- After Allkos announced poor late-stage trial results last year, the biotech stock lost most of its value.
- The firm’s shares, on the other hand, were recovering Wednesday.
- Investors are betting that the company’s late-stage clinical trials will be successful, driving the stock price.
What’s going on with Allakos stock
The beaten-down biotech Allakos stock was soaring yesterday. As of the market close on Wednesday, the stock price of the clinical-stage immunomodulatory receptor specialist was up by over 19%, on heavy volume.
What was powering the biotech firm’s stock higher yesterday? Allakos (NASDAQ:ALLK) hasn’t issued any important news since its 2022 second-quarter earnings release, nearly an entire month ago. In turn, investors appear to simply be positioning themselves for a key upcoming catalyst set to come out next month.
Why we care
This rising trend might be forcing short-sellers to reconsider their position right now. As a result, the short covering may have helped contribute to this almost 20% increase in asset value. After all, Allakos shares have been a popular short-selling target since the biotech’s late-stage monoclonal antibody lirentelimab missed the target as a treatment for eosinophilic gastrointestinal diseases (EGIDs) late last year.
What near-term catalyst is catching investors’ attention right now? By the end of next month, Allakos expects to reveal the top-line results for lirentelimab’s late-stage trial for eosinophilic duodenitis. Allakos’s shares could surge back after last year’s steep decline if this crucial data is accurate.
Is Allakos’ stock worth the gamble? This small-cap biotech is a textbook example of a high-risk, high-reward investment. For instance, on positive phase 3 results for eosinophilic duodenitis, Allakos share price might increase fourfold. In contrast, if lirentelimab stumbles in another indication, the biotech’s stock might drop even further. As a result, investors may wish to adopt a cautious approach with this high-risk biopharmaceutical company for the time being, even though Allakos stock was soaring yesterday.