What happened

Shares of the clinical-stage biopharma Allakos (ALLK -0.69%) defied the turbulence in the broader markets today. Specifically, the drugmaker's shares were up by a healthy 21% on heavy volume at Tuesday's close. 

The big gain came in response to the company's 2022 fourth-quarter and full-year financial results, released ahead of Tuesday's opening bell. Although Allakos reported a net loss of $43 million in the fourth quarter of 2022, investors were more concerned with the progress of the company's clinical pipeline.

So what

More specifically, Allakos reaffirmed today that it expects to report trial results from a pair of ongoing mid-stage studies for its lead compound, lirentelimab, in the second half of 2023. The monoclonal antibody is presently in a phase 2 trial as a treatment for atopic dermatitis and a phase 2b trial for chronic spontaneous urticaria (hives).

In response to this pair of upcoming clinical catalysts, Piper Sandler analyst Yasmeen Rahimi rolled out a Street-high price target of $22 per share. By contrast, the previous consensus price target on Allakos' stock was a far more modest $5.31. This latest Piper Sandler price target implies upside potential of 236% from current levels. 

Now what

Is Allakos stock a buy ahead of these clinical catalysts? There is a lot of doubt about its lead compound on Wall Street, after setbacks in late-stage testing. That doesn't necessarily mean that lirentelimab can't mount a comeback, but this biotech stock is arguably only suited for investors with a high tolerance for risk.