On March 14, 2024 Allakos Inc. (the "Company") (Nasdaq: ALLK), a biotechnology company developing antibodies for the treatment of allergic, inflammatory and proliferative diseases, reported a business update and provided financial results for the fourth quarter and full year ended December 31, 2023 (Press release, Allakos, MAR 14, 2024, View Source [SID1234641152]).

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Recent Allakos Events

Completed dosing in the single ascending dose (SAD) cohorts and continued dosing in the multiple ascending dose (MAD) cohorts of the randomized, double-blind, placebo-controlled Phase 1 trial of Intravenous (IV) AK006 in healthy volunteers.
Initiated the randomized, double-blind, placebo-controlled subcutaneous (SC) AK006 cohort in healthy volunteers.
Published preclinical research in Allergy showing that AK006 controls mast cell function through interaction with multiple activating receptors and key signaling pathways.
Presented preclinical data at the American Academy of Allergy, Asthma & Immunology (AAAAI) Annual Meeting 2024 highlighting AK006’s mechanism of action and ability to reduce MRGPRX2-induced skin inflammation.
Reported topline data from the Phase 2 study of SC lirentelimab in patients with atopic dermatitis and Phase 2b study of SC lirentelimab in patients with chronic spontaneous urticaria.
Halted lirentelimab-related development activities and announced a restructuring plan to reduce costs and focus on AK006 clinical development. As a result of the restructuring, Allakos expects its cash runway to extend into mid-2026.
Upcoming Allakos Anticipated Milestones

Report safety, pharmacokinetics (PK), and pharmacodynamic (PD) results from the Phase 1 trial of IV AK006 in healthy volunteers, including data to confirm Siglec-6 receptor occupancy in skin biopsy samples in Q2 2024.
Initiate the randomized, double-blind, placebo-controlled Phase 1 trial of IV AK006 in patients with chronic spontaneous urticaria in Q2 2024.
Report safety, PK, and PD results from the Phase 1 trial of SC AK006 in healthy volunteers, including data to confirm Siglec-6 receptor occupancy in skin biopsy samples in Q3 2024.
Report topline data from the Phase 1 trial of IV AK006 in patients with CSU at year end 2024
Cash Guidance

The Company expects that the restructuring activities will extend the cash runway into mid-2026.

The Company ended the fourth quarter of 2023 with approximately $170.8 million in cash, cash equivalents and investments. The Company’s outlook for 2024 cash, cash equivalents and investments is as follows:

Cash, cash equivalents and investments at year end 2023 $171 million
Estimated 2024 net cash used in operating activities (GAAP) ($85 to $90 million)
Estimated cash, cash equivalents and investments at year end 2024 $81 to $86 million

Components of estimated 2024 net cash used in operating activities for the year ended December 31, 2024 are as follows:

Estimated net cash used in operating activities (GAAP) $85 to $90 million
Less: estimated lirentelimab closeout, severance and other costs 1 ($30 million)
Estimated adjusted net cash used in operating activities (non-GAAP) 2 $55 to $60 million

1 The Company anticipates that the significant majority of the restructuring expenditures, including approximately $4 million of severance, will be paid in the first half of 2024.

2 For additional information on the Company’s use of non-GAAP financial information, please see the section titled "Non-GAAP Financial Measure" below.

Fourth Quarter 2023 Financial Results

Research and development expenses were $53.8 million in the fourth quarter of 2023 compared to $35.4 million in the fourth quarter of 2022, an increase of $18.4 million. This quarter over quarter increase is attributed to $15.0 million of increased manufacturing costs and $3.4 million of increased other research and development expenses related primarily to our clinical studies.

General and administrative expenses were $11.2 million for the fourth quarter of 2023 compared to $10.8 million for the fourth quarter of 2022, an increase of $0.4 million. The quarter over quarter change included $0.3 million of increase stock-based compensation expenses and $0.1 million increase in other general and administrative expenses.

Allakos reported a net loss of $62.6 million in the fourth quarter of 2023 compared to $43.0 million in the fourth quarter of 2022. The fourth quarter of 2023 included noncash expenses for stock-based compensation of $10.2 million, compared to $9.3 million in the same period in 2023, and depreciation expense of $1.5 million in each of the fourth quarters of 2023 and 2022. Net loss per basic and diluted share was $0.71 for the fourth quarter of 2023 compared to $0.50 in the fourth quarter of 2022.

Allakos ended the fourth quarter of 2023 with $170.8 million in cash, cash equivalents and investments resulting in a net decrease in cash, cash equivalents and investments of $23.1 million during the fourth quarter of 2023.