MENLO PARK, Calif. - Oruka Therapeutics, Inc. (NASDAQ:ORKA), a biotech firm specializing in chronic skin disease treatments, has announced a private investment in public equity (PIPE) deal expected to generate $200 million in gross proceeds before fees and expenses. The transaction is set to close on or around September 13, 2024, subject to customary conditions.
This funding round saw participation from a mix of new and existing investors, such as Braidwell LP and Venrock Healthcare Capital Partners. Oruka will issue 5.6 million shares of common stock at $23 per share, Series A non-voting convertible preferred stock, and pre-funded warrants to purchase additional common stock.
The newly issued Series A Preferred Stock is convertible into approximately 2.4 million shares of common stock, dependent on stockholder approval and ownership limitations. Post-transaction, Oruka will have around 55.1 million shares of common and equivalent stock outstanding.
Oruka plans to allocate the net proceeds from the PIPE towards research and development, general corporate purposes, and working capital needs. The company anticipates that its current cash reserves will sustain operations through 2027.
The offer and sale of the securities are private and have not been registered under the Securities Act of 1933, as amended. However, Oruka has agreed to file a registration statement with the SEC to enable the resale of the securities sold in this financing.
The joint placement agents for the financing include Jefferies, TD Cowen, Leerink Partners, Stifel, and LifeSci Capital.
Oruka Therapeutics is advancing a portfolio of antibodies engineered by Paragon Therapeutics, targeting core mechanisms of plaque psoriasis and other dermatologic and inflammatory diseases, aiming to offer patients significant relief from their conditions with minimal dosing.
The information provided is based on a press release statement.
In other recent news, ARCA biopharma has completed its merger with Oruka Therapeutics, resulting in Oruka becoming a wholly-owned subsidiary of ARCA. As part of the merger, each share of Oruka common stock has been converted into 6.8569 shares of ARCA common stock. Moreover, ARCA stockholders were issued a special cash dividend of $1.613 per share. The combined entity will operate under the name Oruka Therapeutics, Inc. and will trade on The Nasdaq Global Market. These are the latest developments in the ongoing merger process between ARCA biopharma and Oruka Therapeutics.
In line with these developments, an amendment to the Subscription Agreement with Oruka Therapeutics was made, correcting a clerical error in the definition of "Purchase Price" within the original agreement. Following this adjustment, an Amended and Restated Subscription Agreement was entered into, which includes provisions for the issuance of warrants to certain employees and service providers of Oruka.
Finally, ARCA biopharma has announced a special cash dividend of $1.59 per share in connection with its merger with Oruka Therapeutics. This dividend was contingent on stockholder approval of the merger, and was distributed to stockholders of record as of August 26, 2024.
InvestingPro Insights
As Oruka Therapeutics (NASDAQ:ORKA) secures a significant PIPE deal to bolster its financial position and support its R&D efforts, investors and stakeholders are keenly observing its market performance and financial health. With a market capitalization of $870.79 million, the company's recent activities in the stock market have shown a notable uptick. Specifically, Oruka's stock has experienced a substantial return over the last week, with a 21.84% increase in price total return, reflecting a surge in investor confidence following the announcement of the PIPE deal.
Despite this positive momentum, the company faces some financial challenges. An InvestingPro Tip highlights that Oruka operates with moderate levels of debt. This is a crucial factor for investors to consider as the company navigates through its growth and development phase. Moreover, another InvestingPro Tip reveals that analysts are not expecting Oruka to be profitable this year, which could be a point of concern for long-term investors.
From a valuation standpoint, Oruka's P/E ratio stands at -4.83, indicating that the market currently does not expect earnings growth in the near term. Additionally, the company's Price/Book ratio for the last twelve months as of Q2 2024 is -30.05, suggesting that investors may have concerns about the company's asset value relative to its market valuation.
For those interested in further analysis and additional InvestingPro Tips, Oruka Therapeutics has a comprehensive list available at InvestingPro Oruka Therapeutics, which includes more insights into the company's financials and market performance.
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