The California-based Allakos has instituted cost-saving measures as its chronic spontaneous urticaria (CSU) therapy, AK006, fails to show “therapeutic activity” in a Phase I trial.
The company plans to layoff approximately 75% of its workforce while retaining about 15 employees. Adding that Allakos intends to “explore strategic alternatives, maintain compliance with regulatory and financial reporting requirements, and wind down the Phase I clinical trial”.
Following the news, Allakos’ stock was down by 80.2% at the market close on 27 January, compared to the market close on Friday (24 January).
Dire financial straits
Allakos expects to incur approximately $34-38 million in costs as part of the restructuring, with most of these paid over the first and second quarters of 2025. The company reported $81 million in cash reserves at the end of the fourth quarter of last year, with the company estimating $35-40 million in cash reserves at the end of the second quarter this year (30 June 2025).
In a September 2024 SEC filing, the company noted that it has incurred “net losses and negative cash flows” since its inception, having accumulated a deficit of $1.2 billion as of 30 September 2024. Adding that, Allakos has primarily funded its operations “primarily through the sale of common stock”, with the company’s management expecting further operating losses as it continues to develop.
Early last year, Allakos fired half of its staff after its atopic dermatitis and CSU treatment, lirentelimab, failed in two Phase II trials. At that time, the company noted its plans to focus its resources on developing AK006.
Disappointing Phase I results
Allakos released topline results from a placebo-controlled, dose ascension Phase I trial (NCT06072157). The 23 participants who received 720mg AK006 observed an 8.2-point mean change in the Urticaria Activity Score (UAS)-7 at 14 weeks, the study’s primary endpoint. Compared to a 12.4-point mean change in IAS-7 seen in the placebo group.
AK006 was well-tolerated, with no serious adverse events observed in the study. The commonly observed side effects were headache, infusion-related reaction, and Covid-19, all of which were mild to moderate in severity.
