Alx Oncology Stock Downgrade

Shares of Alx Oncology (NASDAQ:ALXO) fell in pre-market trading on Thursday after Jefferies downgraded the stock from a "buy" to a "hold" rating, citing concerns over clinical trial results and the higher burden of proof for its flagship drug, evorpacept.

Jefferies analysts noted that while ALX Oncology initially generated investor excitement with its Phase II interim results in gastric cancer, the complete dataset revealed weaker outcomes. The study's objective response rate and progression-free survival appeared less compelling upon further analysis.

Analysts attributed the diminished efficacy in the later phases of the trial to inconsistencies, raising doubts about the drug's performance in broader applications. The downgrade reflects broader uncertainties tied to the company's pipeline, with ongoing trials for head and neck cancer showing only modest differentiation from existing treatments like Keytruda.

Additionally, experimental combinations with antibody-drug conjugates such as Padcev and Enhertu face low expectations due to limited and non-randomized data. Financial constraints are critical; ALX Oncology's cash reserves are projected to last only until the first quarter of 2026, which may hinder the company’s ability to advance its clinical programs effectively, increasing risks for investors.

Currently, ALX Oncology's stock is trading at $1.79, with Jefferies reducing its price target to $2 from $12, signaling tempered expectations for the company's near-term prospects. While there remains potential for better data readouts in 2025, Jefferies emphasized that the burden lies on the company to demonstrate clear and consistent value for its therapies.