Allakos Provides Business Update and Reports First Quarter 2022 Financial Results

On May 6, 2022 Allakos Inc. (the "Company") (Nasdaq: ALLK), a biotechnology company developing lirentelimab (AK002) and AK006 for the treatment of allergic and inflammatory diseases, reported financial results for the first quarter ended March 31, 2022 (Press release, Allakos, MAY 6, 2022, View Source [SID1234613776]).

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Recent Events

•Initiated a Phase 2 randomized, double-blind, placebo-controlled study of subcutaneous lirentelimab in patients with moderate-to-severe atopic dermatitis in the fourth quarter of 2021.
•Hosted an Investor Day on February 15, 2022 to provide the results and learnings from the ENIGMA 2 and KRYPTOS studies as well as the next steps in the lirentelimab and AK006 development program. Additionally, we announced a restructuring plan with expected charges associated with exiting certain contractual obligations and reducing our workforce.
Upcoming Milestones

•Hold an End-of-Phase 2 meeting with the FDA during second quarter of 2022 to discuss the Phase 2/3 KRYPTOS data and the development path with subcutaneous lirentelimab in patients with eosinophilic esophagitis (EoE).
•Initiate a Phase 2b randomized, double-blind, placebo-controlled study of subcutaneous lirentelimab in patients with chronic spontaneous urticaria in the middle of 2022.
•Report topline data from the Phase 3 EoDyssey study of lirentelimab in patients with eosinophilic duodenitis (EoD) in the third quarter of 2022.
•Complete IND-Enabling studies of AK006 during 2022 and initiate the first-in-human study in the first half of 2023.
First Quarter 2022 Financial Results

Research and development expenses were $176.8 million in the first quarter of 2022 compared to $38.9 million in first quarter of 2021. First quarter 2022 research and development expenses include $135.1 million in settlement costs to exit future manufacturing obligations and relating to employee severance and retention arrangements in connection with our reorganization plan. Research and development expenses in the first quarter of 2022 also include non-cash expenses for stock-based compensation of $4.4 million, compared to $5.1 million in same period of 2021, and depreciation of $0.2 million, compared to $0.3 million in the same period of 2021.

General and administrative expenses were $18.8 million in the first quarter of 2022 compared to $16.7 million in first quarter of 2021. First quarter 2022 general and administrative expenses include $4.3 million of costs relating to employee severance and retention arrangements in connection with our reorganization plan. General and administrative expenses also include non-cash expenses for stock-based compensation of $7.0 million, compared to $7.3 million in the same period of 2021, and depreciation of $1.9 million, compared to $0.1 million in the same period of 2021.

Allakos reported a net loss of $197.0 million in the first quarter of 2022 compared to $55.6 million in the same period in 2022. As disclosed at our February 15, 2022 Investor Day, we expected to incur approximately $150 million in settlement expenses to exit future manufacturing and other contractual obligations with vendors, as well as, employee severance and retention arrangements. During the first quarter 2022, we incurred $139.4 million in aggregate of these expenses as described above in the research development expense and general and administrative expense sections. We anticipate that approximately $5 million of the remaining estimated expenses will primarily be classified as research and development costs and will be incurred over the second and third quarters of 2022 with the remainder being incurred thereafter. Net loss per basic and diluted share was $3.60 for the first quarter of 2022 compared to $1.04 in the same period in 2021.

Allakos ended the first quarter of 2022 with $246.7 million in cash, cash equivalents and marketable securities.