Since the rise of the omicron variant, the biotech and pharmaceutical sectors have been in the spotlight. While we’ve seen some companies with plenty to celebrate, not everyone has been so lucky. One company in particular has seen its shares plunge today after receiving some bad news. Allakos (NASDAQ:ALLK) reported disappointing results form multiple studies. And as a result, ALLK stock is falling sharply.
What’s Happening with ALLK Stock
So what do you need to know?
News this morning included a report that two studies from Allakos, both on monoclonal antibody Lirentelimab, did not achieve statistical significance. That verdict is one of the worst things anyone conducting a study can hear because it essentially means that the research has been deemed irrelevant.
Unsurprisingly, ALLK stock was quick to react very poorly to this news. As of this writing, shares have shed nearly 90% on astronomical trading volume. After spending the week hovering around $82, shares plunged to less than $10 apiece before the morning was over.
To say that this development is disconcerting would be an understatement.
Why It Matters
As noted, the omicron variant has spurred a new stage of the biotech boom. Allakos initially looked like a stock that could emerge as a winner. In May 2021, InvestorPlace analyst Louis Navellier named it a top pick for pharma stocks, noting its potential to treat many ailments and its unique approach to doing so.
That argument made sense at the time. Today, the market is even more ripe for antibody treatments, as Covid-19 has thrust that scientific concept into the mainstream.
For a stock like ALLK to recover the ground it lost today, though, it would take quite a bit. The type pf plunge that we saw today indicates that investors were spooked by the study results and were quick to jump ship, setting off a trend that pushed ALLK stock down even further. Pharmaceutical companies receiving disappoint results from studies is nothing unusual. In fact, it’s par for the course.
However, the size of its drop suggests something else. Lirentelimab is its lead drug candidate, meaning the bad news carries great weight for Allakos.
What It Means for Allakos
The biotech boom isn’t over yet. In fact, it may just be getting started.
Unless something dramatic changes, though, ALLK stock isn’t going to one of the breakout sensations of this trend. Investors should keep these bad results in mind when evaluating Allakos.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.