Oruka Therapeutics, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. ORUKA THERAPEUTICS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Audited Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 80 Consolidated Balance Sheets 81 Consolidated Statements of Operations 82 Consolidated Statements of Comprehensive Loss 83 Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity 84 Consolidated Statement of Cash Flows 85 Notes to Consolidated Financial Statements 86 79 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Oruka Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Oruka Therapeutics, Inc. and its subsidiary (the “Company”) as of December 31, 2025 and December 31, 2024, and the related consolidated statements of operations, of comprehensive loss, of convertible preferred stock and stockholders’ equity and of cash flows for the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. External Research and Development Costs As described in Note 2 to the consolidated financial statements, research and development costs are expensed as incurred. Research and development costs include salaries and bonuses, stock-based compensation, employee benefits, and external costs of vendors and consultants engaged to conduct research and development activities, as well as allocated human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities, and depreciation. As disclosed by management, the Company’s research and development expense for the year ended December 31, 2025 was $100.6 million, $64.4 million of which relates to external research and development costs. The principal consideration for our determination that performing procedures relating to external research and development costs is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s external research and development costs. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, testing external research and development costs, on a sample basis, by obtaining and agreeing the contractual terms of the agreement, amounts incurred to date, and estimates of work performed to date to the (i) underlying agreements with vendors engaged to conduct research and development; (ii) purchase orders; (iii) invoices received; (iv) underlying payments made for expenses incurred on the contracts; and (v) external confirmations or communications obtained by management from vendors. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts March 12, 2026 We have served as the Company’s auditor since 2024. 80 ORUKA THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 46,935 $ 61,575 Marketable securities, current 290,109 314,073 Prepaid expenses and other current assets 6,813 1,221 Total current assets 343,857 376,869 Marketable securities, long-term 142,539 18,069 Property and equipment, net 288 162 Operating lease right-of-use assets 1,830 876 Other non-current assets 103 43 Total assets $ 488,617 $ 396,019 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 4,155 $ 3,462 Accrued expenses and other current liabilities 10,591 3,346 Operating lease liability, current 619 213 Related party accounts payable and other current liabilities 9 6,022 Total current liabilities 15,374 13,043 Operating lease liability, non-current 1,313 755 Total liabilities 16,687 13,798 Commitments and contingencies (Note 15) Stockholders’ equity: Series B non-voting convertible preferred stock, $ 0.001 par value; 251,504 shares authorized as of December 31, 2025 and 2024; 137,138 shares issued and outstanding as of December 31, 2025 and 2024 2,931 2,931 Common stock, $ 0.001 par value as of December 31, 2025 and 2024; 545,000,000 shares authorized as of December 31, 2025 and 2024, 48,722,309 and 37,440,510 shares issued and outstanding as of December 31, 2025 and 2024, respectively 49 37 Additional paid-in capital 657,561 463,018 Accumulated other comprehensive income (loss) 546 ( 41 ) Accumulated deficit ( 189,157 ) ( 83,724 ) Total stockholders’ equity 471,930 382,221 Total liabilities and stockholders’ equity $ 488,617 $ 396,019 The accompanying notes are an integral part of these consolidated financial statements. 81 ORUKA THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Operating expenses: Research and development (1) $ 100,640 $ 75,060 General and administrative (2) 21,411 13,063 Total operating expenses 122,051 88,123 Loss from operations ( 122,051 ) ( 88,123 ) Other income (expense): Interest income 16,630 5,863 Interest expense (3) — ( 1,468 ) Other income (expense), net ( 12 ) 4 Total other income, net 16,618 4,399 Net loss $ ( 105,433 ) $ ( 83,724 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 1.85 ) $ ( 3.87 ) Net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted $ — $ ( 3,873.25 ) Net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted $ ( 154.03 ) $ ( 322.81 ) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 45,614,142 16,789,362 Weighted-average shares used in computing net loss per share attributable to Series A non-voting convertible preferred stockholders, basic and diluted — 495 Weighted-average shares used in computing net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted 137,138 51,946 (1) Includes related party amounts of $ 17,129 and $ 42,640 for the year ended December 31, 2025 and for 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 for 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 for the period from February 6, 2024 (inception) to December 31, 2024, respectively The accompanying notes are an integral part of these consolidated financial statements. 82 ORUKA THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Net loss $ ( 105,433 ) $ ( 83,724 ) Other comprehensive income (loss): Unrealized gains (losses) on marketable securities 587 ( 41 ) Total comprehensive loss $ ( 104,846 ) $ ( 83,765 ) The accompanying notes are an integral part of these consolidated financial statements. 83 ORUKA THERAPEUTICS, INC. CONSOLIDATED STATEMENT OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (In thousands, except share data) Series A Convertible Preferred Stock Series A Non-Voting Convertible Preferred Stock Series B Non-Voting Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Capital Income (Loss) Deficit Equity Balances as of February 6, 2024 (inception) — $ — — $ — — $ — 3,197,975 $ 3 $ ( 2 ) $ — $ — $ 1 Issuance of common stock — — — — — — 2,207,553 2 ( 2 ) — — — Issuance of Series A convertible preferred stock, net of issuance costs of $ 69 20,000,000 2,931 — — — — — — — — — — Exchange of Series A convertible preferred stock for Series B non-voting convertible preferred stock upon the closing of the reverse capitalization ( 20,000,000 ) ( 2,931 ) — — 137,138 2,931 — — — — — 2,931 Conversion of convertible notes (including accrued interest) into common stock upon the closing of the reverse recapitalization — — — — — — 2,722,207 3 26,445 — — 26,448 Issuance of common stock and pre-funded warrants in the Pre-Closing Financing — — — — — — 20,061,932 20 248,437 — — 248,457 Issuance costs of Pre-Closing Financing and reverse recapitalization — — — — — — — — ( 20,504 ) — — ( 20,504 ) Issuance of common stock to former stockholders of ARCA biopharma, Inc. in connection with the closing of reverse recapitalization — — — — — — 1,208,883 1 4,999 — — 5,000 Issuance of common stock, Series A non-voting convertible preferred stock, and pre-funded warrants in connection with the 2024 PIPE Financing — — 2,439 56,097 — — 5,600,000 6 144,433 — — 144,439 Issuance costs of 2024 PIPE Financing — — — ( 3,263 ) — — — — ( 8,592 ) — — ( 8,592 ) Conversion of Series A non-voting convertible preferred stock to common stock — — ( 2,439 ) ( 52,834 ) — — 2,439,000 2 52,832 — — 52,834 Issuance of common stock under employee stock purchase plan — — — — — — 2,960 — 53 — — 53 Reclassification of the Paruka warrant from liability to equity — — — — — — — — 10,357 — — 10,357 Stock-based compensation expense — — — — — — — — 4,562 — — 4,562 Unrealized losses on marketable securities — — — — — — — — — ( 41 ) — ( 41 ) Net loss — — — — — — — — — — ( 83,724 ) ( 83,724 ) Balances as of December 31, 2024 — $ — — $ — 137,138 $ 2,931 37,440,510 $ 37 $ 463,018 $ ( 41 ) $ ( 83,724 ) $ 382,221 Issuance of common stock and pre-funded warrants in connection with the 2025 PIPE Financing — — — — — — 10,933,405 11 179,989 — — 180,000 Issuance cost of the 2025 PIPE Financing — — — — — — — — ( 10,356 ) — — ( 10,356 ) Issuance of common stock upon exercise of pre-funded warrants — — — — — — 325,000 1 ( 1 ) — — — Issuance of common stock upon exercise of stock options and employee warrants — — — — — — 36,022 — 294 — — 294 Issuance of common stock under employee stock purchase plan — — — — — — 35,316 — 377 — — 377 Cancellation of restricted stock awards — — — — — — ( 47,944 ) — — — — — Reclassification of the Paruka warrant from liability to equity — — — — — — — — 10,065 — — 10,065 Stock-based compensation expense — — — — — — — — 14,175 — — 14,175 Unrealized gains on marketable securities — — — — — — — — — 587 — 587 Net loss — — — — — — — — — — ( 105,433 ) ( 105,433 ) Balances as of December 31, 2025 — $ — — $ — 137,138 $ 2,931 48,722,309 $ 49 $ 657,561 $ 546 $ ( 189,157 ) $ 471,930 The accompanying notes are an integral part of these consolidated financial statements. 84 ORUKA THERAPEUTICS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Cash flows from operating activities: Net loss $ ( 105,433 ) $ ( 83,724 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 24,240 14,919 Net accretion of premiums and discounts on marketable securities ( 5,003 ) ( 2,245 ) Non-cash interest expense — 1,468 Non-cash lease expense 458 127 Depreciation expense 83 27 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 3,972 ) ( 1,128 ) Other non-current assets ( 60 ) ( 43 ) Accounts payable 693 3,462 Accrued expenses and other current liabilities 7,245 3,292 Operating lease liability ( 448 ) ( 14 ) Related party accounts payable and other current liabilities ( 6,013 ) 6,022 Net cash used in operating activities ( 88,210 ) ( 57,837 ) Cash flows from investing activities: Purchases of property and equipment ( 209 ) ( 189 ) Purchases of marketable securities ( 520,959 ) ( 329,938 ) Proceeds from maturities of marketable securities 424,423 — Net cash used in investing activities ( 96,745 ) ( 330,127 ) Cash flows from financing activities: Proceeds from issuance of Pre-Merger Oruka Series A Preferred Stock, net of issuance costs paid — 2,931 Proceeds from issuance of notes payable to related party, net of issuance costs paid — 24,980 Proceeds from the Pre-Closing Financing, net — 227,953 Proceeds from the PIPE Financings, net 169,644 188,681 Cash acquired in connection with the reverse recapitalization — 4,940 Proceeds from issuance of common stock upon exercise of stock options and employee warrants and purchases under employee stock purchase plan 671 54 Net cash provided by financing activities 170,315 449,539 Net (decrease) increase in cash and cash equivalents ( 14,640 ) 61,575 Cash and cash equivalents at beginning of period 61,575 — Cash and cash equivalents at end of period $ 46,935 $ 61,575 Supplemental disclosures of non-cash operating and financing activities: Operating lease liability arising from obtaining operating right-of-use asset $ 1,412 $ 982 Assets acquired in connection with the reverse recapitalization $ — $ 114 Other liabilities assumed in connection with the reverse recapitalization $ — $ ( 54 ) Non-cash accrued interest on convertible note converted to common stock $ — $ 1,468 Non-cash exchange of Pre-Merger Oruka Series A Preferred Stock for Company Series B Convertible Preferred Stock $ — $ 2,931 Conversion of Series A non-voting convertible preferred stock to common stock $ — $ 52,834 Reclassification of the Paruka warrant from liability to equity $ 10,065 $ 10,357 The accompanying notes are an integral part of these consolidated financial statements 85 ORUKA THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of the Business and Basis of Presentation Background and Basis of Presentation Oruka Therapeutics, Inc., together with its subsidiary (collectively, the “Company”), formerly known as ARCA biopharma, Inc. (“ARCA”), is a clinical-stage biopharmaceutical company that is the result of the reverse recapitalization discussed below. Prior to the reverse recapitalization, the private company Oruka Therapeutics, Inc. (“Pre-Merger Oruka”) was established and incorporated under the laws of the state of Delaware on February 6, 2024 (referred to in the Notes as the inception of the Company). The Company is headquartered in Menlo Park, California. The Company is focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”) and other inflammatory and immunology (“I&I”) indications. The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Reverse Recapitalization and Pre-Closing Financing, and Reverse Stock Split On August 29, 2024 (the “Closing”), the Company completed the acquisition (the “Merger”) of Pre-Merger Oruka pursuant to an Agreement and Plan of Merger and Reorganization, dated as of April 3, 2024 (the “Merger Agreement”). 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 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”. On August 29, 2024, the Company changed its name from “ARCA biopharma, Inc.” to “Oruka Therapeutics, Inc.” and the Company effected a 1-for-12 reverse stock split (the “Reverse Stock Split”) of its common stock, par value $ 0.001 per share (“Company Common Stock”), which became effective on September 3, 2024. All references to common stock, options to purchase common stock, outstanding common stock warrants, common stock share data, per share data, Company Common Stock, and related information contained in the consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented, unless otherwise specifically indicated or the context otherwise requires. Immediately prior to the 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) and accrued interest on such note which converted to shares of Pre-Merger Oruka Common Stock) (the “Pre-Closing Financing”). The Company incurred transaction costs of $ 20.5 million, which were recorded as a reduction to additional paid-in capital in the consolidated financial statements. In connection with the Closing, the shares of Pre-Merger Oruka Common Stock were converted into shares of Company Common Stock and pre-funded warrants of Company Common Stock in accordance with the Exchange Ratio (as defined below and determined by the terms of the Merger Agreement). Moreover, as part of the Closing, (i) then-issued and outstanding 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. 86 The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. 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 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. Liquidity As of December 31, 2025, the Company had cash, cash equivalents, and marketable securities of $ 479.6 million and an accumulated deficit of $ 189.2 million. Since its inception, the Company has devoted substantially all of its resources to advancing the development of its portfolio of programs, organizing and staffing the Company, business planning, raising capital, and providing general and administrative support for these operations. Current and future programs will require significant research and development efforts, including preclinical and clinical trials, and regulatory approvals to commercialization. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operating activities through a combination of equity offerings and debt financings. The Company expects that its research and development and general and administrative costs will continue to increase significantly, including in connection with conducting future pre-clinical activities and clinical trials and manufacturing for its existing product candidates and any future product candidates to support commercialization and providing general and administrative support for its operations, including the costs associated with operating as a public company. The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company may be required to significantly curtail, delay, or discontinue one or more of its research or development programs or the commercialization of any product candidate, or be unable to expand its operations or otherwise capitalize on the Company’s business opportunities, as desired, which could materially harm the Company’s business, financial condition and results of operations. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected within these consolidated financial statements include but are not limited to research and development expenses and related prepaid or accrued costs and the valuation of stock-based compensation awards and related expenses. The Company bases its estimates on known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts, and experience. Actual results could differ materially from those estimates or assumptions. Concentrations of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and marketable securities. The Company’s investment policy limits investments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies, highly rated banks, and corporate issuers, subject to certain concentration limits and restrictions on maturities. The Company’s cash, cash equivalents and marketable securities are held by financial institutions that management believes are of high credit quality. The financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash deposits. Accounts at the Company’s U.S. banking institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per depositor. As of December 31, 2025, the balance at the Company’s U.S. banking institution exceeded the FDIC limits. The Company has not experienced any losses on its deposits of cash and cash equivalents and its accounts are monitored by management to mitigate risk. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents, and bond issuers. 87 The Company is dependent on third-party organizations to research, develop, manufacture, and process its product candidates for its development programs, including its two most advanced programs, ORKA-001 and ORKA-002. The Company expects to continue to be dependent on a small number of manufacturers to supply it with its requirements for all products. The Company’s research and development programs could be adversely affected by a significant interruption in the supply of the necessary materials. A significant amount of the Company’s research and development activities are performed under its agreements with Paragon Therapeutics, Inc. (“Paragon”) (see Note 14). Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the time of initial purchase to be cash equivalents. The cash equivalents were comprised of investments in money market funds, U. S. treasury securities, U.S. government agency securities, and debt securities and are stated at fair value. Marketable Securities The Company invests in marketable securities, primarily securities issued by the U.S. government and its agencies, commercial paper and corporate debt securities. The Company’s marketable securities are classified as available-for-sale and reported at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive loss. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in other income (expense) in the results of operations. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, an allowance is recorded for the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security. Impairment losses attributable to credit loss factors are charged against the allowance when management believes an available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit loss factors are recognized as a component of accumulated other comprehensive loss, net of unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income, net, in the results of operations. Marketable securities with stated maturities of greater than three months from the date of purchase but less than one year from the consolidated balance sheet date are classified as current, while marketable securities with maturities in one year or beyond one year from the consolidated balance sheet date are classified as long-term. The cost of securities sold is determined using the specific-identification method. Interest earned and adjustments for the amortization of premiums and discounts on investments are included in interest income on the consolidated statements of operations and comprehensive loss. Debt Issuance Costs Debt issuance costs incurred in connection with the Convertible Note (see Note 9) are recorded as a reduction of the carrying value of the notes payable liability on the Company’s balance sheet and are amortized to interest expense over the term of the loan using the effective interest method. At the effective time of the Merger the Convertible Note was converted to common stock and is no longer on the balance sheet as of December 31, 2025. 88 Fair Value Measurements Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets that are identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques. The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described above (see Note 6). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their relatively short maturity period. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to five years . Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Classification of Convertible Preferred Stock Prior to the reverse recapitalization, the Company had classified its Pre-Merger Oruka Series A Preferred Stock outside of stockholders’ equity on the Company’s consolidated balance sheet because the holders of such stock have certain liquidation rights in the event of a deemed liquidation event that, in certain situations, is not solely within the control of the Company and would require the redemption of the then-outstanding convertible preferred stock. Upon the closing of the Merger, the Company converted its Pre-Merger Oruka Series A Preferred Stock to Company Series B Preferred Stock and has classified the Company Series B Preferred Stock within stockholders’ equity on its consolidated balance sheet because the Company Series B Preferred Stock is not redeemable or puttable to the Company by the holder under any circumstances. In connection with the 2024 PIPE Financing (see Note 4) the Company issued Company Series A Preferred Stock, and has classified the Company Series A Preferred Stock outside of stockholders’ equity on the Company’s consolidated balance sheet because the holders of such stock have certain rights (see Note 10) that, in certain situations, is not solely within the control of the Company and would require the redemption of the then-outstanding convertible preferred stock. In November 2024, the Company Series A Preferred Stock shares were converted to common stock, and as of December 31, 2025 and December 31, 2024, there were no shares of Company Series A Preferred Stock outstanding. 89 Note Payable to Related Party The Company accounted for the Convertible Note (as defined in Note 9) at amortized cost. The Company considered if optional conversion features are required to be bifurcated and separately accounted for as a derivative. Costs related to the issuance of the Convertible Note were recorded as a debt discount, amortized over the term of the Convertible Note (see Note 9) and were accounted for as interest expense in other income (expenses) within the consolidated statements of operations using the effective interest method. At the effective time of the Merger, shares of Pre-Merger Oruka Common Stock issued pursuant to the conversion of the Convertible Note (including accrued interest) automatically converted into shares of Company Common Stock (see Note 1). Research and Development Contract Costs Accruals The Company records the costs associated with research studies and manufacturing development as incurred. These costs are a significant component of the Company’s research and development expenses, with a substantial portion of the Company’s ongoing research and development activities conducted by third-party service providers, including contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), and the Company’s related-party Paragon (see Note 14). The Company accrues for expenses resulting from obligations under its antibody discovery and option agreements (the “Option Agreements”) (see Note 14), by and among Paragon, Paruka Holding LLC (“Paruka”), an entity formed by Paragon as a vehicle to hold equity in the Company, and the Company as well as agreements with CROs, CMOs, and other outside service providers for which payment flows do not match the periods over which materials or services are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with Paragon, CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. If advance payments are made to Paragon, a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid asset which will be expensed as the contracted services are performed. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. As of December 31, 2025 and December 31, 2024, the Company has not experienced any material deviations between accrued and actual research and development expenses. Leases At the lease commencement date, when control of the underlying asset is transferred from the lessor to the Company, the Company classifies a lease as either an operating or finance lease and recognizes a right-of-use (“ROU”) asset and a current and non-current lease liability, as applicable, in the balance sheet if the lease has a term greater than one year. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise its option. At the lease commencement date, operating lease liabilities and their corresponding ROU assets are recorded at the present value of future minimum lease payments over the expected remaining lease term. The Company determines the present value of lease payments using the implicit rate, if it is readily determinable, or the risk-free discount rate for a period comparable with that of the lease term. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, lease expense includes amortization expense of the ROU asset recognized on a straight-line basis over the lease term and interest expense recognized on the finance lease liability. In addition, certain adjustments to the ROU asset may be required for items such as lease prepayments, incentives received or initial direct costs. As of December 31, 2025, the Company has two operating leases and no finance leases. The Company accounts for lease and non-lease components related to operating leases as a single lease component. The Company has elected that costs associated with leases having an initial term of 12 months or less are recognized in the consolidated statements of operations on a straight-line basis over the lease term and are not recorded on its consolidated balance sheets. Variable lease expense is recognized as incurred and consists primarily of real estate taxes, utilities, and other office space-related expenses. 90 Segment Reporting The Company operates as a single reportable and operating segment. Its Chief Executive Officer, serving as the Chief Operating Decision Maker (“CODM”), oversees operations on an aggregated basis to allocate resources effectively. In assessing the Company’s financial performance, the CODM regularly reviews total operating expenses and consolidated net loss. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs include salaries and bonuses, stock-based compensation, employee benefits, and external costs of vendors and consultants engaged to conduct research and development activities, as well as allocated human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities, and depreciation. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses on the accompanying consolidated balance sheet. 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. If nonrefundable advance payments represent a one-time cost for obtaining goods or services, with anticipated benefits to be utilized within a year of period end, the payment is expensed immediately. General and Administrative Expenses General and administrative expenses consist primarily of salaries and bonuses, stock-based compensation, employee benefits, finance and administration costs, patent and intellectual property costs, professional fees, as well as allocated human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities and depreciation. Commitments and Contingencies The Company is subject to contingent liabilities, such as legal proceedings and claims, that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability on the balance sheet. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of reasonably possible losses. As of December 31, 2025 and 2024, no liabilities were recorded for loss contingencies (see Note 15). Stock-Based Compensation The Company estimates the fair value of its stock awards using the Black-Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock, and certain management estimates, including the expected stock price volatility, the expected term of the award, the risk-free interest rate, and expected dividends. Expected volatility is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available. The Company selects companies with comparable characteristics with historical share price information that approximates the expected term of the equity-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period that approximates the calculated expected term of the stock options. The Company will continue to apply this method until a sufficient amount of historical information regarding the volatility of its stock price becomes available. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, commensurate with the expected term assumption. For employee and non-employee awards (except the Paruka warrant) the Company uses the simplified method, under which the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term. The Company utilizes this method due to lack of historical exercise data. For the Paruka warrant, the contractual term is used for the expected term. The expected dividend yield is assumed to be zero as the Company has no current plans to pay any dividends on common stock. The Company measures restricted common stock awards (“RSAs”) using the difference, if any, between the purchase price per share of the award and the fair value of the Company’s common stock at the date of grant. 91 The Company grants stock options, restricted stock awards, and warrants that are subject to service or performance-based vesting conditions. Compensation expense for awards to employees and directors with service-based vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if the Company had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. Forfeitures are accounted for as they occur. As of each reporting date, the Company estimates the probability that specified performance criteria will be met and does not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved. The Company has issued stock options, warrants, and RSAs with service-based and performance-based vesting conditions. The Company recognizes the compensation expense for the option to purchase common stock under the Employee Stock Purchase Plan (“ESPP”), based on the fair value of the common stock estimated using the closing price of the Company’s common stock as reported on the date of offering, less the purchase discount percentage provided for in the plan. The Company classifies stock-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified, as applicable. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and events other than those with stockholders. The Company’s unrealized gains and losses on marketable securities represent the only component of other comprehensive loss that is excluded from the reported net loss and that is presented in the consolidated statements of comprehensive loss. Net Loss per Share Attributable to Stockholders Basic and diluted net loss attributable to stockholders per share is presented in conformity with the two-class method required for participating securities (Pre-Merger Oruka Series A Preferred Stock). Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock and participating securities outstanding during the period. Pre-funded warrants were included as the exercise price is negligible and these warrants are fully vested and exercisable. Company Series A Preferred Stock and Company Series B Preferred Stock share the same characteristics as Common Stock and have no substantive preference attributed to them and, accordingly, have been considered as classes of Common Stock in the computation of net loss per share regardless of their legal form. Net loss is allocated to common stock based on its proportional ownership on an as-converted basis. Net loss is not allocated to participating securities as they do not have an obligation to fund losses. The weighted-average number of shares outstanding of common stock reflects changes in ownership over the periods presented. See Note 10 — Convertible Preferred Stock and Stockholders’ Equity. Diluted net loss per share is computed by dividing the net loss attributable to stockholders adjusted for income (expenses), net of tax, related to any diluted securities, by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of this calculation, stock options to purchase common stock, employee warrants to purchase common stock, and unvested RSAs are considered potential dilutive common shares. The Company generated a net loss for the periods presented. Accordingly, basic and diluted net loss per share is the same because the inclusion of the potentially dilutive securities would be anti-dilutive. Other income (expense), net Other income (expense), net, consists of interest earned on the Company’s cash, cash equivalents, and marketable securities; interest expense on the convertible note from a related party, and foreign currency transactions gains and losses. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. The potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. 92 The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. The Company had accrued no amounts for interest or penalties related to uncertain tax positions as of December 31, 2025. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S. and foreign jurisdictions. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period. The Company adopted ASU 2023-09 in 2025 and applied the update retrospectively for the period from February 6, 2024 (inception) to December 31, 2024, and the impact of the adoption of this update was not material to the Company’s consolidated financial position and results of operations since the update requires only enhancements of existing income tax disclosures. The additional required disclosures have been included in Note 13. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed disclosures, on an annual and interim basis, about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements. 3. Reverse Recapitalization and Pre-Closing Financing As described within the Reverse Recapitalization and Pre-Closing Financing section in Note 1, on August 29, 2024, the reverse recapitalization between Pre-Merger Oruka and ARCA was consummated. The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. At the effective time of the Merger, substantially all of the assets of ARCA consisted of cash and cash equivalents and other nominal non-operating assets and liabilities. No goodwill or intangible assets were recognized. As part of the recapitalization, the Company acquired the assets and liabilities listed below (in thousands): August 29, 2024 Cash and cash equivalents $ 4,940 Other current assets 114 Accrued liabilities ( 54 ) Net assets acquired $ 5,000 4. PIPE Financings On September 11, 2024, the Company entered into a Securities Purchase Agreement (the “2024 Securities Purchase Agreement”) for a private placement (the “2024 PIPE Financing”) with certain institutional and accredited investors. The closing of the 2024 PIPE Financing occurred on September 13, 2024. Pursuant to the 2024 Securities 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 share of Company Series A Preferred Stock was 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). In November 2024, the 2,439 shares of the Company Series A Preferred Stock were converted to 2,439,000 shares of Company Common Stock. On September 17, 2025, the Company entered into a Securities Purchase Agreement (the “2025 Securities Purchase Agreement”) for a private placement (the “2025 PIPE Financing”) with certain institutional and accredited investors. The closing of the 2025 PIPE Financing occurred on September 19, 2025. Pursuant to the 2025 Securities Purchase Agreement, the investors purchased an aggregate of 10,933,405 shares of Company Common Stock at a purchase price of $ 15.00 per share, and pre-funded warrants to purchase an aggregate of 1,066,666 shares of Company Common Stock at a purchase price of $ 14.999 per pre-funded warrant, for aggregate net proceeds of approximately $ 169.6 million (net of issuance costs of $ 10.4 million). 93 5. ATM Offering On October 3, 2025, the Company entered into a Sales Agreement with TD Securities (USA) LLC (the “Sales Agreement”), as its sales agent, pursuant to which the Company may issue and sell, from time to time, shares of the Company Common Stock for aggregate gross proceeds of up to $ 200.0 million under an at-the-market (“ATM”) offering program. The Company is not obligated to make any sales of shares under the Sales Agreement. No securities were sold under the ATM offering program during the year ended December 31, 2025. Subsequent to the year end, the Company issued and sold an aggregate of 1,167,895 shares of Company Common Stock pursuant to the ATM offering program at an average price per share of $ 33.99 for total net proceeds of $ 38.9 million after deducting sales agents’ commissions. 6. Fair Value Measurements The following tables present the Company’s fair value hierarchy for financial assets measured as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Cash equivalents Money market funds $ 30,268 $ — $ — $ 30,268 Commercial papers — 14,483 — 14,483 Total cash equivalents 30,268 14,483 — 44,751 Marketable securities Marketable securities, current U.S. treasury securities — 195,915 — 195,915 U.S. government agency securities — 28,757 — 28,757 Commercial papers — 21,241 — 21,241 Corporate debt securities — 44,196 — 44,196 Total marketable securities, current — 290,109 — 290,109 Marketable securities, long-term U.S. treasury securities — 75,730 — 75,730 Corporate debt securities — 54,998 — 54,998 U.S. government agency securities — 11,811 — 11,811 Total marketable securities, long-term — 142,539 — 142,539 Total cash equivalents and marketable securities $ 30,268 $ 447,131 $ — $ 477,399 December 31, 2024 Level 1 Level 2 Level 3 Total Cash equivalents Money market funds $ 6,350 $ — $ — $ 6,350 U.S. treasury securities — 19,660 — 19,660 U.S. government agency securities — 3,988 — 3,988 Commercial papers — 22,177 — 22,177 Total cash equivalents 6,350 45,825 — 52,175 Marketable securities Marketable securities, current U.S. treasury securities — 190,792 — 190,792 U.S. government agency securities — 12,966 — 12,966 Commercial papers — 34,811 — 34,811 Corporate debt securities — 75,504 — 75,504 Total marketable securities, current — 314,073 — 314,073 Marketable securities, long-term U.S. treasury securities — 13,607 — 13,607 U.S. government agency securities — 4,462 — 4,462 Total marketable securities, long-term — 18,069 — 18,069 Total cash equivalents and marketable securities $ 6,350 $ 377,967 $ — $ 384,317 There were no transfers in or out of Level 3 during the year ended December 31, 2025, and the period from February 6, 2024 (inception) to December 31, 2024. 94 7. Cash Equivalents and Marketable Securities Cash equivalents and marketable securities, which are classified as available-for-sale, consisted of the following as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents Money market funds $ 30,268 $ — $ — $ 30,268 Commercial papers 14,484 — ( 1 ) 14,483 Total cash equivalents 44,752 — ( 1 ) 44,751 Marketable securities Marketable securities, current U.S. treasury securities 195,607 308 — 195,915 U.S. government agency securities 28,724 33 — 28,757 Commercial papers 21,239 2 — 21,241 Corporate debt securities 44,173 26 ( 3 ) 44,196 Total marketable securities, current 289,743 369 ( 3 ) 290,109 Marketable securities, long-term U.S. treasury securities 75,612 118 — 75,730 Corporate debt securities 54,949 55 ( 6 ) 54,998 U.S. government agency securities 11,797 14 — 11,811 Total marketable securities, long-term 142,358 187 ( 6 ) 142,539 Total cash equivalents and marketable securities $ 476,853 $ 556 $ ( 10 ) $ 477,399 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents Money market funds $ 6,350 $ — $ — $ 6,350 U.S. treasury securities 19,656 4 — 19,660 U.S. government agency securities 3,988 — — 3,988 Commercial papers 22,180 — ( 3 ) 22,177 Total cash equivalents 52,174 4 ( 3 ) 52,175 Marketable securities Marketable securities, current U.S. treasury securities 190,748 55 ( 11 ) 190,792 U.S. government agency securities 12,967 1 ( 2 ) 12,966 Commercial papers 34,808 3 — 34,811 Corporate debt securities 75,537 7 ( 40 ) 75,504 Total marketable securities, current 314,060 66 ( 53 ) 314,073 Marketable securities, long-term U.S. treasury securities 13,639 — ( 32 ) 13,607 U.S. government agency securities 4,485 — ( 23 ) 4,462 Total marketable securities, long-term 18,124 — ( 55 ) 18,069 Total cash equivalents and marketable securities $ 384,358 $ 70 $ ( 111 ) $ 384,317 95 The following table summarizes the available-for-sale securities in an unrealized loss position, aggregated by major security type and length of time in a continuous unrealized loss position, for which an allowance for credit losses was not recorded as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Cash equivalents Commercial papers $ 14,483 $ ( 1 ) $ — $ — $ 14,483 $ ( 1 ) Marketable securities Marketable securities, current Corporate debt securities 8,771 ( 3 ) — — 8,771 ( 3 ) Marketable securities, long-term Corporate debt securities 6,143 ( 6 ) — — 6,143 ( 6 ) Total $ 29,397 $ ( 10 ) $ — $ — $ 29,397 $ ( 10 ) December 31, 2024 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Cash equivalents Commercial papers $ 18,199 $ ( 3 ) $ — $ — $ 18,199 $ ( 3 ) Marketable securities Marketable securities, current U.S. treasury securities 49,904 ( 11 ) — — 49,904 ( 11 ) U.S. government agency securities 4,713 ( 2 ) — — 4,713 ( 2 ) Corporate debt securities 39,468 ( 40 ) — — 39,468 ( 40 ) Marketable securities, long-term — — U.S. treasury securities 13,607 ( 32 ) — — 13,607 ( 32 ) U.S. government agency securities 4,462 ( 23 ) — — 4,462 ( 23 ) Total $ 130,353 $ ( 111 ) $ — $ — $ 130,353 $ ( 111 ) The Company evaluated its securities for credit losses and considered the decline in market value to be primarily attributable to current economic and market conditions and not to a credit loss or other factors. Additionally, the Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell the securities before recovery of the unamortized cost basis, which may be at maturity. There were no material realized gains or realized losses on marketable securities for the period presented. Given the Company’s intent and ability to hold such securities until recovery, and the lack of significant change in credit risk of these investments, the Company does not consider these marketable securities to be impaired as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, the Company did not record an allowance for credit losses. 96 The following table summarizes the contractual maturities of the Company’s marketable securities at estimated fair value (in thousands): December 31, 2025 December 31, 2024 Due in one year or less $ 290,109 $ 314,073 Due in 1-2 years 142,539 18,069 Total $ 432,648 $ 332,142 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2025 December 31, 2024 Accrued employee compensation and benefits $ 5,266 $ 2,041 Accrued research and development 4,384 1,084 Accrued professional and consulting 941 221 Total $ 10,591 $ 3,346 9. Note Payable with Related Party In March 2024, Pre-Merger Oruka entered into a Series A Preferred Stock and Convertible Note Purchase Agreement (the “Purchase Agreement”) with Fairmount Healthcare Fund II, L.P. (“Fairmount”), whereby Pre-Merger Oruka issued a convertible note (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. Immediately prior to the completion of the Merger (see Note 1), 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 2,722,207 shares of Company Common Stock. The Company assessed all terms and features of the Convertible Note in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the embedded features. The Company determined that the share settled redemption feature was clearly and closely related to the debt host and did not require separate accounting. The Company determined that the conversion options of the Convertible Note were not clearly and closely associated with a debt host. However, these features did not meet the definition of a derivative under ASC 815, Derivatives and Hedging, and as a result, did not require separate accounting as a derivative liability. The Company paid debt issuance costs of less than $ 0.1 million in relation to the Convertible Note. The debt issuance costs were reflected as a reduction of the carrying value of Convertible Note on the consolidated balance sheet and were being amortized as interest expense over the term of the Convertible Note using the effective interest method. For the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024, the Company recognized interest expenses related to the Convertible Note of nil and $ 1.5 million, respectively, which includes non-cash interest expense related to the amortization of debt issuance. As of December 31, 2025 and 2024, the Convertible Note was not outstanding. 97 10. Convertible Preferred Stock and Stockholders’ Equity Pre-Funded Warrants In August 2024, pursuant to the Subscription Agreement and immediately prior to the Closing, certain new and current investors purchased pre-funded warrants, which, at the effective time of the Merger, were exercisable for 5,522,207 shares of Company Common Stock at a purchase price of approximately $ 9.70 per warrant. After the Closing, there were 5,522,207 pre-funded warrants outstanding and were exercisable for 5,522,207 shares of the Company Common Stock at an exercise price of $ 0.01 per share. The Company issued 25,014 shares of Company Common Stock on net exercises of 25,024 pre-funded warrants during the year ended December 31, 2025. In September 2024, in connection with the 2024 PIPE Financing, the Company issued and sold 680,000 pre-funded warrants, at a purchase price of $ 22.999 per warrant, exercisable for 680,000 shares of Company Common Stock at an exercise price of $ 0.001 per share. The Company issued 299,986 shares of Company Common Stock on net exercises of 300,000 pre-funded warrants during the year ended December 31, 2025. In September 2025, in connection with the 2025 PIPE Financing, the Company issued and sold 1,066,666 pre-funded warrants, at a purchase price of $ 14.999 per warrant, exercisable for 1,066,666 shares of Company Common Stock at an exercise price of $ 0.001 per share. The pre-funded warrants were recorded as a component of stockholders’ equity within additional paid-in-capital and have no expiration date. Collectively, 6,943,849 and 6,202,207 pre-funded warrants were outstanding as of December 31, 2025 and 2024, respectively. Employee Warrants The Subscription Agreement provided for, among other things, the issuance of warrants to certain of Pre-Merger Oruka’s employees and directors immediately prior to the Closing. During the period from February 6, 2024 (inception) to December 31, 2024, 3,054,358 employee warrants were issued at an exercise price of $ 7.80 per warrant. These warrants vest over a period of four years . Per the terms of the Employee Warrant Agreement, the holders of the Company’s warrants shall not have any of the rights or privileges of a stockholder of the Company in respect of any shares purchasable upon the exercise of the warrant or any portion thereof unless and until a certificate or certificates representing such shares have been issued or a book entry representing such shares has been made and such shares have been deposited with the appropriate registered book-entry custodian. The Company recognizes compensation cost related to warrants on a straight-line basis over the requisite service period, which is the period in which the related services are received. During the year ended December 31, 2025, 19,570 warrants were exercised. No employee warrants were exercised during the period from February 6, 2024 (inception) to December 31, 2024. As of December 31, 2025 and 2024, 3,029,510 and 3,054,358 warrants, respectively, were outstanding. Convertible Preferred Stock In March 2024, Pre-Merger Oruka issued and sold an aggregate of 20,000,000 shares of Pre-Merger Oruka Series A Preferred Stock to Fairmount, at a purchase price of approximately $ 0.15 per share, for aggregate gross proceeds of $ 3.0 million. Pre-Merger Oruka incurred less than $ 0.1 million of issuance costs in connection with this transaction. Upon the issuance of the Pre-Merger Oruka Series A Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities as described below and determined that such features did not require the Company to separately account for these features. In August 2024, upon Closing, the Pre-Merger Oruka Series A Preferred Stock converted to 137,138 shares of Company Series B Preferred Stock. In September 2024, in connection with the 2024 PIPE Financing, the Company issued and sold an aggregate of 2,439 shares of the Company Series A Preferred Stock at a purchase price of $ 23,000.00 per share. In November 2024, the 2,439 shares of the Company Series A Preferred Stock were converted to 2,439,000 shares of Company Common Stock. As of December 31, 2025 and 2024, there are no outstanding shares of Company Series A Preferred Stock. 98 As of December 31, 2025 and 2024, convertible preferred stock consisted of the following (in thousands, except share data): December 31, 2025 Preferred Stock Authorized Preferred Stock Issued and Outstanding Carrying Value Common Stock Issuable Upon Conversion Company Series B Preferred Stock 251,504 137,138 $ 2,931 11,428,149 December 31, 2024 Preferred Stock Authorized Preferred Stock Issued and Outstanding Carrying Value Common Stock Issuable Upon Conversion Company Series B Preferred Stock 251,504 137,138 $ 2,931 11,428,149 Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of the Series A Non-Voting Convertible Preferred Stock (the “Series A Certificate of Designation”) filed in connection with the PIPE Financing, holders of Company Series A Preferred Stock were entitled to receive dividends on shares of Company Series A Preferred Stock equal to, on an as-if-converted-to-Company Common Stock basis, and in the same form as, dividends actually paid on shares of Company Common Stock. Except as provided in the Series A Certificate of Designation or as otherwise required by law, the Company Series A Preferred Stock did not have voting rights. The Company Series A Preferred Stock shall rank on parity with the Company Common Stock and Company Series B Preferred Stock upon any liquidation, dissolution or winding-up of the Company. Subject to the terms and limitations contained in the Series A Certificate of Designation, the Company Series A Preferred Stock issued in the PIPE Financing will not become convertible until the Company’s stockholders approve the conversion of the Company Series A Preferred Stock into shares of Company Common Stock in accordance with the listing rules of the Nasdaq Stock Market (the “Stockholder Approval”), which, on issuance, resulted in the Company Series A Preferred Stock being classified outside of stockholders’ equity on the Company’s consolidated balance sheet. Following the Stockholder Approval in November 2024, each share of Company Series A Preferred Stock was automatically converted into 1,000 shares of Company Common Stock. Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting Convertible Preferred Stock (the “Series B Certificate of Designation”) filed in connection with the Merger, holders of Company Series B Preferred Stock are entitled to receive dividends on shares of Company Series B Preferred Stock equal to, on an as-if-converted-to-Company Common Stock basis, and in the same form as, dividends actually paid on shares of Company Common Stock. Except as provided in the Series B Certificate of Designation or as otherwise required by law, the Company Series B Preferred Stock does not have voting rights. The Company Series B Preferred Stock shall rank on parity with the Company Common Stock as to the distribution of assets upon any liquidation, dissolution, or winding-up of the Company. Each share of Company Series B Preferred Stock is convertible at the option of the holder, at any time, and without the payment of additional consideration by the holder. As of each of December 31, 2025 and 2024, each outstanding share of Company Series B Preferred Stock was convertible into common stock at a ratio of approximately 83.3332:1 . Paruka Warrant On December 31, 2024, the Company settled its 2024 obligations under the Paruka Warrant Obligation (defined below) by issuing Paruka a warrant to purchase 596,930 shares of Company Common Stock at an exercise price of $ 19.39 per share. On December 12, 2025, the Company settled its 2025 obligations under the Paruka Warrant Obligation (defined below) by issuing Paruka a warrant to purchase 375,000 shares of Company Common Stock at an exercise price of $ 30.18 per share. The warrants have a term of 10 years, are fully vested, and are exercisable in part or full at any time during the term of the warrant. As of December 31, 2025 and 2024, the warrants issued under the Paruka Warrant Obligation are outstanding and unexercised. See Note 11 for additional information on the Paruka Warrant Obligation. Common Stock The Certificate of Incorporation provides for 545,000,000 authorized shares of Company Common Stock as of each of December 31, 2025 and 2024. As of December 31, 2025, 48,722,309 shares of Company Common Stock were issued and outstanding, including 2,159,609 shares of RSAs issued and outstanding. As of December 31, 2024, 37,440,510 shares of Company Common Stock were issued and outstanding, including 2,207,553 shares of RSAs issued and outstanding. 99 As of December 31, 2025 and 2024, the Company had common stock reserved for future issuance as follows: December 31, 2025 December 31, 2024 Shares issuable on conversion of Company Series B Preferred Stock 11,428,149 11,428,149 Shares issuable upon exercise of pre-funded warrants 6,943,849 6,202,207 Shares issuable upon exercise of warrants under the Paruka Warrant Obligation 971,930 596,930 Outstanding and issued stock options 3,950,958 1,567,760 Outstanding and issued employee warrants 3,029,510 3,054,358 Shares available for grant under 2024 Stock Incentive Plan 4,600,217 4,246,324 Shares available for grant under 2024 Employee Stock Purchase Plan 975,922 460,529 Total shares of common stock reserved 31,900,535 27,556,257 11. Stock-Based Compensation 2024 Equity Incentive Plan The 2024 Equity Incentive Plan (“2024 Plan”) was adopted by the board of directors of Pre-Merger Oruka on February 6, 2024. The 2024 Plan provided for Pre-Merger Oruka to grant stock options, restricted stock awards, restricted stock units, and other stock-based awards to employees, officers, directors, consultants, and advisors. Equity incentive stock options granted under the 2024 Plan generally vest over four years, subject to the participant’s continued service, and expire after ten years, although two non-employee stock options were granted with vesting terms less than four years. As of December 31, 2025, and 2024, 1,167,826 shares and 1,179,193 shares, respectively, were subject to options outstanding under the 2024 Plan and will become available under the 2024 Stock Incentive Plan (defined below) to the extent the options are forfeited or lapse unexercised. 2024 Stock Incentive Plan On August 22, 2024, the 2024 Stock Incentive Plan (“2024 Stock Plan”) was approved by the Company’s stockholders and on August 29, 2024, the board of directors of the Company (the “Board”) ratified the 2024 Stock Plan. The 2024 Stock Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stockholder-based awards and incentive bonuses. The 2024 Stock Plan is administered by the Compensation Committee of the Board (the “Compensation Committee”) or another committee designated by the Board to administer the Plan. The initial share pool under the 2024 Stock Plan was 4,634,891 shares of Company Common Stock. The shares that may be issued under the 2024 Stock Plan will be automatically increased on January 1 of each year beginning in 2025 and ending with a final increase on January 1, 2034 in an amount equal to 5 % of the diluted stock (including Company Common Stock, preferred stock and unexercised pre-funded warrants) on the preceding December 31, unless a lower, or no, increase is determined by the Compensation Committee. An additional 2,753,543 shares and 3,354,715 shares became available for issuance under the 2024 Stock Plan on January 1, 2025 and 2026, respectively, as a result of the annual increase pursuant to the evergreen provision. Current or prospective employees, officers, non-employee directors, and other independent service providers of the Company and its subsidiary are eligible to participate in the 2024 Stock Plan. As of December 31, 2025, 7,383,349 shares were reserved for issuance under the 2024 Stock Plan, of which 4,600,217 shares were available for future grant and 2,783,132 shares were subject to outstanding options. As of December 31, 2024, 4,634,891 shares were reserved for issuance under the 2024 Stock Plan, of which 4,246,324 shares were available for future grant and 388,567 shares were subject to outstanding options. 2024 Employee Stock Purchase Plan The 2024 Employee Stock Purchase Plan (the “ESPP”) became effective in August 2024, at which time 463,489 shares of Company Common Stock were reserved for issuance. Eligible employees may purchase shares of Company Common Stock under the ESPP at 85 % of the lower of the fair market value of the Company Common Stock as of the first or the last day of each offering period. Employees are limited to contributing 15 % of the employee’s eligible compensation and may not purchase more than $ 25,000 of stock during any calendar year. The ESPP will terminate ten years from the first purchase date under the plan, unless terminated earlier by the board of directors. The shares that may be issued under the ESPP will be automatically increased on January 1 of each year beginning in 2025 and ending with a final increase on January 1, 2034 in an amount equal to 1 % of the diluted stock (including Company Common Stock, preferred stock and unexercised pre-funded warrants) on the preceding December 31, unless a lower, or no increase is determined by the Compensation Committee. An additional 550,709 shares and nil shares became available for issuance under the ESPP on January 1, 2025 and 2026, respectively, as a result of the annual increase pursuant to the evergreen provision. The Company issued 35,316 and 2,960 shares during the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, respectively, out of the ESPP. As of December 31, 2025 and 2024, there were 975,922 and 460,529 shares, respectively, of Company Common Stock available in the pool for future issuances. For the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, stock-based compensation expenses related to the ESPP were $ 0.2 million and less than $ 0.1 million, respectively. 100 Stock Option Valuation The following table summarizes the weighted-average assumptions used in calculating the fair value of the awards for the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024: Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Expected term (in years) 6.0 6.1 Expected volatility 95.2 % 100.21 % Risk-free interest rate 4.32 % 4.26 % Expected dividend yield — — Stock Option Activity The following table summarizes the stock option activities under the 2024 Plan and 2024 Stock Plan for the year ended December 31, 2025: Number of Stock Options Outstanding Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in Thousands) Balance as of December 31, 2024 1,567,760 $ 11.39 9.4 $ 15,470 Granted 2,440,400 $ 13.35 Exercised ( 16,452 ) $ 8.59 Canceled/forfeited ( 40,750 ) $ 11.09 Balance as of December 31, 2025 3,950,958 $ 12.61 8.9 $ 69,966 Vested and expected to vest, December 31, 2025 3,950,958 $ 12.61 8.9 $ 69,966 Exercisable, December 31, 2025 972,898 $ 10.75 8.6 $ 19,029 The weighted average grant-date fair value per share of stock options granted during the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024 was $ 10.49 and $ 9.12 per share, respectively. Aggregate intrinsic value represents the difference between the estimated fair value of the underlying Company Common Stock and the exercise price of outstanding, in-the-money employee stock options. The total intrinsic value of the options exercised during the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024 was $ 0.3 million and nil , respectively. Restricted Stock Awards In February 2024 and March 2024, the Company issued 2,207,553 shares of RSAs to certain employees, directors, and consultants at a price of $ 0.0001 per share, the then par value of Pre-Merger Oruka Common Stock. Such RSAs have service-based vesting conditions only and vest over a four-year period, during which time all unvested shares are subject to forfeiture in the event the holder’s service with the Company voluntarily or involuntarily terminates. For each of the year ended December 31, 2025 and the period February 6, 2024 (inception) to December 31, 2024, stock-based compensation expenses related to RSAs were less than $ 0.1 million. The following table summarizes the RSA activity for the year ended December 31, 2025: Number of RSAs Weighted Average Grant Date Fair Value Unvested balance as of January 1, 2025 2,207,553 $ — Granted — $ — Vested ( 1,010,020 ) $ — Forfeited ( 47,944 ) $ — Unvested balance as of December 31, 2025 1,149,589 $ — The fair value of restricted stock awards that vested during the year ended December 31, 2025 was $ 14.0 million. 101 Option Agreements and the Paruka Warrant Obligation As part of the Option Agreements, the Company granted warrants 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, or based upon the agreed number of warrants as disclosed in the Warrant Agreement, with an exercise price equal to the fair market value of the underlying shares on the grant date (the “Paruka Warrant Obligation”). The grant dates for the issuance of warrants were expected to be December 31, 2024 and December 31, 2025 as all terms of the award, including number of shares and exercise price, will be known by all parties. The Company determined that the 2024 and 2025 grants are two separate grants, as there would be no obligation for the 2025 grant had the Company exercised or terminated all of the options under the Option Agreements prior to December 31, 2024. The service inception period for the grant precedes the grant date, with the full award being vested as of the grant date with no post-grant date service requirement. Accordingly, a liability related to the Paruka Warrant Obligation was recorded during the 2024 and 2025 interim periods. The liability is adjusted to fair value at the end of each interim reporting period, with changes in fair value recorded in the consolidated statements of operations as stock-based compensation expenses under research and development expenses. The Company settled its 2024 and 2025 obligations under the Paruka Warrant Obligation by issuing Paruka 596,930 and 375,000 warrants, respectively, to purchase the Company Common Stock at an exercise price per share per warrant of $ 19.39 and $ 30.18 , respectively. For the year ended December 31, 2025 and for the period from February 6 (inception) to December 31, 2024, $ 10.1 million and $ 10.4 million, respectively, were recognized as stock-based compensation expenses related to the Paruka Warrant obligation. On issuance of the warrants to Paruka, the fair value of the warrants was reclassified from liability to equity on the consolidated balance sheet as of December 31, 2025 and 2024. The following table summarizes the assumptions used in calculating the fair value of the Paruka Warrant Obligation for the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024: Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Expected term (in years) 10.0 10.0 Expected volatility 94.08 % 95.08 % Risk-free interest rate 4.19 % 4.58 % Expected dividend yield — — As of December 31, 2025, the unamortized expense related to Paruka Warrant Obligation was nil . Employee Warrants As stated above, in July 2024, the Subscription Agreement was amended and restated, among other things, for employee warrants to be issued to certain Pre-Merger Oruka employees and directors prior to the Closing. During the period from February 6, 2024 (inception) to December 31, 2024, the Company issued 3,054,358 warrants at an exercise price of $ 7.80 per warrant, which are accounted as equity in the consolidated financial statements. The employee warrants were subject to performance and service based vesting requirements and upon completion of the Merger the performance-based requirements had been achieved. The following table summarizes the employee warrant activity for the period during the year ended December 31, 2025: Number of Employee Warrants Outstanding Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in Thousands) Balance as of December 31, 2024 3,054,358 $ 7.80 9.5 $ 35,400 Granted — $ — Exercised ( 19,570 ) $ 7.80 Canceled/forfeited ( 5,278 ) $ 7.80 Balance as of December 31, 2025 3,029,510 $ 7.80 8.5 $ 68,194 Vested and expected to vest, December 31, 2025 3,029,510 $ 7.80 8.5 $ 68,194 Exercisable, December 31, 2025 1,221,338 $ 7.80 8.5 $ 27,492 No employee warrants were granted during the year ended December 31, 2025. The weighted average grant-date fair value per share of the employee warrants granted during the period from February 6, 2024 (inception) to December 31, 2024 was $ 6.27 per share. 102 Aggregate intrinsic value represents the difference between the estimated fair value of the underlying Company Common Stock and the exercise price of outstanding, in-the-money warrants. The total intrinsic value of the employee warrants exercised during the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024 was $ 0.4 million and nil , respectively. The following table summarizes the weighted-average assumptions used in calculating the fair value of the warrants for the period from February 6, 2024 (inception) to December 31, 2024: Period from February 6, 2024 (inception) to December 31, 2024 Expected term (in years) 6.1 Expected volatility 99.02 % Risk-free interest rate 4.15 % Expected dividend yield — Stock-Based Compensation Expense The following table summarizes the classification of the Company’s stock-based compensation expense in the consolidated statements of operations (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Research and development $ 17,019 $ 11,992 General and administrative 7,221 2,927 Total $ 24,240 $ 14,919 As of December 31, 2025, total unrecognized compensation cost related to the unvested stock options was $ 29.1 million, which is expected to be recognized over a weighted average period of approximately 2.9 years. As of December 31, 2025, total unrecognized compensation cost related to the unvested RSAs was less than $ 0.1 million, which is expected to be recognized over a weighted average period of 2.1 years. As of December 31, 2025, the unrecognized compensation cost related to the employee warrants was $ 11.0 million, which is expected to be recognized over a weighted average period of 2.3 years. The following table summarizes the award types of the Company’s stock-based compensation expense in the consolidated statements of operations (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Paruka Warrant Obligation $ 10,065 $ 10,357 Employee warrants 5,185 2,899 Stock options 8,805 1,626 Employee stock purchase plan 185 37 Total $ 24,240 $ 14,919 103 12. Segment Disclosures The Company operates and manages its business activities on a consolidated basis and operates in one reportable segment. The Company operates as a single reportable and operating segment. Its Chief Executive Officer , serving as the Chief Operating Decision Maker (“CODM”), oversees operations on an aggregated basis to allocate resources effectively. In assessing the Company’s financial performance, the CODM regularly reviews total operating expenses and consolidated net loss. The measure of segment assets is reported on the balance sheet as total consolidated assets. The Company’s long-lived assets consist primarily of property and equipment, net. As of December 31, 2025 all of long-lived assets were in the U.S. The table summarizes the segment loss from operations, including significant segment expenses (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Research and development personnel-related (excluding stock-based compensation) $ 14,957 $ 3,959 General and administrative personnel-related (excluding stock-based compensation) 7,811 5,054 Research and development stock-based compensation 17,019 11,992 General and administrative stock-based compensation 7,221 2,927 External research and development 64,378 57,680 Other research and development 4,286 1,429 General and administrative, excluding personnel-related and stock-based compensation 6,379 5,082 Total operating expenses 122,051 88,123 Loss from operations $ ( 122,051 ) $ ( 88,123 ) 13. Income Taxes 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. The following table summarizes the loss before income tax expense by jurisdiction for the periods indicated (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Domestic $ ( 105,433 ) $ ( 83,724 ) Foreign — — Loss before income tax expense $ ( 105,433 ) $ ( 83,724 ) For the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, the Company recognized no provision or benefit from income taxes. The difference between the Company’s provision for income taxes and the amounts computed by applying the statutory federal income tax rate to income before income taxes is as follows (amounts in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Amount Percent Amount Percent Tax benefit derived by applying the federal statutory rate to loss before income taxes $ ( 22,141 ) ( 21.00 )% $ ( 17,582 ) ( 21.00 )% Nontaxable or nondeductible items 54 0.05 76 0.09 Credits Research and development credits ( 2,109 ) ( 2.00 ) ( 2,840 ) ( 3.39 ) Other 949 0.90 ( 731 ) ( 0.87 ) Worldwide changes in unrecognized tax benefits ( 91 ) ( 0.09 ) — 0.00 Change in the valuation allowance 23,338 22.14 21,077 25.17 Income tax (benefit) expense $ — 0.00 % $ — 0.00 % 104 The components of the deferred tax assets and liabilities consist of the following (in thousands): December 31, 2025 December 31, 2024 Deferred tax assets Net operating loss carryforwards $ 6,398 $ 2,260 Research and development credits 5,372 3,080 Stock-based compensation 7,827 3,063 Accruals and other 1,083 424 Lease liability 448 203 Intangibles 2,943 1,477 Capitalized R&D expenses 25,069 10,994 Total deferred tax assets 49,140 21,501 Deferred tax liabilities Right- of- use asset ( 424 ) ( 184 ) Total deferred tax liabilities ( 424 ) ( 184 ) Valuation allowance ( 48,716 ) ( 21,317 ) Deferred tax assets, net $ — $ — The Company has established a full federal and state valuation allowance equal to the net deferred tax assets due to uncertainties regarding the realization of the deferred tax asset based on the Company’s lack of earnings history. The valuation allowance increased by $ 27.4 million and $ 21.3 million, respectively during the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024, primarily due to continuing loss from operations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Beginning balance $ 21,317 $ — Change in valuation allowance 27,399 21,317 Ending balance $ 48,716 $ 21,317 As of December 31, 2025 and 2024, the Company had U.S. net operating loss carryforwards (“NOL”) of $ 28.2 million and $ 10.8 million, respectively. The federal NOL carryforwards do not expire and can be utilized to offset up to 80 % of the taxable income in any tax year. As of December 31, 2025 and 2024, the Company also had state NOL carryforwards of $ 7.5 million and nil , respectively. The state NOL carryforwards will expire starting in 2044, if not utilized. For the year ended December 31, 2025, the Company had federal tax credit carryforwards and state tax credit carryforwards of $ 6.7 million and $ 0.5 million, respectively. For the period from February 6, 2024 (inception) to December 31, 2024 the Company had federal tax credit carryforwards and state tax credit carryforwards of $ 3.8 million and $ 0.4 million, respectively. The federal credits will expire starting in 2044 if not utilized, and the state research credit can be carried forward indefinitely. The Tax Reform Act of 1986 limits the use of net operating loss carryforwards in certain situations where changes occur in the stock ownership of a company. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has not performed a Section 382 analysis through December 31, 2025. To the extent that an assessment is completed in the future, the Company’s ability to utilize tax attributes could be restricted on a year-by-year basis and certain attributes could expire before they are utilized. The Company will examine the impact of any potential ownership changes in the future. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Beginning balance $ 1,047 $ — Additions based on tax positions taken in the current year 895 1,047 Reductions for tax positions taken in prior years ( 123 ) — Ending balance $ 1,819 $ 1,047 105 The Company includes penalties and interest expense related to income taxes as a component of income tax expense, as necessary. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. The Company is not currently under examination by income tax authorities in federal, state, or other jurisdictions. 14. Option Agreements and License Agreements Option Agreements – Paragon Therapeutics In March 2024, the Company entered into two antibody discovery and option agreements (the “Option Agreements”) with Paragon Therapeutics, Inc. (“Paragon”) and Paruka. Under the terms of each agreement, Paragon identifies, evaluates, and develops antibodies directed against certain mutually agreed therapeutic targets of interest to the Company. From time to time, the Company can choose to add additional targets to the collaboration upon agreement with Paragon and Paruka. Under the Option Agreements, the Company has the exclusive option to, on a research program-by-research program basis, be granted an exclusive, worldwide license to all of Paragon’s 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”). The Company has initiated certain research programs with Paragon that generally focus on discovering, generating, identifying and/or characterizing antibodies directed to a particular target (each, a “Research Program”), including for IL-23 and IL-17A/F for ORKA-001 and ORKA-002, respectively. The exclusive option with respect to each Research Program is exercisable at the Company’s sole discretion at such time as specified in the Option Agreements (the “Option Period”). There is no payment due upon exercise of an Option pursuant to the Option Agreements. In December 2025, the Company entered into an additional option agreement for an antibody with Paragon and Paruka to enter into a license agreement, which the Company exercised in December 2025. For the year ended December 31, 2025 the Company 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 the Company enters into the corresponding license agreement, it will be required to make non-refundable milestone payments to Paragon of up to $ 12.0 million under 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, the Company has not entered into a license agreement with Paragon and Paruka related to this additional option agreement. As part of the Option Agreements and the additional option agreement mentioned above, on December 31, 2024, the Company settled its 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, the Company settled its 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, the Company exercised its exclusive option to acquire certain rights to ORKA-001, and in December 2024, it entered into a corresponding license agreement with Paragon (the “ORKA-001 License Agreement”), pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize, or otherwise exploit certain antibodies and products targeting IL-23 in all fields other than the field of inflammatory bowel disease (“ORKA-001 Field”). In December 2024, the Company exercised its exclusive option to acquire certain rights to ORKA-002, and in February 2025, it entered into the corresponding license agreement with Paragon (the “ORKA-002 License Agreement” and together with the ORKA-001 License Agreement, the “License Agreements”), pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize, or otherwise exploit certain antibodies and products targeting IL-17A/F in all fields (“ORKA-002 Field” and together with the ORKA-001 Field, the “Fields”). Pursuant to each of the two License Agreements, Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F monospecific antibodies in the respective agreed-upon fields. The License Agreements provide the Company 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. 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. Pursuant to the terms of each of the License Agreements, the Company is obligated to pay Paragon non-refundable milestone payments of up to $ 12.0 million under each respective agreement upon the achievement of certain clinical development milestones and up to $ 10.0 million under each respective agreement upon the achievement of certain regulatory milestones. In addition, the Company is obligated to pay Paragon a low single-digit percentage royalty for antibody products for each of ORKA-001 and ORKA-002. For each of the License Agreements, the royalty term ends on the later of (i) the last-to-expire licensed patent or our patent directed to the manufacture, use or sale of a licensed antibody in the country at issue or (ii) 12 years from the date of first sale of a Company product. There is also a royalty step-down if there is no Paragon patent in effect during the royalty term for each program. Each of the License Agreements may be terminated on 60 days’ notice to Paragon, on material breach without cure, and on a party’s insolvency or bankruptcy to the extent permitted by law. As of December 31, 2025, the Company has incurred and expensed milestone payments of $ 7.0 million and $ 4.0 million in connection with the ORKA-001 License Agreement and the ORKA-002 License Agreement, respectively. 106 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, the Company was required to pay certain initiation fees, development costs and milestone payments to Paragon. For the ORKA-001 program, the Company 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 the Company’s 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. The Company was 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, the Company 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 the Company’s Option and achievement of development candidate. The Company was responsible for the development costs incurred through the completion of the IL-23 selection process, which was completed in December 2024. 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, the Company’s share of research and development expenses for the ORKA-001 program was nil . The Company recognized a milestone payment of $ 3.0 million related to completing the first dosing of a human patient in a Phase 2 trial 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, the Company’s share of research and development expense for the ORKA-002 program was $ 0.1 million. The Company recognized a milestone payment of $ 2.5 million related to completing the first dosing of a human subject in a Phase 1 trial 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. The Company expenses 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. The Company 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 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. 107 15. Commitments and Contingencies Leases In April 2024, the Company entered into an operating lease agreement for the Company’s headquarters in Menlo Park, California, which commenced on June 15, 2024 with an initial term of 39.5 months. In February 2025, the Company entered into an operating lease agreement in Waltham, Massachusetts, which commenced on April 1, 2025 with an initial term of 54 months. The Company leases office spaces under noncancelable operating lease agreements. Lease liabilities are based on the net present value of the remaining lease payments over the remaining lease terms. In determining the present value of lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities, as discount rates were not implicit or readily determinable. For the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, the Company recorded operating and variable lease expenses of $ 0.9 million and $ 0.3 million, respectively, in general and administrative expenses in its consolidated statements of operations. The following table presents the Company’s supplemental cash flow information related to leases (in thousands): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Cash paid for amounts included in the measurement of lease liabilities $ 700 $ 116 Weighted average remaining lease terms (years) 3.0 2.8 Weighted-average discount rate 13.07 % 17.95 % The following table summarizes a maturity analysis of the Company’s operating lease liabilities showing the aggregate lease payments as of December 31, 2025 (in thousands): Year ending December 31, Amount 2026 $ 822 2027 768 2028 397 2029 304 Total undiscounted lease payments 2,291 Less: imputed interest ( 359 ) Total discounted lease payments 1,932 Less: current portion of lease liability ( 619 ) Non-current portion of lease liability $ 1,313 Cell Line License Agreement In March 2024, the Company entered into the Cell Line License Agreement (the “Cell Line License Agreement”) with WuXi Biologics Ireland Limited (“WuXi Biologics”). Under the Cell Line License Agreement, the Company received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics’ know-how, cell line, biological materials (the “WuXi Biologics Licensed Technology”) and media and feeds to make, have made, use, sell and import certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (the “WuXi Biologics Licensed Products”). Specifically, the WuXi Biologics Licensed Technology is used in certain manufacturing activities in support of the ORKA-001 and ORKA-002 programs. In consideration for the license, the Company 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 the Company manufactures its commercial supplies of bulk drug product with a manufacturer other than WuXi Biologics or its affiliates, the Company is 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 the Company upon six months’ prior written notice and its payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by the Company that remains uncured for 60 days after written notice, (iii) by WuXi Biologics if the Company fails 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. 108 16. Net Loss Per Share The following table summarizes the basic and diluted net loss per share attributable to stockholders were calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2025 Period from February 6, 2024 (inception) to December 31, 2024 Loss Allocation Weighted Average Shares Outstanding Loss Per Share, Basic and Diluted Loss Allocation Weighted Average Shares Outstanding Loss Per Share, Basic and Diluted Common Stock $ ( 84,310 ) 45,614,142 $ ( 1.85 ) $ ( 65,037 ) 16,789,362 $ ( 3.87 ) Company Series A Preferred Stock (1) — — $ — ( 1,918 ) 495 $ ( 3,873.25 ) Company Series B Preferred Stock (2) ( 21,123 ) 137,138 $ ( 154.03 ) ( 16,769 ) 51,946 $ ( 322.81 ) Net loss $ ( 105,433 ) $ ( 83,724 ) (1) The weighted-average number of shares of as-converted Company Series A Preferred Stock used in the loss allocation was nil and 495,191 for the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024, respectively. (2) The weighted-average number of shares of as-converted Company Series B Preferred Stock used in the loss allocation was 11,428,129 and 4,328,844 for the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024, respectively. For the computation of basic net loss per share attributable to stockholders, the amount of weighted-average shares outstanding excludes all shares of unvested restricted common stock as such shares are not considered outstanding for accounting purposes until vested. The amount of weighted-average shares outstanding includes the pre-funded warrants as the exercise price is negligible and these warrants are fully vested and exercisable. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to stockholders for the periods presented because including them would have had an anti-dilutive effect were as follows: December 31, 2025 December 31, 2024 Outstanding employee warrants to purchase common stock 3,029,510 3,054,358 Outstanding unvested restricted stock awards 1,149,589 2,207,553 Outstanding and issued common stock options 3,950,958 1,567,760 Outstanding and issued warrant to Paruka 971,930 596,930 Total 9,101,987 7,426,601 17. Related Party Transactions Paragon and Paruka each beneficially own less than 5% of the Company’s capital stock through their respective holdings of Company Common Stock. Fairmount beneficially owns more than 5% of the Company’s capital stock, currently has one representative appointed to the Board, and beneficially owns more than 5% of Paragon. Fairmount appointed Paragon’s board of directors and has the contractual right to approve the appointment of any executive officers of Paragon. The following is a summary of related party accounts payable and other current liabilities (in thousands): December 31, 2025 December 31, 2024 Paragon reimbursable Option Agreements’ fees $ — $ 1,482 Paragon milestone payments for License Agreement — 4,000 Paragon reimbursable other research expenses — 515 Paragon reimbursable patent expenses 9 25 Total $ 9 $ 6,022 18. 401(k) Plan The Company has a retirement and savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering all U.S. employees. The 401(k) Plan allows employees to make pre- and post-tax contributions up to the maximum allowable amount set by the Internal Revenue Service. The Company may make contributions to this plan at its discretion. During the year ended December 31, 2025 the Company matched 100 % of each employee’s first 3 % of pay contributed to the 401(k) Plan. The company match was limited up to $ 10,500 per employee for the year ende d December 31, 202 5. The Company recognized an expense of $ 0.4 million for the year ended December 31, 202 5 . The Company did not make any matching contributions for the period from February 6, 2024 (inception) to December 31, 2024. 109 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.