What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-14 · 274 added, 188 removed, 302 unchanged (60% of the section changed)

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discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial

statements and the related notes included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended March

statements and the related notes included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended June

30, 2025 (this “Quarterly Report”) and with the audited consolidated financial statements and related notes included in our

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expertise position us to set a new treatment standard in large I&I markets with continued unmet need.

Since our inception in February 2024,

we have devoted substantially all of our resources to raising capital, organizing and staffing the company, business and scientific planning,

conducting discovery and research activities, establishing arrangements with third parties for the manufacture of our programs and component

materials, and providing general and administrative support for these operations.

We do not have any programs approved for sale and have

not generated any revenue from product sales.

To date, we have funded our operations primarily with proceeds from the issuance of convertible

preferred stock, common stock, a convertible note, pre-funded warrants, and the proceeds from the reverse recapitalization and merger,

our Pre-Closing Financing and subsequent PIPE Financing (as defined and further described in “Recent Developments” below).

Since our inception, we have

incurred significant losses and negative cash flows from our operations.

Our ability to generate product revenue sufficient to achieve

profitability will depend heavily on the successful development and eventual commercialization of any programs we may develop.

the three months ended March 31, 2025, we generated net losses of $21.0 million and used net cash of $20.9 million for our operating activities.

Since our inception in February 2024, we have devoted substantially all of our resources to raising capital, organizing and staffing our

company, business and scientific planning, conducting discovery and research activities, establishing and protecting our intellectual

property portfolio, establishing arrangements with third parties for the manufacture of our programs and component materials, developing

and progressing our pipeline, and providing general and administrative support for these operations.

We do not have any products approved

for sale and have not generated any revenue from product sales.

To date, we have funded our operations primarily with proceeds from the

issuance of convertible preferred stock, common stock, a convertible note, pre-funded warrants, and the proceeds from the reverse recapitalization

and merger, our Pre-Closing Financing and subsequent PIPE Financing (as defined and further described in “Recent Developments”

Since our inception, we have incurred significant losses and negative

cash flows from our operations.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the

successful development and eventual commercialization of any programs we may develop.

During the three and six months ended June 30, 2025,

we generated net losses of $24.6 million and $45.6 million, respectively, and for the six months ended June 30, 2025, we used net cash

of $44.0 million for our operating activities.

We had cash, cash equivalents,

and marketable securities of $373.0 million as of March 31, 2025.

and marketable securities of $351.5 million as of June 30, 2025.

We expect that our existing cash, cash equivalents, and marketable securities

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As a result, it has a pharmacokinetic profile designed to support a subcutaneous

injection as infrequently as once or twice a year.

injection as infrequently as once or twice per year.

In addition, emerging evidence suggests that IL-23 blockade can modify the disease

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of ORKA-001 increase its potential to deliver these disease-modifying benefits.

We initiated the dosing of healthy volunteers in a Phase 1 trial of ORKA-001 in the fourth quarter of 2024.

We expect to share interim

data from the first-in-human trial in healthy volunteers, including initial pharmacokinetic data, in the third quarter of 2025.

Additionally,

we plan to initiate a Phase 2a proof-of-concept study in the second half of 2025 and expect to share efficacy and response duration data

in the second half of 2026.

We initiated the dosing

of healthy volunteers in a Phase 1 trial of ORKA-001 in the fourth quarter of 2024.

We expect to share interim data from the

first-in-human trial in healthy volunteers, including initial pharmacokinetic data, at the European Academy of Dermatology &

Venereology (EADV) Congress in September 2025.

In July 2025, the

United States Food and Drug Administration (“FDA”) cleared our investigational new drug (“IND”) application

and Health Canada cleared our Clinical Trial Application (“CTA”) for our Phase 2a trial of ORKA-001 in

moderate-to-severe PsO, called EVERLAST-A.

In the third quarter of 2025, we commenced dosing in a Phase 2a clinical trial of

ORKA-001 in patients with moderate-to-severe PsO.

We expect to share efficacy and response duration data from this study in the

second half of 2026.

Based on recent precedent for PsO, we anticipate that the entire development program from first-in-human to

biologics license application (“BLA”) filing could take as little as six to seven years based on the averages for recently

approved medicines.

However, we have no control over the length of time needed for United States Food and Drug Administration (“FDA”)

review, and this timeline could vary.

ORKA-002 is a high affinity, extended half-life mAb designed to target

IL-17A and IL-17F (“IL-17A/F”).

IL-17 inhibition has become central to the treatment of psoriatic diseases, including

PsO and PsA, and has also shown efficacy in other I&I indications, such as hidradenitis suppurativa and axial spondyloarthritis.

recently, the importance of inhibiting the IL-17F isoform along with IL-17A has become appreciated, and dual blockade with the recently

approved therapy Bimzelx (bimekizumab) has led to higher response rates in patients than blockade of IL-17A alone.

ORKA-002 is designed

to bind IL-17A/F at similar epitopes, or binding sites, and affinity ranges as bimekizumab, but incorporates half-life extension technology

that could enable more convenient dosing intervals.

We plan to initiate the dosing of healthy volunteers in a Phase 1 trial of ORKA-002

in the second quarter of 2025.

We expect to share interim data from the first-in-human trial in healthy volunteers, including initial

pharmacokinetic data, around year end 2025.

We view ORKA-002 and ORKA-001

as highly complementary.

Patients with moderate-to-severe PsO that have purely skin manifestations are most often treated with IL-23 inhibitors

due to the high efficacy and tolerability of this mechanism.

However, for patients who also have joint involvement, or signs and symptoms

of PsA, an IL-17 inhibitor is typically used due to its efficacy in addressing both skin and joint symptoms.

In addition, IL-17 inhibitors

are often used in patients with highly resistant skin symptoms that do not adequately resolve through treatment with an IL-23 inhibitor.

Furthermore, we have the potential opportunity to administer ORKA-002 and ORKA-001 sequentially, called ORKA-021, to combine two features

of each program:

the rapid response of an IL-17 inhibitor with the ideal maintenance profile of an IL-23 inhibitor.

We believe that ORKA-001

and ORKA-002 provide the potential to offer a highly compelling product profile for most patients with PsO and/or PsA, as well as the

opportunity to address additional I&I indications.

biologics license application (“BLA”) filing could take as little as six to seven years based on the averages for

recently approved medicines.

However, we have no control over the length of time needed for the FDA review, and this timeline could

ORKA-002 is a high affinity,

extended half-life mAb designed to target IL-17A and IL-17F (“IL-17A/F”).

IL-17 inhibition has become central to the

treatment of psoriatic diseases, including PsO and PsA, and has also shown efficacy in other I&I indications, such as hidradenitis

suppurativa and axial spondyloarthritis.

More recently, the importance of inhibiting the IL-17F isoform along with IL-17A has become

appreciated, and dual blockade with the recently approved therapy Bimzelx (bimekizumab) has led to higher response rates in patients than

blockade of IL-17A alone.

ORKA-002 is designed to bind IL-17A/F at similar epitopes, or binding sites, and affinity ranges as bimekizumab,

but incorporates half-life extension technology that could enable more convenient dosing intervals.

We initiated the dosing of healthy

volunteers in a Phase 1 trial of ORKA-002 in the second quarter of 2025.

We expect to share interim data from the first-in-human

trial in healthy volunteers, including initial pharmacokinetic data, around year end 2025.

We view ORKA-002 and

ORKA-001 as highly complementary.

Patients with moderate-to-severe PsO that have purely skin manifestations are most often treated

with IL-23 inhibitors due to the high efficacy and tolerability of this mechanism.

However, for patients who also have joint

involvement, or signs and symptoms of PsA, an IL-17 inhibitor is typically used due to its efficacy in addressing both skin and

joint symptoms.

In addition, IL-17 inhibitors are often used in patients with highly resistant skin symptoms that do not adequately

resolve through treatment with an IL-23 inhibitor.

Furthermore, we plan to pursue a sequential combination regimen of ORKA-002

followed by ORKA-001, called ORKA-021.

ORKA-021 has the potential to combine the rapid response of an IL-17 inhibitor with the ideal

maintenance profile of an IL-23 inhibitor in a single regimen.

We believe that ORKA-001 and ORKA-002 provide the potential to offer

a highly compelling product profile for most patients with PsO and/or PsA, as well as the opportunity to address additional I&I

Additional Pipeline Program

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Option Agreements and License Agreements – Paragon Therapeutics

As stated above, in March 2024,

we entered into two Antibody Discovery and Option Agreements with Paragon and Paruka Holding, LLC (“Paruka”) (each, an “Option

In March 2024, we entered

into two Antibody Discovery and Option Agreements with Paragon and Paruka Holding, LLC (“Paruka”) (each, an “Option

Agreement”), pursuant to which we initiated certain research programs with Paragon focusing on discovering, generating, identifying

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the “License Agreements”).

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.

Each of the ORKA-001 and ORKA-002 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

Pursuant to each of the 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.

Each of the ORKA-001 and ORKA-002 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.

Pursuant to the terms of

each of the ORKA-001 and ORKA-002 License Agreements, we are 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, we are 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 our 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, we are 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, we are 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 our product.

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

the royalty term for each program.

Pursuant to the License Agreements,

as of March 31, 2025, we have incurred and expensed milestone payments of $4.0 million and $1.5 million for ORKA-001 and ORKA-002, respectively.

as of June 30, 2025, we have incurred and expensed milestone payments of $4.0 million for each of ORKA-001 and ORKA-002.

Subsequent to the quarter end, we dosed the first patient in a Phase

2a clinical trial for ORKA-001.

In the third quarter of 2025, we 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.

Components of Results of Operations

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These expenses include:

of funding research performed by third parties that conduct research and development activities on our behalf;

incurred, and milestone payments under license and option agreements;

incurred in connection with continuing our current research programs and discovery-phase development of any programs we may identify,

including under future agreements with third parties, such as consultants and contractors;

incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”),

and with clinical trial sites that conduct research and development activities on our behalf;

cost of development and validating our manufacturing process for use in our preclinical studies and current and future clinical trials;

● personnel-related

expenses, including salaries, bonuses, employee benefits, travel, and stock-based compensation expense;

human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities, and depreciation

for our leased office space.

costs of funding research performed by third parties that conduct research and development activities on our behalf;

costs incurred, and milestone payments under license and option agreements;

expenses incurred in connection with continuing our current research programs and discovery-phase development of any programs we may identify, including under future agreements with third parties, such as consultants and contractors;

expenses incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and with clinical trial sites that conduct research and development activities on our behalf;

the cost of development and validating our manufacturing process for use in our preclinical studies and current and future clinical trials;

personnel-related expenses, including salaries, bonuses, employee benefits, travel, and stock-based compensation expense;

allocated human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities, and depreciation for our leased office space.

We expense research and development

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many factors, including the following:

and successful completion of preclinical studies;

investigational new drug (“IND”) or comparable foreign applications that allow commencement of our planned clinical trials

or future clinical trials for any programs we may develop;

enrollment and completion of clinical trials;

results from our clinical trials that support a finding of safety and effectiveness, acceptable pharmacokinetics profile, and an acceptable

risk-benefit profile in the intended populations;

of marketing approvals from applicable regulatory authorities;

● establishment

of arrangements through our own facilities or with third-party manufacturers for clinical supply and, where applicable, commercial manufacturing

capabilities;

● maintenance

of a continued acceptable safety, tolerability, and efficacy profile of any programs we may develop following approval.

timely and successful completion of preclinical studies;

effective investigational new drug (“IND”) or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for any programs we may develop;

successful enrollment and completion of clinical trials;

positive results from our clinical trials that support a finding of safety and effectiveness, acceptable pharmacokinetics profile, and an acceptable risk-benefit profile in the intended populations;

receipt of marketing approvals from applicable regulatory authorities;

establishment of arrangements through our own facilities or with third-party manufacturers for clinical supply and, where applicable, commercial manufacturing capabilities;

maintenance of a continued acceptable safety, tolerability, and efficacy profile of any programs we may develop following approval.

Any changes in the outcome

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Other Income (Expense), Net

Total other income (expense), net, consists of interest earned on our

cash, cash equivalents, and marketable securities;

interest expense on the convertible note from a related party (see discussion herein);

Total other income (expense),

net, consists of interest earned on our cash, cash equivalents, and marketable securities;

interest expense on the convertible note from

a related party (see discussion herein);

and foreign currency transactions gains and losses.

Interest expense relates to a convertible note (the “Convertible Note”)

issued to Fairmount Healthcare Fund II, L.P.

(“Fairmount”), a related party, in March 2024.

At the effective time

of the Merger, the Convertible Note, along with the accrued interest, was automatically converted into Company Common Stock.

Results of Operations for the Three Months

Ended March 31, 2025 and the period from February 6 (inception) to March 31, 2024

Interest expense relates to a convertible

note (the “Convertible Note”) issued to Fairmount Healthcare Fund II, L.P.

(“Fairmount”), a related party,

in March 2024.

At the effective time of the Merger, the Convertible Note, along with the accrued interest, was automatically converted

into Company Common Stock.

Results of Operations

Comparison of the Three Months Ended June

30, 2025 and 2024

The following table summarizes

our results of operations and comprehensive loss for the periods presented (in thousands):

Operating expenses

Research and development (1)

General and administrative (2)

Total operating expenses

Loss from operations

Other income (expense)

Interest income

Interest expense (3)

Other expense, net

Total other income (expense), net

Percentage not meaningful

(1) Includes related party amounts

of $4,281 and $15,379 for the three months ended June 30, 2025 and 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

(3) Includes related party amounts

of nil and $750 for the three months ended June 30, 2025 and June 30, 2024, respectively

Research and Development Expenses

The following table summarizes our research and

development expenses for the periods presented (in thousands):

External research and development expenses

Other research and development expenses:

Personnel-related (excluding stock-based compensation)

Stock-based compensation

Total research and development expenses

Percentage not meaningful

Research and development

expenses increased by $5.4 million, from $18.7 million for the three months ended June 30, 2024 to $24.1 million for the three months

ended June 30, 2025.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses decreased by $0.7 million, from

$17.1 million for the three months ended June 30, 2024 to $16.4 million for the three months ended June 30, 2025.

The decrease is primarily

related to the decrease in research expenses incurred by Paragon partially offset by increased CMO product development and manufacturing

expenses and an increase in our CRO expenses related to our ongoing clinical trials and toxicology studies.

Personnel-related

expenses increased by $2.4 million, from $0.9 million for the three months ended June 30, 2024 to $3.3 million for the three months

ended June 30, 2025, as we continue hiring employees in our research and development organization.

Stock-based compensation expense

increased by $2.9 million, from $0.5 million for the three months ended June 30, 2024 to $3.4 million for the three months ended

June 30, 2025.

The increase in stock-based compensation expense is related to the $1.3 million increase in Paruka warrant liability

under the Option Agreements and $1.6 million related to the increase in employee awards.

Other research and development expenses

increased by $0.8 million, from $0.2 million for the three months ended June 30, 2024 to $1.0 million for the three months ended

June 30, 2025, primarily due to increases to facilities and allocated overhead expenses as we commenced using our leased Menlo Park

office space from June 2024 and Waltham office from April 2025, as well as an increase in our research and development employee

General and Administrative Expenses

The following table summarizes our general and

administrative expenses for the periods presented (in thousands):

Personnel-related (including stock-based compensation)

Professional and consulting services

Total general and administrative expenses

General and administrative

expenses increased by $1.5 million, from $2.8 million for the three months ended June 30, 2024 to $4.3 million for the three months ended

June 30, 2025.

Personnel-related expenses

increased by $2.1 million, from $1.3 million for the three months ended June 30, 2024 to $3.4 million for the three months

ended June 30, 2025, as a result of continued hiring of executives and administrative employees.

Stock-based compensation expense increased

by $1.5 million, from $0.2 million for the three months ended June 30, 2024 to $1.7 million for three months ended June 30, 2025.

Expenses related to professional

and consulting services decreased by $0.6 million, from $1.4 million for the three months ended June 30, 2024 to $0.8 million

for the three months ended June 30, 2025, due to higher spending in the prior period on accounting, audit, and legal fees as we began

preparation to become a public company.

Other general and administrative expenses increased

by $0.1 million primarily due to facilities and allocated overhead expenses as we commenced using our leased Menlo Park office space from

June 2024 and Waltham office from April 2025, as well as an increase in our employee count.

Total Other Income (Expense), Net

Interest income from cash

equivalents and marketable securities was $3.9 million for the three months ended June 30, 2025.

No interest income was recorded for the

three months ended June 30, 2024.

No interest expense was recorded

during the three months ended June 30, 2025.

Interest expense of $0.8 million was incurred for the three months ended June 30, 2024 relating

to the Convertible Note issued to Fairmount in March 2024.

Comparison of the Six Months Ended June 30,

2025, and the period from February 6 (inception) to June 30, 2024

The following table summarizes our results of

operations and comprehensive loss for the periods presented (in thousands):

(Inception) to

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Percentage not meaningful

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

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

Includes related party amounts of nil and $214 for the three months

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

Includes related party amounts of $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

Includes related party amounts of $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

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

Research and Development Expenses

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Percentage not meaningful

Includes related party amounts of $707 and $4,905 for the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, respectively

Includes related party amounts of nil and $78

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

Includes related party amounts of $1,415 and $68 for the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, respectively

Research and development

expenses increased by $14.7 million, from $5.2 million for the period from February 6, 2024 (inception) to March 31, 2024 to $19.9 million

for the three months ended March 31, 2025.

External CROs, CMOs and other

third-party preclinical studies and clinical trials expenses increased by $8.7 million, from $4.9 million for the period from February

6, 2024 (inception) to March 31, 2024 to $13.6 million for the three months ended March 31, 2025.

The increase is primarily related to

increased CMO product development and manufacturing expenses, increase in our CRO expenses related to our ongoing clinical trials and

toxicology studies, partially offset by reduction of research expenses incurred by Paragon.

Employee payroll and related

expenses increased by $2.3 million, from $0.2 million for the period from February 6, 2024 (inception) to March 31, 2024 to $2.5 million

for the three months ended March 31, 2025, as we continue hiring employees in our research and development organization.

Stock-based compensation

expenses increased by $2.9 million, from $0.1 million for the period from February 6, 2024 (inception) to March 31, 2024 to $3.0 million

for the three months ended March 31, 2025.

The increase in stock-based compensation expenses is related to $1.3 million of increase in

Paruka warrant liability under the Options Agreement (“Paruka Warrant Obligation”) and $1.6 million related to the increase

in employee awards.

Facilities and allocated overhead expenses increased by $0.8 million, as we commenced using our leased office space

from June 2024 and increased our research and development headcount.

expenses increased by $20.1 million, from $23.9 million for the period from February 6, 2024 (inception) to June 30, 2024 to $44.0 million

for the six months ended June 30, 2025.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses increased by $8.0 million, from

$22.0 million for the period from February 6, 2024 (inception) to June 30, 2024 to $30.0 million for the six months ended June 30, 2025.

The increase is primarily related to increased CMO product development and manufacturing expenses, an increase in our CRO expenses related

to our ongoing clinical trials and toxicology studies, partially offset by a reduction of research expenses incurred by Paragon.

Personnel-related

expenses increased by $4.7 million, from $1.1 million for the period from February 6, 2024 (inception) to June 30, 2024 to $5.8

million for the six months ended June 30, 2025, as we continue hiring employees in our research and development organization.

Stock-based compensation expense increased by $5.8 million, from $0.5 million for the period from February 6, 2024 (inception) to

June 30, 2024 to $6.4 million for the six months ended June 30, 2025.

Stock-based compensation expense increased by $3.2 million due

to the increase in employee awards and $2.6 million due to an increase in Paruka warrant liability under the Option Agreements.

Other research and development expenses increased by $1.6 million, from $0.2 million for the period from February 6, 2024

(inception) to June 30, 2024 to $1.8 million for the six months ended June 30, 2025, primarily due to facilities and allocated

overhead expenses as we commenced using our leased Menlo Park office space from June 2024 and Waltham office from April 2025, as

well as increased our research and development employee count.

General and Administrative Expenses

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Personnel-related (including stock-based compensation)

Professional and consulting fees (2)

Professional and consulting services

Total general and administrative expenses

Includes related party amounts of nil and $505 for the three months

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

Includes related party amounts of $110 and $256 for the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024

Includes related party amounts of nil and $87 for the three months

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

General and administrative

expenses increased by $3.5 million, from $1.7 million for the period from February 6, 2024 (inception) to March 31, 2024 to $5.2 million

for the three months ended March 31, 2025.

Employee payroll and related expenses increased by $2.8 million, from $0.8 million

for the period from February 6, 2024 (inception) to March 31, 2024 to $3.6 million for the three months ended March 31, 2025,

as a result of continued hiring of executives and administrative employees.

Stock-based compensation expenses were less than $0.1 million

and $1.9 million for the period from February 6, 2024 (inception) to March 31, 2024 and for the three months ended March 31, 2025, respectively.

Expenses related to professional services increased by $0.7 million, from $0.7 million for the period from February 6, 2024

(inception) to March 31, 2024 to $1.4 million for the three months ended March 31, 2025, due to increased spending on consulting,

insurance costs, recruiting, legal, audit, accounting and other services to support our growing operations as a public company and as

we continue to expand our operations to support our business strategy and product development.

General and administrative expenses increased

by $5.0 million, from $4.5 million for the period from February 6, 2024 (inception) to June 30, 2024 to $9.5 million for the six months

ended June 30, 2025.

Personnel-related expenses increased by $4.8 million,

from $2.2 million for the period from February 6, 2024 (inception) to June 30, 2024 to $7.0 million for the six months

ended June 30, 2025, as a result of continued hiring of executives and administrative employees.

Stock-based compensation expense was

$0.2 million and $3.6 million for the period from February 6, 2024 (inception) to June 30, 2024 and for the six months ended June 30,

2025, respectively.

Expenses related to professional and consulting services remained relatively

consistent at $2.1 million for the period from February 6, 2024 (inception) to June 30, 2024 compared to $2.1 million for the

six months ended June 30, 2025.

Other general and administrative expenses increased

by $0.2 million primarily due to facilities and allocated overhead expenses as we commenced using our leased Menlo Park office space from

June 2024 and Waltham office from April 2025, as well as an increase in our employee count.

Total Other Income (Expense), Net

Interest income from cash

equivalents and marketable securities was $4.1 million for the three months ended March 31, 2025.

No interest income was recorded for

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

equivalents and marketable securities was $7.9 million for the six months ended June 30, 2025.

No interest income was recorded for the

period from February 6, 2024 (inception) to June 30, 2024.

No interest expense was recorded

during the three months ended March 31, 2025.

Interest expense was $0.2 million for the period from February 6, 2024 (inception) to March

31, 2024 relating to the Convertible Note issued to Fairmount in March 2024.

during the six months ended June 30, 2025.

Interest expense was $1.0 million for the period from February 6, 2024 (inception)

to June 30, 2024 relating to the Convertible Note issued to Fairmount in March 2024.

Liquidity and Capital Resources

As of March 31, 2025, we

had $373.0 million of cash, cash equivalents, and marketable securities.

As of June 30, 2025, we had

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

Since our inception, we have

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We have not yet commercialized any products, and we do not expect to generate revenue from sales of products for several years, if

Through March 31, 2025, we had funded our operations primarily with proceeds from issuances of convertible preferred stock, common

Through June 30, 2025, we had funded our operations primarily with proceeds from issuances of convertible preferred stock, common

stock, a convertible note, and pre-funded warrants.

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our cash flows for the periods presented (in thousands):

(Inception) to

Six Months Ended

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

Net cash used in operating activities

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Operating Activities

For the three months ended

March 31, 2025, net cash used in operating activities was $20.9 million, which was primarily attributable to a net loss of $21.0 million

For the six months ended

June 30, 2025, net cash used in operating activities was $44.0 million, which was primarily attributable to a net loss of $45.6 million

and net changes in our operating assets and liabilities of $5.3 million, partially offset by net non-cash charges of $6.9 million.

changes in our operating assets and liabilities were primarily comprised of a decrease of $5.9 million in related party accounts payable

and other current liabilities and an increase of $2.3 million in accrued expenses and other current liabilities.

Net non-cash charges

primarily comprised of $4.9 million in stock-based compensation expense, partially offset by $1.8 million in net accretion of premiums

and discounts on marketable securities.

From February 6, 2024 (inception) to March 31, 2024, net

cash used in operating activities was $0.2 million and was primarily attributable to a net loss of $7.1 million, offset by a

$6.1 million increase in related parties accounts payable and other current liabilities and a $0.8 million increase in accrued

expenses and other current liabilities.

The increase in amounts due to related parties and accrued expenses and other current liabilities

was primarily due to an increase in Oruka’s business activity, as well as vendor invoicing and payments.

and other current liabilities and an increase of $1.2 million in accounts payable.

Net non-cash charges primarily comprised of an increase

of $10.0 million in stock-based compensation expense, partially offset by $3.3 million in net accretion of premiums and discounts on marketable

From February 6, 2024

(inception) to June 30, 2024, net cash used in operating activities was $11.2 million, which was primarily attributable to a net

loss of $29.3 million, partially offset by non-cash charges of $0.8 million and net cash provided by changes in operating activities of

$17.3 million.

Non-cash charges consisted of a $0.8 million increase in stock-based compensation expense.

Net cash provided by changes

in our operating activities primarily consisted of a $15.4 million increase in related parties accounts payable and other current liabilities,

$2.0 million increase in accounts payable, $1.0 million increase in accrued interest, related party, $0.6 million increase in accrued

expenses and other current liabilities, partially offset by a $1.7 million increase in prepaid expenses and other current assets.

Investing Activities

For the three months ended

March 31, 2025, net cash provided by investing activities was $42.9 million, which included $87.2 million in proceeds from maturities

of marketable securities, partially offset by $44.3 million in purchases of marketable securities.

For the six months ended

June 30, 2025, net cash provided by investing activities was $47.7 million, which included $200.1 million in proceeds from maturities

of marketable securities, offset by $152.3 million in purchases of marketable securities.

From February 6, 2024

(inception) to March 31, 2024, no cash was used in or provided by investing activities.

(inception) to June 30, 2024, no cash was used in or provided by investing activities.

Financing Activities

For the three months ended

March 31, 2025, no cash was used in or provided by financing activities.

From February 6, 2024

(inception) to March 31, 2024, net cash provided by financing activities was $27.9 million, consisting of $2.9 million in net proceeds

from the issuance of Series B Preferred Stock and $25.0 million in net proceeds from the issuance of the Convertible Note.

For the six months ended

June 30, 2025, net cash provided by financing activities was $0.1 million due to proceeds from the issuance of shares of common stock

in connection with purchases under our employee stock purchase plan.

From February 6, 2024 (inception) to June 30, 2024, net cash provided

by financing activities was $26.3 million, consisting of $2.9 million of net proceeds from the issuance of Pre-Merger Oruka Series A Preferred

Stock and $25.0 million of net proceeds from the issuance of the Convertible Note, partially offset by $1.6 million of payments in deferred

offering costs.

Contractual Obligations and Commitments

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We do not expect

any such contract terminations and did not have any non-cancellable obligations under these agreements as of March 31, 2025.

any such contract terminations and did not have any non-cancellable obligations under these agreements as of June 30, 2025.

10 and 11 to the condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report for further information

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this Quarterly Report.

During the three months ended March 31, 2025, there were no changes to our critical accounting policies and significant

During the three months ended June 30, 2025, there were no changes to our critical accounting policies and significant

judgments and estimates as disclosed in our Annual Report on Form 10-K for the period from February 6 (inception) to December 31, 2024.

Off-Balance Sheet Arrangements

As of March 31, 2025, we did not have any off-balance

sheet arrangements, as defined in the rules and regulations of the SEC.

As of June 30, 2025, we did

not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined

by Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in Item 10(f)(1) of Regulation

S-K, and are not required to provide the information under this item.

We are a smaller reporting

company, as defined by Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in Item

10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

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 2. Management’s Discussion and Analysis