What changed in this filing

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Item 1. Financial Statements

2025-11-12 compared with 2025-08-11 · 314 added, 228 removed, 779 unchanged (41% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

7 unchanged sentences

Other non-current assets

Liabilities, Convertible Preferred Stock and Stockholders’ Equity

Liabilities and Stockholders’ Equity

Current liabilities:

10 unchanged sentences

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

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

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

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

Common stock, $ 0.001 par value;

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,

545,000,000 shares authorized as of September 30, 2025 and December 31, 2024;

48,384,150 and 37,440,510 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

Total stockholders’ equity

Total liabilities, convertible preferred stock and stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(inception) to

September 30,

Operating expenses:

11 unchanged sentences

Net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted

Net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

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

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 $ 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

(1) Includes related party amounts of $ 9,595 and $ 13,537 for the three months ended September 30, 2025 and September 30, 2024, respectively, and $ 15,998 and $ 33,967 for the nine months ended September 30, 2025 and the period from February 6, 2024 (inception) to September 30, 2024, respectively

(2) Includes related party amounts of $ 8 and $ 71 for the three months ended September 30, 2025 and September 30, 2024, respectively, and $ 130 and $ 1,339 for the nine months ended September 30, 2025 and the period from February 6, 2024 (inception) to September 30, 2024, respectively

(3) Includes related party amounts of nil and $ 504 for the three months ended September 30, 2025 and September 30, 2024, respectively, and nil and $ 1,468 for the nine months ended September 30, 2025 and the period from February 6, 2024 (inception) to September 30, 2024, respectively

The accompanying notes are an integral part of

6 unchanged sentences

Stockholders’

Income (Loss)

Balances as of December 31, 2024

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

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

Net change in unrealized gains (losses) on marketable securities

Balances as of June 30, 2025

$ ( 129,297 )

Convertible Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Issuance of common stock and pre-funded warrants in connection with the 2025 PIPE Financing

Issuance cost of the 2025 PIPE Financing

Stock-based compensation expense

Net change in unrealized gains (losses) on marketable securities

Balances as of September 30, 2025

$ ( 159,574 )

Preferred Stock

Stockholders’

as of February 6, 2024 (inception)

of common stock

Issuance of common

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

compensation expense

as of March 31, 2024

compensation expense

as of June 30, 2024

Stock-based compensation

Balances as of

March 31, 2024

Stock-based compensation

Balances as of

June 30, 2024

Exchange of Series

A convertible preferred stock for Series B non-voting convertible preferred stock upon the closing of the reverse recapitalization

( 20,000,000 )

Conversion of convertible

notes (including accrued interest) into common stock upon the closing of the reverse recapitalization

Issuance of common

stock and pre-funded warrants in the Pre-Closing Financing,

Issuance costs

of Pre-Closing Financing and reverse recapitalization

Issuance of common

stock to former stockholders of ARCA biopharma, Inc.

in connection with the closing of the reverse recapitalization

Issuance of common

stock, Series A non-voting convertible preferred stock, and pre-funded warrants in connection with the 2024 PIPE

Issuance cost of

the 2024 PIPE Financing

Stock-based compensation

as of September 30, 2024

The accompanying notes are an integral part of

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

(inception) to

September 30,

Cash flows from operating activities:

6 unchanged sentences

Changes in operating assets and liabilities:

Subscription receivable

Prepaid expenses and other current assets

4 unchanged sentences

Related party accounts payable and other current liabilities

Accrued interest payable, related party

Net cash used in operating activities

3 unchanged sentences

Proceeds from maturities of marketable securities

Net cash provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

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

Payment of deferred offering costs

Proceeds from the Pre-Closing Financing, net

Proceeds from the PIPE Financings, net

Cash acquired in connection with the reverse recapitalization

Proceeds from issuance of common stock

5 unchanged sentences

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

Deferred offering costs in accrued expenses and other current liabilities

Assets acquired in connection with the reverse recapitalization

Other liabilities assumed in connection with the reverse recapitalization

Pre-Closing Financing and reverse recapitalization issuance costs included in accounts payable

PIPE Financing issuance costs included in accounts payable

PIPE Financing issuance costs included in accrued expenses and other current liabilities

Non-cash accrued interest on convertible note converted to common stock

Non-cash exchange of Pre-Merger Oruka Series A Preferred Stock for Company Series B Convertible Preferred Stock

The accompanying notes are an integral part of

35 unchanged sentences

The results for the three

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

and nine months ended September 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.

5 unchanged sentences

29, 2024, the Company changed its name from “ARCA biopharma, Inc.” to “Oruka Therapeutics, Inc.” and the Company

effected a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the common stock, par value $ 0.001 per share, of the

Company (“Company Common Stock”), which became effective on September 3, 2024.

All references to common stock, options to

purchase common stock, outstanding common stock warrants, common stock share data, per share data, and related information contained in

the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for

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

effected a 1-for-12 reverse stock split (the “Reverse Stock Split”) of its common stock, par value $ 0.001 per share (“Company

Common Stock”), which became effective on September 3, 2024.

All references to common stock, options to purchase common stock, outstanding

common stock warrants, common stock share data, per share data, Company Common Stock, and related information contained in the condensed

consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods

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

Immediately prior to the

37 unchanged sentences

As part of the reverse recapitalization, the Company acquired a cash balance of $ 4.94 million from ARCA.

PIPE Financing

PIPE Financings

On September 11, 2024, the

Company entered into a Securities Purchase Agreement for a private placement (the “PIPE Financing”) with certain institutional

and accredited investors.

The closing of the PIPE Financing occurred on September 13, 2024.

Company entered into a Securities Purchase Agreement (the “2024 Securities Purchase Agreement”) for a private placement (the

“2024 PIPE Financing”) with certain institutional and accredited investors.

The closing of the 2024 PIPE Financing occurred

on September 13, 2024.

Pursuant to the 2024 Securities

7 unchanged sentences

to 2,439,000 shares of Company Common Stock.

On September 17, 2025, the

Company entered into a Securities Purchase Agreement (the “2025 Securities Purchase Agreement”) for a private placement (the

“2025 PIPE Financing”) with certain institutional and accredited investors.

The closing of the 2025 PIPE Financing occurred

on September 19, 2025.

Pursuant to the 2025 Securities

Purchase Agreement, the investors purchased an aggregate of 10,933,405 shares of Company Common Stock at a purchase price of $ 15.00 per

share, and pre-funded warrants to purchase an aggregate of 1,066,666 shares of Company Common Stock at a purchase price of $ 14.999 per

pre-funded warrant, for aggregate net proceeds of approximately $ 169.6 million (net of issuance costs of $ 10.4 million).

Sales Agreement

On October 3, 2025, the Company entered into a Sales Agreement with

TD Securities (USA) LLC (the “Sales Agreement”), as its sales agent, pursuant to which the Company may issue and sell, from

time to time, shares of the Company Common Stock for aggregate gross proceeds of up to $ 200.0 million under an at-the-market (“ATM”)

offering program.

The Company is not obligated to make any sales of shares under the Sales Agreement.

Liquidity and Going Concern

10 unchanged sentences

since inception.

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.

For the three and nine months ended September 30, 2025, the Company incurred net losses of $ 30.3 million and $ 75.9 million,

respectively, and used net cash of $ 65.6 million for its operating activities during the first nine months of 2025.

As of September 30, 2025,

the Company had cash, cash equivalents, and marketable securities of $ 500.9 million.

The Company’s management expects that the existing

16 unchanged sentences

its quarterly and annual financial statements.

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

ended June 30, 2025.

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

months ended September 30, 2025.

Use of Estimates

37 unchanged sentences

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

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

September 30, 2025

Cash equivalents

1 unchanged sentence

treasury securities

government agency securities

Commercial papers

9 unchanged sentences

treasury securities

Corporate debt securities

government agency securities

2 unchanged sentences

There were no transfers in

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

or out of Level 3 during the three and nine months ended September 30, 2025.

December 31, 2024

19 unchanged sentences

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

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

(in thousands):

September 30, 2025

Amortized Cost

4 unchanged sentences

treasury securities

government agency securities

Commercial papers

9 unchanged sentences

treasury securities

Corporate debt securities

government agency securities

25 unchanged sentences

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

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

September 30, 2025

Less than 12 months

8 unchanged sentences

treasury securities

government agency securities

Commercial papers

Corporate debt securities

Marketable securities, long-term

treasury securities

Corporate debt securities

government agency securities

December 31, 2024

1 unchanged sentence

12 months or longer

Unrealized Losses

Cash equivalents

16 unchanged sentences

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 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.

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

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

The following table summarizes

the contractual maturities of the Company’s marketable securities at estimated fair value (in thousands):

September 30,

Due in one year or less

3 unchanged sentences

and other current liabilities (in thousands):

September 30,

Accrued research and development

31 unchanged sentences

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,

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

(inception) to September 30, 2024, the Company recognized interest expenses related to the Convertible Note of $ 0.5 million and $ 1.5 million,

respectively, which included non-cash interest expense related to the amortization of debt issuance.

As of December 31, 2024 and September

30, 2025, the Convertible Note was not outstanding.

8 unchanged sentences

for 680,000 shares of Company Common Stock at an exercise price of $ 0.001 per share.

In September 2025, in connection

with the 2025 PIPE Financing, the Company issued and sold 1,066,666 pre-funded warrants, at a purchase price of $ 14.999 per warrant, exercisable

for 1,066,666 shares of Company Common Stock at an exercise price of $ 0.001 per share.

The pre-funded warrants were

1 unchanged sentence

Collectively, 7,268,873

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

and 6,202,207 pre-funded warrants were outstanding as of September 30, 2025 and December 31, 2024, respectively.

Employee Warrants

7 unchanged sentences

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.

3,054,358 warrants were outstanding as of September 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, at a purchase price of approximately $ 0.15 per share, for aggregate gross proceeds of $ 3.0 million.

Pre-Merger Oruka incurred less

than $ 0.1 million of issuance costs in connection with this transaction.

Upon the issuance of the Pre-Merger Oruka Series A

Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities as described below and determined

that such features did not require the Company to separately account for these features.

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 than $ 0.1 million

of issuance costs in connection with this transaction.

Upon the issuance of the Pre-Merger Oruka Series A Preferred Stock, the Company

assessed the embedded conversion and liquidation features of the securities as described below and determined that such features did not

require the Company to separately account for these features.

In August 2024, upon Closing,

5 unchanged sentences

shares of Company Common Stock.

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

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

As of September 30, 2025, Company Series B Preferred

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

June 30, 2025

September 30, 2025

Stock Issuable

11 unchanged sentences

consideration by the holder.

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 .

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

common stock at a ratio of approximately 83.3332:1 .

Paruka Warrant

4 unchanged sentences

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

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”)

As of September 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 Obligation.

As of September 30, 2025,

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

As of September 30, 2025, 48,384,150

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 June 30, 2025 and December 31, 2024, the

Company had common stock reserved for future issuance as follows:

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

the Company had common stock reserved for future issuance as follows:

September 30,

Shares issuable on conversion of Company Series B Preferred Stock

15 unchanged sentences

with vesting terms less than four years.

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.

As of September 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

2024 Stock Incentive Plan

6 unchanged sentences

pursuant to the evergreen provision.

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

were subject to outstanding options.

As of September 30, 2025,

7,388,434 shares were reserved for issuance under the 2024 Stock Plan, of which 4,753,067 shares were available for future grant and 2,635,367

shares were subject to outstanding options.

2024 Employee Stock Purchase Plan

9 unchanged sentences

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.

The Company issued nil and 10,235 shares during the three and nine

months ended September 30, 2025, respectively, out of the ESPP, and as of September 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.

nine months ended September 30, 2025, the three months ended September 30, 2024, and the period from February 6, 2024

(inception) to September 30, 2024, 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 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,

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

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

September 30,

2025 Three Months

September 30,

2024 Nine Months

September 30,

2025 Period from

(inception) to

September 30,

Expected term (in years) 6.1 6.1 6.0 6.1

4 unchanged sentences

The following table summarizes

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

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

Outstanding Weighted

5 unchanged sentences

Canceled/forfeited ( 32,000 ) $ 10.91

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

Balance as of September 30, 2025 3,814,560 $ 11.90 9.1 $ 30,938

Vested and expected to vest, September 30, 2025 3,814,560 $ 11.90 9.1 $ 30,938

Exercisable, September 30, 2025 730,123 $ 8.99 8.8 $ 7,689

The weighted average grant-date

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

Aggregate intrinsic value

represents the difference between the estimated fair value of the underlying Company Common Stock and the exercise price of outstanding,

fair value per share of stock options granted during the nine months ended September 30, 2025 was $ 9.66 per share.

Aggregate intrinsic

value represents the difference between the estimated fair value of the underlying Company Common Stock and the exercise price of outstanding,

in-the-money employee stock options.

Restricted Stock Awards

In February 2024 and March 2024,

the Company issued 2,207,553 shares of RSAs to certain employees, directors, and consultants at a price of $ 0.0001 per share, the then

par value of Pre-Merger Oruka Common Stock.

Such RSAs have service-based vesting conditions only and vest over a four-year period, during

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

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.

In February 2024 and

March 2024, the Company issued 2,207,553 shares of RSAs to certain employees, directors, and consultants at a price of $ 0.0001

per share, the then par value of Pre-Merger Oruka Common Stock.

Such RSAs have service-based vesting conditions only and vest over a

four-year period, during which time all unvested shares are subject to forfeiture in the event the holder’s service with the

Company voluntarily or involuntarily terminates.

137,972 and 852,515 RSAs vested during the three and nine months ended September

30, 2025, respectively.

For each of the three and nine months ended September 30, 2025, the three months ended September 30, 2024,

and the period from February 6, 2024 (inception) to September 30, 2024, stock-based compensation expense related to RSAs was less

than $ 0.1 million.

The following table summarizes

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

Number of RSAs

the RSA activity for the nine months ended September 30, 2025:

Weighted Average

Unvested balance as of December 31, 2024

Unvested balance as of June 30, 2025

Unvested balance as of September 30, 2025

Option Agreements and Paruka Warrant Obligation

16 unchanged sentences

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

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

September 30, 2024, $ 7.7 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 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

As of September 30, 2025,

the estimated fair value of the warrant to be granted on December 31, 2025 was $ 12.9 million.

For the three and nine months ended September

30, 2025, $ 6.6 million and $ 9.7 million, respectively, was recognized as stock-based compensation expense related to the December 31,

2025 Paruka Warrant Obligation.

As of September 30, 2025, there was $ 3.2 million in unamortized expense related to the December 31, 2025

Paruka Warrant Obligation.

Employee Warrants

6 unchanged sentences

the performance-based requirements had been achieved.

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

During the three and nine months ended September 30, 2025, no employee warrants

were granted.

The following table summarizes

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

the employee warrant activity during the nine months ended September 30, 2025:

Outstanding Weighted

4 unchanged sentences

Canceled/forfeited —

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

Balance as of September 30, 2025 3,054,358 $ 7.80 8.8 $ 34,911

Vested and expected to vest, September 30, 2025 3,054,358 $ 7.80 8.8 $ 34,911

Exercisable, September 30, 2025 1,050,013 $ 7.80 8.8 $ 12,002

Stock-Based Compensation Expense

2 unchanged sentences

comprehensive loss (in thousands):

Six Months Ended

September 30,

(inception) to

September 30,

Research and development

General and administrative

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 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 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

As of September 30, 2025,

total unrecognized compensation cost related to the unvested stock options was $ 28.0 million, which is expected to be recognized over

a weighted average period of approximately 3.1 years.

As of September 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 2.4 years.

As of September 30, 2025,

the unrecognized compensation cost related to the employee warrants was $ 12.3 million, which is expected to be recognized over a weighted

average period of 2.6 years.

2 unchanged sentences

loss (in thousands):

Six Months Ended

September 30,

(inception) to

September 30,

Paruka Warrant Obligation

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equipment, net.

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

As of September 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

September 30,

Ended September 30,

Nine Months Ended

September 30,

(inception) to

September 30,

Research and development personnel-related (excluding stock-based compensation)

29 unchanged sentences

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.

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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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.

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.

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

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 September 30, 2025, the Company has incurred and expensed

milestone payments of $ 7.0 million and $ 4.0 million in connection with the ORKA-001 License Agreement and the ORKA-002 License Agreement,

respectively.

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 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.

Agreements, for each of the three and nine months ended September 30, 2025, the Company’s share of research and development

expenses for the ORKA-001 program were nil .

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

(inception) to September 30, 2024, the Company’s share of research and development expenses, including the research

initiation fee, incurred for the ORKA-001 program were $ 0.8 million and $ 14.0 million, respectively.

The Company recognized a

milestone payment of $ 3.0 million related to completing the first dosing of a human patient in a Phase 2 trial milestone during the

three and nine months ended September 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.

As of September 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 nine months ended September 30, 2025, the Company’s share of research and development

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

For the three months ended September 30, 2024, and the

period from February 6, 2024 (inception) to September 30, 2024, the Company’s share of research and development expense,

including the research initiation fee, incurred for the ORKA-002 program were $ 3.8 million and $ 10.7 million, respectively.

Company recognized a milestone payment of nil and $ 2.5 million related to completing the first dosing of a human subject in a Phase

1 trial milestone during the three and nine months ended September 30, 2025, respectively.

These costs were recorded as research and development

As of September 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 nine months

ended September 30, 2025, the Company recognized $ 9.6 million and $ 15.3 million, respectively, of expenses in connection with services

provided by Paragon and Paruka under the Option Agreements.

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

2024 (inception) to September 30, 2024, the Company recognized $ 13.4 million and $ 33.8 million, respectively.

The Company expenses the

25 unchanged sentences

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.

For the three and nine months

ended September 30, 2025, the Company recorded operating and variable lease expenses of $ 0.2 million and $ 0.6 million, respectively, in

general and administrative expenses in its condensed consolidated statement of operations and comprehensive loss.

For the three months

ended September 30, 2024 and the period from February 6, 2024 (inception) to September 30, 2024, the Company recorded operating and variable

lease expenses of $ 0.1 million and $ 0.2 million, respectively, in general and administrative expenses in its condensed consolidated statement

of operations and comprehensive loss.

The following table presents

the Company’s supplemental cash flow information related to leases (in thousands):

Nine Months Ended

Cash paid for amounts included in the measurement of lease liabilities

The following table summarizes a maturity analysis

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

The following table

summarizes a maturity analysis of the Company’s net operating lease liabilities showing the aggregate lease payments as of

September 30, 2025 (in thousands):

Year ending December 31,

2025 (remainder of the year)

2025 (net of leasehold incentives receivable) (remainder of the

Total undiscounted lease payments

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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

Three Months Ended September 30, 2025

Three Months Ended September 30, 2024

Loss Allocation

Company Series A Preferred Stock (1)

$ ( 1,461.10 )

Company Series B Preferred Stock (2)

(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

(1) The weighted-average number of shares of as-converted Company Series A Preferred Stock used in the loss allocation was nil and 477,196 for the three months ended September 30, 2025 and September 30, 2024, respectively.

(2) The weighted-average number of shares of as-converted Company Series B Preferred Stock used in the loss allocation was 11,428,129 and 4,099,227 for the three months ended September 30, 2025 and September 30, 2024, respectively.

Nine Months Ended September 30, 2025

February 6, 2024 (inception) to

June 30, 2024

September 30, 2024

Loss Allocation

Company Series A Preferred Stock (1)

$ ( 6,077.25 )

Company Series B Preferred Stock (2)

(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.

(1) The weighted-average number of shares of as-converted Company Series A Preferred Stock used in the loss allocation was nil and 184,462 for the nine months ended September 30, 2025 and the period from February 6, 2024 (inception) to September 30, 2024, respectively.

(2) The weighted-average number of shares of as-converted Company Series B Preferred Stock used in the loss allocation was 11,428,129 and 1,584,575 for the nine months ended September 30, 2025 and the period from February 6, 2024 (inception) to September 30, 2024, respectively.

For the computation of basic

6 unchanged sentences

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

Six Months Ended

September 30,

February 6, 2024

(Inception) to June 30,

Outstanding convertible preferred stock (as converted to common stock)

(inception) to September 30,

Outstanding employee warrants to purchase common stock

5 unchanged sentences

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 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.

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

of related party accounts payable and other current liabilities (in thousands):

September 30,

Paragon reimbursable Option Agreements’ fees

2 unchanged sentences

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.

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 evaluated the income tax effects of the Act and determined that the provisions did not have a material impact on its 2025

consolidated financial statements.

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