On Thursday, Jefferies initiated coverage on Oruka Therapeutics (NASDAQ: ORKA) with a Buy rating and set a price target of $40.00. The firm's analysis is based on the potential success of Oruka's two YTE modified "long-acting" enhanced antibodies. These antibodies are aimed at the well-established IL23 and IL17 targets, which are currently addressed by drugs like Skyrizi and Bimzelx in the Psoriasis (PsO) markets, valued at over $25-30 billion.
The firm anticipates that Oruka Therapeutics will experience stock upside as the company continues its execution and as it prepares to report important pharmacokinetic (PK) data in the second half of 2025. This upcoming data is seen as a critical catalyst for the stock's performance.
The analyst from Jefferies expressed confidence in the company's approach by highlighting previously published data. This data suggests that a higher exposure of the IL23 antibody could significantly increase PASI-100 efficacy. PASI-100 refers to a 100% reduction in the Psoriasis Area and Severity Index, a measure of treatment effectiveness for psoriasis. Achieving this level of efficacy is considered a key positive scenario for Oruka Therapeutics' stock.
The firm's positive outlook is anchored on the expectation that Oruka's enhanced antibodies could lead to better treatment outcomes for patients with psoriasis. The analyst's comments indicate a belief in the strong potential for these therapies to perform well in the market, which could, in turn, benefit the company's stock value as it progresses towards reporting its pharmacokinetic data next year.
In other recent news, Oruka Therapeutics has announced significant advancements in its drug development pipeline. The company has set clinical trial dates for its leading drug candidates, ORKA-001 and ORKA-002, which are designed to treat chronic skin diseases. The first human dosing for ORKA-001 is slated for the first quarter of 2025, with initial efficacy data in psoriasis patients expected in the latter half of 2026. ORKA-002 is expected to enter first-in-human trials in the third quarter of 2025.
In the backdrop of these developments, Oruka Therapeutics secured $200 million through private investment in public equity (PIPE) financing, with participation from investors such as Braidwell LP and Venrock Healthcare Capital Partners. This funding is expected to sustain the company's operations through 2027.
Furthermore, ARCA biopharma's recent merger with Oruka Therapeutics has resulted in Oruka becoming a wholly-owned subsidiary of ARCA. As part of this merger, each share of Oruka common stock was converted into 6.8569 shares of ARCA common stock. An amendment to the Subscription Agreement with Oruka Therapeutics was made, correcting a clerical error in the definition of "Purchase Price" within the original agreement.
These recent developments reflect the ongoing progress in both the drug development and corporate aspects of Oruka Therapeutics.
InvestingPro Insights
Jefferies's optimistic stance on Oruka Therapeutics is echoed in some of the recent performance metrics. According to InvestingPro data, Oruka has seen a significant return over the last week, with a 21.84% increase in its stock price. This uptick aligns with Jefferies's projection of stock upside as the company advances towards its pharmacokinetic data release. The market cap of Oruka stands at $764.36 million, reflecting investor confidence despite the company not paying dividends, as noted in one of the InvestingPro Tips.
However, potential investors should be aware of the financial nuances that come with this growth. Oruka operates with a moderate level of debt and is not expected to be profitable this year, as per insights from InvestingPro. Additionally, the stock's current P/E ratio is -4.47, and it trades at 78.79% of its 52-week high, which could suggest room for growth or volatility depending on market conditions and the company's performance. For those interested in deeper analysis, InvestingPro offers additional tips on Oruka Therapeutics, which can be found at their dedicated InvestingPro page.
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