WESTMINSTER, Colo. - In a significant move within the biopharmaceutical industry, ARCA biopharma, Inc. (NASDAQ: ABIO), a company focused on genetically-targeted therapies for cardiovascular diseases, and Oruka Therapeutics, a private biotech firm developing novel biologics for chronic skin diseases, have announced an all-stock transaction merger. The new entity will operate under the name Oruka Therapeutics, Inc. and is expected to trade on Nasdaq with the ticker symbol ORKA.
The merger aims to advance Oruka's portfolio, particularly ORKA-001 and ORKA-002, which are antibodies targeting IL-23p19 and IL-17A/F, respectively. These therapies are engineered to potentially offer superior efficacy and less frequent dosing for patients with chronic skin conditions such as plaque psoriasis. Clinical trials for these treatments are slated to begin in 2025.
Oruka has secured approximately $275 million in private financing to support operations through 2027. This funding is anticipated to close immediately before the merger's completion, which is expected in the third quarter of 2024, subject to customary closing conditions and shareholder approvals.
The merger agreement stipulates that pre-merger ARCA stockholders will own approximately 2.38% of the combined company, with the remaining 97.62% owned by pre-merger Oruka stockholders, including new investors from the private financing round. ARCA also plans to declare a cash dividend to its pre-merger stockholders based on its net cash exceeding $5 million.
Lawrence Klein, Ph.D., CEO of Oruka, emphasized the merger's potential to enhance operational capabilities and accelerate the development of their programs. Dr. Andrew Blauvelt, chair of Oruka's Scientific Advisory Board and a renowned expert in psoriasis, expressed optimism about the lead programs' potential to significantly improve the standard of care in psoriasis and related diseases.
The merger has received approval from the boards of directors of both companies. Strategic and legal advisors are in place for both parties, with financial advisors and legal counsel assisting in the transaction's execution.
This article is based on a press release statement.
InvestingPro Insights
In light of ARCA biopharma's recent merger with Oruka Therapeutics, investors are closely monitoring ABIO's financial health and market performance. According to InvestingPro data, ARCA biopharma holds a market capitalization of approximately $24.8 million. Despite the company's focus on innovative cardiovascular therapies, it has not been profitable over the last twelve months, as indicated by a negative P/E ratio of -4.65. Additionally, the company has reported an operating loss of $7.14 million for the same period.
On the positive side, one of the InvestingPro Tips highlights that ARCA biopharma holds more cash than debt on its balance sheet, which could provide financial flexibility post-merger. Moreover, the company's liquid assets exceed its short-term obligations, suggesting a solid position to meet immediate financial needs. These factors could be crucial as the company transitions into the combined entity and seeks to advance its therapeutic portfolio.
Investors considering the long-term potential of the newly formed Oruka Therapeutics may find these insights particularly relevant. For those looking to delve deeper into the financial nuances of ARCA biopharma, InvestingPro offers additional tips that can be accessed at https://www.investing.com/pro/ABIO. There are 5 more InvestingPro Tips available for those who want a comprehensive understanding of the company's financial position and performance.
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