ARCA biopharma(ABIO) - 2025 Q1 - Quarterly Report

Cover Page 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 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] 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 This section provides a comprehensive list of all chapters and sub-sections within the report, facilitating navigation PART I. Financial Information 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) 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 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] Condensed Consolidated Statements of Operations and Comprehensive Loss 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] Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (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] Condensed Consolidated Statements of Cash Flows 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] Notes to Unaudited Condensed Consolidated Financial Statements 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 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][25] - 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][30] - 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] 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 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] - 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] - 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][34] 3. Fair Value Measurements 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] 4. Cash Equivalents and Marketable Securities 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][38] 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 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] 6. Note Payable with Related Party 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] - 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] - As of December 31, 2024, and March 31, 2025, the convertible notes were no longer outstanding[43] 7. Convertible Preferred Stock and Stockholders' Equity 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] - 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] - 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] - 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] 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 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] - 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][70] - 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] 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 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] 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 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] - 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] - 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] - 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] - 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] 11. Commitment and Contingencies 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][90] 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][92] - 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] 12. Net Loss per Share 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] 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 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] 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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][104] 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] ORKA-001 Program 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] - 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] - 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] ORKA-002 Program 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] - ORKA-002 aims for similar binding sites and affinity range as bimekizumab but with more convenient dosing intervals through half-life extension technology[109] - 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] - 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] Additional Pipeline Program 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] Recent Developments 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] - 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] - 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] - 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] - 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] Components of Results of Operations 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] - 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][122] - 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][127] - 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] Results of Operations for the Three Months Ended March 31, 2025 and the period from February 6 (inception) to March 31, 2024 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][137][138] - 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][140] - 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] Liquidity and Capital Resources 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] - 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] - 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] Cash Flows 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][149] - 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][151] Contractual Obligations and Commitments 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] - The company has lease contractual obligations, including for its Menlo Park headquarters and Waltham office[152] Critical Accounting Policies and Significant Judgments and Estimates 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][154] Off-Balance Sheet Arrangements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[159] PART II. Other Information This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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 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] - 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][175] - Raising additional capital may dilute existing stockholders' equity, restrict company operations, or require the company to relinquish rights to technologies or product candidates[180][181] Risks Related to Clinical Development, Regulatory Approval and Commercialization 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] - 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] - 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] - Failure to achieve anticipated development goals on time could delay product candidate development and potential commercialization, increase expenses, and materially harm the business[190] - Any drug delivery devices used by the company to deliver product candidates may have their own regulatory, development, supply, and other risks[192] - The company's approach to discovering and developing programs is unproven and may not successfully establish a commercially valuable pipeline[193] - 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] - Difficulties in enrolling participants in current and future clinical trials could delay or adversely affect clinical development activities[200] - 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] - 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] - The company may allocate limited resources to specific programs, failing to capitalize on potentially more profitable or successful ones[207] - Any approved products may not achieve sufficient market acceptance among clinicians, patients, healthcare third-party payors, and the medical community, hindering commercial success[208] - Some of the company's programs may compete with its other programs, negatively impacting the business and reducing future revenue[210] - 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][212] Risks Related to Government Regulations 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][214][215] - The company may fail to meet the chemistry, manufacturing, and control requirements for its programs, which could impede product approval[216] - 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][218] - 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][220] - 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][222][223][224] - 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][226][227] - 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][229] - 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] - 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] - Governments outside the U.S. tend to impose strict price controls, which could adversely affect the company's revenue[232] Risks Related to Our Intellectual Property 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] - The company may be unable to acquire or maintain rights necessary for its programs through acquisitions and licenses, which could impede business growth[237] - 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] - 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] - 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][249][250][251] - 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] - 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][254] - The company may face claims challenging the inventorship or ownership of patents and other intellectual property[255] - Patent terms may be insufficient to protect the company's product candidates' competitive position for a sufficiently long period[256] - 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][258] Risks Related to Our Reliance on Third Parties 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][260][261][262] - 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][264] - 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][267] - 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][269] Risks Related to Employee Matters, Managing Growth and Other Risks Related to Our Business 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] - 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][272][273] - 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] - 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][276] - 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] - 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][279][280][281][283] - 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] - 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] - 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] - The company may acquire businesses or products or form strategic alliances in the future but may not realize the benefits of such acquisitions[287] - 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] - 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][294][295] Risks Related to Owning Our Common Stock 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][297] - 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][302][303][308] - 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][305] - Future sales of shares by existing stockholders could cause the company's stock price to decline[306] - 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] - 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] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities 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] Item 4. Mine Safety Disclosures This disclosure is not applicable to the company's operations - This disclosure is not applicable[313] Item 5. Other Information 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] Item 6. Exhibits 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] 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]