Oruka Therapeutics, Inc. (ORKA)

Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations

You should read the following
discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial
statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2026 (this “Quarterly Report”) and with the audited consolidated financial statements and related notes included in our
Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”)
on March 12, 2026. This discussion contains forward-looking statements that involve risks and uncertainties, such as statements regarding
our plans, objectives, expectations, intentions, hopes, beliefs, strategies or projections regarding the future of our pipeline and business
and words such as “may,” “will,”, “should,” “could,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “project,” “potential,”
“seek,” “target,” “goal,” “intend” and variations of such words and any statements that
refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and
similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking
statements. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential
effects. There can be no assurance that future developments affecting us will be those that have been anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those expressed or implied by these forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report entitled
“Risk Factors” and elsewhere in this Quarterly Report. These and many other factors could affect our future financial and
operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly
Report. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,”
“the Company,” “Oruka Therapeutics, Inc.,” and “Oruka,” refers to Oruka Therapeutics, Inc. and its
consolidated subsidiary, Oruka Therapeutics Operating Company LLC, taken as a whole.

Overview

We are a clinical-stage
biopharmaceutical company focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”) and other inflammatory
and immunology (“I&I”) indications. Our name is derived from or, for “skin,” and arukah, for
“restoration,” and reflects our mission to deliver therapies for chronic skin diseases that provide patients the most
possible freedom from their condition. Our strategy is to apply antibody engineering and format innovations to validated modes of action,
which we believe will enable us to improve meaningfully upon the efficacy and dosing regimens of standard-of-care medicines while significantly
reducing technical and biological risk. Our programs aim to treat and potentially modify disease by targeting mechanisms with proven
efficacy and safety involved in disease pathology and the activity of pathogenic tissue-resident memory T cells (“TRMs”).

Our lead program,
ORKA-001, is designed to target the p19 subunit of interleukin-23 (“IL-23p19”) for the treatment of PsO. Our co-lead
program, ORKA-002, is designed to target interleukin-17A and interleukin-17F (“IL-17A/F”) for the treatment of PsO,
hidradenitis suppurativa (“HS”), psoriatic arthritis (“PsA”), and other conditions. These programs each bind
their respective targets at high affinity and incorporate half-life extension technology with the aim to increase exposure and
decrease dosing frequency. We are also developing ORKA-004, a novel, extended half-life antibody designed to target TNF-like ligand
1A (“TL1A”), which we plan to pursue in combination with ORKA-001 and ORKA-002 in a variety of diseases. We believe that
our focused strategy, differentiated portfolio, and deep expertise position us to set a new treatment standard in large I&I
markets with continued unmet need.

Since our inception in February
2024, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific
planning, conducting discovery and research activities, establishing and protecting our intellectual property portfolio, establishing
arrangements with third parties for the manufacture of our programs and component materials, developing and progressing our pipeline,
and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated
any revenue from product sales. To date, we have funded our operations primarily with proceeds from the issuance of convertible preferred
stock, common stock, a convertible note, and pre-funded warrants.

Since our inception, we have
incurred significant losses and negative cash flows from our operations. Our ability to generate product revenue sufficient to achieve
profitability will depend heavily on the successful development and eventual commercialization of any programs we may develop. As of June
30, 2026, we had an accumulated deficit of $262.2 million. For the three and six months ended June 30, 2026, we had net losses of $41.2
million and $73.0 million, respectively, and we used net cash of $56.7 million for our operating activities during the six months ended
June 30, 2026.

We had cash, cash equivalents,
and marketable securities of $1.1 billion as of June 30, 2026. In addition, in July 2026, we sold 1,499,500 shares of our common stock
pursuant to our existing ATM offering program for net proceeds of $122.5 million, after deducting sales agents’ commissions. We
expect that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operating plans for at least
twelve months from the date of filing of this Quarterly Report. We expect to continue to incur substantial losses for the foreseeable
future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates
and upon achievement of sufficient revenues to support our cost structure.

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Our Portfolio and Development Plans

ORKA-001

ORKA-001 is a high affinity,
extended half-life monoclonal antibody (“mAb”) designed to target IL-23p19. IL-23 is a pro-inflammatory cytokine that plays
a critical role in the proliferation and development of T helper 17 (“Th17”) cells, which are the primary drivers of several
autoimmune and inflammatory disorders, including PsO. IL-23 is composed of two subunits: a p40 subunit that is shared with IL-12
and a p19 subunit that is specific to IL-23. First-generation IL-23 antibodies bound p40 and inhibited both IL-12 and IL-23 signaling,
while more recent IL-23 antibodies targeting the p19 subunit have shown improved efficacy and safety. Based on clinical evidence, we
believe that ORKA-001 could achieve higher response rates than established therapies in PsO while requiring less frequent dosing and
maintaining the favorable safety profile of therapies targeting IL-23p19.

ORKA-001 is engineered with
YTE half-life extension technology, a specific three amino acid change in the fragment crystallizable (“Fc”) domain to modify
the pH-dependent binding to the neonatal Fc receptor (“FcRn”). As a result, it has a pharmacokinetic profile designed to
support a subcutaneous (“SQ”) injection as infrequently as once or twice per year. In addition, emerging evidence suggests
that IL-23 blockade can modify the disease biology of PsO, possibly leading to durable remissions and preventing the development of PsA.
We believe that the expected characteristics of ORKA-001 increase its potential to deliver these disease-modifying benefits.

We initiated a Phase 1 trial
of ORKA-001 in the fourth quarter of 2024. In September 2025, we announced interim results and updated those results in April 2026. The
data showed that ORKA-001 has a human half-life of approximately 100 days and was well tolerated at all dose levels, with a favorable
safety profile consistent with the anti-IL-23 class. The Phase 1 trial data support that a single 600 mg dose maintained ORKA-001
concentrations well above effective trough levels through Week 52, the last timepoint evaluated, with sustained inhibition of IL-23 pathway
signaling observed throughout that time period.

In the third quarter of 2025,
we commenced dosing in a Phase 2a clinical trial of ORKA-001 in patients with moderate-to-severe PsO (also known as “EVERLAST-A”).
EVERLAST-A enrolled 84 patients randomized 3:1 to receive 600 mg of ORKA-001 at Weeks 0 and 4 or matching placebo. At Week 28, patients
who achieved PASI 100 were randomized 2:1 to an arm where either (1) they do not receive another dose until disease recurrence (to evaluate
the possibility of both yearly dosing and extended off-treatment remissions) or (2) they receive 300 mg ORKA-001 every six months. In
April 2026, we presented Week 16 data for all EVERLAST-A patients, showing that 40 of 63 participants (63.5%) treated with ORKA-001 achieved
the primary endpoint of PASI 100, representing a 100% reduction from baseline in the Psoriasis Area and Severity Index (“PASI”),
with identical results observed for Investigator’s Global Assessment (“IGA”) 0. Other key secondary endpoints included
PASI 90 at Week 16, achieved by 83% of participants, and IGA 0/1 at Week 16, achieved by 84% of participants. ORKA-001 was observed as
well tolerated with a safety profile consistent with prior IL-23p19 inhibitors. There were no serious treatment-emergent adverse events
(“TEAEs”) and only one severe TEAE, which occurred in the placebo group. Additionally, there were no injection site reactions.
Eligible patients initially randomized to ORKA-001 have the option to transition to the open-label extension study of ORKA-001 at Week
52, and eligible patients initially randomized to placebo have the option to transition to the open-label extension study at Week 28.
We plan to share Week 28 data from all patients at the end of the third quarter of 2026. We also plan to announce Week 52 data from all
patients by the end of 2026.

Additionally, we
commenced dosing in a Phase 2b clinical trial of ORKA-001 in patients with moderate-to-severe PsO (also known as
“EVERLAST-B”) in December 2025. EVERLAST-B enrolled 187 patients and is designed to evaluate three dose levels of
ORKA-001: 37.5 mg at Week 0, 300 mg at Weeks 0 and 4, and 600 mg at Weeks 0 and 4, versus placebo. The primary endpoint is PASI 100
at Week 16. Building on EVERLAST-A, this design is intended to further test the potential for ORKA-001 to achieve yearly dosing,
higher efficacy and extended off-treatment remissions. At Week 28, patients who have achieved PASI 100 will be re-randomized 1:1 to
either a 600 mg dose once yearly or placebo. Patients who have not achieved PASI 100 at Week 28 will receive a 300 mg dose every six
months. Eligible patients initially randomized to placebo have the option to roll over into the open-label extension study of
ORKA-001 at Week 28. We expect to announce Week 16 data from EVERLAST-B in the fourth quarter of 2026.

In addition, we expect to initiate the ORKA-001 Phase 3 program in
the first half of 2027.

ORKA-002

ORKA-002 is a high affinity,
extended half-life mAb designed to target IL-17A and IL-17F (“IL-17A/F”). IL-17 inhibition has become central to the treatment
of psoriatic diseases, including PsO and PsA, and has also shown efficacy in other I&I indications, such as H

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.

You should read the following
discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the
related notes included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2025 (this “Annual Report”).
This discussion contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives,
expectations, intentions, hopes, beliefs, strategies or projections regarding the future of its pipeline and business and words such as
“may,” “will,”, “should,” “could,” “would,” “expect,” “plan,”
“anticipate,” “believe,” “estimate,” “project,” “potential,” “seek,”
“target,” “goal,” “intend” and variations of such words and any statements that refer to projections,
forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and similar expressions
are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. These forward-looking
statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance
that future developments affecting us will be those that have been anticipated. These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section of this Annual Report entitled “Risk Factors” and elsewhere
in this Annual Report. These and many other factors could affect our future financial and operating results. We undertake no obligation
to update any forward-looking statement to reflect events after the date of this Annual Report. As used in this Annual Report, unless
the context suggests otherwise, “we,” “us,” “our,” “the Company,” “Oruka Therapeutics,
Inc.,” “Oruka,” “ARCA biopharma, Inc.,” “ARCA,” refers to Oruka Therapeutics, Inc. and its consolidated
subsidiary, Oruka Therapeutics Operating Company LLC, taken as a whole.

Overview

We are a clinical-stage biopharmaceutical
company focused on developing novel monoclonal antibody therapeutics for psoriasis (“PsO”) and other inflammatory and immunology
(“I&I”) indications. Our name is derived from or, for “skin,” and arukah, for “restoration,” and
reflects our mission to deliver therapies for chronic skin diseases that provide patients the most possible freedom from their condition.
Our strategy is to apply antibody engineering and format innovations to validated modes of action, which we believe will enable us to
improve meaningfully upon the efficacy and dosing regimens of standard-of-care medicines while significantly reducing technical and biological
risk. Our programs aim to treat and potentially modify disease by targeting mechanisms with proven efficacy and safety involved in disease
pathology and the activity of pathogenic tissue-resident memory T cells (“TRMs”).

Our lead program, ORKA-001, is designed to target the p19 subunit of
interleukin-23 (“IL-23p19”) for the treatment of PsO. Our co-lead program, ORKA-002, is designed to target interleukin-17A
and interleukin-17F (“IL-17A/F”) for the treatment of PsO, hidradenitis suppurativa (“HS”), psoriatic arthritis
(“PsA”), and other conditions. These programs each bind their respective targets at high affinity and incorporate half-life
extension technology with the aim to increase exposure and decrease dosing frequency. We believe that our focused strategy, differentiated
portfolio, and deep expertise position us to set a new treatment standard in large I&I markets with continued unmet need.

Since our inception in February
2024, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific
planning, conducting discovery and research activities, establishing and protecting our intellectual property portfolio, establishing
arrangements with third parties for the manufacture of our programs and component materials, developing and progressing our pipeline,
and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated
any revenue from product sales. To date, we have funded our operations primarily with proceeds from the issuance of convertible preferred
stock, common stock, a convertible note, pre-funded warrants, and the proceeds from the reverse recapitalization and merger, our Pre-Closing
Financing and subsequent PIPE Financings (as defined and further described below).

Since our inception, we have incurred significant losses and negative
cash flows from our operations. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the
successful development and eventual commercialization of any programs we may develop. As of December 31, 2025, we had an accumulated deficit
of $189.2 million. For the year ended December 31, 2025, we had net losses of $105.4 million, and we used net cash of $88.2 million for
our operating activities.

67

We had cash, cash equivalents, and marketable securities of $479.6
million as of December 31, 2025. We expect that our existing cash, cash equivalents, and marketable securities will be sufficient to fund
our operating plans for at least twelve months from the date of the filing of this Annual Report. We expect to continue to incur substantial
losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization
of our product candidates and upon achievement of sufficient revenues to support our cost structure.

Our Portfolio and Development
Plans

ORKA-001

ORKA-001 is a high affinity,
extended half-life monoclonal antibody (“mAb”) designed to target IL-23p19. IL-23 is a pro-inflammatory cytokine that plays
a critical role in the proliferation and development of T helper 17 (“Th17”) cells, which are the primary drivers of several
autoimmune and inflammatory disorders, including PsO. IL-23 is composed of two subunits: a p40 subunit that is shared with IL-12 and a
p19 subunit that is specific to IL-23. First-generation IL-23 antibodies bound p40 and inhibited both IL-12 and IL-23 signaling, while
more recent IL-23 antibodies targeting the p19 subunit have shown improved efficacy and safety. Based on clinical evidence, we believe
that ORKA-001 could achieve higher response rates than established therapies in PsO while requiring less frequent dosing and maintaining
the favorable safety profile of therapies targeting IL-23p19.

ORKA-001 is engineered with YTE half-life extension technology, a specific
three amino acid change in the fragment crystallizable (“Fc”) domain to modify the pH-dependent binding to the neonatal Fc
receptor (“FcRn”). As a result, it has a pharmacokinetic profile designed to support a subcutaneous (“SQ”) injection
as infrequently as once or twice per year. In addition, emerging evidence suggests that IL-23 blockade can modify the disease biology
of PsO, possibly leading to durable remissions and preventing the development of PsA. We believe that the expected characteristics of
ORKA-001 increase its potential to deliver these disease-modifying benefits.

We initiated a Phase 1 trial
of ORKA-001 in the fourth quarter of 2024 and in September 2025, we announced interim results at the European Academy of Dermatology and
Venereology (EADV) Congress. The data showed that ORKA-001 has a human half-life of approximately 100 days. Single doses of ORKA-001 demonstrated
complete and sustained inhibition of STAT3 signaling, a downstream marker of IL-23 activity, in an ex vivo assay through 24 weeks. In
addition, ORKA-001 was well tolerated at all dose levels, with a favorable safety profile consistent with the anti-IL-23 class.

In the third quarter of 2025, we commenced dosing in a Phase 2a clinical trial of ORKA-001 in patients with moderate-to-severe PsO (also
known as “EVERLAST-A”). We expect to share Week 16 data for all patients in the second quarter of 2026. In addition, we plan
to share longer-term data, including Week 28 for all patients and 52-week follow-up for a portion of the cohort in the second half of
2026. EVERLAST-A enrolled 84 patients randomized 3:1 to receive 600 mg of ORKA-001 at Weeks 0 and 4 or matching placebo. The primary endpoint
is PASI 100, a 100% reduction from baseline in the Psoriasis Area and Severity Index (“PASI”), at Week 16. At Week 28, patients
who have achieved PASI 100 will be randomized 2:1 to an arm where either (1) they do not receive another dose until disease recurrence
(to evaluate the possibility of both yearly dosing and extended off-treatment remissions) or (2) they receive 300 mg ORKA-001 every six
months.

Additionally, the first patients were dosed in EVERLAST-B in December
2025. EVERLAST-B is designed to enroll approximately 160 patients into a dose-ranging Phase 2b trial of ORKA-001 in patients with moderate-to-severe
PsO and will evaluate three dose levels of ORKA-001: 37.5 mg at Week 0, 300 mg at Weeks 0 and 4, and 600 mg at Weeks 0 and 4, versus placebo.
The primary endpoint is PASI 100 at Week 16. At Week 28, patients who have achieved PASI 100 will be re-randomized 1:1 to either a 600
mg dose once-yearly or placebo. Patients who have not achieved PASI 100 at Week 28 will receive a 300 mg dose every six months. Building
on EVERLAST-A, this design will further test the potential for ORKA-001 to achieve yearly dosing, higher efficacy and extended off-treatment
remissions. Data from EVERLAST-B is anticipated in 2027.

Based
on recent precedent in PsO, we anticipate that the overall development program, from first-in-human studies through biologics license
application (“BLA”) submission, could take as little as six to seven years, based on averages observed for recently approved
medicines. However, we have no control over the duration of the United States Food and Drug Administration (“FDA”) review
process, and the actual timeline may vary.

ORKA-002

ORKA-002 is a high affinity, extended half-life mAb designed to target
IL-17A and IL-17F (“IL-17A/F”). IL-17 inhibition has become central to the treatment of psoriatic diseases, including PsO
and PsA, and has also shown efficacy in other I&I indications, such as HS and axial spondyloarthritis (“axSpA”). More
recently, the importance of inhibiting the IL-17F isoform along with IL-17A has become appreciated, and dual blockade with the recently
approved therapy Bimzelx (bimekizumab) has led to higher response rates in patients than blockade of IL-17A alone. ORKA-002 is designed
to bind IL-17A/F at similar epitopes, or binding sites, and affinity ranges as bimekizumab, but incorporates half-life extension technology
that could enable more convenient dosing intervals.

In January 2026, we
announced interim findings from the Phase 1 trial of ORKA-002 in healthy volunteers. The results showed that ORKA-002 has a
half-life of approximately 75-80 days, which supports the potential for twice-yearly maintenance dosing in PsO and quarterly
maintenance dosing in HS. Single doses of ORKA-002 demonstrated potent and sustained inhibition of IL-17 signaling in an ex vivo
assay through 24 weeks. ORKA-002 was well tolerated at all dose levels, with a favorable safety profile consistent with
the anti-IL-17 class. The trial remains blinded, and as of January 6, 2026, which was the data cutoff date, all subjects remained on trial.

Based on these Phase 1
results, we initiated ORCA-SURGE, a Phase 2 trial of ORKA-002 in patients with moderate-to-severe PsO, in F

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]