Shares of the Allakos Inc. (ALLK) stock saw a huge drop in the premarket today following the announcement of topline Phase 3 Data from the ENIGMA 2 Study and Phase 2/3 Data from the KRYPTOS Study. ALLK stock price saw a downtrend of 87.14% to drop at $10.85 a share as of this writing. ALLK stock rose by 3.70% in the previous trade and closed with $84.39 per share price. Let’s take a closer look at recent events.

What’s Happening?

The topline results from the ENIGMA 2 Study and KRYPTOS Study were not according to the expectation that resulted in a significant decline in the per-share price of the ALLK stock. ENIGMA 2 is the 24-week study of lirentelimab in patients with biopsy-confirmed eosinophilic gastritis (EG) and/or eosinophilic duodenitis (EoD). The KRYPTOS is the 2-week lirentelimab study in patients with biopsy-confirmed eosinophilic esophagitis (EoE). Both studies met histologic co-primary endpoints but missed the symptomatic co-primary endpoints.

How Allakos will react to this situation?

The management of the company is deeply disappointed and surprised with the topline results of both studies. However, the company will continue its effort to analyze the data in order to understand the results. Only then the Allakos will be able to determine the forward path for lirentelimab in EGIDs. The management of the ALLK is anticipating the initiation of chronic spontaneous urticaria and asthma studies in 2022 and advancing other preclinical pipeline programs.

The company previously on November 30, 2021, announced the initiation of a Phase 2 clinical trial of subcutaneous (SC) lirentelimab. It is a randomized, double-blind, placebo-controlled trial, intended for adult patients with moderate to severe atopic dermatitis.

Financial View of ALLK stock:

• According to third-quarter 2021 financial results, ALLK suffered a net loss of $62.7 million as compared to $42.1 million in the same quarter of last year. Per basic and diluted share net loss of ALLK stock was $1.16 in the third quarter of 2021.
• Allakos spent $19.1 million in general and administrative expenses in the third quarter of 2021. These expenses were $12.1 million in the same period as the previous year.
• Research and development expenses of the ALLK were $43.6 million in Q3,2021 as compared to $30.4 million in Q3,2020.
• The company ended the quarter on September 30, 2021, with $505.6 million in cash, cash equivalents, and marketable securities.

Wrap Up:

The unsatisfactory results from the ENIGMA 2 Study and KRYPTOS Study led to the huge decline in the ALLK stock price. Dealing with such a situation is a challenging task for the management of the company. In a nutshell, investors eyeing ALLK stock must be cautious before making any decision.