Small-Cap ARCA Biopharma Stock Soars On Merger Pact: The Details

ARCA Biopharma Inc ABIO and Oruka Therapeutics have entered into a definitive agreement to combine the companies in an all-stock transaction.

Oruka Therapeutics is a privately held biotechnology company developing novel biologics for chronic skin diseases, including plaque psoriasis.

The resulting entity will focus on advancing Oruka’s pipeline, 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. The financing is expected to close immediately before the 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. 

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.

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 are expected to own approximately 97.62%. 

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 before the close of the merger.

The transaction is expected to close in the third quarter of 2024.

Price Action: ABIO shares are up 106.40% at $3.49 on the last check Wednesday.

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