Allakos (ALLK) Plummets 60% on Ending Development of Lead Drug

Core Viewpoint - Allakos' shares dropped 60.2% following disappointing results from two mid-stage studies of its lead drug lirentelimab, which failed to meet primary endpoints in treating atopic dermatitis and chronic spontaneous urticaria [1][2]. Group 1: Study Results and Drug Development - Allakos reported top-line data from the phase II ATLAS and phase IIb MAVERICK studies, both of which did not achieve their primary endpoints [2]. - The company has decided to halt further clinical development of lirentelimab and will focus on its early-stage candidate AK006 and other preclinical candidates [2][3]. - Allakos is currently conducting early-stage studies of lirentelimab in healthy volunteers, with dosing expected to complete by the end of the current quarter [4]. Group 2: Financial Impact and Restructuring - Following the decision to terminate lirentelimab, Allakos plans to reduce its workforce by nearly half to cut costs, which is expected to extend its cash runway into mid-2026 [3]. - The company anticipates incurring around $30 million in restructuring costs, primarily before the first half of 2024 [3]. - As of the end of December 2023, Allakos reported a cash and cash equivalents balance of $171 million, with expectations to close 2024 with a balance between $81 million and $86 million [3]. Group 3: Market Performance - Over the past year, Allakos' stock has declined by 85%, contrasting with a 12.2% growth in the industry [2].