Allakos Slashes Workforce and Discontinues AK006 Development Following Disappointing Trial Results

Allakos, a San Carlos, California-based biotech company, has announced a significant restructuring that includes a 75% reduction in its workforce and the discontinuation of its AK006 development program. This decision comes in the wake of disappointing Phase 1 clinical trial results for the drug candidate in chronic spontaneous urticaria (CSU) patients.

Workforce Reduction and Financial Impact

The latest round of layoffs will leave Allakos with approximately 15 employees as the company explores strategic alternatives. This drastic measure follows a previous workforce reduction of about 50% just a year ago. The company estimates that the costs associated with terminating the AK006 development and implementing the workforce reduction will range from $34 million to $38 million, with the majority of these expenses expected to be paid out during the first half of 2025.

Allakos projects its cash, cash equivalents, and investments to be between $35 million and $40 million by June 30, 2025. This financial outlook comes against the backdrop of significant accumulated losses, with the company reporting an accumulated deficit of $1.2 billion as of September 30, 2024.

Clinical Trial Results and Program Discontinuation

The decision to halt the AK006 program stems from the drug's failure to demonstrate clinical efficacy in CSU patients, despite being well-tolerated. Dr. Chin Lee, Allakos' Chief Medical Officer, stated that the preclinical inhibitory effects observed with AK006 did not translate to clinical benefits in patients suffering from chronic spontaneous urticaria, a skin condition characterized by hives.

In the Phase 1 trial, patients treated with AK006 showed no significant improvement in their symptoms compared to the placebo group. This setback marks the second time Allakos has abandoned a CSU candidate, following the discontinuation of lirentelimab, a humanized IgG1 antibody, in January 2024 after it failed two Phase II studies in atopic dermatitis and CSU.

Strategic Alternatives and Company Outlook

With the termination of its lead drug candidate and the substantial reduction in workforce, Allakos is now actively exploring strategic alternatives. The company's focus has shifted from drug development to preserving its remaining financial resources and evaluating potential paths forward in the highly competitive pharmaceutical landscape.

As Allakos navigates this challenging period, the biotech industry watches closely to see how the company will address its significant accumulated deficit and chart a course for potential recovery or strategic repositioning.