ARCA biopharma, Inc. (Nasdaq: ABIO), (the “Company”) a
biopharmaceutical company applying a precision medicine approach to
developing genetically targeted therapies for cardiovascular
diseases, today reported second quarter 2024 financial results and
provided a corporate update.
In April 2022, ARCA established a Special
Committee of the board of directors (the “Board”) of ARCA to
conduct a comprehensive review of strategic alternatives. As part
of the strategic review process, the Company explored potential
strategic alternatives that included, without limitation, an
acquisition, merger, business combination or other transactions.
The Company has and is continuing to explore strategic alternatives
related to its product candidates and related assets, including,
without limitation, licensing transactions and asset sales.
On April 3, 2024, following a comprehensive
review of strategic alternatives, the Company, Atlas Merger Sub
Corp., a Delaware corporation and a wholly-owned subsidiary of ARCA
(“Merger Sub I”), Atlas Merger Sub II LLC, a Delaware limited
liability company and a wholly-owned subsidiary of ARCA (“Merger
Sub II”) and Oruka Therapeutics, Inc., a Delaware corporation
(“Oruka”), entered into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”), pursuant to which, among
other matters, and subject to the satisfaction or waiver of the
conditions set forth in the Merger Agreement, Merger Sub I will
merge with and into Oruka, with Oruka continuing as a wholly owned
subsidiary of ARCA and the surviving corporation of such merger
(the “First Merger”) and as part of the same overall transaction,
the surviving corporation in the First Merger will merge with and
into Merger Sub II with Merger Sub II continuing as a wholly owned
subsidiary of ARCA and the surviving entity of such merger (the
“Second Merger” and together with the First Merger, the “Merger”).
The Merger is intended to qualify for federal income tax purposes
as a tax-free reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended.
Additional descriptions about the Merger
Agreement and related agreements were previously disclosed on a
Current Report on Form 8-K filed with the U.S. Securities and
Exchange Commission (the “SEC”) on April 3, 2024. In connection
with the proposed Merger, the Company has filed relevant materials
with the SEC, including a registration statement on Form S-4 that
contains a definitive proxy statement and prospectus of the
Company.
In connection with the Merger, the Company will
dispose of (or is in the process of disposing of) its legacy
technology and intellectual property, including those related to
Gencaro™ (bucindolol hydrochloride) and Recombinant Nematode
Anticoagulant Protein c2 (“rNAPc2”). Any such disposal of legacy
technology and intellectual property will be contingent upon
obtaining stockholder approval for the Merger and is expected to
occur immediately prior to or concurrently with the closing of the
Merger. In the event that the Company shall enter into an agreement
for any such sale or other disposition of its legacy assets at or
prior to the closing of the Merger, the net proceeds received at or
prior to the closing of the Merger will be included in the
calculation of the net cash of the Company as of the closing.
The Company’s future operations are highly
dependent on the success of the Merger and there can be no
assurances that the Merger will be successfully consummated. In the
event that the Company does not complete the Merger, the Company
may explore strategic alternatives, including, without limitation,
another strategic transaction and/or pursue a dissolution and
liquidation of the Company.
Second Quarter 2024 Summary Financial
Results
Cash and cash equivalents were
$33.3 million as of June 30, 2024, compared to $37.4 million as of
December 31, 2023. ARCA believes that its current cash and cash
equivalents, consisting primarily of money market funds, will be
sufficient to fund its operations through the end of 2025. Our
future viability beyond that point is dependent on the results of
the strategic review process and our ability to raise additional
capital to fund our operations. We expect to continue to incur
costs and expenditures in connection with the process of evaluating
strategic alternatives. There can be no assurance, however, that we
will be able to successfully consummate any particular strategic
transaction, including the Merger. The process of continuing to
evaluate these strategic options may be very costly, time-consuming
and complex and we have incurred, and may in the future incur,
significant costs related to this continued evaluation, such as
legal, accounting and advisory fees and expenses and other related
charges.
General and administrative (G&A)
expenses were $3.0 million for the quarter ended
June 30, 2024, compared to $1.7 million for the
corresponding period in 2023, an increase of approximately $1.3
million. During the three months ended June 30, 2024, we recorded
$370,000 for one-time termination benefits related to the
separation of Dr. Michael Bristow, the former Chief Executive
Officer of ARCA, effective April 3, 2024. The increase for the
three month period was primarily the result of a $0.9 million
increase in professional fees primarily related to the Merger
Agreement discussed above and $0.4 million higher one-time
termination benefits from the termination discussed above in 2024.
G&A expenses in 2024 are expected to be higher than those in
2023 as we incur professional fees related to the Merger Agreement
discussed above and maintain administrative activities to support
our ongoing operations. We expect to incur significant costs
related to our exploration of strategic alternatives and the
Merger, including legal, accounting and advisory expenses and other
related charges.
Research and development (R&D)
expenses were $0.1 million for the quarter ended
June 30, 2024, compared to $0.3 million for the
corresponding period in 2023. Of the $0.2 million decrease in
R&D expenses in the second quarter of 2024 as compared to the
second quarter of 2023, $0.1 million was primarily related to
decreased headcount and $0.1 million was primarily related to the
unrestricted research grants with ARCA’s former President and Chief
Executive Officer’s academic research laboratory at the University
of Colorado. There was no expense under these arrangements for the
three months ended June 30, 2024. Total expense under
these arrangements for the three months ended June 30, 2023
was $0.1 million. In December 2023, the Company made a payment of
$125,000 for the grant period July 2022 through December 2023 under
these arrangements. As discussed above, the former President and
Chief Executive Officer resigned in April 2024. R&D expense in
2024 is expected to be lower than 2023 while we explore strategic
alternatives. Should we resume clinical trials of product
candidates, we expect research and development costs to increase
significantly for the foreseeable future as our product candidate
development programs progress.
Total operating expenses for
the quarter ended June 30, 2024 were $3.1 million compared to $2.0
million for the second quarter of 2023.
Net loss for the quarter ended
June 30, 2024 was $2.7 million, or $0.18 per basic and diluted
share, compared to $1.5 million, or $0.10 per basic and diluted
share in the second quarter of 2023.
About ARCA biopharmaARCA
biopharma is dedicated to developing genetically and other targeted
therapies for cardiovascular diseases through a precision medicine
approach to drug development. For more information, please visit
www.arcabio.com or follow the Company on LinkedIn.
Safe Harbor Statement
This press release contains "forward-looking
statements" for purposes of the safe harbor provided by the Private
Securities Litigation Reform Act of 1995 concerning ARCA, Oruka,
the proposed pre-closing financing and the proposed merger between
ARCA and Oruka (collectively, the “Proposed Transactions”) and
other matters. These statements include, but are not limited to,
express or implied statements relating to ARCA’s or Oruka’s
management team’s expectations, hopes, beliefs, intentions or
strategies regarding the future including, without limitation,
statements regarding: the Proposed Transactions and the expected
effects, perceived benefits or opportunities, including investment
amounts from investors and expected proceeds, and related timing
with respect thereto, expectations regarding or plans for
discovery, preclinical studies, clinical trials and research and
development programs, in particular with respect to ORKA-001 and
ORKA-002, and any developments or results in connection therewith,
including the target product profile of each of ORKA-001 and
ORKA-002; the anticipated timing of the commencement of and results
from those studies and trials; expectations regarding the use of
proceeds, the sufficiency of post-transaction resources to support
the advancement of Oruka’s pipeline through certain milestones and
the time period over which Oruka’s post-transaction capital
resources will be sufficient to fund its anticipated operations;
the cash balance of the combined entity at closing; expectations
regarding the treatment of psoriasis and associated diseases;
expectations related to ARCA’s contribution and payment of
dividends in connection with the Merger, including the timing
thereof; the expected trading of the combined company’s stock on
Nasdaq under the ticker symbol “ORKA;” potential future development
plans for Gencaro, including ARCA’s ability to continue development
of Gencaro; ARCA’s ability to secure sufficient financing to
support any clinical trials for Gencaro: and the ability of ARCA’s
financial resources to support its operations at the current levels
through the end of fiscal year 2025, ARCA’s ability to obtain
additional funding when needed or enter into a strategic or other
transaction, the extent to which ARCA’s issued and pending patents
may protect ARCA’s products and technology, the potential of such
product candidates to lead to the development of safe or effective
therapies, ARCA’s ability to enter into collaborations, or ARCA’s
ability to maintain listing of its common stock on a national
exchange. These and other factors are identified and described in
more detail in ARCA’s filings with the Securities and Exchange
Commission, including without limitation ARCA’s annual report on
Form 10-K for the year ended December 31, 2023 and the registration
statement on Form S-4, as amended, filed with the SEC, and
subsequent filings. ARCA disclaims any intent or obligation to
update these forward-looking statements.
All forward-looking statements in this press
release are current only as of the date hereof and, except as
required by applicable law, ARCA undertakes no obligation to revise
or update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise. All forward-looking statements are
qualified in their entirety by this cautionary statement.
No Offer or Solicitation
This press release and the information contained
herein is not intended to and does not constitute (i) a
solicitation of a proxy, consent or approval with respect to any
securities or in respect of the Proposed Transactions or
(ii) an offer to sell or the solicitation of an offer to
subscribe for or buy or an invitation to purchase or subscribe for
any securities pursuant to the Proposed Transactions or otherwise,
nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the Securities Act of 1933, as amended, or an
exemption therefrom. Subject to certain exceptions to be approved
by the relevant regulators or certain facts to be ascertained, the
public offer will not be made directly or indirectly, in or into
any jurisdiction where to do so would constitute a violation of the
laws of such jurisdiction, or by use of the mails or by any means
or instrumentality (including without limitation, facsimile
transmission, telephone and the internet) of interstate or foreign
commerce, or any facility of a national securities exchange, of any
such jurisdiction.
NEITHER THE SEC NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR
DETERMINED IF THIS PRESS RELEASE IS TRUTHFUL OR COMPLETE.
Important Additional Information About the Proposed
Transactions Will be Filed with the SEC
This press release is not a substitute for the
registration statement on Form S-4 or any other document that ARCA
has filed or may file with the SEC in connection with the Proposed
Transactions. In connection with the Proposed Transactions, ARCA
has filed with the SEC a registration statement on
Form S-4, which contains a proxy statement/prospectus of
ARCA. ARCA URGES INVESTORS AND STOCKHOLDERS TO READ THE
REGISTRATION STATEMENT ON FORM S-4, PROXY STATEMENT/PROSPECTUS AND
ANY OTHER RELEVANT DOCUMENTS THAT ARE OR MAY BE FILED WITH THE SEC,
AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY DO AND WILL CONTAIN
IMPORTANT INFORMATION ABOUT ARCA, ORUKA, THE PROPOSED TRANSACTIONS
AND RELATED MATTERS. Investors and stockholders can obtain free
copies of the proxy statement/prospectus and other documents filed
by ARCA with the SEC through the website maintained by the SEC at
www.sec.gov. Stockholders are urged to read the proxy
statement/prospectus and the other relevant materials filed with
the SEC before making any voting or investment decision with
respect to the Proposed Transactions. In addition, investors and
stockholders should note that ARCA communicates with investors and
the public using its website (https://arcabio.com/investors/).
Participants in the Solicitation
ARCA, Oruka and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from stockholders in connection with the
Proposed Transactions. Information about ARCA’s directors and
executive officers including a description of their interests in
ARCA is included in ARCA’s most recent Annual Report on
Form 10-K, including any information incorporated therein
by reference, as filed with the SEC. Information about ARCA’s and
Oruka’s respective directors and executive officers and their
interests in the Proposed Transactions is included in the proxy
statement/prospectus relating to the Proposed Transactions filed
with the SEC.
Investor & Media
Contact:Jeff Dekker720.940.2122ir@arcabio.com
ARCA BIOPHARMA, INC.BALANCE SHEET
DATA(in
thousands)(unaudited) |
|
June 30, 2024 |
December 31, 2023 |
Cash and cash equivalents |
$33,283 |
$37,431 |
Working capital |
$32,549 |
$36,955 |
Total assets |
$33,844 |
$37,861 |
Total stockholders’ equity |
$32,573 |
$37,020 |
ARCA BIOPHARMA, INC. STATEMENTS OF
OPERATIONS(unaudited) |
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
(in thousands, except share and per share
amounts) |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
$ |
2,992 |
|
|
$ |
1,719 |
|
|
$ |
5,309 |
|
|
$ |
3,125 |
|
Research and development |
|
130 |
|
|
|
254 |
|
|
|
295 |
|
|
|
644 |
|
Total costs and expenses |
|
3,122 |
|
|
|
1,973 |
|
|
|
5,604 |
|
|
|
3,769 |
|
Loss from operations |
|
(3,122 |
) |
|
|
(1,973 |
) |
|
|
(5,604 |
) |
|
|
(3,769 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
444 |
|
|
|
493 |
|
|
|
917 |
|
|
|
943 |
|
Net loss |
$ |
(2,678 |
) |
|
$ |
(1,480 |
) |
|
$ |
(4,687 |
) |
|
$ |
(2,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.18 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.20 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
14,506,879 |
|
|
|
14,410,143 |
|
|
|
14,504,011 |
|
|
|
14,410,143 |
|
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