Allakos, Inc. (ALLK) Accused of Misleading Shareholders
According to the complaint against the Company for alleged violations of the Securities Exchange Act of 1934 between August 5, 2019 and December 17, 2019, on August 5, 2019, Allakos, Inc. (ALLK) announced that its drug AK002 had met all pre-specified primary and secondary endpoints in its Phase 2 clinical trial (the “ENIGMA Trial”). Touting the success of the ENIGMA Trial, the Company then filed its prospectus with the SEC offering 4.5 million shares of common stock at $77.00 per share. Contrary to the trial’s purported success, on December 18, 2019, Seligman Investments published a report identifying several concerns with the ENIGMA trial, including but not limited to “flagrant nepotism in key clinical roles,” “poor controls as well as Allakos’ role in running the study itself,” and trial results that were compromised by ample use of steroids, glaring omissions, cherry-picked measures, and statistical gimmicks and obfuscation. Since this news, shares of Allakos have precipitously declined and currently trade at around $58.00, representing an almost 58% decline from its class period high of $137.73.
