{"id":487123,"date":"2024-01-16T10:09:00","date_gmt":"2024-01-16T15:09:00","guid":{"rendered":"https:\/\/platohealth.ai\/allakos-to-lay-off-half-of-staff-scrap-drug-after-study-setback\/"},"modified":"2024-01-16T11:00:40","modified_gmt":"2024-01-16T16:00:40","slug":"allakos-to-lay-off-half-of-staff-scrap-drug-after-study-setback","status":"publish","type":"post","link":"https:\/\/platohealth.ai\/allakos-to-lay-off-half-of-staff-scrap-drug-after-study-setback\/","title":{"rendered":"Allakos to lay off half of staff, scrap drug after study setback","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"
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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. <\/p>\n

The medicine, lirentelimab, missed its main goals<\/a> in mid-stage trials for eczema and a chronic form of hives. In eczema, lirentelimab treatment didn\u2019t 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. <\/p>\n

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. <\/p>\n

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<\/a>. Allakos also laid off staff in 2022<\/a>. <\/p>\n

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\u2019t intend to raise more money until after it reports results on AK006. <\/p>\n

The setback is the latest for Allakos\u2019 lead drug, a medicine that\u2019s 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. <\/p>\n

Lirentelimab, though, failed two late-stage trials a year later<\/a>, causing Allakos\u2019 share price to collapse. Still, analysts at the investment bank Leerink Partners last week noted there\u2019s been a \u201crecent uptick in investor interest\u201d in the drug in part because of the possibility of it treating urticarias, an area of drug research that\u2019s become increasingly competitive<\/a> of late<\/a>. <\/p>\n

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\u2019ve now lost nearly all their value since Allakos went public at $18 a share in 2018<\/a>. <\/p>\n

The layoffs, meanwhile, make Allakos the latest in a large wave of biotechnology and pharmaceutical companies to cut jobs during the industry\u2019s pullback. More than 120 biotech companies laid off staff in 2023<\/a>, according to BioPharma Dive data. Allakos has become at least the seventh to join those ranks this year, and at least the third \u2014 along with Affimed and AlloVir \u2014 to reduce its workforce by at least 50%. <\/p>\n