UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from ________ to ________

Commission file number: 000-22873

Oruka Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware		36-3855489
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

855 Oak Grove Avenue
Suite 100
Menlo Park, California		94025
(Address of principal executive offices)		(Zip Code)

(650) 606-7910

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.001 per share		ORKA		The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2025, there were 37,440,510 shares of the registrant’s common stock outstanding.

Table of Contents

		Page
	PART I. Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
	PART II. Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
Signatures		62

Part I - Financial Information

Item 1. Financial Statements

ORUKA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share data)

	March 31,			December 31,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	83,572		$	61,575
Marketable securities, current		265,522			314,073
Prepaid expenses and other current assets		2,989			1,221
Total current assets		352,083			376,869
Marketable securities, long-term		23,953			18,069
Property and equipment, net		159			162
Operating lease right-of-use assets		814			876
Other non-current assets		103			43
Total assets	$	377,112		$	396,019
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,545		$	3,462
Accrued expenses and other current liabilities		5,663			3,346
Operating lease liability, current		283			213
Related party common stock warrant liability		1,415			—
Related party accounts payable and other current liabilities		817			6,022
Total current liabilities		11,723			13,043
Operating lease liability, non-current		664			755
Total liabilities		12,387			13,798
Commitment and contingencies (Note 11)
Stockholders’ equity:
Series B non-voting convertible preferred stock, $0.001 par value; 251,504 shares authorized as of March 31, 2025 and December 31, 2024; 137,138 shares issued and outstanding as of March 31, 2025 and December 31, 2024		2,931			2,931
Common stock, $0.001 par value; 545,000,000 shares authorized, 37,440,510 shares issued and outstanding as of March 31, 2025 and December 31, 2024		37			37
Additional paid-in capital		466,486			463,018
Accumulated other comprehensive loss		(6	)		(41	)
Accumulated deficit		(104,723	)		(83,724	)
Total stockholders’ equity		364,725			382,221
Total liabilities, convertible preferred stock and stockholders’ equity	$	377,112		$	396,019

The accompanying notes are an integral part of these condensed consolidated financial statements.

ORUKA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except share and per share data)

	Three Months Ended March 31, 2025			Period from February 6, 2024 (Inception) to March 31, 2024
Operating expenses
Research and development ⁽¹⁾	$	19,925		$	5,193
General and administrative ⁽²⁾		5,161			1,670
Total operating expenses		25,086			6,863
Loss from operations		(25,086	)		(6,863	)
Other income (expense)
Interest income		4,092			—
Interest expense ⁽³⁾		—			(214	)
Other expense, net		(5	)		—
Total other income (expense), net		4,087			(214	)
Net loss		(20,999	)		(7,077	)
Net change in unrealized gains (losses) on marketable securities		35			—
Comprehensive loss	$	(20,964	)	$	(7,077	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.40	)	$	(2.21	)
Net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted	$	(32.95	)	$	—

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		41,679,560			3,197,977
Weighted-average shares used in computing net loss per share attributable to Series B non-voting convertible preferred stockholders, basic and diluted		137,138			—

(1)	Includes related party amounts of $2,122 for the three months ended March 31, 2025 and $5,051 for the period from February 6, 2024 (inception) to March 31, 2024

(2)	Includes related party amounts of $110 for the three months ended March 31, 2025 and $848 for the period from February 6, 2024 (inception) to March 31, 2024

(3)	Includes related party amounts of nil for the three months ended March 31, 2025 and $214 for the period from February 6, 2024 (inception) to March 31, 2024

The accompanying notes are an integral part of these condensed consolidated financial statements.

ORUKA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)

	Series B Non-Voting Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balances as of December 31, 2024		137,138	$	2,931		37,440,510	$	37	$	463,018	$	(41	)	$	(83,724	)	$	382,221
Stock-based compensation expense		—		—		—		—		3,468		—			—			3,468
Net change in unrealized gains (losses) on marketable securities		—		—		—		—		—		35			—			35
Net loss		—		—		—		—		—		—			(20,999	)		(20,999	)
Balances as of March 31, 2025		137,138	$	2,931		37,440,510	$	37	$	466,486	$	(6	)	$	(104,723	)	$	364,725

	Series A Convertible Preferred Stock				Series B Non-Voting Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Gain (Loss)		Deficit			Deficit
Balances as of February 6, 2024 (Inception)		—	$	—		—	$	—		3,197,975	$	3	$	(2	)	$	—	$	—		$	1
Issuance of common stock		—		—		—		—		2,207,553		2		(2	)		—		—			—
Issuance of Series A convertible preferred stock, net of issuance costs of $69		20,000,000		2,931		—		—		—		—		—			—		—			—
Stock-based compensation expense		—		—		—		—		—		—		17			—		—			17
Net loss		—		—		—		—		—		—		—			—		(7,077	)		(7,077	)
Balances as of March 31, 2024		20,000,000	$	2,931		—	$	—		5,405,528	$	5	$	13		$	—	$	(7,077	)	$	(7,059	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ORUKA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

	Three Months Ended March 31, 2025			Period from February 6, 2024 (Inception) to March 31, 2024
Cash flows from operating activities:
Net loss	$	(20,999	)	$	(7,077	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		4,883			85
Net accretion of premiums and discounts on marketable securities		(1,797	)		—
Non-cash interest expense		—			1
Non-cash lease expense		62			—
Depreciation expense		16			—
Changes in operating assets and liabilities:
Subscription receivable		—			1
Prepaid expenses and other current assets		(148	)		—
Other non-current assets		(60	)		—
Accounts payable		83			4
Accrued expenses and other current liabilities		2,317			773
Operating lease liability		(21	)		—
Related party accounts payable and other current liabilities		(5,205	)		5,831
Accrued interest payable, related party		—			214
Net cash used in operating activities		(20,869	)		(168	)
Cash flows from investing activities:
Purchases of property and equipment		(13	)		—
Purchases of marketable securities		(44,290	)		—
Proceeds from maturities of marketable securities		87,169			—
Net cash provided by investing activities		42,866			—
Cash flows from financing activities:
Proceeds from issuance of Pre-Merger Oruka Series A Preferred Stock, net of issuance costs paid		—			2,931
Proceeds from issuance of notes payable to related party, net of issuance costs paid		—			24,980
Net cash provided by financing activities		—			27,911
Net increase in cash and cash equivalents		21,997			27,743
Cash and cash equivalents at beginning of period		61,575			—
Cash and cash equivalents at end of period	$	83,572		$	27,743
Supplemental disclosures of non-cash operating and financing activities:
Deferred offering costs in accrued expenses and other current liabilities	$	—		$	488

The accompanying notes are an integral part of these condensed consolidated financial statements.

ORUKA THERAPEUTICS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

Background and Basis of Presentation

Oruka Therapeutics, Inc., together with its subsidiaries (collectively, the “Company”), formerly known as ARCA biopharma, Inc. (“ARCA”), is a clinical-stage biopharmaceutical company that is the result of the reverse recapitalization discussed below. Prior to the reverse recapitalization, the private company Oruka Therapeutics, Inc. (“Pre-Merger Oruka”) was established and incorporated under the laws of the state of Delaware on February 6, 2024 (referred to in the Notes as the inception of the Company). The Company is headquartered in Menlo Park, California. The Company is led by the Pre-Merger Oruka management team and is focused on developing biologics for psoriasis and other inflammatory and immunology indications.

The condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and therefore do not include all information and disclosures normally included in the annual consolidated financial statements. The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the period ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2025 (the “Annual Report”). The information as of December 31, 2024, included in the condensed consolidated balance sheets was derived from the Company’s audited financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial statements.

The results for the three months ended March 31, 2025 are not necessarily indicative of results that may be expected for the year ending December 31, 2025 or for any other interim period or for any other future year.

Reverse Recapitalization, Pre-Closing Financing, and Reverse Stock Split

On August 29, 2024 (the “Closing”), the Company completed the acquisition (the “Merger”) of Pre-Merger Oruka pursuant to an Agreement and Plan of Merger and Reorganization, dated as of April 3, 2024 (the “Merger Agreement”). Following the transactions contemplated by the Merger Agreement, on August 29, 2024, the Company changed its name from “ARCA biopharma, Inc.” to “Oruka Therapeutics, Inc.” and the Company effected a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the common stock, par value $0.001 per share, of the Company (“Company Common Stock”), which became effective on September 3, 2024. All references to common stock, options to purchase common stock, outstanding common stock warrants, common stock share data, per share data, and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented, unless otherwise specifically indicated or the context otherwise requires.

Immediately prior to the execution and delivery of the Merger Agreement, certain new and existing investors of Pre-Merger Oruka entered into a subscription agreement with Pre-Merger Oruka (that was subsequently amended and restated in July 2024, the “Subscription Agreement”), pursuant to which, and on the terms and subject to the conditions of which, immediately prior to the Closing, those investors purchased shares of common stock of Pre-Merger Oruka (“Pre-Merger Oruka Common Stock”) and Pre-Merger Oruka pre-funded warrants for gross proceeds of approximately $275.0 million (which includes $25.0 million of proceeds previously received from the issuance of the Convertible Note (as defined in Note 6) and accrued interest on such note which converted to shares of Pre-Merger Oruka Common Stock) (the “Pre-Closing Financing”). The Company incurred transaction costs of $20.5 million which were recorded as a reduction to additional paid-in capital in the condensed consolidated financial statements.

In connection with the Closing, the shares of Pre-Merger Oruka Common Stock were converted into shares of Company Common Stock and pre-funded warrants of Company Common Stock in accordance with the Exchange Ratio (as defined below and determined by the terms of the Merger Agreement). Moreover, as part of the Closing, (i) then-issued and outstanding share of Pre-Merger Oruka Common Stock (including outstanding and unvested Pre-Merger Oruka restricted stock and shares of Pre-Merger Oruka Common Stock issued in connection with the Subscription Agreement) were converted into the right to receive a number of shares of Company Common Stock, equal to the exchange ratio of 6.8569 shares of Company Common Stock (the “Exchange Ratio”), which were subject to the same vesting provisions as those immediately prior to the Merger; (ii) each share of Pre-Merger Oruka Series A convertible preferred stock, par value $0.0001 (“Pre-Merger Oruka Series A Preferred Stock”) was converted into the right to receive a number of shares of ARCA Series B non-voting convertible preferred stock, par value $0.001 per share (“Company Series B Preferred Stock”), which are convertible into shares of Company Common Stock at a conversion ratio of approximately 83.3332:1 after the Reverse Stock Split, (iii) each outstanding option to purchase Pre-Merger Oruka Common Stock was converted into an option to purchase shares of Company Common Stock, and (iv) each outstanding warrant to purchase shares of Pre-Merger Oruka Common Stock was converted into a warrant to purchase shares of Company Common Stock.

The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Pre-Merger Oruka was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the fact that, immediately following the Merger: (i) Pre-Merger Oruka stockholders own a substantial majority of the voting rights in the combined company; (ii) Pre-Merger Oruka’s largest stockholders retain the largest interest in the combined company; (iii) Pre-Merger Oruka designated a majority of the initial members of the board of directors of the combined company; and (iv) Pre-Merger Oruka’s executive management team became the management team of the combined company. Accordingly, for accounting purposes: (a) the Merger was treated as the equivalent of Pre-Merger Oruka issuing stock to acquire the net assets of ARCA, and (b) the reported historical operating results of the combined company prior to the Merger are those of Pre-Merger Oruka. As part of the reverse recapitalization, the Company acquired a cash balance of $4.94 million from ARCA.

PIPE Financing

On September 11, 2024, the Company entered into a Securities Purchase Agreement for a private placement (the “PIPE Financing”) with certain institutional and accredited investors. The closing of the PIPE Financing occurred on September 13, 2024.

Pursuant to the Securities Purchase Agreement, the investors purchased an aggregate of 5,600,000 shares of Company Common Stock at a purchase price of $23.00 per share, an aggregate of 2,439 shares of the Company’s Series A non-voting convertible preferred stock, par value $0.001 per share (“Company Series A Preferred Stock”), at a purchase price of $23,000.00 per share (each share of Company Series A Preferred Stock was convertible into 1,000 shares of Company Common Stock), and pre-funded warrants to purchase an aggregate of 680,000 shares of Company Common Stock at a purchase price of $22.999 per pre-funded warrant, for aggregate net proceeds of approximately $188.7 million (net of issuance costs of $11.9 million). In November 2024, the 2,439 shares of the Company Series A Preferred Stock were converted to 2,439,000 shares of Company Common Stock.

Liquidity and Going Concern

Since its inception, the Company has devoted substantially all of its resources to advancing the development of its portfolio of programs, organizing and staffing the Company, business planning, raising capital, and providing general and administrative support for these operations. Current and future programs will require significant research and development efforts, including preclinical and clinical trials, and regulatory approvals to commercialization. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects it will need additional financing to fund its operating activities.

The Company has not generated any revenue from product sales or other sources and has incurred significant operating losses and negative cash flows from operations since inception. For the three months ended March 31, 2025, the Company incurred a net loss of $21.0 million and used net cash of $20.9 million for its operating activities.

As of March 31, 2025, the Company had cash, cash equivalents, and marketable securities of $373.0 million. The Company’s management expects that the existing cash, cash equivalents, and marketable securities will be sufficient to fund the Company’s operating plans for at least twelve months from the date these condensed consolidated financial statements were issued. The Company expects that its research and development and general and administrative costs will continue to increase significantly, including in connection with conducting pre-clinical activities and clinical trials and manufacturing for its existing product candidates and any future product candidates to support commercialization and providing general and administrative support for its operations, including the costs associated with operating as a public company. The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company may be required to significantly curtail, delay, or discontinue one or more of its research or development programs or the commercialization of any product candidate, or be unable to expand its operations or otherwise capitalize on the Company’s business opportunities, as desired, which could materially harm the Company’s business, financial condition and results of operations.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in the Notes titled “1. Nature of the Business and Basis of Presentation” and “2. Summary of Significant Accounting Policies” of the Company’s Annual Report. The Company uses the same accounting policies in preparing its quarterly and annual financial statements. There have been no material changes to significant accounting policies during the three months ended March 31, 2025.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected within these condensed consolidated financial statements include but are not limited to research and development expenses and related prepaid or accrued costs and the valuation of stock-based compensation awards and related expenses. The Company bases its estimates on known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts, and experience. Actual results could differ materially from those estimates or assumptions.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S. and foreign jurisdictions. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period. The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed disclosures, on an annual and interim basis, about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements.

3. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for financial assets measured as of March 31, 2025 and December 31, 2024 (in thousands):

	March 31, 2025
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	11,129	$	—	$	—	$	11,129
U.S. government agency securities		—		1,997		—		1,997
Corporate debt securities		—		1,341		—		1,341
Commercial papers		—		64,892		—		64,892
Total cash equivalents		11,129		68,230		—		79,359
Marketable securities
Marketable securities, current
U.S. treasury securities		—		174,191		—		174,191
U.S. government agency securities		—		8,765		—		8,765
Commercial papers		—		30,226		—		30,226
Corporate debt securities		—		52,340		—		52,340
Total marketable securities, current		—		265,522		—		265,522
Marketable securities, long-term
U.S. treasury securities				19,510		—		19,510
U.S. government agency securities		—		4,443		—		4,443
Total marketable securities, long-term		—		23,953		—		23,953
Total cash equivalents and marketable securities	$	11,129	$	357,705	$	—	$	368,834

There were no transfers in or out of Level 3 during the three months ended March 31, 2025.

	December 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	6,350	$	—	$	—	$	6,350
U.S. treasury securities		—		19,660		—		19,660
U.S. government agency securities		—		3,988		—		3,988
Commercial papers		—		22,177		—		22,177
Total cash equivalents		6,350		45,825		—		52,175
Marketable securities
Marketable securities, current
U.S. treasury securities		—		190,792		—		190,792
U.S. government agency securities		—		12,966		—		12,966
Commercial papers		—		34,811		—		34,811
Corporate debt securities		—		75,504		—		75,504
Total marketable securities, current		—		314,073		—		314,073
Marketable securities, long-term
U.S. treasury securities		—		13,607		—		13,607
U.S. government agency securities		—		4,462		—		4,462
Total marketable securities, long-term		—		18,069		—		18,069
Total cash equivalents and marketable securities	$	6,350	$	377,967	$	—	$	384,317

4. Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities, which are classified as available-for-sale, consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):

	March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents
Money market funds	$	11,129	$	—	$	—		$	11,129
U.S. government agency securities		1,997		—		—			1,997
Corporate debt securities		1,341		—		—			1,341
Commercial papers		64,903		—		(11	)		64,892
Total cash equivalents		79,370		—		(11	)		79,359
Marketable securities
Marketable securities, current
U.S. treasury securities		174,191		13		(13	)		174,191
U.S. government agency securities		8,766		—		(1	)		8,765
Commercial papers		30,234		—		(8	)		30,226
Corporate debt securities		52,347		5		(12	)		52,340
Total marketable securities, current		265,538		18		(34	)		265,522
Marketable securities, long-term
U.S. treasury securities		19,490		20		—			19,510
U.S. government agency securities		4,442		2		(1	)		4,443
Total marketable securities, long-term		23,932		22		(1	)		23,953
Total cash equivalents and marketable securities	$	368,840	$	40	$	(46	)	$	368,834

	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents
Money market funds	$	6,350	$	—	$	—		$	6,350
U.S. treasury securities		19,656		4		—			19,660
U.S. government agency securities		3,988		—		—			3,988
Commercial papers		22,180		—		(3	)		22,177
Total cash equivalents		52,174		4		(3	)		52,175
Marketable securities
Marketable securities, current
U.S. treasury securities		190,748		55		(11	)		190,792
U.S. government agency securities		12,967		1		(2	)		12,966
Commercial papers		34,808		3		—			34,811
Corporate debt securities		75,537		7		(40	)		75,504
Total marketable securities, current		314,060		66		(53	)		314,073
Marketable securities, long-term
U.S. treasury securities		13,639		—		(32	)		13,607
U.S. government agency securities		4,485		—		(23	)		4,462
Total marketable securities, long-term		18,124		—		(55	)		18,069
Total cash equivalents and marketable securities	$	384,358	$	70	$	(111	)	$	384,317

The following table summarizes the available-for-sale securities in an unrealized loss position, aggregated by major security type and length of time in a continuous unrealized loss position, for which an allowance for credit losses was not recorded as of March 31, 2025 and December 31, 2024 (in thousands):

	March 31, 2025
	Less than 12 months					12 months or longer				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Cash equivalents
Commercial papers	$	64,892	$	(11	)	$	—	$	—	$	64,892	$	(11	)
Marketable securities
Marketable securities, current
U.S. treasury securities		89,724		(13	)		—		—		89,724		(13	)
U.S. government agency securities		5,044		(1	)		—		—		5,044		(1	)
Commercial papers		24,248		(8	)		—		—		24,248		(8	)
Corporate debt securities		34,358		(12	)		—		—		34,358		(12	)
Marketable securities, long-term
U.S. government agency securities		1,538		(1	)		—		—		1,538		(1	)
Total	$	219,804	$	(46	)	$	—	$	—	$	219,804	$	(46	)

	December 31, 2024
	Less than 12 months					12 months or longer				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Cash equivalents
Commercial papers	$	18,199	$	(3	)	$	—	$	—	$	18,199	$	(3	)
Marketable securities
Marketable securities, current
U.S. treasury securities		49,904		(11	)		—		—		49,904		(11	)
U.S. government agency securities		4,713		(2	)		—		—		4,713		(2	)
Corporate debt securities		39,468		(40	)		—		—		39,468		(40	)
Marketable securities, long-term
U.S. treasury securities		13,607		(32	)		—		—		13,607		(32	)
U.S. government agency securities		4,462		(23	)		—		—		4,462		(23	)
Total	$	130,353	$	(111	)	$	—	$	—	$	130,353	$	(111	)

The Company evaluated its securities for credit losses and considered the decline in market value to be primarily attributable to current economic and market conditions and not to a credit loss or other factors. Additionally, the Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell the securities before recovery of the unamortized cost basis, which may be at maturity. There were no material realized gains or realized losses on marketable securities for the periods presented. Given the Company’s intent and ability to hold such securities until recovery, and the lack of significant change in credit risk of these investments, the Company does not consider these marketable securities to be impaired as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, the Company did not record an allowance for credit losses.

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

	March 31, 2025		December 31, 2024
Due in one year or less	$	265,522	$	314,073
Due in 1-2 years		23,953		18,069
Total	$	289,475	$	332,142

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	March 31, 2025		December 31, 2024
Accrued employee compensation and benefits	$	818	$	2,041
Accrued professional and consulting		487		221
Accrued research and development		4,358		1,084
Total	$	5,663	$	3,346

6. Note Payable with Related Party

In March 2024, Pre-Merger Oruka entered into a Series A Preferred Stock and Convertible Note Purchase Agreement (the “Purchase Agreement”) with Fairmount Healthcare Fund II, L.P. (“Fairmount”), whereby Pre-Merger Oruka issued a convertible note (the “Convertible Note”), with an initial principal amount of $25.0 million that, at the time of issuance, could be converted into Pre-Merger Oruka Series A Preferred Stock (or a series of preferred shares that is identical in respect to the shares of preferred shares issued in its next equity financing) or shares of Pre-Merger Oruka Common Stock in exchange for aggregate proceeds of $25.0 million. The Convertible Note accrued interest at a rate of 12.0% per annum. Immediately prior to the completion of the Merger (see Note 1), the Convertible Note was converted into shares of Pre-Merger Oruka Common Stock based on the aggregate principal amount of $25.0 million, plus unpaid accrued interest of $1.5 million divided by the conversion price which was determined based upon the Company’s fully-diluted capitalization immediately prior to the Merger. At the effective time of the Merger, the Pre-Merger Oruka Common Stock issued upon the conversion of the Convertible Note (including accrued interest) automatically converted into 2,722,207 shares of Company Common Stock.

The Company assessed all terms and features of the Convertible Note in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the embedded features. The Company determined that the share settled redemption feature was clearly and closely related to the debt host and did not require separate accounting. The Company determined that the conversion options of the Convertible Note were not clearly and closely associated with a debt host. However, these features did not meet the definition of a derivative under ASC 815, Derivatives and Hedging, and as a result, did not require separate accounting as a derivative liability.

The Company paid debt issuance costs of less than $0.1 million in relation to the Convertible Note. The debt issuance costs were reflected as a reduction of the carrying value of Convertible Note on the consolidated balance sheet and were being amortized as interest expense over the term of the Convertible Note using the effective interest method. For the three months ended March 31, 2025 and the period from February 6, 2024 (inception) to March 31, 2024, the Company recognized interest expenses related to the Convertible Note of nil and $0.2 million, respectively, which included non-cash interest expense related to the amortization of debt issuance of less than $0.1 million. As of December 31, 2024 and March 31, 2025, the Convertible Note is not outstanding.

7. Convertible Preferred Stock and Stockholders’ Equity

Pre-Funded Warrants

In August 2024, pursuant to the Subscription Agreement and immediately prior to the Closing, certain new and current investors purchased pre-funded warrants, which, at the effective time of the Merger, were exercisable for 5,522,207 shares of Company Common Stock at a purchase price of approximately $9.70 per warrant and after the Closing, are now exercisable for 5,522,207 shares of the Company Common Stock at an exercise price of $0.01 per share.

In September 2024, in connection with the PIPE Financing, the Company issued and sold 680,000 pre-funded warrants, at a purchase price of $22.999 per warrant, exercisable for 680,000 shares of Company Common Stock at an exercise price of $0.001 per share.

The pre-funded warrants were recorded as a component of stockholders’ equity within additional paid-in-capital and have no expiration date. Collectively, 6,202,207 pre-funded warrants are outstanding as of March 31, 2025 and December 31, 2024.

Employee Warrants

The Subscription Agreement provided for, among other things, the issuance of warrants to certain of Pre-Merger Oruka’s employees and directors immediately prior to the closing of the Merger. During the period from February 6, 2024 (inception) to December 31, 2024, 3,054,358 employee warrants were issued at an exercise price of $7.80 per warrant. These warrants vest over a period of four years. The Company recognizes compensation cost related to warrants on a straight-line basis over the requisite service period, which is the period in which the related services are received. 3,054,358 warrants are outstanding as of March 31, 2025 and December 31, 2024.

Convertible Preferred Stock

In March 2024, Pre-Merger Oruka issued and sold an aggregate of 20,000,000 shares of Pre-Merger Oruka Series A Preferred Stock to Fairmount (see Note 13), at a purchase price of approximately $0.15 per share, for aggregate gross proceeds of $3.0 million. Pre-Merger Oruka incurred less than $0.1 million of issuance costs in connection with this transaction. Upon the issuance of the Pre-Merger Oruka Series A Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities as described below and determined that such features did not require the Company to separately account for these features.

In August 2024, upon Closing, the Pre-Merger Oruka Series A Preferred Stock converted to 137,138 shares of Company Series B Preferred Stock.

In September 2024, in connection with the PIPE Financing, the Company issued and sold an aggregate of 2,439 shares of the Company Series A Preferred Stock at a purchase price of $23,000.00 per share. In November 2024, the 2,439 shares of the Company Series A Preferred Stock were converted to 2,439,000 shares of Company Common Stock. As of December 31, 2024 and March 31, 2025, there are no outstanding shares of Company Series A Preferred Stock.

As of March 31, 2025, Company Series B Preferred Stock consisted of the following (in thousands, except share data):

	March 31, 2025
	Preferred Stock Authorized		Preferred Stock Issued and Outstanding		Carrying Value		Common Stock Issuable Upon Conversion
Company Series B Preferred Stock		251,504		137,138	$	2,931		11,428,149

Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting Convertible Preferred Stock (the “Series B Certificate of Designation”) filed in connection with the Merger, holders of Company Series B Preferred Stock are entitled to receive dividends on shares of Company Series B Preferred Stock equal to, on an as-if-converted-to-Company Common Stock basis, and in the same form as, dividends actually paid on shares of Company Common Stock. Except as provided in the Series B Certificate of Designation or as otherwise required by law, the Company Series B Preferred Stock does not have voting rights. The Company Series B Preferred Stock shall rank on parity with the Company Common Stock as to the distribution of assets upon any liquidation, dissolution, or winding-up of the Company. Each share of Company Series B Preferred Stock is convertible at the option of the holder, at any time, and without the payment of additional consideration by the holder. As of March 31, 2025, each outstanding share of Company Series B Preferred Stock was convertible into common stock at a ratio of approximately 83.3332:1.

Paruka Warrant

On December 31, 2024, the Company settled its 2024 obligations under the Paruka Warrant Obligation (defined below) by issuing Paruka Holding LLC (“Paruka”) a warrant to purchase 596,930 shares of Company Common Stock at an exercise price of $19.39 per share. The warrant has a term of 10 years, is fully vested, and is exercisable in part or full at any time during the term of the warrant. As of March 31, 2025, the warrant issued under the Paruka Warrant Obligation is outstanding and unexercised. See Note 8 for additional information on the Paruka Warrant Obligation.

Common Stock

As of March 31, 2025, the Certificate of Incorporation provides for 545,000,000 authorized shares of Company Common Stock. As of March 31, 2025, 37,440,510 shares of Company Common Stock were issued and outstanding, including 2,207,553 shares of restricted common stock awards (“RSAs”) issued and outstanding.

As of March 31, 2025 and December 31, 2024, the Company had common stock reserved for future issuance as follows:

	March 31, 2025		December 31, 2024
Shares issuable on conversion of Company Series B Preferred Stock		11,428,149		11,428,149
Shares issuable upon exercise of pre-funded warrants		6,202,207		6,202,207
Shares issuable upon exercise of warrant under the Paruka Warrant Obligation		596,930		596,930
Outstanding and issued stock options		3,265,460		1,567,760
Outstanding and issued employee warrants		3,054,358		3,054,358
Shares available for grant under 2024 Stock Incentive Plan		5,302,167		4,246,324
Shares available for grant under 2024 Employee Stock Purchase Plan		1,011,238		460,529
Total shares of common stock reserved		30,860,509		27,556,257

8. Stock-Based Compensation

2024 Equity Incentive Plan

The 2024 Equity Incentive Plan (“2024 Plan”) was adopted by the board of directors of Pre-Merger Oruka on February 6, 2024. The 2024 Plan provided for Pre-Merger Oruka to grant stock options, restricted stock awards, restricted stock units, and other stock-based awards to employees, officers, directors, consultants, and advisors. Equity incentive stock options granted under the 2024 Plan generally vest over four years, subject to the participant’s continued service, and expire after ten years, although two non-employee stock options were granted with vesting terms less than four years. As of March 31, 2025, 1,179,193 shares were subject to options outstanding under the 2024 Plan and will become available under the 2024 Stock Incentive Plan (defined below) to the extent the options are forfeited or lapse unexercised.

2024 Stock Incentive Plan

On August 22, 2024, the 2024 Stock Incentive Plan (“2024 Stock Plan”) was approved by the Company’s stockholders and on August 29, 2024, the board of directors of the Company (the “Board”) ratified the 2024 Stock Plan. The 2024 Stock Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stockholder-based awards and incentive bonuses. An additional 2,753,543 shares became available for issuance under the 2024 Stock Plan on January 1, 2025 as a result of the annual increase pursuant to the evergreen provision.

As of March 31, 2025, 7,388,434 shares were reserved for issuance under the 2024 Stock Plan, of which 5,302,167 shares were available for future grant and 2,086,267 shares were subject to outstanding options.

2024 Employee Stock Purchase Plan

The 2024 Employee Stock Purchase Plan (the “ESPP”) became effective in August 2024. Eligible employees may purchase shares of Company Common Stock under the ESPP at 85% of the lower of the fair market value of the Company Common Stock as of the first or the last day of each offering period. Employees are limited to contributing 15% of the employee’s eligible compensation and may not purchase more than $25,000 of stock during any calendar year. The ESPP will terminate ten years from the first purchase date under the plan, unless terminated earlier by the board of directors. An additional 550,709 shares became available for issuance under the ESPP on January 1, 2025 as a result of the annual increase pursuant to the evergreen provision.

The Company issued no shares during the three months ended March 31, 2025 out of the ESPP and as of March 31, 2025, there were 1,011,238 shares of Company Common Stock available in the pool for future issuances.

For the three months ended March 31, 2025, stock-based compensation expense related to the ESPP was less than $0.1 million.

Stock Option Valuation

The following table summarizes the weighted-average assumptions used in calculating the fair value of the awards for the three months ended March 31, 2025 and for the period from February 6, 2024 (inception) to March 31, 2024:

	Three Months Ended March 31, 2025			Period from February 6, 2024 (Inception) to March 31, 2024
Expected term (in years)		6.0			6.0
Expected volatility		96.0	%		103.0	%
Risk-free interest rate		4.5	%		4.2	%
Expected dividend yield		—			—

Stock Options

The following table summarizes the stock option activities under the 2024 Plan and the 2024 Stock Plan for the three months ended March 31, 2025:

	Number of Stock Options Outstanding		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Balance as of December 31, 2024		1,567,760	$	11.39		9.4	$	15,470
Granted		1,697,700	$	12.48
Exercised		—	$	—
Canceled/forfeited		—	$	—
Balance as of March 31, 2025		3,265,460	$	11.96		9.5	$	4,704
Vested and expected to vest, March 31, 2025		3,265,460	$	11.96		9.5	$	4,704
Exercisable, March 31, 2025		161,539	$	7.77		9.3	$	521

The weighted average grant-date fair value per share of stock options granted during the three months ended March 31, 2025 was $9.88 per share. Aggregate intrinsic value represents the difference between the estimated fair value of the underlying Company Common Stock and the exercise price of outstanding, in-the-money employee stock options.

Restricted Stock Awards

In February 2024 and March 2024, the Company issued 2,207,553 shares of RSAs to certain employees, directors, and consultants at a price of $0.0001 per share, the then par value of Pre-Merger Oruka Common Stock. Such RSAs have service-based vesting conditions only and vest over a four-year period, during which time all unvested shares are subject to forfeiture in the event the holder’s service with the Company voluntarily or involuntarily terminates. 576,571 RSAs vested during the three months ended March 31, 2025 and as of March 31, 2025, 1,630,982 of the RSAs remain unvested. For each of the three months ended March 31, 2025 and from February 6, 2024 (inception) to March 31, 2024, stock-based compensation expense related to RSAs was less than $0.1 million.

The following table summarizes the RSA activity for the three months ended March 31, 2025:

	Number of RSAs			Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024		2,207,553		$	—
Granted		—		$	—
Vested		(576,571	)	$	—
Unvested balance as of March 31, 2025		1,630,982		$	—

Option Agreements and Paruka Warrant Obligation

As part of the Option Agreements, (defined in Note 10 below) on December 31, 2024 the Company granted, and on December 31, 2025, will grant, Paruka a warrant to purchase a number of shares equal to 1.00% of outstanding shares as of the date of the grant on a fully-diluted basis, with an exercise price equal to the fair market value of the underlying shares on the grant date (the “Paruka Warrant Obligation”).

The grant dates for the issuance of warrants were expected to be December 31, 2024 and December 31, 2025 as all terms of the award, including number of shares and exercise price, will be known by all parties. The Company determined that the 2024 and 2025 grants are two separate grants, as there would be no obligation for the 2025 grant had the Company exercised or terminated all of the options under the Option Agreements prior to December 31, 2024. The service inception period for the grant precedes the grant date, with the full award being vested as of the grant date with no post-grant date service requirement. Accordingly, the warrant expected to be granted to Paruka was accounted for as a liability on the balance sheet on the service inception date and, after the initial recognition, the liability is adjusted to fair value at the end of each reporting period, with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss as stock-based compensation expenses under research and development expenses. For the period from February 6, 2024 (inception) to March 31, 2024, less than $0.1 million was recognized as stock-based compensation expenses related to the December 31, 2024 Paruka Warrant Obligation. On issuance of the warrant to Paruka on December 31, 2024, the fair value of the warrant issued on December 31, 2024 of $10.4 million was reclassified from liability to equity on the condensed consolidated balance sheet as of December 31, 2024.

As of March 31, 2025, the estimated fair value of the warrant to be granted on December 31, 2025 was $5.6 million. For the three months ended March 31, 2025 $1.4 million was recognized as stock-based compensation expenses related to the December 31, 2025 Paruka Warrant Obligation. As of March 31, 2025, there was $4.2 million in unamortized expense related to the December 31, 2025 Paruka Warrant Obligation.

Employee Warrants

As stated above, in July 2024, the Subscription Agreement was amended and restated, among other things, for employee warrants to be issued to certain Pre-Merger Oruka employees and directors prior to the Closing. During the period from February 6, 2024 (inception) to December 31, 2024, the Company issued 3,054,358 warrants at an exercise price of $7.80 per warrant, which are accounted as equity in the condensed consolidated financial statements. The employee warrants were subject to performance and service based vesting requirements and upon completion of the Merger the performance-based requirements had been achieved. During the three months ended March 31, 2025, no employee warrants were granted.

The following table summarizes the employee warrant activity during the three months ended March 31, 2025:

	Number of Employee Warrants Outstanding		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Balance as of December 31, 2024		3,054,358	$	7.80		9.5	$	35,400
Granted		—	$	—
Exercised		—	$	—
Canceled/forfeited		—	$	—
Balance as of March 31, 2025		3,054,358	$	7.80		9.3	$	7,514
Vested and expected to vest, March 31, 2025		3,054,358	$	7.80		9.3	$	7,514
Exercisable, March 31, 2025		—	$	—		—	$	—

Stock-Based Compensation Expense

The following table summarizes the classification of the Company’s stock-based compensation expense in the condensed consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended March 31, 2025		Period from February 6, 2024 (Inception) to March 31, 2024
Research and development	$	3,003	$	70
General and administrative		1,880		15
Total	$	4,883	$	85

As of March 31, 2025, total unrecognized compensation cost related to the unvested stock options was $27.6 million, which is expected to be recognized over a weighted average period of approximately 3.4 years.

SEC Form 10-Q filed by Oruka Therapeutics Inc.