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On Tuesday, H.C. Wainwright reaffirmed its Buy rating and $2.00 price target for ALX Oncology (NASDAQ:ALXO), following the company’s virtual investor event. The stock, currently trading at $0.46, has shown resilience with an 8.14% gain over the past week, despite experiencing a challenging year with a 72% decline year-to-date. According to InvestingPro data, analyst price targets range from $1 to $3, suggesting potential upside from current levels. During this event, ALX Oncology presented preclinical data and outlined the development strategy for its EGFR-targeted ADC, ALX2004. The drug is noted for its unique design, incorporating a proprietary topoisomerase 1 inhibitor payload linked to an EGFR-targeting antibody through a specialized linker.
The company highlighted the discovery of a distinctive anti-EGFR antibody, which binds to an epitope not recognized by any FDA-approved antibodies, such as cetuximab and panitumumab. This antibody’s high affinity is believed to enhance tumor uptake while minimizing healthy tissue exposure. H.C. Wainwright analysts believe that this design could be pivotal in treating patients who have developed resistance to existing EGFR antibody treatments.
ALX Oncology’s proprietary linker-payload architecture, which uses cysteine conjugation with advanced chemistry, is engineered for plasma stability. This stability is crucial for ensuring that the payload is released specifically in the tumor environment, reducing the potential for systemic exposure. The company maintains a strong liquidity position with a current ratio of 5.47 and more cash than debt on its balance sheet, providing runway for its development programs.InvestingPro subscribers have access to 10+ additional tips and comprehensive financial metrics that could help evaluate ALXO’s investment potential. Moreover, the payload itself, a novel topoisomerase 1 inhibitor, has demonstrated a broad therapeutic window, effectively killing tumor cells and potentially impacting neighboring EGFR-expressing tumor cells through a bystander effect.
In summary, H.C. Wainwright’s analysis suggests that ALX2004 has been crafted to target EGFR-resistant tumors effectively while limiting systemic exposure. The firm’s reiterated Buy rating and $2 price target reflect confidence in the drug’s design and its potential within the oncology treatment landscape. With a market capitalization of just $24.78 million and trading below InvestingPro’s Fair Value estimate, the stock could present an opportunity for investors willing to accept the risks associated with early-stage biotech companies.
In other recent news, ALX Oncology Holdings Inc. has reported promising results from a Phase 1/2 trial for its lead drug candidate, evorpacept, in combination with rituximab and lenalidomide for B-cell non-Hodgkin lymphoma. The trial demonstrated a complete response rate of 83%, significantly higher than historical rates with the R2 regimen alone. However, in a different development, ALX Oncology announced that its Phase 2 trials for evorpacept in combination with Merck (NSE:PROR)’s KEYTRUDA for advanced head and neck squamous cell carcinoma did not meet primary endpoints, leading to the discontinuation of this combination for HNSCC.
Additionally, ALX Oncology has received FDA clearance for an Investigational New Drug application for ALX2004, a novel antibody-drug conjugate targeting solid tumors with EGFR expression, and plans to start Phase 1 trials in mid-2025. Meanwhile, the company faces potential Nasdaq delisting for failing to meet the minimum bid price requirement, with a deadline set for October 2025 to regain compliance. In light of these developments, Stifel analysts have reduced the stock’s price target to $1.50, maintaining a Hold rating due to concerns over development strategies and regulatory risks.
Despite these challenges, ALX Oncology remains committed to advancing its pipeline, including ongoing evaluations of evorpacept in various cancer indications. The company is also planning an R&D call focused on ALX2004 in the second quarter of 2025. These updates reflect the company’s ongoing efforts to navigate complex regulatory landscapes and develop innovative cancer therapies.
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