ARCA biopharma, Inc. (NASDAQ: ABIO) (“ARCA”), and Oruka
Therapeutics (“Oruka”), a privately held biotechnology company
developing novel biologics designed to set a new standard for the
treatment of chronic skin diseases, including plaque psoriasis,
announced today that they have entered into a definitive agreement
to combine the companies in an all-stock transaction. The resulting
entity will focus on advancing Oruka’s pipeline of potentially
best-in-class biologics, including ORKA-001 (an IL-23p19 inhibitor)
and ORKA-002 (an IL-17A/F inhibitor). Upon completion of the
merger, the combined company plans to operate under the name Oruka
Therapeutics, Inc. and trade on Nasdaq under the ticker symbol
“ORKA”.
In support of the merger, Oruka has secured commitments for a
$275 million private investment in its common stock and pre-funded
warrants to purchase its common stock from a syndicate of
healthcare investors led by Fairmount and Venrock Healthcare
Capital Partners, with participation from RTW Investments, Access
Biotechnology, Commodore Capital, Deep Track Capital, Perceptive
Advisors, Blackstone Multi-Asset Investing, Avidity Partners, Great
Point Partners LLC, Paradigm BioCapital, Braidwell LP, and Redmile
Group, as well as other investors, including multiple large
investment management firms. The financing is expected to close
immediately prior to completion of the merger. The combined
company’s cash balance at closing is anticipated to fund Oruka’s
operations through 2027 and support the advancement of ORKA-001 and
ORKA-002 through initial clinical proof-of-concept. In addition,
prior to closing of the merger, ARCA expects to declare a cash
dividend to the pre-merger ARCA stockholders equal to the amount by
which ARCA’s net cash exceeds $5 million.
“Our mission at Oruka is to offer people affected with chronic
skin diseases the most possible freedom from their condition. We
believe that our lead programs, engineered by the world-class team
at Paragon, could meaningfully advance the standard of care in
psoriasis and related diseases,” said Lawrence Klein, PhD, Chief
Executive Officer of Oruka. “This merger and significant financing
is expected to provide resources to build out our operational
capabilities and propel our programs into clinical development with
focus and efficiency.”
Oruka aims to transform the treatment of plaque psoriasis,
psoriatic arthritis, and other dermatologic and inflammatory
indications by developing potentially best-in-class, long-acting
antibodies against validated targets with critical roles in these
diseases. Oruka is the third company founded based on assets
generated by Paragon Therapeutics (“Paragon”). Oruka’s co-lead
programs, ORKA-001 and ORKA-002, were designed utilizing
state-of-the-art antibody engineering, including half-life
extension, to enable dosing as infrequently as once or twice a year
while potentially delivering superior efficacy than the current
standard of care. Both programs are expected to enter clinical
trials in 2025, with initial pharmacokinetic data for ORKA-001
anticipated as early as the second half of 2025, which could
provide important validation of the ability to achieve extended
dosing intervals and high antibody exposures. The scientific
foundation for Oruka was established in large part by Dr. Andrew
Blauvelt, a world-renowned expert in psoriasis and chair of Oruka’s
Scientific Advisory Board.
“I am excited to support Oruka in their mission to advance the
standard of care in plaque psoriasis and other associated
diseases,” said Dr. Blauvelt. “Over the past 25 years, I’ve seen
the field advance to previously unimagined levels of efficacy, but
there is still unmet need as patients continue to seek freedom from
their disease. Our recent work in the KNOCKOUT study has
demonstrated that stronger IL-23 inhibition can lead to higher
response rates, with the potential for continued disease remissions
without therapy. Oruka’s lead programs are uniquely suited to build
upon this work, potentially offering greater efficacy, less
frequent dosing, and more durable disease modification than
currently available therapies.”
“We believe that this combination with Oruka is the best path
forward for ARCA stockholders,” said Robert E. Conway, Chairman of
the Board of Directors of ARCA. “We believe that the expected cash
dividend and Oruka’s promising pipeline provides the potential for
significant value creation for ARCA stockholders in the near- and
long-term.”
About the Proposed Transactions
Under the terms of the merger agreement, the pre-merger ARCA
stockholders are expected to own approximately 2.38% of the
combined company and the pre-merger Oruka stockholders (inclusive
of those investors participating in the pre-closing financing) are
expected to own approximately 97.62% of the combined company. The
percentage of the combined company that ARCA’s stockholders will
own as of the close of the merger is subject to adjustment based on
the amount of ARCA’s net cash at the closing date. ARCA is expected
to contribute $5 million to the combined entity and expects to pay
a dividend to pre-merger ARCA stockholders of approximately $20
million immediately prior to the close of the merger.
The transaction has received approval by the Board of Directors
of both companies and is expected to close in the third quarter of
2024, subject to certain closing conditions, including, among other
things, approval by the stockholders of each company, the
effectiveness of a registration statement to be filed with the U.S.
Securities and Exchange Commission (the “SEC”) to register the
securities to be issued in connection with the merger, and the
satisfaction of customary closing conditions.
The combined company will be named Oruka Therapeutics, Inc. and
led by Lawrence Klein, PhD, Oruka’s current Chief Executive
Officer, who will be joined on Oruka’s Board of Directors by Peter
Harwin, Managing Member of Fairmount, Samarth Kulkarni, PhD, CEO
and Chairman, CRISPR Therapeutics, Cameron Turtle, DPhil, CEO,
Spyre Therapeutics, and Carl Dambkowski, MD, CMO, Apogee
Therapeutics.
Wedbush PacGrow is serving as strategic advisor and Gibson, Dunn
& Crutcher LLP is serving as legal counsel to Oruka. Jefferies,
TD Cowen, Leerink Partners, and LifeSci Capital are serving as the
placement agents to Oruka. Cooley LLP is serving as legal counsel
to the placement agents. Lucid Capital Markets is serving as
financial advisor and Wilson Sonsini Goodrich & Rosati, P.C. is
serving as legal counsel to ARCA.
Conference Call Details
The companies plan to hold a joint conference call on April 3,
2024 at 8:30 AM EDT to discuss the merger details.
The dial-in number in the U.S./Canada is (800) 715-9871; for
international participants, the number is (646) 307-1963. For all
callers, please refer to the Conference ID 4737644.
Live webcast
link: https://edge.media-server.com/mmc/p/rnug3oyp
A replay of the conference call will be available for seven
business days beginning shortly after the conclusion of the live
call, by calling: Toll Free: (800) 770-2030; Toll: (609) 800-9909;
Playback ID: 4737644#.
About ARCA biopharma
ARCA biopharma is dedicated to developing genetically and other
targeted therapies for cardiovascular diseases through a precision
medicine approach to drug development. For more information, please
visit www.arcabio.com or follow the company on LinkedIn.
About Paragon Therapeutics
Paragon Therapeutics, Inc. is a biotechnology company leveraging
cutting-edge science and technology to identify and propel
best-in-class biologics into the clinic for a range of human
diseases with high unmet needs. The company rapidly advances
therapies through a range of opportunities, from new company
creation and strategic partnerships to shaping programs in-house.
Founded by Fairmount in 2021 as a joint venture with FairJourney
Biologics, Paragon Therapeutics is based in Waltham, Mass. For more
information, please visit www.paragontherapeutics.com.
About Oruka Therapeutics
Oruka Therapeutics is developing novel biologics designed to set
a new standard for the treatment of chronic skin diseases. Oruka’s
mission is to offer patients suffering from chronic skin diseases
like plaque psoriasis the greatest possible freedom from their
condition by achieving high rates of complete disease clearance
with dosing as infrequently as one or twice a year. Oruka is
advancing a proprietary portfolio of potentially best-in-class
antibodies that were engineered by Paragon Therapeutics and target
the core mechanisms underlying plaque psoriasis and other
dermatologic and inflammatory diseases. For more information, visit
www.orukatx.com.
Forward-Looking Statements
Certain statements in this press release, other than purely
historical information, may constitute “forward-looking statements”
within the meaning of the federal securities laws, including for
purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995, concerning ARCA,
Oruka, the proposed pre-closing financing and the proposed merger
between ARCA and Oruka (collectively, the “Proposed Transactions”)
and other matters. These forward-looking statements include, but
are not limited to, express or implied statements relating to
ARCA’s or Oruka’s management team’s expectations, hopes, beliefs,
intentions or strategies regarding the future including, without
limitation, statements regarding: the Proposed Transactions and the
expected effects, perceived benefits or opportunities, including
investment amounts from investors and expected proceeds, and
related timing with respect thereto, expectations regarding or
plans for discovery, preclinical studies, clinical trials and
research and development programs, in particular with respect to
ORKA-001 and ORKA-002, and any developments or results in
connection therewith, including the target product profile of each
of ORKA-001 and ORKA-002; the anticipated timing of the
commencement of and results from those studies and trials;
expectations regarding the use of proceeds, the sufficiency of
post-transaction resources to support the advancement of Oruka’s
pipeline through certain milestones and the time period over which
Oruka’s post-transaction capital resources will be sufficient to
fund its anticipated operations; the cash balance of the combined
entity at closing; expectations regarding the treatment of
psoriasis and associated diseases; expectations related to ARCA’s
contribution and payment of dividends in connection with the
merger, including the timing thereof; and the expected trading of
the combined company’s stock on Nasdaq under the ticker symbol
“ORKA.” In addition, any statements that refer to projections,
forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words “opportunity,” “potential,”
“milestones,” “pipeline,” “can,” “goal,” “strategy,” “target,”
“anticipate,” “achieve,” “believe,” “contemplate,” “continue,”
“could,” “estimate,” “expect,” “intends,” “may,” “plan,”
“possible,” “project,” “should,” “will,” “would” and similar
expressions (including the negatives of these terms or variations
of them) may identify forward-looking statements, but the absence
of these words does not mean that a statement is not
forward-looking. 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 ARCA, Oruka or the Proposed Transactions
will be those that have been anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which
are beyond ARCA’s 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. These
risks and uncertainties include, but are not limited to, the risk
that the conditions to the closing or consummation of the Proposed
Transactions are not satisfied, including ARCA’s failure to obtain
stockholder approval for the proposed merger; the risk that the
proposed pre-closing financing is not completed in a timely manner
or at all; uncertainties as to the timing of the consummation of
the Proposed Transactions and the ability of each of ARCA and Oruka
to consummate the transactions contemplated by the Proposed
Transactions; risks related to ARCA’s continued listing on Nasdaq
until closing of the Proposed Transactions and the combined
company’s ability to remain listed following the Proposed
Transactions; risks related to ARCA’s and Oruka’s ability to
correctly estimate their respective operating expenses and expenses
associated with the Proposed Transactions, as applicable, as well
as uncertainties regarding the impact any delay in the closing of
any of the Proposed Transactions would have on the anticipated cash
resources of the resulting combined company upon closing and other
events and unanticipated spending and costs that could reduce the
combined company’s cash resources; the failure or delay in
obtaining required approvals from any governmental or
quasi-governmental entity necessary to consummate the Proposed
Transactions; the occurrence of any event, change or other
circumstance or condition that could give rise to the termination
of the business combination between ARCA and Oruka; the effect of
the announcement or pendency of the merger on ARCA’s or Oruka’s
business relationships, operating results and business generally;
costs related to the merger; as a result of adjustments to the
exchange ratio, Oruka stockholders and ARCA stockholders could own
more or less of the combined company than is currently anticipated;
the outcome of any legal proceedings that may be instituted against
ARCA, Oruka or any of their respective directors or officers
related to the merger agreement or the transactions contemplated
thereby; the ability of ARCA or Oruka to protect their respective
intellectual property rights; competitive responses to the Proposed
Transactions; unexpected costs, charges or expenses resulting from
the Proposed Transactions; potential adverse reactions or changes
to business relationships resulting from the announcement or
completion of the Proposed Transactions; failure to realize certain
anticipated benefits of the Proposed Transactions, including with
respect to future financial and operating results; the risk that
ARCA stockholders receive more or less of the cash dividend than is
currently anticipated; legislative, regulatory, political and
economic developments; and those uncertainties and factors
described under the heading “Risk Factors” and “Business” in ARCA’s
most recent Annual Report on Form 10-K filed with the SEC on
February 1, 2024, as well as discussions of potential risks,
uncertainties, and other important factors included in other
filings by ARCA from time to time, any risk factors related to ARCA
or Oruka made available to you in connection with the Proposed
Transactions, as well as risk factors associated with companies,
such as Oruka, that operate in the biopharma industry. Should one
or more of these risks or uncertainties materialize, or should any
of ARCA’s or Oruka’s assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. Nothing in this press release should be
regarded as a representation by any person that the forward-looking
statements set forth herein will be achieved or that any of the
contemplated results of such forward-looking statements will be
achieved. You should not place undue reliance on forward-looking
statements in this press release, which speak only as of the date
they are made and are qualified in their entirety by reference to
the cautionary statements herein. Neither ARCA nor Oruka undertakes
or accepts any duty to release publicly any updates or revisions to
any forward-looking statements. This press release does not purport
to summarize all of the conditions, risks and other attributes of
an investment in ARCA or Oruka.
No Offer or Solicitation
This press release and the information contained herein is not
intended to and does not constitute (i) a solicitation of a proxy,
consent or approval with respect to any securities or in respect of
the Proposed Transactions or (ii) an offer to sell or the
solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities pursuant to the
Proposed Transactions or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
the Securities Act of 1933, as amended, or an exemption therefrom.
Subject to certain exceptions to be approved by the relevant
regulators or certain facts to be ascertained, the public offer
will not be made directly or indirectly, in or into any
jurisdiction where to do so would constitute a violation of the
laws of such jurisdiction, or by use of the mails or by any means
or instrumentality (including without limitation, facsimile
transmission, telephone and the internet) of interstate or foreign
commerce, or any facility of a national securities exchange, of any
such jurisdiction.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESS
RELEASE IS TRUTHFUL OR COMPLETE.
Important Additional Information About the Proposed
Transactions Will be Filed with the SEC
This press release is not a substitute for the registration
statement or for any other document that ARCA may file with the SEC
in connection with the Proposed Transactions. In connection with
the Proposed Transactions between ARCA and Oruka, ARCA intends to
file relevant materials with the SEC, including a registration
statement on Form S-4 that will contain a proxy
statement/prospectus of ARCA. ARCA URGES INVESTORS AND STOCKHOLDERS
TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND
ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ARCA, ORUKA, THE
PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and
stockholders will be able to obtain free copies of the proxy
statement/prospectus and other documents filed by ARCA with the SEC
(when they become available) through the website maintained by the
SEC at www.sec.gov. Stockholders are urged to read the proxy
statement/prospectus and the other relevant materials when they
become available before making any voting or investment decision
with respect to the Proposed Transactions. In addition, investors
and stockholders should note that ARCA communicates with investors
and the public using its website
(https://arcabio.com/investors/).
Participants in the Solicitation
ARCA, Oruka and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from stockholders in connection with the Proposed
Transactions. Information about ARCA’s directors and executive
officers including a description of their interests in ARCA is
included in ARCA’s most recent Annual Report on Form 10-K,
including any information incorporated therein by reference, as
filed with the SEC. Additional information regarding these persons
and their interests in the transaction will be included in the
proxy statement/prospectus relating to the Proposed Transactions
when it is filed with the SEC. These documents can be obtained free
of charge from the sources indicated above.
ARCA biopharma Investor & Media
Contact:Jeff Dekker720.940.2122ir@arcabio.com
Oruka Therapeutics Corporate Communications
Contact:Caitlin
Stern203.554.7604cstern@realchemistry.com
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