What changed in this filing

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Item 1. Financial Statements

2026-05-13 compared with 2025-11-12 · 381 added, 670 removed, 423 unchanged (71% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

12 unchanged sentences

Operating lease liability, current

Related party common stock warrant liability

Related party accounts payable and other current liabilities

5 unchanged sentences

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

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

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

251,504 shares authorized as of March 31, 2026 and December 31, 2025;

137,138 shares issued and outstanding as of March 31, 2026 and December 31, 2025

Common stock, $ 0.001 par value;

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

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

545,000,000 shares authorized as of March 31, 2026 and December 31, 2025;

50,167,623 and 48,722,309 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

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ORUKA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

(inception) to

September 30,

Operating expenses:

5 unchanged sentences

Interest income

Interest expense (3)

Other expense, net

Total other income (expense), net

Net change in unrealized gains (losses) on marketable securities

Comprehensive loss

Other income (expense), net

Total other income, net

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

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

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

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

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

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

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

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

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

(1) Includes related party amounts of $ 3,000 and $ 2,122 for the

three months ended March 31, 2026 and 2025, respectively

(2) Includes related party amounts of $ 4 and $ 110 for the three

months ended March 31, 2026 and 2025, respectively

The accompanying notes are an integral part of

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ORUKA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(In thousands)

Other comprehensive income (loss):

Unrealized gains (losses) on marketable securities

Total comprehensive loss

The accompanying notes are an integral part of

these condensed consolidated financial statements.

ORUKA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(In thousands, except share data)

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Stockholders’

Income (Loss)

Balances as of December 31, 2025

Stock-based compensation expense

Net change in unrealized gains (losses) on marketable securities

Balances as of March 31, 2025

$ ( 189,157 )

Issuance of common stock under employee stock purchase plan

Stock-based compensation expense

Net change in unrealized gains (losses) on marketable securities

Balances as of June 30, 2025

$ ( 129,297 )

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

Issuance cost of the 2025 PIPE Financing

Issuance of common stock upon exercise of stock options and employee warrants

Issuance of common stock under the at-the-market (“ATM”) offering program, net of commissions

Issuance of common stock upon vesting of restricted stock units

Issuance of common stock upon exercise of prefunded warrants

Stock-based compensation expense

Net change in unrealized gains (losses) on marketable securities

Balances as of September 30, 2025

Unrealized gains (losses) on marketable securities

Balances as of March 31, 2026

$ ( 220,977 )

Preferred Stock

Comprehensive

Stockholders’

as of February 6, 2024 (inception)

Issuance of common

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

Stock-based compensation

Balances as of

March 31, 2024

Stock-based compensation

Balances as of

June 30, 2024

Exchange of Series

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

Balances as of December 31, 2024

Stock-based compensation expense

Unrealized gains (losses) on marketable securities

Balances as of March 31, 2025

$ ( 104,723 )

Conversion of convertible

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

Issuance of common

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

Issuance costs

of Pre-Closing Financing and reverse recapitalization

Issuance of common

stock to former stockholders of ARCA biopharma, Inc.

in connection with the closing of the reverse recapitalization

Issuance of common

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

Issuance cost of

the 2024 PIPE Financing

Stock-based compensation

as of September 30, 2024

The accompanying notes are an integral part of

3 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

(inception) to

September 30,

Cash flows from operating activities:

2 unchanged sentences

Net accretion of premiums and discounts on marketable securities

Non-cash interest expense

Non-cash lease expense

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Proceeds from maturities of marketable securities

Net cash used in investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of Pre-Merger Oruka Series A Preferred Stock, net of issuance costs paid

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

Proceeds from the Pre-Closing Financing, net

Proceeds from the PIPE Financings, net

Cash acquired in connection with the reverse recapitalization

Proceeds from issuance of common stock

Proceeds from issuance of common stock upon exercise of stock options and employee warrants

Proceeds from at-the-market offering, net of commissions

Net cash provided by financing activities

2 unchanged sentences

Cash and cash equivalents at end of period

Supplemental disclosures of non-cash operating and financing activities:

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

Assets acquired in connection with the reverse recapitalization

Other liabilities assumed in connection with the reverse recapitalization

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

PIPE Financing issuance costs included in accounts payable

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

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

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

Supplemental disclosures of non-cash financing activities:

Amounts receivable related to exercise of stock options and employee warrants

The accompanying notes are an integral part of

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Oruka Therapeutics, Inc.,

together with its subsidiaries (collectively, the “Company”), formerly known as ARCA biopharma, Inc.

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).

together with its subsidiary (collectively, the “Company”), is a clinical-stage biopharmaceutical company.

The Company is

headquartered in Menlo Park, California.

The Company is led by the Pre-Merger Oruka management team and is focused on developing biologics

for psoriasis and other inflammatory and immunology indications.

The Company is focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”)

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

The condensed consolidated

financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting

principles (“GAAP”) for interim financial reporting and the rules and regulations of the U.S.

Securities and Exchange Commission

(the “SEC”) and therefore do not include all information and disclosures normally included in the annual consolidated financial

The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries.

Intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote

disclosures normally included in the financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant

to such rules and regulations.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited

financial statements and the related notes thereto for the period ended December 31, 2024 included in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 6, 2025 (the “Annual Report”).

The information

as of December 31, 2024, included in the condensed consolidated balance sheets was derived from the Company’s audited financial

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s

annual consolidated financial statements, and in the opinion of the Company’s management, reflect all adjustments, which include

only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial statements.

financial statements and accompanying notes reflect the operations of the Company and its wholly-owned subsidiary.

Intercompany balances

and transactions have been eliminated in consolidation.

The condensed consolidated financial statements and accompanying notes have been

prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim

financial reporting and the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”) and therefore

do not include all information and disclosures normally included in the annual consolidated financial statements.

Certain information

and footnote disclosures normally included in the financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted

pursuant to such rules and regulations.

Accordingly, these condensed consolidated financial statements should be read in conjunction with

the audited financial statements and the related notes thereto, included in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2025 filed with the SEC on March 12, 2026 (the “Annual Report”).

The information as of December 31, 2025,

included in the condensed consolidated balance sheets was derived from the Company’s audited financial statements.

These unaudited

interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial

statements, and in the opinion of the Company’s management, reflect all adjustments, which include only normal recurring adjustments

necessary for a fair statement of the Company’s condensed consolidated financial statements.

The results for the three

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

2025 or for any other interim period or for any other future year.

Reverse Recapitalization, Pre-Closing Financing, and Reverse

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, 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 condensed

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

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

Immediately prior to the

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

The Company incurred transaction costs of $ 20.5 million which were recorded as a reduction to additional paid-in capital

in the condensed 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).

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;

share of Pre-Merger Oruka Series A convertible preferred stock, par value $ 0.0001 (“Pre-Merger Oruka Series A Preferred Stock”)

was converted into the right to receive a number of shares of ARCA Series B non-voting convertible preferred stock, par value $ 0.001 per

share (“Company Series B Preferred Stock”), which are convertible into shares of Company Common Stock at a conversion ratio

of approximately 83.3332:1 after the Reverse Stock Split, (iii) each outstanding option to purchase Pre-Merger Oruka Common Stock was

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

Oruka Common Stock was converted into a warrant to purchase shares of Company Common Stock.

The Merger was accounted

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

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

accounting acquirer for financial reporting purposes.

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

(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.

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).

Sales Agreement

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

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

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

offering program.

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

Liquidity and Going Concern

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

it will need additional financing to fund its operating activities.

The Company has not generated

any revenue from product sales or other sources and has incurred significant operating losses and negative cash flows from operations

since inception.

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

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

As of September 30, 2025,

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

The Company’s management expects that the existing

cash, cash equivalents, and marketable securities will be sufficient to fund the Company’s operating plans for at least twelve months

months ended March 31, 2026 are not necessarily indicative of results that may be expected for the year ending December 31, 2026 or for

any other interim period or for any other future year.

As of March 31, 2026, the Company had cash, cash equivalents, and marketable

securities of $ 496.0 million and an accumulated deficit of $ 221.0 million.

The Company’s management expects that the existing cash,

cash equivalents, and marketable securities will be sufficient to fund the Company’s operating plans for at least twelve months

from the date these condensed consolidated financial statements were issued.

The Company expects that its research and development and

general and administrative costs will continue to increase significantly, including in connection with conducting 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.

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.

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 preclinical 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.

Summary of Significant Accounting

The Company’s significant

accounting policies are detailed in the Notes titled “1.

Nature of the Business and Basis of Presentation” and “2.

of Significant Accounting Policies” of the Company’s Annual Report.

The Company uses the same accounting policies in preparing

its quarterly and annual financial statements.

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

months ended September 30, 2025.

There have been no significant

changes from the significant accounting policies and estimates disclosed in the Note titled “2.

Summary of Significant Accounting

Policies” of the Company’s Annual Report.

The Company uses the same accounting policies in preparing its quarterly and annual

financial statements.

Use of Estimates

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could differ materially from those estimates or assumptions.

Recently Adopted Accounting Pronouncements

There have been no recent accounting pronouncements

or changes in accounting pronouncements adopted during the three months ended March 31, 2026 that are of significance or potential significance

to the Company.

Recently Issued Accounting Pronouncements

In December 2023, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 is currently evaluating the impact of the adoption of this

ASU on its condensed consolidated financial statements.

In November 2024, the FASB

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The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements.

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 common stock for aggregate gross proceeds of up to $ 200.0 million under an at-the-market (“ATM”) equity

offering program.

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

During the three months ended March

31, 2026, the Company issued and sold an aggregate of 1,167,895 shares of common stock pursuant to the ATM offering program for total

net proceeds of $ 38.9 million after deducting sales agents’ commissions.

Fair Value Measurements

The following tables present

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

September 30, 2025

the Company’s fair value hierarchy for financial assets measured as of March 31, 2026 and December 31, 2025 (in thousands):

March 31, 2026

Cash equivalents

Money market funds

treasury securities

government agency securities

Commercial papers

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There were no transfers in

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

or out of Level 3 during the three months ended March 31, 2026.

December 31, 2025

1 unchanged sentence

Money market funds

treasury securities

government agency securities

Commercial papers

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treasury securities

Corporate debt securities

government agency securities

3 unchanged sentences

The following tables summarize

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

the cash equivalents and marketable securities, which are classified as available-for-sale as of March 31, 2026 and December 31, 2025

(in thousands):

September 30, 2025

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

March 31, 2026

Cash equivalents

Money market funds

treasury securities

government agency securities

Commercial papers

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December 31, 2025

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Cash equivalents

Money market funds

treasury securities

government agency securities

Commercial papers

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treasury securities

Corporate debt securities

government agency securities

3 unchanged sentences

the available-for-sale securities in an unrealized loss position, aggregated by major security type and length of time in a continuous

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

September 30, 2025

unrealized loss position, for which an allowance for credit losses was not recorded as of March 31, 2026 and December 31, 2025 (in thousands):

March 31, 2026

Less than 12 months

12 months or longer

Unrealized Losses

Cash equivalents

3 unchanged sentences

treasury securities

government agency securities

Commercial papers

Corporate debt securities

Marketable securities, long-term

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Marketable securities, current

treasury securities

government agency securities

Corporate debt securities

Marketable securities, long-term

treasury securities

government agency securities

Corporate debt securities

The Company evaluated its

6 unchanged sentences

Given the Company’s intent and ability to hold such securities until recovery, and the lack of significant change in credit risk

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

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

of these investments, the Company does not consider these marketable securities to be impaired as of March 31, 2026 and December 31, 2025.

As of March 31, 2026 and December 31, 2025, the Company did not record an allowance for credit losses.

The following table summarizes

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

September 30,

Due in one year or less

3 unchanged sentences

and other current liabilities (in thousands):

September 30,

Accrued research and development

1 unchanged sentence

Accrued professional and consulting

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.

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.

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

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

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

As of December 31, 2024 and September

30, 2025, the Convertible Note was not outstanding.

Preferred Stock and Stockholders’ Equity

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 and after the Closing, are now exercisable for 5,522,207 shares of the Company Common Stock at an exercise price of

$ 0.01 per share.

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.

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.

In August 2024, certain investors in the Company were issued pre-funded

warrants which were exercisable for shares of the Company’s common stock at an exercise price of $ 0.01 per share.

During the three

months ended March 31, 2026, the Company issued 57,212 shares of common stock on net exercises of 57,228 pre-funded warrants out of the

pre-funded warrants previously issued in August 2024.

No pre-funded warrants were exercised during the three months ended March 31, 2025.

As of March 31, 2026 and December 31, 2025, 5,439,955 and 5,497,183 pre-funded warrants, respectively, remain issued and outstanding from

the August 2024 issuance.

In September 2024, certain investors in the Company were issued pre-funded

warrants which were exercisable for shares of the Company’s common stock at an exercise price of $ 0.001 per share.

During the three

months ended March 31, 2026 and 2025, no pre-funded warrants were exercised out of the pre-funded warrants previously issued in September

As of each of March 31, 2026 and December 31, 2025, 380,000 pre-funded warrants remain issued and outstanding from the September

2024 issuance.

In September 2025, certain investors in the Company were issued pre-funded

warrants which were exercisable for shares of the Company’s common stock at an exercise price of $ 0.001 per share.

During the three

months ended March 31, 2026, no pre-funded warrants were exercised out of the pre-funded warrants previously issued in September 2025.

As of each of March 31, 2026 and December 31, 2025, 1,066,666 pre-funded warrants remain issued and outstanding from the September 2025

On issuance, the pre-funded

warrants were recorded as a component of stockholders’ equity within additional paid-in-capital and have no expiration date.

Collectively,

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

6,886,621 and 6,943,849 pre-funded warrants were outstanding as of March 31, 2026 and December 31, 2025, 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 .

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.

3,054,358 warrants were outstanding as of September 30, 2025 and December 31, 2024.

During 2024, employee warrants

were issued at an exercise price of $ 7.80 per warrant to the employees and directors of the Company.

These warrants vest over a period

of four years .

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.

As of March 31, 2026 and December 31, 2025, 2,767,511 and 3,029,510 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 September 30, 2025 and December 31, 2024, there were no outstanding shares of Company Series A Preferred

As of September 30, 2025, Company Series B Preferred

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

September 30, 2025

As of March 31, 2026, Series B preferred stock

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

March 31, 2026

Stock Issuable

Company Series B Preferred 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

Series B preferred 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”), holders of

Series B preferred stock are entitled to receive dividends on shares of Series B preferred stock equal to, on an as-if-converted-to common

stock basis, and in the same form as, dividends actually paid on shares of common stock.

Except as provided in the Series B Certificate

of Designation or as otherwise required by law, Series B preferred stock does not have voting rights.

Series B preferred stock shall rank

on parity with the Company’s common stock as to the distribution of assets upon any liquidation, dissolution, or winding-up of the

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

common stock at a ratio of approximately 83.3332:1 .

As of March 31, 2026, each outstanding share of 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 Holding LLC (“Paruka”)

a warrant to purchase 596,930 shares of Company Common Stock at an exercise price of $ 19.39 per share.

The warrant has a term of 10 years,

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

As of September 30, 2025, the warrant

issued to settle the 2024 Paruka Warrant Obligation was outstanding and unexercised.

See Note 8 for additional information on the Paruka

Warrant Obligation.

As of September 30, 2025,

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

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

shares of Company Common Stock were issued and outstanding, including 2,207,553 shares of restricted common stock awards (“RSAs”)

issued and outstanding.

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

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

September 30,

Shares issuable on conversion of Company Series B Preferred Stock

On December 31, 2024, the Company settled its 2024 obligations under

the Paruka Warrant Obligation (defined below) by issuing Paruka Holding LLC (“Paruka”) a warrant to purchase 596,930 shares

of the Company’s 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 the Company’s 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 March 31, 2026 and December 31, 2025, the warrants issued under the Paruka Warrant

Obligation are outstanding and unexercised.

See Note 8 for additional information on the Paruka Warrant Obligation.

As of March 31, 2026, the

Certificate of Incorporation provided for 545,000,000 authorized shares of common stock.

As of March 31, 2026, 50,167,623 shares of common

stock were issued and outstanding, including 2,159,609 shares of restricted common stock awards (“RSAs”) issued and outstanding.

As of March 31, 2026 and December 31, 2025, the

Company had common stock reserved for future issuance as follows:

Shares issuable on conversion of Series B preferred stock

Shares issuable upon exercise of pre-funded warrants

Shares issuable upon exercise of warrant under the Paruka Warrant Obligation

Shares issuable upon exercise of warrants under the Paruka Warrant Obligation

Outstanding and issued stock options

Outstanding and issued employee warrants

Outstanding and issued restricted stock units

Shares available for grant under 2024 Stock Incentive Plan

3 unchanged sentences

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 September 30, 2025, 1,179,193 shares were subject to options outstanding under the

2024 Plan and will become available under the 2024 Stock Incentive Plan (defined below) to the extent the options are forfeited or lapse

Plan (“2024 Plan”) was adopted on February 6, 2024.

The 2024 Plan provided for the Company to grant stock options, restricted

stock awards, restricted stock units, and other stock-based awards to employees, officers, directors, consultants, and advisors.

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.

As of March 31, 2026 and December 31, 2025, 1,155,540 and 1,167,826 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.

An additional 2,753,543 shares became available for issuance under the 2024 Stock Plan on January 1, 2025 as a result of the annual increase

pursuant to the evergreen provision.

As of September 30, 2025,

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

shares were subject to outstanding options.

The 2024 Stock Incentive

Plan (“2024 Stock Plan”) became effective in August 2024.

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.

An additional

3,354,715 shares became available for issuance under the 2024 Stock Plan on January 1, 2026 as a result of the annual increase pursuant

to the evergreen provision.

As of March 31, 2026, 10,667,146

shares were reserved for issuance under the 2024 Stock Plan, of which 6,129,190 shares were available for future grant and 4,537,956 shares

were subject to outstanding options and restricted stock units.

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.

2024 Employee Stock Purchase Plan

1 unchanged sentence

Plan (the “ESPP”) became effective in August 2024.

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.

An additional 550,709 shares became available for issuance under the ESPP on January 1, 2025 as a result of the

annual increase pursuant to the evergreen provision.

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

months ended September 30, 2025, respectively, out of the ESPP, and as of September 30, 2025, there were 1,001,003 shares of Company Common

Stock available in the pool for future issuances.

For each of the three and

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

(inception) to September 30, 2024, stock-based compensation expense related to the ESPP was less than $ 0.1 million.

Eligible employees may purchase shares of common stock under the ESPP at 85 %

of the lower of the fair market value of the 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

The Company issued no shares

during the three months ended March 31, 2026 and 2025, out of the ESPP.

As of each of March 31, 2026 and December 31, 2025, there were

975,922 shares of common stock available in the pool for future issuances.

For each of the three months

ended March 31, 2026 and March 31, 2025, stock-based compensation expenses related to the ESPP were less than $ 0.1 million.

Stock Option Valuation

The following table summarizes

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

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

September 30,

2025 Three Months

September 30,

2024 Nine Months

September 30,

2025 Period from

(inception) to

September 30,

the weighted-average assumptions used in calculating the fair value of the awards for the three months ended March 31, 2026 and 2025:

Three Months Ended

Expected term (in years) 6.0 6.0

2 unchanged sentences

Expected dividend yield —

Stock Options

Stock Option Activity

The following table summarizes

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

the stock option activities under the 2024 Plan and the 2024 Stock Plan for the three months ended March 31, 2026:

Outstanding Weighted

4 unchanged sentences

Granted 1,482,951 $ 34.31

Exercised ( 58,593 ) $ 11.91

Canceled/forfeited ( 77,965 ) $ 15.04

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

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

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

Balance as of March 31, 2026 5,297,351 $ 18.66 9.0 $ 160,987

Vested and expected to vest, March 31, 2026 5,297,351 $ 18.66 9.0 $ 160,987

Exercisable, March 31, 2026 1,269,986 $ 12.11 8.4 $ 46,912

The weighted average grant-date

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

Aggregate intrinsic

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

in-the-money employee stock options.

fair value per share of stock options granted during the three months ended March 31, 2026 was $ 25.68 per share.

The aggregate intrinsic value represents the difference between the

closing price of the Company’s common stock on March 31, 2026 and the exercise price of outstanding, in-the-money employee stock

The aggregate intrinsic value

of the options exercised during the three months ended March 31, 2026 and 2025 were $ 1.4 million and nil , respectively.

Restricted Stock Units

The Company began issuing restricted stock units (“RSUs”)

under the 2024 Stock Plan during the quarter ended March 31, 2026.

An RSU is an agreement to issue shares of the Company’s common

stock at the time of vesting.

RSUs generally vest over a four-year service period.

RSUs granted during the annual refresher awards vest

typically in equal quarterly installments over four years, subject to continued employment.

RSUs granted to a new employee cliff vest

25 % on the Company’s quarterly vesting date on or after the first anniversary of the grant date, followed by 12 equal quarterly

vesting thereafter.

Upon vesting, each RSU converts into one share of the Company’s common stock.

Stock-based compensation

expense associated with RSUs are based on the fair value of the Company’s common stock on the grant date, which equals the closing

market price of the Company’s common stock on the grant date.

For RSUs, the Company recognizes compensation expense over the vesting

period of the awards that are ultimately expected to vest.

The following table summarizes

the RSU activity for the three months ended March 31, 2026:

Unvested as of December 31, 2025

Canceled/forfeited

Unvested as of March 31, 2026

The fair value of RSUs that vested during the

three months ended March 31, 2026 was $ 1.0 million.

For the three months ended March 31, 2026 and

March 31, 2025, stock-based compensation expenses related to RSUs was $ 1.0 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.

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

30, 2025, respectively.

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

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

than $ 0.1 million.

The following table summarizes

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

Weighted Average

the restricted stock awards (“RSA”) activity for the three months ended March 31, 2026:

Unvested balance as of December 31, 2025

Unvested balance as of September 30, 2025

Canceled/ forfeited

Unvested balance as of March 31, 2026

The fair value of RSAs that

vested during the three months ended March 31, 2026 was $ 4.5 million.

For the three months ended

March 31, 2026 and March 31, 2025, stock-based compensation expenses related to RSAs were less than $ 0.1 million.

Option Agreements and Paruka Warrant Obligation

As part of the Option Agreements

(defined in Note 10 below) on December 31, 2024 the Company granted, and on December 31, 2025, will grant, Paruka a warrant

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

price equal to the fair market value of the underlying shares on the grant date (the “Paruka Warrant Obligation”).

(defined in Note 10 below), 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, the warrant expected to be granted to Paruka was accounted for as a liability

on the balance sheet on the service inception date and, after the initial recognition, the liability is adjusted to fair value at the

end of each reporting period, with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive

loss as stock-based compensation expense under research and development expenses.

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

September 30, 2024, $ 7.7 million was recognized as stock-based compensation expenses related to the December 31, 2024 Paruka Warrant Obligation.

On issuance of the warrant to Paruka on December 31, 2024, the fair value of the warrant issued on December 31, 2024 of $ 10.4 million

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

As of September 30, 2025,

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

For the three and nine months ended September

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

2025 Paruka Warrant Obligation.

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

Paruka Warrant Obligation.

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

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 common

stock at an exercise price per warrant of $ 19.39 and $ 30.18 , respectively.

For the three months ended March 31, 2026 and 2025, nil and

$ 1.4 million, respectively, was recognized as stock-based compensation expense related to the Paruka Warrant Obligation.

As of each of

March 31, 2026 and December 31, 2025, the unamortized expense related to the 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 condensed consolidated financial

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.

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

were granted.

The following table summarizes

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

the employee warrant activity during the three months ended March 31, 2026:

Outstanding Weighted

3 unchanged sentences

Balance as of December 31, 2025 3,029,510 $ 7.80 8.5 $ 68,194

Exercised ( 137,003 ) $ 7.80

Canceled/forfeited ( 124,996 ) $ 7.80

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

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

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

Balance as of March 31, 2026 2,767,511 $ 7.80 8.3 $ 114,160

Vested and expected to vest, March 31, 2026 2,767,511 $ 7.80 8.3 $ 114,160

Exercisable, March 31, 2026 1,265,741 $ 7.80 8.3 $ 52,212

The aggregate intrinsic

value represents the difference between the closing price of the Company’s common stock as of March 31, 2026 and the exercise

price of outstanding, in-the-money warrants.

The aggregate intrinsic value

of the employee warrants exercised during the three months ended March 31, 2026 and 2025 was $ 3.5 million and nil , respectively.

Stock-Based Compensation Expense

The following table summarizes

the classification of the Company’s stock-based compensation expense in the condensed consolidated statements of operations and

comprehensive loss (in thousands):

September 30,

(inception) to

September 30,

The following table summarizes the classification

of the Company’s stock-based compensation expense in the condensed consolidated statements of operations (in thousands):

Three Months Ended

Research and development

General and administrative

As of September 30, 2025,

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

a weighted average period of approximately 3.1 years.

As of September 30, 2025,

total unrecognized compensation cost related to the unvested RSAs was less than $ 0.1 million, which is expected to be recognized over

a weighted average period of 2.4 years.

As of September 30, 2025,

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

average period of 2.6 years.

As of March 31, 2026, total

unrecognized stock-based compensation expenses related to the unvested stock options, RSUs, RSAs, employee warrants, and ESPP was $ 84.1

million, which is expected to be recognized over a weighted average period of approximately 3.1 years.

The following table summarizes

the award types of the Company’s stock-based compensation expense in the condensed consolidated statements of operations and comprehensive

loss (in thousands):

September 30,

(inception) to

September 30,

the award types of the Company’s stock-based compensation expense in the condensed consolidated statements of operations (in thousands):

Three Months Ended

Paruka Warrant Obligation

1 unchanged sentence

Stock options

Restricted stock units

Employee stock purchase plan

Segment Disclosures

The Company operates and

10 unchanged sentences

equipment, net.

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

As of March 31, 2026 and December 31, 2025 all long-lived assets were in the U.S.

The following table summarizes

the segment loss from operations, including significant segment expenses (in thousands):

September 30,

Ended September 30,

Nine Months Ended

September 30,

(inception) to

September 30,

Three Months Ended

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

13 unchanged sentences

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).

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.

For each of these agreements, 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 each respective

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

achievement of certain regulatory milestones, as well as a low single-digit percentage royalty for antibody products beginning on the

first commercial sale in each program.

The Company may terminate

any Option Agreement or any Research Program at any time for any or no reason upon 30 days’ prior written notice to Paragon,

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

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

Paragon may terminate any Option Agreement

or Research Program immediately upon written notice to the Company if, as a result of any action or failure to act by the Company or its

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

delayed for a certain consecutive number of months.

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

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

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.

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.

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 a certain regulatory milestone,

as well as a low single-digit percentage royalty for antibody products beginning on the first commercial sale.

As of March 31, 2026, 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 the Company’s 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 the Company’s common stock at an exercise price of $ 30.18 per share.

License Agreements – Paragon Therapeutics

30 unchanged sentences

on a party’s insolvency or bankruptcy to the extent permitted by law.

As of September 30, 2025, the Company has incurred and expensed

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

respectively.

Additionally, as part of

the Option Agreements, on December 31, 2024 the Company granted and on December 31, 2025, will grant Paruka a warrant to purchase

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

to the fair market value of the underlying shares on the grant date.

Pursuant to the Option Agreements,

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

the Company is 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 its 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.

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 its 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.

Pursuant to the Option

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

expenses for the ORKA-001 program were nil .

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

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

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

The Company recognized a

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

three and nine months ended September 30, 2025.

These costs were recorded as research and development expenses.

As of September 30,

2025 and December 31, 2024, nil and $ 12.4 million, respectively, related to ORKA-001 were included in related party accounts payable

and other current liabilities.

Pursuant to the Option

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

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

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

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

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

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

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

These costs were recorded as research and development

As of September 30, 2025 and December 31, 2024, nil and $ 2.7 million, respectively, related to ORKA-002 were included in

related party accounts payable and other current liabilities.

For the three and nine months

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

provided by Paragon and Paruka under the Option Agreements.

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

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

The Company expenses the

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 condensed consolidated statements of operations and comprehensive loss.

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

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.

During the quarter ended March 31, 2026, the Company incurred

and expensed a milestone of $ 3.0 million related to the dosing of the first patient in a Phase 2 trial for the ORKA-002 License Agreement.

As of March 31, 2026, the Company has incurred and expensed milestone payments of $ 7.0 million in connection with each of the ORKA-001

License Agreement and the ORKA-002 License Agreement.

As of December 31, 2025, the Company had incurred and expensed milestone payments

of $ 7.0 million and $ 4.0 million for the ORKA-001 License Agreement and the ORKA-002 License Agreement, respectively.

These costs were

recorded as research and development expenses in the accompanying condensed consolidated statements of operations.

As of March 31, 2026 and

December 31, 2025, $ 3.0 million and nil , respectively were included in related party accounts payable and other current liabilities.

For the three months ended

March 31, 2026 and 2025, the Company recognized $ 3.0 million and $ 1.5 million, respectively, of expenses in connection with milestone

payable and services provided by Paragon and Paruka under the Option and License Agreements.

Commitments and Contingencies

9 unchanged sentences

rates were not implicit or readily determinable.

For the three and nine months

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

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

For the three months

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

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

of operations and comprehensive loss.

For the three months ended

March 31, 2026 and 2025, the Company recorded operating and variable lease expenses of $ 0.2 million and $ 0.1 million, respectively, in

general and administrative expenses in its condensed consolidated statements of operations.

The following table presents

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

Nine Months Ended

Cash paid for amounts included in the measurement of lease liabilities

The following table

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

September 30, 2025 (in thousands):

The following table summarizes

a maturity analysis of the Company’s net operating lease liabilities showing the aggregate lease payments as of March 31, 2026 (in

Year ending December 31,

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

2026 (remainder of the year)

Total undiscounted lease payments

35 unchanged sentences

net loss per share attributable to stockholders (in thousands, except share and per share data):

Three Months Ended September 30, 2025

Three Months Ended September 30, 2024

Loss Allocation

Company Series A Preferred Stock (1)

$ ( 1,461.10 )

Company Series B Preferred Stock (2)

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

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

Nine Months Ended September 30, 2025

February 6, 2024 (inception) to

September 30, 2024

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Loss Allocation

Company Series A Preferred Stock (1)

$ ( 6,077.25 )

Company Series B Preferred Stock (2)

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

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

For the computation of basic

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.

Series B preferred stock (1)

weighted-average number of shares of as-converted Series B preferred stock used in the loss allocation was 11,428,149 for the three months

ended March 31, 2026 and 2025.

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

1 unchanged sentence

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

September 30,

February 6, 2024

(inception) to September 30,

Three Months Ended

Outstanding employee warrants to purchase common stock

1 unchanged sentence

Outstanding and issued common stock options

Outstanding unvested restricted stock units

Outstanding and issued warrant to Paruka

1 unchanged sentence

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.

own less than 5% of the Company’s capital stock through their respective holdings of common stock.

Fairmount Healthcare Fund II, L.P.

(“Fairmount”) beneficially

owns more than 5% of the Company’s capital stock, currently has one representative appointed to the Board, and beneficially owns

more than 5% of Paragon.

Fairmount appointed Paragon’s board of directors and has the contractual right to approve the appointment

of any executive officers of Paragon.

The following is a summary

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

September 30,

Paragon reimbursable Option Agreements’ fees

Paragon milestone payments for License Agreement

Paragon reimbursable other research expenses

Paragon milestone payments for the Option Agreements

Paragon reimbursable patent expenses

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”)

was signed into law.

The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100 % bonus depreciation, domestic research

cost expensing, and the business interest expense limitation.

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

consolidated financial statements.

On April 30, 2026, the Company announced the closing of an underwritten

public offering.

The Company issued and sold 9,660,000 shares of its common stock, par value $ 0.001 , at a public offering price of $ 72.50

per share (the “April 2026 Offering”) for gross proceeds of $ 700.4 million before any underwriting discounts and commissions

and related issuance expenses.

The Company has granted the underwriters an option for a period of 30 days expiring May 28, 2026 , to purchase

up to an additional 1,449,000 shares of its common stock at the public offering price of $ 72.50 per share, less underwriting discounts

and commissions.

As of the filing of these condensed financial statements, the option remains unexercised.

On May 1, 2026, the

Company and Halozyme Hypercon, Inc.

(“Halozyme”) entered into a global exclusive collaboration and license agreement

(“Halozyme License Agreement”).

Under the Halozyme License Agreement, the Company has licensed Halozyme’s

Hypercon TM technology for IL-23p19 in psoriatic disease and up to one additional target.

Hypercon TM is an

innovative microparticle technology that allows for hyperconcentration of drugs and biologics, reducing injection volume for a given

dose and supporting more convenient, patient-friendly administration.

Pursuant to the terms of the Halozyme License Agreement, the

Company is obligated to pay Halozyme a non-refundable upfront payment and milestone payments upon the achievement of certain

clinical, developmental and sales milestones for a total amount up to $ 176.5 million, along with reimbursement of the costs to be

incurred in the development of the licensed products.

In addition, the Company would be obligated to pay mid-single digit royalties

on net sales of products developed using Hypercon TM technology.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements