SCHEDULE: OrbiMed Advisors Reduces Stake in Passage BIO to 9.5% Following Share Sales

OrbiMed Advisors and OrbiMed Capital GP VII have significantly reduced their beneficial ownership in Passage BIO, Inc. to 9.5% through a series of share sales in late June and early July 2025.

Summary

• OrbiMed Advisors LLC and OrbiMed Capital GP VII LLC (collectively, the "Reporting Persons") filed Amendment No. 7 to their Schedule 13D regarding Passage BIO, Inc.
• The amendment reports a decrease in the Reporting Persons' beneficial ownership of Passage BIO's common stock by more than 1%.
• As of the filing date, the Reporting Persons beneficially own 5,923,534 shares, representing approximately 9.5% of the 62,148,274 outstanding shares of Passage BIO.
• The decrease in ownership resulted from a series of sales by OrbiMed Private Investments VII, LP (OPI VII), a limited partnership for which OrbiMed GP is the general partner and OrbiMed Advisors is the managing member.
• Total shares sold across multiple transactions from June 24, 2025, to July 9, 2025, amount to 726,466 shares.
• Sale prices ranged from $0.33 to $0.48 per share.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a significant reduction in ownership by a major institutional investor, implying a decreased conviction in the company's prospects. The low sale prices further contribute to the negative sentiment.

Negatives

• The Reporting Persons, a significant institutional investor, have reduced their beneficial ownership in Passage BIO by more than 1%, indicating a decreased conviction or a strategic exit from a portion of their investment.
• The shares were sold at relatively low prices, ranging from $0.33 to $0.48 per share, which could reflect a challenging market valuation for Passage BIO's stock.

Risks

• A significant reduction in ownership by a major institutional investor like OrbiMed could signal a lack of confidence in Passage BIO's future prospects, potentially leading to negative market sentiment and further share price decline.
• The continued disposition of shares by a large holder could exert downward pressure on the stock price, especially given the low per-share prices at which the recent sales occurred.

Future Outlook

The Reporting Persons intend to periodically review their investment in Passage BIO based on various factors, including the Issuer's business, financial condition, market conditions, and other investment opportunities. They may acquire additional shares or dispose of some or all of their currently owned shares in the future, depending on market and other factors. They have not formulated plans for extraordinary corporate transactions, changes in management, or material changes to the Issuer's capitalization or corporate structure.

Management Comments

• Carl L. Gordon, a Member of OrbiMed Advisors LLC, signed the Joint Filing Agreement and the Schedule 13D/A on behalf of both OrbiMed Advisors LLC and OrbiMed Capital GP VII LLC.

Industry Context

This filing reflects a specific investment firm's portfolio management decision rather than a broad industry trend. However, significant reductions in stakes by major healthcare-focused investors like OrbiMed can sometimes precede or coincide with broader re-evaluations of valuations within the biotechnology sector, particularly for companies with early-stage pipelines or those facing commercialization challenges.

Comparison to Industry Standards

• Schedule 13D filings are standard regulatory disclosures for investors acquiring or disposing of more than 5% of a company's shares, indicating a change in their investment intent or position. This amendment adheres to the standard reporting requirements.
• The sale of shares by a major institutional investor like OrbiMed, particularly at the reported low price points, is a common occurrence in the volatile biotechnology sector where investment theses can evolve rapidly based on clinical trial results, regulatory milestones, or financial performance. While not directly comparable to specific company performance benchmarks, such divestments are closely watched by the market as they can signal a shift in investor confidence, similar to how other biotech-focused funds might adjust their positions in companies like Sarepta Therapeutics or BioMarin Pharmaceutical based on pipeline progress or market conditions.

Corporate Governance

Related Party Transactions

• OrbiMed Advisors LLC is the managing member of OrbiMed Capital GP VII LLC.
• OrbiMed Capital GP VII LLC is the general partner of OrbiMed Private Investments VII, LP (OPI VII).
• OrbiMed Advisors and OrbiMed GP share power to direct the vote and disposition of shares held by OPI VII, and are deemed beneficial owners of these shares due to their mutual affiliation and control relationships.

Stakeholder Impact

• Shareholders: The reduction in stake by a major institutional investor could lead to negative market sentiment and potentially impact the share price. Existing shareholders might interpret this as a signal of reduced confidence in the company's future.
• Management: While not directly impacting management structure, a significant investor's divestment could prompt management to address investor concerns or re-evaluate strategic priorities to regain investor confidence.

Next Steps

• The Reporting Persons will continue to review their investment in Passage BIO based on various factors.
• They may acquire additional shares or dispose of existing shares in the future, depending on market and other factors.

Key Dates

Recommendation

Keywords

Passage BIO, OrbiMed Advisors, OrbiMed Capital GP VII, Schedule 13D/A, beneficial ownership, share sales, institutional investor, biotechnology, SEC filing, equity stake