Full Press Release Details
ARCA biopharma and Oruka Therapeutics Announce Merger Agreement
Merger to create a company focused on advancing Oruka s portfolio of novel biologics
that aim to redefine the standard of care for patients with chronic skin diseases
Oruka, the third company founded based on assets generated by Paragon Therapeutics, expects to advance
ORKA-001 and ORKA-002, potentially best-in-class antibodies targeting IL-23p19 and IL-17A/F, respectively, into clinical trials in 2025
Pre-closing private financing of approximately $275 million anticipated to fund operations
Companies to hold conference call on April 3, 2024 at 8:30 AM EDT
Westminster, CO and Waltham, MA, April 3, 2024 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.
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