Assessing Arcellx (ACLX) Valuation Following New CAR-T Therapy Competition from Kelonia Therapeutics

Arcellx (ACLX) shares came under pressure following early-stage trial data from Kelonia Therapeutics. Kelonia's CAR-T therapy KLN-1010 for multiple myeloma showed strong signals of efficacy, raising questions about Arcellx’s competitive positioning.

See our latest analysis for Arcellx.

With the renewed spotlight on CAR-T therapies, Arcellx shares have come under pressure, dropping nearly 19% over the past week after Kelonia’s new trial data stirred concerns about future competition. While that short-term share price return looks rough, Arcellx’s three-year total shareholder return sits at an impressive 266%. However, recent volatility hints that investor sentiment could be shifting.

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With shares now trading at a steep discount to analyst targets, and strong underlying growth figures, the question is whether Arcellx presents a compelling entry point or if the market has already factored in all the risks and rewards.

Price-to-Book Ratio of 9.6x: Is it justified?

Arcellx currently trades at a price-to-book ratio of 9.6x, meaning the market is valuing the shares significantly above the company’s book value and peer group averages.

The price-to-book (P/B) ratio compares a company’s market value to its net assets. In biotechnology, investors may pay a premium due to growth expectations. However, a high P/B also invites questions about whether such optimism is warranted for a still unprofitable business.

Compared to the US Biotechs industry, which trades at a 2.7x average, Arcellx’s 9.6x ratio stands out as expensive. The company is also priced above its peer average of 9.1x. Without improved profitability or clearer paths to sustained growth, this premium could be difficult to justify long-term.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 9.6x (OVERVALUED)

However, clinical setbacks or slower than expected revenue growth could quickly overshadow Arcellx's upside, making the current valuation harder to defend.

Find out about the key risks to this Arcellx narrative.

Another View: Discounted Cash Flow Tells a Different Story

While Arcellx looks expensive on a price-to-book basis, our DCF model paints a strikingly different picture. According to this method, shares are trading 86% below their estimated fair value, which suggests there could be significant potential upside. Could the market be overly cautious, or is there a reason behind this disconnect?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Arcellx for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 923 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Arcellx Narrative

If you see the numbers differently or want to dive deeper into the details yourself, you can build your own view in just a few minutes. Do it your way

A great starting point for your Arcellx research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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