Business Overview: Alector Inc. is a late-stage clinical biotechnology company focused on developing innovative therapies to counteract the devastating progression of neurodegenerative diseases. The company was founded in 2013 and is headquartered in South San Francisco, California. Alector's mission is to leverage its deep expertise in genetics, immunology, and neuroscience to identify and validate novel targets and advance a diverse portfolio of product candidates aimed at restoring healthy immune function and addressing the underlying mechanisms of neurodegeneration.
Alector was founded in 2013 by renowned scientists Arnon Rosenthal, Ph.D., and Asa Abeliovich, M.D., Ph.D., who recognized the potential of targeting the immune system as a novel approach to treat neurodegenerative diseases. The company's initial focus was on frontotemporal dementia (FTD), a rare and devastating form of early-onset dementia with limited treatment options.
Since its inception, Alector has financed its operations primarily through the sale of equity securities and upfront payments received from collaboration arrangements. The company has not generated any revenue from product sales and has incurred significant net losses each year since its founding, investing substantial financial resources in research and development activities for its preclinical and clinical product candidates.
Alector's most advanced product candidates include latozinemab, which is in Phase 2 and Phase 3 clinical trials, AL002, which is in a Phase 2 clinical trial, and AL101, which is in a Phase 2 clinical trial. The company has faced challenges in patient enrollment for its clinical trials, requiring measures such as opening additional clinical trial sites and expanding recruitment efforts.
In 2017, Alector entered into an agreement with AbbVie to co-develop antibodies to two program targets in preclinical development. However, in 2022, AbbVie decided to terminate the CD33 collaboration program, concluding that further development of AL003, the asset being developed under that program, was not warranted. Additionally, in 2023, Alector decided to close the Phase 1 clinical trial for its AL044 product candidate based on initial pharmacokinetic and tolerability data.
A significant milestone for Alector came in 2021 when the company entered into a Collaboration and License Agreement with GlaxoSmithKline (GSK) to collaborate on the global development and commercialization of progranulin-elevating monoclonal antibodies, including latozinemab and AL101. Under the terms of this agreement, Alector received $700 million in upfront payments, which has bolstered its financial position and research capabilities.
Despite facing setbacks and challenges in its product development efforts, including the termination of the CD33 collaboration program with AbbVie and the closure of the Phase 1 trial for AL044, Alector continues to advance its pipeline of therapies targeting neurodegenerative diseases. The company's approach remains centered on identifying and validating genetically-supported targets that play key roles in the pathogenesis of these diseases, and then developing targeted therapies to modulate these targets.
One of Alector's lead product candidates is Latozinemab, a first-in-class monoclonal antibody designed to elevate progranulin levels in the brain. Progranulin is a critical regulator of immune function and neuronal health, and its deficiency is a known genetic cause of FTD. Latozinemab is currently in a pivotal Phase 3 clinical trial (INFRONT-3) for the treatment of FTD with progranulin gene mutation (FTD-GRN), with topline data expected by the fourth quarter of 2025.
Another key program in Alector's pipeline is AL101, a monoclonal antibody that also targets progranulin elevation, but with distinct pharmacokinetic and pharmacodynamic properties that may make it more suitable for the treatment of larger indications, such as Alzheimer's disease. AL101 is being evaluated in the ongoing PROGRESS-AD Phase 2 clinical trial in early Alzheimer's disease patients, with enrollment expected to complete by mid-2025.
In addition to its late-stage clinical programs, Alector has a robust preclinical pipeline that leverages its proprietary Alector Brain Carrier (ABC) technology. The ABC platform is designed to enhance the delivery of Alector's protein and nucleic acid therapeutics to the brain, with the goal of improving efficacy and safety while reducing costs. The company is advancing several ABC-enabled programs, including candidates targeting amyloid-beta and GCase replacement for Parkinson's disease.
Alector's partnerships with industry leaders, such as GlaxoSmithKline (GSK) and AbbVie, have further bolstered its capabilities and resources. The company's collaboration with GSK covers the global development and commercialization of Latozinemab and AL101, while the AbbVie partnership focuses on the development of therapies for Alzheimer's disease and other neurodegenerative disorders.
Financials and Liquidity As of September 30, 2024, Alector reported $457.2 million in cash, cash equivalents, and investments, which the company believes will fund its operations through 2026. For the nine months ended September 30, 2024, the company reported collaboration revenue of $46.3 million, compared to $81.9 million in the same period of 2023. Total research and development expenses for the first nine months of 2024 were $139.5 million, compared to $144.4 million in the prior-year period, while general and administrative expenses were $44.6 million, up from $41.8 million in the same period of 2023.
For the full year 2025, Alector expects collaboration revenue to be between $5 million and $15 million, with total research and development expenses estimated to be between $175 million and $185 million, and total general and administrative expenses estimated to be between $55 million and $65 million.
In the most recent quarter, Alector reported revenue of $54,240,000 and a net loss of $2,074,000. The company's operating cash flow for the quarter was negative $55,028,000, while free cash flow was negative $55,201,000. As of the latest reporting period, Alector had $37,160,000 in cash and a current ratio of 3.40, which is equal to its quick ratio.
For the full year 2023, Alector reported collaboration revenue of $97.1 million, total research and development expenses of $192.1 million, and total general and administrative expenses of $56.7 million.
Risks and Challenges As a clinical-stage biotechnology company, Alector faces several risks and challenges common to the industry. These include the inherent uncertainties of drug development, the potential for clinical trial failures or delays, regulatory approval risks, and intense competition in the neurodegenerative disease landscape.
The company's reliance on its partnerships with GSK and AbbVie also introduces risks related to the successful execution of these collaborations and the ability of Alector to achieve its desired milestones and revenue targets. Additionally, Alector's heavy focus on the development of its proprietary ABC technology introduces technology-specific risks, such as the potential for manufacturing challenges or the inability to achieve the desired level of brain penetration and therapeutic efficacy.
Outlook and Catalysts Alector is poised for a potentially transformative year in 2025, with several key milestones and data readouts anticipated. The company expects to report topline data from the pivotal INFRONT-3 Phase 3 trial of Latozinemab in FTD-GRN by the fourth quarter of 2025, which could potentially lead to regulatory approvals and commercialization of this first-in-class therapy.
Additionally, Alector plans to complete enrollment in the PROGRESS-AD Phase 2 trial of AL101 in early Alzheimer's disease by mid-2025, setting the stage for the advancement of this program. The company's preclinical pipeline, which includes ABC-enabled candidates targeting amyloid-beta and GCase replacement for Parkinson's disease, also holds promise for future growth and pipeline expansion.
Alector's strong cash position, coupled with its partnerships and robust pipeline, positions the company well to navigate the challenges of the neurodegenerative disease field and potentially deliver innovative therapies to patients in need. As the company continues to execute on its strategic priorities, investors will closely watch for updates on the progress of its late-stage and preclinical programs, as well as any potential business development activities or collaborations that could further strengthen its pipeline and capabilities.
In May 2023, Alector and its collaboration partner, GSK, amended their agreement, with Alector responsible for funding and sharing in the development costs up to $140.5 million for the conduct of the initial Phase 2 trial of AL101 in Alzheimer's disease. In August 2023, GSK received FDA clearance of the Investigational New Drug (IND) application for AL101 in the treatment of early Alzheimer's disease, and in February 2024, GSK dosed the first participant in the PROGRESS-AD global Phase 2 clinical trial of AL101 in early Alzheimer's disease.
Alector's third product candidate, AL002, targets Triggering Receptor Expressed on Myeloid cells 2 (TREM2) to increase the functionality of TREM2 signaling and enhance microglia cell activation. AL002 is currently being developed for the treatment of Alzheimer's disease in collaboration with AbbVie. In January 2023, the first patient was enrolled and dosed in a long-term extension (LTE) of Alector's INVOKE-2 Phase 2 clinical trial for AL002. In February 2023, Alector and AbbVie amended their agreement, which resulted in Alector receiving a $17.8 million milestone payment in March 2023 for the dosing of the first patient in the LTE trial. Alector completed enrollment of 381 patients in the INVOKE-2 clinical trial in the third quarter of 2023, with data expected in the fourth quarter of 2024.