ALX ONCOLOGY HOLDINGS INC (ALXO) stock intrinsic value fair value estimate & owner earnings analysis

ALX Oncology is a clinical-stage biotechnology company with no meaningful product revenue. Its lead candidate, evorpacept, blocks the CD47 "don't eat me" signal that cancer cells use to evade the immune system, and is being tested in combination with approved cancer therapies. A second candidate, ALX2004, is an EGFR-targeted antibody-drug conjugate that entered its first human trial in 2025. The company's most advanced study, in gastric cancer, hit a setback: in April 2025 the FDA told the company that its completed data was not sufficient to seek accelerated approval, given the availability of a competing approved therapy. A full Phase 3 trial would be needed to pursue approval on that path, and the company decided not to fund that trial itself, choosing instead to look for a partner to advance the gastric-cancer program. No such partnership has been signed. Later in 2025, follow-up analysis identified a biomarker (a protein called CD47 that some tumors overexpress) that predicted which patients benefited most, which could make the program more attractive to a future partner, but this has not yet translated into a deal with disclosed financial terms. Because there is no revenue and no signed partnership with disclosed economics, we have not assumed either will materialize by a certain date, and we have not put a value on the pipeline beyond what the company has already demonstrated. What is real today is the cash on the balance sheet and the rate at which the company is spending it. As of the most recent quarter, the company held roughly $138 million in cash and short-term investments against about $10 million of debt (a term loan), for net cash of roughly $128 million. Annual cash used in operations fell from about $130 million in 2023 to $122 million in 2024 to $84 million in 2025, and continued improving into 2026, following a completed reduction in the company's workforce and the decision to stop funding the gastric-cancer Phase 3 trial. In February 2026 the company raised approximately $140 million in a stock offering, which management says funds operations into the first half of 2028. We valued the company on this basis: net cash today, less the cash we expect will be spent running the business over roughly the next two years, with nothing assumed afterward unless a specific, dated event (like a partnership) occurs. Stock-based compensation, a real cost to shareholders through dilution even though it isn't a cash expense, is deducted in full each year rather than added back. In our base case, spending continues to moderate at a pace similar to the recent trend before leveling off, consistent with the completed workforce reduction; on that basis, we estimate the shares are worth about $0.07 each — essentially, the business is worth close to its net cash, with modest execution assumed. In our bear case, spending does not keep improving — new costs from the recently launched ALX2004 trial offset further savings elsewhere — and in that scenario the company would be worth slightly less than its current net cash, about -$0.27 per share, implying real risk of a dilutive capital raise before funds run out. In our bull case, the recent pace of cost discipline continues a bit longer, putting the value at about $0.13 per share. None of these cases credit any value to a future partnership or improved trial outcome, since no such deal exists today with disclosed terms — if one is signed, it would be a source of upside not reflected here. The company's debt is modest (roughly $10 million) and not a material factor next to its cash position. There is no near-term concern about the company's ability to fund itself; management states existing resources are sufficient into the first half of 2028, well beyond the next year. Given how thin the value is in every case, and the real chance that another capital raise or a business setback further dilutes shareholders before any pipeline catalyst arrives, the margin-of-safety price sits at a substantial discount to net cash, and the estimate gives little credit in advance of firmer news.