Allakos axes program, lays off 75% of staff and seeks strategic alternatives after phase 1 flop

Allakos is throwing in the towel. After seeing phase 1 data in hives, the biotech has decided to drop the drug candidate and layoff 75% of its employees to hunker down while exploring strategic alternatives.

The biotech bet its future on AK006 one year ago after its previous lead candidate lirentelimab chalked up two phase 2 flops to extend its long losing streak. Allakos identified AK006, which targets Siglec-6, as a molecule capable of triggering broader and deeper mast cell inhibition than lirentelimab, leading the biotech to hope the follow-up molecule could succeed where its predecessor failed.

Those hopes withered under the glare of phase 1 data. The trial compared AK006 to placebo in 34 adults with moderate-to-severe chronic spontaneous urticaria (CSU), a skin condition that causes hives. Eight of the patients had previously received Novartis and Roche’s hives drug Xolair.

At baseline, the 23 patients in the AK006 cohort scored 34.4 on a 42-point disease scale. After receiving AK006 intravenously once every four weeks, the mean score fell 8.2 points. The placebo result put that data in perspective. The 11 people on placebo scored 30.5 at baseline and improved 12.4 points over the course of the trial. The proportion of complete responses was the same in each arm, 9%.

On a call with analysts to discuss the data, Chin Lee, M.D, chief medical officer of Allakos, said the placebo response was “in line with what we've seen for other CSU clinical trials.” Allakos CEO Robert Alexander, Ph.D., added more details on the failure and its broader implications for Siglec-6 programs.

“We don't know why the preclinical data didn't translate in humans, but clearly it did not. All we can say now is that we know that [Siglec-]6 is not active in CSU, whether it would be active in another disease setting we don't know,” Alexander said.

The setback led Allakos to stop development of AK006. Stopping clinical, manufacturing, research and administrative functions related to AK006 will put 75% of Allakos’ employees out of work. The biotech plans to retain around 15 employees to explore strategic alternatives, maintain compliance with reporting requirements and wind-down the phase 1 clinical trial.

Shutting down the AK006 program will put a big dent in Allakos’ cash reserves. The biotech, which ended last year with $81 million, expects to spend $34 million to $38 million on severance payments and other restructuring costs. Allakos estimates the outlay will drive its reserves down to around $35 million to $40 million by the midpoint of the year. The clock is ticking on the search for a strategic alternative.

“In terms of strategic alternatives, we’ll explore the usual things,” Alexander said. “We'll do that for a period of time and if something comes up we'll pursue it. If not, we'll continue with the wind-down of the company.”