What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-11 · 253 added, 228 removed, 348 unchanged (58% 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 June

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

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 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.

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 Financings (as defined and further described 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 and nine months ended September 30, 2025, we generated net losses of $30.3 million and $75.9 million, respectively, and for

the nine months ended September 30, 2025, we used net cash of $65.6 million for our operating activities.

We had cash, cash equivalents,

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

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

will be sufficient to fund our operating plans for at least twelve months from the date of filing of this Quarterly Report.

to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development,

approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure.

ORKA-001 is a high affinity,

extended half-life monoclonal antibody (“mAb”) designed to target IL-23p19.

IL-23 is a pro-inflammatory cytokine that plays

a critical role in the proliferation and development of T helper 17 (“Th17”) cells, which are the primary drivers of several

autoimmune and inflammatory disorders, including PsO.

and marketable securities of $500.9 million as of September 30, 2025.

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

securities will be sufficient to fund our operating plans for at least twelve months from the date of filing of this Quarterly Report.

We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful

development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost

Our Portfolio and Development Plans

ORKA-001 is a high affinity, extended half-life monoclonal antibody

(“mAb”) designed to target IL-23p19.

IL-23 is a pro-inflammatory cytokine that plays a critical role in the proliferation

and development of T helper 17 (“Th17”) cells, which are the primary drivers of several autoimmune and inflammatory disorders,

including PsO.

IL-23 is composed of two subunits:

a p40 subunit that is shared with IL-12

and a p19 subunit that is specific to IL-23.

First-generation IL-23 antibodies bound p40 and inhibited both IL-12 and IL-23 signaling,

while more recent IL-23 antibodies targeting the p19 subunit have shown improved efficacy and safety.

Based on preclinical evidence, we

believe that ORKA-001 could achieve higher response rates than established therapies in PsO while requiring less frequent dosing and maintaining

the favorable safety profile of therapies targeting IL-23p19.

a p40 subunit that is shared with IL-12 and a p19 subunit that is specific to IL-23.

First-generation IL-23 antibodies bound p40 and inhibited both IL-12 and IL-23 signaling, while more recent IL-23 antibodies targeting

the p19 subunit have shown improved efficacy and safety.

Based on clinical evidence, we believe that ORKA-001 could achieve higher response

rates than established therapies in PsO while requiring less frequent dosing and maintaining the favorable safety profile of therapies

targeting IL-23p19.

ORKA-001 is engineered with

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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, 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 the FDA review, and this timeline could

We initiated a Phase 1 trial

of ORKA-001 in the fourth quarter of 2024 and in September 2025, we announced the interim results at the European Academy of Dermatology

and Venereology (EADV) Congress.

ORKA-001 showed a half-life of approximately 100 days.

Single doses of ORKA-001 demonstrated complete

and sustained inhibition of STAT3 signaling, a downstream marker of IL-23 activity, in an ex vivo assay through 24 weeks (the longest

follow-up available).

ORKA-001 was well tolerated at all dose levels, with a favorable safety profile consistent with the anti-IL-23 class.

The trial remains blinded, and as of August 6, 2025, which was the data cutoff date, all subjects remained on trial.

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 (also known as “EVERLAST-A”).

We expect to share efficacy and response duration data from this study in the second half of 2026.

EVERLAST-A is expected to enroll approximately

80 patients randomized 3:1 to receive 600 mg of ORKA-001 at Weeks 0 and 4 or matching placebo.

The primary endpoint is PASI 100 at Week

At Week 28, patients who have achieved PASI 100 will be randomized 2:1 to an arm where either (1) they do not receive another dose

until disease recurrence (to evaluate the possibility of both yearly dosing and extended off-treatment remissions) or (2) they receive

300 mg ORKA-001 every six months.

Additionally, in the third

quarter of 2025, we announced our plans to initiate a dose-ranging Phase 2b trial of ORKA-001 in moderate-to-severe PsO patients (also

known as “EVERLAST-B”) in the first half of 2026.

EVERLAST-B will evaluate three dose levels of ORKA-001:

37.5 mg at Week

0, 300 mg at Weeks 0 and 4, and 600 mg at Weeks 0 and 4, versus placebo.

The primary endpoint will be PASI 100 at Week 16.

To expedite development,

EVERLAST-B dosing is projected to begin enrolling before the completion of EVERLAST-A.

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 the FDA review, and this timeline could vary.

ORKA-002 is a high affinity,

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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

suppurativa (“HS”) 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 and plan to initiate a

Phase 2 clinical trial of ORKA-002 in the first half of 2026.

We expect to share interim data from the Phase 1 trial of ORKA-002, including

initial pharmacokinetic data, around year end 2025.

The Company is also planning for a Phase 2 trial in HS.

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.

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.

Additional Pipeline Program

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may create combination opportunities with our more advanced programs.

Recent Developments

Acquisition of Pre-Merger Oruka

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(“Pre-Merger Oruka”),

a pre-clinical stage biotechnology company that was incorporated on February 6, 2024 under the direction of Peter Harwin, a Managing Member

of Fairmount Funds Management LLC, for the purposes of holding rights to certain intellectual property being developed by Paragon Therapeutics,

On August 29, 2024, we changed our name from “ARCA biopharma, Inc.” to “Oruka Therapeutics,

Inc.” and our Nasdaq ticker symbol from “ABIO” to “ORKA”.

Following consummation of the Merger, we 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”).

The Company Common Stock commenced trading on a post-Reverse Stock Split, post-Merger basis at the

opening of trading on September 3, 2024.

a pre-clinical stage biotechnology company that was incorporated on February 6, 2024 for the purposes of holding rights to certain intellectual

property being developed by Paragon Therapeutics, Inc.

On August 29, 2024, we changed our name from “ARCA

biopharma, Inc.” to “Oruka Therapeutics, Inc.” and our Nasdaq ticker symbol from “ABIO” to “ORKA”.

Following consummation of the Merger, we 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”).

The Company Common Stock commenced trading on

a post-Reverse Stock Split, post-Merger basis at the opening of trading on September 3, 2024.

Pre-Closing Financing and Closing

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

PIPE Financing

PIPE Financings

On September 11, 2024, we

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

accredited investors.

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

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$11.9 million).

On September 17, 2025, we

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

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).

Option Agreements and License Agreements – Paragon Therapeutics

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Pursuant to the License Agreements,

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.

as of September 30, 2025, we have incurred and expensed milestone payments of $7.0 million and $4.0 million for ORKA-001 and ORKA-002,

respectively.

Components of Results of Operations

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Results of Operations

Comparison of the Three Months Ended June

Comparison of the Three Months Ended September

30, 2025 and 2024

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

September 30,

Operating expenses

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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

Includes related party amounts of $9,595 and $13,537 for the three months ended September 30, 2025 and September 30, 2024, respectively

Includes related party amounts of $8 and $71 for the three months ended September 30, 2025 and September 30, 2024, respectively

Includes related party amounts of nil and $504 for the three months ended September 30, 2025 and September 30, 2024, respectively

Research and Development Expenses

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development expenses for the periods presented (in thousands):

September 30,

External research and development expenses

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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.

expenses increased by $3.3 million, from $25.7 million for the three months ended September 30, 2024 to $29.0 million for the three

months ended September 30, 2025.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses decreased by $0.3 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

$15.9 million for the three months ended September 30, 2024 to $15.6 million for the three months ended September 30, 2025.

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 $2.5 million, from $1.3 million for the three months ended September 30, 2024 to $3.8 million for the three months ended

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

Stock-based compensation expense increased

by $0.6 million, from $7.8 million for the three months ended September 30, 2024 to $8.3 million for the three months ended September

The increase in stock-based compensation expense is primarily related to a $1.3 million increase in employee awards, partially

offset by a $0.7 million decrease in Paruka warrant liability under the Option Agreements.

Other research and development expenses increased

by $0.6 million, from $0.7 million for the three months ended September 30, 2024 to $1.3 million for the three months ended September

30, 2025, primarily due to increases to facilities and allocated overhead expenses as we commenced using our leased Waltham office from

April 2025, as well as an increase in our research and development employee count.

General and Administrative Expenses

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administrative expenses for the periods presented (in thousands):

September 30,

Personnel-related (including stock-based compensation)

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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.

expenses increased by $1.4 million, from $3.8 million for the three months ended September 30, 2024 to $5.1 million for the three months

ended September 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.

increased by $1.3 million, from $2.4 million for the three months ended September 30, 2024 to $3.8 million for the three months

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

Stock-based compensation expense

increased by $0.6 million, from $1.2 million for the three months ended September 30, 2024 to $1.8 million for three months ended September

Expenses related to professional and consulting services increased

by $0.5 million, from $0.8 million for the three months ended September 30, 2024 to $1.3 million for the three months

ended September 30, 2025, due to higher spending on accounting, audit, and legal fees.

Other general and administrative

expenses decreased by $0.5 million primarily due to facilities and allocated overhead expenses being allocated to research and development

expenses as a result of the increase in our research and development 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.

Interest income from cash equivalents and marketable

securities was $3.8 million for the three months ended September 30, 2025.

Interest income from money market funds was $1.3 million for

the three months ended September 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

during the three months ended September 30, 2025.

Interest expense of $0.5 million was incurred for the three months ended September 30,

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

Comparison of the Nine Months Ended September

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

The following table summarizes our results of

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

September 30,

(inception) to

September 30,

Operating expenses

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Percentage not meaningful

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

Includes related party amounts of $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

Includes related party amounts of $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

Includes related party amounts of 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

Research and Development Expenses

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development expenses for the periods presented (in thousands):

September 30,

(inception) to

September 30,

External research and development expenses

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Research and development

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.

expenses increased by $23.4 million, from $49.6 million for the period from February 6, 2024 (inception) to September 30, 2024 to $73.0 million

for the nine months ended September 30, 2025.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses increased by $7.7 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.

$37.9 million for the period from February 6, 2024 (inception) to September 30, 2024 to $45.6 million for the nine months ended September

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 $7.2 million, from $2.4 million for the period from February 6, 2024 (inception) to September 30, 2024 to $9.5 million for

the nine months ended September 30, 2025, as we continue hiring employees in our research and development organization.

Stock-based compensation

expense increased by $6.4 million, from $8.3 million for the period from February 6, 2024 (inception) to September 30, 2024 to $14.7 million

for the nine months ended September 30, 2025.

Stock-based compensation expense increased by $4.4 million due to the increase in employee

awards and $2.0 million due to an increase in Paruka warrant liability under the Option Agreements.

Other research and development expenses

increased by $2.2 million, from $0.9 million for the period from February 6, 2024 (inception) to September 30, 2024 to $3.1 million for

the nine months ended September 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 increase in our research and development employee

General and Administrative Expenses

1 unchanged sentence

administrative expenses for the periods presented (in thousands):

September 30,

(inception) to

September 30,

Personnel-related (including stock-based compensation)

1 unchanged sentence

Total general and administrative expenses

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.

General and administrative

expenses increased by $6.4 million, from $8.2 million for the period from February 6, 2024 (inception) to September 30, 2024 to $14.6

million for the nine months ended September 30, 2025.

Personnel-related expenses

increased by $6.2 million, from $4.6 million for the period from February 6, 2024 (inception) to September 30, 2024 to $10.8 million

for the nine months ended September 30, 2025, as a result of continued hiring of executives and administrative employees.

compensation expense was $1.5 million and $5.4 million for the period from February 6, 2024 (inception) to September 30, 2024 and for

the nine months ended September 30, 2025, respectively.

Expenses related to professional and consulting services increased

by $0.5 million, from $2.9 million for the period from February 6, 2024 (inception) to September 30, 2024 compared to $3.4 million

for the nine months ended September 30, 2025, due to higher spending on accounting, audit, and legal fees.

Other general and administrative

expenses decreased by $0.3 million primarily due to facilities and allocated overhead expenses being allocated to research and development

expenses as a result of the increase in our research and development employee count.

Total Other Income (Expense), Net

Interest income from cash

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.

equivalents and marketable securities was $11.8 million for the nine months ended September 30, 2025.

Interest income from money market

funds was $1.3 million for the period from February 6, 2024 (inception) to September 30, 2024.

No interest expense was recorded

during the six months ended June 30, 2025.

during the nine months ended September 30, 2025.

Interest expense was $1.5 million for the period from February 6, 2024 (inception)

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

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

Liquidity and Capital Resources

As of June 30, 2025, we had

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

As of September 30, 2025,

we had $500.9 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 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.

In March 2024, we received $2.9 million in net proceeds from the issuance

of Pre-Merger Oruka Series A Preferred Stock and $25.0 million in gross proceeds from the issuance of the Convertible Note,

both of which were related party transactions.

In August 2024, we raised approximately $228.0 million in net proceeds from Pre-Closing

Financing and received $4.9 million in cash from ARCA upon consummation of the Merger.

In September 2024, we received approximately $188.7

million in net proceeds from the issuance of common stock, Company Series A Preferred Stock, and pre-funded warrants in connection with

the PIPE Financing.

Through September 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.

In October 2025, we entered into a Sales Agreement with TD Securities

(USA) LLC (the “Sales Agreement”), as its sales agent, pursuant to which we may issue and sell, from time to time, shares

of Company Common Stock for aggregate gross proceeds of up to $200.0 million under an at-the-market equity offering program.

obligated to make any sales of shares under the Sales Agreement.

Our primary use of cash is

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

Six Months Ended

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

September 30,

Period from February 6, 2024 (inception) to September 30,

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in investing activities

Net cash provided by financing activities

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Operating Activities

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 $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.

For the nine months

ended September 30, 2025, net cash used in operating activities was $65.6 million, which was primarily attributable to a net loss of

$75.9 million and net cash used by changes in our operating assets and liabilities of $5.9 million, partially offset by net non-cash

charges of $16.2 million.

Net cash used by changes in our operating assets and liabilities were primarily comprised of a decrease of

$6.0 million in related party accounts payable and other current liabilities, an increase of $3.2 million in prepaid expenses and other current assets,

partly offset by an increase of $5.0 million in accrued expenses and

other current liabilities.

Net non-cash charges

primarily comprised of $20.1 million in stock-based compensation expense (includes $9.7 million from Paruka Warrant Obligation), partially offset by $4.3 million in net

accretion of premiums and discounts on marketable securities.

From February 6, 2024 (inception) to September 30,

2024, net cash used in operating activities was $39.0 million, which was primarily attributable to a net loss of $57.9 million, offset

by non-cash charges of $11.3 million and net cash provided by changes in operating activities of $7.6 million.

Non-cash charges primarily

consisted of a $9.8 million increase in stock-based compensation expense (primarily from the Paruka Warrant Obligation) and $1.5 million

of non-cash interest expense.

Net cash provided by changes in our operating activities primarily consisted of a $1.6 million increase

in accounts payable, $1.7 million increase in accrued expenses and other current liabilities, $6.4 million increase in related parties

accounts payable and other current liabilities, partially offset by a $2.0 million increase in prepaid expenses and other current assets.

Investing Activities

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.

For the nine months ended September 30, 2025, net cash used in investing

activities was $74.7 million, which included $420.0 million in purchases of marketable securities, $0.1 million in purchases of property

and equipment, partially offset by $345.4 million in proceeds from maturities of marketable securities.

From February 6, 2024

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

(inception) to September 30, 2024, net cash used in investing activities was $0.2 million, which was attributable to purchases of

property and equipment.

Financing Activities

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.

For the nine months ended

September 30, 2025, net cash provided by financing activities was $170.0 million due to $169.9 million of net proceeds from the 2025 PIPE

Financing and $0.1 million 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 September 30, 2024,

net cash provided by financing activities was $450.1 million, consisting of $228.1 million of net proceeds from the Pre-Closing Financing,

$189.1 million of net proceeds from the 2024 PIPE Financing, $25.0 million of net proceeds from the issuance of the Convertible Note,

$4.9 million of cash acquired in connection with the reverse recapitalization, and $2.9 million of net proceeds from the issuance

of Series B Preferred Stock

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 June 30, 2025.

any such contract terminations and did not have any non-cancellable obligations under these agreements as of September 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 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.

During the three months ended September 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

Off-Balance Sheet Arrangements

As of June 30, 2025, we did

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

As of September 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

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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