ALX Oncology's Strategic Momentum in Immuno-Oncology: Evaluating the Investment Potential of Evorpacept's Pipeline Progress

In the high-stakes arena of immuno-oncology, ALX Oncology (NASDAQ: ALXO) has carved a niche with its CD47-blocking agent, evorpacept, and its novel EGFR-targeted antibody-drug conjugate (ADC), ALX2004. As of August 2025, the company's strategic repositioning—centered on biomarker-driven development and cost optimization—has positioned it as a compelling, albeit high-risk, play for investors seeking exposure to next-generation cancer therapies. This analysis evaluates the clinical and financial catalysts propelling ALX Oncology's momentum, while dissecting the risks and rewards inherent in its ambitious pipeline.

Clinical Catalysts: Evorpacept's Biomarker-Driven Breakthrough

The cornerstone of ALX Oncology's strategy is evorpacept, a CD47 inhibitor designed to unlock the immune system's ability to attack cancer cells. The ASPEN-06 trial in HER2-positive gastric cancer has yielded groundbreaking insights: patients with high CD47 expression achieved a 65% objective response rate (ORR) when evorpacept was combined with trastuzumab, ramucirumab, and paclitaxel, compared to just 26% with the standard regimen alone. For CD47-low patients, the ORR was 39% versus 25%. These results validate CD447 as a predictive biomarker, enabling precision targeting of patients most likely to benefit from evorpacept.

Building on this, the ASPEN-Breast trial has been redesigned as a single-arm, biomarker-driven study in HER2-positive breast cancer, with interim data expected in Q3 2026. Success here could fast-track a registrational study, potentially positioning evorpacept as a first-in-class CD47 inhibitor in a $10 billion+ HER2-positive breast cancer market. Meanwhile, the ASPEN-03 and ASPEN-04 trials in head and neck cancer are expected to report topline results in 2025, further broadening evorpacept's therapeutic footprint.

Financial Catalysts: Extended Runway and Strategic Efficiency

ALX Oncology's financial discipline has been a quiet but critical enabler of its progress. As of June 30, 2025, the company held $83.5 million in cash, a 35% decline from December 2024 but sufficient to fund operations through Q1 2027. This extended runway was achieved through a 30% reduction in preclinical research staff and the suspension of the ASPEN-CRC trial in colorectal cancer—a strategic pivot to prioritize higher-potential programs.

The Q2 2025 net loss of $25.9 million (down from $39.4 million in Q2 2024) reflects reduced R&D expenses and streamlined operations. Notably, the company's IND clearance for ALX2004 in April 2025 and its Phase 1 trial initiation in August 2025 add a second pillar to its pipeline, diversifying risk and creating a dual-catalyst model. ALX2004's proprietary topoisomerase I inhibitor payload and EGFR-targeting mechanism offer a differentiated profile in the crowded ADC space, with initial safety data expected in 1H 2026.

Strategic Partnerships and Leadership Reinforcements

ALX Oncology's collaboration with Sanofi in the UMBRELLA trial for multiple myeloma further underscores its ability to leverage external expertise. The completion of the dose escalation phase and the ongoing dose optimization phase signal progress in validating evorpacept's potential in hematologic malignancies. Additionally, the appointment of Daniel Curran, M.D., to the board—a seasoned executive with experience in drug development and corporate strategy—adds credibility to the company's governance and long-term vision.

Risks and Rewards: A High-Stakes Proposition

While ALX Oncology's strategic moves are laudable, the path to commercialization remains fraught with challenges. The CD47 space is highly competitive, with companies like Amgen and Astex Pharmaceuticals also pursuing CD47 inhibitors. Moreover, the biomarker-driven approach, while scientifically sound, requires robust validation in larger trials. Regulatory hurdles, such as the FDA's scrutiny of biomarker-enriched trials, could delay approvals.

Financially, the company's reliance on a narrow cash runway means any delays in trial timelines or unmet endpoints could force a capital raise, diluting existing shareholders. However, the $107 million cash balance as of March 2025 and the absence of immediate debt obligations provide a buffer.

Investment Thesis: A High-Risk, High-Reward Play

For investors with a high-risk tolerance, ALX Oncology offers a compelling case. The ASPEN-Breast interim data in Q3 2026 and ALX2004's Phase 1 readouts in 1H 2026 represent key inflection points that could catalyze a re-rating of the stock. A successful ASPEN-Breast trial could justify a $1 billion+ valuation, while ALX2004's differentiation in the ADC market could attract partnership interest.

However, the stock's volatility—exacerbated by its small-cap status and sector-specific risks—demands caution. Investors should monitor cash burn rates, trial timelines, and regulatory updates closely. A diversified portfolio approach, with ALXO as a satellite holding, is advisable.

Conclusion

ALX Oncology's strategic focus on biomarker-driven development and cost efficiency has positioned it to capitalize on the next wave of immuno-oncology innovation. While the road ahead is uncertain, the company's clinical and financial catalysts—coupled with a robust cash runway—make it a high-conviction opportunity for those willing to navigate the inherent risks. As the data from ASPEN-Breast and ALX2004 unfold, ALX Oncology could emerge as a pivotal player in the CD47 and ADC landscapes, offering substantial long-term value for patient shareholders.