IPO Launch: ALX Oncology Proposes $128 Million IPO


ALX Oncology (ALXO) aims to raise $128 million from the sale of its common stock in an IPO, according to an amended registration statement.

The company is developing treatment candidates for various blood and solid tumor cancer conditions.

ALXO is pursuing treatments in extremely large market spaces and has produced promising Phase 1b trial response results.


To listen to an audio version of this report, click the Play button on the graphic below:


Burlingame, California-based ALX was founded to advance a pipeline of drug treatments seeking to negate the ability of certain cancer cells to avoid detection via CD47 checkpoints.

Management is headed by president and Chief Executive Officer Jaume Pons, Ph.D, who has been with the firm since April 2015 and was previously Senior Vice President at Pfizer (PFE) and Chief Scientific Officer at Rinat Neuroscience, a subsidiary of Pfizer.

Below is a brief overview video of CD47 proteins:

Source: Stanford Cancer Institute

The firm's candidate, ALX148, is being developed to treat myelodysplastic syndromes [MDS] and acute myeloid leukemia [AML].

Management intends to advance ALX148 as a monotherapy as well as in conjunction with other treatments, for non-Hodgkin's lymphoma and various solid tumor conditions.

Below is the current status of the company’s drug development pipeline:


Source: Company S-1 Filing

Investors in the firm have invested at least $180 million and include venBio, Lightstone Ventures, Vivo Capital and Logos Opportunities Fund, among others.

According to a 2019 market research report by MarketsandMarkets, the global market for leukemia therapeutics was an estimated $12.3 billion 2019 and is expected to exceed $17 billion by 2024.

This represents a forecast CAGR (Compound Annual Growth Rate) of 6.8% from 2019 to 2024.

Key elements driving this expected growth are a growing incidence of disease among an aging global population, a broader set of treatment options amid growing awareness and distribution of treatments.

Below is a chart that shows the historical activity and forecast growth of leukemia treatments by year and region:


Also, the global head and neck squamous cell cancer market is expected to reach $4.5 billion by 2027.

This represents a CAGR forecast of 17.3% from 2020 to 2027 and is due to tobacco use, alcohol consumption, human papillomavirus infection and Epstein-Barr virus infection.

Emerging market countries are expected to play a growing role in providing growth opportunities for treatment providers in the market.

Major competitive vendors that provide or are developing treatments include:

  • AstraZeneca
  • Bristol-Myers Squibb
  • Gilead Sciences
  • Merck
  • Novartis
  • Pfizer
  • Roche
  • Other firms developing the CD47 pathway for other diseases

ALX’s recent financial results are typical of a clinical stage biopharma due to minimal revenue and significant R&D and G&A expenses associated with its research activities.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):


Source: Company registration statement

As of March 31, 2020, the company had $105.0 million in cash and $9.3 million in total liabilities. (Unaudited, interim)

ALXO intends to sell 8 million shares of common stock at a midpoint price of $16.00 per share for gross proceeds of approximately $128.0 million, not including the sale of customary underwriter options.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a common feature of many life science IPOs.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $455.9 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 23.05%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $10.0 million to advance the clinical development of ALX148 through completion of our existing Phase 1b clinical trials in HNSCC and gastric/GEJ cancer;

approximately $25.0 million to advance the clinical development of ALX148 through initiation and completion of our Phase 1b/2 combination clinical trial in MDS;

approximately $20.0 million to advance the clinical development of ALX148 through initiation and completion of our Phase 1b/2 combination clinical trial in AML;

approximately $15.0 million for manufacturing activities related to chemistry, manufacturing and controls, or CMC, activities;

approximately $50.0 million to advance the clinical development of ALX148 through initiation and completion of our Phase 2 combination clinical trials in HNSCC and gastric/GEJ cancer or alternative Phase 2 indications if there are compelling clinical data; and

the remainder for other development work associated with advancing ALX148 and for working capital and other general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed underwriters of the IPO are Jefferies, Credit Suisse, Piper Sandler and LifeSci Capital.


ALXO is seeking public capital market funding to advance its pipeline of blood and solid tumor cancer treatment candidates.

For its candidate ALX148, management is pursuing a range of indications in conjunction with existing therapies as well as a monotherapy.

Its solid tumor programs have received FDA fast track designation.

The market opportunities for solid tumor treatments and blood cancer treatments are some of the largest cancer treatment markets worldwide.

Management has not entered into any research or commercial collaborations to-date, so is pursuing a ‘go it alone’ approach.

Jefferies is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 87.6% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, the proposed IPO is valued within the typical range for biopharma IPOs.

Given the firm’s results to-date and extremely large market opportunities, for life science investors with a hold time frame of at least 18 - 36 months, my opinion on the IPO is a BUY at up to $16.00 per share.

Expected IPO Pricing Date: July 16, 2020.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)


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