UPDATE 2-Allakos tumbles after skin disease drug fails mid-stage studies

(Updates shares in paragraph 1, adds details on studies and restructuring throughout)

Jan 16 (Reuters) - Allakos on Tuesday said its experimental skin disease drug failed to meet the main goal in two mid-stage studies, sending its shares tumbling nearly 50% in premarket trading.

The company said it will stop further development of the drug, lirentelimab, as it did not reduce symptoms of either of the skin conditions it was being tested for in the studies.

Lirentelimab was one of two lead drug candidates for Allakos. It said it will now shift its focus to the development of its other lead drug, AK006, which is in early stages of development.

The drug developer also said it will halt any manufacturing and administrative activities related to lirentelimab and cut its workforce by half.

The company had 123 full-time employees as of Dec. 31, 2022, based on its latest annual regulatory filing. California-based Allakos was testing lirentelimab as a potential treatment for two skin conditions - atopic dermatitis and chronic spontaneous urticaria.

Both the lead drugs work by reducing or hindering the action of mast cells or white blood cells known as eosinophils, which are elevated in patients with the two diseases.

The most common adverse events related to lirentelimab were injection-related reactions.

Allakos plans to report data from a study testing AK006 as a treatment for chronic spontaneous urticaria by end-2024.

The layoffs and restructuring actions are expected to extend the company's cash runway into mid-2026, it said.

Allakos ended the fourth quarter of 2023 with about $171 million in cash and cash equivalents, and said it expects to report $81 million to $86 million by the end of 2024.

Shares of the California-based drug developer fell to $1.32 in premarket trading. (Reporting by Sneha S K; Editing by Sonia Cheema)