Allakos Inc. (NASDAQ:ALLK) is a clinical-stage biopharmaceutical company focused on developing therapeutics that target immunomodulatory receptors present on immune effector cells involved in allergic, inflammatory, and proliferative diseases. The company's lead product candidate, AK006, is currently in a Phase 1 clinical trial, with plans to evaluate it in chronic spontaneous urticaria (CSU) and other mast cell-driven conditions.
Allakos was incorporated in 2012 and is headquartered in San Carlos, California. The company's primary focus is on developing AK006, which targets Siglec-6, an inhibitory receptor expressed selectively on mast cells. Mast cells play a central role in the inflammatory response, and inappropriately activated mast cells have been identified as key drivers in a number of severe diseases affecting the gastrointestinal tract, eyes, skin, lungs, and other organs.
In preclinical studies, AK006 has shown the ability to inhibit multiple modes of mast cell activation, including IgE, IL-33, KIT, C5a, and MRGPR-X2, resulting in the deep suppression of mast cell activation. Additionally, AK006 has demonstrated the ability to reduce human tissue mast cells via antibody-dependent cell-mediated phagocytosis (ADCP) in the presence of activated macrophages.
The company is currently evaluating AK006 in a Phase 1 study in healthy volunteers, with plans to initiate a randomized, double-blind, placebo-controlled cohort of patients with CSU. Allakos expects to report data from the Phase 1 study, including Siglec-6 receptor occupancy in skin biopsy samples, in the second quarter of 2023. The company also plans to initiate a clinical study with AK006 in an additional mast cell-driven condition in 2023.
Financials
Allakos has incurred significant net losses since its inception, with a net loss of $185.7 million for the year ended December 31, 2022 and a net loss of $71.1 million for the three months ended March 31, 2023. The company has not generated any revenue to date and does not expect to generate revenue from product sales for the foreseeable future.In January 2023, Allakos announced a reorganization plan to reduce operating costs and better align its workforce with the current clinical development plans of its business. As part of this plan, the company's workforce was reduced by approximately 50%, primarily during the first quarter of 2023. While this will result in increased near-term costs, Allakos believes the reorganization plan will reduce its overall spending in subsequent quarters, subject to periodic fluctuations caused by the timing of ongoing manufacturing development efforts and the future clinical trials.
Additionally, during the three months ended March 31, 2023, the company recorded a $27.3 million noncash charge related to the impairment of long-lived assets, primarily due to the significant sustained decline observed in the company's stock price and related market capitalization following the decision to halt the development of lirentelimab.
Liquidity
As of March 31, 2023, Allakos had cash, cash equivalents, and investments of $139.3 million, which the company believes will be sufficient to fund its planned operations for at least the next 12 months. However, the company will require substantial additional capital to continue the development of its product candidates and fund its operations in the long term.Risks and Challenges
Allakos faces several significant risks and challenges in the development and commercialization of its product candidates. The company's lead product candidate, AK006, is still in early clinical development, and there is no guarantee that it will successfully complete clinical trials, obtain regulatory approval, or be successfully commercialized.The company's previous lead product candidate, lirentelimab, was halted in January 2023 due to unfavorable clinical trial results in atopic dermatitis and chronic spontaneous urticaria. This decision has had a significant impact on the company's financial position and operations, as evidenced by the $27.3 million impairment charge and the need for the 2023 Reorganization Plan.
Allakos also faces risks related to its ability to raise additional capital, as it will require substantial funding to continue the development of its product candidates and fund its operations in the long term. The company's ability to raise capital may be adversely impacted by potential worsening of global economic conditions and volatility of financial markets.
Outlook
Despite the challenges faced by Allakos, the company's pipeline, particularly its lead product candidate AK006, holds promise. The positive preclinical data for AK006 and the company's plans to evaluate it in CSU and other mast cell-driven conditions suggest that Allakos may have a viable path forward.However, the company's recent setbacks with lirentelimab and the need for significant additional capital raise concerns about Allakos' long-term viability. Investors will be closely watching the upcoming data readouts from the AK006 Phase 1 study and the initiation of the CSU trial to gauge the potential of the company's lead asset.