ALX Oncology turns to biomarker-led development after evorpacept gastric cancer results

ALX Oncology has strengthened the scientific case for evorpacept in HER2-positive gastric cancer, but the company is taking a deliberately capital-conscious approach to what happens next. Newly published randomized Phase 2 data in Nature Medicine showed a 40.3% objective response rate when evorpacept was added to trastuzumab, ramucirumab and paclitaxel, rising to 63.6% in a post hoc subgroup whose tumors retained HER2 expression and showed high CD47 levels. Rather than finance an expensive U.S. Phase 3 gastric cancer program itself, ALX Oncology plans to explore partnerships while directing its own resources toward a biomarker-led breast cancer study and its earlier-stage antibody-drug conjugate pipeline. That strategy preserves cash and concentrates spending around nearer-term catalysts, but it also means the commercial future of evorpacept in gastric cancer increasingly depends on whether another company is willing to fund late-stage development.

The publication arrives as ALX Oncology remains a small clinical-stage biotechnology company with no approved products and a market capitalization of roughly $180 million before the latest trading move. Shares had fallen from above $2 at the beginning of September to $1.31 by the previous session, although the stock rose about 6% after the ASPEN-06 publication was announced. The market response suggests the biomarker findings attracted interest, but the larger valuation question remains whether ALX Oncology can convert those signals into a development path capable of generating meaningful commercial value.

Biomarker-selected gastric cancer patients could make evorpacept more commercially targeted

ASPEN-06 evaluated 127 patients with previously treated HER2-positive advanced gastric or gastroesophageal junction cancer. Patients received either evorpacept with trastuzumab, ramucirumab and paclitaxel or the three-drug regimen alone, giving ALX Oncology randomized evidence of whether its CD47-blocking therapy added meaningful activity to an established HER2-directed treatment backbone.

The overall response rate reached 40.3% in the evorpacept group compared with 26.6% in the control arm. That difference supported a contribution from evorpacept, although the trial did not meet every prespecified statistical criterion used in its Phase 2 design, preventing the results from being interpreted as an uncomplicated registrational success.

The commercial case becomes more interesting when the analysis narrows to biologically selected tumors. Among patients whose cancers retained HER2 positivity, response reached 48.9% with evorpacept versus 25.0% with control. In patients with retained HER2-positive disease and high CD47 expression, the gap widened further to 63.6% versus 23.1%.

Durability also improved in that biomarker-defined group. Median progression-free survival reached 19.5 months with evorpacept compared with 7.0 months for control, while median duration of response reached 25.5 months versus 8.4 months. Those figures make the subgroup particularly important to ALX Oncology because identifying a smaller population with substantially stronger activity could create a more focused development and commercialization strategy than attempting to treat all HER2-positive gastric cancer patients.

That approach could also make future trials more efficient if the biomarker proves predictive. Selecting patients most likely to respond can potentially reduce the number of participants needed to demonstrate an effect and improve the probability of clinical success, although the economic benefit depends on the biomarker being validated prospectively.

The limitation is that the strongest CD47 analysis was post hoc. The subgroup was identified after the trial was conducted rather than serving as the basis of the original primary analysis, meaning the large response difference cannot yet be treated as definitive evidence that CD47-high tumors will consistently respond better.

ALX Oncology is choosing partnership economics over funding its own gastric cancer Phase 3 trial

The most consequential business decision accompanying the publication is what ALX Oncology is not doing. Despite the favorable biomarker signal, management has elected not to finance a U.S. registrational Phase 3 gastric cancer trial with its own resources and will instead consider development partnerships for the indication.

That choice reflects the economics facing smaller biotechnology companies. Large international oncology trials can require substantial capital and years of development before generating revenue, while ALX Oncology is simultaneously funding another evorpacept program and the Phase 1 development of ALX2004.

Avoiding a self-funded gastric cancer Phase 3 reduces near-term spending and lowers the risk that one program absorbs a disproportionate share of the company’s balance sheet. It also allows ALX Oncology to use the Nature Medicine publication and biomarker data as supporting evidence in potential discussions with larger pharmaceutical companies that already have global oncology development and commercialization infrastructure.

A partnership would involve trade-offs. An external company could provide clinical funding, regulatory expertise and commercial scale, but ALX Oncology would likely surrender some future economics through licensing rights, profit sharing, royalties or regional control.

The alternative is that no sufficiently attractive partnership emerges. In that scenario, the gastric cancer data could remain scientifically interesting without advancing toward an approval pathway in the United States, leaving much of evorpacept’s future value dependent on other indications.

That makes the partnership strategy an important distinction for investors. ASPEN-06 may support the asset’s biological credibility, but the publication alone does not create a late-stage commercial program.

Mid-2027 breast cancer data are becoming the central test of the evorpacept investment case

ALX Oncology is directing more of its internal attention toward ASPEN-09-Breast, a Phase 2 study evaluating evorpacept with trastuzumab and chemotherapy in HER2-positive metastatic breast cancer. Topline results from approximately 80 patients are expected in mid-2027, making the study one of the company’s most important upcoming value catalysts.

The breast cancer program carries strategic importance because earlier exploratory results have already suggested that CD47 expression may help identify patients more likely to benefit from evorpacept. Reproducing the gastric cancer pattern in a separate HER2-positive tumor type would provide stronger evidence that CD47 is functioning as a predictive biomarker rather than simply identifying a favorable subgroup within one trial.

That could materially change how evorpacept is developed. The initial investment case around CD47 therapies centered on broadly removing a “don’t eat me” signal that tumors use to avoid macrophage attack, but development across the class has produced mixed results and safety challenges.

ALX Oncology designed evorpacept with an inactive Fc domain intended to reduce unwanted destruction of normal blood cells while preserving CD47 blockade. The company is now adding another layer of differentiation by arguing that the drug may work best when combined with tumor-targeting antibodies in patients whose cancers express sufficient CD47.

Commercially, a validated biomarker could allow ALX Oncology to target a defined patient population rather than compete as a broad immuno-oncology therapy. That would reduce the addressable population but potentially improve clinical-development efficiency and strengthen the rationale for combination treatment.

The upcoming breast cancer trial therefore matters beyond a single indication. A positive biomarker-defined result could validate a development framework that ALX Oncology may apply across additional HER2-directed combinations, while a weak result would raise questions about whether the gastric cancer subgroup can be reproduced prospectively.

ALX Oncology has enough cash for key catalysts but still depends on clinical success

ALX Oncology reported $153.4 million in cash, cash equivalents and investments at the end of the second quarter and expects existing resources to support planned operations through the first half of 2028. The company also refinanced its debt and secured access to additional borrowing capacity, increasing financial flexibility while its clinical programs progress.

Research and development spending declined to $13.1 million in the second quarter from $18.0 million a year earlier, while the quarterly net loss narrowed to $18.0 million from $25.9 million. Management attributed part of the lower spending to reduced costs associated with legacy trials as investment shifted toward ASPEN-09-Breast and ALX2004.

The cash runway is significant because it extends beyond the expected mid-2027 breast cancer readout and should also cover additional milestones from ALX2004. That reduces the immediate financing pressure frequently associated with small clinical-stage biotechnology companies, although future capital needs will still depend on trial outcomes and development plans.

ALX Oncology has already experienced substantial shareholder dilution. Approximately 138 million shares are outstanding, up more than 60% over the previous year following financing activity that strengthened the balance sheet. The additional cash improves the company’s ability to reach major catalysts, but the expanded share count means future clinical success must support a larger equity base.

The decision not to fund gastric cancer Phase 3 development internally can therefore be viewed partly as capital preservation. Management is effectively prioritizing the studies it believes can create the clearest near-term evidence around evorpacept’s biomarker strategy while maintaining resources for ALX2004.

ALX2004 gives investors a second pipeline opportunity beyond evorpacept

ALX Oncology’s valuation is no longer tied exclusively to evorpacept. The company is also developing ALX2004, an EGFR-targeted antibody-drug conjugate being tested in a Phase 1 dose-escalation study across EGFR-expressing solid tumors.

Enrollment has continued through dose escalation, with initial safety data expected during the second half of 2026. ALX Oncology has positioned the asset as a differentiated approach to delivering a cytotoxic payload against a clinically established target that is expressed across several major cancers.

The program remains much earlier than evorpacept and cannot yet be assigned the same level of clinical evidence. However, having a second internally controlled oncology asset reduces some of the strategic dependence on whether the CD47 program ultimately reaches the market.

That diversification is particularly relevant now that the gastric cancer program is moving toward a partnership-dependent model. A successful ALX2004 program would give ALX Oncology another route to build value without relying entirely on evorpacept licensing negotiations or the ASPEN-09-Breast outcome.

For investors, the coming year therefore contains several separate questions. ALX Oncology needs to show that its CD47 biomarker strategy can reproduce across tumor types, determine whether a partner sees enough value in ASPEN-06 to advance gastric cancer, and establish whether ALX2004 has an acceptable safety and activity profile as dose escalation progresses.

The Nature Medicine publication strengthens the first part of that story without settling it. Evorpacept produced a clear response improvement in the randomized gastric cancer trial, and the CD47-high, HER2-retained subgroup generated substantially stronger outcomes. The business opportunity now depends on whether those retrospective biomarker findings translate into prospective clinical success and whether ALX Oncology can convert scientific validation into partnerships and development programs without exhausting its balance sheet.

Key takeaways from ALX Oncology’s evorpacept biomarker strategy and partnership shift

• Evorpacept produced a 40.3% response rate in ASPEN-06 versus 26.6% with the control regimen in previously treated HER2-positive gastric cancer.
• Response increased to 63.6% in patients with retained HER2-positive tumors and high CD47 expression, although that analysis was post hoc.
• Median progression-free survival reached 19.5 months in the biomarker-selected group versus 7.0 months with control.
• ALX Oncology will not self-fund a U.S. Phase 3 gastric cancer trial and plans to explore potential development partnerships instead.
• The strategy preserves capital but makes further gastric cancer development dependent on attracting an external partner.
• ASPEN-09-Breast is now a major internal catalyst, with topline data from approximately 80 patients expected in mid-2027.
• ALX Oncology held $153.4 million in cash and investments and expects its current resources to support operations through the first half of 2028.
• ALX2004 provides a second pipeline opportunity, with Phase 1 development underway in EGFR-expressing solid tumors.
• ALX Oncology shares rose about 6% following the publication after a sharp decline during September, highlighting continued uncertainty around the company’s valuation.