What happened
Shares of clinical-stage biotech company Allakos (ALLK 0.99%) were up more than 15% as of 11:40 a.m. on Wednesday. The stock got a boost when an analyst initiated coverage. Despite the rise, Allakos' stock is still down more than 70% so far this year.
So what
Allakos focuses on monoclonal antibodies to trigger responses in the body's immune cells to treat various conditions, including allergies, and inflammatory and proliferative diseases. The company, on Wednesday, got a buy rating with a price target of $11 from analyst Jonathan Wolleben of JMP Securities. Another factor in the stock's rise is investors have jumped in on a potential bargain after the stock fell to a 52-week low of $2.02 on Sept. 21.
The company has two lead therapies, lirentelimab and AK006. Lirentelimab is in a phase 2b study as a subcutaneous treatment for chronic spontaneous urticaria, a complex, chronic inflammatory skin disease. Lirentelimab is also in a phase 2a trial to treat atopic dermatitis. Results from both trials are expected by the end of the year.
AK006, though still in early trials, may have even more potential than lirentelimab. According to Allakos, AK006 provides greater inhibition of mast cells than lirentelimab and can reduce mast cell numbers through antibody-dependent cellular phagocytosis (ADCP). The therapy is expected to begin a phase 1 trial as a chronic spontaneous urticaria therapy in the second quarter next year.
Now what
The company's therapies have the potential to have widespread indications for diseases that have a great deal of unmet need. However, with no revenue and only $67.4 million in cash as of the second quarter, the stock remains a risky choice for investors. Until Allakos publishes updated trial results on lirentelimab, there's a good reason to stay on the sidelines.
