[PART I. Financial Information](index=2&type=section&id=PART%20I.%20Financial%20Information) This part presents the company's unaudited financial statements, management's analysis, and disclosures on market risk and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $357,418 | $396,019 | | Total Current Assets | $332,012 | $376,869 | | Cash and cash equivalents | $65,396 | $61,575 | | Marketable securities, current | $263,010 | $314,073 | | Total Liabilities | $13,776 | $13,798 | | Total Stockholders' Equity | $343,642 | $382,221 | - Total assets decreased by **$38.6 million** from December 31, 2024, to June 30, 2025, primarily driven by a reduction in current marketable securities[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $24,087 | $18,673 | $44,012 | $23,866 | | General and administrative | $4,342 | $2,820 | $9,503 | $4,490 | | Total operating expenses | $28,429 | $21,493 | $53,515 | $28,356 | | Loss from operations | $(28,429) | $(21,493) | $(53,515) | $(28,356) | | Interest income | $3,857 | — | $7,949 | — | | Interest expense | — | $(750) | — | $(964) | | Net loss | $(24,574) | $(22,243) | $(45,573) | $(29,320) | | Comprehensive loss | $(24,595) | $(22,243) | $(45,559) | $(29,320) | | Net loss per share (basic and diluted) | $(0.46) | $(6.96) | $(0.85) | $(9.17) | - Net loss increased by **10% to $24.6 million** for the three months ended June 30, 2025, compared to $22.2 million in the prior year, primarily due to increased operating expenses partially offset by interest income[10](index=10&type=chunk)[130](index=130&type=chunk) - Research and development expenses increased by **29% to $24.1 million** for the three months ended June 30, 2025, driven by higher personnel-related and stock-based compensation expenses[10](index=10&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) | Metric (in thousands) | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $382,221 | $364,725 | $343,642 | | Accumulated Deficit | $(83,724) | $(104,723) | $(129,297) | | Additional Paid-In Capital | $463,018 | $466,486 | $469,998 | - Total stockholders' equity decreased from **$382.2 million** at December 31, 2024, to **$343.6 million** at June 30, 2025, primarily due to net losses incurred during the period[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(44,014) | $(11,201) | | Net cash provided by investing activities | $47,726 | — | | Net cash provided by financing activities | $109 | $26,322 | | Net increase in cash and cash equivalents | $3,821 | $15,121 | | Cash and cash equivalents at end of period | $65,396 | $15,121 | - Net cash used in operating activities increased significantly to **$44.0 million** for the six months ended June 30, 2025, from $11.2 million in the prior year period, reflecting increased net loss and changes in operating assets and liabilities[13](index=13&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Investing activities provided **$47.7 million in cash** for the six months ended June 30, 2025, primarily from maturities of marketable securities offsetting purchases[13](index=13&type=chunk)[159](index=159&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of the Business and Basis of Presentation](index=8&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) - Oruka Therapeutics, Inc is a clinical-stage biopharmaceutical company focused on developing biologics for psoriasis and other inflammatory and immunology indications, formed through a reverse recapitalization of ARCA biopharma, Inc on August 29, 2024[15](index=15&type=chunk)[19](index=19&type=chunk) - The company completed a Pre-Closing Financing of approximately **$275.0 million** and a PIPE Financing of approximately **$188.7 million** in 2024 to fund operations[20](index=20&type=chunk)[24](index=24&type=chunk) - The company has incurred significant operating losses and negative cash flows since inception, with net losses of **$24.6 million** and **$45.6 million** for the three and six months ended June 30, 2025, respectively; existing cash, cash equivalents, and marketable securities of **$351.5 million** are expected to fund operations for at least twelve months[26](index=26&type=chunk)[27](index=27&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The company's accounting policies remain consistent with its Annual Report, with no material changes during the six months ended June 30, 2025[28](index=28&type=chunk) - New accounting pronouncements include ASU 2023-09 (Income Taxes) effective for fiscal year 2025 and ASU 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026, both of which the company is currently evaluating for impact[30](index=30&type=chunk)[31](index=31&type=chunk) [3. Fair Value Measurements](index=11&type=section&id=3.%20Fair%20Value%20Measurements) | Asset Type (in thousands) | June 30, 2025 (Total Fair Value) | December 31, 2024 (Total Fair Value) | | :--- | :--- | :--- | | Cash equivalents | $63,288 | $52,175 | | Marketable securities, current | $263,010 | $314,073 | | Marketable securities, long-term | $23,053 | $18,069 | | Total | $349,351 | $384,317 | - The majority of cash equivalents and marketable securities are classified as **Level 2**, indicating fair value is determined using observable inputs other than quoted prices[32](index=32&type=chunk)[33](index=33&type=chunk) [4. Cash Equivalents and Marketable Securities](index=12&type=section&id=4.%20Cash%20Equivalents%20and%20Marketable%20Securities) | Security Type (in thousands) | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | | Money market funds | $20,931 | $6,350 | | U.S. treasury securities | $229,366 | $224,069 | | U.S. government agency securities | $18,628 | $17,454 | | Commercial papers | $40,796 | $56,988 | | Corporate debt securities | $39,630 | $75,504 | | Total | $349,351 | $384,317 | - The company holds available-for-sale securities, with total fair value decreasing from **$384.3 million to $349.4 million**; unrealized losses were **$72 thousand** as of June 30, 2025, primarily due to market conditions, but no credit losses were recorded[34](index=34&type=chunk)[35](index=35&type=chunk) | Maturity (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Due in one year or less | $263,010 | $314,073 | | Due in 1-2 years | $23,053 | $18,069 | | Total | $286,063 | $332,142 | [5. Accrued Expenses and Other Current Liabilities](index=14&type=section&id=5.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued research and development | $1,756 | $1,084 | | Accrued employee compensation and benefits | $1,684 | $2,041 | | Accrued professional and consulting | $138 | $221 | | Total | $3,578 | $3,346 | - Accrued research and development increased by **$0.7 million**, while accrued employee compensation and benefits decreased by **$0.4 million**[37](index=37&type=chunk) [6. Note Payable with Related Party](index=14&type=section&id=6.%20Note%20Payable%20with%20Related%20Party) - Pre-Merger Oruka issued a **$25.0 million convertible note** to Fairmount Healthcare Fund II, L.P. in March 2024, accruing **12.0% interest per annum**; this note, including $1.5 million in accrued interest, converted into Pre-Merger Oruka Common Stock prior to the Merger in August 2024[38](index=38&type=chunk) - The Convertible Note was not outstanding as of December 31, 2024, and June 30, 2025, having been fully converted[40](index=40&type=chunk) [7. Convertible Preferred Stock and Stockholders' Equity](index=14&type=section&id=7.%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity) - As of June 30, 2025, **6,202,207 pre-funded warrants** were outstanding, exercisable for Company Common Stock at nominal prices, recorded as additional paid-in capital[41](index=41&type=chunk)[42](index=42&type=chunk) - **137,138 shares of Company Series B Preferred Stock** were outstanding as of June 30, 2025, convertible into 11,428,149 shares of Common Stock at a ratio of approximately 83.3332:1[45](index=45&type=chunk)[47](index=47&type=chunk) - As of June 30, 2025, **37,450,745 shares of Company Common Stock** were issued and outstanding, with **30,850,274 shares reserved** for future issuance under various plans and warrants[49](index=49&type=chunk)[50](index=50&type=chunk) [8. Stock-Based Compensation](index=16&type=section&id=8.%20Stock-Based%20Compensation) | Expense Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,368 | $468 | $6,371 | $538 | | General and administrative | $1,709 | $215 | $3,589 | $230 | | Total | $5,077 | $683 | $9,960 | $768 | - Total stock-based compensation expense increased significantly to **$5.1 million** for the three months ended June 30, 2025, from $0.7 million in the prior year, and to **$10.0 million** for the six months ended June 30, 2025, from $0.8 million in the prior year period[65](index=65&type=chunk) | Award Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Paruka Warrant Obligation | $1,674 | $362 | $3,089 | $430 | | Employee warrants | $1,238 | — | $2,789 | — | | Stock options | $2,130 | $321 | $4,019 | $338 | | Employee stock purchase plan | $35 | — | $63 | — | | Total | $5,077 | $683 | $9,960 | $768 | - Unrecognized compensation cost for unvested stock options, RSAs, and employee warrants totaled **$28.5 million**, less than **$0.1 million**, and **$13.5 million**, respectively, as of June 30, 2025, to be recognized over weighted average periods of 3.2, 2.6, and 2.8 years[65](index=65&type=chunk)[66](index=66&type=chunk) [9. Segment Disclosures](index=19&type=section&id=9.%20Segment%20Disclosures) - The company operates as a **single reportable segment**, with its Chief Executive Officer reviewing total operating expenses and consolidated net loss to allocate resources[68](index=68&type=chunk) - All long-lived assets were located in the **U.S.** as of June 30, 2025, and December 31, 2024[69](index=69&type=chunk) [10. Option Agreements and License Agreements](index=20&type=section&id=10.%20Option%20Agreements%20and%20License%20Agreements) - The company entered into Option Agreements with Paragon Therapeutics, Inc and Paruka Holding LLC in March 2024 for antibody discovery, with exclusive options to license intellectual property for targets like IL-23 (ORKA-001) and IL-17A/F (ORKA-002)[71](index=71&type=chunk) - License Agreements for ORKA-001 and ORKA-002 were executed in December 2024 and February 2025, respectively, granting exclusive worldwide licenses for development and commercialization, with milestone payments up to **$22.0 million per agreement** and low single-digit royalties[73](index=73&type=chunk)[75](index=75&type=chunk) - As of June 30, 2025, **$4.0 million in milestone payments** were incurred and expensed for each License Agreement; an additional **$3.0 million milestone payment** for ORKA-001 was accrued in Q3 2025 after dosing the first patient in a Phase 2a clinical trial[75](index=75&type=chunk)[120](index=120&type=chunk) - Research and development expenses related to Paragon and Paruka services were **$4.2 million** and **$5.7 million** for the three and six months ended June 30, 2025, respectively, a decrease from $15.4 million and $20.4 million in the prior year periods[81](index=81&type=chunk) [11. Commitments and Contingencies](index=22&type=section&id=11.%20Commitments%20and%20Contingencies) - The company has operating lease agreements for headquarters in Menlo Park, California (commenced June 2024, 27 months remaining) and an office in Waltham, Massachusetts (commenced April 2025, 51 months remaining)[85](index=85&type=chunk)[86](index=86&type=chunk) | Year ending December 31, | Amount (in thousands) | | :--- | :--- | | 2025 (remainder) | $527 | | 2026 | $822 | | 2027 | $768 | | 2028 | $397 | | 2029 | $304 | | Total undiscounted lease payments | $2,818 | - A non-exclusive, worldwide license agreement with WuXi Biologics Ireland Limited for cell line technology was entered in March 2024, with a non-refundable license fee of **$150,000** and potential low single-digit royalty payments if manufacturing is done by a third party[88](index=88&type=chunk)[89](index=89&type=chunk) [12. Net Loss per Share](index=23&type=section&id=12.%20Net%20Loss%20per%20Share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss per share attributable to common stockholders, basic and diluted | $(0.46) | $(6.96) | $(0.85) | $(9.17) | | Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 42,095,951 | 3,197,975 | 41,888,906 | 3,197,975 | - The weighted-average shares outstanding for common stockholders increased significantly in 2025 due to the reverse recapitalization and subsequent financings[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Potential common stock shares from convertible preferred stock, warrants, and options were excluded from diluted EPS computation due to their **anti-dilutive effect**[95](index=95&type=chunk) [13. Related Party Transactions](index=24&type=section&id=13.%20Related%20Party%20Transactions) - Fairmount beneficially owns more than **5%** of the company's capital stock and has a representative on the Board, also owning more than 5% of Paragon[96](index=96&type=chunk) | Related Party Liability (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Paragon reimbursable Option Agreements' fees | — | $1,482 | | Paragon milestone payments for License Agreement | — | $4,000 | | Paragon reimbursable other research expenses | $107 | $515 | | Paragon reimbursable patent expenses | $12 | $25 | | Total | $119 | $6,022 | - Related party accounts payable and other current liabilities significantly decreased from **$6.0 million** at December 31, 2024, to **$0.1 million** at June 30, 2025[97](index=97&type=chunk) [14. Income Taxes](index=24&type=section&id=14.%20Income%20Taxes) - The company is evaluating the impact of the recently signed One Big Beautiful Bill Act (July 4, 2025), which makes permanent key elements of the Tax Cuts and Jobs Act, including **100% bonus depreciation** and domestic research cost expensing[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operating results, liquidity, and capital resources [Overview](index=25&type=section&id=Overview) - Oruka Therapeutics is a clinical-stage biopharmaceutical company focused on developing novel monoclonal antibody therapeutics for psoriasis (PsO) and other inflammatory and immunology (I&I) indications[100](index=100&type=chunk) - The company's strategy involves applying antibody engineering and format innovations to validated modes of action to improve efficacy and dosing regimens[100](index=100&type=chunk) - Since inception in February 2024, the company has incurred significant losses and negative cash flows, with net losses of **$24.6 million** and **$45.6 million** for the three and six months ended June 30, 2025, respectively[103](index=103&type=chunk) - As of June 30, 2025, the company had **$351.5 million** in cash, cash equivalents, and marketable securities, expected to fund operating plans for at least twelve months[104](index=104&type=chunk) [ORKA-001](index=26&type=section&id=ORKA-001) - ORKA-001 is a high-affinity, extended half-life monoclonal antibody targeting IL-23p19 for the treatment of PsO, engineered with YTE half-life extension technology for potential **once or twice per year** subcutaneous injection[105](index=105&type=chunk)[106](index=106&type=chunk) - A Phase 1 trial in healthy volunteers was initiated in Q4 2024, with interim data expected in September 2025; a Phase 2a trial in moderate-to-severe PsO (EVERLAST-A) commenced in Q3 2025, following FDA IND and Health Canada CTA clearance[107](index=107&type=chunk)[108](index=108&type=chunk) [ORKA-002](index=26&type=section&id=ORKA-002) - ORKA-002 is a high-affinity, extended half-life monoclonal antibody targeting IL-17A and IL-17F for PsO, psoriatic arthritis (PsA), and other I&I conditions, designed for convenient dosing intervals[109](index=109&type=chunk) - A Phase 1 trial in healthy volunteers was initiated in Q2 2025, with interim data expected around year-end 2025[109](index=109&type=chunk) - The company plans to pursue a sequential combination regimen of ORKA-002 followed by ORKA-001 (ORKA-021) to combine rapid response with ideal maintenance[110](index=110&type=chunk) [Additional Pipeline Program](index=26&type=section&id=Additional%20Pipeline%20Program) - ORKA-003 is a third mAb program targeting an undisclosed pathway, providing potential for indication expansion beyond PsO and combination opportunities with more advanced programs[111](index=111&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) - On August 29, 2024, the company completed the acquisition of Pre-Merger Oruka via a reverse recapitalization, changed its name to Oruka Therapeutics, Inc, and effected a **1-for-12 reverse stock split**[113](index=113&type=chunk) - Pre-Closing Financing generated approximately **$275.0 million** in gross proceeds, and a PIPE Financing on September 13, 2024, generated approximately **$188.7 million** in net proceeds[114](index=114&type=chunk)[116](index=116&type=chunk) - License Agreements with Paragon Therapeutics for ORKA-001 and ORKA-002 were entered into in December 2024 and February 2025, respectively, involving milestone payments and royalties[117](index=117&type=chunk)[119](index=119&type=chunk) - As of June 30, 2025, **$4.0 million** in milestone payments were expensed for each program, with an additional **$3.0 million** accrued for ORKA-001 in Q3 2025[120](index=120&type=chunk) [Components of Results of Operations](index=28&type=section&id=Components%20of%20Results%20of%20Operations) - The company has not generated any revenue from product sales to date and does not expect to in the foreseeable future, relying on successful development and commercialization of product candidates[121](index=121&type=chunk) - Research and development expenses, expensed as incurred, include costs for third-party research, milestone payments, CROs/CMOs, personnel, and allocated facility costs, and are expected to **increase substantially**[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - General and administrative expenses, including personnel, legal, professional fees, and allocated facility costs, are also expected to increase due to expanding operations and public company costs[126](index=126&type=chunk)[127](index=127&type=chunk) - Other income (expense), net, includes interest income from cash/marketable securities and interest expense from a related party convertible note (now converted)[128](index=128&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $24,087 | $18,673 | $5,414 | 29% | | General and administrative | $4,342 | $2,820 | $1,522 | 54% | | Total operating expenses | $28,429 | $21,493 | $6,936 | 32% | | Loss from operations | $(28,429) | $(21,493) | $(6,936) | 32% | | Interest income | $3,857 | — | $3,857 | 100% | | Interest expense | — | $(750) | $750 | (100)% | | Net loss | $(24,574) | $(22,243) | $(2,331) | 10% | - Research and development expenses increased by **$5.4 million (29%)** for the three months ended June 30, 2025, driven by higher personnel-related and stock-based compensation, partially offset by decreased external research expenses[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - General and administrative expenses increased by **$1.5 million (54%)** for the three months ended June 30, 2025, due to increased personnel and stock-based compensation, partially offset by lower professional and consulting services[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Comparison of Six Months Ended June 30, 2025, and Period from Inception to June 30, 2024 (in thousands) | Metric | June 30, 2025 | Inception to June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $44,012 | $23,866 | $20,146 | 84% | | General and administrative | $9,503 | $4,490 | $5,013 | 112% | | Total operating expenses | $53,515 | $28,356 | $25,159 | 89% | | Loss from operations | $(53,515) | $(28,356) | $(25,159) | 89% | | Interest income | $7,949 | — | $7,949 | 100% | | Interest expense | — | $(964) | $964 | (100)% | | Net loss | $(45,573) | $(29,320) | $(16,253) | 55% | - Research and development expenses increased by **$20.1 million (84%)** for the six months ended June 30, 2025, primarily due to increased CMO product development, CRO expenses, personnel, and stock-based compensation[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - General and administrative expenses increased by **$5.0 million (112%)** for the six months ended June 30, 2025, driven by continued hiring of executives and administrative employees, and higher stock-based compensation[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$351.5 million** in cash, cash equivalents, and marketable securities[153](index=153&type=chunk) - Operations have been funded by convertible preferred stock, common stock, a convertible note, pre-funded warrants, and proceeds from the reverse recapitalization and PIPE Financing, totaling approximately **$444.6 million in net proceeds** from March to September 2024[154](index=154&type=chunk) - The company expects existing capital to fund operations for at least twelve months but will require **additional financing** for future research, development, and potential commercialization[155](index=155&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Period from Feb 6, 2024 (Inception) to June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(44,014) | $(11,201) | | Net cash provided by investing activities | $47,726 | — | | Net cash provided by financing activities | $109 | $26,322 | | Net increase in cash and cash equivalents | $3,821 | $15,121 | - Operating activities used **$44.0 million in cash** for the six months ended June 30, 2025, primarily due to a net loss of $45.6 million and a $5.3 million decrease in operating assets and liabilities, partially offset by $6.9 million in non-cash charges[157](index=157&type=chunk) - Investing activities provided **$47.7 million in cash** for the six months ended June 30, 2025, mainly from proceeds from marketable securities maturities ($200.1 million) exceeding purchases ($152.3 million)[159](index=159&type=chunk) - Financing activities provided **$0.1 million in cash** for the six months ended June 30, 2025, from common stock issuance under the employee stock purchase plan, a significant decrease from $26.3 million in the prior year period which included proceeds from preferred stock and convertible notes[161](index=161&type=chunk)[162](index=162&type=chunk) [Contractual Obligations and Commitments](index=37&type=section&id=Contractual%20Obligations%20and%20Commitments) - The company enters into cancelable contracts with CROs, CMOs, and other vendors for research, clinical trials, and manufacturing, with no non-cancellable obligations as of June 30, 2025, beyond lease and license agreements[163](index=163&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - No changes were made to critical accounting policies and significant judgments and estimates during the three months ended June 30, 2025, as disclosed in the Annual Report on Form 10-K[165](index=165&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of June 30, 2025, the company did not have any off-balance sheet arrangements[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Oruka Therapeutics, Inc is not required to provide these disclosures - The company is a **smaller reporting company** and is not required to provide quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports no material changes to internal control over financial reporting [Management's Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Management's%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were **effective** at a reasonable assurance level as of June 30, 2025[169](index=169&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were **no changes** in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[170](index=170&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=38&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that control systems provide **reasonable, not absolute, assurance** and are subject to inherent limitations, including faulty judgments, simple errors, circumvention by individuals, or management override[171](index=171&type=chunk) [PART II. Other Information](index=39&type=section&id=PART%20II.%20Other%20Information) This part covers legal proceedings, risk factors, securities sales, and other required corporate disclosures [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently party to any **material legal proceedings**[172](index=172&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks spanning financial condition, clinical development, regulations, and intellectual property [RISK FACTOR SUMMARY](index=39&type=section&id=RISK%20FACTOR%20SUMMARY) - The company is subject to numerous risks that could harm its business, including those related to clinical development, regulatory approval, intellectual property, and reliance on third parties[174](index=174&type=chunk) - Key risks include **limited operating history**, historical and anticipated losses, no product revenue, potential inability to raise sufficient capital, and dilution from future equity sales[179](index=179&type=chunk) - Drug development is costly, time-consuming, and uncertain, with substantial dependence on the success of **ORKA-001 and ORKA-002**, facing competition and potential delays in regulatory approval[179](index=179&type=chunk) [Risks Related to Our Financial Condition and Capital Requirements](index=41&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) - The company is a clinical-stage biopharmaceutical company with a **limited operating history**, no products approved for sale, and has incurred significant losses, expecting to continue doing so for the foreseeable future[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) - **Substantial additional capital** will be required to fund future operations, and there is no assurance that it will be available on reasonable terms, or at all, potentially leading to curtailment or cessation of product development[185](index=185&type=chunk)[186](index=186&type=chunk)[189](index=189&type=chunk) - Raising additional capital through equity or convertible debt will **dilute existing stockholders**, and debt financing may impose restrictive covenants[191](index=191&type=chunk) [Risks Related to Clinical Development, Regulatory Approval and Commercialization](index=42&type=section&id=Risks%20Related%20to%20Clinical%20Development,%20Regulatory%20Approval%20and%20Commercialization) - The company faces **intense competition** from biopharmaceutical companies with greater resources and expertise, which could hinder market penetration for its product candidates[193](index=193&type=chunk) - Clinical testing is **expensive, lengthy, and uncertain**; preclinical and early clinical trial results may not predict later-stage success, and unforeseen events can delay the product development timeline[196](index=196&type=chunk)[197](index=197&type=chunk) - The company is substantially dependent on the success of **ORKA-001 and ORKA-002**, particularly on observing an extended half-life in humans, which is not guaranteed and could significantly affect commercial potential[200](index=200&type=chunk) - Preliminary or interim clinical data are **subject to change and audit**, and negative or inconclusive results could require additional trials or halt development[212](index=212&type=chunk)[214](index=214&type=chunk) - Clinical trials may reveal **significant adverse events** or undesirable side effects, potentially halting development, inhibiting regulatory approval, or limiting market acceptance[215](index=215&type=chunk)[216](index=216&type=chunk) [Risks Related to Government Regulations](index=49&type=section&id=Risks%20Related%20to%20Government%20Regulations) - Regulatory approval processes (FDA and foreign) are **lengthy, unpredictable, and expensive**; failure or delays in obtaining approval would materially impair revenue generation[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The company must meet stringent **chemistry, manufacturing, and control (CMC)** requirements for its drug products and delivery devices to gain regulatory approval[228](index=228&type=chunk) - Approved biologics may face competition sooner than anticipated due to **biosimilar pathways**, potentially shortening exclusivity periods[229](index=229&type=chunk)[230](index=230&type=chunk) - **Ongoing regulatory obligations** post-approval, including safety monitoring and cGMP compliance, can be costly, and non-compliance may lead to penalties or product withdrawal[231](index=231&type=chunk)[232](index=232&type=chunk) - Disruptions at government agencies (e.g., FDA, SEC) due to funding shortages or policy changes (e.g., Trump administration actions) could **delay regulatory reviews and approvals**[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - Legislative or regulatory reforms, such as price controls or cost-containment measures (e.g., IRA), could adversely affect **pharmaceutical pricing and profitability**[238](index=238&type=chunk)[239](index=239&type=chunk) - Business operations are subject to healthcare regulatory laws (fraud, abuse, data privacy), and non-compliance could result in **significant penalties, fines, and reputational harm**[240](index=240&type=chunk)[242](index=242&type=chunk) [Risks Related to Our Intellectual Property](index=54&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - The company's ability to obtain and protect patents and other proprietary rights is **uncertain**, and failure to do so could lead to loss of competitive advantage, especially in foreign jurisdictions[247](index=247&type=chunk)[248](index=248&type=chunk) - Reliance on trade secrets carries risks of **disclosure or misappropriation**, which could erode competitive position, and enforcement of trade secret claims is challenging[249](index=249&type=chunk) - Failure to obtain or maintain necessary third-party intellectual property rights through acquisitions or in-licenses could force the company to **abandon development programs**[251](index=251&type=chunk)[253](index=253&type=chunk) - The company may face **patent infringement claims** or need to file claims to protect its IP, leading to substantial costs, liability, and potential inability to commercialize products[255](index=255&type=chunk) - Changes in patent laws (e.g., U.S. Supreme Court rulings, European UPC) could **diminish the value of patents** and impair the ability to protect products[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - Non-compliance with procedural and fee requirements for patent agencies could lead to **abandonment or lapse of patent rights**[266](index=266&type=chunk) [Risks Related to Our Reliance on Third Parties](index=58&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) - The company relies on licensing arrangements with Paragon for a substantial portion of its in-licenses (ORKA-001, ORKA-002); failure to maintain these or if they are unsuccessful could **negatively impact the business**[273](index=273&type=chunk)[274](index=274&type=chunk) - Reliance on third parties (investigators, CROs, CMOs) to conduct preclinical studies and clinical trials means **less direct control**, and their failure to perform could delay or terminate development[277](index=277&type=chunk)[278](index=278&type=chunk) - The company relies on CMOs for manufacturing product candidates and has a **sole source for ORKA-001 and ORKA-002**; disruptions or non-compliance could adversely affect clinical development and commercialization[279](index=279&type=chunk)[280](index=280&type=chunk) - Reliance on foreign CROs and CMOs (e.g., WuXi Biologics) exposes the company to U.S. legislation (e.g., BIOSECURE Act), trade restrictions, and foreign regulatory requirements, potentially **increasing costs or reducing supply**[281](index=281&type=chunk)[282](index=282&type=chunk) [Risks Related to Employee Matters, Managing Growth, Other Risks Related to Our Business, and Risks Related to Owning Our Common Stock](index=61&type=section&id=Risks%20Related%20to%20Employee%20Matters,%20Managing%20Growth,%20Other%20Risks%20Related%20to%20Our%20Business,%20and%20Risks%20Related%20to%20Owning%20Our%20Common%20Stock) - **Significant growth** in employees and operations is expected, which may be difficult to manage effectively due to limited financial resources and management experience[283](index=283&type=chunk) - The company is **highly dependent on key personnel**, and the inability to attract and retain qualified individuals could impede research, development, and commercialization objectives[284](index=284&type=chunk)[285](index=285&type=chunk) - Employees, contractors, and other third parties may engage in **misconduct**, leading to noncompliance with regulatory standards and potential governmental investigations or lawsuits[288](index=288&type=chunk) - Internal IT systems or those of third-party providers are vulnerable to **security breaches**, which could result in costs, revenue loss, liabilities, and disruption of operations[289](index=289&type=chunk)[290](index=290&type=chunk) - The market price of common stock has been and is likely to remain **highly volatile**, influenced by clinical trial results, financial projections, regulatory actions, and macroeconomic conditions[306](index=306&type=chunk)[308](index=308&type=chunk) - The company **does not anticipate paying cash dividends** in the foreseeable future, meaning capital appreciation will be the sole source of gain for stockholders[315](index=315&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds to report[318](index=318&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities[319](index=319&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[320](index=320&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[321](index=321&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of this Quarterly Report on Form 10-Q - The report includes various exhibits such as the Agreement and Plan of Merger and Reorganization, Amended and Restated Certificate of Incorporation and Bylaws, Certificates of Designation for Preferred Stock, Forms of Pre-Funded Warrants, Paruka Warrant, and certifications by executive officers[323](index=323&type=chunk) [Signatures](index=70&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers - The report is signed by Lawrence Klein, President and Chief Executive Officer (Principal Executive Officer), and Arjun Agarwal, Senior Vice President, Finance and Treasurer (Principal Financial Officer and Principal Accounting Officer), on August 11, 2025[329](index=329&type=chunk)

[Cover Page](index=1&type=section&id=Cover%20Page) This section provides essential filing information for Oruka Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2025 [Filing Information](index=1&type=section&id=Filing%20Information) This report is Oruka Therapeutics, Inc.'s Quarterly Report (Form 10-Q) for the period ended March 31, 2025, with the company registered in Delaware, trading as ORKA on The Nasdaq Global Market, and designated as a non-accelerated filer and smaller reporting company - The company filed its Quarterly Report (Form 10-Q) for the period ended March 31, 2025[1](index=1&type=chunk) Company Registration Information | Metric | Detail | | :--- | :--- | | Company Name | Oruka Therapeutics, Inc. | | Jurisdiction of Incorporation | Delaware | | Trading Symbol | ORKA | | Exchange | The Nasdaq Global Market | | Filing Status | Non-accelerated filer, Smaller reporting company | | Common Stock Outstanding (as of April 30, 2025) | 37,440,510 shares | [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section provides a comprehensive list of all chapters and sub-sections within the report, facilitating navigation [PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows, along with detailed notes explaining accounting policies and financial details [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (Summary, in thousands of US dollars) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $83,572 | $61,575 | | Current marketable securities | $265,522 | $314,073 | | Total current assets | $352,083 | $376,869 | | Long-term marketable securities | $23,953 | $18,069 | | Total assets | $377,112 | $396,019 | | **Liabilities** | | | | Total current liabilities | $11,723 | $13,043 | | Total liabilities | $12,387 | $13,798 | | **Stockholders' Equity** | | | | Accumulated deficit | $(104,723) | $(83,724) | | Total stockholders' equity | $364,725 | $382,221 | | Total liabilities, convertible preferred stock and stockholders' equity | $377,112 | $396,019 | - As of March 31, 2025, total assets were **$377.1 million**, a decrease from **$396.0 million** on December 31, 2024, with cash and cash equivalents increasing to **$83.57 million** while current marketable securities decreased[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This statement details the company's revenues, expenses, and net loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations and Comprehensive Loss (Summary, in thousands of US dollars) | Metric | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | R&D expenses | $19,925 | $5,193 | | General and administrative expenses | $5,161 | $1,670 | | Total operating expenses | $25,086 | $6,863 | | Operating loss | $(25,086) | $(6,863) | | Interest income | $4,092 | $0 | | Interest expense | $0 | $(214) | | Net loss | $(20,999) | $(7,077) | | Net loss per share attributable to common stockholders (basic and diluted) | $(0.40) | $(2.21) | - For the three months ended March 31, 2025, the company reported a net loss of **$21.0 million**, a significant increase from **$7.08 million** in the prior period (from inception), driven by substantial growth in R&D and general and administrative expenses[12](index=12&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) This statement outlines changes in the company's convertible preferred stock and stockholders' equity over time, including net loss and stock-based compensation Changes in Stockholders' Equity (Summary, in thousands of US dollars) | Metric | Balance as of December 31, 2024 | Balance as of March 31, 2025 | | :--- | :--- | :--- | | Series B Non-Voting Convertible Preferred Stock | $2,931 | $2,931 | | Common Stock | $37 | $37 | | Additional Paid-in Capital | $463,018 | $466,486 | | Accumulated Other Comprehensive Loss | $(41) | $(6) | | Accumulated Deficit | $(83,724) | $(104,723) | | **Total Stockholders' Equity** | **$382,221** | **$364,725** | - As of March 31, 2025, total stockholders' equity was **$364.7 million**, a decrease from **$382.2 million** on December 31, 2024, primarily due to a **$20.999 million** net loss, partially offset by **$3.468 million** in stock-based compensation expense and a **$0.035 million** net change in unrealized gains/losses on marketable securities[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Summary, in thousands of US dollars) | Cash Flow Type | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,869) | $(168) | | Net cash provided by investing activities | $42,866 | $0 | | Net cash provided by financing activities | $0 | $27,911 | | Net increase in cash and cash equivalents | $21,997 | $27,743 | | Cash and cash equivalents at end of period | $83,572 | $27,743 | - For the three months ended March 31, 2025, net cash used in operating activities was **$20.869 million**, while net cash provided by investing activities was **$42.866 million**, primarily from maturities of marketable securities, with no cash flow from financing activities[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the unaudited condensed consolidated financial statements, clarifying accounting policies and specific financial items [1. Nature of the Business and Basis of Presentation](index=8&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core business as a clinical-stage biopharmaceutical firm and the foundational principles used in preparing its financial statements - Oruka Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing biologics for psoriasis and other inflammatory and immunological indications, formed through a reverse recapitalization with ARCA biopharma, Inc., where Pre-Merger Oruka was deemed the accounting acquirer[18](index=18&type=chunk)[25](index=25&type=chunk) - The company has incurred significant operating losses and negative cash flows since inception, with a net loss of **$21.0 million** and **$20.9 million** cash outflow from operations as of March 31, 2025, but expects existing cash, cash equivalents, and marketable securities totaling **$373 million** to fund operations for at least the next 12 months[29](index=29&type=chunk)[30](index=30&type=chunk) - The company completed the acquisition of Pre-Merger Oruka on August 29, 2024, and changed its name to Oruka Therapeutics, Inc., concurrently effecting a 1-for-12 reverse stock split[22](index=22&type=chunk) Summary of Financing Activities (Units: US dollars) | Financing Type | Date | Funds Raised (Approx.) | | :--- | :--- | :--- | | Pre-Closing Financing | August 2024 | $275 million (gross) | | PIPE Financing | September 2024 | $188.7 million (net) | [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods applied in preparing the financial statements, including estimates and assumptions - The company prepares its financial statements in accordance with U.S. GAAP, applying the same accounting policies as its annual financial statements, with no significant changes this quarter[31](index=31&type=chunk) - Management makes estimates, assumptions, and judgments in preparing financial statements, such as for R&D expenses, prepaid or accrued costs, and valuation of stock-based compensation awards, where actual results may differ materially[32](index=32&type=chunk) - The company is evaluating the impact of ASU 2023-09 (income tax disclosure improvements, effective FY2025) and ASU 2024-03 (disclosures about disaggregated expenses in the income statement, effective FY2026) on its consolidated financial statements[33](index=33&type=chunk)[34](index=34&type=chunk) [3. Fair Value Measurements](index=11&type=section&id=3.%20Fair%20Value%20Measurements) This note details how the company measures the fair value of its financial assets and liabilities, categorizing them into a three-level hierarchy Fair Value Hierarchy of Financial Assets (in thousands of US dollars) | Asset Category | March 31, 2025 (Total) | December 31, 2024 (Total) | | :--- | :--- | :--- | | Cash equivalents | $79,359 | $52,175 | | Current marketable securities | $265,522 | $314,073 | | Long-term marketable securities | $23,953 | $18,069 | | **Total** | **$368,834** | **$384,317** | - As of March 31, 2025, most of the company's cash equivalents and marketable securities (**$357.7 million**) are classified as Level 2, primarily comprising U.S. government agency securities, corporate bonds, and commercial paper valued using observable market inputs, with Level 1 assets (money market funds) totaling **$11.129 million**[35](index=35&type=chunk) [4. Cash Equivalents and Marketable Securities](index=12&type=section&id=4.%20Cash%20Equivalents%20and%20Marketable%20Securities) This note provides a breakdown of the company's cash equivalents and marketable securities, including their fair values and unrealized gains or losses Fair Value of Cash Equivalents and Marketable Securities (in thousands of US dollars) | Category | Fair Value as of March 31, 2025 | Fair Value as of December 31, 2024 | | :--- | :--- | :--- | | Cash equivalents | $79,359 | $52,175 | | Current marketable securities | $265,522 | $314,073 | | Long-term marketable securities | $23,953 | $18,069 | | **Total** | **$368,834** | **$384,317** | Unrealized Losses on Marketable Securities (in thousands of US dollars) | Category | Unrealized Losses as of March 31, 2025 | Unrealized Losses as of December 31, 2024 | | :--- | :--- | :--- | | Cash equivalents (commercial paper) | $(11) | $(3) | | Current marketable securities | $(34) | $(53) | | Long-term marketable securities | $(1) | $(55) | | **Total** | **$(46)** | **$(111)** | - The company classifies cash equivalents and marketable securities as available-for-sale, with total unrealized losses of **$0.046 million** as of March 31, 2025, a decrease from **$0.111 million** on December 31, 2024, and does not intend to sell these securities before recovery of amortized cost[37](index=37&type=chunk)[38](index=38&type=chunk) Contractual Maturities of Marketable Securities (in thousands of US dollars) | Maturity Period | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | One year or less | $265,522 | $314,073 | | 1-2 years | $23,953 | $18,069 | | **Total** | **$289,475** | **$332,142** | [5. Accrued Expenses and Other Current Liabilities](index=14&type=section&id=5.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note details the composition of the company's accrued expenses and other current liabilities, providing a breakdown of various obligations Composition of Accrued Expenses and Other Current Liabilities (in thousands of US dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued employee compensation and benefits | $818 | $2,041 | | Accrued professional and consulting fees | $487 | $221 | | Accrued R&D expenses | $4,358 | $1,084 | | **Total** | **$5,663** | **$3,346** | - As of March 31, 2025, total accrued expenses and other current liabilities were **$5.663 million**, an increase from **$3.346 million** on December 31, 2024, primarily due to a significant rise in accrued R&D expenses[40](index=40&type=chunk) [6. Note Payable with Related Party](index=14&type=section&id=6.%20Note%20Payable%20with%20Related%20Party) This note describes a convertible note agreement with a related party, detailing its terms and conversion status - In March 2024, Pre-Merger Oruka entered into a convertible note purchase agreement with Fairmount Healthcare Fund II, L.P., issuing **$25.0 million** in convertible notes with a **12.0%** annual interest rate[41](index=41&type=chunk) - Prior to the merger, the convertible notes, along with **$1.5 million** in accrued interest, converted into Pre-Merger Oruka common stock, which further converted into **2,722,207** shares of the company's common stock upon the merger[41](index=41&type=chunk) - As of December 31, 2024, and March 31, 2025, the convertible notes were no longer outstanding[43](index=43&type=chunk) [7. Convertible Preferred Stock and Stockholders' Equity](index=14&type=section&id=7.%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity) This note provides details on the company's convertible preferred stock and various components of stockholders' equity, including outstanding warrants and common stock - As of March 31, 2025, and December 31, 2024, the company had **6,202,207** pre-funded warrants outstanding, recorded as part of additional paid-in capital with no expiration date[45](index=45&type=chunk) - As of March 31, 2025, and December 31, 2024, **3,054,358** employee warrants were outstanding with an exercise price of **$7.80** per share, accounted for as equity, and vesting over four years[46](index=46&type=chunk) - As of March 31, 2025, the company had **137,138** shares of Series B Preferred Stock issued and outstanding, each convertible into approximately **83.3332** shares of common stock, with dividend rights equivalent to common stock[50](index=50&type=chunk) - As of March 31, 2025, the company had **37,440,510** shares of common stock issued and outstanding, including **2,207,553** restricted stock awards[52](index=52&type=chunk) Common Stock Reserved for Issuance (in shares) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Convertible Series B Preferred Stock | 11,428,149 | 11,428,149 | | Pre-funded warrant exercise | 6,202,207 | 6,202,207 | | Paruka warrant exercise | 596,930 | 596,930 | | Stock options outstanding | 3,265,460 | 1,567,760 | | Employee warrants outstanding | 3,054,358 | 3,054,358 | | Shares available for grant under 2024 Equity Incentive Plan | 5,302,167 | 4,246,324 | | Shares available for grant under 2024 Employee Stock Purchase Plan | 1,011,238 | 460,529 | | **Total** | **30,860,509** | **27,556,257** | [8. Stock-Based Compensation](index=16&type=section&id=8.%20Stock-Based%20Compensation) This note details the company's stock-based compensation plans, including outstanding options, restricted stock awards, and related expenses - Under the 2024 Equity Incentive Plan and 2024 Stock Incentive Plan, **3,265,460** stock options were outstanding as of March 31, 2025, with a weighted-average exercise price of **$11.96**[61](index=61&type=chunk) - As of March 31, 2025, **1,630,982** unvested restricted stock awards (RSAs) were outstanding, with compensation cost expected to be recognized over **2.9 years**[62](index=62&type=chunk)[70](index=70&type=chunk) - For the Paruka warrant obligation, the estimated fair value of warrants to be granted as of December 31, 2025, was **$5.6 million** as of March 31, 2025, with **$1.4 million** in stock-based compensation expense recognized this quarter[66](index=66&type=chunk) Stock-Based Compensation Expense by Category (in thousands of US dollars) | Category | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | R&D expenses | $3,003 | $70 | | General and administrative expenses | $1,880 | $15 | | **Total** | **$4,883** | **$85** | Stock-Based Compensation Expense by Award Type (in thousands of US dollars) | Award Type | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | Paruka warrant obligation | $1,415 | $68 | | Employee warrants | $1,551 | $0 | | Stock options | $1,889 | $17 | | Employee stock purchase plan | $28 | $0 | | **Total** | **$4,883** | **$85** | [9. Segment Disclosures](index=19&type=section&id=9.%20Segment%20Disclosures) This note explains that the company operates and manages its business activities within a single reportable segment, with the CEO overseeing operations for resource allocation - The company operates and manages its business activities within a single reportable segment, with the CEO, as the chief operating decision maker, overseeing operations on an aggregated basis for effective resource allocation[72](index=72&type=chunk) Segment Operating Loss and Key Expenses (in thousands of US dollars) | Expense Category | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | R&D personnel-related expenses (excluding stock-based compensation) | $2,463 | $194 | | General and administrative personnel-related expenses (excluding stock-based compensation) | $1,694 | $766 | | R&D stock-based compensation | $3,003 | $70 | | General and administrative stock-based compensation | $1,880 | $15 | | External R&D expenses | $13,610 | $4,905 | | Other R&D expenses | $849 | $24 | | General and administrative expenses (excluding personnel-related and stock-based compensation) | $1,587 | $889 | | **Total Operating Expenses** | **$25,086** | **$6,863** | | **Operating Loss** | **$(25,086)** | **$(6,863)** | [10. Option Agreements and License Agreements](index=20&type=section&id=10.%20Option%20Agreements%20and%20License%20Agreements) This note details the company's agreements with Paragon Therapeutics, Inc. and Paruka for exclusive options and subsequent licensing of antibody development programs - In March 2024, the company entered into two antibody discovery and option agreements with Paragon Therapeutics, Inc. and Paruka, securing exclusive options to develop, manufacture, and commercialize antibodies targeting IL-23 (ORKA-001) and IL-17A/F (ORKA-002)[75](index=75&type=chunk) - The company exercised its exclusive options for ORKA-001 and ORKA-002, subsequently entering into corresponding license agreements with Paragon in December 2024 and February 2025, respectively[77](index=77&type=chunk) - Under the license agreements, the company is obligated to pay Paragon up to **$12.0 million** in clinical development milestone payments and up to **$10.0 million** in regulatory milestone payments, plus low single-digit percentage royalties on net sales of antibody products[79](index=79&type=chunk) - As of March 31, 2025, the company had incurred and paid **$4.0 million** and **$1.5 million** in milestone payments for ORKA-001 and ORKA-002, respectively[79](index=79&type=chunk) - The company accounts for rights obtained under option agreements as asset acquisitions, with related research initiation fees and development costs recognized immediately as R&D expenses[87](index=87&type=chunk) [11. Commitment and Contingencies](index=22&type=section&id=11.%20Commitment%20and%20Contingencies) This note outlines the company's contractual commitments, including operating leases, and discusses potential contingent liabilities - The company leases office space in Menlo Park and Waltham, with the Menlo Park lease having a remaining term of **30 months** and a discount rate of **17.95%** as of March 31, 2025[88](index=88&type=chunk)[90](index=90&type=chunk) Operating Lease Liability Maturity Analysis (in thousands of US dollars) | Year Ending December 31 | Amount | | :--- | :--- | | 2025 (remaining) | $306 | | 2026 | $494 | | 2027 | $380 | | **Total Undiscounted Lease Payments** | **$1,180** | | Less: Imputed interest | $(233) | | **Total Discounted Lease Payments** | **$947** | | Less: Current portion | $(283) | | **Non-current portion** | **$664** | - The company entered into a cell line license agreement with WuXi Biologics Ireland Limited, obtaining a non-exclusive, worldwide license to use its technology for therapeutic product manufacturing, for a non-refundable license fee of **$0.15 million**[91](index=91&type=chunk)[92](index=92&type=chunk) - The company is not currently involved in any material legal proceedings that are reasonably expected to have a material adverse effect on its operations, financial condition, or cash flows[94](index=94&type=chunk) [12. Net Loss per Share](index=23&type=section&id=12.%20Net%20Loss%20per%20Share) This note details the calculation of basic and diluted net loss per share for both common and preferred stockholders Net Loss per Share Calculation (in thousands of US dollars, shares) | Category | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(16,480) | $(7,077) | | Weighted-average common shares outstanding | 41,679,560 | 3,197,977 | | Net loss per common share (basic and diluted) | $(0.40) | $(2.21) | | Net loss attributable to Series B Preferred Stock | $(4,519) | $0 | | Weighted-average Series B Preferred Shares outstanding | 137,138 | $0 | | Net loss per Series B Preferred Share (basic and diluted) | $(32.95) | $0 | | **Total Net Loss** | **$(20,999)** | **$(7,077)** | - For the three months ended March 31, 2025, basic and diluted net loss per common share was **$0.40**, compared to **$2.21** in the prior period, while net loss per Series B Non-Voting Convertible Preferred Share was **$32.95**[95](index=95&type=chunk) Potential Common Shares Excluded from Diluted Net Loss per Share Calculation (in shares) | Category | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Employee warrants | 3,054,358 | $0 | | Unvested restricted stock awards | 1,630,982 | 2,207,553 | | Stock options outstanding | 3,265,460 | 399,222 | | Paruka warrants | 596,930 | $0 | | **Total** | **8,547,730** | **2,606,775** | [13. Related Party Transactions](index=24&type=section&id=13.%20Related%20Party%20Transactions) This note discloses transactions and relationships with related parties, including ownership interests and outstanding payables - Paragon and Paruka each beneficially own less than **5%** of the company's capital stock, while Fairmount beneficially owns more than **5%** of the company's capital and has a board representative, also beneficially owning more than **5%** of Paragon[98](index=98&type=chunk) Related Party Accounts Payable and Other Current Liabilities (in thousands of US dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Paragon reimbursable option agreement expenses | $80 | $1,482 | | Paragon option agreement milestone payments | $0 | $4,000 | | Paragon reimbursable other R&D expenses | $627 | $515 | | Paragon reimbursable patent expenses | $110 | $25 | | **Total** | **$817** | **$6,022** | - As of March 31, 2025, total related party accounts payable and other current liabilities were **$0.817 million**, a significant decrease from **$6.022 million** on December 31, 2024, primarily due to reduced Paragon milestone payments[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, including an overview, key R&D programs, recent developments, and analysis of financial results, liquidity, and capital resources [Overview](index=25&type=section&id=Overview) This overview introduces Oruka Therapeutics, Inc. as a clinical-stage biopharmaceutical company focused on developing novel monoclonal antibody therapies for inflammatory and immunological indications - Oruka Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing novel monoclonal antibody therapies for psoriasis (PsO) and other inflammatory and immunological (I&I) indications[101](index=101&type=chunk) - Since its inception in February 2024, the company has primarily allocated resources to financing, staffing, business planning, discovery, and research activities, generating no product sales revenue and incurring significant operating losses and negative cash flows[103](index=103&type=chunk)[104](index=104&type=chunk) Key Financial Overview (in thousands of US dollars) | Metric | Three Months Ended March 31, 2025 | | :--- | :--- | | Net loss | $(20,999) | | Net cash used in operating activities | $(20,900) | | Cash, cash equivalents, and marketable securities | $373,000 | - The company anticipates its existing cash, cash equivalents, and marketable securities are sufficient to fund its operating plan for at least the next 12 months[105](index=105&type=chunk) [ORKA-001 Program](index=26&type=section&id=ORKA-001%20Program) This section describes ORKA-001, a high-affinity, half-life extended monoclonal antibody targeting IL-23p19 for psoriasis treatment, highlighting its development status and expected milestones - ORKA-001 is a high-affinity, half-life extended monoclonal antibody designed to target IL-23p19 for the treatment of psoriasis[106](index=106&type=chunk) - This program utilizes YTE half-life extension technology, aiming to support once or twice-yearly subcutaneous dosing and potentially achieve higher response rates than existing therapies[107](index=107&type=chunk) - The company initiated a Phase 1 healthy volunteer trial for ORKA-001 in Q4 2024, expects to share preliminary pharmacokinetic data in Q3 2025, and plans to initiate a Phase 2a proof-of-concept study in H2 2025[108](index=108&type=chunk) [ORKA-002 Program](index=26&type=section&id=ORKA-002%20Program) This section details ORKA-002, a high-affinity, half-life extended monoclonal antibody targeting IL-17A and IL-17F for psoriasis, psoriatic arthritis, and other I&I indications - ORKA-002 is a high-affinity, half-life extended monoclonal antibody designed to target IL-17A and IL-17F for the treatment of psoriasis, psoriatic arthritis, and other I&I indications[109](index=109&type=chunk) - ORKA-002 aims for similar binding sites and affinity range as bimekizumab but with more convenient dosing intervals through half-life extension technology[109](index=109&type=chunk) - The company plans to initiate a Phase 1 healthy volunteer trial for ORKA-002 in Q2 2025 and expects to share preliminary pharmacokinetic data around the end of 2025[109](index=109&type=chunk) - ORKA-002 and ORKA-001 are considered highly complementary, offering treatment options for different types of psoriasis patients and potentially sequential dosing (ORKA-021) to combine the benefits of both mechanisms[110](index=110&type=chunk) [Additional Pipeline Program](index=26&type=section&id=Additional%20Pipeline%20Program) This section briefly introduces ORKA-003, a third monoclonal antibody program targeting an undisclosed pathway for indications beyond psoriasis - The company has a third monoclonal antibody program, ORKA-003, targeting an undisclosed pathway for indication expansion beyond psoriasis, potentially for use in combination with existing programs[111](index=111&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) This section highlights recent significant corporate events, including the acquisition of Pre-Merger Oruka, financing activities, and the exercise of key program options - The company completed the acquisition of Pre-Merger Oruka on August 29, 2024, changing its name to Oruka Therapeutics, Inc. and its Nasdaq ticker from "ABIO" to "ORKA," concurrently effecting a 1-for-12 reverse stock split[112](index=112&type=chunk) - In pre-merger financing, the company raised approximately **$275 million** in gross proceeds through the issuance of Pre-Merger Oruka common stock and pre-funded warrants, incurring **$20.5 million** in transaction costs[113](index=113&type=chunk) - In September 2024, the company raised approximately **$188.7 million** in net proceeds through a PIPE financing, issuing common stock, Series A Non-Voting Convertible Preferred Stock, and pre-funded warrants[115](index=115&type=chunk) - The company exercised its exclusive options for ORKA-001 and ORKA-002, entering into corresponding license agreements with Paragon for global exclusive licenses to develop, manufacture, and commercialize the related antibodies[116](index=116&type=chunk) - As of March 31, 2025, the company had incurred and paid **$4.0 million** and **$1.5 million** in milestone payments for ORKA-001 and ORKA-002, respectively[119](index=119&type=chunk) [Components of Results of Operations](index=28&type=section&id=Components%20of%20Results%20of%20Operations) This section explains the key components contributing to the company's operating results, including revenue, research and development expenses, general and administrative expenses, and other income/expense - The company has not generated revenue from product sales or other sources to date and does not anticipate generating revenue in the foreseeable future[120](index=120&type=chunk) - R&D expenses primarily include costs related to program development and research, expected to increase significantly in the future, including manufacturing investments and clinical trials[121](index=121&type=chunk)[122](index=122&type=chunk) - General and administrative expenses primarily include personnel-related costs, legal services, professional fees, and costs associated with operating as a public company, also expected to increase significantly in the future[126](index=126&type=chunk)[127](index=127&type=chunk) - Net other income (expense) includes interest income from cash, cash equivalents, and marketable securities, and interest expense related to the convertible note with a related party[128](index=128&type=chunk) [Results of Operations for the Three Months Ended March 31, 2025 and the period from February 6 (inception) to March 31, 2024](index=30&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%20the%20period%20from%20February%206%20(inception)%20to%20March%2031%2C%202024) This section provides a comparative analysis of the company's operating results for the three months ended March 31, 2025, against the period from inception to March 31, 2024 Summary of Results of Operations and Comprehensive Loss (in thousands of US dollars) | Metric | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | R&D expenses | $19,925 | $5,193 | $14,732 | 284% | | General and administrative expenses | $5,161 | $1,670 | $3,491 | 209% | | Total operating expenses | $25,086 | $6,863 | $18,223 | 266% | | Operating loss | $(25,086) | $(6,863) | $(18,223) | 266% | | Interest income | $4,092 | $0 | $4,092 | 100% | | Interest expense | $0 | $(214) | $214 | (100)% | | Net loss | $(20,999) | $(7,077) | $(13,922) | 197% | - R&D expenses increased by **$14.7 million (284%)** to **$19.9 million** for the three months ended March 31, 2025, from **$5.2 million** in the prior period, primarily due to increased CMO product development and manufacturing, CRO fees, and R&D personnel hiring[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - General and administrative expenses increased by **$3.5 million (209%)** to **$5.2 million** for the three months ended March 31, 2025, from **$1.7 million** in the prior period, mainly due to executive and administrative personnel hiring and increased professional services[139](index=139&type=chunk)[140](index=140&type=chunk) - Interest income was **$4.1 million** for the three months ended March 31, 2025, compared to zero in the prior period, while interest expense was zero, down from **$0.2 million** in the prior period[141](index=141&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its financial obligations, detailing its cash position, historical funding sources, and future capital requirements - As of March 31, 2025, the company held **$373.0 million** in cash, cash equivalents, and marketable securities[143](index=143&type=chunk) - The company has consistently generated significant operating losses and negative cash flows since inception, a trend expected to continue, with primary funding sources including convertible preferred stock, common stock, convertible notes, pre-funded warrants, and proceeds from reverse recapitalization and PIPE financing[144](index=144&type=chunk) - The company expects its current funds to support operating plans for at least the next 12 months, but anticipates needing additional financing in the future for R&D and potential commercialization[145](index=145&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) This section provides a detailed analysis of the company's cash flows from operating, investing, and financing activities over specific periods Summary of Cash Flows (in thousands of US dollars) | Cash Flow Type | Three Months Ended March 31, 2025 | Period from Inception (February 6, 2024) to March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,869) | $(168) | | Net cash provided by investing activities | $42,866 | $0 | | Net cash provided by financing activities | $0 | $27,911 | | Net increase in cash and cash equivalents | $21,997 | $27,743 | - For the three months ended March 31, 2025, net cash used in operating activities was **$20.9 million**, primarily due to net loss and changes in working capital, while net cash provided by investing activities was **$42.9 million**, mainly from maturities of marketable securities[147](index=147&type=chunk)[149](index=149&type=chunk) - For the period ended March 31, 2024, net cash used in operating activities was **$0.2 million**, and net cash provided by financing activities was **$27.9 million**, primarily from the issuance of Series B Preferred Stock and convertible notes[148](index=148&type=chunk)[151](index=151&type=chunk) [Contractual Obligations and Commitments](index=34&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and commitments, including agreements with third-party vendors and lease obligations - Contracts with CROs, CMOs, and other vendors are generally terminable, with no non-cancelable obligations as of March 31, 2025[152](index=152&type=chunk) - The company has lease contractual obligations, including for its Menlo Park headquarters and Waltham office[152](index=152&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses the critical accounting policies and the significant judgments and estimates made by management in preparing the financial statements - The company's financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions, with no changes to critical accounting policies or significant judgments and estimates for the three months ended March 31, 2025[153](index=153&type=chunk)[154](index=154&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that the company has no off-balance sheet arrangements as defined by SEC rules and regulations - As of March 31, 2025, the company had no off-balance sheet arrangements as defined by SEC rules and regulations[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Oruka Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting - Management assessed the effectiveness of the company's disclosure controls and procedures as effective at a reasonable assurance level as of March 31, 2025[158](index=158&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[159](index=159&type=chunk) [PART II. Other Information](index=36&type=section&id=PART%20II.%20Other%20Information) This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Management believes there are no pending claims or litigation against the company that are reasonably expected to have a material adverse effect on its operations, financial condition, or cash flows - The company is not currently involved in any material legal proceedings that are reasonably expected to have a material adverse effect on its operations, financial condition, or cash flows[161](index=161&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could adversely affect the company's business, financial condition, operating results, and growth prospects, including those related to financial condition, clinical development, regulatory approval, government regulations, intellectual property, reliance on third parties, employee matters, growth management, and common stock ownership [Risks Related to Our Financial Condition and Capital Requirements](index=36&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) This section details risks associated with the company's financial health, including its limited operating history, historical losses, and ongoing need for substantial capital - As a clinical-stage biopharmaceutical company with limited operating history, no completed clinical trials, and no approved commercial products, the company has a history of continuous losses and expects to incur significant losses in the future[173](index=173&type=chunk) - The company needs to raise substantial additional capital to support future operations but may not obtain sufficient funds or on reasonable terms, and current market conditions could hinder successful financing[174](index=174&type=chunk)[175](index=175&type=chunk) - Raising additional capital may dilute existing stockholders' equity, restrict company operations, or require the company to relinquish rights to technologies or product candidates[180](index=180&type=chunk)[181](index=181&type=chunk) [Risks Related to Clinical Development, Regulatory Approval and Commercialization](index=36&type=section&id=Risks%20Related%20to%20Clinical%20Development%2C%20Regulatory%20Approval%20and%20Commercialization) This section covers risks inherent in the clinical development, regulatory approval, and commercialization processes for the company's product candidates - The company faces intense competition from entities developing or potentially developing programs for the same diseases, and failure to compete effectively could hinder market penetration[182](index=182&type=chunk) - Product candidates may fail or be delayed in development, as clinical trials are expensive, difficult to design and implement, and their outcomes are uncertain[185](index=185&type=chunk) - The company is highly dependent on the success of ORKA-001 and ORKA-002, whose clinical trials may not be successful, and their success relies on observing a longer half-life in humans than existing monoclonal antibodies[189](index=189&type=chunk) - Failure to achieve anticipated development goals on time could delay product candidate development and potential commercialization, increase expenses, and materially harm the business[190](index=190&type=chunk) - Any drug delivery devices used by the company to deliver product candidates may have their own regulatory, development, supply, and other risks[192](index=192&type=chunk) - The company's approach to discovering and developing programs is unproven and may not successfully establish a commercially valuable pipeline[193](index=193&type=chunk) - The preclinical and clinical development process is lengthy, expensive, and uncertain, and results from early studies and trials may not predict future clinical trial outcomes[196](index=196&type=chunk) - Difficulties in enrolling participants in current and future clinical trials could delay or adversely affect clinical development activities[200](index=200&type=chunk) - Preliminary, topline, or interim data from clinical trials may change as more participant data becomes available and is subject to audit and verification procedures, requiring caution until final data is available[201](index=201&type=chunk) - Clinical trials may reveal significant adverse events, side effects, or patient intolerances not observed in preclinical studies or earlier clinical trials, potentially leading to safety profiles that impede clinical development, regulatory approval, or limit commercial potential[203](index=203&type=chunk) - The company may allocate limited resources to specific programs, failing to capitalize on potentially more profitable or successful ones[207](index=207&type=chunk) - Any approved products may not achieve sufficient market acceptance among clinicians, patients, healthcare third-party payors, and the medical community, hindering commercial success[208](index=208&type=chunk) - Some of the company's programs may compete with its other programs, negatively impacting the business and reducing future revenue[210](index=210&type=chunk) - The company may conduct clinical trials for programs outside the U.S., where the FDA may not accept such trial data, and foreign clinical trials pose additional risks[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks Related to Government Regulations](index=36&type=section&id=Risks%20Related%20to%20Government%20Regulations) This section addresses risks stemming from extensive government regulations, including lengthy approval processes, compliance burdens, and potential legislative changes affecting drug pricing and healthcare - The regulatory approval process by the FDA and other comparable foreign regulatory agencies is lengthy, time-consuming, and unpredictable, and failure to obtain or delays in obtaining required regulatory approvals could prevent or delay commercialization of product candidates, severely harming revenue generation[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - The company may fail to meet the chemistry, manufacturing, and control requirements for its programs, which could impede product approval[216](index=216&type=chunk) - Biologics for which the company seeks approval may face competition sooner than anticipated, as the Biologics Price Competition and Innovation Act (BPCIA) provides an abbreviated approval pathway for biosimilar products[217](index=217&type=chunk)[218](index=218&type=chunk) - Even if regulatory approval for product candidates is obtained, the company will remain subject to extensive ongoing regulatory obligations and scrutiny, potentially leading to restricted product use, substantial additional expenses, and penalties for non-compliance[219](index=219&type=chunk)[220](index=220&type=chunk) - Disruptions to government agencies (e.g., FDA, SEC) due to funding shortages or global health concerns could hinder their ability to hire and retain key personnel, delay development or commercialization of new products and services, or impede their normal business functions[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - The company may face difficulties from legislative or regulatory reform measures, such as healthcare cost control policies (e.g., IRA) that could lead to drug price controls or limitations, adversely affecting the business[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The company's business operations and existing and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations, and customers will be subject to applicable healthcare regulatory laws (including conflict of interest rules), potentially resulting in penalties[228](index=228&type=chunk)[229](index=229&type=chunk) - Even if the company commercializes any product candidates, it may be subject to unfavorable pricing regulations and/or third-party coverage and reimbursement policies, potentially preventing it from offering products at competitive prices and severely harming the business[230](index=230&type=chunk) - The company is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations, with violations potentially leading to criminal liability and other severe consequences[231](index=231&type=chunk) - Governments outside the U.S. tend to impose strict price controls, which could adversely affect the company's revenue[232](index=232&type=chunk) [Risks Related to Our Intellectual Property](index=37&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks concerning the company's ability to obtain, protect, and enforce its intellectual property rights, including patents, trademarks, and trade secrets - The company's ability to obtain and protect patents and other proprietary rights is uncertain, potentially leading to a loss of competitive advantage, as it relies on patents, trademarks, trade secret protection, and confidentiality agreements to safeguard intellectual property[233](index=233&type=chunk) - The company may be unable to acquire or maintain rights necessary for its programs through acquisitions and licenses, which could impede business growth[237](index=237&type=chunk) - The company may face patent infringement claims or need to initiate litigation to protect its intellectual property, potentially incurring substantial costs and liabilities and preventing commercialization of potential products[241](index=241&type=chunk) - The company may face claims of improper hiring of competitors' employees or improper use or disclosure of third-party confidential information by employees, consultants, or independent contractors[246](index=246&type=chunk) - Changes in patent laws in the U.S. and other jurisdictions could diminish the value of patents, thereby harming the company's ability to protect its products[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Obtaining and maintaining patent protection relies on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and non-compliance could result in reduced or lost patent protection[252](index=252&type=chunk) - The company may fail to identify relevant third-party patents or misinterpret their relevance, scope, or expiration dates, which could adversely affect its ability to develop and sell products[253](index=253&type=chunk)[254](index=254&type=chunk) - The company may face claims challenging the inventorship or ownership of patents and other intellectual property[255](index=255&type=chunk) - Patent terms may be insufficient to protect the company's product candidates' competitive position for a sufficiently long period[256](index=256&type=chunk) - Technology licensed by the company from various third parties may be subject to retained rights, such as licensors retaining rights for non-commercial academic and research uses[257](index=257&type=chunk)[258](index=258&type=chunk) [Risks Related to Our Reliance on Third Parties](index=37&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) This section addresses risks arising from the company's dependence on third parties for licensing, clinical research, and manufacturing activities - The company currently relies on license agreements with Paragon, and failure to maintain collaborations or licensing arrangements, or unsuccessful collaborations, could negatively impact the business[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - The company currently and plans to rely on third parties to conduct and support preclinical studies and clinical trials, and if these third parties fail to adequately perform contractual duties or complete them on schedule, the company may not obtain regulatory approval or commercialize product candidates[263](index=263&type=chunk)[264](index=264&type=chunk) - The company currently and plans to rely on third-party facilities or manufacturers to produce product candidates, and inability to use third-party manufacturing facilities or difficulties encountered by third-party manufacturers in production could adversely affect the business[266](index=266&type=chunk)[267](index=267&type=chunk) - Foreign contract manufacturing organizations (CMOs) may be affected by U.S. legislation (including the proposed BIOSECURE Act), trade restrictions, and other foreign regulatory requirements, potentially increasing costs, reducing material supply, delaying material procurement or supply, or adversely affecting the company's ability to secure government commitments for potential therapies[268](index=268&type=chunk)[269](index=269&type=chunk) [Risks Related to Employee Matters, Managing Growth and Other Risks Related to Our Business](index=37&type=section&id=Risks%20Related%20to%20Employee%20Matters%2C%20Managing%20Growth%20and%20Other%20Risks%20Related%20to%20Our%20Business) This section covers risks related to human resources, organizational growth, market estimates, information technology, regulatory compliance, and broader macroeconomic factors - To successfully implement its plans and strategies, the company needs to expand its organization and may encounter difficulties in managing growth[270](index=270&type=chunk) - The company is highly dependent on key personnel and plans to recruit new key personnel, and inability to attract and retain highly qualified individuals may prevent successful implementation of business strategies[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The company's future growth may partly depend on its ability to operate in foreign markets, which will entail additional regulatory burdens and other risks and uncertainties[274](index=274&type=chunk) - The company's estimates of market opportunities and market growth forecasts may be inaccurate, and even if the market achieves projected growth, the company's business may not grow at a similar rate[275](index=275&type=chunk)[276](index=276&type=chunk) - The company's employees, independent contractors, consultants, business partners, principal investigators, CROs, CMOs, suppliers, and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements[277](index=277&type=chunk) - The company's internal information technology systems or those of any third-party service providers may fail or suffer security or data privacy breaches, potentially leading to additional costs, lost revenue, significant liabilities, brand damage, and operational disruptions[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[283](index=283&type=chunk) - The company is subject to stringent and evolving privacy, data protection, and data security laws, regulations, and standards, as well as contractual obligations, and failure to comply could result in government enforcement actions, fines, litigation, and/or negative publicity[284](index=284&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations could result in fines or penalties, or incur costs that could materially adversely affect business success[285](index=285&type=chunk) - The company may face adverse U.S. legislative or regulatory tax changes, which could negatively impact its financial condition, such as the effects of the Inflation Reduction Act (IRA) and the Tax Cuts and Jobs Act on R&D expenditures[286](index=286&type=chunk) - The company may acquire businesses or products or form strategic alliances in the future but may not realize the benefits of such acquisitions[287](index=287&type=chunk) - The company deposits cash in financial institutions, typically exceeding federal insurance limits, and failure of a financial institution could adversely affect its ability to pay operating expenses or make other payments[288](index=288&type=chunk) - Economic downturns, inflation, interest rate fluctuations, natural disasters, public health crises, political crises, geopolitical events, or other macroeconomic conditions could adversely affect the company's business[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) [Risks Related to Owning Our Common Stock](index=37&type=section&id=Risks%20Related%20to%20Owning%20Our%20Common%20Stock) This section addresses risks pertinent to common stock ownership, including market price volatility, corporate governance provisions, potential dilution, and dividend policy - The market price of the company's common stock has been and may continue to be highly volatile and subject to significant fluctuations, potentially leading to increased securities litigation or shareholder activism[296](index=296&type=chunk)[297](index=297&type=chunk) - Provisions in the company's certificate of incorporation and bylaws, and Delaware law, may make an acquisition of the company more difficult and could prevent attempts by stockholders to replace or remove management[300](index=300&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[308](index=308&type=chunk) - The company's governing documents stipulate that certain designated courts will be the sole and exclusive forum for specific legal actions between the company and its stockholders, unless the company consents in writing to an alternative forum, which may limit stockholders' ability to obtain a favorable jurisdiction in disputes with the company or its directors, officers, employees, or agents[304](index=304&type=chunk)[305](index=305&type=chunk) - Future sales of shares by existing stockholders could cause the company's stock price to decline[306](index=306&type=chunk) - The company does not anticipate paying any cash dividends in the foreseeable future, making stock price appreciation the sole source of gain for stockholders[307](index=307&type=chunk) - The company's executive officers, directors, and principal stockholders have the ability to control or significantly influence all matters submitted to stockholders for approval[309](index=309&type=chunk) - If equity research analysts do not publish research reports, or publish unfavorable reports about the company, its business, or its market, the company's stock price and trading volume could decline[310](index=310&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms that there were no unregistered sales of equity securities or use of proceeds during the current reporting quarter - There were no unregistered sales of equity securities or use of proceeds during the current quarter[311](index=311&type=chunk) [Item 3. Defaults Upon Senior Securities](index=65&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that the company did not experience any defaults upon senior securities during the current reporting quarter - There were no defaults upon senior securities during the current quarter[312](index=312&type=chunk) [Item 4. Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure is not applicable to the company's operations - This disclosure is not applicable[313](index=313&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) This section confirms that no Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements were adopted or terminated by the company's directors or Section 16 officers during the quarter - No Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements were adopted or terminated by the company's directors or Section 16 officers during the current quarter[314](index=314&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the quarterly report, including agreements, corporate documents, and executive certifications - Exhibits include the Agreement and Plan of Merger and Reorganization, Certificate of Incorporation, Certificate of Designations of Preferred Stock, warrants, license agreements, and executive certifications[316](index=316&type=chunk) [Signatures](index=67&type=section&id=Signatures) This section confirms the official signing of the report by Oruka Therapeutics, Inc.'s President and CEO, Dr. Lawrence Klein, and Senior Vice President, Treasurer, and Chief Accounting Officer, Arjun Agarwal, on May 14, 2025 - The report was signed by Dr. Lawrence Klein, President and CEO, and Arjun Agarwal, Senior Vice President, Treasurer, and Chief Accounting Officer, on May 14, 2025[320](index=320&type=chunk)

Financial Performance - The company generated net losses of $83.7 million from February 6, 2024 (inception) to December 31, 2024, with net cash used for operating activities amounting to $57.8 million[411]. - The company reported total operating expenses of $88.1 million for the period from February 6, 2024, to December 31, 2024, with research and development expenses accounting for $75.1 million[441]. - The company has not generated any revenue from product sales and does not expect to do so in the foreseeable future[430]. - The company anticipates needing additional financing in the future to support ongoing research and development efforts[448]. - Interest income for the period was $5.9 million, while interest expense related to a convertible note was $1.5 million[445]. - Net cash used in operating activities from February 6, 2024, to December 31, 2024, was $57.8 million, primarily due to a net loss of $83.7 million[450]. - Net cash used in investing activities during the same period was $330.1 million, mainly attributed to purchases of marketable securities[451]. - Net cash provided by financing activities was $449.5 million, including $228.0 million from Pre-Closing Financing and $188.7 million from PIPE Financing[452]. Cash and Securities - As of December 31, 2024, the company had cash, cash equivalents, and marketable securities totaling $393.7 million, expected to fund operations for at least twelve months[413]. - As of December 31, 2024, the company had $393.7 million in cash, cash equivalents, and marketable securities[446]. Research and Development - The lead program, ORKA-001, targets IL-23p19 for psoriasis treatment and is designed for subcutaneous injection as infrequently as once or twice a year[414][415]. - The company initiated dosing of healthy volunteers in a Phase 1 trial of ORKA-001 in Q4 2024, with interim pharmacokinetic data expected in H2 2025 and initial efficacy data in psoriasis patients anticipated in H2 2026[416]. - ORKA-002, targeting IL-17A/F, is planned to begin dosing healthy volunteers in a Phase 1 trial in Q3 2025, with initial pharmacokinetic data expected in H1 2026[417]. - The company has a third mAb program, ORKA-003, targeting an undisclosed pathway, with potential for indication expansion beyond psoriasis[420]. - The company expects significant increases in both research and development and general and administrative expenses as it expands its operations[438]. - Research and development expenses included $57.7 million for external research and development, primarily related to services rendered by Paragon[442]. - The company recognized $13.5 million in development costs related to ORKA-001 as research and development expenses[459]. - The company is responsible for development costs incurred by Paragon, totaling $3.3 million for ORKA-002, recognized as research and development expenses[460]. - Research and development expenses are expensed as incurred, including costs for salaries, overhead, and contract services, with significant estimates involved in accrued balances[476]. Mergers and Financing - The merger with Pre-Merger Oruka was completed on August 29, 2024, resulting in a name change from ARCA biopharma, Inc. to Oruka Therapeutics, Inc.[421]. - The Pre-Closing Financing raised approximately $275.0 million, with transaction costs of $20.5 million recorded as a reduction to additional paid-in capital[422]. - The merger was accounted for as a reverse recapitalization, with Pre-Merger Oruka deemed the accounting acquirer for financial reporting purposes[426]. - The company raised approximately $188.7 million in net proceeds from a PIPE Financing on September 13, 2024, selling 5,600,000 shares of common stock at $23.00 per share[429]. - The company entered into a Series A Preferred Stock and Convertible Note Purchase Agreement with Fairmount, issuing a Convertible Note with an initial principal amount of $25.0 million, accruing interest at 12.0% per annum[470]. - Prior to the merger, the Convertible Note was converted into 2,722,207 shares of Company Common Stock, based on an aggregate principal amount of $25.0 million plus unpaid accrued interest of $1.5 million[471]. Stock and Compensation - The company executed a 1-for-12 reverse stock split on September 3, 2024, adjusting the share data retrospectively for all periods presented[427]. - Stock-based compensation is measured using the Black-Scholes option-pricing model, with expenses recognized over the requisite service period[477]. - The fair value of Company Common Stock is determined based on the quoted market price following the completion of the merger[478]. - Prior to the merger, common stock valuations were prepared using a hybrid method, including an option pricing method and a probability-weighted expected return method[480]. Contracts and Obligations - The company entered into Option Agreements with Paragon for antibody discovery, with potential milestone payments of up to $12.0 million for clinical development milestones[455][466]. - Total expenses recognized in connection with services provided by Paragon and Paruka under the Option Agreements amounted to $42.0 million[463]. - The company recorded a $1.5 million milestone payment related to the achievement of a development candidate for the ORKA-001 program[459]. - A non-refundable license fee of $150,000 was paid to WuXi Biologics under the Cell Line License Agreement, recognized as a research and development expense[468]. - The company has exclusive licenses for ORKA-001 and ORKA-002, with royalty obligations including a low single-digit percentage for antibody products[465][466]. - The company has contractual obligations for minimum lease payments under its operating lease for headquarters in Menlo Park, California[473]. Miscellaneous - As of December 31, 2024, there is no note payable to a related party[471]. - As of December 31, 2024, the company did not have any off-balance sheet arrangements[483]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[484].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from ________ to ________ Commission file number: 000-22873 Oruka Therapeutics, Inc. (Exact name of registrant as specified in its charter) (650) 606-7910 (Registrant's ...

Merger and Business Combination - Oruka Therapeutics, Inc. completed a business combination with ARCA biopharma, resulting in Oruka securityholders owning approximately 97.61% of the combined company[4]. - The Exchange Ratio for the merger was set at 6.8569 shares of ARCA Common Stock for each share of Oruka Common Stock[7]. - The merger is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code[9]. - The merger involved two stages: the First Merger and the Second Merger, with Oruka becoming a wholly owned subsidiary of ARCA[9]. - Approximately 28.5% of ARCA stockholders and 90% of Oruka stockholders entered into support agreements for the merger[11]. - Following the Merger and a 1-for-12 reverse stock split, the Company had 46,348,968 shares of Common Stock outstanding[22][23]. - The Company ceased to be a shell company as of the Closing Date due to the Merger[127]. - Oruka Therapeutics, Inc. is in the process of integrating operations with ARCA biopharma, Inc., as indicated in the pro forma financial statements[99.5]. Financial Information - A special cash dividend of approximately $23.4 million was paid, distributing $1.613 per share of ARCA Common Stock to stockholders[8]. - The Pre-Closing Financing raised approximately $275.0 million, including $25.0 million from a Convertible Note[14]. - Oruka issued an aggregate of 39,873,706 shares of Common Stock and 9,664,208 pre-funded warrants for gross proceeds of approximately $275.0 million in connection with the Merger[21]. - The Company’s unaudited interim condensed consolidated financial statements for the period from February 6, 2024 (inception) to June 30, 2024 are included in the report[30]. - The audited financial statements of ARCA for the years ended December 31, 2023 and 2022 are incorporated by reference in the Proxy Statement/Prospectus[31]. - The unaudited pro forma condensed combined financial information of ARCA and Oruka for the six months ended June 30, 2024 is provided in the report[32]. - The Company’s management discusses the financial condition and results of operations as of June 30, 2024, highlighting key performance metrics[32]. - Oruka Therapeutics, Inc. reported its financial results for the three months ended June 30, 2024, and the period from February 6, 2024 (inception) to June 30, 2024[99.4]. - Unaudited interim condensed consolidated financial statements for the three months ended June 30, 2024, were provided, indicating the company's financial position[99.3]. Stock and Shareholder Information - A reverse stock split of 1-for-12 is set to take effect on September 3, 2024[5]. - The Reverse Stock Split became effective on September 3, 2024, with trading commencing on a post-split basis[23]. - The Company’s beneficial ownership table indicates a total of 29,398,595 shares of Common Stock outstanding as of August 29, 2024, post-reverse stock split[34]. - Fairmount Funds Management LLC holds 6,611,255 shares, representing 19.99% of shares outstanding[36]. - Venrock Healthcare Capital Partners owns 2,937,064 shares, accounting for 9.99% of shares outstanding[36]. - FMR LLC has 2,573,301 shares, which is 8.75% of shares outstanding[36]. - RTW Investments, LP possesses 1,543,984 shares, equating to 5.25% of shares outstanding[36]. - The group of all executive officers and directors collectively owns 7,548,826 shares, or 23.18% of shares outstanding[36]. - As of the closing date, the company has approximately 29,398,595 shares of common stock issued and outstanding[47]. - The company was listed on The Nasdaq Global Market under the symbol "ORKA" following the merger[47]. - The number of holders of record is approximately 68, excluding a larger number of beneficial holders[47]. Governance and Management - Indemnification agreements were established for directors and executive officers, replacing previous agreements[16]. - The board has determined that all directors, except for the CEO, qualify as independent directors under Nasdaq rules[45]. - The Company appointed Kristine Ball, Carl Dambkowski, and Cameron Turtle to the Audit Committee, with Kristine Ball serving as the chair[118]. - The Compensation Committee was formed with Peter Harwin, Samarth Kulkarni, and Cameron Turtle, with Cameron Turtle as the chair[119]. - The Nominating and Corporate Governance Committee includes Kristine Ball, Samarth Kulkarni, and Peter Harwin, with Peter Harwin as the chair[119]. - The Board appointed Lawrence Klein as President and CEO, and increased its size from five to six members on August 29, 2024[99]. - The newly appointed directors will serve staggered terms, with Class I directors' terms expiring in 2025 and Class III directors' terms expiring in 2027[100]. - The Company believes Dr. Klein is qualified for the Board due to his experience in biotechnology and senior management[103]. - The Company believes Ms. Ball is qualified for the Board due to her executive experience in life sciences and finance[109]. - The Company believes Dr. Dambkowski is qualified for the Board due to his significant experience in biotechnology and academic accomplishments[112]. - The Company believes Dr. Kulkarni is qualified for the Board due to his executive experience in the biopharmaceutical industry[115]. - The Company believes Dr. Turtle is qualified for the Board due to his leadership experience in biopharmaceutical organizations[118]. - The Company believes Mr. Harwin is qualified for the Board due to his experience in biotechnology and fund management[113]. Corporate Policies and Compliance - The Company has obtained insurance covering certain liabilities of its directors and officers effective August 29, 2024[51]. - The Company adopted an amendment and restatement of its Bylaws on August 29, 2024, which includes increasing the quorum requirement for stockholder meetings from one-third to a majority of stock outstanding[122]. - A new Code of Business Conduct and Ethics was adopted on August 29, 2024, which establishes policies regarding conflicts of interest, legal compliance, and anti-corruption standards[124]. - The Company has established a whistleblower hotline and procedures for reporting potential violations under the new Code of Conduct[126]. - The Company has updated its governance structure to align with the new Bylaws and Code of Conduct, removing duplicative provisions[122]. - The Delaware Court of Chancery has been designated as the sole forum for certain types of disputes, as allowed by law[122]. - The Company has opted out of electronic delivery of documents or information under DGCL Section 116[122]. - The Company has made various updates to its governance documents, including clarifying and conforming changes[122]. Employee and Incentive Plans - The 2024 Stock Incentive Plan was approved, allowing for the grant of up to 4,634,897 shares of Company Common Stock[68][70]. - The 2024 Stock Plan will automatically increase the share pool by 5% of diluted stock annually from 2025 to 2034[70]. - Approximately 21 employees and five non-employee directors are expected to be eligible to participate in the 2024 Stock Plan[72]. - The 2024 Employee Stock Purchase Plan (ESPP) was approved with an initial share pool of 463,490 shares, subject to adjustments for changes in capitalization[83][85]. - The ESPP allows eligible employees to purchase shares at a price no less than 85% of the fair market value on the first or last day of the offering period[90]. - Approximately 21 employees are expected to be eligible to participate in the ESPP, with a maximum purchase limit of $25,000 per calendar year[87]. - The ESPP will automatically increase the share pool by 1% of diluted stock annually from 2025 to 2034, unless a lower increase is determined[85]. - Participants can purchase shares through payroll deductions ranging from 1% to 15% of their salary[89]. - The ESPP allows for pro rata allocation of shares if the total number of shares requested exceeds the available shares[86]. - The ESPP will continue until terminated by the Administrator, with provisions for adjustments in case of corporate transactions[97][96]. - Each of the departing executive officers will receive a severance payment equivalent to 12 months of their annual base salary[66]. - The consulting agreement for Mr. Dekker includes a fee of $20,000 for initial services and $250 per hour thereafter, up to a total of $27,500[67]. Strategic Focus and Future Outlook - The Company emphasizes the risks associated with its business, including limited operating history and regulatory challenges[29][25]. - The Company’s forward-looking statements include expectations regarding future performance and market conditions, subject to various risks and uncertainties[25][26]. - Future outlook includes a focus on expanding its market presence and potential strategic partnerships[99.4]. - The company is actively pursuing antibody discovery and option agreements to enhance its research and development capabilities[10.23][10.24]. - The company is planning to leverage its equity incentive plan to attract and retain key talent in the industry[10.15].

Core Points - ARCA biopharma announced a special cash dividend of $1.613 per share, payable on August 28, 2024, to stockholders of record as of August 26, 2024, in connection with its merger with Oruka Therapeutics [1] - The special dividend exceeds 25% of ARCA's stock price on the declaration date, resulting in an ex-dividend date of August 29, 2024, as per Nasdaq rules [2] - The merger with Oruka Therapeutics is expected to close on August 29, 2024, pending the satisfaction or waiver of all conditions under the merger agreement [3] Company Information - ARCA biopharma focuses on developing genetically and other targeted therapies for cardiovascular diseases through a precision medicine approach [4] - Oruka Therapeutics is developing novel biologics aimed at treating chronic skin diseases, with a mission to achieve high rates of complete disease clearance for conditions like plaque psoriasis [5]

Company Overview - ARCA biopharma, Inc. has announced a reverse stock split at a ratio of 1-for-12, effective September 3, 2024, following its merger with Oruka Therapeutics, Inc. [1] - The company will change its name to Oruka Therapeutics, Inc. and its stock symbol to "ORKA" post-merger [1]. Stock Split Details - The reverse stock split will reduce the number of outstanding shares from approximately 14,507,143 to about 1,208,928 shares [2]. - The authorized common stock will increase from 100,000,000 shares to 545,000,000 shares in connection with the merger [2]. - Stockholders will receive cash payments for any fractional shares resulting from the reverse stock split, calculated based on the closing price on September 3, 2024 [2]. Merger Implications - Following the merger, the total issued and outstanding common stock is expected to be approximately 29,490,443 shares, with additional shares underlying warrants and convertible preferred stock [4]. - Proportionate adjustments will be made to the exercise prices and number of shares underlying outstanding equity and warrant awards as a result of the reverse stock split [3]. Company Missions - ARCA biopharma focuses on developing targeted therapies for cardiovascular diseases through a precision medicine approach [5]. - Oruka Therapeutics aims to develop novel biologics for chronic skin diseases, particularly targeting conditions like plaque psoriasis [6].

Group 1 - ARCA biopharma has declared a special cash dividend estimated at $1.59 per share in connection with its merger with Oruka Therapeutics [1][2] - The special dividend will be payable to stockholders of record as of August 26, 2024, with a payment date scheduled for August 28, 2024 [2][3] - The payment of the special dividend is contingent upon ARCA stockholder approval of the merger, which will be voted on at a special meeting on August 22, 2024 [3] Group 2 - ARCA biopharma focuses on developing genetically and targeted therapies for cardiovascular diseases through a precision medicine approach [4] - Oruka Therapeutics is developing novel biologics aimed at treating chronic skin diseases, with a mission to achieve high rates of complete disease clearance for conditions like plaque psoriasis [5]

Core Viewpoint - ARCA biopharma, Inc. is undergoing a strategic review process, including a merger with Oruka Therapeutics, and has reported its second quarter 2024 financial results, highlighting the company's financial position and operational changes. Financial Results - As of June 30, 2024, cash and cash equivalents were $33.3 million, down from $37.4 million as of December 31, 2023, indicating a decrease of approximately 11.5% [6][18]. - General and administrative expenses for the quarter were $3.0 million, an increase of approximately 76.5% from $1.7 million in the same period of 2023 [7][19]. - Research and development expenses decreased to $0.1 million from $0.3 million year-over-year, primarily due to reduced headcount and the cessation of certain research grants [9][19]. - Total operating expenses for the quarter were $3.1 million, compared to $2.0 million in the second quarter of 2023 [10][19]. - The net loss for the quarter was $2.7 million, or $0.18 per share, compared to a net loss of $1.5 million, or $0.10 per share, in the same quarter of 2023 [10][19]. Strategic Developments - In April 2024, ARCA entered into a Merger Agreement with Oruka Therapeutics, which involves a two-step merger process intended to qualify as a tax-free reorganization [2][3]. - The company is in the process of disposing of legacy technology and intellectual property, contingent upon stockholder approval for the merger [4]. - Future operations are highly dependent on the successful completion of the merger, with the possibility of exploring other strategic alternatives if the merger does not proceed [5]. Corporate Update - The company has established a Special Committee to review strategic alternatives, including potential acquisitions, mergers, or licensing transactions [1]. - Significant costs are expected to be incurred in connection with the evaluation of strategic alternatives and the merger, including legal and advisory fees [6][8].

Financial Performance - The net loss for the three months ended June 30, 2024, was $2,678,000, compared to a net loss of $1,480,000 for the same period in 2023, indicating an increase in losses of approximately 80.8%[8] - The company reported a basic and diluted net loss per share of $(0.18) for the three months ended June 30, 2024, compared to $(0.10) for the same period in 2023, reflecting a deterioration of 80%[8] - General and administrative expenses for the three months ended June 30, 2024, were $2,992,000, compared to $1,719,000 for the same period in 2023, an increase of approximately 74.1%[8] - The accumulated deficit increased from $(188,741,000) as of December 31, 2023, to $(193,428,000) as of June 30, 2024, indicating a worsening of the deficit by approximately 2.9%[9] - ARCA biopharma has not generated any revenue to date and has incurred substantial losses and negative cash flows since inception[14] Assets and Liabilities - Total current assets decreased from $37,592,000 as of December 31, 2023, to $33,820,000 as of June 30, 2024, representing a decline of approximately 10.3%[7] - Total liabilities increased from $841,000 as of December 31, 2023, to $1,271,000 as of June 30, 2024, representing an increase of approximately 51.1%[7] - Cash and cash equivalents decreased from $37,431,000 at the beginning of the year to $33,283,000 at the end of the period, a decline of approximately 11.5%[11] - Total stockholders' equity decreased from $37,020,000 as of December 31, 2023, to $32,573,000 as of June 30, 2024, a decline of approximately 12.0%[9] Cash Flow and Operating Activities - The net cash used in operating activities for the six months ended June 30, 2024, was $(4,162,000), compared to $(2,289,000) for the same period in 2023, representing an increase in cash outflow of approximately 82%[11] - The company expects its current cash and cash equivalents to fund operations through the end of fiscal year 2025[15] Research and Development - Research and development expenses for the three months ended June 30, 2024, were $130,000, down from $254,000 in the same period of 2023, reflecting a decrease of approximately 48.8%[8] Strategic Initiatives and Mergers - The company is in the process of merging with Oruka Therapeutics, which is intended to be a tax-free reorganization[13] - The merger will involve the disposal of legacy technology and intellectual property, contingent upon stockholder approval[13] - The future viability of the company is highly dependent on the success of the merger and its ability to raise additional capital[15] - The merger agreement between ARCA and Oruka is set to close with Oruka becoming a wholly owned subsidiary of ARCA, with Oruka stockholders owning approximately 97.61% of the combined company[44] - ARCA anticipates declaring a cash dividend of approximately $20.0 million to pre-First Merger ARCA stockholders, with net cash expected to be around $5.0 million at closing[44] - The financing transaction associated with the merger includes a subscription agreement for the purchase of PIPE Securities totaling approximately $275.0 million[46] - The board of directors of the combined company will consist of six members, all designated by Oruka, with Oruka's CEO leading the new entity[45] - The merger is subject to various closing conditions, including stockholder approvals and Nasdaq's approval for listing[45] Employee Compensation and Management Changes - Dr. Michael Bristow's employment was mutually concluded on April 3, 2024, with a severance payment of 12 months' base salary and a cash payment of $25,000[30] - Retention bonuses for certain employees were increased by 50% in November 2023, totaling $265,000, with unpaid bonuses amounting to $444,000 as of June 30, 2024[33] - The company recorded severance benefits of $159,000 for the former Secretary and General Counsel during the year ended December 31, 2023[34] - Thomas A. Keuer has been appointed as ARCA's President and principal executive officer, effective April 3, 2024[47] - The retention bonus for executives Thomas A. Keuer and C. Jeffrey Dekker has been increased to $200,000[48] Legal and Regulatory Matters - A complaint has been filed against the company regarding a proposed merger, alleging a misleading registration statement, with potential implications for the merger[32] - The company has recorded a full valuation allowance against its net deferred tax assets due to uncertainty in future taxable income[43] Stock Options and Shareholder Matters - The company has outstanding stock options totaling 607,055 as of June 30, 2024, down from 619,782 in 2023[23] - Share-based compensation expense for the three months ended June 30, 2024, was $112,000, compared to $145,000 for the same period in 2023[40] - As of June 30, 2024, options outstanding were 607,055 with a weighted average exercise price of $4.17[42]