Oruka Therapeutics raises $180 million in private placement

MENLO PARK - Biotechnology company Oruka Therapeutics, Inc. (NASDAQ:ORKA), currently valued at $558 million, announced Wednesday it has secured approximately $180 million in a private investment in public equity (PIPE) financing to advance its development of biologics for chronic skin diseases. According to InvestingPro data, the company has been quickly burning through cash, making this financing crucial for its development pipeline.

The financing round was led by Viking Global Investors with participation from both new and existing investors including Blackstone Multi-Asset Investing, Perceptive Advisors, and Venrock Healthcare Capital Partners, among others. The investment comes as analysts maintain a strong buy consensus, with price targets ranging from $21 to $47 per share, suggesting significant upside potential according to InvestingPro analysis.

Under the agreement, Oruka is selling 10,933,405 shares of common stock at $15.00 per share and pre-funded warrants to purchase 1,066,666 additional shares at $14.999 per warrant. The pre-funded warrants have an exercise price of $0.001 per share.

The transaction is expected to close around September 19, subject to customary closing conditions.

Oruka plans to use the proceeds to fund research and development, general corporate expenses, and working capital needs. While the company maintains a strong current ratio of 27.42 and holds more cash than debt on its balance sheet, InvestingPro analysis indicates the company is not yet profitable, with a net loss over the last twelve months. The company stated that the financing should support operations for at least one year following its planned Phase 2 data readouts in 2027.

Jefferies, TD Cowen, Guggenheim Securities, and LifeSci Capital are acting as joint placement agents for the financing.

Following the transaction, Oruka will have approximately 67.1 million shares of common stock and common stock equivalents outstanding, including shares underlying pre-funded warrants and Series B non-voting convertible preferred stock. The stock has shown strong momentum with a 25% gain over the past six months, despite trading below its 52-week high of $31.13.

The securities offered in this private placement have not been registered under the Securities Act of 1933 and may not be resold in the United States except through an effective registration statement or applicable exemption.

This information is based on a press release statement from the company.

In other recent news, Oruka Therapeutics has announced interim Phase 1 trial data for its long-acting IL-23p19 antibody, ORKA-001, which suggests a potential for once-yearly dosing for plaque psoriasis patients. The data, shared at a dermatology congress, highlighted a half-life of approximately 100 days, significantly longer than current market treatments. Furthermore, the U.S. Food and Drug Administration has cleared Oruka’s Investigational New Drug application, allowing the company to proceed with a Phase 2a trial of ORKA-001 in moderate-to-severe psoriasis patients. This trial, named EVERLAST-A, will assess the antibody’s effectiveness in achieving complete skin clearance in about 80 participants.

Analysts have been optimistic about Oruka’s prospects, with Clear Street initiating coverage with a Buy rating and a $46.00 price target, citing the development of next-generation psoriasis treatments. BTIG has also maintained a Buy rating with a $44.00 price target, referencing positive market indicators from competing treatments as a favorable sign for Oruka’s pipeline. Additionally, H.C. Wainwright reiterated its Buy rating and a $45.00 price target following the FDA clearance. These developments reflect a growing confidence in Oruka’s innovative approach to psoriasis treatment.

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