Oruka Therapeutics wanted to go public as it prepares to advance its co-lead pipeline programs into the clinic next year. ARCA Biopharma, which first went public in 1997, sought to conclude the strategic review it launched nearly two years ago, after its candidate for hospitalized COVID-19 patients failed a mid-stage clinical trial.
Both companies have found answers in each other. Oruka and ARCA are pursuing a reverse merger intended to create a $300 million-plus combined company focused on treating plaque psoriasis and other chronic skin diseases with therapies designed to inhibit two interleukins, IL-17A/F and IL-23p19.
The combined company, which will carry on the name Oruka Therapeutics, aims to develop best-in-class, long-acting antibodies against validated targets known to play key roles in dermatologic and inflammatory diseases.
If the merger goes through as planned, the new Oruka will launch with a $275 million private investment in public equity (PIPE) transaction and a public listing on Nasdaq under the ticker symbol “ORKA.” That financing—plus $37.4 million in ARCA’s existing cash and cash equivalents as of December 31, 2023—is expected to provide Oruka more than three years of capital, allowing it to fund its operations through the end of 2027.
During that period, the combined company plans on advancing to clinical trials its two lead candidates: ORKA-001, an antibody targeting IL-23p19 with potential indications in psoriasis; and ORKA-002, an antibody targeting IL-17A/F that has numerous potential dermatological applications, including psoriasis and psoriatic arthritis.
Oruka expects to launch a first in human trial of ORKA-001 during the first half of 2025 and report initial pharmacokinetic data from healthy volunteers in the second half of next year, the same timeframe the company has set for a first in human study of ORKA-002. The first data for ORKA-002 is expected in early 2026.
“We wanted to access the public markets as we bring these programs into the clinic,” Lawrence Klein, PhD, Oruka’s CEO, told GEN Edge. “We think that we’ll have potential for early inflection points like showing our extended half-life in Phase I trials, and that having access to the public markets through those events, could be beneficial to the company for extending our cash runway.”
The combined company says it will be able to fund its operations through the end of 2027 as a result of the merger, and especially through the PIPE financing—Two and a half years longer than the cash runway of ARCA, which will run through mid-2025.
$50B+ Market by 2028
In announcing its planned reverse merger with ARCA, Oruka identified an addressable market for ORKA-001 and -002 that stood at $38 billion in 2022, but the company expects will exceed $50 billion by 2028, based on internal analysis and data from EvaluatePharma, GlobalData, Barclays, and TD Cowen.
More than half of that market is psoriasis, expected to climb by 2028 from $25 billion to $32 billion. Next highest is psoriatic arthritis (from $7 billion to $10 billion), followed by ankylosing spondylitis ($4 billion to $6 billion), then hidradenitis suppurativa ($2 billion to $4 billion).
Oruka—whose name combines the Hebrew words for skin (“or”) and restoration (“arukah”)—is based on the dermatological expertise of Andrew Blauvelt, MD, who chairs the company’s scientific advisory board. Blauvelt was President and owner of the Oregon Medical Research Center from 2013–22, a clinical research venue where he also served as investigator from 2011 until March.
Blauvelt told GEN that ORKA-001 is designed to compete with several dominant drugs. Four of those are IL-23 inhibitors—including AbbVie’s Skyrizi® (risankizumab), Janssen Biotech (Johnson & Johnson)’s Tremfya® (guselkumab) and Stelara® (ustekinumab), and Sun Pharmaceutical Industries’ Ilumya® (tildrakizumab-asmn). Another three potential competitor therapies are IL-17 inhibitors that include Novartis’ Cosentyx® (secukinumab), Eli Lilly’s Taltz® (ixekizumab), and UCB’s Bimzelx® (bimekizumab-bkzx).
Skyrizi is the best seller among IL-23 inhibitors, finishing 2023 with $7.763 billion in net revenues, up 50% from 2022. Next highest is Stelara with $10.858 billion (up 12%), followed by Tremfya with $3.147 billion (up 18%). Sun does not disclose Ilumya sales, which Oruka pegged at about $1 billion for psoriasis alone.
Among IL-17 inhibitors, Cosentyx led the field with $4.98 billion (up 4% from 2022), followed by Taltz with $2.76 billion (up 11%), then Bimzelx with €148 million ($157.5 million) in its first year on the market.
Extended and higher dosing
Oruka plans to compete with established drugs in part by extending the half-life of its IL-23 inhibitor to get less frequent dosing—as little as once or twice a year, Blauvelt said, compared with dosing frequencies ranging from every two months to quarterly (after an initial four-week interval) for the IL-23 inhibitors, and once or twice monthly for IL-17 inhibitors.
Blauvelt and Oruka also reason that they can compete with established dermatological drugs through higher dosages. Blauvelt has studied that in recent years as Oregon Medical Research Center has conducted the Phase II KNOCKOUT trial (NCT05283135), assessing whether higher initial doses of Skyrizi (300 mg and 600 mg, twice and four times the standard initial doses for plaque psoriasis) can more effectively target resident memory T cells. KNOCKOUT is also examining whether the higher doses would lead to higher levels of completely clear skin for longer periods of time following withdrawal of Skyrizi.
“It’s a marriage of extended dosing and my idea of dosing higher,” Blauvelt said. “Putting those together, our aspirations are that we think we will be able to get complete clearance rates with the Oruka compound that are several degrees higher than any of the best drugs on the market. Perhaps in the 80% range of complete clearance with higher than usual dosing. And then, we think we can possibly get to once-a-year dosing.”
In the early 2000s, Blauvelt began to study psoriasis in depth as a professor of dermatology at Oregon Health & Science University (OHSU) and chief of dermatology at the VA Medical Center in Portland, OR. Blauvelt’s lab studied how IL-23 and T helper 17 (Th17) cells played key roles in the pathogenesis of psoriasis.
IL-23 was found to be the master cytokine regulator or orchestrator of the inflammation that occurs in lesions of psoriasis (“I call it the head of the snake,” Blauvelt quips), and regulates production of another cytokine, IL-17, which acts on keratinocytes, the most prominent cells within the epidermis, to make them proliferate.
Why not target both IL-23 and IL-17 in a single drug? Because IL-23 inhibition only knocks out 90% of IL-17 production, and IL-17 inhibitors work better in psoriatic arthritis. Also, IL-23 inhibition allows for the longer dosing sought by Blauvelt and Oruka.
“What has emerged now in the field as a best of care or gold standard of care is to use an IL-23 inhibitor for two-thirds of the patients that don’t have joint disease. An IL-17 inhibitor would be best in class or gold standard for someone with concomitant psoriatic arthritis,” Blauvelt said.
At OHSU, Blauvelt organized a multidisciplinary center for care of complicated psoriasis patients and began participating in pivotal psoriasis clinical trials. Before focusing on dermatology, Blauvelt was a senior investigator at the NIH, where he pioneered research into HIV and some of its initial targets, Langerhans cells, and also studied how human herpes viruses cause Kaposi’s sarcoma and pityriasis rosea.
Struggling Since 2018
Headquartered in Westminster, CO, ARCA has struggled since 2018, when investors sent the company’s shares tumbling after the company released mixed results from the Phase IIb GENETIC-AF trial (NCT01970501 assessing the genetically targeted beta blocker GencaroTM (bucindolol hydrochloride) as a treatment for atrial fibrillation in patients with heart failure and reduced left ventricular ejection fraction.
In all 267 patients studied, Gencaro showed a treatment benefit similar to the trial’s control, metoprolol succinate, though the 127 U.S. patients showed what ARCA called potential superior benefit in favor of Gencaro—which ARCA inherited through a merger wiith Nuvelo in 2008. ARCA and the FDA later agreed on a protocol for a Phase III trial of Gencaro, which the cash-strapped never launched.
Instead, when the COVID-19 pandemic emerged in 2020, ARCA pivoted to development of the tissue factor inhibitor rNAPc2 (AB201) as a treatment for COVID-19 associated coagulopathy and related inflammatory response.
That effort failed in March 2022 when ARCA reported results from the 160-patient Phase IIb ASPEN-COVID-19 trial (NCT04655586) showing that neither of two doses of rNAPc2 achieved statistical significance for the primary efficacy endpoint of change in D-dimer level from baseline to day eight compared to the standard of care, heparin.
In May of that year, ARCA hired Ladenburg Thalmann as financial advisor and began reviewing strategic options to maximize shareholder value that it said would include “the potential for an acquisition, merger, business combination, or other strategic transaction involving the company.”
Klein said Oruka was attracted to ARCA because of its willingness to help Oruka access public markets.
“There are different ways of doing that. A reverse merger is one way that can actually be very expeditious, and that’s helpful in an election year, where the second half of this year is a bit uncertain on a number of levels,” Klein said. “We like this path, we were able to find a great partner in ARCA to allow that to move forward, and we’re excited to announce the transaction.”
From CRISPR to “compelling”
Klein became Oruka’s CEO at launch in February, following a year as a partner at venture capital firm Versant Ventures, then previously chief operating officer and chief business officer at CRISPR Therapeutics. At CRISPR, he oversaw expansion of the staff from 25 to 550 people as the company built a pipeline led by Casgevy™, which made history in December when it won the FDA’s first-ever approval for a CRISPR-edited therapy in sickle cell disease (followed in January by approval in beta thalassemia).
When he came across Oruka, Klein recalled, “I started talking to the investors behind the company. It was an idea at that stage, and their candidates were in the research phase. But just as I learned more about it, I actually spent time with Andy [Blauvelt]. It was very compelling for me to hear that part of the story, and the work he’d done. I just became more and more convinced that this is just a fantastic opportunity to offer something different to patients in a very important indication.”
“Everyone knows someone that’s affected by these diseases. And the possibility that we could offer something truly different without embarking on unproven biology, the idea that we could use Andy’s foundation plus these technology innovations around half-life extension to potentially offer patients more freedom from these diseases, I just was very, very compelled and had to have in.”
Klein will join Oruka’s board along with his former boss at CRISPR Therapeutics, its CEO and chairman Samarth Kulkarni, PhD. Joining them on Oruka’s board will be Peter Harwin, Managing Member of Fairmount; Cameron Turtle, DPhil, CEO of Spyre Therapeutics; and Carl Dambkowski, MD, CMO of Apogee Therapeutics.
Oruka acquired its rights to develop ORKA-001 and -002 from Paragon Therapeutics, a joint venture founded in 2021 by Fairmount with FairJourney Biologics, from which Oruka was spun out earlier this year.
Oruka is the third company founded to develop Paragon-generated therapies. The other two are Spyre, a developer of treatments for inflammatory bowel disease, and Apogee a developer of biologics to treat atopic dermatitis, chronic obstructive pulmonary disease, and other inflammatory and immune diseases with high unmet need.
“Growing rapidly”
The Oruka-ARCA combined company will draw upon Paragon’s 34 staffers, who will support development of ORKA-001 and -002 up to Phase I; and Oruka’s six staffers—a number Klein said expected to quadruple in 2024.
“We have plans to be 25 by the end of the year. We’re growing rapidly,” Klein said.
In addition to ORKA-001 and -002, Oruka’s pipeline includes a preclinical program with an undisclosed target that will apply a tissue-resident memory mechanism of action; as well as undisclosed combination treatment programs.
Immediately before the merger closes, ARCA said, it expects to contribute $5 million to the combined company, and expects to pay a dividend to its pre-merger stockholders of approximately $20 million.
Holders of ARCA shares before the merger are expected to own approximately 2.38% of the combined company—a percentage subject to adjustment based on the amount of ARCA’s net cash at the closing date. Pre-merger Oruka stockholders (including investors participating in the pre-closing financing) are expected to own nearly all of the combined company, approximately 97.62%.
The boards of both Oruka and ARCA have approved the merger, which is expected to close in the third quarter subject to conditions that include approvals by the stockholders of each company; the effectiveness of a statement registering the securities to be issued in connection with the merger, to be filed with the U.S. Securities and Exchange Commission (SEC); and satisfaction of customary closing conditions.
Oruka says it has commitments from a syndicate of healthcare investors for a $275 million private investment in its common stock, and pre-funded warrants to purchase its common stock. The financing is expected to close immediately before completion of the merger.
The investor syndicate is led by Fairmount and Venrock Healthcare Capital Partners, with participation from RTW Investments, Access Biotechnology, Commodore Capital, Deep Track Capital, Perceptive Advisors, Blackstone Multi-Asset Investing, Avidity Partners, Great Point Partners, Paradigm BioCapital, Braidwell, and Redmile Group, as well as other unnamed investors that include “multiple” large investment management firms.
“Launching Oruka with such strong investor support is a testament to the company’s differentiated portfolio, experienced leadership team, and focused strategy to transform the treatment paradigm across multiple chronic skin diseases,” stated Evan Thompson, PhD, Paragon’s chief operating officer.
