Form 4: Fairmount Funds Management Converts Preferred Stock to Common

Fairmount Funds Management LLC, along with affiliated entities, has converted a significant portion of Series B Preferred Stock into common stock of Oruka Therapeutics, Inc.

Summary

• Fairmount Funds Management LLC, acting as the investment manager for Fairmount Healthcare Fund II L.P. and Fairmount Healthcare Co-Invest III L.P., has converted 42,641 shares of Series B Preferred Stock into 3,553,410 shares of Oruka Therapeutics, Inc. common stock.
• This conversion occurred on July 1, 2026, and was executed without any cash consideration, in accordance with the terms of the Series B Convertible Preferred Stock.
• Following the transaction, Fairmount Healthcare Fund II L.P. beneficially owns 1,131,954 shares of common stock and Fairmount Healthcare Co-Invest III L.P. beneficially owns 2,573,308 shares of common stock.
• The conversion is subject to beneficial ownership limitations, preventing any single holder from exceeding 19.99% of the total outstanding common stock after conversion.
• Fairmount Funds Management LLC, along with its managing members Peter Harwin and Tomas Kiselak, are identified as directors and 10% owners of Oruka Therapeutics, Inc.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral event. While it represents a significant change in share structure for the reporting persons, it is a planned conversion based on existing terms and does not inherently signal positive or negative performance for the company.

Positives

• Conversion of preferred stock to common stock indicates a potential step towards simplifying the capital structure or realizing value from preferred holdings.
• The conversion was executed without cash consideration, suggesting it was a planned event based on the terms of the preferred stock.
• Fairmount Funds Management LLC and its affiliates maintain significant beneficial ownership, indicating continued strategic interest in Oruka Therapeutics, Inc.

Negatives

• The conversion results in a large block of common stock being issued, which could potentially impact the stock price if sold in the open market.
• The beneficial ownership limitation of 19.99% suggests that further conversions or sales might be restricted, potentially limiting liquidity or future strategic actions for these holders.

Risks

• Potential for increased selling pressure on the common stock if the converted shares are sold.
• The 19.99% beneficial ownership limitation could restrict future actions or necessitate complex management of holdings.
• The filing does not provide context on the strategic reasons for the conversion, leaving open questions about the reporting persons' intentions.

Future Outlook

The filing does not contain forward-looking statements or guidance. The conversion is a past event.

Management Comments

• Fairmount may be deemed a director by deputization of Issuer by virtue of the fact that Peter Harwin serves on the board of directors of the Issuer and is also a Managing Member of Fairmount.
• Fairmount, Mr. Harwin, and Mr. Kiselak disclaim beneficial ownership of any of the reported securities, except to the extent of their pecuniary interest therein.

Industry Context

StockSavvy.ai notes that conversions of preferred stock to common stock are common events in the biotechnology and pharmaceutical sectors, often occurring as companies mature or reach specific milestones. This transaction reflects a typical move by investment funds to adjust their holdings.

Related Party Transactions

• The conversion of Series B Preferred Stock to Common Stock by affiliated entities managed by Fairmount Funds Management LLC, where individuals associated with Fairmount also serve as directors of Oruka Therapeutics, Inc.

Stakeholder Impact

• Shareholders: Potential for increased supply of common stock, which could exert downward pressure on the share price if shares are sold.
• Management/Board: Continued significant ownership by a key investment fund and its affiliates, with individuals holding director positions.

Next Steps

• Monitoring of Fairmount Funds Management's subsequent trading activity in Oruka Therapeutics, Inc. common stock.

Key Dates

Keywords

Form 4, SEC Filing, Oruka Therapeutics, ORKA, Fairmount Funds Management, Preferred Stock Conversion, Common Stock, Beneficial Ownership, Insider Trading, Securities Exchange Act