Oruka Therapeutics Announces $200 Million Private Placement

Rhea-AI Summary

Oruka Therapeutics (Nasdaq: ORKA) has announced a $200 million private placement financing. The biotechnology company, focused on developing novel biologics for chronic skin diseases, is selling 5,600,000 shares of common stock at $23.00 per share, 2,439 shares of Series A non-voting convertible preferred stock at $23,000 per share, and pre-funded warrants for 680,000 shares at $22.999 per warrant. The PIPE financing includes participation from both new and existing investors, including major investment firms. Upon closing, Oruka will have approximately 55.1 million shares of common stock and equivalents outstanding. The company plans to use the proceeds for research and development, general corporate expenses, and working capital, expecting to fund its operating plan through 2027.

Positive

• Secured $200 million in PIPE financing, strengthening the company's financial position
• Attracted participation from both new and existing investors, including major investment firms
• Expected to fund the company's operating plan through 2027
• Increased total shares outstanding to approximately 55.1 million, potentially improving liquidity

Negative

• Potential dilution of existing shareholders due to the issuance of new shares and convertible securities
• The securities are not registered and have resale restrictions, which may limit investor flexibility

Insights

Financial Analyst

Oruka Therapeutics' $200 million PIPE financing is a significant capital infusion that strengthens the company's financial position. With gross proceeds of $200 million, this deal provides substantial runway, funding operations through 2027. The $23 per share price suggests investor confidence in Oruka's potential. The diverse investor base, including notable firms like Blackstone and RTW Investments, adds credibility. This capital will support R&D efforts in chronic skin diseases, particularly plaque psoriasis. The 55.1 million shares outstanding post-transaction indicates potential dilution, but the long-term funding security may outweigh this concern. Overall, this financing bolsters Oruka's ability to advance its novel biologics pipeline.

Biotechnology Expert

This substantial funding round signifies strong investor interest in Oruka's novel biologics for chronic skin diseases. The company's focus on plaque psoriasis, a prevalent condition with a large market potential, likely attracted this diverse group of investors. The extended cash runway through 2027 allows Oruka to pursue ambitious R&D goals without immediate financial pressure. This stability is important in biotech, where drug development timelines are often lengthy and unpredictable. The involvement of specialized healthcare investors like Venrock and Frazier Life Sciences suggests confidence in Oruka's scientific approach and market potential. This financing could accelerate the company's path to potential breakthrough treatments in dermatology.

Market Research Analyst

The successful completion of this $200 million PIPE deal amid challenging market conditions is noteworthy. It demonstrates strong investor appetite for Oruka's potential in the chronic skin disease market, particularly plaque psoriasis. The premium pricing at $23 per share indicates positive sentiment towards Oruka's prospects. The inclusion of both new and existing investors suggests growing confidence in the company's trajectory. The dermatology therapeutics market is projected to expand significantly, driven by increasing prevalence of skin disorders and demand for novel treatments. Oruka's ability to secure substantial funding positions it favorably against competitors in this growing sector. However, investors should monitor the company's progress in translating this capital into clinical advancements and potential market approvals.

MENLO PARK, Calif., Sept. 12, 2024 (GLOBE NEWSWIRE) -- Oruka Therapeutics, Inc. (“Oruka” or the “Company”) (Nasdaq: ORKA), a biotechnology company developing novel biologics designed to set a new standard for the treatment of chronic skin diseases, including plaque psoriasis, today announced that it has entered into a securities purchase agreement for a private investment in public equity (“PIPE”) financing that is expected to result in gross proceeds of approximately $200 million to the Company, before placement agent fees and offering expenses. The PIPE financing included participation from both new and existing investors, including a large investment manager, Braidwell LP, Venrock Healthcare Capital Partners, Fairmount, Access Biotechnology, Blackstone Multi-Asset Investing, Frazier Life Sciences, Paradigm BioCapital, RTW Investments LP, SR One, Janus Henderson Investors, Commodore Capital, Kalehua Capital, Avidity Partners, Affinity Healthcare Fund LP and Allostery Investments LP, among others.

Pursuant to the terms of the securities purchase agreement, Oruka is selling an aggregate of (i) 5,600,000 shares of its common stock (“Common Stock”) at a purchase price of $23.00 per share, (ii) 2,439 shares of its Series A non-voting convertible preferred stock (the “Series A Preferred Stock”) at a purchase price of $23,000 per share, and (iii) pre-funded warrants to purchase 680,000 shares of Common Stock at a price of $22.999 per pre-funded warrant. The shares of Series A Preferred Stock issued in the PIPE financing are convertible into an aggregate of 2,439,000 shares of Common Stock, with each share of Series A Preferred Stock being convertible into 1,000 shares of Common Stock, subject to Oruka stockholder approval and certain beneficial ownership limitations set by each holder. The pre-funded warrants have an exercise price of $0.001 per share. Following the transaction, there will be approximately 55.1 million shares of the Company’s Common Stock and Common Stock equivalents issued and outstanding, including shares of Common Stock underlying pre-funded warrants and Series A and Series B non-voting convertible preferred stock. The PIPE financing is expected to close on or about September 13, 2024, subject to satisfaction of customary closing conditions.

The Company intends to use the net proceeds from the PIPE financing, together with the Company’s existing cash, cash equivalents, and marketable securities, to provide financing for research and development, general corporate expenses, and working capital needs. The Company expects that its cash will fund its operating plan through 2027.

Jefferies, TD Cowen, Leerink Partners, Stifel, and LifeSci Capital are acting as joint placement agents for the PIPE financing.

The offer and sale of the foregoing securities are being made in a transaction not involving a public offering and the securities have not been registered under the Securities Act of 1933, as amended, and may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements. Concurrently with the execution of the securities purchase agreement, Oruka and the investors entered into a registration rights agreement pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) registering the resale of the shares of Common Stock, the Common Stock issuable upon conversion of the Series A Preferred Stock, and the Common Stock issuable upon exercise of the pre-funded warrants, in each case sold in the PIPE financing.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

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 once or twice per 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 and follow Oruka on LinkedIn.

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 Oruka and other matters. These forward-looking statements include, but are not limited to, express or implied statements relating to Oruka’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future of its pipeline and business including, without limitation, the intended use of proceeds from the PIPE financing, Oruka’s cash sufficiency and runway, the expected timing of closing of the PIPE financing and the completion of the PIPE financing, and Oruka’s business plans. 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 “potential,” “pipeline,” “can,” “target,” “believe,” “expect,” “intends,” “may,” “might,” “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 Oruka will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Oruka’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, market conditions and the satisfaction of closing conditions, as well as those uncertainties and factors described under the heading “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Oruka’s most recent filings with the SEC (including its S-4 Registration Statement). Should one or more of these risks or uncertainties materialize, or should any of 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 therein 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. Oruka does not undertake or accept any duty to make 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 Oruka.

Investor Contact:
Alan Lada
(650) 606-7911
alan.lada@orukatx.com    

FAQ

What is the purpose of Oruka Therapeutics' $200 million private placement?

Oruka Therapeutics (ORKA) is raising $200 million through a private placement to fund research and development, general corporate expenses, and working capital needs. This financing is expected to support the company's operating plan through 2027.

How many new shares is Oruka Therapeutics (ORKA) issuing in the private placement?

Oruka Therapeutics is issuing 5,600,000 shares of common stock, 2,439 shares of Series A non-voting convertible preferred stock (convertible into 2,439,000 common shares), and pre-funded warrants for 680,000 shares in the private placement.

What is the price per share for Oruka Therapeutics' (ORKA) common stock in the private placement?

In the private placement, Oruka Therapeutics is selling its common stock at a price of $23.00 per share.

When is the expected closing date for Oruka Therapeutics' (ORKA) private placement?

The private placement for Oruka Therapeutics is expected to close on or about September 13, 2024, subject to satisfaction of customary closing conditions.