UBS cuts ALX Oncology target to $2.20, keeps Buy rating

Bristow's report suggests that the current share price does not account for the potential success of subsequent programs, including those for head and neck squamous cell carcinoma (HNSCC), immuno-oncology (IO), or antibody-drug conjugate (ADC) combinations. The price target was reduced by adjusting the multiple of discounted sales from 1x to 0.5x, aligning with other small to mid-size oncology stocks that also lack significant clinical validation. Despite the price target reduction, UBS views the risk/reward balance for ALX Oncology as positively skewed and continues to recommend a Buy rating. InvestingPro analysis indicates the company maintains a strong liquidity position with a current ratio of 4.82 and more cash than debt on its balance sheet, though it's currently experiencing rapid cash burn. Additional financial health indicators and 8 more ProTips are available with an InvestingPro subscription. InvestingPro analysis indicates the company maintains a strong liquidity position with a current ratio of 4.82 and more cash than debt on its balance sheet, though it's currently experiencing rapid cash burn. Additional financial health indicators and 8 more ProTips are available with an InvestingPro subscription.

ALX Oncology's recent data release from the ASPEN-06 study has sparked discussions regarding the isolated clinical activity of evorpacept. The study's progression-free survival (PFS) results did not show a clear differentiation between the treatment and control arms in the intent-to-treat population. However, Bristow noted that later-presented Kaplan-Meier curves hinted at potential benefits, though these were obscured by the trial's design and the small sample size.

The analysis delved into the efficacy measures among subgroups of patients with or without confirmed HER2 expressions. UBS highlighted the company's observation about the impact of HER2 expression loss on the efficacy of the evo combination treatment. Despite the phase 2 results necessitating further investigation of evorpacept in HER2-positive gastric cancer in a larger phase 3 study, the recent anti-TIGIT phase 3 trial failure underscores the need for robust efficacy to succeed in immuno-oncology trials.

Bristow's report suggests that the current share price does not account for the potential success of subsequent programs, including those for head and neck squamous cell carcinoma (HNSCC), immuno-oncology (IO), or antibody-drug conjugate (ADC) combinations. The price target was reduced by adjusting the multiple of discounted sales from 1x to 0.5x, aligning with other small to mid-size oncology stocks that also lack significant clinical validation. Despite the price target reduction, UBS views the risk/reward balance for ALX Oncology as positively skewed and continues to recommend a Buy rating.

In other recent news, ALX Oncology has seen several significant developments. The company reported encouraging results from its Phase 2 ASPEN-06 clinical trial, demonstrating a significant tumor response in patients with HER2-positive advanced gastric cancer using its investigational drug, evorpacept. The U.S. Food and Drug Administration has also granted Fast Track designation for evorpacept, emphasizing its potential as a second-line treatment.

On the analyst front, Stifel maintained a Hold rating on ALX Oncology, keeping a steady price target of $3.00. H.C. Wainwright analysts, while reducing their price target for ALX Oncology to $5, maintained a Buy rating. However, Jefferies downgraded ALX Oncology's stock from 'Buy' to 'Hold', reducing the price target from $12.00 to $2.00 due to uncertainties in the company's future plans.

In terms of internal changes, ALX Oncology announced the adoption of a new equity incentive plan, reserving 1.5 million shares of common stock for issuance in various forms of equity awards. Additionally, the company's Chief Medical (TASE:PMCN) Officer, Sophia Randolph, resigned but will continue to provide consulting services for up to 18 months. These are the recent developments in ALX Oncology.

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