On Wednesday, Stifel maintained its Hold rating on ALX Oncology (NASDAQ:ALXO), with a steady stock price target of $14.00. The firm's analysis followed the presentation of new single-arm efficacy data from an evorpacept non-Hodgkin lymphoma (NHL) combination at the American Association for Cancer Research (AACR) on April 2, 2024.
This data is said to support the view that evorpacept can enhance the tumor cell killing abilities of monoclonal antibodies without introducing significant toxicity.
The company's stock response was subdued, attributed to the limited sample size of the study, which involved 20 participants. Additionally, the results did not suggest a new independent pivotal development plan for ALX Oncology. The firm's current financing is believed to support only solid tumor plans, including an ongoing second-line HER2+ gastric cancer pivotal.
ALX Oncology, a clinical-stage biotechnology company, is noted for its anti-CD47 data in combination with standards of care in solid tumors. The firm considers ALX Oncology's CD47 blocker, evorpacept, as potentially the best in its class due to its design that augments other anti-cancer therapies while limiting hematological toxicities seen with other CD47 blockers.
Despite this, evorpacept's most compelling data is in a relatively small solid tumor indication, HER2+ gastric cancer. This market is estimated to be worth a few hundred million dollars at most and faces competition from antibody-drug conjugates (ADCs) already launched for this indication.
ALX Oncology is also undergoing testing in other combinations with PD-1 inhibitors, anti-cancer antibodies, and ADCs. Still, the evidence is currently insufficient to suggest that evorpacept in combination with PD-1 inhibitors will be effective in a large head and neck squamous cell carcinoma (HNSCC) study.
Moreover, development plans for the more significant ADC combinations, which hold multi-billion dollar potential and are considered more likely to succeed compared to PD-1 combinations, have not been clearly outlined. Stifel's Hold thesis is based on this lack of clarity in the company's development strategy for these opportunities.
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