ALX Oncology Shares Dip Despite Positive Phase 2 Results for Evorpacept
Thursday, Jan 23, 2025 2:56 pm ET
2min read ALX Oncology (ALXO) shares dropped by 15% on Tuesday, January 23, despite announcing positive updated data from the ASPEN-06 Phase 2 clinical trial of evorpacept in HER2-positive gastric cancer patients. The trial demonstrated significant improvements in patients with confirmed HER2-positive cancer, showing a 48.9% overall response rate (ORR) and a median duration of response (mDOR) of 15.7 months compared to 24.5% and 9.1 months in the control group, respectively. The progression-free survival (PFS) Hazard Ratio was 0.64, indicating a 36% reduction in the risk of progression or death.
The company hosted a conference call and investor webcast on the same day to discuss the results, but the market reaction was less than enthusiastic. The drop in share price can be attributed to several factors, including market expectations, competition, safety concerns, and regulatory uncertainty.
Market expectations and competition: The market may have had high expectations for the trial results, and the actual data, while positive, might not have met these expectations. Additionally, the competitive landscape in the gastric cancer space is crowded, with several established therapies and ongoing clinical trials. The market may be waiting for more data or a clear differentiation of evorpacept before fully valuing the company.
Safety concerns and tolerability: Although the trial results showed that evorpacept was generally well-tolerated, the market may be cautious about the potential side effects and safety profile of CD47 inhibitors, given the historical challenges faced by other agents in this class. The market may be waiting for more long-term safety data before fully embracing the stock.
Regulatory uncertainty: The market may be uncertain about the regulatory pathway for evorpacept and the potential timeline for approval. While the drug has received Fast Track and Orphan Drug Designations, the market may be cautious about the potential regulatory hurdles and the time it might take for the drug to reach the market.
Despite the recent share price decline, ALX Oncology's positive trial results position evorpacept as a promising therapeutic option in the gastric cancer treatment landscape. The superior efficacy and well-tolerated safety profile of evorpacept in combination with established agents could facilitate rapid market adoption if approved. Additionally, the potential for broad reimbursement and the possibility of expanding into other HER2-positive cancers further strengthen ALX Oncology's market position.
In conclusion, ALX Oncology's shares dropped by 15% following the announcement of positive Phase 2 results for evorpacept in HER2-positive gastric cancer. The market reaction can be attributed to factors such as market expectations, competition, safety concerns, and regulatory uncertainty. However, the positive trial results position evorpacept as a promising therapeutic option in the gastric cancer treatment landscape, and the company's long-term prospects remain strong. As more data becomes available and the company addresses market concerns, the share price may rebound, and the company's long-term prospects could improve.
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