Allakos Provides Business Update and Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Allakos Inc. (Nasdaq: ALLK) has provided a business update and financial results for Q2 2024. Key highlights include:

1. Initiation of a Phase 1 trial for IV AK006 in chronic spontaneous urticaria patients
2. Completion of dosing in the SC AK006 cohort for healthy volunteers
3. Presentation of preclinical data on AK006 at EAACI 2024
4. Q2 2024 ended with $123.1 million in cash, cash equivalents, and investments
5. Reiteration of financial outlook and cash runway into mid-2026
6. Q2 2024 net loss of $26.7 million, or $0.30 per share

The company expects to report SC AK006 trial results in Q3 2024 and CSU trial data by year-end 2024.

Positive

• Initiated Phase 1 trial of IV AK006 in chronic spontaneous urticaria patients
• Completed dosing in SC AK006 cohort for healthy volunteers
• Cash runway extended into mid-2026
• Decreased R&D expenses by $7.9 million compared to Q2 2023
• Reduced G&A expenses by $1.3 million compared to Q2 2023
• Net loss per share improved from $0.41 in Q2 2023 to $0.30 in Q2 2024

Negative

• Net loss of $26.7 million in Q2 2024
• Net decrease in cash, cash equivalents, and investments of $16.2 million during Q2 2024
• Estimated $30 million in closeout, severance, and other costs related to exiting lirentelimab development program

Insights

Financial Analyst

Allakos' Q2 2024 results show a mixed financial picture. The company ended the quarter with $123.1 million in cash and investments, a decrease of $16.2 million from the previous quarter. This burn rate is concerning, but the company maintains its cash runway projection into mid-2026.

Positively, R&D expenses decreased by $7.9 million year-over-year, primarily due to halting lirentelimab development. G&A expenses also decreased by $1.3 million. The net loss narrowed to $26.7 million ($0.30 per share) from $35.1 million ($0.41 per share) in Q2 2023, showing improved cost management.

However, investors should note the projected $30 million in closeout costs for 2024, with $13 million already spent. This could impact the company's cash position, potentially affecting its ability to fund ongoing clinical trials for AK006.

Medical Research Analyst

Allakos is making progress with its AK006 program, which is now the company's primary focus after halting lirentelimab development. Key developments include:

• Initiation of a Phase 1 trial for IV AK006 in chronic spontaneous urticaria (CSU) patients
• Completion of dosing in the SC AK006 cohort for healthy volunteers
• Reported safety, PK and PD results for IV AK006 in healthy volunteers

The company expects to report SC AK006 results in Q3 2024 and CSU patient data by year-end. These milestones will be important for assessing AK006's potential. The presentation of preclinical data at EAACI 2024 on mast cell inhibition with AK006 suggests promising mechanism of action, but clinical efficacy remains to be proven.

SAN CARLOS, Calif., Aug. 07, 2024 (GLOBE NEWSWIRE) -- Allakos Inc. (the “Company”) (Nasdaq: ALLK), a biotechnology company developing antibodies for the treatment of allergic, inflammatory and proliferative diseases, today provided a business update and reported financial results for the second quarter ended June 30, 2024.

Recent Allakos Events

• Initiated the randomized, double-blind, placebo-controlled Phase 1 trial of intravenous (IV) AK006 in patients with chronic spontaneous urticaria.
• Completed dosing in the randomized, double-blind, placebo-controlled subcutaneous (SC) AK006 cohort in healthy volunteers.
• Reported safety, pharmacokinetics (PK), and pharmacodynamic (PD) results from the Phase 1 trial of IV AK006 in healthy volunteers.
• Presented preclinical data at the 2024 European Academy of Allergy and Clinical Immunology (EAACI) Annual Congress on mast cell inhibition with AK006.

Upcoming Allakos Anticipated Milestones

• Report safety, PK, and PD results from the Phase 1 trial of SC AK006 in healthy volunteers in Q3 2024.
• Report randomized double-blind, placebo-controlled data from the Phase 1 trial of AK006 in patients with CSU at year end 2024.

Cash Guidance
Allakos ended the second quarter of 2024 with $123.1 million in cash, cash equivalents and investments. Allakos’ financial outlook, restructuring activities and estimated cash runway as reported by the Company in January 2024 remain unchanged. The Company reiterates that the restructuring activities will extend the cash runway into mid-2026 and continues to expect to end 2024 with total cash, cash equivalents and investments in the range of $81 to $86 million. The Company reiterates that an estimated $30 million of closeout, severance and other costs will be paid in 2024 in connection with exiting the lirentelimab development program, of which we have spent $13 million to date in the first six months of 2024. Approximately $1 million of these payments were made in the second quarter of 2024.

Second Quarter 2024 Financial Results
Allakos ended the second quarter of 2024 with $123.1 million in cash, cash equivalents and investments resulting in a net decrease in cash, cash equivalents and investments of $16.2 million during the second quarter of 2024.

Research and development expenses were $19.4 million in the second quarter of 2024 compared to $27.3 million in the second quarter of 2023, a decrease of $7.9 million. This quarter over quarter decrease is attributed to $2.5 million of lower contract research and development costs, primarily due to halting lirentelimab development, $2.5 million of decreased compensation costs and a $2.9 million decrease in other research and development expenses.

General and administrative expenses were $9.2 million for the second quarter of 2024 compared to $10.5 million for the second quarter of 2023, a decrease of $1.3 million. The quarter over quarter change included $0.7 million of decreased compensation costs and $0.6 million of decreased other general and administrative expenses.

Allakos reported a net loss of $26.7 million in the second quarter of 2024 compared to $35.1 million in the second quarter of 2023. Net loss per basic and diluted share was $0.30 for the second quarter of 2024 compared to $0.41 in the second quarter of 2023.

About Allakos
Allakos is a clinical stage biotechnology company developing therapeutics that target immunomodulatory receptors present on immune effector cells involved in allergy, inflammatory and proliferative diseases. Activating these immunomodulatory receptors allows for the direct targeting of cells involved in disease pathogenesis and, in the setting of allergy and inflammation, has the potential to result in broad inhibition of inflammatory cells. The Company’s most advanced product candidate is AK006. AK006 targets Siglec-6, an inhibitory receptor expressed on mast cells. Mast cells are widely distributed in the body and play a central role in the inflammatory response. 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 appears to provide deep mast cell inhibition and, in addition to its inhibitory activity, reduce mast cell numbers. For more information, please visit the Company’s website at www.allakos.com.

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’ expected timing of reporting data from its clinical trial of AK006; cash guidance and runway; and restructuring. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially from current expectations and beliefs, including but not limited to: Allakos’ stages of clinical drug development; Allakos’ ability to timely initiate and complete clinical trials for AK006; Allakos’ ability to obtain required regulatory approvals for its clinical trials; uncertainties related to the enrollment of patients in its clinical trials; Allakos’ ability to demonstrate sufficient safety and efficacy of its product candidates in its clinical trials; uncertainties related to the success of clinical trials, regardless of the outcomes of preclinical testing or early-stage trials; Allakos’ ability to obtain regulatory approvals to market its product candidates; market acceptance of Allakos’ product candidates; uncertainties related to the projections of the size of patient populations suffering from the diseases Allakos is targeting; Allakos’ ability to advance additional product candidates beyond AK006; uncertainties related to Allakos’ ability to realize the contemplated benefits of its restructuring and related reduction in force; Allakos’ ability to accurately forecast financial results; Allakos’ ability to obtain additional capital to finance its operations, research and drug development; Allakos’ ability to maintain the listing of our common stock on Nasdaq; general economic and market conditions, both domestic and international; domestic and international regulatory obligations; 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 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:
Denise Powell
denise@redhousecomms.com

ALLAKOS INC. UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Operating expenses
Research and development		$	19,422			$	27,280			$	54,246			$	60,358
General and administrative			9,211				10,537				20,109				22,505
Impairment of long-lived assets			—				—				27,347				—
Total operating expenses			28,633				37,817				101,702				82,863
Loss from operations			(28,633	)			(37,817	)			(101,702	)			(82,863	)
Interest income			1,959				2,697				3,954				5,375
Other expense, net			(2	)			—				(74	)			(36	)
Net loss			(26,676	)			(35,120	)			(97,822	)			(77,524	)
Unrealized gain (loss) on investments			(11	)			(171	)			(41	)			125
Comprehensive loss		$	(26,687	)		$	(35,291	)		$	(97,863	)		$	(77,399	)
Net loss per common share:
Basic and diluted		$	(0.30	)		$	(0.41	)		$	(1.11	)		$	(0.90	)
Weighted-average number of common shares outstanding:
Basic and diluted			88,644				86,646				88,342				86,246

ALLAKOS INC. UNAUDITED CONDENSED BALANCE SHEETS (in thousands)
		June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	26,496			$	66,440
Investments			96,625				104,354
Prepaid expenses and other current assets			4,805				9,095
Total current assets			127,926				179,889
Property and equipment, net			16,590				33,369
Operating lease right-of-use assets			10,228				24,136
Other long-term assets			1,714				6,216
Total assets		$	156,458			$	243,610
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	16,119			$	1,764
Accrued expenses and other current liabilities			19,761				34,814
Total current liabilities			35,880				36,578
Operating lease liabilities, net of current portion			36,579				38,215
Total liabilities			72,459				74,793
Stockholders’ equity:
Common stock			89				88
Additional paid-in capital			1,300,200				1,287,156
Accumulated other comprehensive gain (loss)			9				50
Accumulated deficit			(1,216,299	)			(1,118,477	)
Total stockholders’ equity			83,999				168,817
Total liabilities and stockholders’ equity		$	156,458			$	243,610

FAQ

What were Allakos' (ALLK) key financial results for Q2 2024?

Allakos reported a net loss of $26.7 million ($0.30 per share) in Q2 2024, with $123.1 million in cash, cash equivalents, and investments at quarter-end. R&D expenses decreased to $19.4 million, and G&A expenses reduced to $9.2 million compared to Q2 2023.

What are the upcoming milestones for Allakos (ALLK) in 2024?

Allakos anticipates reporting safety, PK, and PD results from the Phase 1 trial of SC AK006 in healthy volunteers in Q3 2024. Additionally, they expect to report randomized double-blind, placebo-controlled data from the Phase 1 trial of AK006 in CSU patients by the end of 2024.

How has Allakos (ALLK) extended its cash runway?

Allakos has implemented restructuring activities that are expected to extend the company's cash runway into mid-2026. They reiterated their financial outlook and estimate ending 2024 with total cash, cash equivalents, and investments in the range of $81 to $86 million.

What progress has Allakos (ALLK) made with AK006 in Q2 2024?

Allakos initiated a Phase 1 trial of IV AK006 in chronic spontaneous urticaria patients, completed dosing in the SC AK006 cohort for healthy volunteers, and presented preclinical data on AK006's mast cell inhibition at the EAACI 2024 Annual Congress.