ALX Oncology's Earnings Miss Signals a Make-or-Break Year Ahead
18min read ALX Oncology (NASDAQ: ALXO) reported a first-quarter 2025 GAAP net loss of $30.8 million, or -$0.58 per share, a $0.24 miss compared to the consensus estimate of -$0.34. This gap highlights the biotech’s struggle to align financial discipline with its ambitious clinical pipeline. While the company has extended its cash runway into late 2026 through cost-cutting measures, execution risks loom large as it navigates regulatory setbacks, clinical trial failures, and mounting investor skepticism.
The Financial Tightrope
The widened net loss—despite a $7.8 million reduction in R&D expenses—stems from a combination of factors. First, general and administrative (G&A) costs surged by $1.9 million to $7.9 million due to higher personnel expenses, offsetting savings from lower clinical trial manufacturing and stock-based compensation. Second, the weighted-average share count rose to 53.36 million in Q1 2025 from 50.12 million in Q1 2024, diluting EPS by roughly $0.03. Third, non-GAAP adjustments (excluding $5.2 million in stock-based compensation) masked the true operational strain, as GAAP rules force inclusion of these costs.
The cash position dropped from $131.3 million at year-end 2024 to $107.0 million by Q1 2025—a $24.3 million quarterly burn. Management claims the cash runway now extends to Q4 2026, but this depends on strict adherence to its reprioritization plan, including a 30% reduction in preclinical research staff and halting non-core programs.
Clinical Setbacks and Strategic Shifts
ALX Oncology’s pipeline pivots are central to its financial challenges:
1. Evorpacept’s Regulatory Roadblocks: The FDA’s rejection of accelerated approval for evorpacect in HER2-positive gastric cancer—due to ENHERTU’s emergence as a new standard of care—forced the company to abandon a U.S. Phase 3 trial. This decision, while cost-saving, eliminates a near-term regulatory path.
2. Trial Failures: The ASPEN-03/04 trials (evorpacept + KEYTRUDA in HNSCC) and ASPEN-07 (urothelial cancer) missed endpoints, leading to program discontinuations. These setbacks have refocused efforts on combinations where evorpacept shows promise:
- Breast Cancer: The ASPEN-Breast trial (evorpacept + HERCEPTIN) began dosing in mid-2025, with interim data expected late 2026.
- Colorectal Cancer: The ASPEN-CRC trial (evorpacept + ERBITUX) also started mid-2025, targeting safety/efficacy data by early 2026.
- Non-Hodgkin Lymphoma (NHL): Phase 1 data showed an 83% complete response rate in indolent NHL, with Phase 2 enrollment completed.
- New ADC Candidate: ALX2004, an EGFR-targeted ADC, received FDA IND clearance in April 2025, with Phase 1 safety data expected early 2026. This program adds operational complexity but could diversify the pipeline.
The Inflection Point in 2026
ALX Oncology’s survival hinges on three critical milestones:
1. Breast and Colorectal Data: Positive interim results from ASPEN-Breast and ASPEN-CRC trials (late 2026) could reignite investor optimism.
2. ALX2004 Safety: Phase 1 data from its ADC must demonstrate a manageable safety profile to justify further investment.
3. I-SPY Trial: Combined evorpacept/ENHERTU data in metastatic breast cancer (expected late 2025) could provide a near-term catalyst.
Risks and Rewards
The company’s stock has plummeted 97% over the past year, reflecting investor disillusionment. Key risks include:
- Cash Burn Sustainability: The $24.3 million Q1 cash burn suggests the 2026 runway could shrink if trials take longer or costs escalate.
- Competitive Pressure: Evorpacept’s CD47 mechanism faces competition from drugs like Magrolimab, requiring ALX to prove superior efficacy in combination therapies.
- Regulatory Hurdles: Even if trials succeed, FDA approval timelines for oncology therapies are unpredictable.
Conclusion: A High-Stakes Gamble
ALX Oncology’s Q1 2025 miss underscores its precarious position. While strategic cuts have bought time, the company must deliver clinically meaningful data by 2026 to justify its $57 million market cap (as of June 2025). The NHL Phase 2 results and the ASPEN-Breast/ALX2004 milestones are existential tests.
Consider this: If evorpacept’s breast/colorectal programs hit primary endpoints, the stock could rebound sharply. However, failure would likely force a dilutive financing or partnership at unfavorable terms. Investors must weigh the ~$107 million cash runway against the $10 million+ quarterly burn and ask: Can ALX execute its high-stakes pivot? The answer will be clear by late 2026—but for now, the odds are stacked against it.
