What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-06 · 729 added, 669 removed, 34 unchanged (98% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

should read the following discussion and analysis of our financial condition and results of operations together with our consolidated

financial statements and the related notes included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2024

(this “Annual Report”).

This discussion contains forward-looking statements that involve risks and uncertainties, such as

statements regarding our plans, objectives, expectations, intentions, hopes, beliefs, strategies or projections regarding the future

of its pipeline and business and words such as “may,” “will,”, “should,” “could,” “would,”

“expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,”

“potential,” “seek,” “target,” “goal,” “intend” and variations of such words

and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying

assumptions, and similar expressions are intended to identify forward-looking statements.

You should not place undue reliance on these

forward-looking statements.

These forward-looking statements are based on current expectations and beliefs concerning future developments

and their potential effects.

There can be no assurance that future developments affecting us will be those that have been anticipated.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions

that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Annual

Report entitled “Risk Factors” and elsewhere in this Annual Report.

These and many other factors could affect our future

financial and operating results.

We undertake no obligation to update any forward-looking statement to reflect events after the date

of this Annual Report.

As used in this Annual Report, unless the context suggests otherwise, “we,” “us,” “our,”

“the Company,” “Oruka Therapeutics, Inc.,” “Oruka,” “ARCA biopharma, Inc.,” “ARCA,”

refers to Oruka Therapeutics, Inc.

and its consolidated subsidiaries, including Oruka Therapeutics Operating Company LLC, taken as a

are a clinical-stage biotechnology company focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”)

and other inflammatory and immunology (“I&I”) indications.

Our name is derived from or , for “skin,”

and arukah , for “restoration,” and reflects our mission to deliver therapies for chronic skin diseases that provide

patients the most possible freedom from their condition.

Our strategy is to apply antibody engineering and format innovations to validated

modes of action, which we believe will enable us to improve meaningfully upon the efficacy and dosing regimens of standard-of-care medicines

while significantly reducing technical and biological risk.

Our programs aim to treat and potentially modify disease by targeting mechanisms

with proven efficacy and safety involved in disease pathology and the activity of pathogenic tissue-resident memory T cells (“TRMs”).

lead program, ORKA-001, is designed to target the p19 subunit of interleukin-23 (“IL-23p19”) for the treatment of PsO.

co-lead program, ORKA-002, is designed to target interleukin-17A and interleukin-17F (“IL-17A/F”) for the treatment of PsO,

psoriatic arthritis (“PsA”), and other conditions.

These programs each bind their respective targets at high affinity and

incorporate half-life extension technology with the aim to increase exposure and decrease dosing frequency.

We believe that our focused

strategy, differentiated portfolio, and deep expertise position us to set a new treatment standard in large I&I markets with

continued unmet need.

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

company, business and scientific planning, conducting discovery and research activities, establishing arrangements with third parties

for the manufacture of our programs and component materials, and providing general and administrative support for these operations.

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

To date, we have funded our operations

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

the proceeds from the reverse recapitalization and merger with ARCA biopharma, Inc., our Pre-Closing Financing and subsequent PIPE Financing

(as defined and further described in “Recent developments” below).

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.

We generated net losses of $83.7 million for the period from February 6, 2024 (inception) to December 31, 2024.

For the period from February 6 (inception) to December 31, 2024, we have used net cash of $57.8 million for our operating activities.

had cash, cash equivalents, and marketable securities of $393.7 million as of December 31, 2024.

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 Annual 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 structure.

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.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

You should read the following

discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the

related notes included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2025 (this “Annual Report”).

This discussion contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives,

expectations, intentions, hopes, beliefs, strategies or projections regarding the future of its pipeline and business and words such as

“may,” “will,”, “should,” “could,” “would,” “expect,” “plan,”

“anticipate,” “believe,” “estimate,” “project,” “potential,” “seek,”

“target,” “goal,” “intend” and variations of such words and any statements that refer to projections,

forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and similar expressions

are intended to identify forward-looking statements.

You should not place undue reliance on these forward-looking statements.

These forward-looking

statements are based on current expectations and beliefs concerning future developments and their potential effects.

There can be no assurance

that future developments affecting us will be those that have been anticipated.

These forward-looking statements involve a number of risks,

uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially

different from those expressed or implied by these forward-looking statements.

Factors that could cause or contribute to such differences

include, but are not limited to, those discussed in the section of this Annual Report entitled “Risk Factors” and elsewhere

in this Annual Report.

These and many other factors could affect our future financial and operating results.

We undertake no obligation

to update any forward-looking statement to reflect events after the date of this Annual Report.

As used in this Annual Report, unless

the context suggests otherwise, “we,” “us,” “our,” “the Company,” “Oruka Therapeutics,

Inc.,” “Oruka,” “ARCA biopharma, Inc.,” “ARCA,” refers to Oruka Therapeutics, Inc.

and its consolidated

subsidiary, Oruka Therapeutics Operating Company LLC, taken as a whole.

We are a clinical-stage biopharmaceutical

company focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”) and other inflammatory and immunology

(“I&I”) indications.

Our name is derived from or , for “skin,” and arukah , for “restoration,” and

reflects our mission to deliver therapies for chronic skin diseases that provide patients the most possible freedom from their condition.

Our strategy is to apply antibody engineering and format innovations to validated modes of action, which we believe will enable us to

improve meaningfully upon the efficacy and dosing regimens of standard-of-care medicines while significantly reducing technical and biological

Our programs aim to treat and potentially modify disease by targeting mechanisms with proven efficacy and safety involved in disease

pathology and the activity of pathogenic tissue-resident memory T cells (“TRMs”).

Our lead program, ORKA-001, is designed to target the p19 subunit of

interleukin-23 (“IL-23p19”) for the treatment of PsO.

Our co-lead program, ORKA-002, is designed to target interleukin-17A

and interleukin-17F (“IL-17A/F”) for the treatment of PsO, hidradenitis suppurativa (“HS”), psoriatic arthritis

(“PsA”), and other conditions.

These programs each bind their respective targets at high affinity and incorporate half-life

extension technology with the aim to increase exposure and decrease dosing frequency.

We believe that our focused strategy, differentiated

portfolio, and deep 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 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.

As of December 31, 2025, we had an accumulated deficit

of $189.2 million.

For the year ended December 31, 2025, we had net losses of $105.4 million, and we used net cash of $88.2 million for

our operating activities.

We had cash, cash equivalents, and marketable securities of $479.6

million as of December 31, 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 the filing of this Annual 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 structure.

Our Portfolio and Development

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.

is engineered with YTE half-life extension technology, a specific three amino acid change in the fragment crystallizable (“Fc”)

domain to modify the pH-dependent binding to the neonatal Fc receptor.

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

a subcutaneous (“SQ”) injection as infrequently as once or twice a year.

In addition, emerging evidence suggests that IL-23

blockade can modify the disease biology of PsO, possibly leading to durable remissions and preventing the development of PsA.

believe that the expected characteristics of ORKA-001 increase its potential to deliver these disease-modifying benefits.

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

We expect to share interim data

from the first-in-human trial in healthy volunteers, including initial pharmacokinetic data, in the second half of 2025 and initial efficacy

data in PsO patients in the second half of 2026.

Based on recent precedent for PsO, we anticipate that the entire development program

from first-in-human to biologics license application (“BLA”) filing could take as little as six to seven years based

on the averages for recently approved medicines.

However, we have no control over the length of time needed for United States Food and

Drug Administration (“FDA”) review, and this timeline could vary.

is a high affinity, extended half-life mAb designed to target IL-17A and IL-17F (“IL-17A/F”).

IL-17 inhibition has become

central to the treatment of psoriatic diseases, including PsO and PsA, and has also shown efficacy in other I&I indications,

such as hidradenitis suppurativa and axial spondyloarthritis.

More recently, the importance of inhibiting the IL-17F isoform along

with IL-17A has become appreciated, and dual blockade with the recently approved therapy Bimzelx (bimekizumab) has led to higher response

rates in patients than blockade of IL-17A alone.

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

ranges as bimekizumab, but incorporates half-life extension technology that could enable more convenient dosing intervals.

initiate the dosing of healthy volunteers in a Phase 1 trial of ORKA-002 in the third quarter of 2025.

We expect to share interim

data from the first-in-human trial in healthy volunteers, including initial pharmacokinetic data, in the first half of 2026.

view ORKA-002 and ORKA-001 as highly complementary.

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

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

However, for patients who also have

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

joint symptoms.

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

through treatment with an IL-23 inhibitor.

Furthermore, we have the potential opportunity to administer ORKA-002 and ORKA-001 sequentially,

called ORKA-021, to combine two features of each program:

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

of an IL-23 inhibitor.

We believe that ORKA-001 and ORKA-002 provide the potential to offer a highly compelling product profile for most

patients with PsO and/or PsA, as well as the opportunity to address additional I&I indications.

Pipeline Program

have a third mAb program, ORKA-003, designed to target an undisclosed pathway.

Our strategy as a company is to remain highly focused

on I&I diseases, and specifically on inflammatory dermatology conditions.

Our third program provides the potential for indication

expansion beyond PsO and may create combination opportunities with our more advanced programs.

of Pre-Merger Oruka

August 29, 2024 (the “Merger Closing”), we completed our acquisition (the “Merger”) of Oruka Therapeutics, Inc.

(“Pre-Merger Oruka”) pursuant to an Agreement and Plan of Merger and Reorganization, dated as of April 3, 2024 (the “Merger

Following the transactions contemplated by the Merger Agreement, Pre-Merger Oruka merged with and into Atlas Merger

Sub Corp., a wholly owned subsidiary of ARCA biopharma, Inc.

(“ARCA”) and following that, Pre-Merger Oruka then merged with

and into Atlas Merger Sub II, LLC (“Second Merger Sub”), with Second Merger Sub being the surviving entity.

Second Merger

Sub changed its corporate name to “Oruka Therapeutics Operating Company, LLC.” Pre-Merger Oruka was 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 (“Fairmount”), 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.” (“ARCA”)

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

prior to the execution and delivery of the Merger Agreement on April 3, 2024, certain new and existing investors of Pre-Merger Oruka

entered into a subscription agreement with Pre-Merger Oruka (the “Subscription Agreement”), pursuant to which, and on the

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

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

million (which includes $25.0 million of proceeds previously received from the issuance of the Convertible Note (refer to Note 7 in our

consolidated financial statements included in Part II – Item 8 of this Annual Report for additional details) and accrued interest

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

We incurred transaction

costs of $20.5 million, which was recorded as a reduction to additional paid-in capital in the consolidated financial statements.

the Closing, the shares of Pre-Merger Oruka Common Stock and Pre-Merger Oruka pre-funded warrants issued pursuant to the Subscription

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

Ratio (defined below).

accordance with an Exchange Ratio determined by terms of the Merger Agreement and upon the effective time of the First Merger (the “First

Effective Time”), (i) each then-issued and outstanding share of Pre-Merger Oruka Common Stock including outstanding and unvested

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

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

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

Merger, (ii) each share of Pre-Merger Oruka Series A convertible preferred stock, par value $0.0001 (“Pre-Merger Oruka Series A

Preferred Stock”), outstanding immediately prior to the First Effective Time was converted into the right to receive a number of

shares of ARCA Series B non-voting convertible preferred stock, par value $0.001 per share, which are convertible into shares of Company

Common Stock at a conversion ratio of approximately 83.3332:1 after the reverse stock split discussed below, (iii) each outstanding option

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

warrant to purchase shares of Pre-Merger Oruka Common Stock was converted into a warrant to purchase shares of Company Common Stock,

and (v) each share of Company Common Stock issued and outstanding at the First Effective Time remain issued and outstanding in accordance

with its terms and such shares.

Subsequent to the close of the merger, the common stock shares were then, subject to a reverse stock

split of 1-for-12 effected on September 3, 2024 (“Reverse Stock Split”).

part of the Pre-Closing Financing and the Closing, the investors in the Pre-Closing Financing received 22,784,139 shares of Company Common

Stock in exchange for 39,873,706 shares of Pre-Merger Oruka Common Stock (which includes the issuance of 2,722,207 shares of Company

Common Stock in exchange for 4,764,032 shares of Pre-Merger Oruka Common Stock on the conversion of Convertible Note along with the accrued

interest through the conversion date) and 5,522,207 Company pre-funded warrants in exchange for 9,664,208 Pre-Merger pre-funded warrants.

Merger was accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Pre-Merger Oruka

was deemed to be the accounting acquirer for financial reporting purposes.

This determination was primarily based on the fact that, immediately

following the Merger:

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

Pre-Merger Oruka’s largest stockholders retain the largest interest in the combined company;

(iii) Pre-Merger Oruka designated

a majority of the initial members of the board of directors of the combined company;

and (iv) Pre-Merger Oruka’s executive management

team became the management team of the combined company.

Accordingly, for accounting purposes:

(i) the Merger was treated as the equivalent

of Pre-Merger Oruka issuing stock to acquire the net assets of ARCA;

(ii) the reported historical operating results of the combined company

prior to the Merger are those of Pre-Merger Oruka;

and (iii) Pre-Merger Oruka was not a variable interest entity as it had sufficient

equity at risk in order to fund its next development milestones at the time of the reverse recapitalization.

Additional information regarding

the Merger is included in Note 3 to the consolidated financial statements included in Part II – Item 8 of this Annual Report.

September 3, 2024, we effected the Reverse Stock Split, a 1-for-12 reverse stock split of Company Common Stock.

The par value per share

and the number of authorized shares were not adjusted as a result of the Reverse Stock Split.

The shares of Company Common Stock underlying

outstanding stock options, common stock warrants and other equity instruments were proportionately reduced and the respective exercise

prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities.

All references

to common stock, options to purchase common stock, outstanding common stock warrants, common stock share data, per share data, and related

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 YTE half-life extension technology, a specific

three amino acid change in the fragment crystallizable (“Fc”) domain to modify the pH-dependent binding to the neonatal Fc

receptor (“FcRn”).

As a result, it has a pharmacokinetic profile designed to support a subcutaneous (“SQ”) injection

as infrequently as once or twice per year.

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

of PsO, possibly leading to durable remissions and preventing the development of PsA.

We believe that the expected characteristics of

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

We initiated a Phase 1 trial

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

Venereology (EADV) Congress.

The data showed that ORKA-001 has a human 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.

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

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 Week 16 data for all patients in the second quarter of 2026.

In addition, we plan

to share longer-term data, including Week 28 for all patients and 52-week follow-up for a portion of the cohort in the second half of

EVERLAST-A enrolled 84 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, a 100% reduction from baseline in the Psoriasis Area and Severity Index (“PASI”), at Week 16.

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

Additionally, the first patients were dosed in EVERLAST-B in December

EVERLAST-B is designed to enroll approximately 160 patients into a dose-ranging Phase 2b trial of ORKA-001 in patients with moderate-to-severe

PsO and 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 is PASI 100 at Week 16.

At Week 28, patients who have achieved PASI 100 will be re-randomized 1:1 to either a 600

mg dose once-yearly or placebo.

Patients who have not achieved PASI 100 at Week 28 will receive a 300 mg dose every six months.

on EVERLAST-A, this design will further test the potential for ORKA-001 to achieve yearly dosing, higher efficacy and extended off-treatment

Data from EVERLAST-B is anticipated in 2027.

on recent precedent in PsO, we anticipate that the overall development program, from first-in-human studies through biologics license

application (“BLA”) submission, could take as little as six to seven years, based on averages observed for recently approved

However, we have no control over the duration of the United States Food and Drug Administration (“FDA”) review

process, and the actual timeline may vary.

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

IL-17A and IL-17F (“IL-17A/F”).

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

and PsA, and has also shown efficacy in other I&I indications, such as HS and axial spondyloarthritis (“axSpA”).

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.

In January 2026, we

announced interim findings from the Phase 1 trial of ORKA-002 in healthy volunteers.

The results showed that ORKA-002 has a

half-life of approximately 75-80 days, which supports the potential for twice-yearly maintenance dosing in PsO and quarterly

maintenance dosing in HS.

Single doses of ORKA-002 demonstrated potent and sustained inhibition of IL-17 signaling in an ex vivo

assay through 24 weeks.

ORKA-002 was well tolerated at all dose levels, with a favorable safety profile consistent with

the anti-IL-17 class.

The trial remains blinded, and as of January 6, 2026, which was the data cutoff date, all subjects remained on trial.

Based on these Phase 1

results, we initiated ORCA-SURGE, a Phase 2 trial of ORKA-002 in patients with moderate-to-severe PsO, in February 2026.

is designed to enroll approximately 160 patients randomized 1:1:1:1 to receive 40 mg, 160 mg or 320 mg of ORKA-002 at Weeks 0 and 4,

or matching placebo.

The primary endpoint is PASI 100 at Week 16.

Maintenance dosing will evaluate the potential for twice-yearly

dosing with ORKA-002.

Data from ORCA-SURGE is anticipated in 2027.

Moreover, we also expect to initiate a Phase 2 trial of ORKA-002

in patients with HS in the second half of 2026.

Additional Pipeline Program

We have a third program, ORKA-003, designed to target an undisclosed

Our strategy as a company is to remain highly focused on I&I diseases, and specifically on inflammatory dermatology

Our third program provides the potential for indication expansion beyond PsO and may create combination opportunities with

our more advanced programs.

Acquisition of Pre-Merger Oruka

On August 29, 2024 (the “Closing”),

we completed the acquisition (the “Merger”) of the private company, Oruka Therapeutics, Inc.

(“Pre-Merger Oruka”),

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 our 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.

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 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.

September 11, 2024, we entered into a Securities Purchase Agreement for a private placement (the “PIPE Financing”) with certain

institutional and accredited investors.

Pre-Closing Financing and Closing

Immediately prior to the execution and delivery of the Merger Agreement,

certain new and existing investors of Pre-Merger Oruka entered into a subscription agreement with Pre-Merger Oruka (that was subsequently

amended and restated in July 2024, the “Subscription Agreement”), pursuant to which, and on the terms and subject to the conditions

of which, immediately prior to the Closing, those investors purchased shares of common stock of Pre-Merger Oruka (“Pre-Merger Oruka

Common Stock”) and Pre-Merger Oruka pre-funded warrants for gross proceeds of approximately $275.0 million (which includes $25.0

million of proceeds previously received from the issuance of the Convertible Note (as defined in Note 9 to the consolidated financial

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

We incurred transaction costs of $20.5 million which were recorded as a reduction to additional paid-in capital in the consolidated financial

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

Stock and Pre-Merger Oruka pre-funded warrants issued pursuant to the Subscription Agreement were converted into shares of Company Common

Stock and pre-funded warrants to purchase Company Common Stock in accordance with the Exchange Ratio (as defined below and determined

by the terms of the Merger Agreement).

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

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

Stock issued in connection with the Subscription Agreement) were converted into the right to receive a number of shares of Company Common

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

the same vesting provisions as those immediately prior to the Merger;

(ii) each share of Pre-Merger Oruka Series A convertible preferred

stock, par value $0.0001 (“Pre-Merger Oruka Series A Preferred Stock”) was converted into the right to receive a number of

shares of ARCA Series B non-voting convertible preferred stock, par value $0.001 per share (“Company Series B Preferred Stock”),

which are convertible into shares of Company Common Stock at a conversion ratio of approximately 83.3332:1 after the Reverse Stock Split,

(iii) each outstanding option to purchase Pre-Merger Oruka Common Stock was converted into an option to purchase shares of Company Common

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

shares of Company Common Stock.

The Merger was accounted

for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Pre-Merger Oruka was deemed to be the

accounting acquirer for financial reporting purposes.

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

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

(ii) Pre-Merger

Oruka’s largest stockholders retained the largest interest in the combined company;

(iii) Pre-Merger Oruka designated a majority

of the initial members of the board of directors of the combined company;

and (iv) Pre-Merger Oruka’s executive management team

became the management team of the combined company.

Accordingly, for accounting purposes:

(a) the Merger was treated as the equivalent

of Pre-Merger Oruka issuing stock to acquire the net assets of ARCA, and (b) the reported historical operating results of the combined

company prior to the Merger are those of Pre-Merger Oruka.

As part of the reverse recapitalization, the Company acquired a cash balance

of $4.94 million from ARCA.

Additional information

regarding the Merger is included in Note 3 to the consolidated financial statements included in Part II – Item 8 of this Annual

PIPE Financings

On September 11, 2024, we

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

to the Securities Purchase Agreement, the investors purchased an aggregate of 5,600,000 shares of Company Common Stock at a purchase

price of $23.00 per share, an aggregate of 2,439 shares of the Company’s Series A non-voting convertible preferred stock, par value

$0.001 per share (“Company Series A Preferred Stock”), at a purchase price of $23,000.00 per share (each Company Series A

Preferred Stock is convertible into 1,000 shares of Company Common Stock), and pre-funded warrants to purchase an aggregate of 680,000

shares of Company Common Stock at a purchase price of $22.999 per pre-funded warrant, for aggregate net proceeds of approximately $188.7

million (net of issuance costs of $11.9 million).

of Results of Operations

date, we have not generated revenue from any sources, including product sales, and do not expect to generate any revenue from the sale

of products in the foreseeable future.

If our development efforts for our product candidates are successful and result in regulatory

approval, we may generate revenue in the future from product sales or payments from future collaboration or license agreements that we

may enter into with third parties, or any combination thereof.

We cannot predict if, when, or to what extent we will generate revenue

from the commercialization and sale of our product candidates.

We may never succeed in obtaining regulatory approval for any of our product

and Development

and development expenses consist primarily of costs incurred in connection with the development and research of our programs.

These expenses

of funding research performed by third parties, including Paragon, that conduct research

and development activities on our behalf;

Pursuant to the 2024 Securities

Purchase Agreement, the investors purchased an aggregate of 5,600,000 shares of Company Common Stock at a purchase price of $23.00 per

share, an aggregate of 2,439 shares of our Series A non-voting convertible preferred stock, par value $0.001 per share (“Company

Series A Preferred Stock”), at a purchase price of $23,000.00 per share (each Company Series A Preferred Stock is convertible into

1,000 shares of Company Common Stock), and pre-funded warrants to purchase an aggregate of 680,000 shares of Company Common Stock at a

purchase price of $22.999 per pre-funded warrant, for aggregate net proceeds of approximately $188.7 million (net of issuance costs of

$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).

Paragon Therapeutics - Option and License Agreements

Option Agreements –

Paragon Therapeutics

In March 2024, we entered into two antibody discovery and option

agreements (the “Option Agreements”) with Paragon Therapeutics, Inc.

(“Paragon”) and Paruka Holdings LLC (“Paruka”).

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

targets of interest to us.

From time to time, we can choose to add additional targets to the collaboration upon agreement with Paragon

Under the Option Agreements, we have the exclusive option to, on a research program-by-research program basis, be granted

an exclusive, worldwide license to all of Paragon’s rights, titles, and interest in and to the intellectual property resulting from

the applicable research program to develop, manufacture, and commercialize the antibodies and products directed to the selected target(s)

(each, an “Option”).

We have initiated certain research programs with Paragon that generally focus on discovering, generating,

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

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

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

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

There is no payment due upon exercise

of an Option pursuant to the Option Agreements.

In December 2025, we entered into an additional option agreement for

an antibody with Paragon and Paruka to enter into a license agreement, which we exercised in December 2025.

For the year ended December

31, 2025 we incurred $1.5 million related to this additional option agreement which was recognized as research and development expense.

Per the terms of this option agreement, once we enter into the corresponding license agreement, we will be required to make non-refundable

milestone payments to Paragon of up to $12.0 million under the agreement upon the achievement of certain clinical development milestones,

up to $10.0 million under the 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.

As of December 31, 2025, we have not entered into a license agreement

with Paragon and Paruka related to this additional option agreement.

part of the Option Agreements and the additional option agreement mentioned above, on December 31, 2024, we settled our 2024 obligations

under the Paruka Warrant Obligation by issuing Paruka a warrant to purchase 596,930 shares of Company Common Stock at an exercise price

of $19.39 per share, and on December 12, 2025, we settled our 2025 obligations under the Paruka Warrant Obligation by issuing Paruka

a warrant to purchase 375,000 shares of Company Common Stock at an exercise price of $30.18 per share.

License Agreements – Paragon Therapeutics

In September 2024, we exercised

our exclusive option to acquire certain rights to ORKA-001, and in December 2024, we entered into a corresponding license agreement with

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

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

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

In December 2024, we exercised our exclusive option to acquire

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

License Agreement” and together with the ORKA-001 License Agreement, the “License Agreements”), pursuant to which Paragon

granted us a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize, or otherwise exploit certain antibodies

and products targeting IL-17A/F in all fields (“ORKA-002 Field” and together with the ORKA-001 Field, the “Fields”).

Pursuant to each of the two License Agreements, Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific

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

The License Agreements provide

us with exclusive licenses in the Fields to Paragon’s patent applications covering the related antibodies, their method of use and

their method of manufacture and Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific antibodies or

anti-IL-17A/F monospecific antibodies for the ORKA-001 Field or the ORKA-002 Field, respectively, for at least five years.

License Agreements may be terminated on 60 days’ notice to Paragon, on material breach without cure, and on a party’s insolvency

or bankruptcy to the extent permitted by law.

Pursuant to the terms of

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

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

the achievement of certain regulatory milestones.

In addition, we are obligated to pay Paragon a low single-digit percentage royalty

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

For each of the License Agreements, the royalty term ends on the later of (i)

the last-to-expire licensed patent or our patent directed to the manufacture, use or sale of a licensed antibody in the country at issue

or (ii) 12 years from the date of first sale of 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 December 31, 2025,

we have 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.

Pursuant to the Option Agreements

and License Agreements, on a research program-by-research program basis following the finalization of the research plan for each respective

research program, we were required to pay certain initiation fees, development costs and milestone payments to Paragon.

For the ORKA-001 program,

we recognized research and development expenses related to the following milestones during the period from February 6, 2024 (inception)

to December 31, 2024:

a one-time, nonrefundable research initiation fee of $0.8 million;

$1.5 million related to exercising our Option

and achievement of development candidate;

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

We were responsible for 50% of the development costs incurred through the completion of the IL-23 selection process, which was completed

in June 2024.

An amount of $13.5 million was incurred during the period from February 6, 2024 (inception) to December 31, 2024 for research

and development expenses for the ORKA-001 program.

For the ORKA-002 program, we recognized research and development expenses

related to the following milestones during the period from February 6, 2024 (inception) to December 31, 2024:

a one-time, nonrefundable

research initiation fee of $0.8 million and $1.5 million related to exercising our Option and achievement of development candidate.

were responsible for the development costs incurred through the completion of the IL-23 selection process, which was completed in December

An amount of $11.1 million was incurred during the period from February 6, 2024 (inception) to December 31, 2024 for research and

development expenses for the ORKA-002 program.

Pursuant to the Option Agreements

and License Agreements, for year ended December 31, 2025, our share of research and development expenses for the ORKA-001 program was

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

the ORKA-001 program during the year ended December 31, 2025.

These costs were recorded as research and development expenses.

As of December

31, 2025 and 2024, nil and $2.8 million, respectively, related to ORKA-001 were included in related party accounts payable and other

current liabilities.

Pursuant to the Option Agreements

and License Agreements, for the year ended December 31, 2025, our share of research and development expense for the ORKA-002 program was

$0.1 million.

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

trial for the ORKA-002 program during the year ended December 31, 2025.

These costs were recorded as research and development expenses.

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

and other current liabilities.

We expense the service fees

as the associated costs are incurred when the underlying services are rendered.

Such amounts are classified within research and development

expenses in the accompanying consolidated statements of operations.

We concluded that the rights

obtained under the Option Agreements represent an asset acquisition whereby the underlying assets comprise in-process research and development

assets with no alternative future use.

The Option Agreements did not qualify as a business combination because substantially all of the

fair value of the assets acquired was concentrated in the exclusive license options, which represent a group of similar identifiable

The research initiation fee represents a one-time cost on a research program-by-research program basis for accessing research

services or resources with benefits that are expected to be consumed in the near term, therefore the amounts paid are expensed as part

of research and development costs immediately.

Amounts paid as reimbursements of ongoing development cost, monthly development cost fee

and additional development expenses incurred by Paragon due to work completed for selected targets prior to the effective date of the

Option Agreements that is associated with services being rendered under the related Research Programs are recognized as research and

development expense when incurred.

Components of Results of Operations

To date, we have not generated

revenue from any sources, including product sales, and do not expect to generate any revenue from the sale of products in the foreseeable

If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue

in the future from product sales or payments from future collaboration or license agreements that we may enter into with third parties,

or any combination thereof.

We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale

of our product candidates.

We may never succeed in obtaining regulatory approval for any of our product candidates.

Operating Expenses

Research and Development

Research and development

expenses consist primarily of costs incurred in connection with the development and research of our programs.

These expenses include:

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

incurred, and milestone payments under license and option agreements;

incurred in connection with continuing our current research programs and discovery-phase

development of any programs we may identify, including under future agreements with third

parties, such as consultants and contractors;

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

manufacturing organizations (“CMOs”), and with clinical trial sites that conduct

research and development activities on our behalf;

cost of development and validating our manufacturing process for use in our preclinical studies

and current and future clinical trials;

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

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

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

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

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

● personnel-related

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

expense, including stock-based compensation related to the Paruka warrant;

human resource costs, information technology costs, and facility-related costs, including

rent, maintenance, utilities, and depreciation for our leased office space.

expense research and development costs as incurred.

Non-refundable advance payments that we make for goods or services to be received

in the future for use in research and development activities are recorded as prepaid expenses.

The prepaid amounts are expensed as the

related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services

Our primary focus since inception has been the identification and development of our pipeline programs.

Our research and development

expenses primarily consist of external costs, such as fees paid to Paragon under the Option Agreements.

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

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

for our leased office space.

We expense research and development costs as incurred.

Non-refundable

advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded

as prepaid expenses.

The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is

no longer expected that the goods will be delivered or the services rendered.

Our primary focus since inception has been the identification

and development of our pipeline programs.

Our research and development expenses primarily consist of external costs.

See “Contractual

Obligations and Commitments” below for further details on the Option Agreements.

expect our research and development expenses will increase substantially for the foreseeable future as we continue to invest in research

and development activities related to the continued development of our programs, developing any future programs, including investments

in manufacturing, as we advance any program we may identify and continue to conduct clinical trials.

The success of programs we may identify

and develop will depend on many factors, including the following:

and successful completion of preclinical studies;

investigational new drug (“IND”) or comparable foreign applications that allow

commencement of our planned clinical trials or future clinical trials for any programs we

Obligations and Commitments” below for further details.

We expect our research and

development expenses will increase substantially for the foreseeable future as we continue to invest in research and development activities

related to the continued development of our programs, developing any future programs, including investments in manufacturing, as we advance

any program we may identify and continue to conduct clinical trials.

The success of programs we may identify and develop will depend on

many factors, including the following:

and successful completion of preclinical studies and clinical trials;

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

or future clinical trials for any programs we may develop;

enrollment and completion of clinical trials;

results from our future clinical trials that support a finding of safety and effectiveness,

acceptable pharmacokinetics profile, and an acceptable risk-benefit profile in the intended

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

risk-benefit profile in the intended populations;

of marketing approvals from applicable regulatory authorities;

● establishment

of arrangements through our own facilities or with third-party manufacturers for clinical

supply and, where applicable, commercial manufacturing capabilities;

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

capabilities;

● maintenance

of a continued acceptable safety, tolerability, and efficacy profile of any programs we may

develop following approval.

changes in the outcome of any of these variables with respect to the development of programs that we may identify could mean a significant

change in the costs and possible delays in timing associated with the development of such programs.

For example, if the FDA or another

regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the

completion of clinical development of a program, or if we experience significant delays in our clinical trials due to patient enrollment

or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.

We may never obtain regulatory approval for any of our programs.

and Administrative

and administrative expenses consist primarily of personnel-related expenses, including salaries, bonuses, employee benefits, travel,

and stock-based compensation, for our executive and other administrative personnel.

Other significant general and administrative expenses

include legal services, including intellectual property and corporate matters;

professional fees for accounting, auditing, tax, insurance,

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

and depreciation for our leased office space.

expect our general and administrative expenses will increase substantially for the foreseeable future as we anticipate an increase in

our personnel headcount to support the expansion of research and development activities, as well as to support our operations generally.

We also expect to continue to incur significant expenses associated with being a public company, including costs related to accounting,

audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements;

director and officer insurance costs;

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

Any changes in the outcome

of any of these variables with respect to the development of programs that we may identify could mean a significant change in the costs

and possible delays in timing associated with the development of such programs.

For example, if the FDA or another regulatory authority

were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical

development of a program, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we

would be required to expend significant additional financial resources and time on the completion of clinical development.

obtain regulatory approval for any of our programs.

General and Administrative

General and administrative

expenses consist primarily of personnel-related expenses, including salaries, bonuses, employee benefits, travel, and stock-based compensation,

for our executive and other administrative personnel.

Other significant general and administrative expenses include legal services, including

intellectual property and corporate matters;

professional fees for accounting, auditing, tax, insurance, and allocated human resource

costs, information technology costs, and facility-related costs, including rent, utilities, maintenance, and depreciation for our leased

office space.

We expect our general and

administrative expenses will increase substantially for the foreseeable future as we anticipate an increase in our personnel headcount

to support the expansion of research and development activities, as well as to support our operations generally.

We also expect to continue

to incur significant expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory,

and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements;

director and officer

insurance costs;

and investor and public relations costs.

We also expect to incur additional intellectual property-related

expenses as we file patent applications to protect innovations arising from our research and development activities.

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

interest expense on the convertible

note from a related party (see discussion herein);

We also expect to incur additional intellectual property-related expenses as

we file patent applications to protect innovations arising from our research and development activities.

Other Income (Expense), Net

Total other income (expense),

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

interest expense on the convertible note from

a related party (see discussion herein);

and foreign currency transactions gains and losses.

Interest expense relates to a

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

(“Fairmount”), a

related party, in March 2024.

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

converted into Company Common Stock.

provision for income taxes was recorded for the period from February 6, 2024 (inception) through December 31, 2024.

assets generated from our net operating losses have been fully offset by the valuation allowance as we believe it is not more likely

Interest expense relates to a convertible

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

(“Fairmount”), a related party,

in March 2024.

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

into Company Common Stock.

No provision for income taxes

was recorded for the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024.

tax assets generated from our net operating losses have been fully offset by the valuation allowance as we believe it is not more likely

than not that the benefit will be realized due to our cumulative losses generated to date.

of Operations for the Period from February 6, 2024 (inception) to December 31, 2024

following table summarizes our results of operations for the period presented (in thousands):

from February 6,

2024 (Inception) to

Operating expenses

and development (1)

and administrative (2)

Results of Operations

Comparison of the Year Ended December 31, 2025 and the period

from February 6, 2024 (inception) to December 31, 2024

The following table summarizes

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

Year Ended December 31,

Period from February 6, 2024 (inception) to December 31,

Operating expenses

Research and development (1)

General and administrative (2)

Total operating expenses

Loss from operations

1 unchanged sentence

Interest income

other income, net

related party amount of $42,640 for the period from February 6, 2024 (inception) to December

related party amount of $1,364 for the period from February 6, 2024 (inception) to December

related party amount of $1,468 for the period from February 6, 2024 (inception) to December

and Development Expenses

following table summarizes our research and development expenses for the period presented (in thousands):

from February 6,

2024 (Inception) to

External research

and development expenses (1)

Interest expense (3)

Other income (expense), net

Total other income, net

not meaningful

(1) Includes related party amounts of $17,129 and $42,640 for the year

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

(2) Includes related party amounts of $139 and $1,364 for the year ended

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

(3) Includes related party amounts of nil and $1,468 for the year ended

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

Research and Development Expenses

The following table summarizes our research and

development expenses for the periods presented (in thousands):

Year Ended December 31,

Period from February 6, 2024 (inception) to December 31,

External research and development expenses

Other research and development expenses:

Personnel-related (excluding

Personnel-related (excluding stock-based compensation)

Stock-based compensation

Total research and development expenses

Percentage not meaningful

Research and development

expenses increased by $25.6 million from $75.1 million for the period from February 6, 2024 (inception) to December 31, 2024

to $100.6 million for the year ended December 31, 2025.

External research and development

expenses, including CROs, CMOs, and other third-party preclinical studies and clinical trials expenses, increased by $6.7 million, from

$57.7 million for the period from February 6, 2024 (inception) to December 31, 2024 to $64.4 million for the year ended December 31, 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 $11.0 million, from $4.0 million for the period from February 6, 2024 (inception) to December 31, 2024 to $15.0 million for

the year ended December 31, 2025, as we continue hiring employees in our research and development organization.

Stock-based compensation

research and development expenses

related party amount of $32,283 for the period from February 6, 2024 (inception) to December

related party amount of $10,357 for the period from February 6, 2024 (inception) to December

and development expenses were $75.1 million for the period from February 6, 2024 (inception) to December 31, 2024 and consisted

primarily of the following:

$57.7 million

of research and development expense primarily includes:

$18.3 million related to Paragon services rendered under the Option Agreements

for ORKA-001, including $4.8 million for milestones achieved under the Option and License Agreements upon exercise of the option

to enter into a license agreement and achievement of development candidate for IL-23 and dosing of the first subject in a Phase 1

clinical trial;

$13.3 million of research and development expense primarily related to Paragon services rendered under the Option

Agreements for ORKA-002, including $2.3 million for milestones achieved under the Option and License Agreements upon exercise of

the option to enter into a license agreement and achievement of development candidate for IL-17;

$0.7 million of other research and

development expense due to Paragon;

$16.5 million of research and development expense on chemistry, manufacturing, and development

$5.7 million in toxicology testing with a third-party contract research organization;

and $3.2 million of other external research

and development costs;

● $4.0 million

of personnel-related costs related to salaries, benefits, and other compensation-related

million of stock-based compensation expense, including $10.4 million of stock-based compensation

related to the Paruka warrant;

million of other expense and allocated human resource costs, information technology costs,

and facility-related costs, including rent, maintenance, utilities, and depreciation for

our leased office space.

and Administrative Expenses

following table summarizes our general and administrative expenses for the period presented (in thousands):

from February 6,

2024 (Inception) to

Personnel-related (including stock-based

compensation) (1)

Professional and consulting fees (2)

expense increased by $5.0 million, from $12.0 million for the period from February 6, 2024 (inception) to December 31, 2024 to $17.0 million

for the year ended December 31, 2025.

Stock-based compensation expense increased due to the increase in employee awards.

Other research and development

expenses increased by $2.9 million, from $1.4 million for the period from February 6, 2024 (inception) to December 31, 2024 to $4.3 million

for the year ended December 31, 2025, primarily due to higher share of allocated overhead expenses for facilities and information technology

due to an increase in our research and development employee count.

General and Administrative Expenses

related party amount of $609 for the period from February 6, 2024 (inception) to December

related party amount of $575 for the period from February 6, 2024 (inception) to December

related party amount of $180 for the period from February 6, 2024 (inception) to December

and administrative expenses were $13.1 million for the period from February 6, 2024 (inception) to December 31, 2024 and consisted

primarily of the following:

of personnel-related costs related to salaries, benefits, other compensation-related costs, recruiting costs, including stock-based

compensation of $2.9 million, and $0.6 million of personnel-related costs are recruiting costs reimbursed to Paragon for hiring

of our executive team, legal, and finance and accounting functions;

● $4.6 million

of professional and consulting fees associated with accounting, audit, and legal fees associated

with becoming a public company, including $0.6 million of legal fees due to Paragon

associated with patent-related activities;

million of other business expenses and net of allocated human resource costs, information

technology costs, and facility-related costs, including rent, maintenance, utilities, and

depreciation for our leased office space to research and development expenses, including

$0.2 million of other business expenses due to Paragon.

Other Income, Net

income from cash equivalents and marketable securities was $5.9 million for the period from February 6, 2024 (inception) to December

expense was $1.5 million for the period from February 6, 2024 (inception) to December 31, 2024 relating to the Convertible Note from

and Capital Resources

of December 31, 2024, we had $393.7 million of cash, cash equivalents, and marketable securities.

our inception, we have incurred significant operating losses and negative cash flow from operations.

We expect to incur significant expenses

and operating losses for the foreseeable future as we continue the pre-clinical and clinical development of our programs and our early-stage

research activities.

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

several years, if at all.

Through December 31, 2024, 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.

primary use of cash is to fund the development of our product candidates and advance our pipeline.

This includes both the research and

development costs and the general and administrative expenses required to support those operations.

Since we are a clinical stage biotechnology

company, we have incurred significant operating losses since our inception and we anticipate such losses, in absolute dollar terms, to

increase as we continue to pursue clinical development of our product candidates, prepare for the potential commercialization of our

product candidates, and expand our development efforts in our pipeline of nonclinical candidates.

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 Annual Report.

We will need to secure additional financing in the future to fund additional research and development, and before

a commercial drug can be produced, marketed, and sold.

If we are unable to obtain additional financing or generate license or product

revenue, the lack of liquidity could have a material adverse effect on our company.

following table summarizes our cash flows for the period presented (in thousands):

from February 6,

The following table summarizes our general and

administrative expenses for the periods presented (in thousands):

Year Ended December 31,

Period from February 6, 2024 (inception) to December 31,

Personnel-related (including stock-based compensation)

Professional and consulting services

Total general and administrative expenses

General and administrative

expenses increased by $8.3 million from $13.1 million for the period from February 6, 2024 (inception) to December 31, 2024 to $21.4

million for the year ended December 31, 2025.

Personnel-related expenses

increased by $7.0 million, from $8.0 million for the period from February 6, 2024 (inception) to December 31, 2024 to $15.0 million

for the year ended December 31, 2025, as a result of continued hiring of executives and administrative employees.

Stock-based compensation

expenses were $2.9 million and $7.2 million for the period from February 6, 2024 (inception) to December 31, 2024 and for the year ended

December 31, 2025, respectively.

Professional and consulting

services expenses increased by $0.9 million, from $4.6 million for the period from February 6, 2024 (inception) to December 31, 2024

to $5.5 million for the year ended December 31, 2025, due to higher spending on legal and other professional services.

Other general and administrative expenses increased by $0.4 million,

from $0.5 million for the period from February 6, 2024 (inception) to December 31, 2024 to $0.9 million for the year ended December 31,

2025, primarily due to increase in facilities and information technology services expenses, partially offset by a higher allocation of

overhead expenses to research and development expenses as a result of an increase in our research and development employee count.

Total Other Income, Net

Interest income from cash

equivalents and marketable securities increased by $10.8 million, from $5.9 million for the period from February 6, 2024 (inception) to

December 31, 2024 to $16.6 million for the year ended December 31, 2025.

The increase was primarily due to higher invested balances.

No interest expense was recorded

during the year ended December 31, 2025.

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

31, 2024 relating to the Convertible Note from Fairmount.

Liquidity and Capital Resources

As of December 31, 2025,

we had $479.6 million of cash, cash equivalents, and marketable securities.

Since our inception, we have

incurred significant operating losses and negative cash flow from operations.

We expect to incur significant expenses and operating losses

for the foreseeable future as we continue the pre-clinical and clinical development of our programs and our early-stage research activities.

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

Through December 31, 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 our sales agent, pursuant to which we may issue and sell, from time to time, shares

of our common stock for aggregate gross proceeds of up to $200.0 million under an at-the-market equity offering program.

We are not obligated

to make any sales of shares under the Sales Agreement.

As of December 31, 2025, no sales had been made under our at-the-market equity

offering program.

Our primary use of cash is

to fund the development of our product candidates and advance our pipeline.

This includes both the research and development costs and

the general and administrative expenses required to support those operations.

Since we are a clinical stage biopharmaceutical company,

we have incurred significant operating losses since our inception and we anticipate such losses, in absolute dollar terms, to increase

as we continue to pursue clinical development of our product candidates, prepare for the potential commercialization of our product candidates,

and expand our development efforts in our pipeline of nonclinical candidates.

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 Annual

We will need to secure additional financing in the future to fund additional research and development, and before a commercial

drug can be produced, marketed, and sold.

If we are unable to obtain additional financing or generate license or product revenue, the

lack of liquidity could have a material adverse effect on our company.

The following table summarizes

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

Period from February 6,

2024 (inception) to

1 unchanged sentence

Net cash used in investing activities

Net cash provided by

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Operating Activities

For the year ended December 31, 2025, net cash used in operating activities

was $88.2 million, which was primarily attributable to a net loss of $105.4 million and net cash used by changes in our operating assets

and liabilities of $2.6 million, partially offset by net non-cash charges of $19.8 million.

Net cash used by changes in our operating

assets and liabilities was primarily comprised of a decrease of $6.0 million in related party accounts payable and other current liabilities,

an increase of $4.0 million in prepaid expenses and other current assets, partly offset by an increase of $7.2 million in accrued expenses

and other current liabilities, and an increase of $0.7 million in accounts payable balances.

Net non-cash charges primarily comprised

of $24.2 million in stock-based compensation expense (includes $10.1 million from the Paruka Warrant Obligation, as defined in Note 11

to the consolidated financial statements), partially offset by $5.0 million in net accretion of premiums and discounts on marketable securities.

The decrease in amounts due to related parties was primarily due to lower research expenses incurred with Paragon.

The increase in balances

for accrued expenses and other current liabilities, and accounts payable was primarily due to an increase in our business activity, as

well as vendor invoicing and payments.

The increase in prepaid expenses and other current assets was primarily due to prepaid research

and development expenses with our contract research organization.

From February 6, 2024

(inception) to December 31, 2024, net cash used in operating activities was $57.8 million, which was primarily attributable to a net loss

of $83.7 million, offset by net non-cash charges of $14.3 million and net changes in operating activities of $11.6 million.

Non-cash charges

primarily consisted of $14.9 million in stock-based compensation expense (including $10.4 million related to the Paruka Warrant Obligation)

and $1.5 million of non-cash interest expense, partially offset by net accretion of premiums and discounts on marketable securities of

$2.2 million.

Net changes in our operating activities primarily consisted of a $3.5 million increase in accounts payable, a $3.3 million

increase in accrued expenses and other current liabilities, a $6.0 million increase in related parties accounts payable and other current

liabilities, partially offset by a $1.1 million increase in prepaid expenses and other current assets.

The increase in amounts due to

related parties, accounts payable, and accrued expenses and other current liabilities was primarily due to an increase in our business

activity, as well as vendor invoicing and payments.

The increase in prepaid expenses and other current assets was primarily due to prepaid

research and development expenses with our contract research organization.

Investing Activities

For the year ended

December 31, 2025, net cash used in investing activities was $96.7 million, which included $521.0 million in purchases of marketable

securities and $0.2 million in purchases of property and equipment, partially offset by $424.4 million in proceeds from maturities

of marketable securities.

From February 6, 2024

(inception) to December 31, 2024, net cash used in investing activities was $330.1 million, which was primarily attributable to purchases

of marketable securities.

Financing Activities

increase in cash and cash equivalents

February 6, 2024 (inception) to December 31, 2024, net cash used in operating activities was $57.8 million, which was primarily

attributable to a net loss of $83.7 million, offset by net non-cash charges of $14.3 million and net changes in operating activities

of $11.6 million.

Non-cash charges primarily consisted of $14.9 million in stock-based compensation expense (including $10.4 million

related to the Paruka warrant) and $1.5 million of non-cash interest expense, partially offset by net accretion of premiums and discounts

on marketable securities of $2.2 million.

Net changes in our operating activities primarily consisted of a $3.5 million increase in accounts

payable, a $3.3 million increase in accrued expenses and other current liabilities, a $6.0 million increase in related parties accounts

payable and other current liabilities, partially offset by a $1.1 million increase in prepaid expenses and other current assets.

increase in amounts due to related parties, accounts payable, and accrued expenses and other current liabilities was primarily due to

an increase in our business activity, as well as vendor invoicing and payments.

The increase in prepaid expenses and other current assets

was primarily due to prepaid research and development expenses with our contract research organization.

February 6, 2024 (inception) to December 31, 2024, net cash used in investing activities was $330.1 million, which was primarily

attributable to purchases of marketable securities.

February 6, 2024 (inception) to December 31, 2024, net cash provided by financing activities was $449.5 million, consisting of $228.0

million of net proceeds from the Pre-Closing Financing, $188.7 million of net proceeds from the PIPE Financing, $25.0 million of net

proceeds from the issuance of notes payable to related parties, $4.9 million of cash acquired in connection with the reverse recapitalization

and $2.9 million of net proceeds from issuance of the Pre-Merger Oruka Series A Preferred Stock.

Obligations and Commitments

enter into contracts in the normal course of business with CROs, CMOs and with other vendors for preclinical research studies, clinical

trials, manufacturing, and other services and products for operating purposes.

These contracts generally provide for termination on notice

or may have a potential termination fee if a purchase order is cancelled within a specified time, and therefore, are cancelable contracts.

We do not expect any such contract terminations and did not have any non-cancellable obligations under these agreements as of December

Therapeutics - Option Agreements

March 2024, we entered into two antibody discovery and option agreements (“Option

Agreements”) with Paragon and Paruka Holding, LLC (“Paruka”).

terms of each agreement, Paragon identifies, evaluates, and develops antibodies directed

against certain mutually agreed therapeutic targets of interest to us.

From time to time,

we can choose to add additional targets to the collaboration upon agreement with Paragon

Under the Option Agreements, we have the exclusive option to, on a research program-by-research

program basis, be granted an exclusive, worldwide license to all of Paragon’s right,

title, and interest in and to the intellectual property resulting from the applicable research

program to develop, manufacture, and commercialize the antibodies and products directed to

the selected target(s) (each, an “Option”).

We have initiated certain research

programs with Paragon that generally focus on discovering, generating, identifying and/or

characterizing antibodies directed to a particular target (each, a “Research Program”),

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

Our exclusive option

with respect to each Research Program is exercisable at our sole discretion at such time

as specified in the Option Agreements (the “Option Period”).

There is no payment

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

For each of these agreements,

once we enter into the corresponding license agreements, we will be required to make non-refundable

milestone payments to Paragon of up to $12.0 million under each respective agreement upon

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

respective agreement upon the achievement of certain regulatory milestones, as well as a

low single-digit percentage royalty for antibody products beginning on the first commercial

sale in each program.

may terminate any Option Agreement or any Research Program at any time for any or no reason upon 30 days’ prior written notice

to Paragon, provided that we must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations

reasonably incurred by Paragon in connection with its activities under any terminated Research Program.

Paragon may terminate any Option

Agreement or a Research Program immediately upon written notice to us if, as a result of any action or failure to act by us or our affiliates,

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

for a certain consecutive number of months.

Each party has the right to terminate the Option Agreements or any Research Program

upon material breach that remains uncured or the other party’s bankruptcy.

Additionally,

as part of the Option Agreements, on December 31, 2024 and December 31, 2025, we granted and will grant, respectively, Paruka a

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

an exercise price equal to the fair market value of the underlying shares on the grant date.

warrant is liability-classified and after the initial recognition, the liability is adjusted to fair value at the end of each reporting

period, with changes in fair value recorded in the consolidated statement of operations and comprehensive loss as stock-based compensation

expenses under research and development expenses.

On issuance of the December 31, 2024 warrant to Paruka, the change in fair value of

the warrant immediately prior to issuance was recorded in the consolidated statement of operations and comprehensive loss and the resultant

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

to the Option Agreements, on a research program-by-research program basis following the finalization of the research plan for each respective

research program, we were required to pay Paragon a one-time, nonrefundable research initiation fee of $0.8 million related to the

ORKA-001 program.

This amount was recognized as a research and development expense during the period from February 6, 2024 (inception)

to December 31, 2024.

In June 2024, pursuant to the Option Agreements with Paragon, we completed the selection process of our development

candidate for IL-23 antibody for ORKA-001 program.

We were responsible for 50% of the development costs incurred through the completion

of the IL-23 selection process.

We received the rights to at least one selected IL-23 antibody in June 2024.

During the period from February

6, 2024 (inception) to December 31, 2024, we exercised our option for ORKA-001 and recorded a $1.5 million milestone payment related

to the achievement of development candidate as research and development expense in our consolidated statement of operations and comprehensive

In addition, during the period from February 6, 2024 (inception) to December 31, 2024, we recorded a $2.5 million milestone payment

related to the first dosing of a human subject in a Phase 1 trial of ORKA-001 in December 2024 as research and development expense in

our consolidated statement of operations and comprehensive loss.

Our share of development costs incurred for the period from February

6, 2024 (inception) to December 31, 2024 was $13.5 million, which was recorded as research and development expenses.

An amount of $2.8

million related to ORKA-001 is included in related party accounts payable and other current liabilities as of December 31, 2024.

were also required to reimburse Paragon $3.3 million for development costs related to ORKA-002 incurred by Paragon through December 31,

2023 and certain other development costs incurred by Paragon between January 1, 2024 and March 6, 2024 as stipulated by the

Option Agreements.

This amount was recognized as a research and development expense during the period from February 6, 2024 (inception)

to December 31, 2024.

We are also responsible for the development costs incurred by Paragon from January 1, 2024 through the completion

of the IL-17 selection process.

We recognized an amount of $0.8 million payable to Paragon for the research initiation fee related

to ORKA-002 following the finalization of the ORKA-002 research plan.

This was recognized as research and development expenses in the

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

During the period from February 6, 2024 (inception) to December 31, 2024,

we exercised our option for ORKA-002 and recorded a $1.5 million milestone payment related to the achievement of development candidate

as research and development expense in our consolidated statement of operations and comprehensive loss.

We accounted for development

costs of $7.8 million for the period from February 6, 2024 (inception) to December 31, 2024 as research and development expenses.

amount of $2.7 million related to ORKA-002 is included in related party accounts payable and other current liabilities as of December

expense the service fees as the associated costs are incurred when the underlying services

are rendered.

Such amounts are classified within research and development expenses in the

accompanying consolidated statement of operations and comprehensive loss.

concluded that the rights obtained under the Option Agreements represent an asset acquisition whereby the underlying assets comprise

in-process research and development assets with no alternative future use.

The Option Agreements did not qualify as a business combination

because substantially all of the fair value of the assets acquired was concentrated in the exclusive license options, which represent

a group of similar identifiable assets.

The research initiation fee represents a one-time cost on a research program-by-research program

basis for accessing research services or resources with benefits that are expected to be consumed in the near term, therefore the amounts

paid are expensed as part of research and development costs immediately.

Amounts paid as reimbursements of on-going development cost,

monthly development cost fee and additional development expenses incurred by Paragon due to work completed for selected targets prior

to the effective date of the Option Agreements that is associated with services being rendered under the related Research Programs are

recognized as research and development expense when incurred.

the period from February 6, 2024 (inception) to December 31, 2024, we recognized $42.0 million of expenses in connection with services

provided by Paragon and Paruka under the Option Agreements.

Therapeutics – License Agreements

September 2024, we exercised the Option to acquire certain rights to ORKA-001, and in December 2024, we entered into the corresponding

license agreement with Paragon (the “ORKA-001 License Agreement”), pursuant to which Paragon granted us a royalty-bearing,

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

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

In December 2024, we exercised the Option

with respect to ORKA-002 for the IL-17A/F program, and in February 2025, we entered into the corresponding license agreement with Paragon

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

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

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

Field, the “Fields”).

License Agreements provide us with exclusive licenses in the Fields to Paragon’s patent applications covering the related antibodies,

their method of use and their method of manufacture and Paragon has agreed not to conduct any new campaigns that generate anti-IL-23

monospecific antibodies or anti-IL-17A/F monospecific antibodies for the ORKA-001 Field or the ORKA-002 Field, respectively, for at least

Each of the ORKA-001 and ORKA-002 License Agreements may be terminated on 60 days’ notice to Paragon, on material breach

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

to the terms of each of the ORKA-001 and ORKA-002 License Agreements, we are obligated to

pay Paragon non-refundable milestone payments of up to $12.0 million under each respective

agreement upon the achievement of certain clinical development milestones and up to $10.0

million under each respective agreement upon the achievement of certain regulatory milestones,

including a $1.5 million fee for nomination of a development candidate (or initiation of

an IND-enabling toxicology study) and a further milestone payment of $2.5 million upon the

first dosing of a human patient in a Phase 1 trial for each of ORKA-001 and ORKA-002.

addition, we are obligated to pay Paragon a low single-digit percentage royalty for antibody

products for each of ORKA-001 and ORKA-002.

For each of the License Agreements, the royalty

term ends on the later of (i) the last-to-expire licensed patent or our patent directed to

the manufacture, use or sale of a licensed antibody in the country at issue or (ii) 12 years

from the date of first sale of 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.

Line License Agreement

For the year ended December 31, 2025, net cash provided by financing

activities was $170.3 million, consisting of $169.6 million of net proceeds from the 2025 PIPE Financing and $0.7 million proceeds from

the issuance of common stock upon exercise of stock options and employee warrants and purchases under our Employee Stock Purchase Plan.

From February 6, 2024 (inception) to December 31, 2024, net cash

provided by financing activities was $449.5 million, consisting of $228.0 million of net proceeds from the Pre-Closing Financing, $188.7

million of net proceeds from the 2024 PIPE Financing, $25.0 million of net proceeds from the issuance of notes payable to related parties,

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

Oruka Series A Preferred Stock.

Contractual Obligations and Commitments

We enter into contracts in

the normal course of business with CROs, CMOs and with other vendors for preclinical research studies, clinical trials, manufacturing,

and other services and products for operating purposes.

These contracts generally provide for termination on notice or may have a

potential termination fee if a purchase order is cancelled within a specified time, and therefore, are cancelable contracts.

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

Cell Line License Agreement

In March 2024, we entered

6 unchanged sentences

Technology is used in certain manufacturing activities in support of the ORKA-001 and ORKA-002 programs.

consideration for the license, we agreed to pay WuXi Biologics a non-refundable license fee of $150,000, which was recognized as a research

and development expense during the period from February 6, 2024 (inception) to December 31, 2024.

Additionally, to the extent that

we manufacture our commercial supplies of bulk drug product with a manufacturer other than WuXi Biologics or its affiliates, we are required

to make royalty payments to WuXi Biologics at a rate of less than one percent of net sales of WuXi Biologics Licensed Products manufactured

by the third-party manufacturer.

Pursuant to an amendment to the Cell Line License Agreement effective in November 2024, a provision

was added that permits the royalties owed under the agreement to be bought out on a product-by-product basis for a lump-sum payment.

Cell Line License Agreement will continue indefinitely unless terminated (i) by us upon six months’ prior written notice and our

payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material

breach by us that remains uncured for 60 days after written notice, (iii) by WuXi Biologics if we fail to make a payment and such failure

continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy.

with Related Party

March 2024, we entered into a Series A Preferred Stock and Convertible Note Purchase Agreement (the “Purchase Agreement”)

with Fairmount, whereby we issued the Convertible Note, with an initial principal amount of $25.0 million that, at the time of issuance,

could be converted into Pre-Merger Oruka Series A Preferred Stock (or a series of preferred shares that is identical in respect

to the shares of preferred shares issued in its next equity financing) or shares of Pre-Merger Oruka Common Stock in exchange for aggregate

proceeds of $25.0 million.

The Convertible Note accrued interest at a rate of 12.0% per annum.

At issuance, the Convertible Note

required all unpaid interest and principal to mature on December 31, 2025 (the “Maturity Date”) and prepayment was not

permitted without prior written consent of Fairmount.

At issuance, the principal payment along with the accrued interest on the Convertible

Note was due in full on the Maturity Date.

Pursuant to the Purchase Agreement, we had the right to sell and issue additional convertible

notes up to an aggregate principal amount equal to $30.0 million, in addition to the $25.0 million initial principal amount of the Convertible

prior to the completion of the Merger, the Convertible Note was converted into shares of Pre-Merger Oruka Common Stock based on the aggregate

principal amount of $25.0 million, plus unpaid accrued interest of $1.5 million divided by the conversion price, which was determined

based upon the Company’s fully-diluted capitalization immediately prior to the Merger.

At the effective time of the Merger, the

Pre-Merger Oruka Common Stock issued upon the conversion of the Convertible Note (including accrued interest) automatically converted

into shares of Company Common Stock.

2,722,207 shares of Company Common Stock were issued on conversion of the Convertible Note and accrued

As of December 31, 2024, there is no note payable to a related party.

contractual obligations include minimum lease payments under our operating lease obligation for our headquarters in Menlo Park, California.

See Note 13 to the consolidated financial statements elsewhere in this report for additional information.

Accounting Policies and Significant Judgments and Estimates

management’s discussion and analysis of its financial condition and results of operations is based on its financial statements,

which have been prepared in accordance with U.S.

The preparation of these consolidated financial statements requires us to

make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and

liabilities at the date of the financial statements, as well as the reported revenues recognized and expenses incurred during the reporting

Our estimates are based on its historical experience and on various other factors that we believe are reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent

from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere

in this Annual Report, we believe the following accounting policies used in the preparation of our financial statements require the most

significant judgments and estimates.

and Development Expenses

and development costs are expensed as incurred.

Research and development expenses consist of costs incurred in performing research and

development activities, including salaries and bonuses, overhead costs, contract services and other related costs.

The value of goods

and services received from contract research organizations and contract manufacturing organizations in the reporting period are estimated

based on the level of services performed, and progress in the period in cases when we have not received an invoice from the supplier.

In circumstances where amounts have been paid in excess of costs incurred, we record a prepaid expense.

When billing terms under these

contracts do not coincide with the timing of when the work is performed, we are required to make estimates of outstanding obligations

to those third parties as of period end.

Any accrual estimates are based on a number of factors, including our knowledge of the progress

towards completion of the specific tasks to be performed, invoicing to date under the contracts, communication from the vendors of any

actual costs incurred during the period that have not yet been invoiced and the costs included in the contracts.

Significant judgments

and estimates may be made in determining the accrued balances at the end of any reporting period.

Actual results could differ from the

estimates made by us.

measure stock options granted to employees and non-employees based on the estimated fair values of the awards as of the grant date using

the Black-Scholes option-pricing model.

The model requires management to make a number of assumptions, including common stock fair value,

expected volatility, expected term, risk-free interest rate and expected dividend yield.

For restricted stock awards and restricted stock

units, the estimated fair value is the fair market value of the underlying stock on the grant date.

We expense the fair value of our

equity-based compensation awards on a straight-line basis over the requisite service period, which is the period in which the related

services are received.

We account for award forfeitures as they occur.

The expense for stock-based awards with performance conditions

is recognized when it is probable that a performance condition is met during the vesting period.

Determination

of Fair Value of Common Stock

public trading market for Company Common Stock has been established in connection with the completion of the Merger.

As such, it is no

longer necessary for our board of directors to estimate the fair value of our stock-based awards in connection with its accounting for

granted stock-based awards or other such awards we may grant, as the fair value of Company Common Stock and share-based awards is determined

based on the quoted market price of Company Common Stock.

to the merger, Pre-Merger Oruka’s common stock valuations were prepared using a hybrid method, including an option pricing method

The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise

prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes.

this method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the preferred

stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger.

The hybrid method is a probability-weighted

expected return method (“PWERM”), where the equity value in one or more of the scenarios is calculated using an OPM.

PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the Company,

assuming various outcomes.

The common stock value is based on the probability-weighted present value of expected future investment returns

considering each of the possible outcomes available as well as the rights of each class of stock.

The future value of the common stock

under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to

arrive at an indication of value for the common stock.

A discount for lack of marketability of the common stock is then applied to arrive

at an indication of value for the common stock.

assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application

of management’s judgment.

As a result, if Pre-Merger Oruka had used significantly different assumptions or estimates, the fair

value of Pre-Merger Oruka’s incentive shares and its stock-based compensation expense could have been materially different.

Issued Accounting Pronouncements

Note 2 to the consolidated financial statements included in Part II - Item 8 of this Annual Report for more information regarding recently

issued accounting pronouncements.

Sheet Arrangements

of December 31, 2024, 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.

are a smaller reporting company, as defined by Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange

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

In consideration for the

license, we agreed to pay WuXi Biologics a non-refundable license fee of $150,000, which was recognized as a research and development

expense during the period from February 6, 2024 (inception) to December 31, 2024.

Additionally, to the extent that we manufacture

our commercial supplies of bulk drug product with a manufacturer other than WuXi Biologics or its affiliates, we are required to make

royalty payments to WuXi Biologics at a rate of less than one percent of net sales of WuXi Biologics Licensed Products manufactured by

the third-party manufacturer.

Pursuant to an amendment to the Cell Line License Agreement effective in November 2024, a provision was

added that permits the royalties owed under the agreement to be bought out on a product-by-product basis for a lump-sum payment.

The Cell Line License Agreement

will continue indefinitely unless terminated (i) by us upon six months’ prior written notice and our payment of all undisputed amounts

due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by us that remains uncured

for 60 days after written notice, (iii) by WuXi Biologics if we fail to make a payment and such failure continues for 30 days after receiving

notice of such failure, or (iv) by either party upon the other party’s bankruptcy.

Lease Agreement

Our contractual obligations include minimum lease payments under our

operating lease obligation for our headquarters in Menlo Park, California and our office in Waltham, Massachusetts.

See Note 15 to the

consolidated financial statements for additional information.

Option Agreements and License Agreements

– Paragon Therapeutics

Our contractual obligations

include milestones and royalties payable to Paragon.

See Note 14 to the consolidated financial statements for additional information.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion

and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect

the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements,

as well as the reported revenues recognized and expenses incurred during the reporting periods.

Our estimates are based on our historical

experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for

making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may

differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail

in Note 2 to the consolidated financial statements, we believe the following accounting policies used in the preparation of our financial

statements require the most significant judgments and estimates.

Research and Development Expenses

Research and development

costs are expensed as incurred.

Research and development expenses consist of costs incurred in performing research and development activities,

including salaries and bonuses, overhead costs, contract services and other related costs.

The value of goods and services received from

contract research organizations and contract manufacturing organizations in the reporting period are estimated based on the level of services

performed, and progress in the period in cases when we have not received an invoice from the supplier.

In circumstances where amounts

have been paid in excess of costs incurred, we record a prepaid expense.

When billing terms under these contracts do not coincide with

the timing of when the work is performed, we are required to make estimates of outstanding obligations to those third parties as of period

Any accrual estimates are based on a number of factors, including our knowledge of the progress towards completion of the specific

tasks to be performed, invoicing to date under the contracts, communication from the vendors of any actual costs incurred during the period

that have not yet been invoiced and the costs included in the contracts.

Significant judgments and estimates may be made in determining

the accrued balances at the end of any reporting period.

Actual results could differ from the estimates made by us.

Stock-Based Compensation

We measure stock options

granted to employees and non-employees based on the estimated fair values of the awards as of the grant date using the Black-Scholes option-pricing

The model requires management to make a number of assumptions, including common stock fair value, expected volatility, expected

term, risk-free interest rate and expected dividend yield.

For restricted stock awards and restricted stock units, the estimated fair

value is the fair market value of the underlying stock on the grant date.

We expense the fair value of our equity-based compensation awards

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

for award forfeitures as they occur.

The expense for stock-based awards with performance conditions is recognized when it is probable

that a performance condition is met during the vesting period.

Determination of Fair Value of Common Stock

A public trading market for

Company Common Stock has been established in connection with the completion of the Merger.

As such, it is no longer necessary for our

board of directors to estimate the fair value of our stock-based awards in connection with its accounting for granted stock-based awards

or other such awards we may grant, as the fair value of Company Common Stock and share-based awards is determined based on the quoted

market price of Company Common Stock.

Prior to the merger, Pre-Merger

Oruka’s common stock valuations were prepared using a hybrid method, including an option pricing method (“OPM”).

OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the

value thresholds at which the allocation among the various holders of a company’s securities changes.

Under this method, the common

stock has value only if the funds available for distribution to stockholders exceed the value of the preferred stock liquidation preferences

at the time of the liquidity event, such as a strategic sale or a merger.

The hybrid method is a probability-weighted expected return

method (“PWERM”), where the equity value in one or more of the scenarios is calculated using an OPM.

The PWERM is a scenario-based

methodology that estimates the fair value of common stock based upon an analysis of future values for the Company, assuming various outcomes.

The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the

possible outcomes available as well as the rights of each class of stock.

The future value of the common stock under each outcome is discounted

back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value

for the common stock.

A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for

the common stock.

The assumptions underlying

these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s

As a result, if Pre-Merger Oruka had used significantly different assumptions or estimates, the fair value of Pre-Merger Oruka’s

incentive shares and its stock-based compensation expense could have been materially different.

Recently Issued Accounting Pronouncements

See Note 2 to the consolidated

financial statements included in Part II - Item 8 of this Annual Report for more information regarding recently issued accounting pronouncements.

Off-Balance Sheet Arrangements

As of December 31, 2025,

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

Quantitative and Qualitative Disclosures

About Market Risk.

We are a smaller reporting

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

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

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-K

Item 7. Management’s Discussion and Analysis