Why Allakos Stock is collapsing today

What happened

Actions of Allakos (NASDAQ: ALLK) are down 88% as of 10:17 a.m. ET Wednesday. The huge drop came after the company announced the results of its Phase 3 Enigma 2 clinical studies and Phase 2/3 Kryptos clinical studies evaluating lireelimab.

Allakos reported that both clinical studies met their primary histological endpoints. However, neither of the two studies obtained statistically significant improvement on the symptomatic co-primary endpoints reported by the patients.

Image source: Getty Images.

So what

The biotech stock has plummeted so much because the primary endpoint failures weren’t even close. This is all the more problematic given that lireelimab is the only candidate in the Allokos pipeline in clinical development.

Patients in the Enigma 2 study who received placebo reported a greater absolute change in total symptom score (TSS) at six symptoms than patients receiving lireelimab. It was a similar story with the Kryptos study with patients receiving low doses of the drug. Patients receiving the high dose of lireelimab reported greater improvement in symptoms than those taking placebo, but this was not sufficient to be statistically significant.

The leaders of Allakos did not try to pass off the results as positive. CEO Robert Alexander said: “We are deeply disappointed that the studies did not reach their symptomatic results.” Chief Medical Officer Craig Paterson called the results “surprising and disappointing”.

Now what

Paterson said Allokos “currently” plans to continue analyzing data from both studies with the goal of determining a way forward for lireelimab in the treatment of eosinophilic gastrointestinal disease. The company also plans to continue development of a subcutaneous version of the drug targeting atopic dermatitis, asthma and spontaneous chronic urticaria.

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Keith Speights has no position in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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