What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-13 · 395 added, 279 removed, 209 unchanged (76% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial

condition and results of operations together with our 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

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

(“I&I”) indications.

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

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

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

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

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

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

Our lead program, ORKA-001,

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

Our co-lead program, ORKA-002,

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

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

These programs each bind their respective targets at

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

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.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

You should read the following

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

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

30, 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 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.,” and “Oruka,” refers to Oruka Therapeutics, Inc.

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

We are a clinical-stage

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

and immunology (“I&I”) indications.

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

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

possible freedom from their condition.

Our strategy is to apply antibody engineering and format innovations to validated modes of action,

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

reducing technical and biological risk.

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

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

Our lead program,

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

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

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

These programs each bind

their respective targets at high affinity and incorporate half-life extension technology with the aim to increase exposure and

decrease dosing frequency.

We are also developing ORKA-004, a novel, extended half-life antibody designed to target TNF-like ligand

1A (“TL1A”), which we plan to pursue in combination with ORKA-001 and ORKA-002 in a variety of diseases.

We believe that

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

markets with continued unmet need.

Since our inception in February

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30, 2026, we had an accumulated deficit of $262.2 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.

For the three and six months ended June 30, 2026, we had net losses of $41.2

million and $73.0 million, respectively, and we used net cash of $56.7 million for our operating activities during the six months ended

June 30, 2026.

We had cash, cash equivalents,

and marketable securities of $1.1 billion as of June 30, 2026.

In addition, in July 2026, we sold 1,499,500 shares of our common stock

pursuant to our existing ATM offering program for net proceeds of $122.5 million, after deducting sales agents’ commissions.

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

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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.

Based on clinical evidence, we

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

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

ORKA-001 is engineered with

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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.

As a result, it has a pharmacokinetic profile designed to

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

In addition, emerging evidence suggests

that IL-23 blockade can modify the disease biology of PsO, possibly leading to durable remissions and preventing the development of PsA.

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

We initiated a Phase 1 trial

of ORKA-001 in the fourth quarter of 2024.

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.

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.

The Phase 1 trial data support that a single 600 mg 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 achieved PASI 100 were 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.

April 2026, we presented Week 16 data for all EVERLAST-A patients, showing that 40 of 63 participants (63.5%) treated with ORKA-001 achieved

the primary endpoint of PASI 100, representing a 100% reduction from baseline in the Psoriasis Area and Severity Index (“PASI”),

with identical results 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 observed as

well tolerated with a safety profile consistent with prior IL-23p19 inhibitors.

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 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

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

Eligible patients initially randomized to ORKA-001 have the option to transition to the open-label extension study of ORKA-001 at Week

52, and eligible patients initially randomized to placebo have the option to transition to the open-label extension study at Week 28.

We plan to share Week 28 data from all patients at the end of the third quarter of 2026.

We also plan to announce Week 52 data from all

patients by the end of 2026.

Additionally, we

commenced dosing in a Phase 2b clinical trial of ORKA-001 in patients with moderate-to-severe PsO (also known as

“EVERLAST-B”) in December 2025.

EVERLAST-B enrolled 187 patients and is designed to evaluate three dose levels of

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

Building on EVERLAST-A, this design is intended to further test the potential for ORKA-001 to achieve yearly dosing,

higher efficacy and extended off-treatment remissions.

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

Eligible patients initially randomized to placebo have the option to roll over into the open-label extension study of

ORKA-001 at Week 28.

We expect to announce Week 16 data from EVERLAST-B in the fourth quarter of 2026.

In addition, we expect to initiate the ORKA-001 Phase 3 program in

the first half of 2027.

ORKA-002 is a high affinity,

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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.

In January 2026, we announced interim findings from the Phase 1 trial

of ORKA-002 in healthy volunteers.

The results showed that ORKA-002 has a half-life of approximately 75-80 days, which supports the potential

for twice-yearly maintenance dosing in PsO and quarterly maintenance dosing in HS.

Single doses of ORKA-002 demonstrated potent and sustained

inhibition of IL-17 signaling in an ex vivo assay through 24 weeks.

The data supports that 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,

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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 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.

expect to announce data from ORCA-SURGE in the first quarter of 2027.

In addition, we initiated

ORCA-SPLASH, a Phase 2 trial of ORKA-002 in patients with moderate-to-severe HS.

ORCA-SPLASH is designed to enroll approximately 160 patients.

Patients will be randomized

1:1 to receive 320 mg of ORKA-002 or placebo at Week 0, Week 4, Week 8, and Week 12.

The primary endpoint is HiSCR75 (Hidradenitis Suppurativa

Clinical Response 75) at Week 16.

Participants then enter an open-label maintenance period evaluating 320 mg of ORKA-002 every 12

ORKA-004 and Additional Pipeline Program

ORKA-004 is a novel, subcutaneously administered, extended half-life mAb designed to target TL1A.

We anticipate initiating clinical development

of ORKA-004 in the fourth quarter of 2026.

We plan to pursue ORKA-004 in combination with ORKA-001 and ORKA-002, with Phase 2 combination

trials planned to begin in 2027.

In addition, we have a fourth program, ORKA-003, designed to target an undisclosed pathway.

These additional programs provide the potential

for indication expansion beyond PsO while maintaining our strategic focus in I&I diseases, and especially inflammatory dermatology

Option Agreements and License Agreements – Paragon Therapeutics

In March 2024, we entered

into two Antibody Discovery and Option Agreements with Paragon and Paruka Holding, LLC (“Paruka”) (each, an “Option

Agreement”), pursuant to which we initiated certain research programs with Paragon focusing on discovering, generating, identifying

and/or characterizing antibodies directed to a particular target, including for IL-23 and IL-17A/F for ORKA-001 and ORKA-002, respectively.

In September 2024, we exercised our exclusive option to acquire certain rights to ORKA-001, and in December 2024, we entered into a corresponding

into two Antibody Discovery and Option Agreements with Paragon and Paruka (each, an “Option Agreement”), pursuant to which

we initiated certain research programs with Paragon focusing on discovering, generating, identifying and/or characterizing antibodies

directed to a particular target, including for IL-23 and IL-17A/F for ORKA-001 and ORKA-002, respectively.

In September 2024, we exercised

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

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

otherwise exploit certain antibodies and products targeting IL-23 in all fields other than the field of inflammatory bowel disease.

December 2024, we exercised our exclusive option to acquire certain rights to ORKA-002, and in February 2025, we entered into the corresponding

license agreement with Paragon pursuant to which Paragon granted us a royalty-bearing, world-wide, exclusive license to develop, manufacture,

commercialize or otherwise exploit certain antibodies and products targeting IL-23 in all fields other than the field of inflammatory

bowel disease.

In December 2024, we exercised our exclusive option to acquire certain rights to ORKA-002, and in February 2025, we entered

into the corresponding license agreement with Paragon pursuant to which Paragon granted us a royalty-bearing, world-wide, exclusive license

to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting IL-17A/F in all fields (collectively,

the “License Agreements”).

Pursuant to each of the License

Agreements, Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F monospecific

antibodies in the respective agreed-upon fields.

Each of the ORKA-001 and ORKA-002 License Agreements may be terminated on 60 days’

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

commercialize or otherwise exploit certain antibodies and products targeting IL-17A/F in all fields (collectively, the “License

Agreements”).

In May 2026, we amended our ORKA-001 License Agreement with Paragon to expand the definition of “ORKA-001 Field”

to include inflammatory bowel disease.

The amendment expands the definition of ORKA-001 Field to encompass all therapeutic, prophylactic,

palliative and diagnostic uses, subject to the restriction that we will not dose a human patient in a clinical trial of ORKA-001 for inflammatory

bowel disease as part of a combination until June 1, 2028 or as a monotherapy until June 1, 2030 (the “Monotherapy Dosing Restriction”).

In the event we or a licensee of Paragon’s retained rights under the ORKA-001 License Agreement consummates a material transaction,

including a change of control of the Company or such licensee, then any remaining restrictions outside of the initial definition of ORKA-001

Field set forth in the Monotherapy Dosing Restriction shall remain in effect only until June 1, 2028.

Pursuant to each of the

License Agreements, Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F

monospecific antibodies in the respective agreed-upon fields.

Each of the ORKA-001 and ORKA-002 License Agreements may be terminated

on 60 days’ notice to Paragon, on material breach without cure, and on a party’s insolvency or bankruptcy to the extent permitted

Pursuant to the terms of

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the achievement of certain regulatory milestones.

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

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

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

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

(ii) 12 years from the date of first sale of our product.

There is also a royalty step-down if there is no Paragon patent in effect during

the royalty term for each program.

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

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

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

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

or (ii) 12 years from the date of first sale of our product.

There is also a royalty step-down if there is no Paragon patent in effect

during the royalty term for each program.

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.

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

December 2025.

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 June 30, 2026, we have not entered

into a license agreement with Paragon and Paruka related to this additional option agreement.

During the three and six

months ended June 30, 2026, we incurred and expensed a milestone of nil and $3.0 million for the ORKA-002 License Agreement, respectively.

Pursuant to the License Agreements, as of June 30, 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

● 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 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.

We expense research and development

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See Note 9 to the condensed consolidated financial statements included in Part I - Item 1 of this Quarterly

Report for further details on the Option Agreements.

Report for further details on the Option Agreements and License Agreements.

We expect our research and

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

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

many factors, including the following:

● 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;

● 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.

The success of programs we may identify and develop will depend

on many factors, including the following:

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;

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.

Any changes in the outcome

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Results of Operations

Comparison of the Three Months Ended March

Comparison of the Three Months Ended June

30, 2026 and 2025

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Interest income

Other expense, net

Other income (expense), net

Total other income, net

* Percentage not meaningful

(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

not meaningful

(1) Includes related party amounts of nil and $4,281 for the three months

ended June 30, 2026 and 2025, respectively.

(2) Includes related party amounts of nil and $12 for the three months

ended June 30, 2026 and 2025, respectively.

Research and Development Expenses

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Research and development

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.

expenses increased by $19.2 million, from $24.1 million for the three months ended June 30, 2025 to $43.3 million for the three months

ended June 30, 2026.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses increased by $14.5 million, from

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

$16.4 million for the three months ended June 30, 2025 to $30.9 million for the three months ended June 30, 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.

related to increased CRO expenses related to our ongoing clinical trials, a $5.0 million expense related to a non-refundable upfront payment

made to Halozyme Hypercon, Inc.

(“Halozyme”) pursuant to our collaboration and license agreement, and increased CMO product

development and manufacturing expenses.

These increases were partially offset by the absence of a $2.5 million milestone pursuant to ORKA-002

License Agreement with Paragon related to dosing of the first patient in a Phase 1 trial during the prior year.

Personnel-related expenses,

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 $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.

excluding stock-based compensation, increased by $3.5 million, from $3.3 million for the three months ended June 30, 2025 to $6.8 million

for the three months ended June 30, 2026.

This increase was primarily attributable to the growth in our research and development headcount

to support our growing portfolio of clinical trials.

Stock-based compensation expense increased by $0.5 million, from $3.4 million for

the three months ended June 30, 2025 to $3.9 million for the three months ended June 30, 2026.

The increase in stock-based compensation

expense is primarily related to a $2.2 million increase related to employee awards due to an increase in research and development headcount,

partially offset by a $1.7 million decrease due to the absence of expense related to the Paruka warrant liability under the Option Agreements,

which was recorded in the prior year.

Other research and development

expenses increased by $0.6 million, from $1.0 million for the three months ended June 30, 2025 to $1.6 million for the three months ended

June 30, 2026, primarily due to an increase in our research and development employee count.

General and Administrative Expenses

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General and administrative

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.

expenses increased by $2.5 million, from $4.3 million for the three months ended June 30, 2025 to $6.9 million for the three months ended

June 30, 2026.

Personnel-related expenses,

including stock-based compensation, increased by $2.1 million, from $3.4 million for the three months ended June 30, 2025 to

$5.5 million for the three months ended June 30, 2026.

This increase was primarily attributable to a $1.7 million increase in

stock-based compensation expense due to additional equity awards issued to existing employees and new equity awards granted to new hires,

and an increase in headcount to support our growing operations as a public company.

Expenses related to professional and consulting services increased

by $0.5 million, from $0.8 million for the three months ended June 30, 2025 to $1.2 million for the three months ended

June 30, 2026, due to higher spending on legal and other professional services to support our growing operations as a public company.

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 $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.

Interest income from cash

equivalents and marketable securities was $8.9 million and $3.9 million for the three months ended June 30, 2026 and 2025, respectively.

The increase was primarily due to interest earned on higher cash and marketable securities balances.

Comparison of the Six Months Ended June

30, 2026 and 2025

The following table summarizes

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

Six Months Ended

Operating expenses

Research and development (1)

General and administrative (2)

Total operating expenses

Loss from operations

Other income (expense)

Interest income

Other income (expense), net

Total other income, net

not meaningful

(1) Includes related party amounts of $3,000 and $6,403 for the six months

ended June 30, 2026 and 2025, respectively.

(2) Includes related party amounts of $4 and $122 for the six months ended

June 30, 2026 and 2025, respectively.

Research and Development Expenses

The following table summarizes our research and

development expenses for the periods presented (in thousands):

Six Months Ended

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 $28.4 million, from $44.0 million for the six months ended June 30, 2025 to $72.4 million for the six months

ended June 30, 2026.

External research and development

expenses, including CROs, CMOs and other third-party preclinical studies and clinical trials expenses increased by $19.2 million, from

$30.0 million for the six months ended June 30, 2025 to $49.3 million for the six months ended June 30, 2026.

The increase is primarily

related to an increase in our CRO expenses related to our ongoing clinical trials and a $5.0 million expense related to a non-refundable

upfront payment made to Halozyme pursuant to our collaboration and license agreement.

These increases were partially offset by lower research

related expenses incurred during the current year.

Personnel-related expenses,

excluding stock-based compensation, increased by $7.1 million, from $5.8 million for the six months ended June 30, 2025 to $12.9 million

for the six months ended June 30, 2026.

This increase was primarily attributable to the growth in our research and development headcount

to support our growing portfolio of clinical trials.

Stock-based compensation expense increased by $1.1 million, from $6.4 million for

the six months ended June 30, 2025 to $7.5 million for the six months ended June 30, 2026.

The increase in stock-based compensation expense

is primarily related to a $4.2 million increase related to employee awards due to an increase in research and development headcount, partially

offset by a $3.1 million decrease due to the absence of expense related to the Paruka warrant liability under the Option Agreements, which

was recorded in the prior year.

Other research and development

expenses increased by $0.9 million, from $1.9 million for the six months ended June 30, 2025 to $2.8 million for the six months ended

June 30, 2026, primarily due to 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):

Six Months Ended

Personnel-related (including stock-based compensation)

Professional and consulting services

Total general and administrative expenses

General and administrative

expenses increased by $4.6 million, from $9.5 million for the six months ended June 30, 2025 to $14.1 million for the six months ended

June 30, 2026.

Personnel-related expenses, including stock-based compensation, increased

by $4.0 million, from $7.0 million for the six months ended June 30, 2025 to $11.0 million for the six months ended

June 30, 2026.

This increase was primarily attributable to a $3.2 million increase in stock-based compensation expense due to additional

equity awards issued to existing employees and new equity awards granted to new hires, and an increase in cash personnel costs due to

additional headcount to support our growing operations as a public company.

Expenses related to professional and consulting services increased

by $0.7 million, from $2.1 million for the six months ended June 30, 2025 to $2.8 million for the six months ended

June 30, 2026, due to higher spending on legal and other professional services to support our growing operations as a public company.

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 $13.5 million and $7.9 million for the six months ended June 30, 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 March 31, 2026, we

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

As of June 30, 2026, we had

$1.1 billion of cash, cash equivalents, and marketable securities.

Since our inception, we have

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

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

Through June 30, 2026, we have funded our operations primarily with proceeds from issuances of convertible preferred stock, common

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

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

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

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

In October 2025, we entered

into a Sales Agreement with TD Securities (USA) LLC (the “Sales Agreement”), as our sales agent, pursuant to which we may

issue and sell, from time to time, shares of 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

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

This includes both the research and development costs and

the general and administrative expenses required to support those operations.

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 July 2026, we

sold 1,499,500 shares of our common stock pursuant to the ATM offering program for net proceeds of $122.5 million, after deducting sales

agents’ commissions.

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

of $658.3 million, after deducting underwriting discounts and commissions and related issuance expenses.

Our primary use of cash

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

This includes both the research and development costs

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

Since we are a clinical stage biopharmaceutical company,

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

Three Months Ended

Six Months Ended

Net cash used in operating activities

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Operating Activities

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

For the six months ended June 30, 2026, net cash used in operating

activities was $56.7 million, which was primarily attributable to a net loss of $73.0 million, partially offset by net non-cash charges

of $13.2 million and net cash provided by changes in our operating assets and liabilities of $3.1 million.

Net cash provided by changes

in our operating assets and liabilities were primarily comprised of an increase of $3.8 million in accounts payable and an increase of

$3.8 million in accrued expenses and other liabilities, partially offset by an increase of $4.2 million in prepaid expenses and other

current assets and a decrease of $0.3 million in operating lease liability.

Net non-cash charges primarily comprised of $14.3 million

in stock-based compensation expense, partially offset by $1.4 million in net accretion of premiums and discounts on marketable securities.

For the six months ended

June 30, 2025, net cash used in operating activities was $44.0 million, which was primarily attributable to a net loss of $45.6 million

and net changes in our operating assets and liabilities of $5.3 million, partially offset by net non-cash charges of $6.9 million.

changes in our operating assets and liabilities were primarily comprised of a decrease of $5.9 million in related party accounts payable

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

Net non-cash charges

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.

and other current liabilities and an increase of $1.2 million in accounts payable.

Net non-cash charges primarily comprised of an increase

of $10.0 million in stock-based compensation expense, partially offset by $3.3 million in net accretion of premiums and discounts on

marketable securities.

Investing Activities

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,

For the six months ended

June 30, 2026, net cash used in investing activities was $425.4 million, which included $581.4 million in purchases of marketable securities,

$0.1 million in purchases of property and equipment, partially offset by $156.1 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

For the six months ended

June 30, 2025, net cash provided by investing activities was $47.7 million, which included $200.1 million in proceeds from maturities

of marketable securities, partially offset by $152.3 million in purchases of marketable securities.

Financing Activities

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.

For the six months ended June 30, 2026, net cash provided by financing

activities was $703.6 million due to $658.3 million of net proceeds from the April 2026 underwritten public offering, $38.9 million of

net proceeds from the ATM offering program, $6.1 million of proceeds from the issuance of shares of common stock in connection with exercises

of stock options and employee warrants, and $0.3 million of proceeds from the issuance of common stock under the employee stock purchase

For the six months ended

June 30, 2025, net cash provided by financing activities was $0.1 million due to proceeds from the issuance of shares of common stock

in connection with purchases under our employee stock purchase plan.

Contractual Obligations and Commitments

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We do not expect

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

any such contract terminations and did not have any non-cancellable obligations under these agreements as of June 30, 2026.

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

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this Quarterly Report.

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

During the three months ended June 30, 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 March 31, 2026, we

As of June 30, 2026, we

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

4 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