Allakos to lay off half of staff, scrap drug after study setback

16 Jan 2024
www.biopharmadive.com
Phase 1Financial Statement
Allakos plans to lay off about half of its workforce and halt development of its most advanced drug prospect after the therapy failed a pair of key trials, the company announced Tuesday.
The medicine, lirentelimab, missed its main goals in mid-stage trials for eczema and a chronic form of hives. In eczema, lirentelimab treatment didn’t lead to a statistically significant reduction, compared to a placebo, in a key measure of disease severity. In chronic hives, or urticarias, the drug failed to meaningfully control symptoms.
The results have led Allakos to abandon further research into lirentelimab. Allakos will instead focus resources on an earlier medicine, AK006, that the company claims may be more potent than lirentelimab. That drug is in Phase 1 testing, and results in healthy volunteers and, eventually, urticaria patients, are expected later this year.
To help bankroll the effort, the company will reduce its workforce by about 50%. The company employed 123 workers at the end of 2022 and 91 of them were involved in research and development, according to a regulatory filing. Allakos also laid off staff in 2022.
The restructuring will leave Allakos with enough cash to continue operating through 2026. The company ended 2023 with about $171 million in cash on hand and expects to burn through about half of it this year. Allakos doesn’t intend to raise more money until after it reports results on AK006.
The setback is the latest for Allakos’ lead drug, a medicine that’s designed to home in on a target found on the surface of immune cells known as mast cells and eosinophils. Allakos had been developing the medicine for a range of immunological conditions, and interest in its potential led shares to exceed $151 apiece in 2020.
Lirentelimab, though, failed two late-stage trials a year later, causing Allakos’ share price to collapse. Still, analysts at the investment bank Leerink Partners last week noted there’s been a “recent uptick in investor interest” in the drug in part because of the possibility of it treating urticarias, an area of drug research that’s become increasingly competitive of late.
Allakos is now leaning on AK006 to keep that interest. It faces a tough road, however. Shares on Tuesday fell 60%, to just over $1 apiece. They’ve now lost nearly all their value since Allakos went public at $18 a share in 2018.
The layoffs, meanwhile, make Allakos the latest in a large wave of biotechnology and pharmaceutical companies to cut jobs during the industry’s pullback. More than 120 biotech companies laid off staff in 2023, according to BioPharma Dive data. Allakos has become at least the seventh to join those ranks this year, and at least the third — along with Affimed and AlloVir — to reduce its workforce by at least 50%.
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