Executive Summary

Q4 2024 printed GAAP net income of $0.4M (EPS $0.00) aided by a $23.9M lease termination gain; otherwise OpEx trends remained disciplined with R&D and G&A markedly below prior-year levels .
AK006 failed to show therapeutic activity in CSU; the company is discontinuing development, cutting workforce ~75%, retaining ~15 employees, and exploring strategic alternatives, with majority of restructuring cash outflows in H1’25 .
Cash ended Q4 at $80.8M; management reiterated cash guidance of $35–$40M at 6/30/2025 and restructuring costs of $34–$38M (majority paid in Q1–Q2’25) .
End‑2024 cash came in slightly below prior guidance of $81–$86M provided with Q3 results; trend analysis shows sequential cash burn moderating in Q4 vs Q3 given lease-related gain and reduced spend .
S&P Global consensus (revenue/EPS) for Q4 2024 was unavailable for ALLK at this time; estimates comparisons could not be performed (S&P Global data unavailable for this ticker mapping).

What Went Well and What Went Wrong

What Went Well
- Operating expense control and portfolio wind-down: R&D fell to $14.8M vs $53.8M y/y (−$39.0M), driven by halting lirentelimab and lower contract/manufacturing and compensation costs; G&A also declined to $9.8M vs $11.2M y/y .
- Lease termination benefit: Q4 recognized a $23.9M gain on lease amendment, lifting GAAP results to modest net income of $0.4M .
- Clear and conservative cash guidance: Management reaffirmed 6/30/2025 cash of $35–$40M and detailed restructuring cash timing and magnitude, aiding scenario visibility for investors .
What Went Wrong
- AK006 clinical failure: “AK006 did not demonstrate clinical efficacy” in CSU; development discontinued, eliminating the near-term value creation path from the lead program .
- Strategic uncertainty: Management will “explore the usual” strategic alternatives and, failing that, “continue with the wind down of the company,” heightening go‑forward uncertainty .
- Slight shortfall vs prior year-end cash guide: End‑2024 cash of $80.8M was modestly below the previously guided $81–$86M range from Q3, reflecting program closeout and timing effects .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Net income (loss) ($USD Millions)	-$26.68	-$18.37	$0.38
Basic & diluted EPS ($)	-$0.30	-$0.21	$0.00
R&D expense ($USD Millions)	$19.42	$10.87	$14.82
G&A expense ($USD Millions)	$9.21	$8.88	$9.84
Gain on lease amendment ($USD Millions)	—	—	$23.88
Cash, cash equivalents & investments (period-end, $USD Millions)	$123.1	$92.7	$80.8
Net change in cash, cash equiv. & investments (quarter, $USD Millions)	-$16.2	-$30.4	-$11.9
Basic weighted-average shares (Millions)	88.64	89.02	89.45

YoY snapshot (Q4 2024 vs Q4 2023):

R&D: $14.8M vs $53.8M (−$39.0M)
G&A: $9.8M vs $11.2M (−$1.4M)
Net income (loss): $0.4M vs $(62.6)M (improvement driven by lease gain) .

Segment breakdown: Not applicable; no segment disclosures in reported materials .

KPIs (operational/financial):

Workforce reduction: ~75% planned; ~15 employees to be retained for wind‑down and compliance .
Restructuring cash outflow: ~$34–$38M; majority paid Q1–Q2’25 .
6/30/2025 cash outlook: $35–$40M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Actual	Change
Ending cash, cash equivalents & investments	FY 2024	$81–$86M (guided with Q3’24)	$80.8M actual	Slightly below range
Restructuring costs (AK006 closeout + RIF)	H1 2025 payout timing	~$34–$38M (majority H1’25)	~$34–$38M (majority H1’25)	Maintained
Cash, cash equivalents & investments	6/30/2025	$35–$40M	$35–$40M (reaffirmed)	Maintained
Workforce reduction	2025	~75% reduction; ~15 retained	Reiterated	Maintained
Cash runway	Prior framework	“Into mid‑2026” pre‑AK006 decision (Q3’24 context)	Not reiterated post‑AK006 discontinuation	Superseded by restructuring/strategy shift

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024 context)	Trend
AK006 efficacy/readouts	Initiated CSU Ph1; IV/SC HV PK/PD; CSU data expected YE’24 → early Q1’25	AK006 showed no therapeutic activity in CSU; program discontinued	Negative
R&D execution	Completed SC HV cohort; strong RO/PK and tolerability; completed CSU enrollment	Safety/tolerability intact but efficacy absent; no ongoing dev. of AK006	Negative
Strategic alternatives	Not emphasized	Exploring alternatives; if none, proceed with wind‑down	Heightened uncertainty
Cost/operational restructuring	Restructuring framework tied to prior program exits (lirentelimab)	~75% workforce reduction; majority of restructuring cash in H1’25	Intensified
Cash outlook	End‑2024 $81–$86M; runway into mid‑2026 (pre‑AK006 outcome)	6/30/2025 cash $35–$40M re‑affirmed; end‑2024 actual $80.8M	Lower trajectory vs prior framework

Management Commentary

“While AK006 was well tolerated, we are disappointed that the preclinical inhibitory effects observed did not translate to clinical benefit in patients with CSU. As a result, the Company has decided to discontinue further clinical development of AK006.” — Chin Lee, M.D., M.P.H., CMO .
“The company plans to discontinue AK006 related activities… and reduce our workforce by approximately 75%… retain approximately 15 employees to explore strategic alternatives, maintain compliance… and wind down the Phase I clinical study.” — H. Baird Radford, CFO .
“We will explore the usual [strategic alternatives]… And if something comes up, we’ll pursue it. If not, we’ll continue with the wind down of the company.” — Robert Alexander, executive .
“The antibody fully saturated the target… 720 mg is quite a bit higher… the target was fully saturated during the study.” — Robert Alexander on dose/pharmacology .

Q&A Highlights

Mechanism translation failure: Management emphasized full target saturation and robust preclinical/ex vivo activity but no clinical benefit in CSU, limiting confidence in translation to this indication .
Strategic path: Team will run a standard process for strategic alternatives; absent a transaction, they will proceed with wind‑down .
Pipeline monetization: Other early programs exist, but management is non‑committal; any utility for AK006 in other indications is speculative and would require new clinical data .
Comparator mechanisms: Discussion acknowledged CSU responsiveness to anti‑IgE and anti‑KIT approaches; implications for other mast‑cell targets remain to be proven clinically .
Restructuring specifics and cash cadence: Majority of the $34–$38M restructuring cash outlay will occur in Q1–Q2’25; end‑Q4 cash ~$81M and 6/30/2025 cash expected $35–$40M .

Estimates Context

S&P Global (Capital IQ) consensus for Q4 2024 revenue and EPS for ALLK was unavailable (mapping not found), so we could not provide a vs‑consensus comparison at this time. Management did not provide revenue guidance and reported no product revenue lines in the presented materials; the quarter’s GAAP profitability was primarily from the lease amendment gain .

Key Takeaways for Investors

The ALLK investment case pivoted from clinical execution to balance‑sheet preservation and optionality, following AK006’s failure in CSU and the program’s discontinuation .
Near‑term stock drivers are process‑driven: outcomes of strategic alternatives, pace of wind‑down, and realization/timing of restructuring cash flows in H1’25 .
Cash ended 2024 at $80.8M; with guidance for $35–$40M by 6/30/2025 after $34–$38M restructuring payments, the time value of cash and any residual assets will anchor valuation debates .
Q4 GAAP profitability is non‑recurring in nature (lease gain); core OpEx trends are materially lower y/y but will continue to shrink with the workforce reduction and program termination .
Prior runway framing (“into mid‑2026”) is no longer pertinent; investors should underwrite to the updated mid‑2025 cash guide and liquidation/wind‑down scenarios vs optionality from any transaction .
Without available Street estimates and with no ongoing lead program, trading is likely to be headline‑ and process‑driven; risk/reward hinges on strategic outcome probability and cash preservation .

References: Q4 2024 8‑K and press release ; AK006 topline/restructuring 8‑K and press release ; Q3 2024 8‑K and press release ; Q2 2024 8‑K and press release ; Jan 27, 2025 call transcript .

Allakos Inc. (ALLK)·Q4 2024 Earnings Summary