Allakos' Antibodies For Chronic Skin Conditions, Analyst Sees Over 400% Stock Upside

JMP Securities initiated coverage on Allakos Inc ALLK, noting novel monoclonal antibodies targeting Siglec (sialic acid immunoglobulin-like lectin) receptors on immune cells that are drivers of multiple diseases.

The analyst Jonathan Wolleben keeps a Market Outperform rating with a price target of $11.

He notes that lead candidates lirentelimab and AK006 bind to Siglec-8 and -6 receptors predominantly expressed on eosinophils and mast cells, suppressing the pathologic activation and proliferation.

JMP writes that the lead programs have broad applications and can respond to and counteract various activating signals.

Lirentelimab, the leading candidate, is undergoing Phase 2 clinical trials for chronic spontaneous urticaria (CSU) and atopic dermatitis (AD). 

These conditions collectively affect approximately 3 million individuals in the United States. Current treatment options primarily involve first-line antihistamines, yielding positive results in half of the patients. 

For those who do not respond to antihistamines, the sole approved biologic, Genentech/Novartis AG's NVS Xolair (omalizumab), offers limited relief, effectively working for only about one-third of patients while bearing a black box warning for anaphylaxis.

Despite its limited effectiveness and safety concerns, Xolair generates over $1.5 billion in sales for chronic spontaneous urticaria (CSU). 

Meanwhile, for the approximately 2 million Americans dealing with moderate-to-severe atopic dermatitis (AD), several approved drugs are contributing to an impressive $8 billion in sales in 2022. 

However, there is still ample opportunity for enhancement in various aspects, including achieving more profound and widespread responses, simplifying dosing regimens, and ensuring improved safety profiles.

Price Action: ALLK shares are up 17.10% at $2.53 on the last check Wednesday.