Oruka Therapeutics, Inc. (ORKA) Business

Item 1. Business.

Acquisition of Pre-Merger Oruka

On August 29, 2024 (the “Merger
Closing”), we completed our acquisition (the “Merger”) of Oruka Therapeutics, Inc. (“Pre-Merger Oruka”)
pursuant to an Agreement and Plan of Merger and Reorganization, dated as of April 3, 2024 (the “Merger Agreement”). Following
the transactions contemplated by the Merger Agreement, Pre-Merger Oruka merged with and into Atlas Merger Sub Corp., a wholly owned subsidiary
of ARCA biopharma, Inc. (“ARCA”) and following that, Pre-Merger Oruka then merged with and into Atlas Merger Sub II, LLC (“Second
Merger Sub”), with Second Merger Sub being the surviving entity. Second Merger Sub changed its corporate name to “Oruka Therapeutics
Operating Company, LLC”. Pre-Merger Oruka was a pre-clinical stage biotechnology company that was incorporated on February 6, 2024
under the direction of Peter Harwin, a Founding Partner at Fairmount Funds Management LLC (“Fairmount”), for the purposes
of holding rights to certain intellectual property being developed by Paragon Therapeutics, Inc. (“Paragon”). On August 29,
2024, we changed our name from “ARCA biopharma, Inc.” (“ARCA”) to “Oruka Therapeutics, Inc.” and our
Nasdaq ticker symbol from “ABIO” to “ORKA”.

Company 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. The product candidates in
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.

Our Portfolio and Development Plans

1

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 anticipated characteristics of ORKA-001 enhance 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 the 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 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. Patients who have not achieved PASI 100 will receive a 300 mg dose 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 matching 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 February 2026. ORCA-SURGE
is designed to enroll approximately 160 patients randomized 1:1:1:1 to receive 40 mg, 160 mg or 320 mg of ORKA-002 at Weeks 0 and 4,
or matching placebo. The primary endpoint is PASI 100 at Week 16. Maintenance dosing will evaluate the potential for twice-yearly
dosing with ORKA-002. Data from ORCA-SURGE is anticipated in 2027. Moreover, we also expect to initiate a Phase 2 trial of ORKA-002
in patients with HS in the second half of 2026.

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We view ORKA-002 and ORKA-001
as highly complementary. Patients with moderate-to-severe PsO that have purely skin manifestations are most often treated with IL-23 inhibitors
due to the high efficacy and tolerability of this mechanism. However, for patients who also have joint involvement or signs and symptoms
of PsA, an IL-17 inhibitor is typically used due to its efficacy in addressing both skin and joint symptoms. In addition, IL-17 inhibitors
are often used in patients with highly resistant skin symptoms that do not adequately resolve through treatment with an IL-23 inhibitor.
Furthermore, we plan to pursue a sequential combination regimen of ORKA-002 followed by ORKA-001, called ORKA-021. ORKA-021 has the potential
to combine the rapid response of an IL-17 inhibitor with the superior maintenance profile of an IL-23 inhibitor in a single regimen. We
believe that ORKA-001 and ORKA-002 provide the potential to offer a highly compelling product profile for most patients with PsO and/or
PsA, as well as the opportunity to address additional I&I indications.

Additional Pipeline Program

We have a third program,
ORKA-003, designed to target an undisclosed pathway. Our strategy as a company is to remain highly focused on I&I diseases, and
specifically on inflammatory dermatology conditions. Our third program provides the potential for indication expansion beyond PsO and
may create combination opportunities with our more advanced programs.

Our Team, Investors, and Paragon Collaboration

We are led by a management
team with significant experience in developing novel treatments for patients at biopharmaceutical companies such as CRISPR Therapeutics,
Celgene, Novartis, CymaBay Therapeutics and Protagonist Therapeutics. Together, our team has a proven track record of building successful
biotech organizations in high-growth environments.

Pre-Merger Oruka was founded
in February 2024 by leading healthcare investor Fairmount. Fairmount founded Paragon in 2021 to conduct biologics discovery and
optimization, including acting as the firm’s discovery engine for biologics that potentially overcome limitations of existing therapies.
We have entered into license agreements with Paragon pursuant to which Paragon granted us a royalty-bearing, world-wide, exclusive license
to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting IL-23 outside of the field of inflammatory
bowel disease for ORKA-001 and for ORKA-002, certain antibodies and products targeting IL-17A/F in all fields.

Our Strategy

To achieve our goal of developing
leading therapeutic antibodies for patients with inflammatory skin diseases, we are applying antibody engineering to validated modes of
action. We believe this approach will enable us to improve meaningfully upon the efficacy and convenience of standard-of-care medicines
while significantly reducing technical and biological risk. The key elements of our strategy include:

3

We believe that pursuing
the focused strategy outlined above will help us to succeed in our mission of offering patients living with PsO, PsA, and other dermatologic
and inflammatory diseases the greatest possible freedom from their condition.

Targeting IL-23 and IL-17 to Treat Multiple I&I
Indications

Our programs benefit
from significant advances in the understanding of the biology of I&I diseases over the past four decades. ORKA-001 and
ORKA-002 are designed to target two key cytokines that play a related role in multiple indications. IL-23 is an upstream regulator
of Th17 cells, a pro-inflammatory subset of T helper cells characterized by their production of IL-17. IL-23 has a critical role in
maintaining Th17 cells in the tissue as well as activating these cells to secrete IL-17, which acts downstream to trigger
inflammation and other disease symptoms. Th17 cells are involved in PsO, HS, PsA, axSpA, and many other diseases. They play a
particularly central role in PsO and PsA. The diagram below depicting the immunopathogenesis of PsO provides an example of how Th17
cells can mediate disease and how blocking IL-23 or IL-17 can break the inflammatory cycle that drives disease.

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Immunopathogenesis of PsO and the role of IL-23
and IL-17

PsO develops when environmental
triggers and a genetic predisposition combine to cause activation of an inflammatory cycle in the skin that leads to the formation of
plaques and other disease manifestations. This process begins with the aberrant activation of the dendritic cells (“DCs”),
specifically those producing IL-23 and other cytokines like IL-1β, IL-21, TNF-α, and IL-12. These cytokines induce the differentiation
of Th17 cells, as well as other cell types, such as T helper type 1 (“Th1”) cells that produce IFNγ and TNF-α
and T helper type 22 (“Th22”) cells that produce IL-22. IL-23 plays a key role in the differentiation and activation of Th17
cells to secrete IL-17, as well as Th22 cells to produce IL-22. IL-17 and these other cytokines induce keratinocyte hyperproliferation
leading to plaque formation and a feedforward inflammatory response, with changes in gene expression in keratinocytes, the production
of antimicrobial peptides, and neutrophil recruitment driving further inflammation. While many cytokines and cell types contribute to
the pathogenesis of PsO, the IL-23/IL-17 axis plays an important role, as supported by the success of therapies targeting this axis.

While the successful treatment
of PsO — for instance, with mAbs targeting IL-23 or IL-17 — can result in lesional skin returning to an apparently
normal state, disease tends to recur at previously affected sites following cessation of therapy, suggesting a mechanism of “immunological
memory” that predisposes individuals to recurrence in the same locations. Evidence suggests that pathogenic TRMs play a critical
role in this memory. TRMs may arise from the Th17 cells and other cells that drove disease in the first place and remain in their resident
tissue, in this case the epidermis and dermis, for long periods of time. Upon a disease trigger, these TRMs can actively produce proinflammatory
cytokines, causing disease recurrence. IL-23 appears to play an important role in maintaining and potentiating TRMs, as indicated by the
depletion of TRMs following treatment with an IL-23 inhibitor but not an IL-17 inhibitor, which may explain the longer remissions observed
with IL-23 inhibitors following withdrawal of therapy. This type of data has raised the prospect that efficient IL-23 blockade could modify
the disease biology of PsO, possibly leading to durable remissions.

5

The scientific discoveries
that refined our understanding of the immunopathogenesis of PsO have led to waves of therapeutic advances, ultimately leading to today’s
standard of care. Before the 1980s, PsO was not even thought of as an immunologic disease, but rather a disease of keratinocyte dysfunction,
leading to treatments such as phototherapy, methotrexate, and retinoids. The discovery in the 1980s that PsO results from immune dysfunction
led to the use of broad immunosuppressants like cyclosporine. From 1990 to 2008, it was believed that Th1 cells were the predominant mediators
of the disease, which led to the use of biologics targeting TNF-α such as Enbrel (etanercept) and Humira (adalimumab). Finally,
the revelation that PsO is driven principally by Th17 cells resulted in the development of the primary therapies used today, which target
IL-23 and IL-17. This increasingly refined understanding of the disease has narrowed the standard of care from broad immunosuppressive
agents (such as cyclosporine) to more specific immunomodulators (TNF-α inhibitors) to precise biologic therapies targeting the key
cytokines involved in disease pathology (IL-23 and IL-17 inhibitors), with each new therapeutic class raising the bar on both safety and
efficacy.

Biologic therapies, especially
mAbs, are now mainstays in the treatment of a wide variety of I&I diseases, including PsO and PsA. Therapies that have improved
upon efficacy and/or reduced dosing frequency have achieved the most commercial success, even when launched many years after other
biologics. Enbrel was first approved for PsO in 2004 with a weekly maintenance dosing schedule. Four years later, Humira was approved
for PsO with an every-other-week (Q2W) dosing schedule. Stelara (ustekinumab) was approved a year later with similar Phase 3 data
to Humira, but with a significantly improved dosing schedule of every twelve weeks (Q12W). Several drugs for PsO have been approved
since 2009 that demonstrated higher efficacy in their pivotal studies compared to Stelara, but with more burdensome dosing schedules,
including Tremfya (guselkumab), which has a dosing schedule of every eight weeks (Q8W), and Cosentyx (secukinumab) and Taltz (ixekizumab),
which have dosing schedules of every four weeks (Q4W). While these therapies have all become generally successful products, the most
commercially successful drug in the PsO market today is Skyrizi (risankizumab), which combines Stelara’s Q12W dosing schedule with
improvements in efficacy, as evidenced by a higher PASI score of PASI 90 and PASI 100 rates (i.e., a 90%
improvement in PASI score and a 100% improvement in PASI score (complete clearance), respectively) in clinical trials. In addition, Bimzelx
(bimekizumab), approved by the FDA in 2023, has shown evidence of efficacy that exceeds even Skyrizi, though with a less convenient Q8W
dosing schedule. Although many biologics have entered the PsO market over the past two decades, new entrants have had significant commercial
success when they have improved upon efficacy and/or dosing frequency, and room remains to improve in both areas to set a new standard
for the treatment of PsO.

Biologics have raised the bar on the standard
of care in PsO, but leave room for improvement

The biology driving PsO and
PsA is well understood today, and the standard of care has progressed dramatically. We believe that it is unlikely that a novel mechanism
will emerge that is as safe and efficacious as targeting the IL-23/IL-17 axis. Therefore, we believe that innovation now should be focused
on optimizing the product profile that can be offered to patients. While much effort is being directed toward daily oral formats to inhibit
this axis, oral medicines have yet to match the efficacy of biologics. We believe that a better biologic with a longer dosing interval
and the potential for improved efficacy will present a more attractive product profile for most patients.

6

Overview of Psoriasis (PsO)

PsO is a chronic autoimmune skin disorder that affects an estimated
125 million people worldwide with steadily increasing prevalence, estimated to be around 2 – 3% of the population
currently, according to the International Federation of Psoriasis Associations (“IFPA”). It is the largest pharmaceutical
market within dermatology, with annual global sales of approximately $28 billion in 2024, which is estimated to grow to approximately
$40 billion by 2032. The most common form of PsO is plaque psoriasis. Patients with chronic plaque psoriasis have well-demarcated,
erythematous plaques with overlying, coarse, silvery-scaled patches. These plaques can occur anywhere on the body, though are typically
found on the scalp, extensor areas of the knees and elbows, and gluteal cleft. Involvement of the palms, soles, or nails, and intertriginous
areas, including the genitals, can also occur and can be particularly difficult to treat. Between one-quarter and one-half of PsO patients
have moderate disease, defined as having 3% to 10% of the body surface area (“BSA”) involved, or severe disease, defined as
having more than 10% BSA involvement. The chronic inflammation in PsO is associated with multiple comorbidities, including PsA, obesity,
metabolic syndrome, hypertension, diabetes, and atherosclerotic cardiovascular disease.

As discussed earlier, PsO
is a complex immune-mediated disease driven primarily by Th17 cells and the cytokines IL-23 and IL-17. The interplay of environmental
and behavioral risk factors and genetics is believed to trigger PsO. Multiple lines of evidence support a genetic component to the
disease, including the observation that approximately 40% of patients with PsO and PsA have a family history of the disease and the identification
of multiple susceptibility loci, many containing genes related to the regulation of the immune system, in genome-wide association studies.

Current PsO Treatments and Limitations

While patients with mild
PsO typically rely on topical corticosteroids or oral therapies like Otezla (apremilast), these agents often do not provide an adequate
response for patients with moderate-to-severe PsO. As a result, the American Academy of Dermatology-National Psoriasis Foundation
recommends biologics as first-line therapy for moderate-to-severe PsO.

Several classes of biologic
therapies have been approved for PsO over the past 20 years, resulting in progressively more complete symptom relief. Efficacy in
PsO is typically measured via the PASI scoring system. The first biologics approved for PsO were tumor necrosis alpha (“TNF-α”)
inhibitors such as Enbrel (etanercept), Humira (adalimumab), and Remicade (infliximab), which achieved a PASI score of PASI 90 at 16 weeks
in around 25 – 50% of patients and a PASI score of PASI 100 in around 5 – 20% of patients. Stelara
(ustekinumab), which targets the p40 subunit of IL-23 that is shared with IL-12, was approved next and achieved efficacy on par with Humira.
IL-17 inhibitors Cosentyx (secukinumab), Taltz (ixekizumab), and Siliq (brodalumab) followed and achieved responses of PASI 90 in around 70%
of patients and PASI 100 in around 40% of patients with some risk of certain side effects such as oral candidiasis. Most recently,
IL-23p19 inhibitors such as Ilumya (tildrakizumab), Tremfya (guselkumab), and Skyrizi (risankizumab) have achieved responses of PASI 90
in around 70 – 80% of patients and PASI 100 in around 30 – 50% of patients with highly tolerable
profiles. Finally, IL-17A/F inhibitors such as Bimzelx (bimekizumab) have recently shown even higher response rates than IL-23 inhibitors,
but with slightly less tolerable profiles.

Treatment expectations in
PsO have evolved progressively with this continued innovation. A 75% improvement in PASI score was previously thought to be an adequate
depth of response, and weekly SQ dosing was viewed as acceptable. With each subsequent generation of innovation, patient and caregiver
expectations have advanced. Today, Skyrizi (risankizumab) is widely viewed as the leader in PsO biologic therapy. In Phase 3 clinical
trials, 43% and 58% of patients achieved PASI 100 at 16 and 52 weeks, respectively, with SQ maintenance dosing every three months.
Most recently, Bimzelx (bimekizumab) has shown evidence of efficacy that exceeds even Skyrizi, achieving a 64% PASI 100 rate at 16 weeks
in Phase 3 trials. However, the increased efficacy comes with a less convenient Q8W dosing schedule and an increased risk of certain
side effects, most notably oral candidiasis. While agents like Skyrizi and Bimzelx reflect the remarkable advancement in PsO treatment,
there remains significant unmet need. Approximately half of moderate-to-severe PsO patients do not achieve full skin clarity, and while
early signs are present, the promise of disease modifying therapy remains unrealized. In addition, a continued desire for more convenient
dosing options has driven significant interest in orally delivered medicines targeting these same pathways. However, oral therapies have
yet to match the efficacy and safety profile of biologics. We believe that ORKA-001 and ORKA-002 could represent the next step in biologic
innovation in PsO, with the potential for higher rates of complete skin clearance, more durable remissions, and markedly more convenient
dosing regimens.

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Overview of Hidradenitis Suppurativa (“HS”)

HS is a chronic inflammatory
skin disease characterized by deep-seated nodules and abscesses, draining sinus tracts, and fibrotic scarring that most commonly occur
in intertriginous areas, such as the axillae and groin. Due to the associated pain, sensitive anatomical locations, drainage, odor, scarring,
and recurrent disease flares, HS can have a substantial negative psychosocial impact across many areas of life, including interpersonal
relationships, education, and employment.

HS is believed to be underdiagnosed
and may have a prevalence exceeding 1% worldwide. Significant delays between symptom onset and diagnosis are common; an average delay
of 7–10 years has been reported, with some patients waiting more than 20 years for diagnosis. This compares to an average time to
diagnosis of approximately 1.6 years for psoriasis. Delayed diagnosis has been associated with worsening disease severity, progression,
and an increased burden of comorbidities, potentially due to delays in receiving appropriate anti-inflammatory treatment.

Current HS Treatments and Limitations

The overall treatment goals
for HS include alleviating lesion-related symptoms (e.g., pain), reducing the frequency and severity of disease flares, limiting the formation
of new inflammatory lesions, and preventing disease progression and associated comorbidities. Treatment varies depending on disease severity
and may include topical and systemic antibiotics, hormone therapy, immunomodulators, and surgical interventions. Humira (adalimumab) was
the only FDA-approved medication for the treatment of moderate-to-severe HS from its approval in 2015 until the approval of Cosentyx (secukinumab)
in October 2023 and Bimzelx (bimekizumab) in November 2024.

The hidradenitis suppurativa
clinical response (HiSCR) outcome measure is currently considered the standard primary endpoint for the assessment of new pharmacologic
interventions in HS clinical trials. HiSCR50, HiSCR75, and HiSCR90 are defined as at least a 50%, 75%, or 90% reduction from baseline
in the total abscess and inflammatory nodule count, with no increase from baseline in abscess or draining tunnel count. A recent network
meta-analysis comparing approved biologics for moderate-to-severe HS found that Bimzelx (bimekizumab) ranked highest across HiSCR efficacy
endpoints. In Phase 3 studies, Bimzelx (bimekizumab) demonstrated placebo-adjusted HiSCR50/75 rates of 18–20%, and 15–20%,
respectively, at Week 16 with Q2W dosing.

In addition to currently
approved therapies, multiple biologic and oral agents targeting a range of inflammatory pathways are advancing through clinical development
for HS. These investigational therapies span diverse mechanisms of action and several have demonstrated encouraging efficacy signals in
Phase 2 clinical trials. However, currently approved therapies and late-stage investigational agents are typically administered on weekly,
bi-weekly, or monthly dosing schedules, and a substantial proportion of patients continue to experience inadequate or incomplete disease
control. These factors underscore the ongoing unmet need for more effective, durable, and more conveniently administered treatment options.

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Overview of Psoriatic Arthritis (PsA)

PsA is a chronic inflammatory
condition that affects both the skin and joints, and often coexists with PsO. Around a quarter to a third of patients with moderate-to-severe
PsO also have PsA. Most individuals develop PsO before being diagnosed with PsA, with a median gap of seven to eight years between
the diagnosis of skin and joint disease, though in up to 30% of patients with PsA, joint symptoms appear before or simultaneously with
skin manifestations. Patients with PsA present with joint pain, stiffness, and swelling affecting the peripheral joints, axial skeleton,
or both. Enthesitis, dactylitis, nail lesions, fatigue, and ocular inflammation all occur commonly. PsA can lead to irreversible joint
damage, including bony fusion across a joint (ankylosis). The pathogenesis of PsA is likely to be closely related to the mechanisms that
underlie PsO. Like PsO, the exact cause of PsA remains unknown, but environmental triggers, including infection and trauma, and genetic
factors play a role.

Current PsA Treatments and Limitations

Effective treatment of PsA
requires a coordinated approach to address the unique combination of disease manifestations each patient has, which can include peripheral
and axial arthritis, enthesitis, dactylitis, and skin and nail involvement. Many patients with milder disease symptoms will start with
nonsteroidal anti-inflammatory drugs (“NSAIDs”) and/or local treatments to address specific disease manifestations. However,
those with more moderate or severe disease and/or multidomain involvement will typically receive a biologic therapy targeting TNF-α
or IL-17, or less commonly an oral Janus kinase (“JAK”) inhibitor. Comorbid conditions can also influence treatment selection.
For example, an IL-17 inhibitor would be preferred for a patient with significant skin involvement, but not for patients with IBD or ocular
symptoms, where a TNF-α inhibitor would be preferred. The most common endpoint used to measure the efficacy of TNF-α or IL-17
inhibitors in PsA is ACR response, or the proportion of patients achieving a specified percent improvement in American College of Rheumatology
(“ACR”) score, which measures peripheral joint disease. Approved TNF-α inhibitors, including Humira (adalimumab) and
Cimzia (certolizumab), achieved a placebo-adjusted ACR50 response of around 30 – 35% at 24 weeks with Q2W dosing.
Approved IL-17 inhibitors, including Cosentyx (secukinumab) and Taltz (ixekizumab), achieved a slightly lower placebo-adjusted ACR50 response
of around 25 – 30% at 24 weeks, but with more convenient Q4W dosing. Bimzelx (bimekizumab), which was recently
approved in the United States for PsA, achieved a placebo-adjusted ACR50 response of approximately 35% at 16 weeks with Q4W
dosing. A significant fraction of patients with PsA still do not achieve a satisfactory response with available therapies, and even the
most convenient regimens require monthly SQ dosing.

Overview of additional opportunities

In addition to PsO, HS, and PsA, inhibition of IL-23 or IL-17 has demonstrated
efficacy in a number of additional I&I indications, such as axSpA.

axSpA is a chronic inflammatory
disease that primarily affects the spine and sacroiliac joints that comprise the axial skeleton. The disease causes severe pain, stiffness,
and fatigue, and can have additional clinical manifestations like uveitis, enthesitis, peripheral arthritis, and PsO. Patients with
axSpA may develop further structural damage in their spine, which can lead to the fusion of vertebra (spinal ankylosis), which has a massive
negative impact on mobility, physical function, and quality of life. The overall prevalence of axSpA is estimated to be around 1% in the
United States. Treatment of axSpA starts with physical therapy and NSAIDs. If patients do not have an adequate response to NSAIDs,
a TNF-α inhibitor is typically used, followed by an IL-17 inhibitor, such as Cosentyx (secukinumab), Taltz (ixekizumab), or Bimzelx
(bimekizumab), or less frequently a JAK inhibitor. Patients often need to cycle through therapies over time due to inadequate responses
or loss of response.

Our Solution: Half-Life Extension and Antibody
Engineering Technologies

Our antibody engineering
campaigns are designed to optimize multiple attributes in parallel: binding affinity, potency in a variety of assays, developability,
and consistently extended serum half-life in non-human primates (“NHPs”). Half-life extension is possible by modifying the
pH-dependent binding affinity of the antibody Fc domain for FcRn. A primary mechanism of elimination of antibodies from the serum is through
pinocytosis and degradation in the lysosomes of cells. Throughout this process, antibodies can be recycled back into the serum by binding
to FcRn while they are in endosomes. The interior of the endosome is acidic, and therefore the efficiency of this recycling process depends
on the ability of the antibody Fc domain to bind to FcRn at low pH. If this low pH binding is efficient enough, antibody recycling
can be favored over degradation, potentially resulting in a much longer serum half-life.

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Antibody engineers have discovered methods of modifying the Fc domain
to optimize the efficiency of recycling via FcRn binding. Several engineering strategies have been identified over the past two decades,
with the so-called “YTE” mutations (M252Y/S254T/T256E) and “LS” mutations (M428L/N434S) being the most frequently
used. Importantly, while these strategies have been known for some time, it was only relatively recently that enough clinical precedent
was established to provide confidence in how these mutations perform in humans. Three products incorporating YTE or LS modifications are
currently approved by the FDA, Beyfortus (nirsevimab), Exdensur (depemokimab), and Ultomiris (ravulizumab), and several more candidates
are in clinical trials. Based on clinical data in humans, antibodies with YTE mutations typically have a half-life that is two to four
times longer than wildtype antibodies.

ORKA-001

Summary

ORKA-001 is a high affinity,
extended half-life mAb designed to target the p19 subunit of IL-23. Based on both preclinical and clinical data generated to date, we
believe ORKA-001 has the potential to become the leading IL-23 inhibitor and achieve an optimal product profile in PsO consisting of the
following:

We believe that this target
profile for ORKA-001 could offer improved freedom from disease to many patients affected by PsO and represent a step forward in the standard
of care.

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Clinical Development

We dosed the first
participants in a Phase 1 clinical trial of ORKA-001 in healthy volunteers in the fourth quarter of 2024. This trial is a
double-blind, placebo-controlled, single ascending dose study evaluating the safety, tolerability, and pharmacokinetics of ORKA-001
in healthy volunteers. The trial enrolled 24 healthy adult participants into three single ascending subcutaneous dose cohorts of 300
mg, 600 mg, and 1200 mg. In September 2025, we announced the 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. We believe this data supports the key ways in which ORKA-001 could re-define the treatment paradigm in psoriasis:
annual dosing, higher efficacy, and off-treatment remission.

ORKA-001 showed a human half-life of
approximately 100 days

In the third quarter of 2025, we commenced dosing in a Phase 2a proof-of-concept study of ORKA-001 in 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 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. Patients who have not achieved PASI 100 will receive a 300 mg dose every six months.
After completing the trial, subjects may have the option to roll over to an open-label extension study.

Additionally, the first
patients were dosed in the EVERLAST-B trial in December 2025. EVERLAST-B is designed to enroll approximately 160 patients, is a
dose-ranging Phase 2b trial of ORKA-001 in moderate-to-severe PsO patients 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 matching 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.

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ORKA-002

Summary

ORKA-002 is a high affinity,
extended half-life mAb designed to target IL-17A/F. Dual inhibition of both IL-17A and IL-17F has shown superior efficacy compared to
IL-17A inhibition alone in PsO and other indications, as shown by the performance of Bimzelx (bimekizumab) compared to Cosentyx (secukinumab)
and Taltz (ixekizumab) in Phase 3 trials. These therapies all utilize Q4W maintenance dosing in PsO and PsA, except Bimzelx, where Q8W
maintenance dosing in PsO patients 120 kg is recommended. By binding IL-17A/F at similar epitopes and affinity ranges as Bimzelx while
incorporating half-life extension technology to potentially enable twice-yearly maintenance dosing in PsO and quarterly maintenance dosing
in HS, we believe that ORKA-002 could become the leading therapy in the IL-17 class.

Clinical Development

In January 2026, we announced
interim findings from the Phase 1 trial of ORKA-002 in healthy volunteers. The study enrolled 24 healthy adult participants into three
single-ascending subcutaneous dose cohorts of 160 mg, 320 mg and 640 mg. ORKA-002 showed a half-life of approximately 75-80 days, greater
than three times that of bimekizumab, and a comparable Cmax to bimekizumab at equivalent doses based on previously reported bimekizumab
data. Pharmacokinetic modeling based on these results supports achieving twice-yearly maintenance dosing in PsO and quarterly maintenance
dosing in HS. Additionally, 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.

ORKA-002 showed a half-life of approximately
75-80 days

We initiated ORCA-SURGE,
a Phase 2 trial of ORKA-002 in patients with moderate-to-severe PsO, in February 2026. ORCA-SURGE is designed to enroll approximately
160 patients randomized 1:1:1:1 to receive 40 mg, 160 mg or 320 mg of ORKA-002 at Weeks 0 and 4, or matching placebo. The primary endpoint
is PASI 100 at Week 16. Maintenance dosing will evaluate the potential for twice-yearly dosing with ORKA-002. Data from ORCA-SURGE is
anticipated in 2027.

We see ORKA-002 as highly
complementary to ORKA-001, with the potential to provide an improved therapy for the approximately one-quarter to one-third of moderate-to-severe
PsO patients who have PsA, as well as for PsO patients with highly resistant skin symptoms that do not respond adequately to an IL-23
inhibitor. Furthermore, ORKA-002 could address indications beyond PsO, including PsA with limited skin involvement, HS, axSpA, and additional I&I
diseases. We plan to initiate a Phase 2 trial of ORKA-002 in patients with HS in the second half of 2026.

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ORKA-021

The IL-17 and IL-23 inhibitor
classes each have distinct advantages. IL-17 inhibitors are generally associated with rapid onset of action and high peak response, while
IL-23 inhibitors are typically characterized by less frequent dosing and favorable durability and safety profiles. Sequential use of these
two mechanisms has the potential to combine attractive attributes of each class, including the rapid response associated with IL-17 inhibition
and the maintenance profile associated with IL-23 inhibition. Accordingly, following ORKA-002 and ORKA-001, we plan to evaluate a sequential
combination regimen of ORKA-002 and ORKA-001, which we refer to as “ORKA-021”.

Additional Pipeline Program

We have a third program, ORKA-003, that targets an undisclosed pathway.
A core tenet of our strategy is to remain highly focused on I&I diseases, and specifically on inflammatory dermatology conditions.
ORKA-003 provides the potential for indication expansion beyond PsO as well as combination opportunities with our more advanced programs.
In the future, we may add additional programs to our portfolio beyond ORKA-001, ORKA-002, ORKA-021 and ORKA-003 that fit our strategic
focus.

Intellectual Property

We seek to protect the proprietary programs and technologies that we
believe are important to our business through a combination of patent protection and other intellectual property strategies. Our intellectual
property portfolio is designed to protect our product candidates and related technologies, including patents directed to composition of
matter, methods of use and manufacture, and other inventions.

We and Paragon have filed,
and may continue to file, patent applications relating to antibodies that target IL-23, including applications covering composition of
matter, pharmaceutical formulations, and methods of use, including for ORKA-001. We and Paragon have also filed, and may continue to file,
patent applications relating to antibodies that target IL-17, including applications covering composition of matter, pharmaceutical formulations,
and methods of use, including for ORKA-002.

We hold exclusive rights to ORKA-001 and ORKA-002, as well as the associated
IL-23 and IL-17 patent rights, pursuant to license agreements with Paragon. Certain patent rights covering ORKA-001 are expected to expire
in 2045, absent any applicable patent term adjustments or extensions. Patent rights relating to ORKA-002, if issued, are also expected
to expire in 2045, absent any applicable patent term adjustments or extensions.

Commercial

If any of our product candidates
are approved for commercialization, we intend to commercialize them in the United States and other key markets either independently or
through strategic collaborations, with the objective of maximizing the commercial value of our programs. Given our current stage of development,
we have not yet established a commercial organization or distribution capabilities. Pursuant to license agreements with Paragon, we hold
exclusive worldwide rights to develop and commercialize ORKA-001 and ORKA-002.

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Manufacturing

We do not currently own or
operate facilities for product manufacturing, testing, storage, and distribution. We have contracted and expect to continue to contract
with third parties for the manufacture and distribution of our product candidates. Because we rely on contract manufacturers, we employ
personnel with extensive technical, manufacturing, analytical, and quality experience. Our team has deep knowledge and understanding of
the regulations that govern manufacturing, documentation, quality assurance, and quality control of drug supply that are required to support
our regulatory filings.

Competition

The biotechnology and biopharmaceutical
industries are characterized by continuing technological advancement and significant competition. While we believe that our programs,
technology, development experience and scientific knowledge provide us with competitive advantages, we face competition from major pharmaceutical
and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.
Any product candidates that we successfully develop and commercialize will compete with existing therapies and therapies that may become
available in the future. Many of the companies with which we are currently competing or will compete against in the future have significantly
greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials,
obtaining regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology
industry may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies
may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These
competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial
sites, patient enrollment for clinical trials as well as in acquiring technologies complementary to, or necessary for, our programs.

Key competitive factors affecting
the success of all our product candidates that we develop, if approved, are likely to be efficacy, safety, convenience, presentation,
price, the level of generic competition, and the availability of reimbursement from government and other third-party payors. Our competitors
may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for our products, which could
result in our competitors establishing a strong market position before we are able to enter the market.

Specifically, there are several
companies developing or marketing treatments that may be approved for the same indications and/or diseases as our two most advanced programs,
ORKA-001 and ORKA-002, including major pharmaceutical companies. We have generated early-stage clinical data for certain programs, and
there can be no assurance that early clinical results will be predictive of later-stage outcomes.

There are several
approved biologic therapies for the treatment of moderate-to-severe PsO. These include mAbs targeting IL-23, such as Skyrizi
(risankizumab) from AbbVie, Tremfya (guselkumab) from Janssen, Ilumya (tildrakizumab) from Sun Pharma, also marketed as Ilumetri by
Almirall in Europe, and Pecondle (picankibart) from Innovent Biologics, which has been approved in China, which all target the p19
subunit, and Stelara (ustekinumab) from Janssen, which targets the p40 subunit; mAbs targeting IL-17, such as Bimzelx (bimekizumab)
from UCB, which targets IL-17A/F, Cosentyx (secukinumab) from Novartis and Taltz (ixekizumab) from Eli Lilly, which both target
IL-17A, and Siliq (brodalumab) from Ortho Dermatologics, also marketed as Kyntheum by LEO Pharma in Europe, which targets IL-17
receptor A; and biologics targeting TNF-α, such as Humira (adalimumab) from AbbVie, Enbrel (etanercept) from Amgen, and
Remicade (infliximab) from Janssen, and various biosimilar versions of each. In addition, there are several approved oral medicines
in these indications, including the phosphodiesterase-4 (PDE4) inhibitor Otezla (apremilast) from Amgen and the tyrosine kinase 2
(TYK2) inhibitor Sotyktu (deucravacitinib) from Bristol-Myers Squibb. Many of these therapies are also approved or in development
for PsA, HS, axSpA, and other I&I indications.

In addition, we are aware
of several product candidates in clinical development for moderate-to-severe PsO, along with PsA, HS, axSpA, and other indications. These
include the biologic sonelokimab from MoonLake Immunotherapeutics targeting IL-17A/F, and several oral agents in development, including
JNJ-2113 (icotrokinra) from Janssen targeting the IL-23 receptor, DC-853 (simepdekinra) from Eli Lilly targeting IL-17A, PN-881 from Protagonist
targeting IL-17A/F, and TAK-279 (zasocitinib) from Takeda and ESK-001 (envudeucitinib) from Alumis, both targeting TYK2. AbbVie has also announced plans to initiate a Phase 1 clinical study of a long-acting IL-23p19 inhibitor
in 2026.

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Significant Agreements

Paragon Therapeutics – Option Agreements
and License Agreements

In March 2024, we entered
into two Antibody Discovery and Option Agreements with Paragon and Paruka Holding, LLC (“Paruka”) (each, an “Option
Agreement”), pursuant to which we initiated certain research programs with Paragon focusing on discovering, generating, identifying
and/or characterizing antibodies directed to a particular target, including for IL-23 and IL-17A/F for ORKA-001 and ORKA-002, respectively.
In September 2024, we exercised our exclusive option to acquire certain rights to ORKA-001, and in December 2024, we entered into a corresponding
license agreement with Paragon pursuant to which Paragon granted us a royalty-bearing, world-wide, exclusive license to develop, manufacture,
commercialize or otherwise exploit certain antibodies and products targeting IL-23 in all fields other than the field of inflammatory
bowel disease. In December 2024, we exercised our exclusive option to acquire certain rights to ORKA-002, and in February 2025, we entered
into the corresponding license agreement with Paragon pursuant to which Paragon granted us a royalty-bearing, world-wide, exclusive license
to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting IL-17A/F in all fields (collectively,
the “License Agreements”).

Pursuant to each of the License
Agreements, Paragon has agreed not to conduct any new campaigns that generate anti-IL-23 monospecific antibodies or anti-IL-17A/F monospecific
antibodies in the respective agreed-upon fields. Each of the ORKA-001 and ORKA-002 License Agreements may be terminated on 60 days’
notice to Paragon, on material breach without cure, and on a party’s insolvency or bankruptcy to the extent permitted by law.

Pursuant to the terms
of each of the License Agreements, we are obligated to pay Paragon non-refundable milestone payments of up to $12.0 million under
each respective agreement upon the achievement of certain clinical development milestones and up to $10.0 million under each
respective agreement upon the achievement of certain regulatory milestones. As of December 31, 2025, we have incurred and expensed
milestone payments of $7.0 million and $4.0 million in connection with the ORKA-001 License Agreement and the ORKA-002 License
Agreement, respectively. In addition, we are obligated to pay Paragon a low single-digit percentage royalty for antibody products
for each of ORKA-001 and ORKA-002. For each of the License Agreements, the royalty term ends on the later of (i) the last-to-expire
licensed patent or our patent directed to the manufacture, use or sale of a licensed antibody in the country at issue or (ii) 12
years from the date of first sale of our product. There is also a royalty step-down if there is no Paragon patent in effect during
the royalty term for each program.

Additionally, as part of
the Option Agreements and the additional option agreement described in the following paragraph, on December 31, 2024, we settled our
2024 obligations under the Paruka Warrant Obligation by issuing Paruka a warrant to purchase 596,930 shares of company common stock at
an exercise price of $19.39 per share, and on December 12, 2025, we settled our 2025 obligations under the Paruka Warrant Obligation
by issuing Paruka a warrant to purchase 375,000 shares of company common stock at an exercise price of $30.18 per share.

In December 2025, we entered into an additional option agreement for
an antibody with Paragon and Paruka to enter into a license agreement, which we exercised in December 2025. For the year ended December
31, 2025 we incurred $1.5 million related to this additional option agreement, which was recognized as research and development expense.
Per the terms of this option agreement, once we enter into the corresponding license agreement, we will be required to make non-refundable
milestone payments to Paragon of up to $12.0 million under the agreement upon the achievement of certain clinical development milestones,
up to $10.0 million under the agreement upon the achievement of certain regulatory milestones, as well as a low single-digit percentage
royalty for antibody products beginning on the first commercial sale. As of December 31, 2025, we have not entered into a license agreement
with Paragon and Paruka related to this additional option agreement.

15

Cell Line License Agreement

In March 2024, we entered
into the Cell Line License Agreement (the “Cell Line License Agreement”) with WuXi Biologics Ireland Limited (“WuXi
Biologics”). Under the Cell Line License Agreement, we received a non-exclusive, worldwide, sublicensable license to certain of
WuXi Biologics’ know-how, cell line, biological materials (the “WuXi Biologics Licensed Technology”) and media and feeds
to make, have made, use, sell and import certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics
under the Cell Line License Agreement (the “WuXi Biologics Licensed Products”). Specifically, the WuXi Biologics Licensed
Technology is used in certain manufacturing activities in support of the ORKA-001 and ORKA-002 programs.

In consideration for the
license, we agreed to pay WuXi Biologics a non-refundable license fee of $150,000. Additionally, to the extent that we manufacture our
commercial supplies of bulk drug product for ORKA-001 and/or ORKA-002 under such license with a manufacturer other than WuXi Biologics
or its affiliates, we are required to make royalty payments to WuXi Biologics at a rate of less than one percent of net sales of WuXi
Biologics Licensed Products manufactured by the third-party manufacturer. Pursuant to an amendment to the Cell Line License Agreement
effective in November 2024, a provision was added that permits the royalties owed under the agreement to be bought out on a product-by-product basis
for a lump-sum payment.

The Cell Line License Agreement
will continue indefinitely unless terminated (i) by us upon six months’ prior written notice and our payment of all undisputed amounts
due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by us that remains uncured
for 60 days after written notice, (iii) by WuXi Biologics if we fail to make a payment and such failure continues for 30 days after receiving
notice of such failure, or (iv) by either party upon the other party’s bankruptcy.

Government Regulation

The FDA and other regulatory authorities at federal, state and local
levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality
control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion,
marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing. We, along with our third-party
contractors, will be required to navigate the various preclinical, clinical, and commercial approval requirements of the governing regulatory
agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates. Generally, before
a new therapeutic product can be marketed, considerable data demonstrating a biological product candidate’s quality, safety, purity,
and potency, or a small molecule drug candidate’s quality, safety, and efficacy, must be obtained, organized into a format specific
for each regulatory authority, submitted for review and approved by the regulatory authority. For biological product candidates, potency
is similar to efficacy and is interpreted to mean the specific ability or capacity of the product, as indicated by appropriate laboratory
tests or by adequately controlled clinical data obtained through the administration of the product in the manner intended, to effect a
given result.

Failure to comply with the applicable U.S. requirements at any time
during the product development process, approval process, or post-marketing may subject an applicant to administrative or judicial sanctions.
These sanctions could include, among other actions, the FDA’s refusal to approve pending applications from the sponsor, withdrawal
of an approval, a clinical hold, untitled or warning letters, product recalls or market withdrawals, product seizures, total or partial
suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, and civil or
criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our company and our products or
product candidates.

16

United States Biologics Regulation

In the United States, biological products are subject to regulation
under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”), and other federal,
state, local, and foreign statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate
federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply
with the applicable U.S. requirements at any time during the product development process, approval process, or following approval may
subject an applicant to administrative action and judicial sanctions. The process required by the FDA before biologic product candidates
may be marketed in the United States generally involves the following:

Preclinical and Clinical Development

Once a therapeutic product
candidate is identified for development, it must undergo preclinical studies before commencing any testing in humans. Preclinical studies
include laboratory evaluations of product chemistry, formulation, and stability, as well as studies to evaluate the candidate’s potential
for efficacy and toxicity in animals. The conduct of preclinical tests and formulation of the compounds for testing must comply with federal
regulations and requirements, including current GLPs.

Prior to beginning any clinical trial with a product candidate in the
United States, we must submit an IND application to the FDA. An IND application is a request for authorization from the FDA to administer
an investigational new drug product to humans. The central focus of an IND application is on the general investigational plan, supportive
nonclinical evaluations, and the protocol or protocols for clinical trials. The IND includes results of animal and in vitro studies assessing
the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product, chemistry, manufacturing and controls
information, and any available human data or literature to support the use of the investigational product. An IND must become effective
before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within
the 30-day period, raises safety concerns or questions about the proposed clinical trial. In such a case, the IND may be placed on clinical
hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission
of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

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Clinical trials involve the
administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with current
GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical
trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters
to be used in monitoring safety, and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made
for each successive clinical trial conducted during product development and for any subsequent protocol amendments. Furthermore, an independent
IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent
form before the clinical trial begins at that site, and must monitor the trial   until completed.

Regulatory authorities, the
IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed
to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some trials also include oversight
by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board
or data monitoring committee, which provides authorization for whether or not a trial may move forward at designated check
points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety
risk for subjects or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of ongoing
clinical trials and clinical trial results to public registries.

Human clinical trials are typically conducted in three sequential phases
that may overlap.

In some cases, the FDA may require, or companies may voluntarily pursue,
additional clinical trials after a product is approved to gain more information about the product. These so-called Phase 4 studies may
be made a condition to approval of the BLA. Concurrent with clinical trials, companies may complete additional animal studies and develop
additional information about the biological characteristics of the product candidate and must finalize a process for manufacturing the
product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing
quality batches of the product candidate and, among other things, methods must be developed for testing the safety, purity, and potency
of the biologic. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate
that the product candidate does not undergo unacceptable deterioration over its claimed shelf life.

18

A sponsor may choose, but is not required, to conduct a foreign clinical trial under an IND. When a foreign clinical trial is conducted
under an IND, all IND requirements must be met unless waived. When the foreign clinical trial is not conducted under an IND, the sponsor
must ensure that the trial complies with certain FDA regulatory requirements in order to use the trial as support of a BLA, including
that the trial was conducted in accordance with GCP, review and approval by an independent ethics committee, use of proper procedures
for obtaining informed consent from subjects, and the FDA is able to validate the data from the trial through an onsite inspection if
the FDA deems such inspection necessary. The GCP requirements encompass both ethical and data integrity standards for clinical studies.

BLA Submission and Review

Assuming successful completion of all required testing in accordance
with all applicable regulatory requirements, the results of product development, nonclinical studies, and clinical trials are submitted
to the FDA as part of a BLA requesting approval to market the product for one or more indications. The BLA must include all relevant data
available from pertinent preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings,
together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other
things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of the product, or from a number
of alternative sources, including trials initiated and sponsored by investigators. The submission of a BLA requires payment of a substantial
application user fee to the FDA, unless a waiver or exemption applies.

In addition, under the Pediatric
Research Equity Act (“PREA”), a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the
biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the product is safe and effective, unless a different timeline has been previously agreed upon
by the FDA, through approval of a pediatric study plan, as described below. The Food and Drug Administration Safety and Innovation Act
requires that a sponsor who is planning to submit a marketing application for a biological product that includes a new active ingredient,
new indication, new dosage form, new dosing regimen or new route of administration submit an initial pediatric study plan (“PSP”)
within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA. Unless otherwise required by regulation,
PREA does not apply to any biological product for an indication for which orphan designation has been granted.

Within 60 days following
submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts
it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may
request additional information. In this event, the BLA must be resubmitted with the additional information. Once a BLA has been accepted
for filing, the FDA’s goal is to review standard applications within ten months after the FDA accepts the application for filing,
or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and
priority reviews, the review process may also be extended by FDA requests for additional information or clarification. The FDA reviews
a BLA to determine, among other things, whether a product is safe, pure, and potent and the facility in which it is manufactured, processed,
packed, or held meets standards designed to assure the product’s continued safety, purity, and potency. The FDA may convene an advisory
committee to provide clinical insight on application review questions. The FDA is not bound by the recommendations of an advisory committee,
but it considers such recommendations carefully when making decisions.

Before approving a BLA, the FDA will typically inspect the facility
or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes
and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs and data
integrity of the submitted clinical trial data. If the FDA determines that the application, manufacturing process or manufacturing facilities
are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding
the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory
criteria for approval.

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After the FDA evaluates a
BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced,
the FDA may issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product
with specific prescribing information for specific indications. A Complete Response letter will describe all of the deficiencies that
the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support
approval, the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted product lots,
and/or reviewing proposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take
to place the BLA in condition for approval, including requests for additional information or clarification. The FDA may delay or refuse
approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information, and/or require post-marketing
testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will
be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. For example,
the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure the benefits of the product
outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients
to have continued access to such medicines by managing their safe use, and could include requirements for medication guides, physician
communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization
tools. The FDA also may condition approval on, among other things, changes to proposed labeling, or the development of adequate controls
and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements
is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-marketing
studies, and/or surveillance in addition to that required of every approved product to further assess and monitor the product’s
safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing
studies.

Combination Therapy

Combination therapy is a
treatment modality that involves the use of two or more drugs to be used in combination to treat a disease or condition. If those drugs
are combined in one dosage form, such as a single injection, that is known as a fixed dose combination product and it is reviewed pursuant
to the FDA’s Combination Rule at 21 CFR 300.50. The rule provides that two or more drugs may be combined in a single dosage form
when each component contributes to the claimed effects and the dosage of each component (amount, frequency, duration) is such that the
combination is safe and effective for a significant patient population requiring such concurrent therapy as defined in the labeling for
the drug. However, not all combination therapy falls under the category of a fixed dose combination. For example, the FDA recognizes that
two drugs in separate dosage forms and in separate packaging, that otherwise might be administered as monotherapy for an indication, also
may be used in combination for the same indication. In 2013, the FDA issued guidance to assist sponsors that were developing the range
of combination therapies that fall outside the category of fixed dose combinations. That guidance provides recommendations and advice
on such topics as: (1) assessment at the outset whether two or more therapies are appropriate for use in combination; (2) guiding principles
for nonclinical and clinical development of the combination; (3) options for regulatory pathways to seek marketing approval of the combination;
and (4) post-marketing safety monitoring and reporting obligations. Given the wide range of potential combination therapy variations,
the FDA indicated it intends to assess each potential combination on a case-by case basis and encouraged sponsors to engage in early and
regular consultation with the relevant review division at the agency throughout the development process for its proposed combination.

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Regulation of Combination Products

Certain therapeutic products are comprised of multiple components,
such as drug components, biologic components, and device components, that would normally be subject to different regulatory frameworks
by the FDA and frequently regulated by different centers at the FDA. These products are known as combination products. Under the FDCA,
the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. The determination
of which center will be the lead center is based on the “primary mode of action” of the combination product. Thus, if the
primary mode of action of a drug/biologic-device combination product is attributable to the drug or biological product, the FDA center
responsible for premarket review of the drug or biological product would have primary jurisdiction for the combination product. The FDA
has also established the Office of Combination Products to address issues surrounding combination products and provide more certainty
to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry.
It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of
the FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute. A combination
product with a primary mode of action attributable to the drug or biologic component generally would be reviewed and approved pursuant
to the drug or biologic approval processes set forth in the FDCA. In reviewing the new drug application (“NDA”) or BLA for such a product,
however, FDA reviewers would consult with their counterparts in the FDA’s Center for Devices and Radiological Health to ensure that
the device component of the combination product met applicable requirements regarding safety, effectiveness, durability, and performance.
In addition, under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including
the Quality System Regulation applicable to medical devices.

Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals
are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping,
reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released
for distribution. After a BLA is approved for a biological product, the product also may be subject to official lot release. If the product
is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release
protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed
on the lot. The FDA also may perform certain confirmatory tests on lots of some products before releasing the lots for distribution by
the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, and potency
or effectiveness of biologics. After approval, most changes to the approved product, such as adding new indications or other labeling
claims, are subject to prior FDA review and approval. There also are continuing user fee requirements, under which the FDA assesses an
annual program fee for each product identified in an approved BLA. Biologic manufacturers and their subcontractors are required to register
their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain
state agencies for compliance with cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers.
Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA review
and approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMPs and impose
reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to
expend time, money, and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory
compliance.

The FDA may withdraw approval
if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with
manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new
safety information; imposition of post-marketing studies or clinical studies to assess new safety risks; or imposition of distribution
restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:

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The FDA closely regulates the marketing, labeling, advertising and
promotion of biologics. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by
the FDA and consistent with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity,
warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products
for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such
off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many
patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however,
restrict manufacturer’s communications on the subject of off-label uses of their products. Additionally, promotional material for
approved biologic products must be submitted to the FDA in conjunction with their first use.

Biosimilars and Reference Product Exclusivity

The Patient Protection and
Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”) includes a subtitle
called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway
for biological products that are highly similar, or “biosimilar,” to or interchangeable with an FDA-approved reference biological
product. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires
that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity,
and potency, is generally shown through analytical studies, animal studies, and a clinical trial or trials. Interchangeability
requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the
same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual,
the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety
risks or risks of diminished efficacy relative to exclusive use of the reference biologic. A product shown to be biosimilar or interchangeable
with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness
for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product.
Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which
such products are manufactured, pose significant hurdles to implementation and the FDA has issued guidance documents intended
to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to
describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.

Under the BPCIA, an application
for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed
by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which
the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version
of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data
and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of its product. The BPCIA also
created certain exclusivity periods for biosimilars approved as interchangeable products. Additionally, many states have passed laws concerning
the ability of pharmacies to substitute biosimilar and interchangeable products for the reference product.

A reference biologic is granted twelve years of exclusivity from the
time of first licensure (BLA approval) of the reference product. The first biologic product submitted under the abbreviated approval pathway
that is determined to be interchangeable with the reference product has exclusivity against other biologics submitted under the abbreviated
approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) 18 months after approval if there is no legal
challenge, (iii) 18 months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if
an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month
period.

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A biological product can also obtain pediatric market exclusivity in
the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month
exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion
of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

As discussed below, the Inflation
Reduction Act of 2022 (“IRA”) is a significant new law that intends to foster generic and biosimilar competition and to lower
drug and biologic costs.

Patent Term Extension

In the United States, after a BLA is approved, owners of relevant drug
patents may apply for up to a five-year patent extension, which permits patent term restoration as compensation for the patent term lost
during the FDA regulatory process. The allowable patent term extension is typically calculated as one-half the time between, the latter
of the effective date of an IND and issue date of the patent for which extension is sought, and the submission date of a BLA, plus the
time between BLA submission date and the BLA approval date up to a maximum of five years. The time can be shortened if the FDA determines
that the applicant did not pursue licensure with due diligence. The total patent term after the extension may not exceed 14 years from
the date of product licensure. Only one patent applicable to a licensed biological product is eligible for extension and only those claims
covering the product, a method for using it, or a method for manufacturing it may be extended and the application for the extension must
be submitted prior to the expiration of the patent in question. However, a company may not be granted an extension because of, for example,
failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines,
failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements. Some, but not all,
foreign jurisdictions possess patent term extension or other additional patent exclusivity mechanisms that may be more or less stringent
and comprehensive than those of the United States.

Other Healthcare Laws and Compliance Requirements

Biopharmaceutical manufacturers,
particularly manufacturers of marketed products, are subject to healthcare regulation and enforcement by federal, state, and local government
authorities in the U.S., as well as by foreign jurisdictions. Biopharmaceutical manufacturers must comply with various federal, state,
and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws.

The federal Anti-Kickback
Statute (“AKS”) generally prohibits, among other things, a pharmaceutical manufacturer from directly or indirectly soliciting,
offering, receiving, or paying any remuneration, in cash or in kind, where one purpose is either to induce the referral of an individual
for, or the purchase or prescription of, a particular drug that is payable by a federal health care program, including Medicare or Medicaid.
A person or entity does not need to have actual knowledge of the statute or a specific intent to violate the statute.

There are a number of statutory
exceptions and regulatory safe harbors protecting some common activities from prosecution, but protection is available only if all requirements
are met. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.
Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct
per se illegal under the statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative
review of all of its facts and circumstances. A claim arising from a violation of the federal Anti-Kickback Statute also constitutes a
fraudulent claim for purposes of the False Claims Act (“FCA”). Other federal and state anti-kickback statutes exist. For example,
another healthcare anti-kickback statute prohibits certain payments related to referrals of patients to certain providers (such as clinical
laboratories) and applies to services reimbursed by private health plans as well as government health care programs.

Federal and state false claims laws, such as the FCA, generally prohibit
anyone from knowingly and willfully, among other activities, presenting or causing to be presented, payment to third party payors (including
Medicare and Medicaid) claims for drugs or services that are false or fraudulent. Pharmaceutical and other healthcare companies have been
prosecuted under these laws for engaging in a variety of different types of conduct that “caused” the submission of false
claims to federal healthcare programs. Such laws are not always limited to activities involving government programs or payors. For example,
a federal healthcare fraud statute prohibits the knowing and willful execution, or attempt to execute, a scheme to defraud a health care
benefit program, including private health plans, or obtain, through false or fraudulent pretenses, money or property owned by, or under
the custody or control of, such a health care benefit program. Laws and regulations have also been enacted by the federal government and
various states to regulate the sales and marketing practices of pharmaceutical manufacturers. The laws and regulations generally limit
financial interactions between manufacturers and health care providers; require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government; and/or
require disclosure to the government and/or public of financial interactions (so-called “sunshine laws” and “sunshine
reporting”). State and local laws may also require disclosure of pharmaceutical pricing information and marketing expenditures or
licensure of sales representatives. Manufacturers must also submit information to the FDA on the identity and quantity of drug samples
requested and distributed by a manufacturer during each year.

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Biopharmaceutical manufacturers
are also subject to federal pricing and price reporting laws. Such laws require manufacturers to calculate and report complex pricing
metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/ or discounts on approved
products. The laws may also require biopharmaceutical manufacturers to offer products at discounted prices to specific government programs
or specific purchasers as a condition for participation in certain government health benefit programs. Federal consumer protection and
unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers.

The distribution of biological products is subject to additional requirements
and regulations, including extensive record-keeping, licensing, storage, and security requirements intended to prevent the unauthorized
sale of such products. Sanctions for the violation of healthcare laws vary by law but may be significant and compliance is challenging.
For example, violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties,
and/or exclusion from federal health care programs (including Medicare and Medicaid). The scope of the federal and the various analogous
state anti-kickback, false claims, and similar fraud and abuse laws vary, but is generally broad. Many of the fraud and abuse laws and
regulations contain ambiguous requirements or require administrative guidance for implementation. Federal and state authorities are paying
increased attention to enforcement of these laws within the pharmaceutical industry, and private individuals have been active in alleging
violations of the laws and bringing suits on behalf of the government under the FCA as evidenced by numerous significant settlements.
Violations of international fraud and abuse laws could result in similar penalties, including exclusion from participation in health programs
outside the U.S.

Data Privacy and Security

Biopharmaceutical companies
are subject to numerous and evolving U.S. federal and state laws and regulations governing the collection, use, disclosure, transfer,
and security of personal information, including health-related information, any of which may impose operational constraints, create compliance
complexity, and increase enforcement and litigation exposure. U.S. federal and state frameworks include HIPAA, as amended by the Health
Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations (including the Privacy,
Security, Breach Notification, and Enforcement Rules), state health information privacy laws, state data breach notification laws, a growing
number of state comprehensive consumer privacy laws, as well as other consumer protection laws and regulations that could apply to our
operations or the operations of our partners. Certain sector and data specific laws, including those governing marketing communications,
data security, and the sale or transfer of certain categories of sensitive data, as well as evolving state tort and other common law restrictions
that may govern privacy and data security practices may be tested by the court system and enforced by enforcement authorities, may apply
to parts of our operations as well as to the operations of our partners.

HIPAA imposes standards for the privacy of protected health information
(“PHI”), the security of electronic PHI, breach notification to individuals and regulators, and enforcement. HIPAA applies
directly to “covered entities” (health care providers, health plans, and health care clearinghouses), as well as their “business
associates” and their covered subcontractors that perform certain services that involve using, disclosing, creating, receiving,
maintaining, or transmitting individually identifiable PHI for or on behalf of such covered entities. Requirements imposed by HIPAA on
covered entities and business associates include: (i) entering into agreements that require business associates and their covered subcontracts
to protect PHI provided by the covered entity against improper use or disclosure; (ii) complying with HIPAA privacy standards that limit
the use and disclosure of information about a patient’s past, present, or future physical or mental health condition, or the patient’s
receipt of health care, where the information identifies, or could reasonably be used to identify, the individual; (iii) implementing
administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of electronic PHI and to
protect against reasonably anticipated threats, hazards, or impermissible uses or disclosure; and (iv) reporting of breaches of unsecured
PHI to affected individuals and, where applicable, regulators. Entities that violate HIPAA may face substantial civil, criminal, and administrative
penalties, additional reporting and oversight obligations, and may be required to enter into resolution agreements and corrective action
plans with the U.S. Department of Health and Human Services. Covered entities and business associates can also be held liable for violations
committed by their agents, including downstream business associates, and HITECH has increased applicable penalties and authorized state
attorneys general to bring civil action in federal court to enforce HIPAA and seek damages, injunctive relief and attorneys’ fees.

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In addition, several states
have enacted or are implementing health data specific statutes outside HIPAA that broadly regulate the collection, use, and disclosure
of “consumer health data” including certain research analytics, website, and marketing activities. These laws may impose consent,
notice, contract, and data security obligations, create limitations on sharing with third parties and processors, and provide private
rights of action or enhanced enforcement, which could affect aspects of our operations. Even when HIPAA and state health information privacy
laws do not apply, according to the FTC and state Attorneys General, violating consumers’ privacy rights or failing to take appropriate
steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation
of Section 5(a) of the Federal Trade Commission Act and state consumer protection laws.

In addition, certain state
laws, such as the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CCPA”)
and other comprehensive state privacy laws, together with their implementing regulations, establish individual rights regarding personal
information, impose notice, purpose-limitation, data minimization, and security obligations, and require specific contracts with service
providers and other third parties. Some of these laws also require honoring opt-out signals for targeted advertising or certain profiling,
restrict processing of “sensitive” personal information, and mandate assessments for higher-risk processing activities. Scope
and exemptions vary by state: for example, the CCPA applies to personal information of consumers, business representatives, and employees,
includes additional protections for “sensitive personal information”, and generally excludes PHI subject to HIPAA; other states
may exempt entities regulated by HIPAA or data processed in the context of clinical trials, or neither, which complicates compliance and
increases legal risks and costs. Other state data breach notification statutes, like the New York SHIELD Act, require notification to
affected individuals and, in some cases, regulators and consumer reporting agencies following certain security incidents.

Use of artificial intelligence (“AI”) and machine learning
technologies in research, analytics, and business operations is subject to a rapidly evolving legal and regulatory landscape. Federal
and state authorities are increasingly focused on the responsible use of AI, including requirements for transparency, accountability,
and the mitigation of algorithmic bias and discrimination. Several states have enacted or are considering laws that regulate the use of
AI in processing personal information, mandate impact assessments for high-risk AI applications, and require disclosures regarding automated
decision-making. We may be required to implement measures to assess and address potential biases in AI models, ensure explainability and
fairness, and provide individuals with rights regarding automated processing of their data. In addition, federal agencies such as the
FDA have issued guidance on the use of AI in medical device development and clinical research, which may impact our business. As regulatory
expectations continue to develop, we may need to update our policies, procedures, and technical controls to ensure compliance with AI-related
requirements. The requirements of these laws and regulations continue to develop, and new laws, amendments, or interpretive guidance may
require us to modify our practices.

Coverage and Reimbursement

In the U.S. and other countries,
patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage
and reimbursement from government healthcare programs, such as Medicare and Medicaid, and private payors are critical to new product acceptance.
Our ability to successfully commercialize our product candidates, if and when approved, will depend in part on the extent to which coverage
and adequate reimbursement for these products and related treatments will be available from government healthcare programs, private health
insurers, and other organizations.

Within the U.S., no uniform policy for coverage and reimbursement exists
and coverage and reimbursement for drugs products can differ significantly from payor to payor, and a third party payor’s decision
to cover a particular drug product does not ensure that other payors will also provide coverage for that drug product. Factors payors
may consider in determining coverage include whether the product is:

Third-party payors are increasingly challenging the prices charged
for pharmaceutical or biological products and related services, examining the medical necessity and reviewing the cost effectiveness of
such products and services. For products administered under the supervision of a physician, inadequate reimbursement for the product itself
or the treatment or procedure in which the product is used may adversely impact physician utilization. Adoption of price controls and
cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further
limit sales of any product that receives approval. Decreases in third-party reimbursement for any product or a decision by a third-party
not to cover a product could reduce physician usage and patient demand for the product.

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Finally, in some foreign countries, the proposed pricing for a drug
must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For
example, drug pricing in the European Union (“EU”) is primarily at the national level, with each member state setting its
own prices and reimbursement rules. To obtain reimbursement or pricing approval, countries may require the completion of clinical trials
to establish relative clinical effectiveness to guide cost effectiveness assessment of anew treatment method to currently available therapies.
A member state may approve a specific price for the medicinal product or implement a system of direct or indirect controls on the profitability
of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement
limitations for pharmaceutical products will grant favorable reimbursement and pricing arrangements for any of our product candidates.
Historically, products launched in the EU do not follow price structures of the United States and generally prices tend to be significantly
lower.

Healthcare Reform

The United States and some
foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system. There is significant
interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding
access.

The ACA, which was enacted
in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and
significantly affected the pharmaceutical industry. The ACA contains a number of provisions of particular import to the pharmaceutical
and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology
by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled,
implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Since
its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and we expect there will be additional
challenges and amendments to the ACA in the future.

In the U.S., in recent years,
the pharmaceutical industry has been a particular focus of healthcare reform efforts and has been significantly affected by major legislative,
administrative and executive initiatives. For example, the Inflation Reduction Act of 2022 (IRA) included a number of changes intended
to address rising prescription drug prices in Medicare Parts B and D. These changes included caps on Medicare Part D out-of-pocket costs,
Medicare Part B and Part D drug price inflation rebates, a new Medicare Part D manufacturer discount drug program (replacing the previous
coverage gap discount program) and a drug price negotiation program for certain high-spend Medicare Part B and D drugs. The IRA has had
and will likely continue to have a significant impact on the pharmaceutical industry. Beyond the IRA, changes to Medicaid effective in
2024 eliminated the Medicaid rebate cap. Additionally, changes to certain Medicare price reporting requirements for drugs beginning in
2026 will likely increase the administrative and compliance burden for manufacturers.

Recently, drug pricing and
payment has been subject to a number of reform initiatives. For example, President Trump issued an Executive Order in April 2025 with
multiple directives aimed at lowering drug prices, including refining the Medicare drug price negotiation program established by the IRA;
accelerating competition for high-cost prescription drugs by accelerating approval of generics and biosimilars and facilitating the process
for re-classifying prescription drugs as over-the-counter drugs; and increasing drug importation. In May 2025, President Trump issued
another Executive Order that directed government agencies and officials to identify most-favored nation pricing targets for prescription
drugs (and looked to pharmaceutical manufacturers to make significant progress towards delivering target prices to patients); prevent
foreign countries from disproportionately shifting the cost of global pharmaceutical research and development to the United States; and
facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers to sell their products to patients at the most-favored-nation
price. In the wake of the Executive Orders and related executive initiatives, a number of pharmaceutical manufacturers have announced
direct-to-consumer offerings with discounted prices and/or reached agreement with the federal government regarding pricing for drugs,
including prices for Medicaid drugs and newly launched products. A website sponsored by the federal government that is anticipated to
offer pharmaceutical direct-to-consumer channels has also been announced. Federal agencies are developing new drug pricing pilot programs,
such as a voluntary Medicaid initiative which would authorize the federal government to negotiate Medicaid supplemental rebates with participating
manufacturers on behalf of state Medicaid programs, in exchange for standardized coverage criteria for participating manufacturer drugs,
and the proposed Medicare Part B and Part D pilot models that, if finalized as proposed, would replace existing inflation-based Medicare
rebates with rebates determined on the basis of international prices, for drugs and patients subject to the model. Many of these reform
initiatives would require additional legal and/or administrative action to implement and may be subject to legal challenge.

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At the state level, individual
states are increasingly implementing initiatives designed to control pharmaceutical and biological product pricing, including price or
patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures,
and measures to encourage importation from other countries and bulk purchasing. For example, certain states have formed Prescription Drug
Affordability Boards that assert authority to set reimbursement rates and/or drug pricing in the state. States are also increasingly expanding
or changing Medicaid supplemental rebate programs to secure additional rebates from manufacturers in exchange for drug coverage and to
limit coverage of certain drugs for certain Medicaid patients or to all Medicaid patients. These and other future state-level reform activities
could negatively affect Medicaid coverage and reimbursement for our products.

Other recent government actions also may affect prices or payments
for prescription drugs. For example, the Trump Administration’s recently announced tariff on branded or patented drugs may adversely
impact our ability to realize an adequate return on the sale of drug products (if approved) that are imported from abroad or manufactured
using products or materials imported from abroad. The timeline for implementation of this tariff has not yet been finalized. As another
example, the Budget Control Act of 2011, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments
to providers in 2013 and will remain in effect into 2032 unless additional Congressional action is taken. Any significant spending reductions
affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes
or fees that may be imposed on us could have an adverse impact on our results of operations.

Moreover, there has recently been heightened governmental scrutiny
over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and
proposed and enacted federal and state measures designed to, among other things, reduce the cost of prescription drugs, bring more transparency
to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement
methodologies for drug products. For example, in May 2019, CMS adopted a final rule allowing Medicare Advantage Plans the option to use
step therapy for Part B drugs, permitting Medicare Part D plans to apply certain utilization controls to new starts of five of the six
protected class drugs, and requiring the Explanation of Benefits for Part D beneficiaries to disclose drug price increases and lower cost
therapeutic alternatives, which went into effect on January 1, 2021.

Other Government Regulation Outside of the
United States

In addition to regulations
in the United States, we are subject to a variety of regulations in other jurisdictions governing, among other things, research and development,
clinical trials, testing, manufacturing, safety, efficacy, quality control, labeling, packaging, storage, record keeping, distribution,
reporting, export and import, advertising, marketing and other promotional practices involving biological products as well as authorization,
approval as well as post-approval monitoring and reporting of our products. Because biologically sourced raw materials are subject to
unique contamination risks, their use may be restricted in some countries.

Whether or not we obtain
FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement
of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process
that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

The requirements and process governing the conduct of clinical trials,
including requirements to conduct additional clinical trials, product licensing, safety reporting, post-authorization requirements, marketing
and promotion, interactions with healthcare professionals, pricing and reimbursement may vary widely from country to country. No action
can be taken to market any product in a country until an appropriate marketing approval has been granted by the regulatory authorities
in that country. The current approval process varies from country to country, and the time spent in gaining approval may vary from that
required for FDA approval. In certain countries, the sales price of a product must also be agreed or approved by payors or the respective
national health system before commercial launch. The pricing review period often begins after marketing approval. Although a product may
receive marketing approval from a regulatory authority, the price agreed upon during the review process may not be commercially sustainable
to justify a commercial launch in those countries.

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Regulation in the European Union

European Data and Security Laws

The collection and use of
personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation
(EU) 2016/679 (“GDPR”), which came into force in May 2018, and related data protection laws in individual EU Member States.
The GDPR imposes a number of strict obligations and restrictions on the ability to process, including collecting, analyzing and transferring,
personal data of individuals, in particular with respect to health data from clinical trials and adverse event reporting. The GDPR includes
requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the
information provided to the individuals prior to processing their personal data, the personal data breaches which may have to be notified
to the national data protection authorities and data subjects, the measures to be taken when engaging processors, and the security and
confidentiality of the personal data. EU Member States may also impose additional requirements in relation to health, genetic and biometric
data through their national legislation.

In addition, the GDPR imposes specific restrictions on the transfer
of personal data to countries outside of the European Economic Area (“EEA”) that are not considered by the European Commission
(“EC”) to provide an adequate level of data protection. Appropriate safeguards are required to enable such transfers. Among
the appropriate safeguards that can be used, the data exporter may use the standard contractual clauses (“SCCs”). When relying
on SCCs, data exporters are also required to conduct a transfer risk assessment to verify if anything in the law and/or practices of the
third country may impinge on the effectiveness of the SCCs in the context of the transfer at stake and, if so, to identify and adopt supplementary
measures that are necessary to bring the level of protection of the data transferred to the EU standard of essential equivalence. Where
no supplementary measure is suitable, the data exporter should avoid, suspend or terminate the transfer. With regard to the transfer of
data from the EEA to the United States, on July 10, 2023, the EC adopted its adequacy decision for the EU-US Data Privacy Framework. On
the basis of the new adequacy decision, personal data can flow from the EEA to U.S. companies participating in the framework. With regard
to the transfer of data from the EU to the United Kingdom (“UK”), personal data may freely flow from the EEA to the UK since
the EC deemed the UK to have an adequate data protection level, and these adequacy decisions were extended in December 2025, and are now
valid until December 27, 2031.

Failure to comply with the
requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines
for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater, other
administrative penalties and a number of criminal offenses for organizations and, in certain cases, their directors and officers, as well
as civil liability claims from individuals whose personal data was processed. Data protection authorities from the different EU Member
States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce additional
national regulations and guidelines, which adds to the complexity of processing personal data in the EU.

Furthermore, there are specific requirements relating to processing
health data from clinical trials, including those related to public disclosure obligations provided in the EU Clinical Trials Regulation
No. 536/2014 (“CTR”), European Medicines Agency (“EMA”), data transparency initiatives and voluntary commitments
by industry. Failure to comply with these obligations could lead to government enforcement actions and significant penalties against us,
harm to our reputation, and adversely impact our business and operating results.

Additionally, following the UK’s withdrawal from the EU and the
EEA, companies also have to comply with the UK’s data protection laws (including the UK GDPR (as defined in section 3(10) (as supplemented
by section 205(4)) of the Data Protection Act 2018 (the “DPA 2018”)), the DPA 2018, and related data protection laws in the
UK). In June 2025, the UK’s Data (Use and Access) Act took effect, which introduces certain relatively minor amendments to the data
protection regime in the UK, and therefore creates slight divergences between the EU and UK Data protection regimes. Separate from the
fines that can be imposed by the GDPR, the UK regime has the ability to fine up to the greater of £17.5 million or 4% of global
turnover.

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Companies are subject to specific transfer data sharing and transfer
rules under the UK regime which broadly mirror the GDPR rules. We therefore also apply or rely on third parties to implement data sharing
and cross-border transfer mechanisms and safeguards, as set out above, in these contexts. On February 2, 2022, the UK Secretary of State
laid before the UK Parliament the international data transfer agreement (“IDTA”) and the international data transfer addendum
to the EC’s standard contractual clauses for international data transfers (Addendum) and a document setting out transitional provisions.
The IDTA and Addendum came into force on March 21, 2022 and replaced the old SCCs for the purposes of the UK regime.

Regarding transfers from
the UK to the EEA, personal data may flow freely since the EEA is deemed to have an adequate data protection level for purposes of the
UK regime. With regard to the transfer of personal data from the UK to the United States, the UK government has adopted an adequacy decision
for the United States, the UK-US Data Bridge, which came into force on October 12, 2023. The UK-US Data Bridge recognizes the United States
as offering an adequate level of data protection where the transfer is to a U.S. company participating in the EU-US Data Privacy Framework
and the UK Extension.

The EU has also recently implemented a number of cybersecurity laws,
some of which are applicable to the healthcare industry. For example, the Network and Information Security Directive (Directive (EU) 2022/2555)
applies to organizations operating in the EU in the healthcare sector and imposes stringent cybersecurity obligations on in-scope organizations,
including in relation to supply chain management and incident reporting.

Drug and Biologic Development Process

Regardless of where they
are conducted, all clinical trials included in applications for marketing authorization (“MA”) for human medicines in the
EU/EEA must have been carried out in accordance with EU regulations. This means that clinical trials conducted in the EU/EEA have to comply
with EU clinical trial legislation but also that clinical trials conducted outside the EU/EEA have to comply with ethical principles equivalent
to those set out in the EEA, including adhering to international good clinical practice and the Declaration of Helsinki. The conduct of
clinical trials in the EU is governed by the CTR, which entered into force on January 31, 2022. The CTR replaced the Clinical Trials Directive
2001/20/EC (“Clinical Trials Directive”) and introduced a complete overhaul of the existing regulation of clinical trials
for medicinal products in the EU.

The EU Clinical Trials Regulation,
which replaced the Clinical Trials Directive and has been in force since 2022, aims to harmonize and streamline clinical trial processes
across Member States through a centralized application system, the Clinical Trials Information System (CTIS), enabling sponsors to submit
a single application for approval. One national regulatory authority, designated as the reporting Member State, leads the validation and
evaluation of applications in consultation with other concerned Member States. Applications may be amended and resubmitted if rejected,
and approved trials may commence in all relevant Member States, although individual states retain the right to “opt out” in
limited circumstances. The Regulation also simplifies safety reporting rules, introduces enhanced transparency requirements such as mandatory
submission of trial results summaries to the EU Database. Since January 31, 2023, all initial clinical trial applications must be submitted
through CTIS which now serves as the single entry point for clinical trial-related information and data. By January 31, 2025, all ongoing
trials approved under the former Clinical Trials Directive must transition to CTIS and comply with the CTR. On July 19, 2023, the EC published
guidance for this transition, clarifying that previously assessed documentation will not be reassessed, EU-endorsed templates do not require
updates, and site suitability forms are only needed for new trial sites.

Under the CTR, clinical trials must comply with national laws, regulations,
and the applicable GCP and GLP standards, and the International Council for Harmonization of Technical Requirements for Pharmaceuticals
for Human Use (“ICH”) guidelines on Good Clinical Practice, as well as the ethical principles outlined in the Declaration of
Helsinki.

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During the development of a medicinal product, the EMA and national
regulators within the EU provide the opportunity for dialogue and guidance on the development program. At the EMA level, this is usually
done in the form of scientific advice, which is given by the Committee for Medicinal Products for Human Use (“CHMP”) on the
recommendation of the Scientific Advice Working Party. A fee is incurred with each scientific advice procedure, but is significantly reduced
for designated orphan medicines. Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry,
manufacturing and controls testing), nonclinical testing and clinical studies, and pharmacovigilance plans and risk-management programs.
Advice is not legally binding with regard to any future Marketing Authorization Application (“MAA”) of the product concerned.

Drug Marketing Authorization

In the EEA, after completion of all required clinical testing, pharmaceutical
products may only be placed on the market after obtaining an MA. To obtain an MA of a drug under EU regulatory systems, an applicant can
submit an MAA through, amongst others, a centralized or decentralized procedure, as detailed below.

Centralized Authorization Procedure

The centralized procedure provides for the grant of a single MA that
is issued by the EC following the scientific assessment of the application by the EMA that is valid for all EU Member States as well as
in the three additional EEA Member States (Norway, Iceland and Liechtenstein). The centralized procedure is compulsory for specific medicinal
products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products,
advanced therapy medicinal products (gene therapy, somatic cell therapy or tissue engineered medicines) and medicinal products with a
new active substance indicated for the treatment of certain diseases (HIV/AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune
and viral diseases). For medicinal products containing a new active substance for indications that do not fall within the mandatory centralized
procedure, they are eligible for centralized assessment if they constitute significant therapeutic, scientific or technical innovations
or for which the grant of a MA through the centralized procedure would be in the interest of public health at EU level.

Under the centralized procedure,
the Committee for Medicinal Products for Human Use (“CHMP”) established at the EMA is responsible for the initial assessment
of an MAA. The CHMP also oversees the scientific assessment of various post-authorization and maintenance activities, including the assessment
of variations or extensions to an existing MA. The standard timeframe for the evaluation of an MAA by the EMA’s CHMP is 210 days
from receipt of a valid MAA, excluding clock stops for the applicant to provide additional written or oral information in response to
questions asked by the CHMP. As a result, the overall process typically takes a year or more, unless the application is eligible for an
accelerated assessment. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected
to be of a major public health interest, particularly from the point of view of therapeutic innovation. Upon request, the CHMP may reduce
the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment. The CHMP will provide a positive
opinion regarding the application only if it meets the required standards for quality, safety and efficacy. This opinion is then transmitted
to the EC, which has the ultimate authority for granting MA.

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Decentralized Authorization Procedure

The decentralized procedure permits companies to file identical MAAs
for a medicinal product not falling within the mandatory centralized procedure to the competent authorities in various EU Member States
simultaneously if such medicinal product has not received marketing approval in any EU Member State. In this procedure, the reference
member state is appointed to lead the scientific review for the agreement with the competent authorities of the other EU Member States
concerned by the procedure. A member state may refuse to accept the assessment provided by the reference member state on grounds of a
potential serious risk to public health that is defined as a situation where there is a significant probability that a serious hazard
resulting from a human medicinal product in the context of its proposed use will affect public health.

Risk Management Plan

All new MAAs must include a Risk Management Plan (“RMP”)
describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated
with the product. RMPs are continually modified and updated throughout the lifetime of the medicine as new information becomes available.
An updated RMP must be submitted: (i) at the request of EMA or a national competent authority, or (ii) whenever the risk-management system
is modified, especially as the result of new information being received that may lead to a significant change to the benefit-risk profile
or as a result of an important pharmacovigilance or risk-minimization milestone being reached. The regulatory authorities may also impose
specific obligations as a condition of the MA. All RMPs for centrally authorized products are published by the EMA, subject only to limited
redactions.

MA Validity Period

MAs have an initial duration
of five years. After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit
balance. Once renewed, the MA is valid for an unlimited period unless the EC or the national competent authority decides, on justified
grounds relating to pharmacovigilance, to proceed with only one additional five-year renewal. Applications for renewal must be made to
the EMA at least nine months before the five-year period expires.

Any authorization which is
not followed by the actual placing of the drug on the EU market (in case of centralized procedure) or on the market of the authorizing
member state within three years after authorization ceases to be valid.

The UK applies a rule, consistent
with directly applicable EU law, requiring that nationally approved medicinal products must be placed on the market within three years
from the date the marketing authorization is granted. When the Medicines and Healthcare products Regulatory Agency (MHRA) becomes aware
that the three-year period is approaching expiry, it will notify the marketing authorization holder in advance that the authorization
will cease to be valid if the product is not marketed within the required timeframe. The MHRA provides notification to the marketing authorization
holder in both scenarios referenced previously: first, where a product has held a marketing authorization for three years but has not
been placed on the market at all; and second, where a product was previously marketed but has subsequently not been placed on the market
for a consecutive period of three years. This process ensures compliance with regulatory requirements and maintains the integrity of the
national medicines supply.

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Following the UK’s exit from the EU, the three-year “sunset clause”
for centrally authorized products in the UK was effectively reset from the date of conversion (January 1, 2021). This means that any product
not placed on the market in Great Britain by early 2024 risked losing its validity unless the appropriate notification was made. The Medicines
and Healthcare products Regulatory Agency (MHRA) is responsible for managing this process for UK marketing authorizations (PLGB MAs),
requiring marketing authorization holders to provide updates on the marketing status of their products. The Windsor Framework agreement
establishes that, effective from January 1, 2025, the Medicines and Healthcare products Regulatory Agency (MHRA) will serve as the sole
regulatory authority for approving medicines for the entire UK market, encompassing both Northern Ireland and Great Britain. Under the
new arrangements, a unified UK-wide authorization process will apply, ensuring that medicines in Northern Ireland are regulated by the
MHRA in the same manner as in Great Britain.

On the other hand, for the
EU, in the case the drug has been marketed in the UK, the placing on the UK market before the end of the period starting when the UK left
the EU on January 31, 2020 and ending on December 31, 2020 (the “Brexit Transition Period”) will be taken into account. If,
after the end of the Brexit Transition Period, the drug is not placed on any other market of the remaining EU Member States, the three-year
period will start running from the last date the drug was placed on the UK market before the end of the Brexit Transition Period.

Advanced Therapy Medicinal Products

In the EU, medicinal products, including ATMPs are subject to extensive
pre- and post-market regulation by regulatory authorities at both the EU and national levels. ATMPs comprise gene therapy products, somatic
cell therapy products and tissue engineered products, which are genes, cells or tissues that have undergone substantial manipulation and
that are administered to human beings in order to cure, diagnose or prevent diseases or regenerate, repair or replace a human tissue.
Pursuant to Regulation (EC) No 1394/2007, the Committee for Advanced Therapies (“CAT”) is responsible in conjunction with
the CHMP for the evaluation of ATMPs. The CHMP and CAT are also responsible for providing guidelines on ATMPs. These guidelines provide
additional guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include, among
other things, the preclinical studies required to characterize ATMPs. Although such guidelines are not legally binding, compliance with
them is often necessary to gain and maintain approval for product candidates.

In addition to the mandatory
RMP, the holder of a MA for an ATMP must put in place and maintain a system to ensure that each individual product and its starting and
raw materials, including all substances coming into contact with the cells or tissues it may contain, can be traced through the sourcing,
manufacturing, packaging, storage, transport and delivery to the relevant healthcare institution where the product is used.

Exceptional Circumstances and Conditional Approval

Similar to accelerated approval
regulations in the United States, conditional MAs can be granted in the EU in exceptional circumstances. A conditional MA can be granted
for medicinal products where, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have
not been supplied, a number of criteria are fulfilled: (i) the benefit/risk balance of the product is positive, (ii) it is likely that
the applicant will be in a position to provide the comprehensive clinical data, (iii) unmet medical needs will be fulfilled by the grant
of the MA and (iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs
the risk inherent in the fact that additional data are still required. Once a conditional MA has been granted, the MA holder must fulfil
specific obligations within defined timelines. A conditional MA is valid for one year and must be renewed annually, but it can be converted
into a standard MA once the MA holder fulfils the obligations imposed and the complete data confirm that the medicine’s benefits
continue to outweigh its risks.

Data and Market Exclusivity

Under EU pharmaceutical law, reference medicinal products are granted
8 years of data exclusivity, during which generic and biosimilar manufacturers cannot rely on the originator’s non-clinical and
clinical data for regulatory approval. This is followed by 2 years of marketing exclusivity, preventing generics and biosimilars from
entering the market for a total of 10 years. If, within the first 8 years, the reference product is approved for a new indication that
provides significant clinical benefit, the exclusivity period may be extended to 11 years. These rules ensure that generics and biosimilars
cannot seek approval or enter the market until the exclusivity periods have expired, balancing incentives for innovation with future market
competition.

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A reference medicinal product
for data and marketing exclusivity typically contains a new active substance and requires a full dossier, including pharmaceutical, non-clinical,
and clinical trial data, for approval. The European Medicines Agency (EMA), based on the scientific assessment and opinion of its Committee
for Medicinal Products for Human Use (CHMP), determines whether a product contains a new active substance. Data and marketing exclusivity
do not prevent other companies from generating their own data through independent development to demonstrate the safety, quality, and
efficacy of their own products.

Recent reforms introduced
through the EU Pharma Package and the proposed Biotech Act bring significant changes, including streamlined authorization procedures,
enhanced measures for access and affordability, stricter management of medicine shortages, strengthened post-market surveillance, and
new requirements addressing environmental and ethical considerations. These initiatives are designed to modernize and harmonize medicines
regulation, facilitate patient access to innovative therapies, and provide robust oversight of emerging technologies across the EU.

The legislative process for the EU Pharma Package began with the European
Commission’s proposal in April 2023, followed by the development of positions by the European Parliament and the Council. This culminated
in Trilogue negotiations, with a political agreement reached in December 2025. The agreed text now awaits formal adoption by both the
Parliament and Council, after which it will be published in the Official Journal of the EU. The new Directive and Regulation will then
enter into force following a transition period of 18 to 36 months, ultimately modernizing EU pharmaceutical law to better support innovation,
access, and supply. Under the agreed EU Pharma Package, companies launching new medicines will benefit from eight years of data protection
and one year of market exclusivity, with a possible additional year for innovative products meeting specific criteria.

Pediatric Development

In the EU, companies developing
a new medicinal product are obligated to study their product in children and must therefore submit a PIP together with a request for agreement
to the EMA. The EMA issues a decision on the PIP based on an opinion of the EMA’s Pediatric Committee. Companies must conduct pediatric
clinical trials in accordance with the PIP approved by the EMA, unless a deferral (e.g. until enough information to demonstrate its effectiveness
and safety in adults is available) or waiver (e.g. because the relevant disease or condition occurs only in adults) has been granted by
the EMA. The MAA for the medicinal product must include the results of all pediatric clinical trials performed and details of all information
collected in compliance with the approved PIP, unless a waiver or a deferral has been granted, in which case the pediatric clinical trials
may be completed at a later date. Medicinal products that are granted an MA on the basis of the pediatric clinical trials conducted in
accordance with the approved PIP are eligible for a six-month extension of the protection under a supplementary protection certificate
(if any is in effect at the time of approval), or, in the case of orphan medicinal products, a two-year extension of the orphan market
exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the
approved PIP are developed and submitted. An approved PIP is also required when a MA holder wants to add a new indication, medicinal form
or route of administration for a medicine that is already authorized and covered by intellectual property rights.

In the UK, the MHRA has established a closely aligned process, frequently
accepting agreed EU PIPs and decisions to streamline UK submissions. However, the MHRA maintains UK-specific requirements, such as the
need for a UK PIP for new medicines.

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Post-Approval Regulation

Similar to the United States,
both MA holders and manufacturers of medicinal products in the EU are subject to comprehensive regulatory oversight by the EMA, the EC
and/or the competent regulatory authorities of the EU Member States. The regulatory oversight covers every stage of the authorization
process, from initial grant of an approval to ongoing monitoring of compliance with EU cGMPs, manufacturing authorizations, pharmacovigilance
rules and requirements governing advertising, promotion, sale, and distribution, recordkeeping, importing, and exporting of medicinal
products.

These regulatory requirements
are designed to ensure that the safety, quality, and efficacy standards of medicinal products are consistently maintained throughout their
lifecycle. Failure by us or by any of our third-party partners, including suppliers, manufacturers and distributors to comply with EU
laws and the related national laws of individual EU Member States governing the conduct of clinical trials, manufacturing approval, MA
of medicinal products and marketing of such products, both before and after grant of MA, statutory health insurance, bribery and anti-corruption
or other applicable regulatory requirements may result in administrative, civil or criminal sanctions. These include delays or refusal
to authorize the conduct of clinical trials or to grant MA, product withdrawals and recalls, product seizures, withdrawal or suspension
of authorizations, restrictions on regulated activities such as production, distribution, manufacturing or clinical trials, operating
restrictions, and financial penalties.

The holder of an MA for a
medicinal product must also comply with EU pharmacovigilance legislation and its related regulations and guidelines, which entail many
requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of medicinal products.

These pharmacovigilance rules
require holders of MAs the obligation to develop a system capable of collecting, collating, assessing, and reporting post-authorization
data to monitor the ongoing risks and benefits of marketed medicinal products, as well as the requirement to conduct additional clinical
studies or post-authorization safety or efficacy studies to address uncertainties about the risk-benefit balance, or to measure the effectiveness
of risk-management measures. Such post-authorization measures may be time-consuming and expensive and could impact our profitability.
MA holders must establish and maintain a pharmacovigilance system designed to monitor the safety of authorized medicinal products and
detect any change to their risk-benefit balance and appoint an individual qualified person for pharmacovigilance, who is responsible for
the oversight of that system. Key obligations include expedited reporting of unexpected serious adverse reactions and submission of Periodic
Safety Update Reports (“PSURs”) in relation to medicinal products for which they hold MAs. The EMA reviews PSURs for medicinal
products authorized through the centralized procedure. If the EMA, based on the scientific assessment conducted by its advisory committees,
determines that the risk-benefit profile of a product has changed, it may issue an opinion recommending suspension, withdrawal, or variation
of the existing MA. The scientific opinion must be ratified by the EC in a legally binding decision. If the MA holder fails to meet the
obligations set out in the EC’s decision, the validity of the MA may be compromised. For centrally authorized products, non-compliance
with pharmacovigilance requirements can result in regulatory sanctions, including financial penalties imposed by the EC.

More generally, non-compliance with pharmacovigilance obligations can
lead to the variation, suspension or withdrawal of the MA for the product or imposition of financial penalties or other enforcement measures.

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The manufacturing process for pharmaceutical products in the EU is
highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations. Manufacturing
requires a manufacturing authorization, and the manufacturing authorization holder must comply with various requirements set out in the
applicable EU laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC (repealed by Directive 2017/1572 on
January 31, 2022), Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice (“GMP”).
These requirements include compliance with EU cGMP standards when manufacturing pharmaceutical products and active pharmaceutical ingredients,
including the manufacture of active pharmaceutical ingredients outside of the EU with the intention to import the active pharmaceutical
ingredients into the EU. Amendments or replacements of at least Directive 2001/83/EC and Regulation (EC) No 726/2004 are part of the reform
proposal for European pharmaceutical legislation. Similarly, the distribution of pharmaceutical products into and within the EU is subject
to compliance with the applicable EU laws, regulations and guidelines, including the requirement to hold appropriate authorizations for
distribution granted by the competent authorities of the EU Member States. The manufacturer or importer must have a qualified person who
is responsible for certifying that each batch of product has been manufactured in accordance with GMP and the terms of a marketing authorization
or clinical trial authorization, before releasing the product for commercial distribution in the EU or for use in a clinical trial. Manufacturing
facilities are subject to periodic inspections by the competent authorities for compliance with GMP.

Advertising and Promotion Regulations

The advertising and promotion
of our products is also subject to EU laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative
advertising and unfair commercial practices. In addition, other national legislation of individual EU Member States may apply to the advertising
and promotion of medicinal products and may differ from one country to another. These laws require that promotional materials and advertising
in relation to medicinal products comply with the product’s SmPC as approved by the competent regulatory authorities. The SmPC is
the document that provides information to physicians concerning the safe and effective use of the medicinal product. It forms an intrinsic
and integral part of the MA granted for the medicinal product. Promotion of a medicinal product that does not comply with the SmPC is
considered to constitute off-label promotion. All advertising and promotional activities for the product must be consistent with the approved
SmPC and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription-only medicines is also prohibited
in the EU. Violations of the rules governing the promotion of medicinal products in the EU could be penalized by administrative measures,
fines and imprisonment. These laws may further limit or restrict the advertising and promotion of our products to the general public and
may also impose limitations on its promotional activities with healthcare professionals.

EU regulation with regards
to dispensing, sale and purchase of medicines has generally been preserved in the UK following Brexit, through the Human Medicines Regulations
2012. However, organizations wishing to sell medicines online need to register with the MHRA. Following Brexit, the requirements to display
the common logo no longer apply to UK-based online sellers, except for those established in Northern Ireland.

Anti-Corruption Legislation

In the EU, interactions between
pharmaceutical companies and physicians are also governed by strict laws, regulations, industry self-regulation codes of conduct and physicians’
codes of professional conduct both at EU level and in the individual EU Member States. The provision of benefits or advantages to physicians
to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is prohibited
in the EU. The provision of benefits or advantages to physicians is also governed by the national anti-bribery laws of the EU Member States.
Violation of these laws could result in substantial fines and imprisonment.

Payments made to physicians
in certain EU Member States also must be publicly disclosed. Moreover, agreements with physicians must often be the subject of prior notification
and approval by the physician’s employer, his/her regulatory professional organization, and/or the competent authorities of the
individual EU Member States. These requirements are provided in the national laws, industry codes, or professional codes of conduct, applicable
in the individual EU Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative
penalties, fines or imprisonment.

In the UK, the pharmaceutical
sector is recognized as being particularly vulnerable to corrupt practices, some of which fall within the scope of the Bribery Act 2010.
Due to the Bribery Act 2010’s far-reaching territorial application, the potential penalized act does not have to occur in the UK
to become within its scope. If the act or omission does not take place in the UK, but the person’s act or omission would constitute
an offense if carried out there and the person has a close connection with the UK, an offense will still have been committed.

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The Bribery Act 2010 is comprised
of four offenses that cover (i) individuals, companies and partnerships that give, promise or offer bribes, (ii) individuals, companies
and partnerships that request, agree to receive or accept bribes, (iii) individuals, companies and partnerships that bribe foreign public
officials, and (iv) companies and partnerships that fail to prevent persons acting on their behalf from paying bribes. The penalties imposed
under the Bribery Act 2010 depend on the offence committed, harm and culpability and penalties range from unlimited fines to imprisonment
for a maximum term of ten years and in some cases both.

Regulations in the UK and Other Markets

The UK formally left the
EU on January 31, 2020 and EU laws now only apply to the UK in respect of Northern Ireland as laid out in the Protocol on Ireland and
Northern Ireland and as amended by the Windsor Framework sets out a long-term set of arrangements for the supply of medicines into Northern
Ireland. The EU and the UK agreed on a trade and cooperation agreement (“TCA”), which includes provisions affecting the life
sciences sector (including on customs and tariffs). There are some specific provisions concerning pharmaceuticals, including the mutual
recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP issued documents. The TCA does not, however,
contain wholesale mutual recognition of UK and EU pharmaceutical regulations and product standards.

The UK government has adopted
the Medicines and Medical Devices Act 2021 (the “MMDA”) to enable the UK’s regulatory frameworks to be updated following
the UK’s departure from the EU. The MMDA introduces regulation-making, delegated powers covering the fields of human medicines,
clinical trials of human medicines, veterinary medicines and medical devices. The MHRA has since been consulting on future regulations
for medicines and medical devices in the UK.

For other countries outside of the EU, such as countries in Eastern
Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement
vary from country to country. In all cases, again, the clinical trials must be conducted in accordance with GCPs and the applicable regulatory
requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we fail to comply with
applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials, suspension
or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Corporate Information

We were formed as a Delaware
corporation in 1992 under the name “Nuvelo, Inc.” and subsequently, in 2009, we completed a business combination with ARCA
biopharma, Inc. On August 29, 2024, we completed the Merger with Pre-Merger Oruka and changed our name from “ARCA biopharma, Inc.”
to “Oruka Therapeutics, Inc.” Our corporate headquarters are located at 855 Oak Grove Avenue, Suite 100, Menlo Park, California
94025. The telephone number at our corporate headquarters is (650) 606-7910. Our corporate website address is www.orukatx.com.
We do not incorporate information contained on, or accessible through, our website into this Annual Report on Form 10-K, and you should
not consider it part of this Annual Report.

Employees and Human Capital Resources

As of December 31, 2025
we had 68 full-time employees of which 51 employees were in research and development and the remaining 17 employees worked in
finance, legal, business development, human resources, and administrative support. All our full-time employees are located in the
United States. We also engage temporary employees and consultants to augment our existing workforce. None of our employees are
represented by a labor union or covered under a collective bargaining agreement. We consider our relationship with our employees to
be good.

We recognize that attracting,
motivating, and retaining talent at all levels is vital to continuing our success. We invest in our employees through high-quality benefits,
professional development opportunities, and various health and wellness initiatives and offer competitive compensation packages (base
salary and incentive plans), ensuring fairness in internal compensation practices. The principal purposes of our incentive plans (bonus
and equity) are to align with the long-term interests of our stakeholders and stockholders.