Sign in

You're signed outSign in or to get full access.

AI

Allakos Inc. (ALLK)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 was dominated by a non-cash $27.3M impairment tied to the January program halt and sustained market cap decline, widening net loss to $71.1M ($0.81/sh) versus $42.4M ($0.49/sh) in Q1 2023; operating expenses rose to $73.1M (from $45.0M YoY) .
  • Cash, cash equivalents and investments declined to $139.3M (down $31.5M QoQ), while management reiterated year-end 2024 cash of $81–$86M and cash runway into mid-2026; ~$12M of the planned ~$30M closeout/severance costs were paid in Q1 and most of the remaining ~$18M expected in Q2–Q3 2024 .
  • Clinical pivot execution: completed SAD and MAD dosing for IV AK006 in healthy volunteers, completed SC AK006 cohort in healthy volunteers, and initiated the IV AK006 Phase 1 in chronic spontaneous urticaria (CSU); catalysts include Q2 HV PK/PD data, Q3 SC HV data, and YE24 CSU topline .
  • Capital strategy: management stated no plans to raise additional capital until after reporting IV AK006 CSU topline at year-end 2024, supported by runway into mid-2026 .

What Went Well and What Went Wrong

What Went Well

  • Completed key AK006 milestones: finished IV SAD and MAD dosing in healthy volunteers, completed SC cohort in healthy volunteers, and initiated the randomized, placebo-controlled IV AK006 Phase 1 in CSU patients, keeping 2024 data milestones intact .
  • Cash guidance unchanged: reiterated YE24 cash of $81–$86M and runway into mid-2026 despite restructuring headwinds; clearly laid out timing of remaining ~$18M restructuring outflows (Q2–Q3) .
  • Capital discipline: “we have no plans to raise additional capital until after we report AK006 top-line data in patients with CSU,” backed by an expected >1 year of cash at the time of YE24 topline .

What Went Wrong

  • Non-cash impairment: recognized a $27.3M impairment of long-lived assets following sustained market cap decline and discontinuation of lirentelimab, materially impacting Q1 loss .
  • R&D mix headwind: R&D increased YoY by $1.7M, driven by $6.3M higher manufacturing costs primarily related to the discontinued lirentelimab program, partially offset by lower compensation and other R&D .
  • Program setbacks and restructuring: January failures in Phase 2/2b lirentelimab AD and CSU trials led to halting the program and a ~50% workforce reduction; ~$30M total closeout and severance costs with majority paid 1H24 drive higher 1H24 burn before 2H24 relief .

Financial Results

P&L and Cash Trend (last three quarters; oldest → newest)

MetricQ3 2023Q4 2023Q1 2024
Total Operating Expenses ($M)$48.210 $64.983 $73.069
Net Loss ($M)$(45.626) $(62.551) $(71.146)
Net Loss per Share$(0.52) $(0.71) $(0.81)
Cash, Cash Equivalents & Investments ($M, end of period)$193.9 $170.8 $139.3

YoY Reference (Q1)

MetricQ1 2023Q1 2024
Research & Development ($M)$33.078 $34.824
General & Administrative ($M)$11.968 $10.898
Impairment of Long-Lived Assets ($M)—$27.347
Total Operating Expenses ($M)$45.046 $73.069
Net Loss ($M)$(42.404) $(71.146)
Net Loss per Share$(0.49) $(0.81)

KPIs and Drivers (Q1 2024):

  • R&D: $34.8M (+$1.7M YoY) on $6.3M higher manufacturing costs primarily due to lirentelimab closeout, partially offset by lower comp and other R&D .
  • G&A: $10.9M (−$1.1M YoY) on lower compensation and other G&A .
  • Impairment: $27.3M non-cash tied to asset write-down after sustained market cap decline and program halt .
  • Cash/investments: $139.3M; net decrease of $31.5M during Q1 .

Note on revenue/EPS vs estimates: The company reports operating expenses and losses; S&P Global consensus estimates for ALLK were unavailable at the time of analysis, so no beat/miss assessment is provided.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Runway—Runway into mid-2026 (Jan 16 & Mar 14 reiterations) Runway into mid-2026 reiterated Maintained
YE2024 Cash, Cash Equivalents & InvestmentsFY2024$81–$86M (Jan 16 & Mar 14) $81–$86M reiterated Maintained
2024 Net Cash Used in Operating Activities (GAAP)FY2024$(85) to $(90)M (Jan 16 & Mar 14) Reiterated indirectly via YE24 cash and runway Maintained
2024 Adjusted Net Cash Used in Operating Activities (non-GAAP)FY2024$(55) to $(60)M (excl. ~$30M closeout/severance/other) (Jan 16 & Mar 14) Reiterated indirectly via YE24 cash and runway Maintained
Lirentelimab Closeout/Severance/Other Cash Costs2024 TimingMajority paid 1H 2024 ~$12M paid in Q1; majority of remaining ~$18M in Q2–Q3 2024 Updated timing detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3’23; Q-1: Q4’23)Current Period (Q1’24)Trend
AK006 clinical progressQ3’23: Began dosing AK006 Phase 1 HV ; Q4’23: Completed IV SAD, continued IV MAD; initiated SC HV cohort Completed IV SAD & MAD HV; completed SC HV cohort; initiated IV AK006 Phase 1 in CSU patients; Q2 HV PK/PD data; Q3 SC HV data; YE24 CSU topline Progressing from HV dosing to patient trial
Cash runway & capital strategyYE23 cash $170.8M; introduced runway into mid-2026 and YE24 $81–$86M Runway into mid-2026 and YE24 $81–$86M reiterated; no plans to raise capital before YE24 AK006 CSU topline Maintained; added no-near-term raise
Pipeline pivot from lirentelimabQ3’23: progressing lirentelimab studies ; Q4’23/Jan: failed endpoints; program halted; restructuring Non-cash impairment recorded; focus fully on AK006 program Pivot completed; one-time clean-up
Mechanism differentiation (Siglec-6 vs Siglec-8)—Management emphasized Siglec-6 potency, high receptor residence time, and ADCP leading to deeper mast cell inhibition vs lirentelimab Heightened mechanistic emphasis supporting AK006
Trial design and readouts—IV AK006 CSU PoC ~30 pts (20 active/10 placebo); subcu to follow; targeted endpoints and timing clarified Clear PoC path and fast-follower subcu plan

Management Commentary

  • Capital and runway: “we have no plans to raise additional capital until after we report AK006 top-line data in patients with CSU,” expecting >1 year of cash at YE24 topline and runway into mid-2026 .
  • Mechanistic differentiation: “AK006 targets a different receptor… Siglec-6 is a more potent inhibitory receptor than Siglec-8… 006 has a long residence time… [and] induces ADCP… reduce mast cell numbers, whereas lirentelimab does not” .
  • Preclinical-to-clinic confidence: AK006 showed significantly greater mast cell inhibition across multiple activation pathways vs lirentelimab, with in vivo signals in anaphylaxis and gut inflammation models; management aims to demonstrate target occupancy and inhibition in human skin biopsies from HV SAD/MAD .
  • Development plan: IV AK006 PoC in CSU in 2024, with subcutaneous formulation right behind; aim for rapid move into Phase 2 upon positive PoC .

Q&A Highlights

  • Translational biomarkers and conviction: Team plans to demonstrate Siglec‑6 receptor occupancy and functional mast cell inhibition in HV skin biopsies (SAD/MAD) to strengthen conviction ahead of CSU PoC .
  • Formulation and timelines: Subcutaneous AK006 is “right behind” IV; Q3 data to inform comparability and enable fast transition to broader development in 2025 .
  • Trial design learnings: Lirentelimab AD/CSU studies were well-conducted with favorable placebo behavior; no major design changes anticipated for AK006 CSU PoC beyond dose selection from SAD/MAD .
  • Occupancy thresholds: Target high receptor occupancy consistent with preclinical inhibition; 006 exhibits minimal internalization vs lirentelimab, supporting sustained inhibition .
  • Competitive landscape: Aim for efficacy comparable to leading options with cleaner tolerability and potential for convenient dosing; rapid follow-on plans if CSU data positive .

Estimates Context

  • S&P Global consensus estimates for ALLK were unavailable at the time of analysis; as a result, we cannot assess revenue/EPS beats or misses relative to Wall Street consensus.

Key Takeaways for Investors

  • The quarter reflects one-time clean-up (non-cash $27.3M impairment) and execution of the AK006 pivot; the operating story now centers on near-term AK006 data readouts (Q2 HV PK/PD, Q3 SC HV, YE24 CSU topline) .
  • Cash guidance unchanged (YE24 $81–$86M; runway into mid‑2026) and explicit timing of remaining restructuring outflows ($12M paid in Q1; majority of ~$18M in Q2–Q3) provide visibility on burn and reduce near-term financing risk; management explicitly does not plan to raise before YE24 CSU data .
  • R&D spend is normalizing post-lirentelimab closeout; expect higher 1H burn due to restructuring with benefits in 2H, consistent with CFO commentary .
  • The investment case now hinges on clinical validation of AK006’s mechanistic advantages (Siglec‑6 potency, receptor residence time, ADCP) in humans via biopsy PD and CSU PoC; positive data would be a material re-rating catalyst .
  • Execution risk remains around enrollment, biomarker translation, and clinical efficacy; the company’s forward-looking statements highlight typical development and financing risks for a clinical-stage biotech .
  • Catalysts to watch: Q2 HV biopsy PK/PD/occupancy readout; Q3 SC HV data; YE24 IV AK006 CSU PoC topline—each can shift sentiment and access to capital .
  • Absence of consensus estimates limits near-term “beat/miss” trading setups; focus instead on clinical milestones and cash runway confirmations as stock drivers.

Supporting documents and data:

  • Q1 2024 8-K/Press Release and financial statements
  • Q4 2023 8-K/Press Release and financial statements
  • Q3 2023 8-K/Press Release and financial statements
  • Jan 16, 2024 restructuring 8-K/Press Releases
  • Jan 16, 2024 Special Call transcript for management commentary -