What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-12 · 272 added, 385 removed, 216 unchanged (75% of the section changed)

1 unchanged sentence

of Financial Condition and Results of Operations

You should read the following

discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial

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

30, 2025 (this “Quarterly Report”) and with the audited consolidated financial statements and related notes included in our

Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”)

on March 6, 2025.

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

our plans, objectives, expectations, intentions, hopes, beliefs, strategies or projections regarding the future of its pipeline and business

and words such as “may,” “will,”, “should,” “could,” “would,” “expect,”

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

“seek,” “target,” “goal,” “intend” and variations of such words and any statements that

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

similar expressions are intended to identify forward-looking statements.

You should not place undue reliance on these forward-looking

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

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

These forward-looking

statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual

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

Factors that could

cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report entitled

“Risk Factors” and elsewhere in this Quarterly Report.

These and many other factors could affect our future financial and

operating results.

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

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

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

refers to Oruka Therapeutics, Inc.

and its consolidated subsidiaries, taken as a whole.

You should read the following discussion and analysis of our financial

condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included

in Part 1, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (this “Quarterly Report”)

and with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended

December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026.

This discussion contains

forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions,

hopes, beliefs, strategies or projections regarding the future of our pipeline and business and words such as “may,” “will,”,

“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”

“estimate,” “project,” “potential,” “seek,” “target,” “goal,”

“intend” and variations of such words and any statements that refer to projections, forecasts or other characterizations of

future events or circumstances, including any underlying assumptions, and similar expressions are intended to identify forward-looking

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

These forward-looking statements are based on current

expectations and beliefs concerning future developments and their potential effects.

There can be no assurance that future developments

affecting us will be those that have been anticipated.

These forward-looking statements involve a number of risks, uncertainties (some

of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those

expressed or implied by these forward-looking statements.

Factors that could cause or contribute to such differences include, but are

not limited to, those discussed in the section of this Quarterly Report entitled “Risk Factors” and elsewhere in this Quarterly

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

We undertake no obligation to update any

forward-looking statement to reflect events after the date of this Quarterly Report.

As used in this Quarterly Report, unless the context

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

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

and its consolidated subsidiary,

Oruka Therapeutics Operating Company LLC, taken as a whole.

We are a clinical-stage biopharmaceutical

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

pathology and the activity of pathogenic tissue-resident memory T cells.

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

Our lead program, ORKA-001,

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Our co-lead program, ORKA-002,

is designed to target interleukin-17A and interleukin-17F (“IL-17A/F”) for the treatment of PsO, psoriatic arthritis (“PsA”),

and other conditions.

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

with the aim to increase exposure and decrease dosing frequency.

We believe that our focused strategy, differentiated portfolio, and deep

expertise position us to set a new treatment standard in large I&I markets with continued unmet need.

is designed to target interleukin-17A and interleukin-17F (“IL-17A/F”) for the treatment of PsO, hidradenitis suppurativa

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

These programs each bind their respective targets at

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

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

with continued unmet need.

Since our inception in February

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To date, we have funded our operations primarily with proceeds from the issuance of convertible preferred

stock, common stock, a convertible note, pre-funded warrants, and the proceeds from the reverse recapitalization and merger, our Pre-Closing

Financing and subsequent PIPE Financings (as defined and further described below).

stock, common stock, a convertible note, and pre-funded warrants.

Since our inception, we have

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profitability will depend heavily on the successful development and eventual commercialization of any programs we may develop.

the three and nine months ended September 30, 2025, we generated net losses of $30.3 million and $75.9 million, respectively, and for

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

We had cash, cash equivalents,

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

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

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

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

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

31, 2026, we had an accumulated deficit of $221.0 million.

For the three months ended March 31, 2026, we had net losses of $31.8 million,

and we used net cash of $23.6 million for our operating activities.

We had cash, cash equivalents, and marketable securities of $496.0

million as of March 31, 2026.

In addition, in April 2026, we sold 9,660,000 shares of our common stock in an underwritten public offering

for gross proceeds of $700.4 million before any underwriting discounts and commissions and related issuance expenses.

We expect that our

existing cash, cash equivalents, and marketable securities will be sufficient to fund our operating plans for at least twelve months from

the date of filing of this Quarterly Report.

We expect to continue to incur substantial losses for the foreseeable future, and our transition

to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement

of sufficient revenues to support our cost structure.

Our Portfolio and Development Plans

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

(“mAb”) designed to target IL-23p19.

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

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

including PsO.

ORKA-001 is a high affinity,

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

IL-23 is a pro-inflammatory cytokine that plays

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

autoimmune and inflammatory disorders, including PsO.

IL-23 is composed of two subunits:

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

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

the p19 subunit have shown improved efficacy and safety.

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

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

targeting IL-23p19.

a p40 subunit that is shared with IL-12

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

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

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

Based on clinical evidence, we believe

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

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

ORKA-001 is engineered with

YTE half-life extension technology, a specific three amino acid change in the fragment crystallizable (“Fc”) domain to modify

the pH-dependent binding to the neonatal Fc receptor.

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

injection as infrequently as once or twice per year.

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

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

We believe that the expected characteristics

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

We initiated a Phase 1 trial

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

and Venereology (EADV) Congress.

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

Single doses of ORKA-001 demonstrated complete

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

follow-up available).

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

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

In the third quarter of 2025,

we commenced dosing in a Phase 2a clinical trial of ORKA-001 in patients with moderate-to-severe PsO (also known as “EVERLAST-A”).

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

EVERLAST-A is expected to enroll approximately

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

the pH-dependent binding to the neonatal Fc receptor (“FcRn”).

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

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

In addition, emerging evidence suggests that IL-23

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

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

We initiated a Phase 1 trial of ORKA-001 in the fourth quarter of 2024.

In September 2025, we announced interim results and updated those results in April 2026.

The data showed that ORKA-001 has a human half-life

of approximately 100 days and was well tolerated at all dose levels, with a favorable safety profile consistent with the anti-IL-23 class.

Phase 1 trial data support that a single 600mg dose maintained ORKA-001 concentrations well above effective trough levels through Week

52, the last timepoint evaluated with sustained inhibition of IL-23 pathway signaling observed throughout that time period.

In the third quarter of 2025, we commenced dosing in a Phase 2a clinical

trial of ORKA-001 in patients with moderate-to-severe PsO (also known as “EVERLAST-A”).

EVERLAST-A enrolled 84 patients randomized

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

At Week 28, patients who have achieved PASI 100 will be randomized

2:1 to an arm where either (1) they do not receive another dose until disease recurrence (to evaluate the possibility of both yearly dosing

and extended off-treatment remissions) or (2) they receive 300 mg ORKA-001 every six months.

We announced Week 16 data for all patients

in April 2026.

40 of 63 participants (63.5%) treated with ORKA-001 achieved the primary endpoint of PASI 100, a 100% reduction from baseline

in the Psoriasis Area and Severity Index (“PASI”), at Week 16 and identical results were observed for Investigator’s

Global Assessment (“IGA”) 0.

Other key secondary endpoints included PASI 90 at Week 16, achieved by 83% of participants, and

IGA 0/1 at Week 16, achieved by 84% of participants.

ORKA-001 was well tolerated with a safety profile consistent with prior IL-23p19

There were no serious treatment-emergent adverse events (“TEAEs”) and only one severe TEAE, which occurred in

the placebo group.

Additionally, there were no injection site reactions.

We plan to share longer-term data, including Week 28 for all

patients and 52-week follow-up for a portion of the cohort, in the second half of 2026.

Additionally, the first patients

were dosed in EVERLAST-B in December 2025.

EVERLAST-B is designed to enroll approximately 160 patients into a dose-ranging Phase 2b trial

of ORKA-001 in patients with moderate-to-severe PsO and will evaluate three dose levels of ORKA-001:

37.5 mg at Week 0, 300 mg at Weeks

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

The primary endpoint is PASI 100 at Week 16.

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

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

300 mg ORKA-001 every six months.

Additionally, in the third

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

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

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

37.5 mg at Week

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

The primary endpoint will be PASI 100 at Week 16.

To expedite development,

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

At Week 28, patients who have achieved

PASI 100 will be re-randomized 1:1 to either a 600 mg dose once-yearly or placebo.

Patients who have not achieved PASI 100 at Week 28

will receive a 300 mg dose every six months.

Building on EVERLAST-A, this design will further test the potential for ORKA-001 to achieve

yearly dosing, higher efficacy and extended off-treatment remissions.

We expect to announce data from EVERLAST-B in 2027.

Based on recent precedent

for PsO, we anticipate that the entire development program from first-in-human to biologics license application (“BLA”) filing

could take as little as six to seven years based on the averages for recently approved medicines.

However, we have no control over the

length of time needed for the FDA review, and this timeline could vary.

in PsO, we anticipate that the overall development program, from first-in-human studies through biologics license application (“BLA”)

submission, could take as little as six to seven years, based on averages observed for recently approved medicines.

However, we have no

control over the duration of the United States Food and Drug Administration (“FDA”) review process, and the actual timeline

ORKA-002 is a high affinity,

extended half-life mAb designed to target IL-17A and IL-17F (“IL-17A/F”).

IL-17 inhibition has become central to the

treatment of psoriatic diseases, including PsO and PsA, and has also shown efficacy in other I&I indications, such as hidradenitis

suppurativa (“HS”) and axial spondyloarthritis.

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

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

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

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

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

We initiated the dosing of healthy volunteers in a Phase 1 trial of ORKA-002 in the second quarter of 2025 and plan to initiate a

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

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

initial pharmacokinetic data, around year end 2025.

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

We view ORKA-002 and ORKA-001

as highly complementary.

Patients with moderate-to-severe PsO that have purely skin manifestations are most often treated with IL-23 inhibitors

due to the high efficacy and tolerability of this mechanism.

However, for patients who also have joint involvement, or signs and symptoms

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

In addition, IL-17 inhibitors

are often used in patients with highly resistant skin symptoms that do not adequately resolve through treatment with an IL-23 inhibitor.

Furthermore, we plan to pursue a sequential combination regimen of ORKA-002 followed by ORKA-001, called ORKA-021.

ORKA-021 has the potential

to combine the rapid response of an IL-17 inhibitor with the ideal maintenance profile of an IL-23 inhibitor in a single regimen.

that ORKA-001 and ORKA-002 provide the potential to offer a highly compelling product profile for most patients with PsO and/or PsA, as

well as the opportunity to address additional I&I indications.

IL-17 inhibition has become central to the treatment

of psoriatic diseases, including PsO and PsA, and has also shown efficacy in other I&I indications, such as HS and axial spondyloarthritis

More recently, the importance of inhibiting the IL-17F isoform along with IL-17A has become appreciated, and dual

blockade with the recently approved therapy Bimzelx (bimekizumab) has led to higher response rates in patients than blockade of IL-17A

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

half-life extension technology that could enable more convenient dosing intervals.

In January 2026, we announced

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

The results showed that ORKA-002 has a half-life of approximately

75-80 days, which supports the potential for twice-yearly maintenance dosing in PsO and quarterly maintenance dosing in HS.

of ORKA-002 demonstrated potent and sustained inhibition of IL-17 signaling in an ex vivo assay through 24 weeks.

ORKA-002 was well tolerated

at all dose levels, with a favorable safety profile consistent with the anti-IL-17 class.

The trial remains blinded, and as of January

6, 2026, which was the data cutoff date, all subjects remained on trial.

Based on these Phase 1 results,

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

ORCA-SURGE is designed

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

The primary endpoint is PASI 100 at Week 16.

Maintenance dosing will evaluate the potential for twice-yearly dosing with ORKA-002.

expect to announce data from ORCA-SURGE in 2027.

Moreover, we also expect to initiate ORCA-SPLASH, a Phase 2 trial of ORKA-002 in patients

with HS in the second half of 2026.

Additional Pipeline Program

We have a third mAb program,

We have a third program,

ORKA-003, designed to target an undisclosed pathway.

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

specifically on inflammatory dermatology conditions.

Our third program provides the potential for indication expansion beyond PsO and

may create combination opportunities with our more advanced programs.

Acquisition of Pre-Merger Oruka

On August 29, 2024 (the “Closing”),

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

(“Pre-Merger Oruka”),

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

property being developed by Paragon Therapeutics, Inc.

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

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

Following consummation of the Merger, we effected a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the common

stock, par value $0.001 per share, of the Company (“Company Common Stock”).

The Company Common Stock commenced trading on

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

Pre-Closing Financing and Closing

In April 2024, certain new

and existing investors of Pre-Merger Oruka entered into a subscription agreement with Pre-Merger Oruka (as amended, 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 and Pre-Merger Oruka pre-funded warrants for gross proceeds of approximately

$275.0 million.

We incurred transaction costs of $20.5 million.

At the Closing, those shares of common stock of Pre-Merger Oruka and the

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

PIPE Financings

On September 11, 2024, we

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

PIPE Financing”) with certain institutional and accredited investors.

The closing of the 2024 PIPE Financing occurred on September

Pursuant to the 2024 Securities

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

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

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

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

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

$11.9 million).

On September 17, 2025, we

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

PIPE Financing”) with certain institutional and accredited investors.

The closing of the 2025 PIPE Financing occurred on September

Pursuant to the 2025

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

$15.00 per share, and pre-funded warrants to purchase an aggregate of 1,066,666 shares of Company Common Stock at a purchase price of

$14.999 per pre-funded warrant, for aggregate net proceeds of approximately $169.6 million (net of issuance costs of $10.4 million).

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

on inflammatory dermatology conditions.

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

opportunities with our more advanced programs.

Option Agreements and License Agreements – Paragon Therapeutics

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the royalty term for each program.

Pursuant to the License Agreements,

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

respectively.

In December 2025, we entered

into an additional option agreement for an antibody with Paragon and Paruka to enter into a license agreement, which we exercised in December

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

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

up to $10.0 million under the agreement upon the achievement of 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, we have not entered into a license agreement

with Paragon and Paruka related to this additional option agreement.

During the quarter ended

March 31, 2026, we 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.

Pursuant to the License Agreements, as of March 31, 2026, we have incurred and expensed milestone payments

of $7.0 million for each of ORKA-001 and ORKA-002.

Components of Results of Operations

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These expenses include:

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

costs incurred, and milestone payments under license and option agreements;

expenses incurred in connection with continuing our current research programs and discovery-phase development of any programs we may identify, including under future agreements with third parties, such as consultants and contractors;

expenses incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and with clinical trial sites that conduct research and development activities on our behalf;

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

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

allocated human resource costs, information technology costs, and facility-related costs, including rent, maintenance, utilities, and depreciation for our leased office space.

● costs of funding research performed by third parties that conduct

research and development activities on our behalf;

● costs incurred, and milestone payments under license and option

● expenses incurred in connection with continuing our current

research programs and discovery-phase development of any programs we may identify, including under future agreements with third parties,

such as consultants and contractors;

● expenses incurred under agreements with contract research organizations

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

and development activities on our behalf;

● the cost of development and validating our manufacturing process

for use in our preclinical studies and current and future clinical trials;

● personnel-related expenses, including salaries, bonuses, employee

benefits, travel, and stock-based compensation expense;

● allocated human resource costs, information technology costs,

and facility-related costs, including rent, maintenance, utilities, and depreciation for our leased office space.

We expense research and development

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many factors, including the following:

timely and successful completion of preclinical studies;

effective investigational new drug (“IND”) or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for any programs we may develop;

● timely and successful completion of preclinical studies and

clinical trials;

● effective investigational new drug (“IND”) or comparable

foreign applications that allow commencement of our planned clinical trials or future clinical trials for any programs we may develop;

● successful enrollment and completion of clinical trials;

positive results from our clinical trials that support a finding of safety and effectiveness, acceptable pharmacokinetics profile, and an acceptable risk-benefit profile in the intended populations;

● positive results from our clinical trials that support a finding

of safety and effectiveness, acceptable pharmacokinetics profile, and an acceptable risk-benefit profile in the intended populations;

● receipt of marketing approvals from applicable regulatory authorities;

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

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

● establishment of arrangements through our own facilities or

with third-party manufacturers for clinical supply and, where applicable, commercial manufacturing capabilities;

● maintenance of a continued acceptable safety, tolerability,

and efficacy profile of any programs we may develop following approval.

Any changes in the outcome

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Total other income (expense),

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

interest expense on the convertible note from

a related party (see discussion herein);

and foreign currency transactions gains and losses.

Interest expense relates to a convertible

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

(“Fairmount”), a related party,

in March 2024.

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

into Company Common Stock.

net, consists of interest earned on our cash, cash equivalents, and marketable securities, and foreign currency transactions gains and

Results of Operations

Comparison of the Three Months Ended September

Comparison of the Three Months Ended March

31, 2026 and 2025

The following table summarizes

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

September 30,

Operating expenses

Research and development (1)

General and administrative (2)

Total operating expenses

Loss from operations

Other income (expense)

Interest income

Interest expense (3)

Other expense, net

Total other income (expense), net

Percentage not meaningful

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

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

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

Research and Development Expenses

The following table summarizes our research and

development expenses for the periods presented (in thousands):

September 30,

External research and development expenses

Other research and development expenses:

Personnel-related (excluding stock-based compensation)

Stock-based compensation

Total research and development expenses

Research and development

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

months ended September 30, 2025.

External research and development

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

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

is primarily related to the decrease in research expenses incurred by Paragon partially offset by increased CMO product development and

manufacturing expenses and an increase in our CRO expenses related to our ongoing clinical trials and toxicology studies.

Personnel-related expenses

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

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

Stock-based compensation expense increased

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

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

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

Other research and development expenses increased

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

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

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

General and Administrative Expenses

The following table summarizes our general and

administrative expenses for the periods presented (in thousands):

September 30,

Personnel-related (including stock-based compensation)

Professional and consulting services

Total general and administrative expenses

General and administrative

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

ended September 30, 2025.

Personnel-related expenses

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

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

Stock-based compensation expense

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

Expenses related to professional and consulting services increased

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

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

Other general and administrative

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

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

Total Other Income (Expense), Net

Interest income from cash equivalents and marketable

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

Interest income from money market funds was $1.3 million for

the three months ended September 30, 2024.

No interest expense was recorded

during the three months ended September 30, 2025.

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

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

Comparison of the Nine Months Ended September

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

The following table summarizes our results of

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

September 30,

(inception) to

September 30,

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

Three Months Ended

Operating expenses

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Interest income

Interest expense (3)

Other expense, net

Total other income (expense), net

Total other income, net

* Percentage not meaningful

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

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

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

(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

Research and Development Expenses

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development expenses for the periods presented (in thousands):

September 30,

(inception) to

September 30,

Three Months Ended

External research and development expenses

3 unchanged sentences

Total research and development expenses

Percentage not meaningful

Research and development

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

for the nine months ended September 30, 2025.

expenses increased by $9.2 million, from $19.9 million for the three months ended March 31, 2025 to $29.1 million for the three months

ended March 31, 2026.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses increased by $4.7 million, from

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

The increase is primarily related to increased CMO product development and manufacturing expenses, an increase in our CRO expenses

related to our ongoing clinical trials and toxicology studies, partially offset by a reduction of research expenses incurred by Paragon.

$13.6 million for the three months ended March 31, 2025 to $18.3 million for the three months ended March 31, 2026.

The increase is primarily

related to increased CMO product development and manufacturing expenses, an increase in our CRO expenses related to our ongoing clinical

trials, and $3.0 million milestone pursuant to ORKA-002 License Agreement with Paragon related to the dosing of the first patient in a

Phase 2 trial during the three months ended March 31, 2026.

Personnel-related expenses,

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

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

excluding stock-based compensation, increased by $3.6 million, from $2.5 million for the three months ended March 31, 2025 to $6.1 million

for the three months ended March 31, 2026, as we continue hiring employees in our research and development organization.

Stock-based compensation

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

for the nine months ended September 30, 2025.

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

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

Other research and development expenses

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

the nine months ended September 30, 2025, primarily due to facilities and allocated overhead expenses as we commenced using our leased

Menlo Park office space from June 2024 and Waltham office from April 2025, as well as increase in our research and development employee

expense increased by $0.6 million, from $3.0 million for the three months ended March 31, 2025 to $3.6 million for the three months ended

March 31, 2026.

The increase in stock-based compensation expense is primarily related to a $2.0 million increase related to employee awards

due to an increase in research and development headcount, partially offset by a $1.4 million decrease in Paruka warrant liability under

the Option Agreements.

Other research and development expenses increased by $0.3 million, from $0.8 million for the three months ended March 31,

2025 to $1.2 million for the three months ended March 31, 2026, primarily due to increases to facilities and allocated overhead expenses

as we commenced using our leased Waltham office from April 2025, as well as an increase in our research and development employee count.

General and Administrative Expenses

1 unchanged sentence

administrative expenses for the periods presented (in thousands):

September 30,

(inception) to

September 30,

Three Months Ended

Personnel-related (including stock-based compensation)

2 unchanged sentences

General and administrative

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

million for the nine months ended September 30, 2025.

Personnel-related expenses

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

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

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

the nine months ended September 30, 2025, respectively.

Expenses related to professional and consulting services increased

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

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

Other general and administrative

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

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

expenses increased by $2.1 million, from $5.2 million for the three months ended March 31, 2025 to $7.3 million for the three months ended

March 31, 2026.

Personnel-related expenses increased by $1.9 million, from $3.6 million

for the three months ended March 31, 2025 to $5.5 million for the three months ended March 31, 2026, as a result of continued

hiring of executives and administrative employees.

Stock-based compensation expense increased by $1.5 million, from $1.9 million for the

three months ended March 31, 2025 to $3.4 million for the three months ended March 31, 2026 due to additional general and administrative

Expenses related to professional

and consulting services increased by $0.2 million, from $1.4 million for the three months ended March 31, 2025 to $1.6 million

for the three months ended March 31, 2026, due to higher spending on legal and other professional services.

Other general and administrative expenses remained relatively consistent

year over year.

Total Other Income (Expense), Net

Interest income from cash

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

Interest income from money market

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

No interest expense was recorded

during the nine months ended September 30, 2025.

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

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

Interest income from cash equivalents and marketable

securities was $4.6 million and $4.1 million for the three months ended March 31, 2026 and 2025, respectively.

The increase was primarily

due to interest earned on higher cash and marketable securities balances.

Liquidity and Capital Resources

As of September 30, 2025,

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

As of March 31, 2026, we

had $496.0 million of cash, cash equivalents, and marketable securities.

Since our inception, we have

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We expect to incur significant expenses and operating losses

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

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

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

Through September 30, 2025, we had funded our operations primarily with proceeds from issuances of convertible preferred stock,

common stock, a convertible note, and pre-funded warrants.

Through March 31, 2026, we had funded our operations primarily with proceeds from issuances of convertible preferred stock, common

stock, a convertible note, and pre-funded warrants.

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

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

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

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

(USA) LLC (the “Sales Agreement”), as our sales agent, pursuant to which we 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.

We are not obligated to make any sales of shares under the Sales Agreement.

During the three months ended March 31, 2026, we issued and

sold an aggregate of 1,167,895 shares of the Company’s common stock pursuant to the ATM offering program for total net proceeds

of $38.9 million after deducting sales agents’ commissions.

In addition, in April 2026, we sold 9,660,000 shares of our common stock

in an underwritten public offering for gross proceeds of $700.4 million before any underwriting discounts and commissions and related

issuance expenses.

Our primary use of cash is

10 unchanged sentences

drug can be produced, marketed, and sold.

At this time, due to the inherently unpredictable nature of clinical development, we cannot

reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval,

and commercialize our current product candidate or any future product candidates.

For the same reasons, we are also unable to predict

when, if ever, we will generate revenue from product sales or our current or any future license agreements which we may enter into or

whether, or when, if ever, we may achieve profitability.

In addition, with a change in the presidential administration in 2025, there

has been an economic policy shift towards increasing tariffs, which in turn has led and could lead to further retaliatory tariffs.

may have the potential to impact expenses as well as our ability to, if ever, generate revenue or achieve profitability.

If we are unable

to obtain additional financing or generate license or product revenue, the lack of liquidity could have a material adverse effect on our

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

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

The following table summarizes

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

September 30,

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

Three Months Ended

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by investing activities

Net cash provided by financing activities

1 unchanged sentence

Operating Activities

For the nine months

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

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

charges of $16.2 million.

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

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

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

other current liabilities.

For the three months ended

March 31, 2026, net cash used in operating activities was $23.6 million, which was primarily attributable to a net loss of $31.8 million,

partially offset by net non-cash charges of $6.7 million and net cash used by changes in our operating assets and liabilities of $1.5

Net cash used by changes in our operating assets and liabilities were primarily comprised of an increase of $3.0 million in related

party accounts payable and other current liabilities and an increase of $0.5 million in prepaid expenses and other current assets, partially

offset by a decrease of $1.3 million in accrued expenses and other liabilities and a decrease of $0.5 million in accounts payable.

non-cash charges primarily comprised of $7.0 million in stock-based compensation expense, partially offset by $0.4 million in net accretion

of premiums and discounts on marketable securities.

For the three months ended

March 31, 2025, net cash used in operating activities was $20.9 million, which was primarily attributable to a net loss of $21.0 million

and net changes in our operating assets and liabilities of $3.0 million, partially offset by net non-cash charges of $3.1 million.

changes in our operating assets and liabilities were primarily comprised of a decrease of $5.2 million in related party accounts payable

and other current liabilities and an increase of $2.3 million in accrued expenses and other current liabilities.

Net non-cash charges

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

accretion of premiums and discounts on marketable securities.

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

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

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

Non-cash charges primarily

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

of non-cash interest expense.

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

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

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

primarily comprised of $4.9 million in stock-based compensation expense, partially offset by $1.8 million in net accretion of premiums

and discounts on marketable securities.

Investing Activities

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

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

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

From February 6, 2024

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

property and equipment.

For the three months ended

March 31, 2026, net cash used in investing activities was $14.4 million, which included $90.8 million in purchases of marketable securities,

$0.1 million in purchases of property and equipment, partially offset by $76.5 million in proceeds from maturities of marketable securities.

For the three months ended

March 31, 2025, net cash provided by investing activities was $42.9 million, which included $87.2 million in proceeds from maturities

of marketable securities, partially offset by $44.3 million in purchases of marketable securities.

Financing Activities

For the nine months ended

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

Financing and $0.1 million proceeds from the issuance of shares of common stock in connection with purchases under our employee stock

purchase plan.

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

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

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

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

of Series B Preferred Stock

For the three months ended

March 31, 2026, net cash provided by financing activities was $40.6 million due to $38.9 million of net proceeds from the ATM offering

program and $1.7 million of proceeds from the issuance of shares of common stock in connection with exercises of stock options and employee

For the three months ended

March 31, 2025, no cash was used in or provided by financing activities.

Contractual Obligations and Commitments

5 unchanged sentences

We do not expect

any such contract terminations and did not have any non-cancellable obligations under these agreements as of September 30, 2025.

any such contract terminations and did not have any non-cancellable obligations under these agreements as of March 31, 2026.

10 and 11 to the condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report for further information

14 unchanged sentences

this Quarterly Report.

During the three months ended September 30, 2025, there were no changes to our critical accounting policies and

significant judgments and estimates as disclosed in our Annual Report on Form 10-K for the period from February 6 (inception) to December

During the three months ended March 31, 2026, there were no changes to our critical accounting policies and significant

judgments and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

As of September 30, 2025,

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

As of March 31, 2026, we

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

Quantitative and Qualitative Disclosures About Market Risk

3 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis