Clinical stage biotech company Allakos Inc. (ALLK:NASDAQ) announced second quarter earnings today for the period ending June 30, 2019, and released a statement that it had successfully completed its phase 2 study for AK002 used in the treatment of eosinophil and mast cell related diseases. The market has responded very favorably to the news with the firm's shares opening nearly 100% higher today.
In the earnings report, Allakos, still a clinical stage company, did not report any revenue in the quarter. The firm stated that research and development (R&D) expenses were $14.1 million in Q2/19 compared to $7.1 million in Q2/18. The increase in R&D expenses was primarily related to an increase in contract research and development activities in support of the advancement of AK002, the company's lead antibody, as well as an increase in consulting and personnel-related costs.
General and administrative expenses (SG&A) were $5.9 million in Q2/19 versus $2.4 million in Q2/18. The firm noted that the increase in SG&A expenses was primarily attributable to an increase in personnel-related costs as a result of an increase in employee headcount, and incremental expenses incurred from outside professional service expenses associated with becoming a publicly traded company in July 2018.
The company reported a net loss of $19.1 million Q2/19 compared to $9.4 million Q2/18, an increase of $9.7 million. Net loss per basic and diluted share improved to $0.44 for Q2/19 compared to $4.17 in Q2/18. The firm ended Q2/19 with $153.1 million in cash, cash equivalents and marketable securities.
In a separate release today, the company announced positive results from its phase 2 randomized, double-blind, placebo-controlled trial of AK002 in patients with eosinophilic gastritis and/or eosinophilic gastroenteritis. The firm reported "all AK002 dose arms showed clinically meaningful and statistically significant benefits compared to placebo on all prespecified primary and secondary endpoints, including gastrointestinal tissue eosinophil counts and patient reported disease symptoms...Statistically significant differences in patient symptoms between the active and placebo groups occurred one day following AK002 administration...patients with comorbid eosinophilic esophagitis treated with AK002 experienced statistically significant decreases in esophageal eosinophil counts and substantial reductions in patient reported dysphagia symptoms."
Dr. Evan Dellon, M.D., a principal investigator of the study and professor of gastroenterology at the University of North Carolina, Chapel Hill, stated, "Eosinophilic gastritis, eosinophilic gastroenteritis, and eosinophilic esophagitis are severe debilitating diseases with no approved therapies...AK002 is unique in that it targets both eosinophils and mast cells, two major effector cell types that cause disease-related tissue damage. In this study, AK002 reduced eosinophil and mast cell counts and showed a statistically significant improvement in disease symptoms one day after administration." Dr. Dellon elaborated further, "These are clinically meaningful changes, and these data suggest that AK002 could provide rapid and sustained benefit in patients with eosinophil gastrointestinal diseases and I look forward to the continued development of AK002 in these severe orphan conditions."
Eosinophilic gastritis, eosinophilic gastroenteritis and eosinophilic esophagitis are severe orphan inflammatory diseases characterized by the presence of high levels of eosinophils in the stomach, duodenum or esophagitis, respectively. Allakos has received orphan drug designation for AK002 in eosinophilic gastritis and eosinophilic gastroenteritis.
Allakos describes itself as a clinical stage biotechnology company developing antibodies that target immunomodulatory receptors present on immune effector cells involved in allergic, inflammatory and proliferative diseases. The firm's lead antibody AK002, which has been tested in five clinical studies, targets Siglec-8, an inhibitory receptor selectively expressed on human mast cells and eosinophils. AK002 has been shown to inhibit mast cells and deplete eosinophils, and in the studies, AK002 eliminated blood eosinophils and improved disease symptoms in patients with eosinophilic gastritis and/or eosinophilic gastroenteritis, eosinophilic esophagitis, severe allergic conjunctivitis, chronic urticaria and indolent systemic mastocytosis.
Allakos shares opened today up nearly 100% higher at $61.00 (+$30.00, + 96.77%) compared to Friday's closing price of $31.00. Since the open, shares have traded between $60.34 and $71.95, setting both 52-week and all-time intraday highs on more than 15 times average volume. At present, shares are trading at $71.07 (+40.07, +129.26%).[NLINSERT]
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