Alector, Inc. Q4 FY2023 earnings call

• Arnon Rosenthal highlighted the broad mechanistic potential of immuno-neurology candidates, which target microglia and other components to combat neurodegeneration. 2023 saw successful clinical execution with key milestones, including trial enrollment for lead programs like the INFRONT-3 Phase 3 trial of latozinemab in frontotemporal dementia and the INVOKE-2 Phase 2 trial of AL002 in early Alzheimer’s disease. The FDA granted Breakthrough Therapy designation to latozinemab for FTD-GRN. • Gary Romano discussed the AL002 program, including its mechanism to activate TREM2, ongoing INVOKE-2 trial details (including ARIA-like MRI findings), and goals to slow Alzheimer’s disease progression. He also provided updates on the latozinemab pivotal Phase 3 trial and the AL101 Phase 2 trial in partnership with GSK. • Sara Kenkare-Mitra updated on the early research pipeline, including the target discovery platform and proprietary blood-brain barrier technology (Alector Brain Carrier), which aims to enhance drug delivery to the CNS. • Marc Grasso noted the strong cash position with $548.9 million in cash, cash equivalents, and short-term investments as of December 31, 2023, the completion of a $75 million follow-on financing in January 2024, and 2024 guidance for collaboration, research and development, and general and administrative expenses.

Collaboration revenue in the fourth quarter of 2023 was $15.2 million, compared to $14.4 million in the same period of 2022. For the full year 2023, collaboration revenue was $97.1 million, versus $133.6 million in 2022. Total research and development expenses in the fourth quarter of 2023 were $47.7 million, compared to $54.5 million in the same period of 2022. Full-year 2023 research and development expenses were $192.1 million, versus $210.4 million in 2022. Total general and administrative expenses in the fourth quarter of 2023 were $14.9 million, compared to $15.4 million in the same period of 2022. Full-year 2023 general and administrative expenses were $56.7 million, versus $61 million in 2022.

• Collaboration revenue for 2024 is estimated to be between $60 million and $70 million. • Anticipated total research and development expenses for 2024 are between $210 million and $230 million. • Anticipated total general and administrative expenses for 2024 are between $60 million and $70 million. • Cash runway extends through 2026, providing flexibility for clinical activities and investment in the Alector Brain Carrier Technology platform.

• The AL002 trial has observed ARIA-like MRI findings, with approximately 20% incidence of ARIA-E and ARIA-H. However, most cases are asymptomatic, and serious ARIA-related serious adverse events (SAEs) are under 1%.

Q: On the brain carrier program, how is the approach to the platform planned? Are doses chosen indication-by-indication? And on ADP027 targeting GPNMB for Parkinson’s.

A: Sara Kenkare-Mitra stated the blood-brain barrier technology is versatile, targeting transferrin and CD98, and adaptable per indication. Arnon Rosenthal discussed the relevance of the GPNMB target to Parkinson’s disease, noting GPNMB’s role in lysosomal pathology and its relevance to the broader Parkinson’s population.

Q: For INVOKE-2, what gives confidence the trial is long enough to see treatment effect?

A: Gary Romano explained the study is a common close design with data available out to 48 weeks and beyond, using a proportional analysis of all collected data to maximize insights into treatment effect.

Q: How do soluble TREM2 levels in INVOKE-2 relate to preclinical AD vs progressive dementia?

A: Gary Romano mentioned that binding of AL002 to TREM2 reduces soluble TREM2, and while soluble TREM2 levels correlate with disease progression, they do not necessarily predict the pharmacological effect.

Q: On AL101 Phase 2 study, how were doses selected?

A: Sara Kenkare-Mitra indicated doses were selected based on pharmacokinetic (PK) and pharmacodynamic (PD) data from the Phase 1 study, tied to progranulin elevation in plasma and cerebrospinal fluid (CSF).

Q: Key endpoints in INVOKE-2 to show benefit beyond amyloid reduction?

A: Gary Romano highlighted biomarkers of Alzheimer’s pathophysiology, including tau biomarkers (plasma p217, tau aggregates) and clinical outcome measures, as key indicators of slowing disease progression.