ALX Oncology Holdings Inc. (NASDAQ:ALXO) is a clinical-stage biotechnology company at the forefront of developing novel therapies that harness the power of the immune system to treat cancer. With its lead product candidate, evorpacept, the company is pioneering a unique approach to checkpoint inhibition that aims to enhance anti-tumor immune responses and improve patient outcomes.

Company Background

ALX Oncology Holdings Inc. was formed as a Delaware corporation on April 1, 2020, with the purpose of completing the company's initial public offering of its common stock and related transactions to carry on the business of ALX Oncology Limited, its wholly-owned subsidiary. ALX Oncology Limited, incorporated in Ireland, was founded in 2015 as a clinical-stage immuno-oncology company focused on helping patients fight cancer by developing therapies that block the CD47 checkpoint pathway and bridge the innate and adaptive immune system.

Initial Public Offering and Follow-on Offering

In July 2020, ALX Oncology Holdings Inc. completed its initial public offering, raising net proceeds of $169.5 million. This allowed the company to advance the clinical development of evorpacept and fund its other research and development programs. In December 2020, the company completed a follow-on public offering, raising an additional $194.9 million in net proceeds, further strengthening its financial position.

Challenges and Milestones

The company has faced some challenges over the years. In 2015, when ALX Oncology Limited was founded, the company had to establish its research and development capabilities from the ground up. Additionally, in 2020, the COVID-19 pandemic impacted the company's clinical trial operations, leading to delays in enrollment and disruptions. However, the company was able to adapt and navigate these challenges.

Despite the obstacles, ALX Oncology has achieved several key milestones. In 2020, the FDA granted Fast Track designation for evorpacept in combination with pembrolizumab, platinum, and fluorouracil for the first-line treatment of adult patients with metastatic or unresectable, recurrent head and neck squamous cell carcinoma. This designation was intended to facilitate the development and expedite the review of drugs to treat serious conditions. In 2022, the company's Orphan Drug Designation for evorpacept for the treatment of gastric/gastroesophageal junction cancer was granted by the FDA and the European Commission, providing several benefits, including financial incentives and regulatory assistance, to support the development of drugs for rare diseases.

Financials

ALX Oncology's financial position has remained stable, with a cash, cash equivalents, and investments balance of $186.20 million as of June 30, 2024. This solid financial foundation has enabled the company to fund its ongoing clinical trials and research efforts, which include exploring evorpacept in various cancer indications, both as a monotherapy and in combination with other targeted therapies and immune checkpoint inhibitors.

The company's financial performance reflects its status as a clinical-stage biotechnology company focused on research and development. For the fiscal year 2023, ALX Oncology reported no revenue, a net loss of $160,805,000, negative operating cash flow of $130,364,000, and negative free cash flow of $131,638,000. In the most recent quarter (Q2 2024), the company continued to report no revenue, with a net loss of $39,399,000, negative operating cash flow of $26,566,000, and negative free cash flow of $26,656,000. The increased net loss and negative cash flows in Q2 2024 compared to the prior year quarter were primarily attributed to higher research and development expenses as the company advanced its clinical programs, particularly the evorpacept program.

ALX Oncology's liquidity position remains strong, with a debt-to-equity ratio of 0.07 as of June 30, 2024. The company's current ratio and quick ratio both stand at 4.39, indicating a healthy short-term financial position. Additionally, ALX Oncology has access to a $100 million secured term loan facility with Oxford Finance and Silicon Valley Bank, of which $10 million was drawn as of June 30, 2024. An additional $65 million may become available upon achievement of certain milestones, and $25 million is available at the lenders' discretion, providing the company with financial flexibility to support its ongoing research and development efforts.

Evorpacept: Lead Product Candidate

Evorpacept, the company's lead product candidate, is a highly differentiated CD47 blocker designed to overcome the limitations of previous approaches. By combining a high-affinity CD47-binding domain with an inactivated Fc domain, evorpacept aims to selectively block the "don't eat me" signal expressed by cancer cells while minimizing the hematologic toxicities associated with other CD47-targeting therapies. This unique design has the potential to enhance the effectiveness of evorpacept in stimulating an anti-tumor immune response without compromising patient safety.

Clinical Development Strategy

ALX Oncology's clinical development strategy for evorpacept is multifaceted, with ongoing trials evaluating the candidate in a range of solid tumors and hematological malignancies. The company's lead indications include head and neck squamous cell carcinoma, gastric/gastroesophageal junction carcinoma, urothelial cancer, breast cancer, non-Hodgkin lymphoma, and multiple myeloma. These trials are assessing evorpacept both as a monotherapy and in combination with various standard-of-care agents and emerging immunotherapies.

The results from these studies have been encouraging, with the ASPEN-6 trial in gastric/gastroesophageal junction carcinoma demonstrating a confirmed overall response rate of 40.3% for the evorpacept-containing arm, compared to 26.6% for the control arm. Additionally, the ASPEN-7 trial evaluating evorpacept in combination with the antibody-drug conjugate enfortumab vedotin in urothelial cancer has reported an unconfirmed overall response rate of 61%. These data highlight the potential of evorpacept to enhance the efficacy of existing cancer therapies while maintaining a favorable safety profile.

Strategic Collaborations

Beyond its clinical progress, ALX Oncology has also established several strategic collaborations to further explore the utility of evorpacept. The company has partnered with Jazz Pharmaceuticals, Quantum Leap Healthcare Collaborative, and Sanofi to evaluate evorpacept in combination with their respective investigational and approved therapies. These collaborations not only expand the breadth of evorpacept's clinical development but also demonstrate the broader industry recognition of the candidate's differentiated mechanism of action and potential to improve patient outcomes.

COVID-19 Impact and Mitigation

Despite the challenges posed by the COVID-19 pandemic and the recent volatility in the financial markets, ALX Oncology has remained focused on advancing its clinical programs and navigating the evolving oncology landscape. The company has implemented measures to mitigate the impact of the pandemic on its operations, including the adoption of remote monitoring and virtual patient visits, ensuring the continuity of its clinical trials.

Future Outlook

Looking ahead, ALX Oncology's pipeline holds significant promise, with evorpacept and its early-stage programs, such as the ALTA-2 collaboration with Tallac Therapeutics, positioning the company as a leader in the immuno-oncology field. As the company continues to execute on its strategic priorities and deliver on its clinical milestones, it is well-poised to make a meaningful impact on the lives of cancer patients.

The immuno-oncology industry, in which ALX Oncology operates, has been experiencing robust growth, with a compound annual growth rate (CAGR) of approximately 15-20% in recent years. This growth is driven by the continuous development and commercialization of novel targeted cancer therapies, providing a favorable environment for companies like ALX Oncology to advance their innovative approaches to cancer treatment.

Conclusion

In conclusion, ALX Oncology is a clinical-stage immuno-oncology company that is advancing innovative therapies to address the unmet needs of cancer patients. With its lead product candidate evorpacept, the company is pioneering a unique approach to checkpoint inhibition, leveraging its strong financial position and strategic collaborations to drive the development of transformative cancer treatments. As ALX Oncology continues to make progress in its clinical programs, it remains a compelling investment opportunity for those seeking exposure to the dynamic and rapidly evolving immuno-oncology landscape. While the company currently operates without revenue, its solid cash position and access to additional funding provide a runway for continued research and development efforts. The promising clinical results from its ongoing trials, coupled with the potential of its pipeline, position ALX Oncology as a noteworthy player in the pursuit of next-generation cancer therapies.