Oruka Therapeutics, Inc.(ORKA) - 2025 Q2 - Quarterly Report

PART I. Financial Information Presents the unaudited condensed consolidated financial statements and related notes, offering a comprehensive financial overview Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' equity (deficit), statements of cash flows, and accompanying notes, providing a detailed financial overview for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Details the company's financial position, including assets, liabilities, and equity, at specific reporting dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $357,418 | $396,019 | | Total Liabilities | $13,776 | $13,798 | | Total Stockholders' Equity | $343,642 | $382,221 | | Cash and cash equivalents | $65,396 | $61,575 | | Marketable securities, current | $263,010 | $314,073 | | Accumulated deficit | $(129,297) | $(83,724) | Condensed Consolidated Statements of Operations and Comprehensive Loss Reports the company's financial performance, including revenues, expenses, and net loss, over specific periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Research and development | $24,087 | $18,673 | | General and administrative | $4,342 | $2,820 | | Total operating expenses | $28,429 | $21,493 | | Loss from operations | $(28,429) | $(21,493) | | Interest income | $3,857 | $— | | Interest expense | $— | $(750) | | Net loss | $(24,574) | $(22,243) | | Comprehensive loss | $(24,595) | $(22,243) | | Net loss per share attributable to common stockholders, basic and diluted | $(0.46) | $(6.96) | | Metric (in thousands) | Six Months Ended June 30, 2025 | Period from Inception to June 30, 2024 | | :-------------------- | :----------------------------- | :------------------------------------- | | Research and development | $44,012 | $23,866 | | General and administrative | $9,503 | $4,490 | | Total operating expenses | $53,515 | $28,356 | | Loss from operations | $(53,515) | $(28,356) | | Interest income | $7,949 | $— | | Interest expense | $— | $(964) | | Net loss | $(45,573) | $(29,320) | | Comprehensive loss | $(45,559) | $(29,320) | | Net loss per share attributable to common stockholders, basic and diluted | $(0.85) | $(9.17) | Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) Outlines changes in the company's equity structure, including preferred stock and common stock, over time | Metric (in thousands, except share data) | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :--------------------------------------- | :---------------- | :------------- | :------------ | | Series B Non-Voting Convertible Preferred Stock Shares | 137,138 | 137,138 | 137,138 | | Series B Non-Voting Convertible Preferred Stock Amount | $2,931 | $2,931 | $2,931 | | Common Stock Shares | 37,440,510 | 37,440,510 | 37,450,745 | | Common Stock Amount | $37 | $37 | $37 | | Additional Paid-In Capital | $463,018 | $466,486 | $469,998 | | Accumulated Other Comprehensive Gain (Loss) | $(41) | $(6) | $(27) | | Accumulated Deficit | $(83,724) | $(104,723) | $(129,297) | | Total Stockholders' Equity | $382,221 | $364,725 | $343,642 | Condensed Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities for the reported periods | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Period from 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 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Nature of the Business and Basis of Presentation Describes the company's core business, its biopharmaceutical focus, and the foundational principles of financial statement preparation - Oruka Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing biologics for psoriasis and other inflammatory and immunology indications[15] - The company was formed through a reverse recapitalization of ARCA biopharma, Inc., with Pre-Merger Oruka deemed the accounting acquirer[15][23] - As of June 30, 2025, the company had cash, cash equivalents, and marketable securities of $351.5 million, which management expects to be sufficient to fund operating plans for at least twelve months[28] - The company incurred net losses of $24.6 million and $45.6 million for the three and six months ended June 30, 2025, respectively[27] 2. Summary of Significant Accounting Policies Outlines the key accounting principles, estimates, and judgments applied in preparing the company's financial statements - There have been no material changes to the company's significant accounting policies during the six months ended June 30, 2025[29] - Management uses estimates, assumptions, and judgments in preparing financial statements, particularly for research and development expenses and stock-based compensation[30] - The company is evaluating the impact of recently issued ASUs 2023-09 (Income Tax Disclosures, effective 2025) and 2024-03 (Expense Disaggregation Disclosures, effective 2026/2027)[31][32] 3. Fair Value Measurements Details the valuation methodologies and classifications for the company's financial assets and liabilities measured at fair value | Asset Type (in thousands) | June 30, 2025 Total Fair Value | December 31, 2024 Total Fair Value | | :------------------------ | :----------------------------- | :--------------------------------- | | Total cash equivalents and marketable securities | $349,351 | $384,317 | - Financial assets are primarily classified as Level 1 (money market funds) and Level 2 (U.S. treasury securities, commercial papers, corporate debt securities)[33][34] - There were no transfers in or out of Level 3 during the three and six months ended June 30, 2025[33] 4. Cash Equivalents and Marketable Securities Provides a breakdown of the company's liquid assets, including fair value, unrealized gains/losses, and contractual maturities | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total cash equivalents and marketable securities (Fair Value) | $349,351 | $384,317 | | Gross Unrealized Gains | $45 | $70 | | Gross Unrealized Losses | $(72) | $(111) | - The company evaluated its securities for credit losses and considered the decline in market value to be primarily attributable to current economic and market conditions, not credit loss[36] | Contractual Maturities (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 Presents a detailed breakdown of the company's short-term liabilities, including accrued research and development and compensation | Accrued Expense (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 | 6. Note Payable with Related Party Describes the terms and status of a convertible note issued to a related party, including its conversion into common stock - In March 2024, Pre-Merger Oruka issued a convertible note for $25.0 million to Fairmount Healthcare Fund II, L.P., accruing 12.0% interest per annum[39] - Immediately prior to the Merger, the Convertible Note, including $1.5 million in accrued interest, converted into 2,722,207 shares of Company Common Stock[39] - The Convertible Note was not outstanding as of December 31, 2024, and June 30, 2025[41] 7. Convertible Preferred Stock and Stockholders' Equity Details the components of the company's equity, including preferred stock, common stock, warrants, and shares reserved for future issuance - As of June 30, 2025, and December 31, 2024, 6,202,207 pre-funded warrants were outstanding, exercisable for Company Common Stock at low exercise prices with no expiration date[43] - As of June 30, 2025, and December 31, 2024, 3,054,358 employee warrants were outstanding, vesting over four years[44] - As of June 30, 2025, 137,138 shares of Company Series B Preferred Stock were issued and outstanding, convertible into 11,428,149 shares of Company Common Stock[48] | Common Stock Reserved for Future Issuance | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Shares issuable on conversion of Company Series B Preferred Stock | 11,428,149 | 11,428,149 | | Shares issuable upon exercise of pre-funded warrants | 6,202,207 | 6,202,207 | | Shares issuable upon exercise of warrant under the Paruka Warrant Obligation | 596,930 | 596,930 | | Outstanding and issued stock options | 3,668,560 | 1,567,760 | | Outstanding and issued employee warrants | 3,054,358 | 3,054,358 | | Shares available for grant under 2024 Stock Incentive Plan | 4,899,067 | 4,246,324 | | Shares available for grant under 2024 Employee Stock Purchase Plan | 1,001,003 | 460,529 | | Total shares of common stock reserved | 30,850,274 | 27,556,257 | 8. Stock-Based Compensation Reports the expenses related to stock options and warrants, along with unrecognized compensation costs for unvested awards | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $3,368 | $468 | | General and administrative | $1,709 | $215 | | Total | $5,077 | $683 | | Stock-Based Compensation Expense (in thousands) | Six Months Ended June 30, 2025 | Period from Inception to June 30, 2024 | | :---------------------------------------------- | :----------------------------- | :------------------------------------- | | Research and development | $6,371 | $538 | | General and administrative | $3,589 | $230 | | Total | $9,960 | $768 | - The estimated fair value of the warrant to be granted on December 31, 2025, under the Paruka Warrant Obligation was $6.2 million as of June 30, 2025[63] - Total unrecognized compensation cost related to unvested stock options was $28.5 million (expected over 3.2 years) and for employee warrants was $13.5 million (expected over 2.8 years) as of June 30, 2025[66][67] 9. Segment Disclosures Confirms the company operates as a single reportable segment and provides financial information related to its operational structure - The company operates as a single reportable and operating segment, with its Chief Executive Officer serving as the Chief Operating Decision Maker[69] - All long-lived assets of the company were located in the U.S. as of June 30, 2025, and December 31, 2024[70] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Total operating expenses | $28,429 | $21,493 | | Loss from operations | $(28,429) | $(21,493) | | Metric (in thousands) | Six Months Ended June 30, 2025 | Period from Inception to June 30, 2024 | | :-------------------- | :----------------------------- | :------------------------------------- | | Total operating expenses | $53,515 | $28,356 | | Loss from operations | $(53,515) | $(28,356) | 10. Option Agreements and License Agreements Outlines the company's strategic agreements for antibody discovery and exclusive licenses for its lead product candidates - The company entered into Option Agreements with Paragon Therapeutics and Paruka in March 2024 for antibody discovery, including for ORKA-001 (IL-23) and ORKA-002 (IL-17A/F)[72] - Exclusive license agreements were entered for ORKA-001 (December 2024) and ORKA-002 (February 2025) after exercising options[74] - Milestone payments of up to $12.0 million for clinical development and $10.0 million for regulatory milestones are due under each License Agreement, plus low single-digit royalties[76] - As of June 30, 2025, the company incurred and expensed $4.0 million in milestone payments for each of the License Agreements[76] - Subsequent to quarter-end, an additional $3.0 million milestone payment for ORKA-001 was accrued in Q3 2025 due to the first patient dosing in a Phase 2a clinical trial[76] - Related party research and development expenses for services from Paragon and Paruka were $4.2 million for Q2 2025 and $5.7 million for H1 2025[82] 11. Commitments and Contingencies Details the company's contractual obligations, including operating leases and license fees, and confirms the absence of material legal proceedings - The company has operating lease agreements for its headquarters in Menlo Park (commenced June 2024) and an office in Waltham (commenced April 2025)[86] | Operating Lease Liabilities (in thousands) | Amount | | :--------------------------------------- | :----- | | Total undiscounted lease payments | $2,818 | | Less: imputed interest | $(492) | | Total discounted lease payments | $2,326 | | Less: current portion of lease liability | $(660) | | Non-current portion of lease liability | $1,666 | - A Cell Line License Agreement with WuXi Biologics provides a non-exclusive, worldwide license for manufacturing technology for ORKA-001 and ORKA-002, with a $150,000 non-refundable license fee[89][90] - The company is not currently party to any material legal proceedings[92] 12. Net Loss per Share Presents the calculation of basic and diluted net loss per share, including the weighted-average shares outstanding and anti-dilutive effects | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | | Net loss per share attributable to common stockholders, basic and diluted | $(0.46) | $(6.96) | | Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 42,095,951 | 3,197,975 | | Metric | Six Months Ended June 30, 2025 | Period from Inception to June 30, 2024 | | :----- | :----------------------------- | :------------------------------------- | | Net loss per share attributable to common stockholders, basic and diluted | $(0.85) | $(9.17) | | Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 41,888,906 | 3,197,975 | - Potential common shares excluded from diluted net loss per share computation due to anti-dilutive effect totaled 8,812,858 for the three and six months ended June 30, 2025[96] 13. Related Party Transactions Identifies transactions and relationships with entities and individuals deemed related parties, including ownership and board representation - Fairmount Healthcare Fund II, L.P. beneficially owns more than 5% of the company's capital stock, has a representative on the Board, and appointed Paragon's board of directors[97] | Related Party Accounts Payable and Other Current Liabilities (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 | 14. Income Taxes Discusses the impact of recent tax legislation and the company's ongoing evaluation of its effects on financial statements - The One Big Beautiful Bill Act, signed July 4, 2025, makes permanent 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation[99] - The company is currently evaluating the impact of the Act on its condensed consolidated financial statements[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 condition and results of operations, highlighting its strategic focus, pipeline progress, recent financing activities, and key financial trends. It details the significant operating losses, cash burn, and liquidity position, along with the factors influencing research and development and general and administrative expenses Overview Oruka Therapeutics is a clinical-stage biopharmaceutical company focused on developing novel monoclonal antibody therapeutics for psoriasis and other inflammatory and immunology indications - Oruka Therapeutics is a clinical-stage biopharmaceutical company focused on developing novel monoclonal antibody therapeutics for psoriasis and other inflammatory and immunology indications[101] - Lead programs, ORKA-001 (IL-23p19) and ORKA-002 (IL-17A/F), are designed with half-life extension technology to improve efficacy and dosing regimens[102] - The company incurred net losses of $24.6 million and $45.6 million for the three and six months ended June 30, 2025, respectively[104] - As of June 30, 2025, the company had $351.5 million in cash, cash equivalents, and marketable securities, expected to fund operations for at least twelve months[105] Pipeline Programs Details the company's lead product candidates, their development status, and the underlying technology - ORKA-001, targeting IL-23p19 for PsO, initiated a Phase 1 trial in Q4 2024 (interim data expected Sept 2025) and a Phase 2a trial in Q3 2025 (efficacy data expected H2 2026)[106][108][109] - ORKA-002, targeting IL-17A/F for PsO, PsA, and other I&I indications, initiated a Phase 1 trial in Q2 2025 (interim data expected year-end 2025)[110] - Both ORKA-001 and ORKA-002 incorporate YTE half-life extension technology, aiming for less frequent subcutaneous injections (e.g., once or twice per year)[107][110] - A third mAb program, ORKA-003, targets an undisclosed pathway for potential indication expansion[112] Recent Developments Summarizes key corporate and financial events, including mergers, financings, and licensing agreements - The company completed a reverse recapitalization with ARCA biopharma, Inc. on August 29, 2024, changing its name to Oruka Therapeutics, Inc. and ticker to ORKA[113] - Pre-Closing Financing in April 2024 generated approximately $275.0 million in gross proceeds, followed by a PIPE Financing in September 2024 that raised approximately $188.7 million in net proceeds[114][116] - Exclusive license agreements for ORKA-001 and ORKA-002 were entered with Paragon in December 2024 and February 2025, respectively, following option exercises[117] - As of June 30, 2025, $4.0 million in milestone payments were incurred and expensed for each of ORKA-001 and ORKA-002, with an additional $3.0 million accrued for ORKA-001 in Q3 2025[120] Components of Results of Operations Explains the primary drivers of the company's financial performance, including revenue, research and development, and administrative expenses - The company has not generated revenue from product sales and does not expect to in the foreseeable future[121] - Research and development expenses are expensed as incurred and are expected to increase substantially with the advancement of pipeline programs and clinical trials[122][124] - General and administrative expenses are also expected to increase significantly due to personnel growth and costs associated with operating as a public company[127] - Other income (expense), net, includes interest income from cash and marketable securities, and previously, interest expense from a convertible note[128] Results of Operations Analyzes the company's financial performance over specific periods, detailing changes in expenses and net loss Comparison of the Three Months Ended June 30, 2025 and 2024 Compares the company's operating expenses, interest income, and net loss for the three-month periods ended June 30, 2025 and 2024 | Metric (in thousands) | June 30, 2025 | June 30, 2024 | Change ($) | 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% | - External research and development expenses decreased by $0.7 million, from $17.1 million (Q2 2024) to $16.4 million (Q2 2025), primarily due to reduced research expenses from Paragon, partially offset by increased CMO and CRO expenses[133] - Personnel-related R&D expenses increased by $2.4 million, and stock-based compensation expense increased by $2.9 million, driven by hiring and increased Paruka warrant liability and employee awards[134] - General and administrative personnel-related expenses increased by $2.1 million, including a $1.5 million increase in stock-based compensation, due to continued hiring[137] Comparison of the Six Months Ended June 30, 2025, and the period from February 6 (inception) to June 30, 2024 Compares the company's financial performance for the six-month period ended June 30, 2025, against the period from inception to June 30, 2024 | Metric (in thousands) | Six Months Ended June 30, 2025 | Period from Inception to June 30, 2024 | Change ($) | 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% | - External research and development expenses increased by $8.0 million, from $22.0 million (H1 2024) to $30.0 million (H1 2025), driven by increased CMO product development and CRO expenses, partially offset by reduced Paragon research expenses[146] - Personnel-related R&D expenses increased by $4.7 million, and stock-based compensation expense increased by $5.8 million, due to hiring and increased Paruka warrant liability and employee awards[147] - General and administrative personnel-related expenses increased by $4.8 million, including a $3.4 million increase in stock-based compensation, due to continued hiring[149] Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and funding sources - 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[153][155] - Operations have been funded primarily by proceeds from convertible preferred stock, common stock, a convertible note, pre-funded warrants, and net proceeds of approximately $228.0 million from Pre-Closing Financing and $188.7 million from PIPE Financing in 2024[154] | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Period from 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 | - The company expects to incur significant expenses and operating losses for the foreseeable future and will need to secure additional financing for future research, development, and commercialization[154][155] Critical Accounting Policies and Significant Judgments and Estimates Discusses the accounting policies that require management's most difficult, subjective, or complex judgments and estimates - The company's financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions[164] - There were no changes to critical accounting policies or significant judgments and estimates during the three months ended June 30, 2025, compared to the Annual Report on Form 10-K[165] Off-Balance Sheet Arrangements Reports any transactions, agreements, or other contractual arrangements with unconsolidated entities that are not recorded on the balance sheet - As of June 30, 2025, the company did not have any off-balance sheet arrangements[166] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Oruka Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk in this Quarterly Report - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[167] Item 4. Controls and Procedures Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. No material changes in internal control over financial reporting occurred during the quarter, though the company acknowledges the inherent limitations of any control system - Management concluded that disclosure controls and procedures were effective as of June 30, 2025, at the reasonable assurance level[169] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[170] - The company acknowledges the inherent limitations on the effectiveness of controls, noting that no system can prevent or detect all errors and fraud[171] PART II. Other Information Provides non-financial disclosures covering legal proceedings, risk factors, equity sales, and internal controls Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings that are expected to have a significant adverse effect on its financial condition, results of operations, or cash flows - The company is not currently party to any material legal proceedings[172] Item 1A. Risk Factors This section outlines a comprehensive set of risks that could materially and adversely affect the company's business, financial condition, results of operations, and growth prospects. These risks span financial stability, clinical development, regulatory compliance, intellectual property, reliance on third parties, and operational management RISK FACTOR SUMMARY Provides an executive overview of the principal risks that could materially impact the company's business and financial performance - The company is subject to numerous risks that could harm its business, financial condition, results of operations, and growth prospects[174] - Key risk categories include financial condition and capital requirements, clinical development, regulatory approval and commercialization, government regulations, intellectual property, reliance on third parties, and employee matters/managing growth[176][177][178][180][181][182] Risks Related to Our Financial Condition and Capital Requirements Highlights risks associated with the company's financial stability, funding needs, and ability to secure additional capital - The company is a clinical-stage biopharmaceutical company with a limited operating history, no product revenue, and a history of significant losses, which are expected to continue for the foreseeable future[184][187] - Substantial additional capital will be required to fund future operations, and the ability to raise such capital on acceptable terms is uncertain, potentially leading to curtailment of development activities or other adverse actions[185][189] - Raising additional capital through equity or convertible debt securities will dilute existing stockholders, and debt financing may impose restrictive covenants on operations[191] - Collaborations or licensing arrangements may require the company to relinquish valuable rights to its research programs or product candidates[192] Risks Related to Clinical Development, Regulatory Approval and Commercialization Addresses the inherent uncertainties and challenges in advancing product candidates through clinical trials to market approval and commercial success - The company faces intense competition from biopharmaceutical companies with greater resources and expertise in drug development and commercialization[193] - Clinical testing is expensive, lengthy, and uncertain, with no guarantee that preclinical or early clinical trial results will predict success in later stages, or that product candidates will obtain regulatory approval[196][207] - The company is substantially dependent on the success of its lead programs, ORKA-001 and ORKA-002, particularly the translation of observed extended half-life in non-human primates to humans[200] - The approach of using half-life extension technologies in I&I indications is unproven, and long-term safety and efficacy in humans are unknown[204][205] - Approved products may not achieve adequate market acceptance among clinicians, patients, and third-party payors, potentially limiting revenue generation[220] - Conducting clinical trials outside the United States presents risks, including potential non-acceptance of data by the FDA and additional administrative burdens[223][224] Risks Related to Government Regulations Covers risks stemming from complex and evolving regulatory environments, including FDA approvals, healthcare laws, and potential legislative reforms - The regulatory approval processes by the FDA and foreign authorities are lengthy, time-consuming, and unpredictable, with no assurance of obtaining or timely obtaining required approvals[225][226] - Even if approved, product candidates will be subject to extensive ongoing regulatory obligations, surveillance, and potential restrictions on use, leading to significant additional expenses[231] - Disruptions at government agencies (e.g., funding shortages, government shutdowns, policy changes) could hinder regulatory review and approval processes[233][234][236] - Legislative or regulatory reforms, such as price controls or cost-containment measures (e.g., Inflation Reduction Act), could adversely affect revenue and profitability[238][239] - Business operations are subject to healthcare regulatory laws (e.g., fraud and abuse, data privacy, anti-corruption), and violations could lead to significant penalties[240][242][243][245] Risks Related to Our Intellectual Property Examines risks concerning the protection, enforcement, and potential infringement of the company's patents and proprietary rights - The ability to obtain and protect patents and other proprietary rights is uncertain, and issued patents may be challenged, narrowed, or difficult to enforce, potentially leading to loss of competitive advantage[247][248] - Reliance on trade secrets carries risks of disclosure, misappropriation, or independent discovery by competitors, eroding competitive position[249] - Failure to obtain or maintain necessary third-party intellectual property rights through acquisitions or in-licenses on reasonable terms could force the abandonment of relevant programs[251][253] - The company may be subject to patent infringement claims or need to file claims to protect its IP, resulting in substantial costs, liability, and potential delays in commercialization[255] - Changes to patent laws (e.g., U.S. Supreme Court rulings, European Unified Patent Court) could diminish the value of patents and impair the ability to protect products[262][263][264] - Failure to identify or correctly interpret relevant third-party patents could negatively impact the ability to develop and market products[267] Risks Related to Our Reliance on Third Parties Details the risks associated with the company's dependence on external partners for licensing, clinical trials, and manufacturing activities - The company relies heavily on licensing arrangements with Paragon; failure to maintain these or if they are unsuccessful could negatively impact the business[273][274] - Reliance on third parties (CROs, CMOs) to conduct preclinical studies and clinical trials means less direct control over activities; failure to perform or comply with regulations could delay or terminate development[277][278] - Dependence on CMOs for manufacturing product candidates, including a sole source for ORKA-001 and ORKA-002, poses risks of supply disruption, manufacturing difficulties, and non-compliance with cGMP requirements[279][280] - Reliance on foreign CMOs, such as 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][282] Risks Related to Employee Matters, Managing Growth, Other Risks Related to Our Business, and Risks Related to Owning Our Common Stock Encompasses a broad range of operational, personnel, growth management, and stock ownership risks Employee Matters and Managing Growth Focuses on challenges related to human capital, organizational expansion, and the complexities of operating in diverse markets - The company expects significant growth in employees and operations, which may be difficult to manage effectively due to limited financial resources and management experience[283] - Success is highly dependent on attracting and retaining qualified key personnel, including executive officers and scientific/clinical teams, in a competitive industry[284][285] - Operating in foreign markets introduces additional regulatory burdens and risks[287] - The company is exposed to risks of misconduct or improper activities by employees and third-party collaborators, potentially leading to non-compliance, investigations, and penalties[288] Information Technology and Data Security Risks Addresses vulnerabilities in IT systems, potential data breaches, and compliance with evolving privacy and data security regulations - Internal IT systems and those of third-party service providers are vulnerable to security incidents, data breaches, or other disruptions, which could lead to costs, revenue loss, liabilities, and reputational harm[289][290][291] - The hybrid-remote workforce creates additional risks for information technology systems and data security[292] - The company is subject to stringent and changing laws, regulations, and contractual obligations relating to privacy, data protection, and data security; non-compliance could result in enforcement actions, fines, and litigation[294] Environmental, Health, Safety, and Tax Risks Covers compliance risks with environmental and safety laws, alongside potential adverse impacts from changes in tax legislation - Failure to comply with environmental, health, and safety laws and regulations could result in fines or penalties[295] - Adverse U.S. legislative or regulatory tax changes (e.g., Inflation Reduction Act, Tax Cuts and Jobs Act's R&D amortization) could negatively impact the company's financial condition[296] Acquisition and Financial Institution Risks Highlights risks associated with strategic acquisitions and the potential exposure from maintaining cash balances in financial institutions - Future acquisitions or strategic alliances may not realize expected benefits due to integration difficulties, potentially harming the business[297] - Maintaining cash balances exceeding federally-insured limits exposes the company to potential loss if financial institutions fail, which could adversely affect its ability to pay operational expenses[298] General Business and Litigation Risks Discusses broad business uncertainties, including market estimates, product liability, legal disputes, and macroeconomic factors - Estimates of market opportunity and forecasts of market growth may be inaccurate, and the business may not grow at similar rates, or at all[299][300] - The company is exposed to costly product liability claims, which could exceed insurance coverage and adversely affect the business[301] - Litigation costs and outcomes, including employment, intellectual property, and contractual disputes, could have a material adverse effect on the business[302] - Macroeconomic conditions, geopolitical events (e.g., tariffs, conflicts), and public health crises could adversely affect operations, supply chains, and financial markets[303][304][305] Risks Related to Owning Our Common Stock Outlines specific risks for investors, such as stock price volatility, dilution, dividend policy, and corporate governance provisions - The market price of the common stock has been and is likely to remain highly volatile due to various factors, including clinical trial results, financial projections, regulatory actions, and broader market conditions[306][308] - Future sales of shares by existing stockholders or future equity and debt issuances could cause the stock price to decline and result in additional dilution[314][183] - The company does not anticipate paying any cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[315] - Executive officers, directors, and principal stockholders have the ability to control or significantly influence all matters submitted to stockholders for approval[316] - Provisions in the certificate of incorporation and bylaws, along with Delaware law, could make an acquisition of the company more difficult and may prevent attempts by stockholders to replace or remove management[309][310] - Governing documents designate specific courts as the sole and exclusive forum for certain legal actions, potentially limiting stockholders' ability to obtain a favorable judicial forum[311][312] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the quarter ended June 30, 2025 - No unregistered sales of equity securities or use of proceeds occurred during the quarter ended June 30, 2025[318] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the quarter ended June 30, 2025 - No defaults upon senior securities occurred during the quarter ended June 30, 2025[319] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[320] Item 5. Other Information During the quarter ended June 30, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by any director or Section 16 officer during the quarter ended June 30, 2025[321] Item 6. Exhibits This section lists all documents filed or furnished as exhibits to the Quarterly Report, including key agreements, corporate governance documents, warrant forms, and certifications - The exhibits include the Agreement and Plan of Merger, Amended and Restated Certificate of Incorporation and Bylaws, various Certificates of Designation for preferred stock, Pre-Funded Warrant forms, the Paruka Warrant, and officer certifications[323] Signatures The Quarterly Report is duly signed on behalf of Oruka Therapeutics, Inc. by Lawrence Klein, President and Chief Executive Officer, and Arjun Agarwal, Senior Vice President, Finance and Treasurer, on August 11, 2025 - The report was 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)[329] - The signing date for the report was August 11, 2025[329]