What changed in this filing

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Item 1. Financial Statements

2025-08-11 compared with 2025-05-14 · 301 added, 252 removed, 706 unchanged (44% of the section changed)

22 unchanged sentences

Total liabilities

Commitment and contingencies (Note 11)

Commitments and contingencies (Note 11)

Stockholders’ equity:

Series B non-voting convertible preferred stock, $ 0.001 par value;

251,504 shares authorized as of March 31, 2025 and December 31, 2024;

137,138 shares issued and outstanding as of March 31, 2025 and December 31, 2024

251,504 shares authorized as of June 30, 2025 and December 31, 2024;

137,138 shares issued and outstanding as of June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

545,000,000 shares authorized, 37,440,510 shares issued and outstanding as of March 31, 2025 and December 31, 2024

545,000,000 shares authorized as of

June 30, 2025 and December 31, 2024;

37,450,745 and 37,440,510 shares issued and outstanding as of June 30, 2025 and December 31, 2024,

Additional paid-in capital

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended

Six Months Ended

(Inception) to

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Weighted-average shares used in computing net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted

(1) Includes related party amounts of $ 2,122 for the three months ended March 31, 2025 and $ 5,051 for the period from February 6, 2024 (inception) to March 31, 2024

(2) Includes related party amounts of $ 110 for the three months ended March 31, 2025 and $ 848 for the period from February 6, 2024 (inception) to March 31, 2024

(3) Includes related party amounts of nil for the three months ended March 31, 2025 and $ 214 for the period from February 6, 2024 (inception) to March 31, 2024

(1) Includes related party amounts of $ 4,281 and $ 15,379 for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ 6,403 and $ 20,430 for the six months ended June 30, 2025 and the period from February 6, 2024 (inception) to June 30, 2024, respectively

(2) Includes related party amounts of $ 12 and $ 420 for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ 122 and $ 1,268 for the six months ended June 30, 2025 and the period from February 6, 2024 (inception) to June 30, 2024, respectively

(3) Includes related party amounts of nil and $ 750 for the three months ended June 30, 2025 and June 30, 2024, respectively, and nil and $ 964 for the six months ended June 30, 2025 and the period from February 6, 2024 (inception) to June 30, 2024, respectively

The accompanying notes are an integral part of

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Preferred Stock

Accumulated Other Comprehensive

Comprehensive

Stockholders’

1 unchanged sentence

Stock-based compensation expense

Net change in unrealized gains (losses) on marketable securities

Net change in unrealized gains

(losses) on marketable securities

Balances as of March 31, 2025

$ ( 104,723 )

Issuance of common stock under

employee stock purchase plan

Stock-based compensation expense

Net change in unrealized gains

(losses) on marketable securities

as of June 30, 2025

$ ( 129,297 )

Convertible Preferred Stock

Series B Non-Voting

Convertible Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Stockholders’

Balances as of February 6, 2024 (Inception)

Issuance of common stock

as of February 6, 2024 (Inception)

of common stock

Issuance of Series A convertible preferred stock, net of issuance costs of $ 69

Stock-based compensation expense

Balances as of March 31, 2024

compensation expense

as of March 31, 2024

compensation expense

as of June 30, 2024

The accompanying notes are an integral part of

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(In thousands)

Six Months Ended

(Inception) to

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Proceeds from issuance of notes payable to related party, net of issuance costs paid

Payment of deferred offering costs

Proceeds from issuance of common stock

Net cash provided by financing activities

3 unchanged sentences

Supplemental disclosures of non-cash operating and financing activities:

Operating lease liability arising from obtaining operating right-of-use asset

Deferred offering costs in accrued expenses and other current liabilities

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financial statements and the related notes thereto for the period ended December 31, 2024 included in the Company’s Annual Report

on Form 10-K filed with the SEC on March 6, 2025 (the “Annual Report”).

The information as of December 31, 2024, included

in the condensed consolidated balance sheets was derived from the Company’s audited financial statements.

These unaudited interim

condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial

statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a

fair statement of the Company’s condensed consolidated financial statements.

on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 6, 2025 (the “Annual Report”).

The information

as of December 31, 2024, included in the condensed consolidated balance sheets was derived from the Company’s audited financial

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s

annual consolidated financial statements, and in the opinion of the Company’s management, reflect all adjustments, which include

only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial statements.

The results for the three

months ended March 31, 2025 are not necessarily indicative of results that may be expected for the year ending December 31, 2025 or for

any other interim period or for any other future year.

Reverse Recapitalization, Pre-Closing Financing, and Reverse Stock Split

and six months ended June 30, 2025 are not necessarily indicative of results that may be expected for the year ending December 31, 2025

or for any other interim period or for any other future year.

Reverse Recapitalization, Pre-Closing Financing, and Reverse

On August 29, 2024 (the “Closing”),

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all periods presented, unless otherwise specifically indicated or the context otherwise requires.

Immediately prior to the execution and delivery

of the Merger Agreement, certain new and existing investors of Pre-Merger Oruka entered into a subscription agreement with Pre-Merger

Oruka (that was subsequently amended and restated in July 2024, the “Subscription Agreement”), pursuant to which, and on the

terms and subject to the conditions of which, immediately prior to the Closing, those investors purchased shares of common stock of Pre-Merger

Oruka (“Pre-Merger Oruka Common Stock”) and Pre-Merger Oruka pre-funded warrants for gross proceeds of approximately $ 275.0

million (which includes $ 25.0 million of proceeds previously received from the issuance of the Convertible Note (as defined in Note 6)

and accrued interest on such note which converted to shares of Pre-Merger Oruka Common Stock) (the “Pre-Closing Financing”).

The Company incurred transaction costs of $ 20.5 million which were recorded as a reduction to additional paid-in capital in the condensed

consolidated financial statements.

In connection with the Closing, the shares of Pre-Merger Oruka Common

Stock were converted into shares of Company Common Stock and pre-funded warrants of Company Common Stock in accordance with the Exchange

Ratio (as defined below and determined by the terms of the Merger Agreement).

Moreover, as part of the Closing, (i) then-issued and

outstanding share of Pre-Merger Oruka Common Stock (including outstanding and unvested Pre-Merger Oruka restricted stock and shares of

Pre-Merger Oruka Common Stock issued in connection with the Subscription Agreement) were converted into the right to receive a number

of shares of Company Common Stock, equal to the exchange ratio of 6.8569 shares of Company Common Stock (the “Exchange Ratio”),

which were subject to the same vesting provisions as those immediately prior to the Merger;

(ii) each share of Pre-Merger Oruka Series

A convertible preferred stock, par value $ 0.0001 (“Pre-Merger Oruka Series A Preferred Stock”) was converted into the right

to receive a number of shares of ARCA Series B non-voting convertible preferred stock, par value $ 0.001 per share (“Company Series

B Preferred Stock”), which are convertible into shares of Company Common Stock at a conversion ratio of approximately 83.3332:1

after the Reverse Stock Split, (iii) each outstanding option to purchase Pre-Merger Oruka Common Stock was converted into an option to

purchase shares of Company Common Stock, and (iv) each outstanding warrant to purchase shares of Pre-Merger Oruka Common Stock was converted

into a warrant to purchase shares of Company Common Stock.

Immediately prior to the

execution and delivery of the Merger Agreement, certain new and existing investors of Pre-Merger Oruka entered into a subscription agreement

with Pre-Merger Oruka (that was subsequently amended and restated in July 2024, the “Subscription Agreement”), pursuant to

which, and on the terms and subject to the conditions of which, immediately prior to the Closing, those investors purchased shares of

common stock of Pre-Merger Oruka (“Pre-Merger Oruka Common Stock”) and Pre-Merger Oruka pre-funded warrants for gross proceeds

of approximately $ 275.0 million (which includes $ 25.0 million of proceeds previously received from the issuance of the Convertible Note

(as defined in Note 6) and accrued interest on such note which converted to shares of Pre-Merger Oruka Common Stock) (the “Pre-Closing

The Company incurred transaction costs of $ 20.5 million which were recorded as a reduction to additional paid-in capital

in the condensed consolidated financial statements.

In connection with the Closing,

the shares of Pre-Merger Oruka Common Stock were converted into shares of Company Common Stock and pre-funded warrants of Company Common

Stock in accordance with the Exchange Ratio (as defined below and determined by the terms of the Merger Agreement).

part of the Closing, (i) then-issued and outstanding shares of Pre-Merger Oruka Common Stock (including outstanding and unvested Pre-Merger

Oruka restricted stock and shares of Pre-Merger Oruka Common Stock issued in connection with the Subscription Agreement) were converted

into the right to receive a number of shares of Company Common Stock, equal to the exchange ratio of 6.8569 shares of Company Common Stock

(the “Exchange Ratio”), which were subject to the same vesting provisions as those immediately prior to the Merger;

share of Pre-Merger Oruka Series A convertible preferred stock, par value $ 0.0001 (“Pre-Merger Oruka Series A Preferred Stock”)

was converted into the right to receive a number of shares of ARCA Series B non-voting convertible preferred stock, par value $ 0.001 per

share (“Company Series B Preferred Stock”), which are convertible into shares of Company Common Stock at a conversion ratio

of approximately 83.3332:1 after the Reverse Stock Split, (iii) each outstanding option to purchase Pre-Merger Oruka Common Stock was

converted into an option to purchase shares of Company Common Stock, and (iv) each outstanding warrant to purchase shares of Pre-Merger

Oruka Common Stock was converted into a warrant to purchase shares of Company Common Stock.

The Merger was accounted

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This determination was primarily based on the fact that, immediately following the

(i) Pre-Merger Oruka stockholders own a substantial majority of the voting rights in the combined company;

(i) Pre-Merger Oruka stockholders owned a substantial majority of the voting rights in the combined company;

(ii) Pre-Merger Oruka’s

largest stockholders retain the largest interest in the combined company;

largest stockholders retained the largest interest in the combined company;

(iii) Pre-Merger Oruka designated a majority of the initial

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since inception.

For the three months ended March 31, 2025, the Company incurred a net loss of $ 21.0 million and used net cash of $ 20.9

million for its operating activities.

As of March 31, 2025, the

For the three and six months ended June 30, 2025, the Company incurred net losses of $ 24.6 million and $ 45.6 million,

respectively, and used net cash of $ 44.0 million for its operating activities during the first six months of 2025.

As of June 30, 2025, the

Company had cash, cash equivalents, and marketable securities of $ 351.5 million.

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Summary of Significant Accounting

The Company’s significant accounting policies are detailed in

the Notes titled “1.

The Company’s significant

accounting policies are detailed in the Notes titled “1.

Nature of the Business and Basis of Presentation” and “2.

Summary of Significant Accounting Policies”

of the Company’s Annual Report.

The Company uses the same accounting policies in preparing its quarterly and annual financial statements.

There have been no material changes to significant accounting policies during the three months ended March 31, 2025.

of Significant Accounting Policies” of the Company’s Annual Report.

The Company uses the same accounting policies in preparing

its quarterly and annual financial statements.

There have been no material changes to significant accounting policies during the six months

ended June 30, 2025.

Use of Estimates

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In December 2023, the

FASB issued ASU 2023-09, Income Taxes (Topic 740):

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU expands disclosures

in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S.

This ASU expands disclosures in an entity’s income tax rate

reconciliation table and disclosures regarding taxes paid both in the U.S.

and foreign jurisdictions.

This update is effective beginning with the Company’s 2025 fiscal year annual reporting period.

The Company is currently evaluating

the impact of the adoption of this ASU on its condensed consolidated financial statements.

This update is effective beginning

with the Company’s 2025 fiscal year annual reporting period.

The Company is currently evaluating the impact of the adoption of this

ASU on its condensed consolidated financial statements.

In November 2024, the FASB

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Fair Value Measurements

The following tables present the Company’s

fair value hierarchy for financial assets measured as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

The following tables present

the Company’s fair value hierarchy for financial assets measured as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025

Cash equivalents

Money market funds

government agency securities

Corporate debt securities

treasury securities

Commercial papers

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Total cash equivalents and marketable securities

There were no transfers in or out of Level 3 during

the three months ended March 31, 2025.

There were no transfers in

or out of Level 3 during the three and six months ended June 30, 2025.

December 31, 2024

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Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities, which

are classified as available-for-sale, consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

The following tables summarize

the cash equivalents and marketable securities, which are classified as available-for-sale as of June 30, 2025 and December 31, 2024 (in

June 30, 2025

Amortized Cost

3 unchanged sentences

Money market funds

government agency securities

Corporate debt securities

treasury securities

Commercial papers

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Total cash equivalents and marketable securities

The following table summarizes the available-for-sale

securities in an unrealized loss position, aggregated by major security type and length of time in a continuous unrealized loss position,

for which an allowance for credit losses was not recorded as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

The following table summarizes

the available-for-sale securities in an unrealized loss position, aggregated by major security type and length of time in a continuous

unrealized loss position, for which an allowance for credit losses was not recorded as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025

Less than 12 months

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Marketable securities, long-term

government agency securities

treasury securities

December 31, 2024

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Given the Company’s intent and ability to hold such securities until recovery, and the lack of significant change in credit risk

of these investments, the Company does not consider these marketable securities to be impaired as of March 31, 2025 and December 31, 2024.

As of March 31, 2025 and December 31, 2024, the Company did not record an allowance for credit losses.

of these investments, the Company does not consider these marketable securities to be impaired as of June 30, 2025 and December 31, 2024.

As of June 30, 2025 and December 31, 2024, the Company did not record an allowance for credit losses.

The following table summarizes

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Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities

consisted of the following (in thousands):

The following table summarizes accrued expenses

and other current liabilities (in thousands):

Accrued research and development

Accrued employee compensation and benefits

Accrued professional and consulting

Accrued research and development

Note Payable with Related Party

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accounting as a derivative liability.

The Company paid debt issuance costs of less than $ 0.1 million

in relation to the Convertible Note.

The debt issuance costs were reflected as a reduction of the carrying value of Convertible Note on

the consolidated balance sheet and were being amortized as interest expense over the term of the Convertible Note using the effective

interest method.

For the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, the Company

recognized interest expenses related to the Convertible Note of nil and $ 0.2 million, respectively, which included non-cash interest expense

related to the amortization of debt issuance of less than $ 0.1 million.

As of December 31, 2024 and March 31, 2025, the Convertible Note

is not outstanding.

The Company paid debt issuance

costs of less than $ 0.1 million in relation to the Convertible Note.

The debt issuance costs were reflected as a reduction of the

carrying value of Convertible Note on the consolidated balance sheet and were being amortized as interest expense over the term of the

Convertible Note using the effective interest method.

For the three months ended June 30, 2024 and the period from February 6, 2024 (inception)

to June 30, 2024, the Company recognized interest expenses related to the Convertible Note of $ 0.8 million and $ 1.0 million, respectively,

which included non-cash interest expense related to the amortization of debt issuance of less than $ 0.1 million, for each of the three

months ended June 30, 2024 and the period from February 6, 2024 (inception) to June 30, 2024.

As of December 31, 2024 and June 30, 2025,

the Convertible Note was not outstanding.

Preferred Stock and Stockholders’ Equity

10 unchanged sentences

Collectively, 6,202,207

pre-funded warrants are outstanding as of March 31, 2025 and December 31, 2024.

pre-funded warrants were outstanding as of June 30, 2025 and December 31, 2024.

Employee Warrants

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provided for, among other things, the issuance of warrants to certain of Pre-Merger Oruka’s employees and directors immediately

prior to the closing of the Merger.

During the period from February 6, 2024 (inception) to December 31, 2024, 3,054,358 employee warrants

were issued at an exercise price of $ 7.80 per warrant.

prior to the Closing.

During the period from February 6, 2024 (inception) to December 31, 2024, 3,054,358 employee warrants were issued

at an exercise price of $ 7.80 per warrant.

These warrants vest over a period of four years .

The Company recognizes compensation

cost related to warrants on a straight-line basis over the requisite service period, which is the period in which the related services

are received.

3,054,358 warrants are outstanding as of March 31, 2025 and December 31, 2024.

The Company recognizes compensation cost related

to warrants on a straight-line basis over the requisite service period, which is the period in which the related services are received.

3,054,358 warrants were outstanding as of June 30, 2025 and December 31, 2024.

Convertible Preferred Stock

In March 2024, Pre-Merger

Oruka issued and sold an aggregate of 20,000,000 shares of Pre-Merger Oruka Series A Preferred Stock to Fairmount (see Note 13),

at a purchase price of approximately $ 0.15 per share, for aggregate gross proceeds of $ 3.0 million.

Oruka issued and sold an aggregate of 20,000,000 shares of Pre-Merger Oruka Series A Preferred Stock to Fairmount, at a purchase price of approximately $ 0.15 per share, for aggregate gross proceeds of $ 3.0 million.

Pre-Merger Oruka incurred less

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shares of Company Common Stock.

As of December 31, 2024 and March 31, 2025, there are no outstanding shares of Company Series A Preferred

As of March 31, 2025, Company Series B Preferred

As of June 30, 2025 and December 31, 2024, there were no outstanding shares of Company Series A Preferred

As of June 30, 2025, Company Series B Preferred

Stock consisted of the following (in thousands, except share data):

March 31, 2025

June 30, 2025

Stock Issuable

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consideration by the holder.

As of March 31, 2025, each outstanding share of Company Series B Preferred Stock was convertible into common

As of June 30, 2025, each outstanding share of Company Series B Preferred Stock was convertible into common

stock at a ratio of approximately 83.3332:1 .

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is fully vested, and is exercisable in part or full at any time during the term of the warrant.

As of March 31, 2025, the warrant issued

under the Paruka Warrant Obligation is outstanding and unexercised.

See Note 8 for additional information on the Paruka Warrant Obligation.

As of March 31, 2025, the

Certificate of Incorporation provides for 545,000,000 authorized shares of Company Common Stock.

As of March 31, 2025, 37,440,510 shares

As of June 30, 2025, the warrant issued

to settle the 2024 Paruka Warrant Obligation was outstanding and unexercised.

See Note 8 for additional information on the Paruka Warrant

As of June 30, 2025, the

Certificate of Incorporation provided for 545,000,000 authorized shares of Company Common Stock.

As of June 30, 2025, 37,450,745 shares

of Company Common Stock were issued and outstanding, including 2,207,553 shares of restricted common stock awards (“RSAs”)

issued and outstanding.

As of March 31, 2025 and December 31, 2024, the

As of June 30, 2025 and December 31, 2024, the

Company had common stock reserved for future issuance as follows:

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with vesting terms less than four years.

As of March 31, 2025, 1,179,193 shares were subject to options outstanding under the 2024

As of June 30, 2025, 1,179,193 shares were subject to options outstanding under the 2024

Plan and will become available under the 2024 Stock Incentive Plan (defined below) to the extent the options are forfeited or lapse unexercised.

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pursuant to the evergreen provision.

As of March 31, 2025, 7,388,434

As of June 30, 2025, 7,388,434

shares were reserved for issuance under the 2024 Stock Plan, of which 4,899,067 shares were available for future grant and 2,489,367 shares

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The ESPP will terminate ten years from the first purchase date under the plan, unless terminated

earlier by the board of directors.

An additional 550,709 shares became available for issuance under the ESPP on January 1, 2025 as a result

of the annual increase pursuant to the evergreen provision.

The Company issued no shares

during the three months ended March 31, 2025 out of the ESPP and as of March 31, 2025, there were 1,011,238 shares of Company Common Stock

available in the pool for future issuances.

For the three months ended

March 31, 2025, stock-based compensation expense related to the ESPP was less than $ 0.1 million.

earlier by the Board.

An additional 550,709 shares became available for issuance under the ESPP on January 1, 2025 as a result of the

annual increase pursuant to the evergreen provision.

The Company issued 10,235

shares during the three and six months ended June 30, 2025 out of the ESPP, and as of June 30, 2025, there were 1,001,003 shares of Company

Common Stock available in the pool for future issuances.

For each of the three and

six months ended June 30, 2025, stock-based compensation expense related to the ESPP was less than $ 0.1 million.

Stock Option Valuation

The following table summarizes

the weighted-average assumptions used in calculating the fair value of the awards for the three months ended March 31, 2025 and for the

period from February 6, 2024 (inception) to March 31, 2024:

2025 Period from

(Inception) to

the weighted-average assumptions used in calculating the fair value of the awards for the three and six months ended June 30, 2025 and

for the three months ended June 30, 2024 and the period from February 6, 2024 (inception) to June 30, 2024:

2024 Six Months Ended

2025 Period from February 6, 2024 (Inception) to June 30,

Expected term (in years) 5.9 6.0 6.0 6.0

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The following table summarizes

the stock option activities under the 2024 Plan and the 2024 Stock Plan for the three months ended March 31, 2025:

Stock Options

the stock option activities under the 2024 Plan and the 2024 Stock Plan for the six months ended June 30, 2025:

Outstanding Weighted

Exercise Price

Per Share Weighted

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Canceled/forfeited —

Balance as of March 31, 2025 3,265,460 $ 11.96 9.5 $ 4,704

Vested and expected to vest, March 31, 2025 3,265,460 $ 11.96 9.5 $ 4,704

Exercisable, March 31, 2025 161,539 $ 7.77 9.3 $ 521

Balance as of June 30, 2025 3,668,560 $ 11.72 9.3 $ 6,634

Vested and expected to vest, June 30, 2025 3,668,560 $ 11.72 9.3 $ 6,634

Exercisable, June 30, 2025 470,276 $ 8.04 9.0 $ 1,661

The weighted average grant-date

fair value per share of stock options granted during the three months ended March 31, 2025 was $ 9.88 per share.

fair value per share of stock options granted during the six months ended June 30, 2025 was $ 9.44 per share.

Aggregate intrinsic value

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which time all unvested shares are subject to forfeiture in the event the holder’s service with the Company voluntarily or involuntarily

576,571 RSAs vested during the three months ended March 31, 2025 and as of March 31, 2025, 1,630,982 of the RSAs remain unvested.

For each of the three months ended March 31, 2025 and from February 6, 2024 (inception) to March 31, 2024, stock-based compensation expense

related to RSAs was less than $ 0.1 million.

137,972 and 714,543 RSAs vested during the three and six months ended June 30, 2025, respectively.

As of June 30, 2025, 1,493,010

of RSAs remain unvested.

For each of the three and six months ended June 30, 2025, the three months ended June 30, 2024, and from February

6, 2024 (inception) to June 30, 2024, stock-based compensation expense related to RSAs was less than $ 0.1 million.

The following table summarizes

the RSA activity for the three months ended March 31, 2025:

the RSA activity for the six months ended June 30, 2025:

Number of RSAs

Weighted Average

Grant Date Fair

Unvested balance as of December 31, 2024

Unvested balance as of March 31, 2025

Unvested balance as of June 30, 2025

Option Agreements and Paruka Warrant Obligation

As part of the Option Agreements, (defined in Note 10 below) on December 31,

2024 the Company granted, and on December 31, 2025, will grant, Paruka a warrant to purchase a number of shares equal to 1.00 % of

outstanding shares as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the

underlying shares on the grant date (the “Paruka Warrant Obligation”).

As part of the Option Agreements,

(defined in Note 10 below) on December 31, 2024 the Company granted, and on December 31, 2025, will grant, Paruka a warrant

to purchase a number of shares equal to 1.00 % of outstanding shares as of the date of the grant on a fully-diluted basis, with an exercise

price equal to the fair market value of the underlying shares on the grant date (the “Paruka Warrant Obligation”).

The grant dates for the issuance

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end of each reporting period, with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive

loss as stock-based compensation expenses under research and development expenses.

loss as stock-based compensation expense under research and development expenses.

For the period from February 6, 2024 (inception) to

March 31, 2024, less than $ 0.1 million was recognized as stock-based compensation expenses related to the December 31, 2024 Paruka Warrant

On issuance of the warrant to Paruka on December 31, 2024, the fair value of the warrant issued on December 31, 2024 of $ 10.4

million was reclassified from liability to equity on the condensed consolidated balance sheet as of December 31, 2024.

As of March 31, 2025, the

June 30, 2024, $ 0.4 million was recognized as stock-based compensation expenses related to the December 31, 2024 Paruka Warrant Obligation.

On issuance of the warrant to Paruka on December 31, 2024, the fair value of the warrant issued on December 31, 2024 of $ 10.4 million

was reclassified from liability to equity on the condensed consolidated balance sheet as of December 31, 2024.

As of June 30, 2025, the

estimated fair value of the warrant to be granted on December 31, 2025 was $ 6.2 million.

For the three months ended March 31, 2025 $ 1.4

million was recognized as stock-based compensation expenses related to the December 31, 2025 Paruka Warrant Obligation.

As of March 31,

2025, there was $ 4.2 million in unamortized expense related to the December 31, 2025 Paruka Warrant Obligation.

For the three and six months ended June 30, 2025

$ 1.7 million and $ 3.1 million, respectively, was recognized as stock-based compensation expense related to the December 31, 2025 Paruka

Warrant Obligation.

As of June 30, 2025, there was $ 3.1 million in unamortized expense related to the December 31, 2025 Paruka Warrant

Employee Warrants

6 unchanged sentences

the performance-based requirements had been achieved.

During the three months ended March 31, 2025, no employee warrants were granted.

During the three and six months ended June 30, 2025, no employee warrants were granted.

The following table summarizes

the employee warrant activity during the three months ended March 31, 2025:

the employee warrant activity during the six months ended June 30, 2025:

Outstanding Weighted

Exercise Price

Per Share Weighted

3 unchanged sentences

Canceled/forfeited —

Balance as of March 31, 2025 3,054,358 $ 7.80 9.3 $ 7,514

Vested and expected to vest, March 31, 2025 3,054,358 $ 7.80 9.3 $ 7,514

Exercisable, March 31, 2025 —

Balance as of June 30, 2025 3,054,358 $ 7.80 9.0 $ 10,415

Vested and expected to vest, June 30, 2025 3,054,358 $ 7.80 9.0 $ 10,415

Exercisable, June 30, 2025 797,307 $ 7.80 9.0 $ 2,719

Stock-Based Compensation Expense

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comprehensive loss (in thousands):

Six Months Ended

(Inception) to

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General and administrative

As of March 31, 2025, total

As of June 30, 2025, total

unrecognized compensation cost related to the unvested stock options was $ 28.5 million, which is expected to be recognized over a weighted

average period of approximately 3.2 years.

As of March 31, 2025, total

As of June 30, 2025, total

unrecognized compensation cost related to the unvested RSAs was less than $ 0.1 million, which is expected to be recognized over a weighted

average period of 2.6 years.

As of March 31, 2025, the

As of June 30, 2025, the

unrecognized compensation cost related to the employee warrants was $ 13.5 million, which is expected to be recognized over a weighted

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loss (in thousands):

Six Months Ended

(Inception) to

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equipment, net.

As of March 31, 2025 and December 31, 2024 all of long-lived assets were in the U.S.

The table below is a summary

of the segment loss from operations, including significant segment expenses (in thousands):

As of June 30, 2025 and December 31, 2024 all long-lived assets were in the U.S.

The following table summarizes

the segment loss from operations, including significant segment expenses (in thousands):

Six Months Ended

(Inception) to

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In March 2024, the Company

entered into two antibody discovery and option agreements (“Option Agreements”) with Paragon Therapeutics, Inc.

entered into two antibody discovery and option agreements (the “Option Agreements”) with Paragon Therapeutics, Inc.

Under the terms of each agreement, Paragon identifies, evaluates, and develops antibodies directed against certain mutually

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Under the Option Agreements, the Company has the exclusive option to, on a research program-by-research

program basis, be granted an exclusive, worldwide license to all of Paragon’s right, title, and interest in and to the intellectual

program basis, be granted an exclusive, worldwide license to all of Paragon’s rights, titles, and interest in and to the intellectual

property resulting from the applicable research program to develop, manufacture, and commercialize the antibodies and products directed

to the selected target(s).

The Company has initiated certain research programs with Paragon that generally focus on discovering,

generating, identifying and/or characterizing antibodies directed to a particular target (each, a “Research Program”), including

for IL-23 and IL-17A/F for ORKA-001 and ORKA-002, respectively.

The exclusive option with respect to each Research Program is exercisable

at the Company’s sole discretion at such time as specified in the Option Agreements (the “Option Period”).

no payment due upon exercise of an Option pursuant to the Option Agreements.

For each of these agreements, once the Company enters into

the corresponding license agreements, it will be required to make non-refundable milestone payments to Paragon of up to $ 12.0 million

under each respective agreement upon the achievement of certain clinical development milestones, up to $ 10.0 million under each respective

agreement upon the achievement of certain regulatory milestones, as well as a low single-digit percentage royalty for antibody products

beginning on the first commercial sale in each program.

The Company has initiated certain research programs with Paragon that generally focus on discovering, generating,

identifying and/or characterizing antibodies directed to a particular target (each, a “Research Program”), including for IL-23

and IL-17A/F for ORKA-001 and ORKA-002, respectively.

The exclusive option with respect to each Research Program is exercisable at the

Company’s sole discretion at such time as specified in the Option Agreements (the “Option Period”).

There is no payment

due upon exercise of an Option pursuant to the Option Agreements.

For each of these agreements, once the Company enters into the corresponding

license agreement, it will be required to make non-refundable milestone payments to Paragon of up to $ 12.0 million under each respective

agreement upon the achievement of certain clinical development milestones, up to $ 10.0 million under each respective agreement upon the

achievement of certain regulatory milestones, as well as a low single-digit percentage royalty for antibody products beginning on

the first commercial sale in each program.

The Company may terminate

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Paragon may terminate any Option Agreement

or a Research Program immediately upon written notice to the Company if, as a result of any action or failure to act by the Company or

its affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise

or Research Program immediately upon written notice to the Company if, as a result of any action or failure to act by the Company or its

affiliates, such Research Program or all material activities under the applicable Research Plan are suspended, discontinued or otherwise

delayed for a certain consecutive number of months.

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with Paragon (the “ORKA-001 License Agreement”), pursuant to which Paragon granted the Company a royalty-bearing, world-wide,

exclusive license to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting IL-23 in all fields

other than the field of inflammatory bowel disease (“ORKA-001 Field”).

In December 2024, the Company exercised its exclusive

option to acquire certain rights to ORKA-002, and in February 2025, it entered into the corresponding license agreement with Paragon (the

“ORKA-002 License Agreement” and together with the ORKA-001 License Agreement, the “License Agreements”), pursuant

to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize or otherwise

exploit certain antibodies and products targeting IL-17A/F in all fields (“ORKA-002 Field” and together with the ORKA-001

Field, the “Fields”).

Pursuant to each of the two License Agreements, Paragon has agreed not to conduct any new campaigns

that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F monospecific antibodies in the respective agreed-upon fields.

exclusive license to develop, manufacture, commercialize, or otherwise exploit certain antibodies and products targeting IL-23 in all

fields other than the field of inflammatory bowel disease (“ORKA-001 Field”).

In December 2024, the Company exercised its

exclusive option to acquire certain rights to ORKA-002, and in February 2025, it entered into the corresponding license agreement with

Paragon (the “ORKA-002 License Agreement” and together with the ORKA-001 License Agreement, the “License Agreements”),

pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize,

or otherwise exploit certain antibodies and products targeting IL-17A/F in all fields (“ORKA-002 Field” and together with

the ORKA-001 Field, the “Fields”).

Pursuant to each of the two License Agreements, Paragon has agreed not to conduct any new

campaigns that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F monospecific antibodies in the respective agreed-upon fields.

The License Agreements provide

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insolvency or bankruptcy to the extent permitted by law.

Pursuant to the terms of each of the License Agreements,

the Company is obligated to pay Paragon non-refundable milestone payments of up to $ 12.0 million under each respective agreement upon

the achievement of certain clinical development milestones and up to $ 10.0 million under each respective agreement upon the achievement

of certain regulatory milestones.

In addition, the Company is obligated to pay Paragon a low single-digit percentage royalty for antibody products

for each of ORKA-001 and ORKA-002.

For each of the License Agreements, the royalty term ends on the later of (i) the last-to-expire licensed

patent or our patent directed to the manufacture, use or sale of a licensed antibody in the country at issue or (ii) 12 years from the

date of first sale of a Company product.

There is also a royalty step-down if there is no Paragon patent in effect during the royalty

term for each program.

Each of the License Agreements may be terminated on 60 days’ notice to Paragon, on material breach without

cure, and on a party’s insolvency or bankruptcy to the extent permitted by law.

As of March 31, 2025, the Company has incurred and

expensed milestone payments of $ 4.0 million and $ 1.5 million for ORKA-001 License Agreement and ORKA-002 License Agreement, respectively.

Pursuant to the terms of

each of the License Agreements, the Company is obligated to pay Paragon non-refundable milestone payments of up to $ 12.0 million under

each respective agreement upon the achievement of certain clinical development milestones and up to $ 10.0 million under each respective

agreement upon the achievement of certain regulatory milestones.

In addition, the Company is obligated to pay Paragon a low single-digit

percentage royalty for antibody products for each of ORKA-001 and ORKA-002.

For each of the License Agreements, the royalty term ends

on the later of (i) the last-to-expire licensed patent or our patent directed to the manufacture, use or sale of a licensed antibody

in the country at issue or (ii) 12 years from the date of first sale of a Company product.

There is also a royalty step-down if there

is no Paragon patent in effect during the royalty term for each program.

Each of the License Agreements may be terminated on 60 days’

notice to Paragon, on material breach without cure, and on a party’s insolvency or bankruptcy to the extent permitted by law.

of June 30, 2025, the Company has incurred and expensed milestone payments of $ 4.0 million for each of the License Agreements.

to the quarter end, the Company dosed the first patient in a Phase 2a clinical trial for ORKA-001.

In the third quarter of 2025, the

Company accrued for the additional milestone payment of $ 3.0 million under the ORKA-001 License Agreement, as it became probable that

the milestone would be achieved.

Additionally, as part of

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IL-23 selection process, which was completed in December 2024.

Pursuant to the Option Agreements,

during the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, the Company’s share

of development costs incurred for ORKA-001 program for the periods were nil and $ 0.8 million, respectively, which were recorded as research

and development expenses.

As of March 31, 2025 and December 31, 2024, nil and $ 2.8 million, respectively, related to ORKA-001 were included

in related party accounts payable and other current liabilities.

Pursuant to the Option Agreements,

the Company recognized $ 0.1 million and $ 4.2 million as research and development expenses for ORKA-002 program during the three months

ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, respectively.

As of March 31, 2025 and December

31, 2024, $ 0.1 million and $ 2.7 million, respectively, related to ORKA-002 were included in related party accounts payable and other current

For the three months ended

March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, the Company recognized $ 1.5 million and $ 5.0 million,

respectively, of expenses in connection with services provided by Paragon and Paruka under the Option Agreements.

Pursuant to the Option Agreements, during the three and six months

ended June 30, 2025, the Company’s share of research and development expenses for ORKA-001 program for the periods were nil .

the three months ended June 30, 2024, and the period from February 6, 2024 (inception) to June 30, 2024, the Company’s share of

research and development expenses, including research initiation fee, incurred for ORKA-001 program for the periods were $ 12.4 million

and $ 13.2 million, respectively.

These costs were recorded as research and development expenses.

As of June 30, 2025 and December 31,

2024, nil and $ 12.4 million, respectively, related to ORKA-001 were included in related party accounts payable and other current liabilities.

Pursuant to the Option

Agreements, during the three and six months ended June 30, 2025, the Company’s share of research and development expenses for

ORKA-002 program was nil and $ 0.1 million, respectively.

For the three months ended June 30, 2024, and the period from February 6,

2024 (inception) to June 30, 2024, the Company’s share of research and development expense, including research initiation fee,

incurred for ORKA-002 program for the periods were $ 2.7 million and $ 6.9 million, respectively.

The Company recognized a milestone

payment of $ 2.5 million related to completing the first dosing of a human subject in a Phase 1

trial milestone during the three and six months ended June 30, 2025.

These costs were recorded as research and development expenses.

As of June 30, 2025 and December 31, 2024, nil and $ 2.7 million, respectively, related to ORKA-002 were included in related party

accounts payable and other current liabilities.

For the three and six months

ended June 30, 2025, the Company recognized $ 4.2 million and $ 5.7 million, respectively, of expenses in connection with services provided

by Paragon and Paruka under the Option Agreements.

For the three months ended June 30, 2024, and the period from February 6, 2024

(inception) to June 30, 2024, the Company recognized $ 15.4 million and $ 20.4 million, respectively.

The Company expenses the

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expense when incurred.

Commitment and Contingencies

Commitments and Contingencies

In April 2024, the Company

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2024 with an initial term of 39.5 months.

The Company leases office space under this noncancelable operating lease agreement.

Lease liabilities

are based on the net present value of the remaining lease payments over the remaining lease term.

In determining the present value of

lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities as discount rates were not

implicit or readily determinable.

As of March 31, 2025, the

operating lease arrangement had a remaining lease term of 30 months and a discount rate of 17.95 %.

For the three months ended March 31,

2025, the Company recorded operating and variable lease expense of $ 0.1 million in general and administrative expenses in its condensed

In February 2025, the Company entered into an operating lease agreement in Waltham, Massachusetts,

which commenced on April 1, 2025 with an initial term of 54 months.

The Company leases office spaces under noncancelable operating lease

Lease liabilities are based on the net present value of the remaining lease payments over the remaining lease terms.

In determining

the present value of lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities as discount

rates were not implicit or readily determinable.

As of June 30, 2025, the

operating lease arrangement for the Company’s headquarters in Menlo Park, California had a remaining lease term of 27 months and

a discount rate of 17.95 %.

As of June 30, 2025, the operating lease arrangement for the Company’s lease in Waltham, Massachusetts

had a remaining lease term of 51 months and a discount rate of 9.95 %.

For the three and six months ended June 30, 2025, the Company recorded

operating and variable lease expenses of $ 0.3 million and $ 0.4 million, respectively, in general and administrative expenses in its condensed

consolidated statement of operations and comprehensive loss.

For the three months ended June 30, 2024 and the period from February 6,

2024 (inception) to June 30, 2024, the Company recorded operating and variable lease expenses of less than $ 0.1 million.

The following table presents

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The following table summarizes a maturity analysis

of the Company’s operating lease liabilities showing the aggregate lease payments as of March 31, 2025 (in thousands):

of the Company’s operating lease liabilities showing the aggregate lease payments as of June 30, 2025 (in thousands):

Year ending December 31,

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Non-current portion of lease liability

In February 2025, the Company

entered into a lease agreement for office space in Waltham, Massachusetts.

This operating lease commenced on April 1, 2025 with an initial

term of 54 months.

The Company expects to pay approximately $ 1.6 million over the lease term.

Cell Line License Agreement

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Net Loss per Share

Basic and diluted net loss per share attributable

to stockholders were calculated as follows (in thousands, except share and per share data):

Three Months Ended March 31, 2025

The following table summarizes the basic and diluted

net loss per share attributable to stockholders (in thousands, except share and per share data):

Three Months Ended June 30, 2025

Three Months Ended June 30, 2024

Loss Allocation

Company Series B Preferred Stock (1)

(1) The weighted-average number of shares of as-converted Company

Series B Preferred Stock used in the loss allocation was 11,428,129 for the three months ended June 30, 2025.

Six Months Ended June 30, 2025

February 6, 2024 (Inception) to

March 31, 2024

June 30, 2024

Loss Allocation

Company Series B Preferred Stock (1)

(1) The weighted-average number of shares of as-converted Company Series B Preferred Stock used in the loss allocation was 11,428,129 for the three months ended March 31, 2025.

(1) The weighted-average number of shares of as-converted Company Series B Preferred Stock used in the loss allocation was 11,428,129 for the six months ended June 30, 2025.

For the computation of basic

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including them would have had an anti-dilutive effect were as follows:

Six Months Ended

February 6, 2024

(Inception) to June 30,

Outstanding convertible preferred stock (as converted to common stock)

Outstanding employee warrants to purchase common stock

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own less than 5% of the Company’s capital stock through their respective holdings of Company Common Stock.

Fairmount beneficially owns

more than 5% of the Company’s capital, currently has one representative appointed to the Board, and beneficially owns more than

5% of Paragon.

Fairmount appointed Paragon’s board of directors and has the contractual right to approve the appointment of any

executive officers of Paragon.

Fairmount beneficially

owns more than 5% of the Company’s capital stock, currently has one representative appointed to the Board, and beneficially owns

more than 5% of Paragon.

Fairmount appointed Paragon’s board of directors and has the contractual right to approve the

appointment of any executive officers of Paragon.

The following is a summary

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Paragon reimbursable Option Agreements’ fees

Paragon milestone payments for Option Agreement

Paragon milestone payments for License Agreement

Paragon reimbursable other research expenses

Paragon reimbursable patent expenses

On July 4, 2025, the One

Big Beautiful Bill Act (the “Act”) was signed into law.

The Act makes permanent key elements of the Tax Cuts and Jobs Act, including

100 % bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

The Company is currently evaluating

the impact of the Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements