On Thursday, Jefferies issued a downgrade for ALX Oncology (NASDAQ:ALXO) stock from 'Buy' to 'Hold', significantly reducing the price target from $12.00 to $2.00. The decision comes after a detailed assessment of the company's recent clinical trial outcomes. InvestingPro data reveals the company's stock has already declined 87% year-to-date, with a current market capitalization of $97 million.
ALX Oncology had previously generated enthusiasm among investors with promising Phase II interim data in gastric cancer, showing proof-of-concept in solid tumors. However, the full Phase II data did not live up to the initial expectations, with efficacy declining in the second half of the study after the interim results. According to InvestingPro analysis, the company is quickly burning through cash, with a weak overall financial health score.
The downgrade reflects increasing uncertainty regarding the company's 2025 readouts and the growing challenge to demonstrate the additive value of CD47, a key component in ALX Oncology's treatment approach. The analyst cited the significant drop in efficacy observed in the later part of the Phase II gastric cancer study as a concerning development.
The lowered price target of $2.00 represents a stark reassessment of ALX Oncology's potential market performance, given the latest clinical trial data. The firm's analysis indicates a cautious outlook for the company's near-term prospects.
Jefferies' new rating and price target adjustment for ALX Oncology are based on the latest available data and the firm's interpretation of the company's research progress and market potential. The report emphasizes the heightened difficulty for ALX Oncology to prove the value of its treatments in the competitive oncology space.
In other recent news, ALX Oncology has seen significant developments in its operations. Following the release of positive results from a clinical trial involving ALX Oncology's evo and JAZZ Pharmaceuticals' zanidatamab, Stifel maintained its Hold rating on the company's shares. The trial demonstrated an impressive response rate in patients with HER2-positive metastatic breast cancer, leading ALX Oncology to advance evo into the second-line treatment setting.
In addition to these promising clinical results, ALX Oncology announced the resignation of its Chief Medical (TASE:PMCN) Officer, Sophia Randolph. The company has expressed gratitude for Dr. Randolph's contributions and has initiated the search for her replacement. Despite her departure, she will continue to provide consulting services to ALX Oncology for up to 18 months.
In other developments, ALX Oncology has reported encouraging results from its Phase 2 ASPEN-06 clinical trial. The trial evaluated the efficacy of evorpacept in patients with HER2-positive advanced gastric or gastroesophageal junction cancer.
Furthermore, the U.S. Food and Drug Administration granted Fast Track designation to evorpacept for the treatment of HER2-positive gastric or GEJ carcinoma.
Lastly, analyst firms UBS and Piper Sandler have maintained 'Buy' and 'Overweight' ratings respectively, while Stifel has maintained its 'Hold' rating on ALX Oncology shares. These are the recent developments in ALX Oncology.
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