Oruka Therapeutics, Inc. (ORKA) stock intrinsic value fair value estimate & owner earnings analysis

Oruka Therapeutics is a clinical-stage biotechnology company developing long-acting antibody treatments for plaque psoriasis and related inflammatory diseases. It has no product revenue. The public company was formed in 2024 when the private Oruka combined with ARCA biopharma, and we measure only the business that has existed since then. The pipeline. ORKA-001 blocks IL-23, the same target as several established psoriasis drugs, and is engineered for a human half-life of roughly 100 days, which the company believes could allow dosing once or twice a year. In the EVERLAST-A Phase 2a trial, the company reported in April 2026 that 40 of 63 treated patients (63.5%) reached complete skin clearance (PASI 100) at Week 16, against 1 of 21 on placebo, and in September 2026 that this rose to 45 of 63 (71.4%) at Week 28 without additional dosing, with no drug-related serious adverse events reported. EVERLAST-B, a dose-ranging Phase 2b trial, is fully enrolled at 187 patients with Week 16 data expected in the fourth quarter of 2026, and the company says it supports a Phase 3 start in the first half of 2027. ORKA-002, which blocks IL-17A and IL-17F, is in the ORCA-SURGE Phase 2 psoriasis trial with data expected in the first quarter of 2027, and a TL1A antibody (ORKA-004) is expected to enter the clinic in the fourth quarter of 2026. The antibodies are licensed from Paragon, which is owed up to $22 million in milestones per program and a low single-digit royalty on sales. Manufacturing currently relies on WuXi Biologics, a China-based contract manufacturer, and the company's own filing names the BIOSECURE Act, enacted in December 2025, as a risk that could force a costly change of supplier. What the business has earned. On our measure of owner earnings (operating cash flow, less working-capital swings, less stock-based compensation, less equipment spending), Oruka consumed $84.5 million in its first eleven months of 2024 ($4.00 per share) and $110.1 million in 2025 ($1.93 per share), and about $82 million in the first half of 2026, a period that included an upfront payment to Halozyme. Spending is rising as trials multiply: 2025 used about 30% more cash than the eleven-month 2024 period, and every case below assumes it rises further, not less. The company has no debt. At June 30, 2026 it held $1,125.6 million of cash and marketable securities, mostly from an April 2026 offering of 9.66 million shares that raised $658.3 million net. Counting common shares, the Series B preferred on an as-converted basis and pre-funded warrants, there are about 78.2 million shares, or roughly $14.39 of cash per share. Stock options and warrants to Paruka are left out of the share count; they bring cash in if exercised and would trim the figures below modestly. How we value it. Nothing about the drugs is in the bag: none is approved, no partner has signed, and no revenue is contracted. Under our approach a drug that has not yet earned anything is worth $0 in every case, however good the early data look. So each case is the cash on hand less the present value of what the company is committed or likely to spend before the evidence lets anyone know whether the drugs have value. In the base and bull cases, spending after that point is treated as a new investment decision that either earns its keep or stops; the bear case instead assumes the company commits to Phase 3 and the money is lost. Bear case: about $2.01 per share. The company starts Phase 3 in 2027 as planned and keeps funding ORKA-001, ORKA-002 and ORKA-004 for more than four years, spending roughly $1.1 billion (about $115 million in the rest of 2026, then $280 million, $320 million, $280 million and $105 million), and Phase 3 results or a supplier disruption leave ORKA-001 without a commercial path. The present value of that spending is about $968.0 million, leaving about $157.6 million, or $2.01 per share. The cash is real, but it is the shareholders' money that is being spent, and a pre-revenue company built around one lead drug is most exposed to a costly late-stage failure. Base case: about $9.92 per share. The company spends roughly $110 million in the rest of 2026 and $260 million in 2027 to complete EVERLAST-A, EVERLAST-B and ORCA-SURGE and to begin Phase 3, by which point the data will show whether the programs warrant the much larger cost of late-stage development. The present value of that spending is about $350.1 million, leaving about $775.4 million, or $9.92 per share, for the drugs carried at nothing. Bull case: about $10.75 per share. The same programs read out on schedule but cost less to reach the decision point, about $100 million in the rest of 2026 and $200 million in 2027, consistent with the pace of spending in 2025 and the first half of 2026 rather than an accelerated Phase 3 build-out. The present value is about $284.5 million, leaving about $841.1 million, or $10.75 per share. The bull case does not credit a partnership or acquisition because none has been signed; such a deal would add value above this figure. The margin-of-safety price is $5.50 per share. We are confident about the cash and share count, which come straight from the June 2026 balance sheet, and much less confident about how much of that cash will be spent before the drugs prove their worth; the company's spending has risen in each period reported and Phase 3 programs in psoriasis are large. The worst plausible outcome is the bear case or something like it: years of heavy spending followed by failure, a manufacturing problem tied to the China-based supplier, or the leftover cash being directed into new programs rather than returned. The structure helps: there is no debt to force a distressed outcome, and no lender can take the cash. If the two things most likely to be wrong are the pace of spending and the length of the development path, the shares would be worth something between the bear and base figures. The price assumes a holding period of about three years and no dividends. From $5.50 the base case implies roughly 22% a year over three years and the bull case slightly more, while the bear case implies a loss of most of the price paid. The margin-of-safety price is set well below the base value precisely because the only asset we credit is a cash balance that management is spending. Changes since our previous analysis. The September 2026 estimate gave credit to partnership and acquisition outcomes that have not occurred, so those figures are not comparable with these. In the business itself, the Week 28 ORKA-001 results reported in September 2026 showed responses deepening without additional dosing, EVERLAST-B has completed enrollment with results now expected in the fourth quarter of 2026 rather than in 2027, and the June 2026 balance sheet confirms about $1.13 billion of cash and securities, while spending has also risen. Accounting notes. Stock-based compensation is treated as a real cost. All equipment spending is treated as needed to run the business because there is no revenue to measure growth against. The six-month 2026 working-capital lines we could read from the quarterly filing did not fully tie to the reported operating cash flow; this affects only the first-half 2026 figure, not any stored annual figure or the cases above.