GlobeNewswire Inc | Nov 9, 2020 08:01AM EST

November 09, 2020

REDWOOD CITY, Calif., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Allakos Inc. (the Company) (Nasdaq: ALLK), a biotechnology company developing lirentelimab (AK002) for the treatment of eosinophil and mast cell-related diseases, today reported financial results for the third quarter endedSeptember 30, 2020 and provided an update of its ongoing development activities.

Business Updates

-- Announced positive results from our prospective prevalence study showing that 45%(181/405) ofsymptomaticpatientsbiopsied with chronic unexplained gastrointestinal (GI) symptoms or functional gastrointestinal disorders (FGIDs) such as irritable bowel syndrome (IBS) and functional dyspepsia (FD) met the histologic criteria foreosinophilic gastritis (EG) and/or eosinophilic duodenitis (EoD). The results suggest that EG and/or EoD are significantly underdiagnosed among these patients. Since many people in the United States and worldwide suffer from chronic unexplained gastrointestinal symptoms or FGIDs, the results from this study suggest that EG and/or EoD may be more common than previously documented in the literature. -- Announced positive safety, pharmacokinetic, and pharmacodynamic results from a randomized, double-blind, placebo-controlled Phase 1 study of subcutaneous lirentelimab in healthy volunteers. The results showed that subcutaneously administered lirentelimab had bioavailibity of 63% and suppressed eosinophils for up to 85 days. Subcutaneously administered lirentelimab was well tolerated with no serious adverse events, no injection site reactions, and no injection reactions/infusion-related reactions. -- Announced the publication of the positive results from the Phase 2 study of lirentelimab in patients with EG and/or EoD (ENIGMA) in the New England Journal of Medicine. -- Closed an underwritten public offering in November 2020, issuing 3,506,098 shares of common stock at an offering price of $82.00 per share. Aggregate net proceeds received from the offering were approximately $271.7 million, after deducting underwriting discounts and commissions. -- The randomized, double-blind, placebo-controlled Phase 3 study of lirentelimab in patients with EG and/or EoD is ongoing with topline data expected in the second half of 2021. -- The randomized, double-blind, placebo-controlled Phase 2/3 study of lirentelimab in patients with eosinophilic esophagitis (EoE) is ongoing with topline data expected in the second half of 2021.

Third Quarter 2020 Financial Results

Research and development expenses were $30.4 million in the third quarter of 2020 as compared to $16.1 million in the same period in 2019, an increase of $14.3 million.

General and administrative expenses were $12.1 million in the third quarter of 2020 as compared to $7.5 million in the same period in 2019, an increase of $4.6 million.

Allakos reported a net loss of $42.1 million in the third quarter of 2020 as compared to $21.7 million in the same period in 2019, an increase of $20.4 million. Net loss per basic and diluted share was $0.86 for the third quarter of 2020 compared to $0.47 in the same period in 2019.

Allakos ended the third quarter of 2020 with $419.8 million in cash, cash equivalents and marketable securities, which does not include the $271.7 million of net proceeds received from the Companys follow-on public offering in November 2020.

AboutAllakos

Allakosis a clinical stage biotechnology company developing antibodies that target immunomodulatory receptors present on immune effector cells involved in allergic, inflammatory, and proliferative diseases. The Companys lead antibody, lirentelimab (AK002), is being evaluated in a Phase 3 study in eosinophilic gastritis (EG) and/or eosinophilic duodenitis (EoD) and a Phase 2/3 study in eosinophilic esophagitis (EoE). Lirentelimabtargets Siglec-8, an inhibitory receptor selectively expressed on human mast cells and eosinophils. Inappropriately activated eosinophils and mast cells have been identified as key drivers in a number of severe diseases affecting the gastrointestinal tract, eyes, skin, lungs and other organs. Lirentelimab has been tested in multiple clinical studies. In these studies, lirentelimab eliminated blood and tissue eosinophils, inhibited mast cells and improved disease symptoms in patients with EG and/or EoD, EoE, mast cell gastrointestinal disease, severe allergic conjunctivitis, chronic urticaria and indolent systemic mastocytosis.For more information, please visit the Company's website at www.allakos.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, Allakos progress and business plans, the expected timing of anticipated study results and plans relating to its future clinical trials. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially from current expectations and beliefs, including but not limited to: Allakos stages of clinical drug development; Allakos ability to timely complete clinical trials for, and if approved, commercialize lirentelimab (AK002), its lead compound; Allakos ability to obtain required regulatory approvals for its product candidates; uncertainties related to the enrollment of patients in its clinical trials; Allakos ability to demonstrate sufficient safety and efficacy of its product candidates in its clinical trials; uncertainties related to the success of later-stage clinical trials, regardless of the outcomes of preclinical testing and early-stage trials; market acceptance of Allakos product candidates; uncertainties related to the projections of the size of patient populations suffering from the diseasesAllakosis targeting; Allakos ability to advance additional product candidates beyond lirentelimab; Allakos ability to obtain additional capital to finance its operations; and other important risk factors set forth in Allakos most recent Annual Report on Form 10-K filed with theSEConFebruary 25, 2020, Quarterly Report on Form 10-Q filed with theSEConNovember 9, 2020and future reports to be filed with theSEC. These documents contain and identify important factors that could cause the actual results forAllakosto differ materially from those contained in Allakos forward-looking statements. Any forward-looking statements contained in this press release speak only as of the date hereof, andAllakosspecifically disclaims any obligation to update any forward-looking statement, except as required by law. These forward-looking statements should not be relied upon as representing Allakos views as of any date subsequent to the date of this press release.

Source: Allakos Inc.

Investor Contact: Media Contact:Adam Tomasi, President and COO Denise Powellir@allakos.com denise@redhousecomms.com

ALLAKOS INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share data)(unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating expensesResearch and $ 30,380 $ 16,067 $ 77,011 $ 45,276 developmentGeneral and 12,055 7,517 35,701 19,292 administrativeTotal operating 42,435 23,584 112,712 64,568 expensesLoss from (42,435 ) (23,584 ) (112,712 ) (64,568 )operationsInterest income, 766 1,887 4,039 3,888 netOther expense, (417 ) (35 ) (529 ) (77 )netNet loss (42,086 ) (21,732 ) (109,202 ) (60,757 )Unrealized gain(loss) on (620 ) (12 ) 30 117 marketableSecuritiesComprehensive $ (42,706 ) $ (21,744 ) $ (109,172 ) $ (60,640 )lossNet loss per common share:Basic and $ (0.86 ) $ (0.47 ) $ (2.24 ) $ (1.38 )dilutedWeighted-averagenumber of commonsharesoutstanding:Basic and 48,950 46,280 48,819 44,025 diluted

ALLAKOS INC. CONDENSED BALANCE SHEETS (in thousands)

September 30, December 31, 2020 2019 (unaudited) Assets Current assets: Cash and cash equivalents $ 104,303 $ 38,367 Investments in marketable securities 315,452 457,534 Prepaid expenses and other current assets 5,012 3,969 Total current assets 424,767 499,870 Property and equipment, net 7,340 8,410 Operating lease right-of-use assets 5,558 5,775 Other long-term assets 2,839 2,839 Total assets $ 440,504 $ 516,894 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 7,581 $ 5,963 Accrued expenses and other current liabilities 11,359 7,098 Total current liabilities 18,940 13,061 Other long-term liabilities 7,752 8,112 Total liabilities 26,692 21,173 Stockholders' equity: Common stock 49 48 Additional paid-in capital 712,282 685,020 Accumulated other comprehensive gain 167 137 Accumulated deficit (298,686 ) (189,484 )Total stockholders? equity 413,812 495,721 Total liabilities and stockholders? equity $ 440,504 $ 516,894