ARCA biopharma (NASDAQ: ABIO) stock skyrocketed 90% in intraday trading amid news of a merger with Oruka Therapeutics.
ARCA Biopharma (ABIO) and Oruka Therapeutics, a private biotech firm developing novel biologics for chronic skin diseases, have unveiled plans for an all-stock transaction merger. The combined entity will be named Oruka Therapeutics, Inc. and trade on the Nasdaq under the ticker symbol ORKA.
The primary objective of this merger is to propel Oruka’s portfolio forward, with a particular focus on ORKA-001 and ORKA-002, two promising antibodies targeting IL-23p19 and IL-17A/F, respectively. These therapies hold immense potential to offer enhanced efficacy and reduced dosing frequency for patients suffering from chronic skin conditions like plaque psoriasis. These treatments will undergo clinical trials in 2025.
Oruka has secured around $275 million in private financing, ensuring operational support through 2027. The company will finalize this funding just before completing the merger, expected in the third quarter of 2024, pending customary closing conditions and shareholder approvals.
Ownership Distribution Post-Merger
Per the merger agreement, pre-merger ARCA stockholders will retain approximately 2.38% ownership in the combined company. However, pre-merger Oruka stockholders, including new investors from the private financing round, will hold the remaining 97.62%. In addition, ARCA plans to issue a cash dividend to its pre-merger stockholders based on its net cash reserves exceeding $5 million.
Lawrence Klein, Ph.D., CEO of Oruka, expects this merger and significant financing to provide the company with resources to build operational capabilities and propel its programs into clinical development with focus and efficiency.
Dr. Andrew Blauvelt, chair of Oruka’s Scientific Advisory Board and a renowned expert in psoriasis, said,
“I am excited to support Oruka in their mission to advance the standard of care in plaque psoriasis and other associated diseases.”
The merger has received unanimous approval from the boards of directors of both companies. Furthermore, both parties have enlisted strategic, financial, and legal advisors to facilitate a smooth execution of the transaction.
ARCA biopharma (NASDAQ: ABIO) Stock Reaction
ABIO stock surged 90.06% to close at $3.25 on Wednesday. The traders had exchanged hands with 80,810,496 (80.81 million) shares compared to the average daily trading volume of 1.33 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
