8-K: ALX Oncology Reports Positive Clinical Trial Results and Secures Funding

ALX Oncology announced positive results from a Phase 2 trial of evorpacept in gastric cancer, along with a successful public offering and financial results for 2023.

Summary

• ALX Oncology reported its fourth quarter and full year 2023 financial results, highlighting a period of significant growth.
• The company's lead drug, evorpacept, showed promising results in a Phase 2 trial for HER2-positive gastric cancer, with a 52% overall response rate in the treatment arm compared to 22% in the control arm.
• The median duration of response was not reached in the evorpacept arm, while it was 7.4 months in the control arm.
• ALX Oncology completed an oversubscribed public offering, raising approximately $63.2 million, extending their cash runway into early 2026.
• The company's cash, cash equivalents, and investments totaled $218.1 million as of December 31, 2023.
• Research and development expenses increased to $41.8 million for the quarter and $141.8 million for the year, driven by increased clinical trial activity.
• The company reported a GAAP net loss of $45.5 million for the fourth quarter and $160.8 million for the full year 2023.
• ALX Oncology anticipates multiple clinical data readouts over the next 12-18 months across various cancer types.

Sentiment

Score: 8

Explanation: The document presents very positive clinical trial results and a successful capital raise, indicating strong potential for the company. However, the significant net losses and increased R&D expenses temper the overall sentiment slightly.

Positives

• The ASPEN-06 Phase 2 trial showed a significantly higher overall response rate for evorpacept compared to the control group.
• The median duration of response was not reached in the evorpacept arm, indicating a potentially durable treatment effect.
• The company successfully raised $63.2 million, strengthening its financial position.
• The company has a strong cash position of $218.1 million, sufficient to fund operations into early 2026.
• Evorpacept's safety profile remains consistent and well-tolerated.
• The company has multiple clinical milestones expected in 2024, indicating a robust pipeline.

Negatives

• The company reported a GAAP net loss of $45.5 million for the fourth quarter and $160.8 million for the full year 2023.
• Research and development expenses increased significantly due to increased clinical trial activity and manufacturing costs.
• The company's cash position decreased from $282.9 million at the end of 2022 to $218.1 million at the end of 2023.

Risks

• The company is dependent on the success of its clinical trials, and there is no guarantee that future trials will be successful.
• The company is subject to the risks associated with drug development, including regulatory approvals and manufacturing challenges.
• The company's financial performance is dependent on its ability to raise additional capital in the future.
• The company faces competition from other companies developing cancer therapies.
• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Future Outlook

ALX Oncology expects to report multiple value inflection data points over the next 12-18 months and plans to expand evorpacept's value to other tumor types. The company anticipates initiating a Phase 3 registrational trial for evorpacept in Q4 2024.

Management Comments

• This past year proved to be a profound growth period for ALX Oncology highlighted by evorpacepts positive results in the prespecified randomized interim analysis of the ASPEN-06 Phase 2 clinical trial in advanced HER2-positive gastric/GEJ cancer, said Jason Lettmann, Chief Executive Officer (CEO) of ALX Oncology.
• Notably, this outcome is particularly important as it represents the first promising activity in a randomized trial in solid tumors in the CD47 space and further underscores evorpacepts differentiation.
• Over the next 12-18 months, we expect to report multiple value inflection datapoints, with the goal of advancing evorpacepts potential beyond anti-cancer antibodies through ongoing combination studies with ADCs and checkpoint inhibitors.

Industry Context

The positive results from the ASPEN-06 trial are significant in the CD47 space, which has seen challenges in demonstrating efficacy in solid tumors. ALX Oncology's approach of combining evorpacept with other therapies like ADCs and checkpoint inhibitors aligns with current trends in immuno-oncology.

Comparison to Industry Standards

• The ASPEN-06 trial results showed a 52% ORR for the evorpacept combination, which is significantly higher than the 28% ORR reported in the RAINBOW study for CYRAMZA + paclitaxel, the current standard of care for second-line gastric/GEJ cancer.
• The median duration of response was not reached for the evorpacept arm, compared to 4.4 months in the RAINBOW study and 7.4 months in the control arm of the ASPEN-06 trial, suggesting a potential improvement in treatment durability.
• These results position evorpacept as a potentially superior treatment option compared to existing therapies in this space.
• Other companies developing CD47 inhibitors include Gilead Sciences and Forty Seven, however, ALX Oncology's evorpacept has shown a differentiated safety profile.

Management Changes

Stakeholder Impact

• Shareholders will likely react positively to the strong clinical trial results and successful capital raise.
• Employees may be encouraged by the company's progress and financial stability.
• Patients with cancer may benefit from the development of new and effective therapies.
• The company's suppliers and partners may see increased business opportunities.

Next Steps

• ALX Oncology will present data from a Phase 1b trial in Non-Hodgkin Lymphoma at the AACR Annual Meeting on April 9, 2024.
• The company expects to release data from a Phase 1b trial in Urothelial Carcinoma in Q2 2024.
• Top line results from the full ASPEN-06 Phase 2 trial are expected in June-July 2024.
• Top line results from a Phase 1b trial in Breast Cancer are expected in Q4 2024.
• Top line results from two Phase 2 trials in Head and Neck Squamous Cell Carcinoma are expected in Q4 2024/Q1 2025.
• The company plans to initiate a Phase 3 registrational trial for evorpacept in Q4 2024.

Key Dates

Keywords

evorpacept, CD47, immuno-oncology, cancer, clinical trial, HER2-positive gastric cancer, ASPEN-06, Non-Hodgkin Lymphoma, urothelial carcinoma, breast cancer, head and neck cancer, public offering, financial results