Allakos gains as Jefferies upgrades to Buy on lead candidate
franckreporter
Allakos (NASDAQ:ALLK) rose ~8% pre-market Friday after Jefferies upgraded the immunology-focused biotech to Buy from Hold, citing an attractive risk-reward setup ahead of a Phase 2 readout for its lead candidate lirentelimab.
San Carlos, California-based Allakos (ALLK) is advancing lirentelimab in mid-stage trials for moderate-to-severe atopic dermatitis and chronic spontaneous urticaria (CSU), expecting topline data from both studies in H2 2023.
Noting that the stock has lost ~50% during the year compared to more than a 5% rise in the broader biotech subsector, Jefferies analyst Maury Raycroft sees a positive risk-reward setup for the stock.
Raycroft who raises his price target on ALLK to $9 from $6 per share argues that lirentelimab has a reasonable threshold to hit success against CSU.
Raycroft highlights lirentelimab’s potential to outperform the placebo with statistical significance and perform at least in line with Xolair, the FDA-approved CSU therapy from Roche (OTCQX:RHHBY) (OTCQX:RHHBF) and Novartis (NVS) (OTCPK:NVSEF).
Recalling that Allakos (ALLK) shares surged in 2019 in reaction to Phase 2 data for AK002 in eosinophilic gastrointestinal disorders, the analyst expects the stock to “respond” to the upcoming readout despite concerns on Phase 3 development/commercialization.