Oruka Therapeutics, Inc. Income Taxes Disclosure

13. Income Taxes

 

No provision for income taxes was recorded for the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024.

 

The following table summarizes the loss before income tax expense by jurisdiction for the periods indicated (in thousands):

 

		Year Ended December 31, 2025				Period from February 6, 2024 (inception) to December 31, 2024
Domestic		$	(105,433	)		$	(83,724	)
Foreign			—				—
Loss before income tax expense		$	(105,433	)		$	(83,724	)

 

For the year ended December 31, 2025 and for the period from February 6, 2024 (inception) to December 31, 2024, the Company recognized no provision or benefit from income taxes. The difference between the Company’s provision for income taxes and the amounts computed by applying the statutory federal income tax rate to income before income taxes is as follows (amounts in thousands):

 

		Year Ended December 31, 2025								Period from February 6, 2024 (inception) to December 31, 2024
		Amount				Percent				Amount				Percent
Tax benefit derived by applying the federal statutory rate to loss before income taxes		$	(22,141	)			(21.00	)%		$	(17,582	)			(21.00	)%
Nontaxable or nondeductible items			54				0.05				76				0.09
Credits
Research and development credits			(2,109	)			(2.00	)			(2,840	)			(3.39	)
Other			949				0.90				(731	)			(0.87	)
Worldwide changes in unrecognized tax benefits			(91	)			(0.09	)			—				0.00
Change in the valuation allowance			23,338				22.14				21,077				25.17
Income tax (benefit) expense		$	—				0.00	%		$	—				0.00	%

The components of the deferred tax assets and liabilities consist of the following (in thousands):

 

		December 31, 2025				December 31, 2024
Deferred tax assets
Net operating loss carryforwards		$	6,398			$	2,260
Research and development credits			5,372				3,080
Stock-based compensation			7,827				3,063
Accruals and other			1,083				424
Lease liability			448				203
Intangibles			2,943				1,477
Capitalized R&D expenses			25,069				10,994
Total deferred tax assets			49,140				21,501
Deferred tax liabilities
Right- of- use asset			(424	)			(184	)
Total deferred tax liabilities			(424	)			(184	)
Valuation allowance			(48,716	)			(21,317	)
Deferred tax assets, net		$	—			$	—

 

The Company has established a full federal and state valuation allowance equal to the net deferred tax assets due to uncertainties regarding the realization of the deferred tax asset based on the Company’s lack of earnings history. The valuation allowance increased by $27.4 million and $21.3 million, respectively during the year ended December 31, 2025 and the period from February 6, 2024 (inception) to December 31, 2024, primarily due to continuing loss from operations.

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

 

		Year Ended December 31, 2025				Period from February 6, 2024 (inception) to December 31, 2024
Beginning balance		$	21,317			$	—
Change in valuation allowance			27,399				21,317
Ending balance		$	48,716			$	21,317

 

As of December 31, 2025 and 2024, the Company had U.S. net operating loss carryforwards (“NOL”) of $28.2 million and $10.8 million, respectively. The federal NOL carryforwards do not expire and can be utilized to offset up to 80% of the taxable income in any tax year. As of December 31, 2025 and 2024, the Company also had state NOL carryforwards of $7.5 million and nil, respectively. The state NOL carryforwards will expire starting in 2044, if not utilized.

 

For the year ended December 31, 2025, the Company had federal tax credit carryforwards and state tax credit carryforwards of $6.7 million and $0.5 million, respectively. For the period from February 6, 2024 (inception) to December 31, 2024 the Company had federal tax credit carryforwards and state tax credit carryforwards of $3.8 million and $0.4 million, respectively. The federal credits will expire starting in 2044 if not utilized, and the state research credit can be carried forward indefinitely.

 

The Tax Reform Act of 1986 limits the use of net operating loss carryforwards in certain situations where changes occur in the stock ownership of a company. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has not performed a Section 382 analysis through December 31, 2025. To the extent that an assessment is completed in the future, the Company’s ability to utilize tax attributes could be restricted on a year-by-year basis and certain attributes could expire before they are utilized. The Company will examine the impact of any potential ownership changes in the future.

 

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

 

		Year Ended December 31, 2025				Period from February 6, 2024 (inception) to December 31, 2024
Beginning balance		$	1,047			$	—
Additions based on tax positions taken in the current year			895				1,047
Reductions for tax positions taken in prior years			(123	)			—
Ending balance		$	1,819			$	1,047

The Company includes penalties and interest expense related to income taxes as a component of income tax expense, as necessary. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions.

 

The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. The Company is not currently under examination by income tax authorities in federal, state, or other jurisdictions.