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Why Allakos Stock Skyrocketed 154% in August

Beth McKenna, The Motley Fool

What happened

Shares of clinical-stage biotech company Allakos (NASDAQ: ALLK) soared 154% in August, according to data from S&P Global Market Intelligence. For context, the S&P 500, including dividends, fell 1.6% last month.

In 2019, shares are up 63.6% through Sept. 6, versus the broader market's 20.5% return.

Allakos, which went public in mid-2018, is "developing therapeutic antibodies that selectively target immunomodulatory receptors present on the surface of immune effector cells involved in allergic, inflammatory, and proliferative diseases," according to its website. The company's initial focus is on rare stomach diseases.  

Young blond woman in a white lab coat using a microscope in a lab.

Image source: Getty Images.

So what

We can attribute Allakos stock's powerful performance last month to the company's Aug. 5 release of positive drug study data, which sent shares rocketing 111% higher. 

In the phase 2 trial for eosinophilic gastritis (EG) and eosinophilic gastroenteritis (EGE) indications, AK002 met all the primary and secondary endpoints. Moreover, the study also showed that patients with comorbid eosinophilic esophagitis (EOE) treated with AK002 "experienced statistically significant decreases in esophageal eosinophil counts and substantial reductions in patient reported dysphagia symptoms," according to the press release. "The data suggest that AK002 could provide rapid and sustained benefit in patients with eosinophil gastrointestinal diseases," said Dr. Evan Dellon, a principal investigator of the study and professor of gastroenterology at the University of North Carolina, Chapel Hill.

Now what

Allakos has a big opportunity because there are no treatments approved specifically for EG, EGE, and EOE, according to the press release. The company estimates that the prevalence of EG and EGE in the United States is about 50,000 patients, while the prevalence of EOE in the U.S. is about 150,000 patients.

Investors comfortable with the risks associated with clinical-stage biotechs might want to put Allakos stock on their watchlist.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com