Arcellx (ACLX) Declined Despite Positive Clinical Trial Results

Baron Funds, an investment management company, released its fourth-quarter investor letter for the “Baron Health Care Fund”. A copy of the letter can be downloaded here. The fund rose 13.10% (Institutional Shares) in the quarter, compared to a 11.92% gain for the Russell 3000 Health Care Index (benchmark) and a 2.40% gain for the Russell 3000 Index (the Index). The Fund returned 10.28% for the full year, compared to 14.56% and 17.15% gains for the indexes, respectively. Strong stock selection in biotechnology contributed to the Fund’s relative gains in the quarter.  The Fund seeks to invest in businesses with secular growth opportunities, a sustainable competitive edge, and strong management. The firm believes that healthcare is a strong sector in the U.S. economy, offering attractive investment opportunities with positive momentum heading into 2026.  Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Health Care Fund highlighted Arcellx, Inc. (NASDAQ:ACLX) as a performance detractor. Headquartered in Redwood City, California, Arcellx, Inc. (NASDAQ:ACLX) develops various immunotherapies for patients with cancer and other incurable diseases. The one-month return of Arcellx, Inc. (NASDAQ:ACLX) was 1.01%, and its shares gained 0.04% of their value over the last 52 weeks. On February 5, 2026, Arcellx, Inc. (NASDAQ:ACLX) stock closed at $66.94 per share with a market capitalization of $3.87 billion.

Baron Health Care Fundstated the following regarding Arcellx, Inc. (NASDAQ:ACLX) in its fourth quarter 2025 investor letter:

“Arcellx, Inc. (NASDAQ:ACLX) is developing cell therapies for multiple myeloma, including lead candidate anito-cel in partnership with Gilead. Anito-cel is a BCMA-targeted CAR-T therapy similar to Legend Biotech and Johnson & Johnson’s Carvykti, showing comparable efficacy with a more benign neurological side-effect profile. Despite encouraging clinical results for anito-cel, Arcellx detracted from performance following Johnson & Johnson’s announcement of strong data for its Tecvayli (a BCMA bispecific) plus Darzalex combination in previously treated, Darzalex-naïve patients, suggesting increased competition for BCMA CAR-T therapies. Based on our discussions with myeloma specialists, we think BCMA CAR-T will remain the preferred treatment option in the second line setting for a substantial portion of patients. We continue to believe Arcellx’s drug is meaningfully differentiated on safety and expect shares to appreciate ahead of a potential 2026 launch.”

Arcellx, Inc. (ACLX): Among Takeover Rumors Hedge Funds Are Buying

Arcellx, Inc. (NASDAQ:ACLX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 36 hedge fund portfolios held Arcellx, Inc. (NASDAQ:ACLX) at the end of the third quarter, compared to 39 in the previous quarter. While we acknowledge the risk and potential of Arcellx, Inc. (NASDAQ:ACLX) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Arcellx, Inc. (NASDAQ:ACLX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Arcellx, Inc. (NASDAQ:ACLX) and shared a list of best high short interest stocks with biggest upside potential. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.