RHHBY - Allakos gains as Jefferies upgrades to Buy on lead candidate

2023-05-12 09:15:18 ET

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 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 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.

More on Allakos

• Allakos jumps 22% after Q4 update amid bullish views from Piper Sandler
• Allakos: Potential For Comeback With Lirentelimab With 2 Indications

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