By Colin Kellaher

ARCA biopharma has struck a deal to combine with privately held biotechnology company Oruka Therapeutics in an all-stock reverse merger.

ARCA on Wednesday said its shareholders would own about 2.38% of the combined company, while Oruka investors would own roughly 97.6%.

ARCA, based in Westminster, Colo., said it also expects to pay a dividend of about $20 million to its shareholders immediately prior to the closing of the deal, slated for the third quarter.

A reverse merger allows a private company to go public by merging with a public one at a lower cost than is involved in traditional initial public offerings.

ARCA said the combined company, which will operate under the Oruka Therapeutics name and trade under the symbol ORKA, will focus on advancing Oruka's portfolio of biologics targeting chronic skin diseases.

ARCA said Oruka has struck a deal for a pre-closing private financing of around $275 million that would give the combined company a runway to fund its operations through 2027.

Trading in shares of ARCA, which closed Tuesday at $1.71, was halted premarket on Wednesday.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

April 03, 2024 07:44 ET (11:44 GMT)

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