- Most of the value in Allakos shares was wiped out due to unsatisfactory results from late-stage clinical trials conducted in 2021.
- Despite this, shares of the biotech company are climbing higher today.
- It would appear that investors are bidding up the price of the company’s shares in preparation for positive late-stage trial findings.
The once-struggling stock of biotechnology company Allakos (NASDAQ:ALLK) is exhibiting upward movement today. As of Wednesday afternoon at 1:15 p.m. Eastern Time, the share price of a clinical-stage immunomodulatory receptor specialist had increased by a robust 24.7% on high volume.
What factors contribute to today’s rise in the stock price of the biotech company? It is interesting to note that Allakos (NASDAQ:ALLK) has not made any significant announcements since the publication of its earnings report for the second quarter of the fiscal year 2022, nearly a whole month ago. On the other hand, investors appear to be doing nothing more than positioning themselves in advance of a significant incoming catalyst that will be released next month.
Because of this bullish tendency, there are definitely some short-sellers who are reevaluating their position right now. As a consequence, short covering might be a factor contributing to this significant swing northward by more than ten. Since the biotech company’s late-stage monoclonal antibody lirentelimab failed to meet the goalpost as a therapy for eosinophilic gastrointestinal illnesses around last year, Allakos (NASDAQ:ALLK) stock has been a hot target for short sellers ever since then.
Which near-term catalyst is likely to be attracting the attention of investors right now? By the end of the next month, Allakos (NASDAQ:ALLK) is planning to announce the top-line results of the lirentelimab late-stage trial for eosinophilic duodenitis. After experiencing a precipitous decline over the previous year, the share price of Allakos could experience a meteoric rise if these crucial figures are accurate.
Is purchasing Allakos (NASDAQ:ALLK) stock worth the potential downside? This microcap biotech company is the very definition of a bet with high risk and a potentially significant profit. If the phase 3 clinical trial for eosinophilic duodenitis is successful, the share price of Allakos might more than quadruple in value. On the other hand, if lirentelimab fails in yet another indication, the biotech company’s stock could fall by another significant amount. Therefore, it would be wise for investors to approach this potentially volatile biopharma company with caution for the time being.
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