Allakos Provides Business Update and Reports Fourth Quarter 2024 Financial Results

Rhea-AI Summary

Allakos (ALLK) has announced significant operational changes in its Q4 2024 report. The company discontinued development of AK006 following topline data from its Phase 1 study in chronic spontaneous urticaria patients in January 2025. Financial highlights include:

The company ended Q4 2024 with $80.8 million in cash and investments, with projected cash of $35-40 million by June 2025 after restructuring costs of $34-38 million. R&D expenses decreased to $14.8 million from $53.8 million year-over-year, while G&A expenses reduced to $9.8 million from $11.2 million.

Notably, Allakos reported a net income of $0.4 million in Q4 2024, compared to a net loss of $62.6 million in Q4 2023, primarily due to a $23.9 million gain from a lease termination agreement.

Positive

• Significant reduction in R&D expenses by $39.0 million year-over-year
• Achieved net income of $0.4 million in Q4 2024 versus $62.6 million loss in Q4 2023
• G&A expenses decreased by $1.4 million year-over-year
• $23.9 million gain realized from lease termination agreement

Negative

• Discontinuation of AK006 drug development program
• Restructuring costs estimated at $34-38 million
• Cash position expected to decline from $80.8 million to $35-40 million by June 2025
• Significant workforce reduction through restructuring

SAN CARLOS, Calif., March 12, 2025 (GLOBE NEWSWIRE) -- Allakos Inc. (the “Company”) (Nasdaq: ALLK), a biotechnology company that has been developing antibodies for the treatment of allergic, inflammatory and proliferative diseases, today provided a business update and reported financial results for the fourth quarter ended December 31, 2024.

Recent Allakos Events

• Reported topline data from the Phase 1 study of AK006 in patients with chronic spontaneous urticaria in January 2025.
• Announced in January 2025 that the Company was discontinuing further development of AK006, restructuring operations to reduce costs and exploring strategic alternatives.

Cash Guidance

Allakos ended the fourth quarter of 2024 with $80.8 million in cash, cash equivalents and investments. Allakos’ financial outlook, restructuring activities and estimated cash outlook as reported by the Company in January 2025 remain unchanged.

The Company estimates that cash used in restructuring activities to close out AK006 development, including severance and contractual payments to vendors, will be approximately $34 million to $38 million. The Company also estimates that a significant majority of these restructuring costs will be paid over the first and second quarters of 2025.

The Company estimates it will have cash, cash equivalents and investments in a range of approximately $35 million to $40 million at June 30, 2025.

Fourth Quarter 2024 Financial Results

Allakos ended the fourth quarter of 2024 with $80.8 million in cash, cash equivalents and investments resulting in a net decrease in cash, cash equivalents and investments of $11.9 million during the fourth quarter of 2024.

Research and development expenses were $14.8 million in the fourth quarter of 2024 compared to $53.8 million in the fourth quarter of 2023, a decrease of $39.0 million. This quarter over quarter decrease is due to halting lirentelimab development and includes a $31.2 million decrease in contract research and manufacturing costs, $6.7 million of decreased compensation costs and a $1.1 million decrease in other research and development expenses.

General and administrative expenses were $9.8 million for the fourth quarter of 2024 compared to $11.2 million for the fourth quarter of 2023, a decrease of $1.4 million. The quarter over quarter change included $2.9 million of decreased compensation costs offset by a $1.5 million increase primarily from professional and other general costs associated with the termination of our office lease.

Allakos reported net income of $0.4 million in the fourth quarter of 2024 compared to a net loss of $62.6 million in the fourth quarter of 2023. The gain in the fourth quarter of 2024 was primarily attributed to the $23.9 million gain on lease amendment recognized as a result of the lease termination agreement entered into during the fourth quarter of 2024.

About Allakos

Allakos is a clinical stage biotechnology company that has been developing therapeutics that target immunomodulatory receptors present on immune effector cells involved in allergy, inflammatory and proliferative diseases.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, Allakos’ expectations regarding its financial position and guidance, including estimated costs of restructuring activities to close out AK006 development, the timing of payment of such restructuring costs, and estimated ending second quarter 2025 cash, cash equivalents and investments; restructuring activities and plans; and exploration of strategic alternatives. Such statements are based on Allakos’ current views about its plans, intentions, expectations, strategies and prospects only as of the date of this release and are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially from those set forth in or implied by such forward-looking statements, including but not limited to: uncertainties related to Allakos’ ability to realize the contemplated benefits of its restructuring activities and related reduction in force; Allakos’ ability to accurately forecast financial results, including restructuring and other costs and expenses; availability of suitable third parties with which to conduct contemplated strategic alternative transactions; whether Allakos will be able to pursue strategic alternative transactions, or whether any transaction, if pursued, will be completed on attractive terms; whether Allakos’ cash resources will be sufficient to fund its foreseeable and unforeseeable operating expenses and capital expenditure requirements; Allakos’ ability to maintain the listing of its common stock on Nasdaq; general economic and market conditions, both domestic and international; risks associated with volatility and uncertainty in the capital markets for biotechnology companies; and other risks. Information regarding the foregoing and additional risks may be found in the section entitled “Risk Factors” in documents that Allakos files from time to time to with the SEC. These documents contain and identify important factors that could cause the actual results for Allakos to differ materially from those contained in Allakos’ forward-looking statements. Any forward-looking statements contained in this press release speak only as of the date hereof, and Allakos specifically disclaims any obligation to update any forward-looking statement, except as required by law. These forward-looking statements should not be relied upon as representing Allakos’ views as of any date subsequent to the date of this press release.

Source: Allakos Inc.

Investor Contact:
Adam Tomasi, President
Alex Schwartz, VP Strategic Finance and Investor Relations
ir@allakos.com

Media Contact:
media@allakos.com

ALLAKOS INC. UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS (in thousands, except per share data)
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2024				2023				2024				2023
Operating expenses
Research and development		$	14,819			$	53,801			$	79,939			$	150,908
General and administrative			9,837				11,182				38,822				45,148
Impairment of long-lived assets			—				—				27,347				—
Gain on lease amendment			(23,883	)			—				(23,883	)			—
Total operating expenses			773				64,983				122,225				196,056
Loss from operations			(773	)			(64,983	)			(122,225	)			(196,056	)
Interest income			1,104				2,382				6,450				10,347
Other expense, net			45				50				(43	)			8
Net income (loss)			376				(62,551	)			(115,818	)			(185,701	)
Unrealized gain (loss) on investments			(198	)			122				86				334
Comprehensive income (loss)		$	178			$	(62,429	)		$	(115,732	)		$	(185,367	)
Net income (loss) per common share:
Basic and diluted		$	0.00			$	(0.71	)		$	(1.30	)		$	(2.14	)
Weighted-average number of common shares outstanding:
Basic			89,445				87,567				88,791				86,798
Diluted			90,400				87,567				88,791				86,798

ALLAKOS INC. UNAUDITED CONDENSED BALANCE SHEETS (in thousands)
		December 31,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	17,753			$	66,440
Investments			63,067				104,354
Prepaid expenses and other current assets			4,766				9,095
Total current assets			85,586				179,889
Property and equipment, net			10,827				33,369
Operating lease right-of-use assets			—				24,136
Other long-term assets			188				6,216
Total assets		$	96,601			$	243,610
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	5,490			$	1,764
Accrued expenses and other current liabilities			12,294				34,814
Total current liabilities			17,784				36,578
Operating lease liabilities, net of current portion			—				38,215
Total liabilities			17,784				74,793
Stockholders’ equity:
Common stock			90				88
Additional paid-in capital			1,312,886				1,287,156
Accumulated other comprehensive gain (loss)			136				50
Accumulated deficit			(1,234,295	)			(1,118,477	)
Total stockholders’ equity			78,817				168,817
Total liabilities and stockholders’ equity		$	96,601			$	243,610

FAQ

What led to Allakos (ALLK) discontinuing AK006 development in January 2025?

Allakos discontinued AK006 development following topline data from its Phase 1 study in chronic spontaneous urticaria patients, leading to operational restructuring and cost reduction initiatives.

How much will Allakos (ALLK) spend on restructuring activities in early 2025?

Allakos estimates restructuring costs of $34-38 million, primarily for closing AK006 development, including severance and vendor payments, mostly paid in Q1 and Q2 2025.

What is Allakos's (ALLK) projected cash position for mid-2025?

Allakos projects cash, cash equivalents and investments of approximately $35-40 million by June 30, 2025.

How did Allakos (ALLK) achieve net income in Q4 2024 despite restructuring?

Allakos reported net income of $0.4 million primarily due to a $23.9 million gain from a lease termination agreement, offsetting operational expenses.