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Piper Sandler has reiterated its Overweight rating on Allakos Inc . (NASDAQ: NASDAQ:ALLK) with a steady price target of $7.00.
The firm acknowledged Allakos' recent announcement regarding the subcutaneous (SC) formulation of AK006, which showed promising results in a clinical study.
The SC formulation of AK006 demonstrated a bioavailability of 77% and a high receptor occupancy of up to 98% by Day 113.
The data, which align with Allakos' preclinical findings, indicate a significant advancement for the company's program. The high receptor occupancy and prolonged duration of action observed in skin biopsies suggest that the SC formulation of AK006 may effectively inhibit mast cells, which are implicated in various inflammatory conditions.
Piper Sandler pointed out the importance of these findings, especially in light of the upcoming topline data from the Phase 1 Chronic Spontaneous Urticaria (CSU) study, which is expected to be released in early 1Q25. The firm expressed confidence in the potential of AK006 to show positive effects in CSU patients, given the extensive data demonstrating profound mast cell inhibition.
In other recent news, Allakos Inc. has reported positive Phase 1 study results for its drug AK006, developed for treating mast cell-driven diseases. The drug demonstrated approximately 77% bioavailability and an estimated half-life of 12-22 days.
A 720 mg dose of AK006 achieved 98% receptor occupancy at day 113, indicating potential for infrequent dosing. Further, the drug was well-tolerated with no serious adverse events reported.
Allakos is also facing a potential delisting risk from the Nasdaq Global Select Market due to non-compliance with the minimum bid price requirement. The company has been granted a 180-day period to regain compliance.
On the financial front, Allakos reported a net loss of $71 million in the first quarter of 2024, primarily due to a non-cash impairment charge. However, the company maintains $139 million in cash reserves, projected to sustain operations until mid-2026.
Regarding analyst evaluations, TD Cowen, Piper Sandler, and JMP Securities have maintained their Hold, Overweight, and Market Outperform ratings respectively for Allakos. This follows the release of Phase I study results for AK006, with the firms citing promising clinical data and the drug's potential.
InvestingPro Insights
While Piper Sandler maintains an optimistic outlook on Allakos Inc. (NASDAQ:ALLK), recent InvestingPro data and tips provide additional context for investors. Despite the promising clinical results for AK006, Allakos faces significant financial challenges. The company's market capitalization stands at a modest $58.55 million, reflecting investor caution.
InvestingPro Tips highlight that Allakos is "quickly burning through cash" and "not profitable over the last twelve months." This aligns with the reported adjusted operating income of -$187.55 million for the last twelve months as of Q2 2024. The company's financial position is further emphasized by its negative return on assets of -86.62% during the same period.
On a positive note, one InvestingPro Tip indicates that Allakos "holds more cash than debt on its balance sheet," which could provide some financial flexibility as it advances its clinical programs. However, investors should be aware that the stock has experienced significant price declines, with a one-year total return of -70.18% as of the latest data.
For those considering an investment in Allakos, it's worth noting that InvestingPro offers 11 additional tips that could provide further insights into the company's financial health and market position. These additional tips could be particularly valuable given the upcoming Phase 1 CSU study results and their potential impact on the stock's performance.
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