device will have to happen at the time of implant. They have a right of first negotiation, but ultimately will have to do another partnership with us to expand the rights for the non-pacemaker population. At the time we formed the partnership, Medtronic invested $50 million in equity of the company at $10 a share. How does AVIM therapy work? The name describes very much the mechanism. The primary mechanism, this is all delivered as programming to a dual-chamber pacemaker. Our primary mechanism for lowering blood pressure is to pace with short AV timing, ultimately reduce the time of the contraction of the atrium and the ventricle. That reduces the time that the ventricle is able to fill. The ventricle is an amazing fill-responsive muscle. The more you fill, the more you stretch, the more it contracts.
By doing short AV pacing, we can see an immediate drop in blood pressure. Ultimately, the body, that's not a sustainable therapy. Our body is always monitoring our blood pressure. You get fast reactions to that drop in pressure. What our IP really is built around is how do you intersperse the right amount of longer AV timing across a sequence of beats, and we do this over long periods of time as well, where you don't get that autonomic response. You don't get a response that drives heart rate up. You don't get a response that increases total peripheral resistance. The combination of modulating between short and longer AV intervals allows us, and you can see on the figure right, which is showing blood pressure, the variability is based on respiration. Each red dot is a heartbeat.
When we turn on AVIM, you see a pronounced drop in blood pressure, and you see that blood pressure reduction sustained. We have data on patients actually out to four years. The impact of the therapy goes beyond lowering systolic blood pressure, which was our primary target. What we see is a reduction of intracardiac pressure. We see the heart get smaller and more efficient. We take workload off the heart, but we do not change its ability to respond to demand for oxygenation and contract. Once again, Medtronic is driving other innovations. One of the most important that is complementary to ours is the rapid emergence of conduction system pacing, where you are shifting lead locations to be able to pace the heart in a way that is physiologic. Highly complementary to what we are doing, our therapy works well with it.
Actually, some of our data suggests that we might see even better results. There has been over a decade of work in developing AVIM therapy, the IP, and the data starting in 2012. I'll go through really our second study, our double-blind randomized Moderato II study, in some detail. We formed our partnership with Medtronic in 2022 and started enrollment of our BackBeat Pivotal study just at the beginning of last year. The key results from our pilot randomized study, Moderato II, this was conducted as a multi-center study in Europe using our investigational Moderato Device that provided standard pacing plus AVIM. Really targeted the same patients we're focused on now with the BackBeat Pivotal study. You needed a pacemaker, but also had hypertension, high blood pressure above target despite medical therapy. In this study, we required at least one drug.
You tend to find most of these patients are on multi-drug therapy. In this study, it was an average of 3.3 medications. The primary endpoint is difference between the groups in 24-hour ambulatory systolic blood pressure. Patients are wearing a device that's monitoring their blood pressure throughout the course of a 24-hour period. The primary endpoint here, you can see we won very clearly, statistically significant difference between groups at six months, absolute effect of 11 millimeters, difference to control of over 8 millimeters.
It's important to note these patients had relatively low baselines, about 137. These were results that took patients to levels that were at target. I'd like to also highlight the one-day results. As we said, this is immediate. You see a very pronounced impact on blood pressure before compliance, adherence, or other things that impact patients in the real world and trials take over.
Once again, the results are consistent, consistent with our prior studies, consistent with the office cuff data. We saw nice sustained results in this study at two years. Safety was measured by a difference between groups in major adverse cardiac events. Not a powered endpoint, but the trends are favorable. No events with AVIM, a 14% rate with the control group. What we are doing by lowering blood pressure is ultimately reducing the number one driver of events in patients. We have continued to put out new data just in the last year, a few key results. We saw long-term ambulatory results from Moderato II patients where a reduction in this subgroup was sustained out through nearly four years without an increase in medication. Actually, we saw a trend to lower medication.
Last year at THT, we showed a different study with invasive PV loops that really highlighted the mechanism, both with standard and with conduction system pacing, where we saw reduction in volumes, all of those items I talked about earlier, reduction in stroke work without any significant reduction in stroke volume. Just last month, we presented additional follow-up for Moderato II, looking at the echocardiographic results, where not only do we see reductions in blood pressure in patients that had identified diastolic dysfunction, but actually some pretty notable and important improvements in the function of the left ventricle, its ability to relax and passively fill. Generally, those tend to deteriorate only in one direction. Not only are we lowering blood pressure, but we're improving the function of the heart. Our key endeavor with this is now the BackBeat Pivotal study, which we started last year.
This is a 500-patient, very robustly designed study that we're going to conduct ultimately in around 100 centers in the US and primarily Europe. We intend to enroll this study and complete enrollment now in the first half of 2026. Very similar study design now scaled up relative to the Moderato study. One-to-one randomization of AVIM plus medical therapy versus medical therapy alone. Primary endpoint is ambulatory blood pressure, but measured at three months.
We have great three-month data for Moderato I, very consistent with what we saw. Shorter endpoint and a novel but appropriate primary safety endpoint. Over 50-plus years of pacing, we have a clear view of what are the anticipated serious adverse device events. We're looking just in the AVIM treated arm for freedom from unanticipated events or an unacceptable rate of unanticipated serious adverse events. Those are the primary endpoints, both at three months.
We will in this study keep blinding and follow patients for significant additional endpoints, both related to safety and efficacy, including looking at a powered comparison of total adverse events. We ultimately believe that's going to be favorable for AVIM. It's a novel study in that there are no implants in the study. Patients are receiving a Medtronic top-of-the-line commercial implant. We can enroll patients looking back up to a year. We can screen and follow patients for a year once we've consented them to the study, ultimately looking for patients that have blood pressure above target on a stable regimen of one, two, or three meds. Importantly, this study, all patients prior to randomization receive the download of AVIM therapy. And then all patients undergo setup, which is essentially programming of the pacemaker for AVIM, efficient procedure, but they need to see a threshold response.
We actually see a responder analysis before randomization. We're making sure we tune to get a great blood pressure reduction without over-tuning the therapy and driving hypotension. Then all the devices are turned off. Patients are randomized. The engineer, the field engineer, turns on the AVIM treatment arm patients and ultimately blinded to physician and to the patient. Double-blind study, though, in a device implant. Primary endpoints at three months, follow-up to 12 months. We think that three and 12-month data will be the basis for the regulatory submission. Importantly, Medtronic will file that PMA supplement, not a full PMA. Shifting gears to our Virtue program. Right now, as we shift from treating hypertension through an implanted electrophysiologic device to treating plumbing in the heart, there's a big paradigm shift going on right now, away from permanent implants like drug-eluting stents to drug-coated balloons.
Last year saw Boston Scientific receive the first approval for a paclitaxel-coated balloon, a breakthrough product for which they did a great job of establishing add-on premium reimbursement, ASPs ranging between $5,000-$7,000. Drug-eluting stents now are below $1,000 in the US. A big shift in paradigm to be able to take away the risks of a permanent implant. What we have, we think, is a highly differentiated and best-in-class solution that ultimately brings the proven gold standard drug, sirolimus, into play from a drug-eluting balloon that does not have a coating that ultimately solves a lot of the procedural issues associated with the type of product that Boston and others are pursuing. This is for a large established market for which we also have breakthrough designation.
That market involves globally 2 million patients that are being treated in the coronary side, over 1 million patients on the peripheral side. Similar to our partnership, we develop the Virtue Sirolimus AngioInfusion Balloon technology from concept stage. We own all the IP, including very significant proprietary know-how. We conducted the prior study I'll walk through. We will be the sponsor for the first pivotal, which will be in coronary in-stent restenosis. We'll receive in the future a royalty in the range of 10-15%. We'd expect in the US it'll be the top of that range. Plus, we provide the drug component for an additional payment. We retain all the rights to this technology outside of vascular. For those of you who are not familiar with Terumo, they're the largest global medical device company headquartered out of Japan, generate well over $6 billion in annual revenues.
Their biggest business segment is interventional cardiology, about 40% of the revenues, 70% of their operating profit. In this deal, we are paid $30 million upfront. Terumo also made an equity investment. They are responsible for the clinical and regulatory expenses of the program beyond the first indication, managing the device and all commercialization. In the U.S., we would see Virtue as a flagship product for them in terms of a therapeutic product. We are currently actively negotiating with Terumo, restructuring of milestone payments and some other key terms, as we've previously disclosed. What we see as a compelling opportunity for this product is a lot of knowns where we think we've built an ideal solution for what physicians want. Ultimately, we know that sirolimus is the gold standard best-performing drug for managing restenosis from drug-eluting stents.
That's based on a huge quantity of data, over 26 randomized controlled trials. However, to get the benefits of sirolimus, you need to make sure the drug has sufficient uptake and is available at a sufficient dose concentration for at least a month. The question is, why do we have, if sirolimus is a better drug, Boston and others have paclitaxel-based coated products? Not because the drug is better, but ultimately, it's easier to formulate in a simple product as a coating, even though the coating comes with challenges. A coating loses drug on the way in. It creates particulate; it forces physicians to rush. Ultimately, that easier product was compelling. We developed through innovative technology and approach, which we think optimizes the entire technology construct and allows the full benefits of sirolimus without the challenges of a coated balloon.
We did that by, first and foremost, innovating around the drug. We've developed what we call SirolimusEFR , or extended focal release. It involves a novel bioabsorbable encapsulation technology that we developed. Ultimately, what you're seeing on the left is our published preclinical data from over 750 porcine artery segments. It's involved over 100 animals. The orange line really is the known dose concentration of sirolimus from all of the drug-eluting stent data. We know we need to have at least 1 nanogram per milligram of drug tissue concentration over that month to manage healing. You see Virtue is able to deliver a very significant—this is a logarithmic scale—dose of drug well above the known concentration at the end of 30 days. It's a targeted system. What goes to the artery is a significant dose.
What goes to downstream myocardial tissue or other organs is below the level of detection by within a few days. At the end of the day, we also deliver that through a differentiated product, a microporous balloon that has the drug reconstituted essentially for liquid delivery. Much like a syringe, we load a specific dose into the catheter, and the physician now is in total control of drug delivery. There is no drug on the surface, no drug loss in transit to the target lesion. At the end of the day, the physician can take their time. They see the drug being delivered. At the end of the day, they do not have to worry about large particulate, which all coated balloons create.
When we look a little bit closer at our drug delivery profile from a subset of the data I previously showed you, and we look at this benchmarked against the exact same protocol of animal studies for Cypher, which was J&J's initial first-ever drug-eluting stent, Xience, the gold standard best-selling stent in the world from Abbott, you can see Cypher and Xience have very similar PK profiles, all aimed at that one nanogram per milligram tissue concentration. You can see Virtue is capable of delivering actually significantly more drug and achieving higher drug levels in tissue. When we did our pilot study, the SABER study in coronary ISR, this translated to best-in-class results. The key clinical endpoint used in this indication, this is first-time single-stent restenosis in patients. You had a stent. Now you have developed restenosis at that lesion.
We look at the endpoint of target lesion failure at 12 months. Did you have—you got retreated? Did you need to go back and treat that again? Did you have a major adverse event? Essentially, that is the rate of TLF. You can see in our study, Virtue at one year had a 2.8% TLF rate in single-layer restenosis. After a year, there was no need for revascularization in those patients. You want to treat them, leave nothing behind, and get a better outcome. Great angiographic results as well. Late lumen loss at just over 0.1 millimeter. All best-in-class results. When we look at Boston Scientific's pivotal trial data in the same population, single-layer restenosis, once again, different studies, you can see a TLF rate of 13.5%.
Much better than plain balloons that garnered approval, but we see opportunity for Virtue to perform really well in a head-to-head study, and that's what we intend to conduct. This also is an update from today. We've been working on what we think is the right study to do to showcase what we believe is a best-in-class product. We plan to conduct a randomized head-to-head study versus the Boston Scientific Agent Balloon. Once again, the primary endpoint with the same target lesion failure at 12 months. It'll be powered for non-inferiority, but we think this large study will be able to showcase the performance and potentially show differentiation between our products.
We expect to have the IDE amended in the near term and are working diligently to be in a position to start this study in the second half of this year while, obviously, our active negotiations with Terumo continue. In summary, we are really excited about both our programs. Our lead program, our AVIM therapy program, is a highly differentiated technology that goes after defined large markets, established markets with hypertension, starting with the pacemaker population. We are actively enrolling our pivotal study with, we think, the market-leading strategic partner. There is a huge revenue share and opportunity to expand this partnership. Our second program is poised to move into a pivotal this year with a great partner and significant near-term milestones.
Our business model is fundamental to how we're going to make money for shareholders, enabled by strategic partners, ultimately more capital-efficient because at some point, we don't need to continue to invest. We shift the responsibility to our partners and hopefully can build a very profitable, actually exceptionally profitable business. We are very proud of the significant shareholders that have helped us build the business, both of our partners and two of the leading healthcare funds, RTW and Perceptive. Hopefully, we have maybe enough time for one question, maybe two.
Great. No, thanks, David. Fantastic download. We appreciate the updates here today in conjunction with the TD Cowen Healthcare Conference. Was hoping to just better understand the strategy to go head-to-head in the drug-coated balloon study and modifying the strategy. I think I know the answer.
You showed a very strong clinical signal with the TLF rate and I know cross-trial comparison with the Agent IDE study outcomes there. Maybe just help us think through the strategy. I think you guys are putting your investment dollars where your confidence level is, it seems.
First and foremost, we have confidence in the product, but that's really what the clinical investigators want. We think there's going to be significant utilization of Agent for coronary ISR. Once again, that's the new product. Enrolling head-to-head is going to probably be easier than enrolling our prior study design versus plain balloons. Ultimately, there's going to be physician and patient resistance to being in a randomized study and not getting a best-in-class product. We think enrollment's going to be an advantage. You can either have the new Agent product or the very compelling Virtue offering.
There's a lot of excitement from physicians and sites. We're pretty far along in terms of establishing that. At the end of the day, what we see is a low-risk study. The baseline non-inferiority is something we have confidence in. Your risk of getting the data you need for approval is very low. The opportunity for upside in this type of study where we have the potential to see numerical differentiation and on the outside chance of even statistical differentiation allows this study to set up Virtue for, even though it won't be first to market, for potentially being best in class. We know that it was really the third and fourth entrants into the drug-eluting stent market that, in the long run, have frankly had almost 20 years of dominant success by coming into a market with a better product.
That is what we would hope to see for Virtue. This is the right approach, we think, to try and establish that.
Understood. I think we may have to just wrap it up there just to get prepped for the next presentation. Thank you so much for joining us up here in Boston. Great to see you.
Appreciate it.