Good morning. I'm Josh Jennings from the TD Cowen Medical Devices Research Team. We are moving through the morning track of day two at the 46th Annual TD Cowen Healthcare Conference. We are excited to have the Chairman, CEO, and Founder of Orchestra BioMed, David Hochman. Orchestra is a has a unique business model and has some disruptive technologies that are in clinical development programs. 2026 is a big year for you guys. Looking forward to hearing the updates, including potentially some the actions going on across town at THT. Thanks a lot, David.
Yeah, thanks, Josh. It's great to be here. I think David E. Kandzari is presenting on AVIM therapy at THT across town right now. It's nice to cover ground in Boston. Orchestra BioMed really was founded to bring a business model that is established in the biotech world to med tech. Really, the vision of the company is to drive innovation through partnerships, and I'll talk about how we're doing that specifically. We're excited about this year in particular 'cause we started the year very strong. We are now actively enrolling two pivotal trials for both of our programs, AVIM therapy and VIRTUE SAB. I'll talk about both.
These are therapies that are targeting very significant indications, hypertensive heart disease and coronary artery disease in two of the most established interventional markets, cardiac rhythm management or pacing and interventional cardiology. Our model really looks to our partners, and I'll talk about our partnership with Medtronic in depth to drive commercialization. Our job is to enroll these trials, get the data. That's really the key value inflection point in our business model. We have very significant royalty-based revenues coming in future success. Importantly, because of financings, strategic financings, we did a partnership with Ligand as well as expansion of our relationship with Medtronic and our Terumo relationship. We started the year very well capitalized. We are funded through late 2027.
We think that gets us to the data on the BACKBEAT trial for AVIM therapy and through enrollment of our VIRTUE Trial. Just to talk at a high level, and I'll go into more in-depth. AVIM therapy is our most advanced pivotal stage program. This is really a unique and potent treatment for hypertension or hypertensive heart disease that is delivered entirely through one of the most established medical devices there is, the pacemaker. We have a very significant patent estate. You'll look at the data. We immediately, substantially, and persistently drop blood pressure. We are enrolling the BACKBEAT pivotal trial in partnership with Medtronic. We have a very broad Breakthrough Designation that we earned from the FDA last year.
I'll go through the markets, but we think both the beachhead in treating hypertension, the pacemaker population, plus the opportunity now to expand the therapy through the same device, but for other patients who look a lot like the ones we've treated, represents a over $17 billion annual global opportunity. Our Virtue SAB program or sirolimus angioinfusion balloon is a unique first of its kind non-coated drug-eluting balloon where we really think we optimize the delivery and extended release of a proven drug, sirolimus, for the treatment of coronary artery disease. That market is going through a paradigm shift to drug-coated balloons. I'll show our data and our mechanism as it relates to other products. Because we're so confident in the product, we are now enrolling a pivotal trial in the U.S., head-to-head VIRTUE versus Boston Scientific's AGENT paclitaxel-coated balloon.
This product also has multiple Breakthrough Designations. We think both in peripheral and coronary artery disease, there's an over $10 billion annual opportunity. We have a rights agreement with Terumo, which I'll explain. Let's keep going here. We had a great year last year. I mentioned we received our broad Breakthrough Designation for AVIM therapy in patients with uncontrolled hypertension and increased cardiovascular risk. We accelerated our BACKBEAT pivotal study through important protocol adjustments. Our goal is going forward to complete enrollment this year and get the data. We expect to provide a clear update probably next quarter on the cadence to data readout. On the VIRTUE side, we secured our IDE, and we launched our pivotal trial. We entered into a new rights agreement, a right of first refusal agreement with Terumo, which I'll explain.
Our focus now is enrolling patients and look to get through to study enrollment next year. On the corporate side, I mentioned we secured a cash runway into late 2027 through transactions with Medtronic, Ligand, and Terumo. We also recently sold a balance sheet asset or participated in selling a balance sheet asset, Vivasure, to Haemonetics, which will bring in additional up to $21 million to the company. In the early Q2 timeframe, we should receive $35 million in tranche payments related to our transactions with Medtronic and Ligand. Some more capital coming. I won't spend too much time, but I'm really proud to lead an extraordinary team. The company is a lean but very impactful organization.
Great leadership team with tons of experience in doing what we need to do best: create IP, drive it through clinical trials to the market. We have a great board. I just highlight something because it's a remarkable fact that something for me. I lead a team. On the leadership side of that team, there are eight people on our senior team that have previously been a CEO or multiple times been CEOs of startup companies. We really have put together an awesome organization, and hopefully, as Josh said, this will be a year where we can really showcase our impact. Let me go into AVIM therapy in a little more detail. This is a purpose-built solution for treating uncontrolled hypertension in patients with increased cardiovascular risk. It is a therapy, as I'll show you, that is designed to drop blood pressure immediately.
The drop is quite substantial, typically over 10 millimeters of mercury systolic blood pressure drops. We have data in patients out almost to 4 years. The data is clear, consistent, and robust from the clinical side. We really know how this therapy works mechanistically, so the clinical impact is consistent with how the therapy is designed. Let's talk first about the addressable market. Hypertension is arguably the largest medical problem in the world, affects over 1.2 billion patients. We are laser-like focused on smaller subsets of patients that are older, that they're comorbid, their hypertensive disease is really hypertensive heart disease, where you have typically high systolic blood pressure, normal diastolic blood pressure. You have high rates of diastolic dysfunction. It carries over into Heart Failure with preserved Ejection Fraction. This is what Dr.
Kandzari is talking about at THT across town right now. Our beachhead market, because our therapy, as you'll see, is entirely delivered through a standard dual-chamber pacemaker, is treating hypertension in the existing pacemaker population, where it is the number one comorbidity affecting upwards of 70% of those patients. I would say this number is conservative. We're looking at it very closely because there is growth in the pacemaker market and there's dramatic growth in China. Conservatively, there's three-quarters of a million patients every year getting a pacemaker that also have hypertension. That hypertension is likely the number one driver of risk and events in those patients. We have a Breakthrough for most of those patients and for the patients on the right of the slide. Once again, on the pacemaker side, you're talking about patients that already need this implant.
They need it for another indication. It's gonna be essentially the same device implanted the same way by the same physician. Importantly, those devices have reimbursement, which we think Medtronic can leverage for their commercial strategy. There's upside to that, everything I'm gonna talk about market size and about our revenue share assumes there's no need to change reimbursement in the U.S. or in other markets. On the right side of the slide is a very narrow set of that 1 billion patients, which we think from a health standpoint, look a lot like the pacemaker population, where our therapy can offer unique benefits to patients that are older, high risk, where we can help control their blood pressure, prevent MIs, strokes, progression to heart failure. Here we would need coverage, ultimately, it's the same device familiar to hospitals and physicians all over the world.
One of the talks happening at the heart failure conference across town is really the focus on the HFpEF population. Once again, assuming same reimbursement, same target ASPs, there's a $15 billion opportunity for us in that increased population. Importantly, our partnership with Medtronic is what makes the vision to see AVIM therapy potentially become a standard of care for the pacemaker population and something that can grow into the broader population a very clear possible reality. We bring to the table in this partnership the technology, a patent estate that now exceeds 120 issued patents worldwide with long protection. We conducted the prior studies, which I'll talk about our double-blind randomized MODERATO II study, the pilot for our pivotal, and we are driving and sponsoring the pivotal study.
When Medtronic commercializes devices that incorporate our technology, we stand to make between $500 and $1,600 on every device they sell. That assumes no change or to the existing reimbursement structure. We have upside beyond that. The $500 represents a minimum per device outside the U.S., excluding China and Japan. The $1,600 represents basically a peak participation, assuming what could be constrained with an existing reimbursement. We have a minimum for the U.S., Japan and China that is in the middle of this range. Just thinking about if we pick the low midpoint of $1,000 per device and assume that would be a reasonable global average going back, the baseline opportunity in the pacemaker population represents a very substantial royalty opportunity for Orchestra on an annual basis of hundreds of millions of dollars.
Important to note, in Medtronic, we have a partner who is the established global market leader in pacing. They control about half the global market, more than half of the U.S. market. This is a core business that generates very important contribution and revenue to Medtronic and is a growth business for them. In the study that we are conducting, they've already integrated our therapy as a download for patients in the clinical study for their top-of-the-line devices. They have exclusive rights and have built a commercial device. They've integrated AVIM therapy as firmware into their next-generation commercial device. Last year, they expanded their investment in the company. Now they've put just under $62 million in equity in the company, have about 18% ownership and a $20 million additional capital commitment that'll come in in late April.
We expanded the focus of our partnership to envision incorporating AVIM therapy on future leadless devices. For the expansion population, the non-pacemaker population, Medtronic has a right of first negotiation. There would be another transaction or partnership expansion with Medtronic, assuming that that is successful. We have a great relationship with the market leader that we think is going great places. Let's talk about AVIM therapy from a quick mechanistic standpoint. AVIM refers to atrioventricular interval modulation therapy, and that really describes exactly what we're doing to have an immediate, substantial, and sustained effect on blood pressure. The primary blood pressure effect that happens when we turn on the therapy is based on shortening the timing of atria and ventricular contraction, therefore shortening the time for the ventricle to fill. Ventricle is a fill responsive muscle, less filling, less contraction force.
You see blood pressure drop immediately. Our autonomic nervous system is one of its principal roles is to both regulate and monitor blood pressure. That drop will solicit a fairly quick response. What's key to our therapy's sustained effect is being able to modulate blood pressure on a beat-to-beat basis so that we prevent those compensatory or autonomic responses that would increase peripheral resistance and increase sympathetic tone. We modulate all three targets, cardiac preload, cardiac afterload, and sympathetic tone, which by the way, are the three principal targets for pharmaceutical therapies for hypertension. The impact of AVIM therapy goes beyond just reducing blood pressure. We take workload off the heart. We actually make the data shows that the therapy makes the heart smaller and more efficient without really changing its ability to meet oxygenation demand or changing contractility.
There are trends happening in pacing, particularly conduction system pacing, which is rapidly becoming a standard of care that are highly complementary to our therapy. The data has been clear and consistent since we've been working in the clinic, now for over 10 years in developing this treatment. Importantly to note, 'cause I'll show consistently double-digit reductions in systolic blood pressure, but those are associated with a profound change in the relative risk for patients. Generally, in every category, heart attack, stroke, progression to heart failure, end-stage kidney disease, you see 20%-30% reductions in relative risk with that level of reduction in systolic blood pressure. By the way, we're concentrated, by the way, in older, higher-risk patients. AVIM therapy has been tested now in 2 long-term follow-up studies.
This is the double-blind randomized pilot study that we conducted prior to our partnership with Medtronic. It has the same target patient population. Uncontrolled hypertension despite medical therapy, at least one drug up to, in this case, more than three, in patients that already needed an indication for a pacemaker. You'll see blood pressure measured two ways. The gold standard is increasingly 24-hour ambulatory systolic blood pressure measurements. The patient's wearing a device, taking their blood pressure 40 or 50 times over the course of a day. This is the average impact. One, I talked about AVIM therapy being immediate. You're seeing on the left side of this slide, the 1-day ambulatory result. This is the true effect before there's any behavioral change in compliance or adherence. 15.5 millimeter average reduction in ambulatory systolic blood pressure.
That's a blood pressure average over the whole course of the day. Very clearly, highly statistically significant versus our control group. At 6 months, which was the primary endpoint you see in a continued double-digit reduction in ambulatory systolic blood pressure. This is a little less than 50 patients, highly statistically significant result in that primary endpoint. The office blood pressure, what we typically all get at our doctor's office, very clear signal, sustained and improved effect over 24 months. While we weren't powered to show differences statistically, there were 0 major adverse events in our treatment group versus 14% in our control group. We think that's encouraging and a possible trend because we're reducing the number 1 driver of events. Without going into too much detail given time, but we have a different patient population than the broad, younger, combined hypertensive population.
These are older patients. We had nearly 90% of our enrolled patients had isolated systolic hypertension, high systolic, normal diastolic, really elevated pulse pressure. You can see the read-through of our ambulatory and our office effect is almost 100% to pulse pressure. It's really an ideal therapy for that patient population. We found looking at echocardiographic data that the majority of our patients also had diastolic dysfunction, so essentially the beginning of progression to diastolic heart disease or HFpEF. We had a significant benefit on key measures of diastolic dysfunction, ability of the ventricle to relax and passively fill. Finally, and this is another exciting finding. You look at echocardiographic data, the typical course of these patients, the blood pressure goes up, ventricular size grows. We see in our patients the opposite effect. Actually, blood pressure goes down and ventricular size reduces.
These are really exciting findings for both target populations. We're now running the BACKBEAT global pivotal trial in partnership with Medtronic. Here, we're allowing to download the therapy to Medtronic's top-of-the-line devices, their Azure. This is a multicenter, multicountry study. Ultimately, we'll probably have up to 16 or 17 countries. It's a 500 up to 500-patient double-blind randomized study. We don't see a lot of those in the device world, where we're actually able to find patients that qualify based on blood pressure and other criteria, download the therapy, set it up on all patients. We need to see an immediate effect of at least 5 millimeters. We randomize, similar to MODERATO II, to treatment versus control, continued background therapy.
The primary endpoints are the, what we've seen, superiority in terms of ambulatory systolic blood pressure here measured at 3 months. Our primary safety endpoint at 3 months is really looking at the history of events in these patients, the anticipated events. This is obviously a patient population that has events, and looking for a signal of unanticipated, never-before-seen events. We feel very confident about the efficacy and safety data we're gonna get out of this study. We will follow patients longer term, both on a blinded basis up to 12 months, and the study's gonna continue a couple of years beyond that, so we can take advantage of this data. We think this trial can drive approval of AVIM therapy in the hands of Medtronic in the U.S. and globally, hopefully in the timeline of around 2028.
I'll shift gears now to our second program, the Virtue Sirolimus AngioInfusion Balloon. This is a first of its kind drug-eluting balloon, which leverages our proprietary SirolimusEFR or extended focal release formulation of that gold standard drug. This is the drug essentially used on every drug-eluting stent available around the world. The market for treating coronary artery disease is shifting from permanent implants like stents rapidly to drug-coated balloons, and we think we have a best-in-class product that we're hopefully gonna showcase in our pivotal trial versus the Boston Scientific AGENT balloon. The market is large established, and we think the whole market is in play for drug-eluting balloons. It'll take some time for that to happen, but we're seeing this with what Boston's leading with the AGENT balloon in the U.S. There is significant add-on reimbursement.
These products are selling at very significant premiums to drug-eluting stents. The opportunity is both coronary and peripheral. The core focus of Virtue is how do we deliver the ideal product to physicians and patients, and that ideal product is based on things we know. We know sirolimus is a superior drug to paclitaxel for the management of inflammation and restenosis after a procedure. We know this from a large body of clinical evidence, including 26 randomized controlled trials. The drug needs a mechanism for being able to get into tissue and be available for 30 days. Stent's a great platform for that.
When you now move to a balloon that's only in the body for a minute, how do you get this ideal drug that doesn't want to go into tissue and doesn't have a long half-life to be available the same way it is from a stent? That's why we have now the predominant form of drug-coated balloon is paclitaxel base. We've gone back to an inferior drug because it's easier, not because it's better. The construct of every other product in this category, we think, is a difficult construct, a fragile coating on a balloon that gets lost in transit, that creates particulate, that forces physicians to rush. We focused on two key innovations. The most important is how do you protect and encapsulate the drug to allow it to get into tissue, form a local tissue depot, and release the drug with kinetics that we know work?
How do you deliver that through a balloon that doesn't have a coating where you really optimize the availability of the drug? That's our microporous AngioInfusion Balloon. Both are proprietary, unique, come together to produce basically an optimal product for what physicians are looking for for patients. On the left, you see a large animal series that was published. This is the key pharmacokinetic data where you're seeing in the orange line. This is the known minimum dose threshold. We didn't make this up. This is what you need to have from stents to have efficacy. You can see that Virtue delivers a, excuse me, a tremendous payload of drug. About 10-fold what a stent delivers, maintains that higher dosing through the critical hearing period. Highly targeted drug delivery, where you look at a distal myocardial tissue and end organs.
By day four, it's below the level of quantification. What we give the physicians is essentially a way of transforming an angioplasty balloon into a syringe for drug delivery. They have a measured dose, they control the delivery of the drug, and they see it go into the body, and we obviously get, in our view, better uptake, better elution. It also translates to what we have seen as best-in-class data. Our lead indication is the treatment of coronary in-stent restenosis. Patients have had a stent. That stent now is restenosed. This is a challenging indication to treat, where event rates are higher and you can differentiate one product from another. The key endpoint is target lesion failure. Essentially, this is measuring clinical outcomes. Did the patient have a major adverse event, or did you need to go back and retreat? You want a low number.
This is an exceptionally low 2.8% TLF at one year. You're leaving nothing behind with the goal of not needing to retreat as frequently. We had no need for retreatment in these patients from one year to three years and great late lumen loss. Just to benchmark that against the product we're randomizing against the AGENT balloon, this is their 2-year data from their AGENT pivotal IDE study. Green is AGENT's data. Gray is a plain balloon, which is their comparator. You can see at one year, and this is just looking at the single-layer restenosis cohort, 13.5%. Other data showing the drug-coated balloons, paclitaxel or sirolimus, are essentially equivalent. We also see that this product has a very significant over 50% increase in relative TLF after one year.
We are now excited to be in the early stages of activating centers and enrolling patients in our Virtue IDE trial. Our confidence in Virtue is showcased in going ahead, head-to-head versus the market leader here in the U.S. This trial is going to have a success on non-inferiority, but we're hoping to see our product perform and show numerical. If not, we also have a statistical secondary in terms of superiority. We think we can enroll this trial in 2027, finish enrollment. In just last point, we have a relationship with Terumo we're excited about. Terumo has a right of first refusal for Virtue in the coronary space. This was restructured late last year. Ultimately, between a combination of payments and equity investments, we've received $65 million from Terumo.
If you don't know Terumo, they're one of the global market leaders in interventional cardiology. The right of first refusal means they could be our partner going forward, but we do have strategic optionality to consider other pathways. We think we have a great platform of technologies that can address huge problems, multiple indications, all covered by Breakthrough Designation. Ultimately, this is, as Josh said, is a big year for us as we are now well-positioned to enroll our trials over the course of 2026 and 2027 for both programs. These are major programs that fit our model, Medtronic being a great partner with a very significant royalty contribution for Orchestra in the future success, and we have the capital to get it done. I'm here mainly 'cause I believe we are still undervalued for this set of opportunities.
Happy to take some questions if we have, I think a few minutes left.
Excellent. Thank you, David. That was very thorough yet concise. A lot going on at Orchestra, as you just, really big year in 2026. I mean, just maybe to ask about what's going on across town at THT and then kind of getting deeper into what's happening in 2026 potentially. Just the heart failure opportunity with AVIM therapy and anything you can share about some of the clinical data that's been coming out of that conference and any expectations for the evolution of AVIM therapy through hypertension into heart failure.
As we talked about, THT has really become one of the most exciting meetings in interventional heart failure and, you know, my good friend Dan Burkhoff, who's the founder of that meeting. What he brings together is both device therapies as well as pharmaceutical therapies and physicians that are looking at the mechanisms of the disease. A lot of insights there. Given time constraints, I'll talk about the thing that we're excited about the potential of AVIM therapy is that hypertension, elevated systolic blood pressure, is the major driver of progression to heart failure. You see very high sustained rates of elevated systolic blood pressure in a diagnosed HFpEF population. Some of those patients will be in the BACKBEAT studies. We've expanded our inclusion criteria to class two.
We think what we're doing, all the things we talked about, reducing systolic blood pressure on a targeted basis, but having these functional benefits by offloading work, and it looks like really improving diastolic function, is an ideal, both preventive therapy. Can we actually slow the dynamics of progression of these older patients to HFpEF? Potentially a great treatment for patients that are diagnosed to slow, stop, or maybe even reverse key progression. That's one of the topics, but, you know, oftentimes we forget that hypertension and heart failure go hand in hand, and one is driving the other and accelerating its progression. I think that's a key topic that, you know, Dr. Kandzari is going through all the data we have in much more detail that shows the promise of the therapy.
We'll learn a lot more out of the BACKBEAT study. One of the things that's so important about the BACKBEAT study is while we're focused on the pacemaker-indicated patients, really the Breakthrough Designation speaks to, that we got from FDA, the mechanism and the data really reflects the potential of therapy to work not just in those patients, but in patients like them. In the interest of time, we'll take a couple other questions, but I would encourage folks to download the slides that we'll make available from THT. They really hit every one of the data points why we think the impact of AVIM in hypertensive heart disease and HFpEF is quite substantial in terms of its potential. Any other questions while we have a couple minutes left?
Thank you for that last answer. May I throw another one into the ring here on Virtue SAB. You know, I think we're entering into or have already entered potentially into a new era of drug-eluding, drug-coated, drug-infusing balloon therapy into the coronary, potentially, outside of the coronary as well. Maybe just help investors that aren't as familiar with the kind of progression and Orchestra's clearly well-positioned.
Yeah.
Everything you lately laid out today and you have over the last couple of years, just in terms of the differentiated solution technology that you guys have developed. Just maybe just talk about the market and how that is the trends that are going on and how that plays into everything you're doing in the Virtue SAB development program.
Yeah. I talked about a paradigm shift. It's certainly outside the U.S., it's been building for years. If you look at Europe, you look at China, Japan, I would estimate approaching half of coronary procedures are now using drug-coated balloons. Predominantly, they are paclitaxel-coated balloons that are a lot like. There's not much differentiation between those products. You know, Boston Scientific was the first to market in the U.S. and has a monopoly, but others are coming in both the paclitaxel-coated. There's a few sirolimus-coated products as well where we're seeing data. Generally, the data looks very consistent. All right? There is more and more results showing that you can get outcomes in de novo, meaning first-time coronary disease, that are non-inferior to stents without leaving something behind. The data is a little worse, but it's within that boundary of non-inferiority.
In-stent restenosis, that's been a key indication. You know, you don't wanna put, if you can avoid putting metal on top of metal. This paradigm shift is taking off. Really most of the other products, I would say almost all the other products, are of that drug-coated variety. We think we have a standout product. In many ways, there's nothing new about it. We're doing balloon angioplasty. We're delivering a proven drug that literally has been used in this indication in tens of millions of patients. We know the drug works. We had to innovate substantially to get them to work together without that metal scaffold being an enabler of drug delivery.
That's where we stand out quite distinctly from everyone else in the category of taking the road less traveled to build a product that we think can deliver better results because it is using proven elements in a unique way. What's exciting now is, as we're opening up centers working with physicians, is the physicians that are gravitating, and there's a large list of them, get it. They understand why our product's different. They understand how our product can optimize drug delivery versus drug-coated balloons, but frankly, potentially versus stents. The data we have to date really, I think, tells a clear story.
Once again, the IDE trial, I think, is potentially gonna be the definitive way to showcase that Virtue potentially is quite different from and hopefully clinically better than, you know, the paradigm that's now establishing itself globally in coronary artery disease.
Excellent. One question from the audience. Yes. Maybe just where did the technology come from?
Yeah, great question.
I'll just repeat the question. Where did the technology come from?
Our founding team really developed both of these programs from concept stage. Orchestra BioMed grew out of a device accelerator with some fantastic roots in innovations like transcatheter aortic valves, Impella. I joined that accelerator. We built a portfolio of technologies. AVIM and Virtue were two of the flagships. Along the way, we got inspired by could we form an operating business that could pursue a partnering business model? In structuring that business, they became wholly owned assets, so we own all the IP. The core concept is a company that can drive clinical results in a capital-efficient manner, but do so at the level that, let's say, a strategic like Medtronic is looking for. Work with global leaders. We're really proud to have...
Personally, I've been involved since these were sort of discussions around a table. We are incredibly excited for those of us who've been involved for many, many years to be now at these late, large pivotal trial stages and being close to pivotal data. Thank you very much for those questions. Thanks so much.
Thanks so much, David. Appreciate it.
Thanks to the group here. Thank you.